Public Policy Proposals & Engagement

Fossil fuel-fired plants are subject to many regulations the Environmental Protection Agency (EPA) either has promulgated recently or is in the process of revising. The exact impact of these rules is difficult to predict because challengers typically question through court action whether the EPA is adhering to key restrictions and obligations. Regardless of the outcome of these challenges, regulatory uncertainty will continue to impact our planning and operations. We’re paying particular attention to the following rules that the EPA is developing or has developed recently.

Coal Combustion Residuals Rule

Regulatory Background

In December 2014 the EPA signed a final rule categorizing coal combustion residuals (CCR) as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act (RCRA). In December 2016 the Water Infrastructure Improvements for the Nation (WIIN) Act was signed into law allowing for oversight of the CCR Rule by individual states if the state develops a CCR permit program and receives approval from EPA. In the absence of a state-approved program, the rule is self-implementing, which means the rule relies on citizen and state involvement with no federal enforcement.

The states where we operate have not received approval from EPA to administer a CCR permit program. Even though the EPA has chosen to regulate CCR under Subtitle D, it reserves the right to regulate the material under Subtitle C as more data becomes available. We continue planning and investing resources to maintain compliance with this rule, including capital projects at Coyote Station and Big Stone Plant as noted in the waste management section above.

Otter Tail Power Company Impact

We’ve completed the tasks necessary for rule compliance and are well prepared for future compliance. We evaluated our CCR units, both landfills and surface impoundments, to ensure conformance with the new rule. In 2016 we developed new webpages (ccr-cs.net, ccr-bsp.net, ccr-hlp.net) that allow the public to quickly access information about the design, operation, maintenance, and environmental monitoring of our CCR units. We’ve installed additional environmental monitoring at several sites. In 2018 we permanently removed CCR from two CCR units at Big Stone Plant and performed CCR removal from three CCR units at Coyote Station in 2019. As we expand landfills or ponds, we’ll incorporate national standards in the units’ designs.

Challenges

The numerous rule changes and uncertainty of pending litigation are our most significant challenges. EPA has announced its intent to issue a series of revisions to the CCR Rule, likely impacting definitions, operational requirements, and reporting requirements.

Greenhouse Gas Regulations

Regulatory Background

In June 2019 the EPA finalized the Affordable Clean Energy Rule (ACE Rule). The new rule will focus on Best System of Emission Reduction improvements that can be made directly to existing coal-fired facilities to reduce greenhouse gas emissions. The ACE Rule will provide regulatory certainty for the utility industry, while ensuring continued greenhouse gas emission reductions. By establishing state guidelines for developing plans to address emissions from existing coal-fired power plants, the ACE Rule offers a tailorable approach allowing for site-specific considerations when determining emission reductions.

Otter Tail Power Company Impact

We’ve taken significant steps to reduce our carbon emissions intensity across our generating fleet and continue to look for ways to improve. Operating in three separate states, we understand the unique complexities of various jurisdictions. We feel the ACE Rule complies with the authority granted to the EPA in the Clean Air Act and gives states the appropriate flexibility needed to better address emissions within their borders.

Challenges

The ACE Rule is subject to ongoing litigation from states and environmental groups, which presents uncertainty as to the durability of the Rule. While the current administration has asked to expedite the litigation in order to come to a resolution before the end of its term, the challengers oppose this. Further, when the District Court of Appeals reaches a decision, it is foreseeable that the non-prevailing side will appeal to the Supreme Court. At any time, the ACE Rule has the potential to be stayed by the court.

Regional Haze Rule

Regulatory Background

The Clean Air Act establishes a national visibility goal to remedy existing and prevent future anthropogenic visibility impairment in national parks, wilderness areas, and wildlife refuges. The EPA’s Regional Haze Rule requires states to periodically provide plans demonstrating how they have made, and will continue to make, reasonable progress towards achieving the goal to attain natural visibility conditions by 2064. The first Regional Haze planning period covered the years 2008 through 2018, and the second planning period will cover the years 2019 through 2028. States must submit plans for the second planning period to the EPA by July 31, 2021.

Otter Tail Power Company Impact

For the first Regional Haze planning period, we were required to install a new air-quality control system at Big Stone Plant. The system resulted in an approximately 90% reduction in SO2 and NOx emissions. Coyote Station reduced NOx emissions by approximately 35% by installing separated over-fire air technology.

For the second planning period, the North Dakota Department of Environmental Quality has notified us that it will evaluate Coyote Station for additional SO2 and NOx reductions. The Clean Air Act requires the evaluation to focus on four factors: (1) The costs of compliance with additional controls, (2) the time it would take to install the controls, (3) the non-air quality environmental impacts of the controls, and (4) the remaining useful life of the plant. We’ll engage with the state throughout the evaluation process.

Challenges

In September 2018 the EPA announced a Regional Haze Reform Roadmap that includes delivering a series of technical tools and guidance to states throughout 2019. We anticipate states will be challenged to adopt any significant changes while still meeting the 2021 plan submittal deadline.

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