The Environmental Protection Agency (EPA) has issued two final rules and one proposed rule which will accelerate dramatic changes in our nation’s interconnected energy economy for decades to come. While each of the rulemaking documents includes discussion of EPA’s efforts to seek input from tribes, there are implications for Indian Country that do not appear to have received sufficient consideration. The deadline for filing comments on the proposed rule is January 21, 2016 and tribes may want to ask for an extension of the comment period.
This is a complex set of rulemaking documents, and the proposed rule, which is still open for comment, builds on the two final rules. These rules are intended to help bring about a transition away from coal-fired power plants and toward much greater use of renewable energy. According to EPA’s analysis, this transition will result in benefits that greatly exceed the costs, benefits that include reducing the adverse impacts of climate change, public health benefits from reduced air pollution, and a net increase in jobs. The proposed rule lays out the contours for what model emission reduction plans can look like and has far reaching financial and legal implications for our national economy, including Indian Country. EPA did seek input from tribes during the rulemaking process, but the proposed rule nevertheless raises issues regarding the extent to which Indian tribes and Indian people will be able to reap their fair share of the benefits from the changes that this proposed rule could bring about. There are also implications for tribal sovereignty that are not addressed in the rulemaking documents, particularly with respect to tribes that do not have electric utility power plants within their reservations.
Understanding the Regulatory Framework that the Final Rules Create
One final rule implements the “Clean Power Plan,” the Obama Administration’s regulatory initiative to use EPA’s authority under the Clean Air Act to reduce carbon dioxide (CO2) emissions from electric utility power plants to 32 percent below 2005 levels by 2030 (with interim targets in effect from 2022 to 2029). The other final rule sets CO2 emission standards for new electric utility power plants. Under the first rule, each state in which there is an existing electric utility power plant is required to submit a plan for reducing CO2 emissions. EPA has calculated the CO2 emission reduction goals for each state. In developing the guidelines for existing power plants, EPA treated the electric grid as a single interconnected entity and designed the guidelines to achieve reductions in CO2 emissions by creating incentives for investments in renewable energy and energy efficiency, thus meeting demands for electricity while reducing reliance on fossil fuels. These reductions in emissions can be achieved through a combination of increasing the efficiency of current power plants; replacing coal-fired power plants with natural gas generating units (which emit less CO2) or with renewable energy such as wind and solar (which emit zero CO2); or by making investments in energy efficiency which reduce the total demand for electricity. The design of the plan is up to each particular state. As one way to achieve these reductions, states may initiate market-based emission trading programs, i.e. mechanisms to account for and give financial credit for investments in renewable energy and energy efficiency that offset reductions in electricity generated from sources that emit larger amounts of CO2. In addition, states may join forces and adopt multi-state or regional plans.
In instances where a state fails to submit a plan or does not submit an acceptable plan, EPA will develop a federal plan for that state. States have until September 6, 2016 to submit their plans to EPA. However, some 27 states have filed suit challenging EPA’s authority to promulgate rules for the Clean Power Plan.
Tribes With Electric Utility Power Plants. There are four electric utility power plants in Indian Country on three reservations. EPA has calculated the CO2 emission reduction goals for each of these three tribes. Each of these tribes has the option to be treated as a state (TAS) and develop a plan. If any of these tribes do not submit an acceptable plan to EPA, and if EPA determines that a federal plan is necessary for that tribe’s reservation, EPA will develop a plan.
Tribes Without Electric Utility Power Plants. The vast majority of tribes do not have electric utility power plants within their reservations. What about those tribes? Can they participate in emissions trading and otherwise benefit from the incentives in the Clean Power Plan to meet energy demands with renewable energy and energy efficiency? To a large extent, the answers depend on policy decisions made by the states. The states choose whether to adopt a state plan and, if so, how to structure that plan. Except for the three tribes that do have electric utility power plants, the rulemaking documents generally overlook the fact that tribes are separate sovereigns, distinct from the states. While some states have developed constructive relationships with tribes within their borders, this is far from a universal condition. Relying on state plans to provide incentives for implementing renewable energy and energy efficiency in Indian Country is likely to be less than optimally effective. One reason is that the transition to clean power raises policy issues on which state officials and tribal officials may not agree, and tribal officials may want to decide for themselves.
Another reason is the general lack of authority on the part of states to implement governmental programs on Indian trust land. In submitting its plan to EPA, each state must demonstrate that it has legal authority to implement and enforce each component of the state plan. Tribes may see any assertion of state authority as a threat to tribal sovereignty. EPA should not implicitly require tribes to accept state authority in order to share in the benefits of the Clean Power Plan.
The Proposed Rule for Model Plans—Comments Due January 21, 2016
The proposed rule spells out two types of model market-based plans that states and the three tribes with covered electric utility power plants can customize if they choose to design their own plans. Both models include extensive provisions for evaluation, measurement, and verification of electricity produced by renewable energy sources or saved by demand-side energy efficiency. In instances when a state does not submit an acceptable plan, the EPA will develop, implement, and enforce a federal plan tailored for that state instead. In that instance, the EPA will look to the two proposed models to design a federal plan specific to that state. However, one key difference is that EPA is proposing to leave credits for energy efficiency out of any federal plan. The stated reason is that, for a federal plan there is a unique need to be able to implement the credit issuance process “in a streamlined manner across many jurisdictions … while still assuring a rigorous EM&V [evaluation, measurement, and verification] process.” This means that the tribe may be able to obtain credits for an energy efficiency project through a state plan, but not if the tribe’s reservation is covered by a federal plan. EPA has asked for comments on this point, i.e., whether various types of energy efficiency components should be included as eligible measures under a federal plan. Examples suggested include “state and utility energy efficiency programs, project-based demand-side energy efficiency, state building codes, state appliance standards, and conservation voltage reduction.”
A Federal Plan for Indian Country? While the electric utility power plants are the sources of the carbon pollution from which the Clean Power Plan seeks to reduce CO2 emissions, EPA treats the entire power grid as a single, interconnected entity. The parts of the grid that are located within Indian Country are part of that single entity. Renewable energy resources in Indian Country that put power into the grid and energy efficiency resources that reduce the demands for power from the grid help to reduce emissions from electric utility power plants that are connected to the grid. EPA should find a way for the Clean Power Plan to incentivize such investments in Indian Country, a way that also supports tribal sovereignty.
One option would be for EPA to use its authority under Clean Air Act section 301(d)(4) and promulgate a federal plan for Indian Country. Such a federal plan could offer the practical advantage of connecting Indian Country to all parts of the grid that will be using the federally-administered emission trading system. Such a federal plan should leave open the option for a tribe to be included in a state or multi-state plan where that would be preferable.
Federal Incentive and Assistance Programs—Comments Requested But No Deadline Specified
Clean Energy Incentive Program. The interim compliance period for the Clean Power Plan begins in 2022. In order to create incentives for investments before then in wind and solar renewable energy, and in demand-side energy efficiency in low-income communities, the Clean Power Plan establishes the Clean Energy Incentive Program (CEIP). State participation in the CEIP is optional, and states that choose to participate are to inform EPA of their intent by September 6, 2016.
In the Clean Power Plan final rule, EPA says that it will address the design and implementation of the CEIP “in a subsequent action” after engaging with “states, utilities, and other stakeholders.” One of the fact sheets, “Clean Energy Incentive Program Next Steps”, raises some of the issues on which EPA seeks input. A few of the issues that may be of particular interest to tribes include:
• Criteria for eligible projects, including those for energy efficiency projects implemented in low-income communities;
• Definition of “low-income community” for eligible energy efficiency projects; and
• How states, tribes, and territories for whom goals have not been established in the final emission guidelines may be able to participate in the CEIP.
Other Federal Assistance Programs. We note the Clean Power Plan final rule states that EPA will be working with “federal partners and others to ensure that states and vulnerable communities have access to information” on federal programs relating to renewable energy and energy efficiency. This exercise should include examining such federal programs and resources to determine whether and, if so, the extent to which, they reach into Indian Country. Programs and resources that do not reach Indian Country should be candidates to be redesigned.
If EPA’s analysis of the benefits of the Clean Power Plan is even relatively accurate, the benefits will be substantial, including a net increase in jobs. The families of Indian Country deserve to share in those benefits. Moreover, the Clean Power Plan is intended to help bring about a fundamental transition in the ways our economic order uses energy, a transition that the scientific consensus tells us must happen soon if we are to have a reasonable chance of avoiding some of the more severe and irreversible effects of global climate change. Tribal governments can help bring about this transition.
In addition to the rulemaking documents, EPA has released a number of fact sheets and other explanatory materials, a Regulatory Impact Analysis, and technical and legal documents, available at: http://www.epa.gov/cleanpowerplan
Please let us know if we may provide additional information regarding the Clean Power Plan or if you would like assistance in preparing comments.