On January 30, 2012, the Federal Energy Regulatory Commission ("FERC" or "Commission") staff issued a White Paper explaining staff's proposal on advising the Environmental Protection Agency ("EPA") in responding to requests for an extension of time to comply with EPA's Mercury and Air Toxics Standards ("MATS").1 FERC staff is seeking comments on its proposal.
MATS limits mercury, acid gases, and other toxic emissions from power plants. According to the final rule, entities subject to MATS must comply within three years of the MATS effective dates. Some affected sources, however, are eligible for a one-year extension, and some affected sources can apply to the EPA for an Administrative Order ("AO") allowing them to operate in noncompliance with MATS for one additional year. Such sources include: (1) electric generating units ("EGUs") that may affect reliability if they are deactivated; and (2) EGUs that may affect reliability due to delays related to installation of controls.
The EPA's Office of Enforcement and Compliance Assurance released a policy memorandum ("Memorandum") that provides the EPA's intended approach in issuing AOs.2 According to the Memorandum, the EPA will seek advice from FERC and other relevant reliability entities prior to issuing any AOs. FERC staff's White Paper sets out a proposal for providing such advice to the EPA.
Per the EPA Memorandum, an owner/operator who submits a request for an AO, must also submit a copy of the request to FERC. In addition, the owner/operator is required to submit a written analysis of any reliability risks posed by the deactivation of the EGU and a written concurrence of the same (or an explanation of why such concurrence is not available) by the relevant planning authority. The requesting owner/operator must also provide a copy of the written analysis to FERC.
The FERC staff proposes that any such AO requests would be filed with the Commission Secretary and treated as an Informational Filing. The Commission would then assign each request a separate Administrative Docket ("AD") number. Any Informational Filing should include the same information that was submitted to the EPA. The staff notes that the "Commission may request additional information from the applicant but generally expects to rely on the information submitted to EPA."3
Although the EPA Memorandum states that the analysis should show that operation of a particular unit after the MATS compliance date would result in either violations of reliability criteria or cause reserves to fall below the required system reserve margin, the Commission proposes to review an informational filing based on whether deactivation would be a violation of Commission-approved Reliability Standards. The Commission staff request comments on this proposal. Furthermore, the Commission staff seek comments on whether the review should be done de novo or with some level of deference to the initial analysis. The White Paper does not propose to allow parties to intervene in the preparation of the Commission's comments. However, the EPA Memorandum requires that owners/operators submitting an AO application must also include any written comments that they have received from third parties that address operation of their units after the MATS compliance date. Such comments must also be included in the copy of the application that FERC receives. FERC staff intends to include such third party comments in the informational filing. Finally, the Commission would then advise the EPA by submitting written comments to the EPA. If the Commission comments to the EPA that there might be a violation of reliability standards, such comments do not constitute final agency decision that would trigger civil penalties or other enforcement actions.
The White Paper emphasized that any action by the Commission under these procedures would only serve as advice to the EPA. The EPA is not bound by FERC's comments and the decision to grant or deny an AO lies entirely with the EPA.
As noted above, the Commission staff is seeking comments on the proposed process for advising the EPA, and in particular:
- whether the Commission's determination should be based on the standard proposed by the EPA or the Commission-approved Reliability Standard;
- how the Commission should review issues other than potential violations of a Reliability Standard; and
- whether the Commission's review should be de novo. Comments are due by February 29, 2012.
1 Staff White Paper on Commission's Role Regarding Environmental Protection Agency's Mercury and Air Toxics Standards (Jan. 30, 2012) ("White Paper"), available at http://www.ferc.gov/media/news-releases/2012/2012-1/01-30-12-whitepaper. Pdf .
2 The Environmental Protection Agency's Enforcement Response Policy for Use of Clean Air Act Section 113(a) Administrative Orders in Relation to Electric Reliability and the Mercury and Air Toxics Standard (Dec. 16, 2011), available A t http://www.epa.gov/mats/pdfs/EnforcementResponsePolicyforCAA113.pdf .
3 White Paper at p 6.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.