Wireless Password: 9166703926

1. Wireless Password: 9166703926

2. Challenges to Cooperative Federalism: State Authority over the Electric Power SectorCWAG, July 2013Barbara Walz, Senior Vice President Policy and ComplianceTri-State Generation and Transmission Association, Inc

3. Tri-State Generation and Transmission Association is… … a wholesale electric power supply cooperative with 44 member systems in Colorado, Nebraska, New Mexico and Wyoming.

4. Hydropower Solar Wind Natural Gas Coal Tri-State delivers . . . … bulk electric power from owned and contracted generation facilities to our member systems over a 5,300-mile transmission network.

5. Environmental Policy: State of Play • Energy policy gridlock in Washington affects the form and content of environmental policies • Significant rulemakings 2010 – 2020 • Unprecedented number in timeframe • Science is not sound basis in many rulemakings • Use of guidance instead of rulemaking • High degree of regulatory uncertainty • Increase in enforcement risk

6. Environmental Policy:State of Play • Executive branch will use Clean Air Act to regulate greenhouse gases • Compressed and overlapping timeframes for compliance • Economic and Reliability impacts • Significant influence of litigation: • “Sue and settle” • Deadline lawsuits

7. '11 '12 '13 '16 '15 '17 '10 '14 Environmental Regulatory Timeline for Coal Units CO Ozone SO2/NO2 PM2.5 CO2/Climate SO2 Primary NAAQS Revision SO2 Attainment GHG Tailoring Rule Effective NO2 Attainment NO2 SIP Due PM-2.5 Attainment PM-2.5 NAAQS Revision Ozone Attainment Ozone SIP Due Revised Ozone NAAQS CO SIP Due NO2 Primary NAAQS Revision CO NAAQS Revision SO2 SIP Due PM-2.5 SIPs Due CO Attainment HAPS MACT final rule expected Effluent Guidelines Compliance 3-5 yrs after final rule Colorado Temperature Standard Effluent Guidelines Final rule expected HAPs MACT proposed rule HAPs ICR Effluent Guidelines proposed rule Final Rule for CCBs Mgmt Begin Compliance Requirements under Final CCB Rule (ground water monitoring, double monitors, closure, dry ash conversion) HAPS MACT Compliance 3 yrs after final rule RHR controls installed RHR SIP due PCB Phaseout - 2025 Proposed Rule for CCBs Management Colorado Impoundment design and upgrade Colorado Impoundment Rule Water RHR Ash Hg/HAPS PCB -- adapted from Wegman (EPA 2003)

8. Two Key Federal Environmental Policy Challenges • EPA “SIP call” to eliminate affirmative defenses for startup and shutdown excess emissions • Coal combustion residuals and possible hazardous waste regulation

9. EPA Startup/Shutdown SIP Call (Slide 1 of 5) • In 2011, Sierra Club filed a petition for rulemaking • As a response, EPA proposed SIP call in February 2013 • For 36 states, EPA calls for full elimination of affirmative defense against the assessment of civil penalties for excess emissions during startup or shutdown • EPA makes no case that SIPs are “substantially inadequate” • No analysis completed to show either that • such emissions may contribute to NAAQS problems or • absence of such emissions would contribute to resolving any NAAQS issue • Startup and shutdown are not normal operation

10. EPA Startup/Shutdown SIP Call (Slide 2 of 5) • EPA proposal would give states a maximum of 18 months to revise their state rules after EPA takes final action • The proposed SIP call overrides Clean Air Act’s model of “cooperative federalism” under which: • EPA is to set the NAAQS • States are to chose how to achieve them • Colorado’s comments included: “Colorado opposes EPA’s proposed finding that the affirmative defense rule is impermissible because the rule is supported by EPA’s long-standing interpretation of the CAA, a reasonable and permissible interpretation of the provisions in question, and because EPA’s new interpretation is unworkable for the Air Pollution Control Division and regulated industry.”

11. EPA Startup/Shutdown SIP Call (Slide 3 of 5) • Arizona’s comments included: “ADEQ exhorts the USEPA to consider its robust existing state rules for affirmative defenses during SSM events. As evidence of the protective nature of Arizona’s SSM provisions, no excess emission event has ever both qualified for an affirmative defense and contributed to a NAAQS exceedance or caused actual harm to public health or the environment. It is therefore, unreasonable for the USEPA to assert that Arizona’s existing SSM rules are not adequate to protect human health and the environment without citing specific evidence to the substantial inadequacy of the SIP . . .”

12. EPA Startup/Shutdown SIP Call (Slide 4 of 5) Tri-State’s comments included: • SIP call reverses the position that EPA has held, and that many states continue to hold, that excess emissions during periods of startup, shutdown, and malfunction are not planned, controllable, or avoidable in most cases • Some exemptions from compliance with one emission limitation in favor of compliance with another emission standard is a reasonable interpretation of Clean Air Act (CAA) section 302(k)

13. EPA Startup/Shutdown SIP Call(Slide 5 of 5) • Risks with Elimination of the Affirmative Defense for SS excess emissions events: • Will not change the fact that large industrial equipment needs start up time – after planned and unplanned outages • Increased risk of non-compliance and Notices of Violations (NOVs) • Increased risk of civil judicial penalty for CAA violation(s) - $37,500 per day per violation

14. Coal combustion residuals and potential hazardous waste regulation (Slide 1 of 6) • Coal Combustion Residuals (CCRs) – fly and bottom ash, FGD sludge, and boiler slag • 2008 failure of impoundment dam structural integrity at TVA Kingston plant • EPA issued two proposed in 2010 to regulation coal ash as • Hazardous waste under RCRA Subtitle C, or • Solid waste under RCRA Subtitle D • Strong state and industry response against hazardous waste proposal • Listed “special waste” hazardous waste • Phase out all CCR surface impoundments • Strict agency monitored closure, post-closure, and corrective action • Eliminate beneficial reuse industry • Previous determinations by EPA in 1993 and 2000 that regulating coal ash as a hazardous waste is unwarranted

15. Coal combustion residuals and potential hazardous waste regulation (Slide 2 of 6) • The Environmental Council of the States (ECOS), the Association of State and Territorial Solid Waste Management Officials (ASTSWMO) and 35 state environmental regulatory agencies • Opposed to hazardous waste regulation • State regulatory programs are adequate

16. Coal combustion residuals and potential hazardous waste regulation (Slide 3 of 6) • Western Governors Association (WGA) comments included: “Federal regulation of coal combustion waste as hazardous would undercut existing and effective state regulatory authority…” • WGA Policy Resolution 10-1: “agree with US EPA’s 1993 and 2000 regulatory determinations that CCB do not warrant regulation as hazardous waste and that the western states have an effective regulatory infrastructure in place to continue as the principal regulatory authorities…”

17. Coal combustion residuals and potential hazardous waste regulation (Slide 4 of 6) • Colorado’s comments included: “Coal combustion waste is managed as a solid waste in Colorado… We believe the solid waste regulation of the waste material and the beneficial reuse is a safe and protective regulatory construct for coal combustion waste.” • Wyoming’s comments included: “CCR is a regulated solid waste in Wyoming… Wyoming is one of the majority of states with permit programs for CCR management in landfills and surface impoundments. States … are in a far better position than EPA to regulate CCR facilities… USEPA should modify RCRA Subtitle D to ensure that CCR is specifically addressed in state Subtitle D municipal solid waste (MSW) management programs.”

18. Coal combustion residuals and potential hazardous waste regulation (Slide 5 of 6) • New Mexico Public Regulation Commission (PRC) comments included: “…every State environmental agency that has weighed in on the issue (approximately twenty State agencies) has opposed regulating CCBs as hazardous waste . . . Give that the States have already made clear that their programs will ensure the safe management of CCBs, the PRC sees no reasons for EPA to pursue the hazardous waste option. . . NMPRC respectfully recommends that EPA regulate CCBs as non-hazardous wastes under RCRA Subtitle D.” • Arizona’s comments included: “…Arizona has the appropriate regulatory framework in place to be protective of human health and the environment concerning CCR management units that do not receive hazardous waste. ADEQ’s Aquifer Protection Permit Program addresses potential discharges to the groundwater from these units; in addition the AZ Department of Water Resources (ADWR) Dam Safety Program regulates dam integrity and safety.”

19. Coal combustion residuals and potential hazardous waste regulation(Slide 6 of 6) • Potential Tri-State hazardous waste management costs • Subtitle C total capital costs $75,000,000 • Subtitle C total monitoring, operating and maintenance costs $86,000,000 • Subtitle C total monitoring, operating and maintenance costs for post-closure $ 19,000,000 • Total Costs = $180,000,000 (Note: Costs are based on 2010 dollars)

20. Other Federal Actions • Utility MACT/MATS • “FrankenMACT” is a federal creation • Regional haze • FIPs proposed to override SIPs • New Mexico, Arizona, Wyoming, North Dakota • NSPS for greenhouse gases for existing units • Federal “guidelines” are TBD • Endangered Species Act listings (Consent decree) • Gunnison Sage Grouse (endangered) • Lesser Prairie Chicken (threatened) • Greater Sage Grouse (TBD)

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