House Bill to Address Reliability Impacts of EPA Rules Divides EPA and FERC
On May 9, 2012, the House of Representatives Committee on Energy and Commerce, Subcommittee on Energy and Power held a hearing on H.R. 4273: “Resolving Environmental and Grid Reliability Conflicts Act of 2012” and the “Hydropower Regulatory Efficiency Act of 2012.” H.R. 4273 purports to resolve the conflict for an electric generator who may be asked by DOE to run for the sake of electric reliability, even though it may be unable to comply with the recent suite of EPA power plant regulations. While FERC, generators, and some state commissions appear to support the bill, EPA, DOE and environmental groups oppose it as unnecessary.
H.R. 4273, as proposed, would amend section 202(c) of the Federal Power Act (“FPA”) to clarify that when an electric generator is operating under a section 202(c) emergency order, it will not be considered a violation of any Federal, State, or local environmental law or regulation. H.R. 4273 also specifies that such action will not subject the party (generator) to any civil or criminal liability or a citizen suit under such environmental law or regulation. Subcommittee Chairman Ed Whitfield (R-KY) supported H.R. 4273, stating that it is “essential that we amend the Federal Power Act so that generators aren’t forced to choose between compliance with an emergency order and compliance with EPA regulations.” Energy and Commerce Committee Chairman Fred Upton (R-MI) also supported H.R. 4273, calling it a “critical piece of legislation” which “protects our nation’s electricity producers from being penalized or sued….”
The following witnesses testified on H.R. 4273 and related issues:
- Patricia Hoffman, Assistant Secretary for the Office of Electricity Delivery and Energy Reliability, Department of Energy (“DOE”)
- Gina McCarthy, Assistant Administrator for the Office of Air and Radiation, Environmental Protection Agency (“EPA”)
- Commissioner Philip D. Moeller, FERC
- Chairman Betty Ann Kane, D.C. Public Service Commission (“DC PSC”)
- Debra Raggio, Vice President, Government and Regulatory Affairs, and Assistant General Counsel, GenOn Energy, Inc.
- Stephen Brick, on behalf of Environmental Integrity Project
Assistant Administrator McCarthy testified that the Executive Branch already has “sufficient tools” to address issues that arise and that 202(c) orders are “rare.” She further argued that H.R. 4273 could remove incentives for owners to act quickly in order to comply with environmental requirements and thus create more conflict between electric reliability and compliance with environmental laws. Finally, McCarthy argued that H.R. 4273 could unnecessarily endanger public health.
Assistant Secretary Hoffman also expressed concerns that amendments to FPA section 202(c) could create a disincentive for generators to take advantage of the options EPA has put into place for compliance concerning reliability issues. Hoffman also stressed that 202(c) authority is a “last resort.”
In addition to the DOE and EPA officials, Stephen Brick from the Environmental Integrity Project testified that H.R. 4273 is “unnecessary” and grants “an environmental hall pass” which will cut environmental regulators out of the process when DOE issues an emergency order. Brick argued that the changes in H.R. 4273 are the “wrong response” to the actual situation and move away from environmental protection.
Debra Raggio from GenOn and DC PSC Chairman Kane testified in support of H.R. 4273. Raggio and Kane each described the experience of Mirant Corporation in 2005 when the company acted pursuant to a DOE order to keep a power plant running for reliability purposes, then faced fines from the Virginia Department of Environmental Quality for exceeding emissions standards. Raggio further described the experience of Mirant in 2001 during the California energy crisis, when a San Francisco area plant was dispatched by the California Independent System Operator to maintain reliability. Mirant then faced a citizen lawsuit. Raggio and Kane used the Mirant example to argue why H.R. 4273 is necessary to prevent the “unfair” choice of electric generators between violating environmental permits and non-compliance with an emergency order from the DOE. Raggio further testified that H.R. 4273 offers a “clear way” to ensure that tools are available to maintain reliability of the grid even with conflicting environmental requirements.
FERC Commissioner Philip Moeller testified that he and his three colleagues on the Commission support the concept of H.R. 4273. Commissioner Moeller also testified that a bill like H.R. 4273 is “essential to address potential reliability challenges.” He emphasized that FERC hopes that the bill would never be invoked, but “erring on the side of reliability is the responsible approach.”
H.R. 4273 was introduced in the House on March 28, 2012 by Representatives Pete Olson (R-TX), Michael Doyle (D-PA), Lee Terry (R-NE), Gene Green (D-TX), Adam Kinzinger (R-IL), and Charles Gonzalez (D-TX).
Copies of testimony from each witness are available here.
A copy of H.R. 4273 is available here.