Legislative committee passes resolution against EPA carbon rule | Arkansas Blog

Tuesday, August 12, 2014

Legislative committee passes resolution against EPA carbon rule

Posted By on Tue, Aug 12, 2014 at 3:58 PM

Earlier this summer, state agencies, power companies and environmental groups began the first step in what will eventually become Arkansas' first serious effort to address climate change: crafting a state plan to implement an eventual federal rule that will lower carbon dioxide emissions. Electric companies don't like the newly proposed rule from the US Environmental Protection Agency (EPA), but they see the writing on the wall. Federal regulation of CO2 is coming. That's why they're sitting down at the table with state regulators to create a road map for both industry and regulators to proceed.

On Tuesday, though, an interim legislative committee sent a starkly different message by passing a resolution condemning the EPA rule as entirely illegitimate. The co-chairs of the Insurance and Commerce committee say the state should fight implementation of the EPA rule til the bitter end. Rep. Tommy Wren, a Democrat, set the tone by saying, "I don't think any member here would be in favor of the proposed changes." His Republican co-chair Sen. Jason Rapert went further, calling the rule an "encroachment on states' rights." He wants Attorney General Dustin McDaniel to join several other states in a lawsuit against the federal government challenging EPA's authority to regulate CO2. Rapert also urged the heads of the state Public Service Commission (PSC) and the Arkansas Department of Environmental Quality (ADEQ) to publicly oppose the EPA rule in its entirety, badgering ADEQ director Teresa Marks to go on the record in her opposition.

"Have you publicly spoken for or against it?" he asked her, adding later that "...it will have a huge detrimental effect on the country, and Arkansas. Does that not bother you?"

Marks, who will depart ADEQ later in the year, replied that the agency's position was neutral — its job, she said, was to prepare for implementing the rule. "Personally, I wouldn't support...bringing a lawsuit on the proposed rule," she said, reluctantly. "I think it's premature until we see what the final rule looks like."

That's right. Legislators are urging a lawsuit against something that has yet to exist. This tyrannical encroachment on states' rights is actually in a year-long review and comment process, during which EPA and states (together with stakeholders such as power companies) are collaboratively working to arrive at the fairest, least painful way to meet emission-reduction goals. Marks noted earlier in the meeting that "states are given a great deal of flexibility so far" compared to pretty much every other EPA rule that binds the state. The whole point of the process is to give states latitude in designing their own plan. Arkansas is currently negotiating with EPA, trying to reduce the strictness of the mandate; both public officials and power executives report back that the feds are reasonable, receptive to changes and willing to modify target dates and figures. Privately, power company execs say some form of the rule is probably inevitable. Sure, they're not happy about it and would rather see it dead — but they're also racing to adapt, providing comments and suggestions in an attempt to reach a compromise. 

The opposition of Rapert and Wren (and many others, such as both gubernatorial candidates) is based in two things. The first is a legitimate question: how much will the rule raise Arkansans' electric bills? Could it reduce the reliability of the grid? Indeed, coal-fired plants may have to close, and rates may increase for consumers; Duane Highley, of Arkansas Electric Cooperatives, said that compliance with the rule as it stands now could create a 10-30% increase in electric rates for consumers. However, he added, if Arkansas cooperates with its neighboring states to design a regional plan for lowering emissions — creating a multi-state carbon market, say — the rate increase could be more on the order of 5-10%.

EPA does place a heavy burden on Arkansas. The feds say we should reduce carbon emissions by a massive 44 percent by 2030 — a steeper goal than most states were given, although that's because Arkansas has invested heavily in coal-burning plants (coal generates more CO2 than other fuels).* That goal, or at least the timeline for reaching it, may well be scaled back as the details are hammered out. Also, the state could certainly institute policies to mitigate the effect of rate hikes on those households least able to afford them. But then there's the second reason to oppose our best hope of reducing CO2 output: grandstanding about federal overreach.

Fortunately, the legislature doesn't really have any power over this. The resolution passed today was toothless; they can't compel the AG to sue the feds. AG McDaniel has already told EPA he's not happy about some of the details in the proposal — but that's a long way from committing to a lawsuit. Of course, McDaniel will be out of office in November.

*This sentence originally read "...because Arkansas power plants are unusually reliant on coal, and thus unusually dirty." Highley provided me with clarification today that indicated my statement wasn't quite accurate. Other states have more carbon-intensive energy profiles than Arkansas — among them Missouri and Kansas — but lower EPA targets for carbon reduction. The reason is that EPA says Arkansas should be able to shift further towards natural gas (in lieu of coal), since we have both ample reserves of gas in the ground and gas-fueled power plants in the state with slack capacity.  EPA's reduction guidelines are based not just on current per-kWh carbon production, but also on a given state's projected capacity to reduce that emission rate in the coming decades. Highley writes that "because Arkansas has a large merchant plant (Union Power Station owned by Entegra) that does not operate very much, the EPA assumed it could be ramped up. ...This is what caused Arkansas to bear such a great burden of compliance – we carry the burden because someone built a gas plant in our state, and not in some other state. So our rates will go up by more than Missouri or Kansas."

Highley also says the EPA rule doesn't properly account for the extent to which energy is now traded across state lines. It tends to think of each state as a separate entity....which, I'd argue, is exactly what state-rights advocates like Rapert are encouraging. But again, bear in mind that the EPA rule isn't finalized. The year-long comment and review process exists exactly for this reason — to come up with a sensible way of structuring the complex regulatory regime that will eventually be imposed.

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