Below is the HillCo client report from the May 6 Railroad Commission meeting.
The following report focuses only on the agenda item below:
Pending and/or contemplated litigation, rulemakings, and other actions initiated by or involving the U.S. Environmental Protection Agency, U.S. Department of Interior, U.S. Department of Transportation, and other federal agencies that may impact the State of Texas, including, but not limited to, the energy, pipeline, and natural resource industries.
Lyndal Fowler, General Counsel, Railroad Commission
- In January 2014, EPA published proposed new performance standards for fossil fuel fired electric generation units
- Have attempted to develop joint comments with TCEQ and PUC to file on May 9; a draft has been prepared; recommend commissioners’ approval on the draft comments
- Commissioners asked the executive director to move forward with the document
- EPA is engaged in developing standards for existing electric generation facilities; EPA develops emission guidelines and have been directed to finalize them by June 1, 2015; not standards just guidelines that control standards which are adopted by the states
- The guidelines are intended to provide a place for federal and state governments to cooperate in developing the standards
- The EPA ultimately has the authority to approve or deny the state’s plan; must be submitted to EPA by June 30, 2016
- Chairman Barry Smitherman noted the EPA is attempting to have different allowables for coal versus natural gas fired plants which is questionable
- Smitherman noted the Supreme Court is still considering the greenhouse gasses case
- EPA has stated in a document on their website that the standards for existing facilities may be less stringent than for new ones; they are required under the Clean Air Act to give consideration to the remaining lives of facilities in developing the standards which could be helpful
- Commissioner Christi Craddick asked what the penalty would be for not meeting the standards
- The only penalty would be an enforcement effort to require states to adhere to it
- Smitherman noted for new projects, a permit would not be issued
- Craddick asked if they take into consideration that 40% of Texas’ generation is from coal fired plants; could cause blackouts if they must be shutdown
- Smitherman noted there is a controversy right now over the Federal Energy Regulatory Committee regarding reliability versus air quality; should we seek such draconian measures for air quality that reliability is put at risk
- Craddick noted Texas’ grid could not support 100% of wind capacity in generation; would taxpayers be willing to pay billions it would take to upgrade the grid
- The methodology the EPA used for their screening process to determine which states were subject to the rule and what emission budgets will be
- On April 29 the Supreme Court addressed the cross state air pollution rule issued by the EPA and overturned by the DC circuit court; Supreme Court overturned the DC circuit court’s ruling; this addressed two principal issues:
- The only good news from the opinion is that the Court agreed with the DC circuit court that EPA cannot require a state to regulate emissions to the point that they would go beneath the 1% threshold which determined whether they were subject to the rule, nor could they require them to regulate emissions beyond the point necessary to bring states down to compliance levels
- The case was remanded to the DC circuit because of issues still remaining such as the compliance deadline
- The notice issue the State of Texas raised in the initial briefing has not been addressed by the DC circuit or the Supreme Court
- There is some potential for continued litigation
- Smitherman asked the executive director to find out if ERCOT has some assessment of what the outcomes would be if the ruling stays in place in regard to future reliability in the state