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What Kentucky's New Law on Carbon Dioxide Emissions Actually Means


Ignoring words of caution from his own administration, Governor Steve Beshear signed a bill directing the state’s Energy and Environment Cabinet to create a Kentucky-specific plan for regulating carbon dioxide emissions into law earlier this month.

The bill—sponsored by Webster County representative Jim Gooch—is meant to preempt the limits for carbon dioxide emissions that the EPA is expected to issue in June. If the EPA’s regulations aren’t invalidated by the courts, the bill requires the Kentucky Energy and Environment Cabinet to establish its own separate CO2 standards for coal and natural gas-fired power plants.

But the bill raises several important questions: is the legislation even needed? Could it be detrimental to Kentucky, as one environmental group claims? And what role did special interest groups play in drafting the measure?

Do we need this?

Kentucky Division of Air Director Sean Alteri says the EEC was always planning to create a Kentucky-specific plan for reducing carbon dioxide emissions, which it’s allowed to do under section 111(d) of the Clean Air Act.If the state doesn’t have its own plan that’s approved by the EPA, Kentucky would automatically be subject to whatever the federal standards are. But the key words here are “approved by the EPA.”

Alteri said that means Kentucky can’t propose a standard that’s extremely lax, because the EPA would be unlikely to approve it.

“When you have a regulation or a plan developed under 111(d), it truly is the state’s plan,” Alteri said. “But again, with that backstop that it has to be equivalent or as stringent or a demonstration made to EPA as to why it’s not in order for EPA to approve that state plan.”

But the legislation passed this year lays out exactly how the EEC should go about writing its plan, including specifying that the cabinet should adjust the standards on a case-by-case basis for power plants and that efficiency measures should be undertaken to reduce carbon dioxide emissions at coal plants, rather than switching to other, less carbon-intensive fuels.

Representative Jim Gooch, the bill's sponsor, said it’s a matter the legislature should be weighing in on.

“I work very well with the cabinet. Secretary Peters is very knowledgeable; he’s done a really good job. But I think it’s something that it’s not just up to the energy cabinet to do,” he said. “I think they need to work with the legislature and make sure that together, we come up with a plan that works for Kentucky.”

But the EEC didn’t exactly have an enthusiastic reaction to Gooch’s bill. In a statement, officials called it ‘premature’ and warned it might pose a problem in the future.
The language of HB 388 is similar in its intent to the language in Section 111(d) of the Clean Air Act.  Because EPA has not yet issued Section 111(d) guidelines for existing sources, the bill may be premature. Additionally, depending on how the bill is interpreted, it might indeed limit flexibility in developing a state-specific plan that would be approvable by EPA.  As we stated recently, any regulations or state plan the Cabinet develops will be subject to public participation and legislative review before submittal to EPA.  If EPA does not approve the state plan, existing sources would then be subject to the federal plan administered by EPA, which may be more stringent than necessary. As we have pointed out in several studies, maintaining affordable, stable electricity costs will continue to be the cornerstone of our efforts as we address federal climate policies.
What could the effects be?

The bill didn’t attract a lot of attention as it moved throughout the legislature, but after Beshear signed it into law the Natural Resources Defense Councilissued a press release warning of dire consequences.

NRDC Climate and Clean Air Program Director David Doniger said the bill would result in higher electricity bills for Kentuckians,by making it harder for the state’s utilities to transition away from the power plants that will be most affected by the EPA’s carbon regulations: coal-fired power plants.

“They’re trying to box states in to a very restrictive, inflexible way of approaching the control of carbon from power plants,” he said. “The lowest cost solution is a system wide solution, not a plant-by-plant solution. And the bill tries to lock the state into a plant-by-plant solution.”

But Tom FitzGerald of the Kentucky Resources Council said just as the bill is “extremely premature,” it’s too early to say what the potential effects could be.

“We’re looking at years down the road before there would be a final rule requiring the development of a plan,” FitzGerald said. “And to try to lock in the cabinet’s discretion in this way, the only thing that it only produces at this point, because it is so premature, is the significant possibility that we have tied the cabinet’s hands so much that they will be required to develop a plan that cannot be approved under this subsequent federal rule, and we’ll end up with the federal EPA developing a plan for Kentucky. Which I don’t think is what the industry folks want.”

Where did the bill come from?

But Kentucky’s bill isn’t exactly unique. Similar bills have been introduced recently—and in some cases, become law—in West Virginia, Virginia, Ohio, Missouri, Kansasand Florida.

Doniger said he suspects the legislation in all seven states comes directly from the American Legislative Exchange Council (ALEC)—a non-profit largely funded by large corporations and conservative donors like the Koch brothers. A spokeswoman for the group says individual states could have taken inspiration from a model resolution the organization drafted, but denied drafting the bill in its entirety.

FitzGerald said he believed some of the language came from the American Coalition for Clean Coal Electricity; a spokeswoman for the group didn’t return a request for comment.

For his part, Gooch denies his bill was drafted by any national organization. “This is not something that came from some organization out there on a national level,” he said. “This was a product of a group of people in Kentucky working together that represented a large variety of people, including utilities, chambers, local groups, coal folks, other industries that are utility users.”

But Kentucky’s legislation is nearly identical in sentiment to the other bills, and includes passages that are repeated verbatim in the other states’ legislation. Hall says ALEC in particular wasn’t in any meetings that he was involved in, but ‘that doesn’t mean that we didn’t take some of their language or something.’

But Doniger of the NRDC says the other states that have passed the similar legislation made some small but crucial changes that watered the measures down and made it less objectionable to the environmental group.

Despite the Energy and Environment Cabinet’s cautions about the bill, Governor Steve Beshear still signed the measure into law earlier this month. In a statement, Beshear said the bill “is an expression by the General Assembly of its desire to help our coal-fired power plants remain open,” and that the state will continue to work with the EPA and other stakeholders to build a Kentucky plan that the EPA is able to approve. Eventually, we'll see whether that's possible under the parameters set by the General Assembly.