I can understand why President Obama would deny that his administration is waging a war on coal. In the midst of difficult economic times, it would be politically risky if he told the bald truth, that his administration has launched a pincer attack on both coal production and consumption, for no discernible purpose other than to placate a political constituency.
I do not, however, understand why informed reporters (most recently, at Politico) and esteemed colleagues (Cato) mistakenly posit that the war on coal is an empty rhetorical device. The truth is so obvious; I can’t fathom how they miss it.
Consider: In 2012, the Environmental Protection Agency promulgated two regulations—the Utility MACT (final) and the Carbon Pollution Standard (proposed)—that effectively ban the construction of new coal-fired power plants. This is extraordinary. An Agency within the Presidency, without a Congressional mandate, has closed the future for an industry that provides 40 percent of the nation’s electricity. And for what? Not for any public health benefit, to be sure.
The regulatory justification for the Utility MACT is particularly risible. Its purpose is to protect a supposed population of pregnant, subsistence fisherwomen, who consume at least 225 pounds of self-caught fish from exclusively the 90th percentile most polluted fresh, inland water bodies. You can’t make this stuff up! Notably, EPA never identified a single member of this putative population. Rather, they are modeled to exist.
The EPA’s case for the Carbon Pollution Standard is subtler, but no less pointless. In the proposed rule, EPA never even tried to tether the regulation to a specific benefit accruable to the American people. This makes sense, because there are no such benefits. U.S. policy on new electricity generation (like the Carbon Pollution Standard) is an insignificant driver of global greenhouse gas emissions relative to coal-fueled Asian economic growth. In fact, the Carbon Pollution Standard rested on a discretionary authority; there was no pressing concern. EPA merely exercised an option resulting from the Agency’s endangerment power grab.
Thus, neither the Utility MACT nor the Carbon Pollution Standard engenders a “real” public health benefit. On the other hand, the rules will cause expensive energy, which is a very real cost to be borne by all of society.
For existing coal-fired power plants, EPA’s strategy is to impose three types of expensive retrofits on every existing coal-fired power plant, regardless whether or not they would serve an actual purpose. The three controls are: selective catalytic reduction for nitrogen oxides; scrubbers for sulfur dioxide; and electrostatic filters for fine particulate matter. The aforementioned Utility MACT would require scrubbers and electrostatic filters. EPA is using the Regional Haze rule to compel selective catalytic reduction systems. Regional Haze is the archetype of all-pain, no-gain regulation. It’s an aesthetic regulation, whose benefits are literally invisible.
All told, these emissions control systems cost hundreds of millions, even billions of dollars. With gas prices at rock-bottom, many utilities will choose to close coal-plants rather than pony up these huge capital costs. According to FERC, almost 81,000 megawatts of electricity generation are “likely” to retire due to regulatory costs.
And all of the above regulations are only on the demand-side of the coal industry! On the supply-side, EPA is waging war on coal production for similarly nonsensical reasons.
In particular, the Obama administration has targeted a subset of coal mining, known as mountaintop removal. That man actually moves mountains is especially galling to environment interest groups, who fiercely oppose the practice in the courts. Mountaintop removal mining may offend green sensibilities in San Francisco and New York, but it’s absolutely essential to the economic well being of certain regions of West Virginia and Kentucky.
In the summer of 2011, EPA imposed Clean Water Act requirements for saline effluent from mountaintop mining operations that EPA Administrator Lisa Jackson admitted would be impossible to meet. Under the Clean Water Act, States are afforded a significant role in policymaking, but EPA issued the salinity standards by fiat. Due to the latter procedural violations, West Virginia and Kentucky sued. On these grounds, the standards were struck down by the federal district court for the District of Columbia earlier this year.
The Court only ruled on grounds of administrative law. It’s a pity the judge didn’t consider the legality of EPA’s salinity standards, per se. According to EPA, the regulation was necessary because States were insufficiently protecting an order of short lived insects, known as mayflies. There’s a law to protect insects. It’s called the Endangered Species Act and it’s administered by the Interior Department. EPA has no business imposing onerous bug-protections on West Virginia and Kentucky.
Speaking of the Interior Department, it’s working on a second regulation that would effectively outlaw mountaintop removal mining. It’s known as the Stream Buffer Zone Rule. This regulation entails a radical reinterpretation of the 1977 Surface Mining Control and Reclamation Act (SMACRA). The Interior Department’s Stream Buffer Zone rule would interpret the SMACRA—the purpose of which is to sanction surface coal mining—such that the law banned surface coal mining. Again, you can’t make this up!
The invaluable Rep. Doc Hastings, Chairman of the Natural Resources Committee, has doggedly investigated this attempt to pervert the purpose of the Congress’s intent. Although the administration has refused to fully cooperate, the Associate Press last year unearthed evidence that consultants to the Interior Department estimated that the rule would cause the loss of 7,000 jobs in Appalachia.
I’m a libertarian, but I accept regulation as an efficient societal response to problems caused by society. To put it another way, I fully support the imposition of expensive pollution-control technologies, in order to address real problems. However, none of the four coal industry-killing regulations explained above would actually mitigate a real problem.
So what’s going on? It seems to me that this administration is warring on coal for reasons of political expediency. As I wrote in a post last week,
Remember, environmental special interests are a significant component of the President’s organizational base. And for them, coal is evil, because it is “dirty.” That’s why, way back in 2008, then-Senator Barack Obama told the San Francisco Chronicle editorial board that he would “bankrupt” the coal industry if elected President. Now, EPA is following through on the President’s promise. The powers of the presidency are the means by which he satisfies the environmentalists’ desired ends. To be sure, it’s an American outrage that the fate of an entire industry can thus be subjected to the capricious winds of presidential politics, but that’s a different blog post. For now, it suffices to say that this Administration is imposing billions of dollars of costs, in the midst of difficult economic times, in order to placate a political constituency, and for nothing else.
Even if you don’t agree with me (that the war on coal is a political sop to the green component of the President’s base), it’s indubitable that there is, in fact, a war on coal now being waged by the Obama administration. In this post, I discuss four regulations that would effectively ban industries in both coal production and consumption. There are many more such regulations in the pipeline, unfortunately. Among them are: Clean Water Act 316(b) standards, coal ash regulation under RCRA, OSHA underground dust standards, Carbon NSPS for existing coal plants, Endangered Species protections for minnows in Appalachian streams, another Interstate Transport rule….
We’re in terra incognita. There’s no precedent. Without a Congressional mandate, the executive has taken it upon itself to seek out and destroy an industry. In so doing, agencies are seeking out novel powers pursuant to existing statutes. To me, as a free marketeer, it’s outrageous that the fate of an entire economic sector can hang in the balance of a Presidential race. It should go without saying that the shifting sands of politics are an unsuitable foundation for wealth creation in America. I’ll end by hopefully quoting Ty Webb: “This isn’t Russia. Is this Russia? This isn’t Russia.”