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Sierra Club hindering settlements between EPA and generators: lawyer

Washington (Platts)--21May2012/330 pm EDT/1930 GMT

Because the Sierra Club does not support power plant owners turning to natural gas as an alternative to coal-fired generation, the environmental group is hindering generators' ability to reach deals with the US Environmental Protection Agency on compliance with agency air rules, attorney Karl Karg said Monday.

Karg, who has utility clients going through various EPA compliance proceedings, said the Sierra Club is holding up the completion of settlements because its position is different than EPA's, which has supported plant owners turning to gas-fired generation.

EPA has endorsed such settlements, but because the Sierra Club has a "Beyond Natural Gas" campaign and generally opposes adding more gas-fired generation because of its concerns over emissions and hydraulic fracturing, utilities are having difficulties reaching settlements with EPA, Karg said at a Platts' conference in Washington Monday.

While the cases involve EPA enforcement of various regulations to address power plant emissions, the agency is dealing with an unprecedented level of environmental group activism in such cases, said Karg, who was associate regional counsel at EPA's Chicago office, enforcing Clean Air Act compliance, before he left for the private sector in 2001.

The Sierra Club is trying to limit the increased reliance on gas-fired generation, but "I'm not aware of a case where it's a big problem" in trying to reach a settlement with a utility to address EPA regulations, said Bruce Nilles, director of the Sierra Club's "Beyond Coal" campaign.

The group is involved in litigation on EPA regulations and trying to limit coal-fired generation, but "we want to make sure we're not slowing down the transition to alternatives," Nilles said in an interview Monday.

The group's efforts to reduce fossil-fuel generation emissions have not yet made it tougher to reach a resolution with plant owners trying to comply with EPA regulations, he added.

The timing of plant owners' compliance with a trio of EPA regulations, including the Mercury and Air Toxics Standards rule, is being closely watched and many utilities will try to delay implementation of the rules, said Gary Hart, senior market analyst for ICAP Energy. The utility sector will try to keep coal-fired generation capacity online as long as it can and delay implementation of EPA rules to "create a window" for bringing new generation capacity online, he said.

The MATS rule, which affects 1,400 power plants in the US, was modified from the proposed rule and additional time was added for compliance "so that we weren't creating grid reliability issues," said Robert Wayland of EPA.

A proposed rule from EPA to limit greenhouse gas emissions from future coal and gas-fired power plants is the subject of day-long public comment sessions this week, said Wayland, leader of the energy strategies group at the agency's Office of Air Quality Planning and Standards. "We believe the standard is flexible and achievable, Wayland said.

--Tom Tiernan, tom_tiernan@platts.com

--Edited by Jeff Barber, jeff_barber@platts.com