On May 17, 2012, FERC issued a policy statement to explain how it will advise the Environmental Protection Agency (“EPA”) on requests for Administrative Orders (“AOs”) to allow generators to operate in noncompliance with the EPA’s recent Mercury and Air Toxic Standards (“MATS”) rule for electric generators.   The Policy Statement is generally consistent with the FERC Staff white paper on the same topic issued in January.

The MATS rule, released by the EPA on December 21, 2011, mandates that power generating units comply with certain emissions standards within three years of its effective date, with some units being eligible for an extension of an additional year to comply with the rule.  Certain units can request an additional year for compliance by obtaining an AO from the EPA.   AOs are intended to permit continued operation by: (1) electric generating units that may affect reliability due to deactivation, and (2) units that may affect reliability due to delays related to the installation of controls. 

The EPA has issued a Policy Memorandum which indicates that the EPA intends to seek advice from the Commission on a case-by-case basis as to whether or not EPA will grant an AO to an owner/operator of a generating unit.  On January 30, 2012, FERC Staff issued a white paper seeking comment on a proposed approach for advising EPA on the reliability impacts associated with requests for extensions of time to comply with the MATS (see February 6, 2012 edition of the WER for more information on the white paper).  The Commission considered the comments received on the white paper in developing this policy statement.  The policy statement does not address all considerations raised in the white paper and is limited in scope to addressing how the Commission will handle an AO filing.

Under the Policy Statement, FERC will ask those generators applying for an AO from EPA to submit a copy of the application to FERC.  FERC will examine whether, based on the circumstances presented, there might be a violation of a Commission-approved Reliability Standard if the generator at issue retires or is otherwise unavailable.  The Commission’s Office of Electric Reliability will be designated as the lead office tasked with handling AO requests.  Each AO request should be filed with the Commission and should include the same information that the owner/operator submitted to the EPA pursuant to the EPA Policy Memorandum.  Each AO request will be treated as an informational filing and be assigned a separate Administrative Docket (AD) number.  Due to the tight timeline for providing timely comments to the EPA, the Commission expects filings to be complete and not require additional information requests by the Commission.  For the same reason, the Commission’s process will not provide for entities to intervene in the AD dockets, but the Commission anticipates that owners/operators will, consistent with the EPA Policy Memorandum, provide third parties with an opportunity to offer written comments before they submit their AO request.

The Commission will vote on the comments to be provided to EPA, which will then be submitted in writing to the EPA.  Conflicting opinions by any Commissioner will also be submitted to the EPA in writing.  The Commission’s comments will not address the appropriateness of granting or denying an AO, and will be limited to whether the Commission believes there might be a violation of a Commission approved reliability standard. 

The Commission’s policy statement is available here.

A summary of the MATS rule can be found here and an informative presentation can be found here.