An Environmental Protection Agency proposal to tighten sulfur dioxide and nitrogen oxides limits in 31 states and the District of Columbia to address transported air pollution fails to give utilities and state air regulators sufficient time to develop rules and install controls, according to American Electric Power Co. Officials from the EPA and New Jersey-based Public Service Enterprise Group said utilities already had begun making investments to cut emissions and they believed the agency’s compliance schedule could be met.

Columbus, Ohio-based AEP made its case against EPA’s new interstate Transport Rule in written testimony at a hearing called by the Senate Environment and Public Works Committee’s subcommittee on clean air and nuclear safety to review the agency’s action.

The proposed rule, unveiled July 6, calls for a new round of emission limits beginning in 2012, and a second round beginning in 2014, in 31 states and the District of Columbia. EPA said that by 2014, the proposal would cut sulfur dioxide (SO2) emissions by 71% and nitrogen oxides by 52% compared to 2005 levels.

AEP said EPA was giving utilities and states only a matter of months to comply with Phase 1 of the program.

“Assuming the proposed rule goes final a little less than a year from now (i.e. EPA’s current schedule is spring 2011), Phase 1 of the program would allow only a little more than six months in total to implement the new emission budgets, establish emission trading programs and for companies to make the needed investments to comply with these new limits,” AEP said.

“Six months, let alone a year or two, is not nearly enough time for this. Having brand new emission caps, state budgets and allowance allocations in 2012 creates major logistical challenges for the electric power sector and for the states that must implement the programs.”

AEP’s concerns were echoed by Sen. George Voinovich (R-Ohio), who warned that the timetable, as well as provisions in the rule that allow intrastate—but not interstate—emissions trading, will make it difficult and expensive for utilities to comply. Compounding these problems, Voinovich said, is EPA’s declaration that it may need to further tighten the rule if the agency finalizes—as is widely expected—more stringent national ambient air quality standards (NAAQS) for ozone and fine particulate matter.

“These timetables do not recognize the logistical or political realities associated with designing, permitting and installing the equipment to meet the mandates,” Voinovich said. “And because the proposal virtually eliminates emissions trading as a compliance option, the regulatory hurdles will be all that much greater.

“Adding to the challenge, EPA is proposing to revise the emissions caps as new NAAQS are promulgated. This means that the electric sector will face ever changing compliance hurdles that will provide little clarity for business planning purposes.”

The proposed rule is intended to replace the now-defunct Clean Air Interstate Rule (CAIR), a regional air pollution program established by the Bush administration in 2005. CAIR was vacated by the U.S. Court of Appeals for the District of Columbia Circuit, which found that the regulation, among other flaws, failed to sufficiently reduce pollution from upwind sources that contribute to the failure of downwind states to meet 1997 NAAQS for ozone and fine particulate pollution, or soot.

Regina McCarthy, EPA assistant administrator for air and radiation, said EPA thinks that the power sector will be able to meet the 2012 emission cuts because utilities in states affected by the proposal already have made substantial investments in pollution controls in anticipation of the CAIR emission limits.

“What we have indicated is we believe that with the investments that have been made already in response to CAIR and with what we believe are investment opportunities before 2012, that we should be able to achieve compliance with the standards we have set in the transport rule and that will generate very cost-effective reductions and they do primarily take advantage of the investments that have already been made,” McCarthy told reporters following the hearing.

Eric Svenson, vice president for policy and environment, health and safety at Public Service Enterprise Group—a utility that relies heavily on nuclear, gas-fired and renewable generation—said: “PSEG believes that the electric power industry can meet the emission caps and timelines proposed by the transport rule.”

Svenson added that his company believes “the rule proposes a reasonable compliance structure given the constraints imposed on EPA by the D.C. Circuit Court’s decision to remand [CAIR].”

The hearing came as Democrats on the House Appropriations Committee’s subcommittee on interior and environment beat back a Republican amendment to EPA’s fiscal year 2011 funding bill that would have barred EPA from spending any money to finalize a new NAAQS for ozone.

The amendment, sponsored by Rep. Steve LaTourette (R-Ohio), was defeated by a party-line vote of 8-5

Chris Holly is a reporter for COAL POWER’s sister publication, The Energy Daily.