FERC’s Role in Utility MACT Implementation

On May 17, 2012, the Federal Energy Regulatory Commission (FERC) issued a Policy Statement explaining how it will advise the EPA on requests by generators for EPA to extend the deadline for compliance with EPA’s mercury emission standards for utilities.

The EPA has stated it will allow generators that are critical to electric reliability, and would otherwise be required to cease operation by the Utility MACT rule by February 16, 2015, to seek an EPA administrative order allowing them to operate for an additional year. Because of concerns that the rule will impact electric reliability, the EPA released an Enforcement Response Policy in December 2011 that provides for an additional year-long compliance extension (a fifth year for compliance) if the EPA determines the extension is needed to address a specific and documented reliability concern.

In considering requests for administrative orders, the EPA indicated it will seek advice from the FERC, state public utility commissions, and other entities with reliability expertise; however, discretion to issue an administrative order rests solely with the EPA. The EPA will issue an administrative order if the agency finds the generator’s continued operation is critical to ensure compliance with FERC-approved reliability standards or required system reserve margins.

The FERC’s new Policy Statement provides that for each such extension request, it will advise the EPA whether failure to grant such an extension might lead to a violation of a FERC-approved Reliability Standard. It will not, however, recommend to the EPA that the agency grant or deny such extension requests, and will not advise the EPA on potential impacts that are not within the FERC’s jurisdiction over reliability standards, reaffirming the fact that the ultimate decision rests solely with the EPA.

In its Policy Statement, FERC outlines the process it will follow in advising the EPA on requests for fifth-year compliance extensions:

• The FERC’s review of a generator’s extension request will be conducted under the FERC’s general investigative authority pursuant to Section 307(a) of the Federal Power Act (FPA). The FERC will examine whether failure to grant an extension might lead to a violation of a Commission-approved Reliability Standard.
• The FERC will also evaluate reliability issues outside the scope of Section 215 of the FPA (which authorizes the FERC to approve Reliability Standards), but that are otherwise within the FERC’s jurisdiction, if those issues are raised in a generator’s extension request. The FERC will not, however, evaluate reliability impacts beyond its jurisdiction, such as potential impacts on resource adequacy, and urges the EPA to look to the North American Electric Reliability Corporation (NERC) and state commissions, among others, for guidance in these areas.
• The FERC will not require any particular analysis or information to be submitted with the generator’s request, but suggests that information pertinent to potential violations of Reliability Standards be included (such as system planning and operations studies, system restoration studies or plans, operating procedures, and mitigation plans).
• The FERC will not permit interventions in dockets addressing extension requests, noting that interventions are not ordinarily permitted in FERC investigations and that interventions could prevent the FERC from offering timely comments to the EPA. The EPA’s Enforcement Response Policy requires that generators forward any comments on an extension request to the EPA.
• The FERC will submit written comments to the EPA advising it whether failure to grant a compliance extension might lead to a violation of a Commission-approved Reliability Standard, but will not address whether the EPA should approve or deny the request. These comments will be voted on by the full Commission and publicly posted in the docket for each informational filing.

This post was authored by GLLF staff attorney Emily Kelchen.