May 2014

[Editor’s Note: “Primary Document Dump Fridays” is a new weekly feature at globalwarming.org. Every Friday, we’ll post all the primary documents relevant to a major EPA regulation]

On Monday, EPA Administrator Gina McCarthy is expected to roll out the Agency’s much-anticipated climate plan for existing power plants. The climate plan is authorized by section 111(d) of the Clean Air Act, pursuant to which EPA is empowered to promulgate regulations, known as “guidelines,” whose function is to aid states in the formulation of implementation plans to achieve the “best” system of emission control system for a “designated pollutant” from a “designated (existing) source.” States are then required to submit these plans to EPA for review.

For EPA’s climate rule, the “designated pollutant” is carbon dioxide, and the “designated sources” are coal-fired power plants. To date, there have been five other designated pollutant-designated source pairs: (1) fluoride emissions from phosphate fertilizer plants; (2) sulfuric acid mist from sulfuric acid production facilities; (3) total reduced sulfur from kraft pulp mills; (4) fluoride emissions from primary aluminum plants; and (5) methane and organic compounds from solid waste landfills.

For last Friday’s primary document dump, I posted EPA’s regulations establishing the process by which States submit 111(d) plans, and also the Guidelines for the aforementioned four pairs of designated pollutants and designated sources. Today, I’ve posted all of EPA’s reviews of State 111(d) submissions.* Together, these two posts provide all the possible background information from the Federal Register on EPA’s forthcoming climate plan for existing power plans. In a subsequent post, I will interpret these documents.

Fluoride Emissions from Existing Phosphate Fertilizer Plants

Alabama 2/22/1982 47 FR 7666

Arkansas 5/12/1982 47 FR 20490

California 6/29/1982 47 FR 28099

Iowa 12/27/1985 50 FR 52920

Louisiana 5/12/1982 47 FR 20490

Mississippi 7/6/1982 47 FR 29234

Missouri 3/14/1986 50 FR 8827

Utah 6/11/1982 47 FR 25335

Sulfuric Acid Mist Emissions from Existing Sulfuric Acid Production Units

Alabama 2/22/1982 47 FR 7666

Arkansas 5/12/1982 47 FR 20490

[click to continue…]

In November of last year, EPA proposed to scale back the overall Renewable Fuel Standard (RFS) 2014 blending target from 18.15 billion to 15.21 billion gallons, and to trim the mandate’s corn-ethanol component from 14.4 billion to 13.0 billion gallons. Forcing EPA’s hand was a set of market constraints commonly called the “E10 blend wall.” EPA intervened so that refiners would not be obligated to purchase and blend more ethanol than could actually be sold in gasoline.

The biofuel industry fiercely opposes the proposed cutbacks. EPA is expected to announce the final 2014 RFS production quota in June.

To help EPA stick to its guns, the Environmental Working Group (EWG) yesterday released Ethanol’s Broken Promise: Using Less Corn Ethanol Reduces Greenhouse Gas Emissions. The study estimates that EPA’s proposed 1.39 billion gallon cutback in the corn-ethanol blending target would “lower U.S. greenhouse gas emissions by the equivalent of 3 million tons of carbon dioxide equivalent (CO2e) — as much as taking 580,000 cars off the road for a year.”

EPA can’t dispute this conclusion because the numbers come from the agency’s own data. EPA estimates that, on a life-cycle basis, corn ethanol’s carbon dioxide-equivalent (CO2e) emissions were 33% higher than gasoline’s in 2012.

Since a chief purpose of the RFS is to reduce greenhouse gas emissions, the policy is counterproductive if corn-ethanol emits more CO2e than the gasoline it displaces.

EPA, however, predicts that by 2022, biofuel production will reduce net CO2e emissions by 17%.

Not so fast, says EWG! EPA assumes that by 2022, carbon-neutral biomass will power ethanol plants. It’s more likely that most plants will run electricity from natural gas. More importantly, land-use conversions associated with ethanol production release carbon locked in soils. And, EWG contends, EPA’s analysis “essentially ignored all land use change emissions before 2022.”

EWG estimates that during 2008-2012 alone, RFS-induced land conversions released 85-to-236 million metric tons of CO2e emissions per year. [click to continue…]

From yesterday evening:

Last week, the D.C. Circuit Court of Appeals ruled that the Federal Energy Regulatory Commission’s (FERC) demand-side response regulation impermissibly infringed on the States’ exclusive authority to regulate retail electricity markets.

Next week, the President is expected to “personally” unveil a climate plan for existing power plants that would, as reported, give the Environmental Protection Agency the authority to impose demand-side management programs on unwilling States.

This is a problematic contradiction.

To recap: Under the Federal Power Act, Congress limited the reach of federal energy regulators “only to those matters which are not subject to regulation by the States” (16 U.S.C. §824(a)).  And in a split 2-1 decision rendered last Friday, May 23^rd (Electric Power Supply Association v. FERC), the D.C. Circuit Court of Appeals determined that demand-side response is a “matter” left to States. But under the Clean Air Act, as understood by the Obama administration, the Congress empowered EPA—federal environmental regulators—to impose a demand-side response program on unwilling States. As reported by Bloomberg,  demand-side response is one of a number of “beyond the fence” or “system-wide” policies that EPA’s impending climate rule will allow States to choose from, in order to achieve mandated cuts in greenhouse gas emissions (somewhere around 25% to 35% below an as yet to be revealed baseline). Because the Clean Air Act gives EPA the power to reject State proposals and impose plans in their stead, the agency would thus gain the authority to force upon the States a demand-side response in the form of a federal implementation plan.

Indeed, most of EPA’s reported options for complying with its Clean Air Act climate plan—including efficiency rebates and renewable energy mandates—are “matters” which are subject to direct regulation by the States. Almost all States undergo some sort of multiyear utility planning, usually known as “Integrated Resource Planning,” under the purview of State regulatory bodies (see map directly below). It is accepted as a given that the Federal Power Act bars FERC from interfering from Integrated Resource Planning. However, under the current administration’s interpretation of the Clean Air Act, Integrated Resource Planning effectively would become subject to EPA oversight, and the agency would even gain the power to impose an IRP.

This raises a rather obvious question: Why would Congress give federal environmental regulators powers over state-wide energy markets that it refused to give to federal energy regulators?

This morning, I bemoaned the Supreme Court’s refusal to review Oklahoma, et al. v. EPA, et al., 723 F. 3d 1201 (2013), because the 10th Circuit’s ruling, if it becomes established precedent, would sound the death knell for cooperative federalism under the Clean Air Act. To be sure, that’s a big deal. However, in my rush to give the big picture, I neglected to mention the local impact, which is also a big deal.

In fact, Oklahoma Gas & Electric ratepayers will be forced to pay $1.2 billion, for no purpose other than the furtherance of a political ‘war on coal.’ That’s no hyperbole. At issue in Oklahoma were visibility-improvement regulations, known as Regional Haze, for 4 coal-fired power plants. Oklahoma wanted one set of controls; EPA wanted a different set of controls that cost $1.2 billion more. The problem is that the agency had no justification for its choice, as its preferred controls didn’t actually engender an improvement in visibility. Using modeling software, it’s possible to recreate the visibility “benefits” wrought by EPA’s Regional Haze regulation in Oklahoma, and, immediately below, I’ve posted the side-by-side images of the same skyline, one depicting visibility using Oklahoma’s controls and the other showing the impact of EPA’s controls. As is plainly evident, there is no difference. For this–NOTHING–OG&E ratepayers are on the hook for more than a billion dollars.

Can you tell the difference?

Why would EPA impose this outrageous regulation? The answer has to do with the revolving door between the agency and environmental special interests. Oklahoma falls within EPA Region 6, which was headed by Al “Crucify” Armendariz when the agency acted in Oklahoma on Regional Haze. Immediately before he was Region 6 Administrator, Armendariz was a “technical adviser” to WildEarth Guardians, the green litigation group whose “sue and settle” lawsuit led to…EPA’s Regional Haze controls for Oklahoma! After Armendariz resigned in disgrace, for having compared his enforcement style to a “crucifixion,” he gained employment at Sierra Club’s “Beyond Coal” campaign. Given Armendariz’s zealotry and connection to green special interests, EPA’s Regional Haze in the Sooner State shenanigans at least makes a modicum of sense. That doesn’t make the situation any easier for OG&E ratepayers, alas.  [click to continue…]

What the Court just did: At 9:30 AM this morning, the Supreme Court declined to review the 10th Circuit’s split 2-1 decision in Oklahoma, et al. v. EPA, et al., 723 F. 3d 1201 (2013).

Case background: Under the Regional Haze provision of the Clean Air Act, States are required to submit visibility improvement plans to the EPA for review. In 2010, the State of Oklahoma proposed Regional Haze controls for 6 power plants. In 2012, EPA rejected Oklahoma’s Regional Haze plan; the agency justified its disapproval based on a claim that the State’s cost estimates were erroneous, which (allegedly) led to the State undervaluing certain control options. Rather than allow Oklahoma to correct the alleged error, as is permitted by the Clean Air Act, EPA imposed a federal plan that cost $1.8 billion more than the State’s plan. Oklahoma sued in the 10th Circuit Court of Appeals, alleging that EPA acted outside its authority in rejecting the State’s plan. The Court sided in favor of EPA in July 2013, by a 2-1 split panel decision in Oklahoma, et al. v. EPA, et al., 723 F. 3d 1201 (2013). Oklahoma appealed the 10th Circuit’s ruling, but the Supreme Court today declined to hear the State’s case.

The BFD legal matter at issue: The Clean Air Act is a “cooperative federalism” arrangement, which establishes a State-Federal partnership to improve the nation’s air quality. Because both sovereigns carry a congressional grant of authority, both possess legitimate claims to judicial deference. Complicating matters further, the State, in exercising its share of congressionally delegated authority pursuant to the Clean Air Act, funds its own implementing agency, which establishes its own administrative code. As a result, each sovereign that is responsible for executing the Clean Air Act can claim a congressional delegation, agency expertise, and political accountability—i.e., all the trappings of deference. So what happens when State and Federal Governments, in the course of implementing their respective delegations of authority, disagree on factual findings, with billions of dollars in compliance costs at stake? Is a court supposed to review the reasonableness of the state’s determinations? Or is it supposed to review the reasonableness of the EPA’s review of the reasonableness of the state’s determination? Most simply put: To which sovereign should the courts defer? The 10^th Circuit ruled that EPA is the proper recipient of deference when State and Federal governments disagree over factual findings, a decision that will not be disturbed by the highest court in the land.

Why did cooperative federalism just die?: Pursuant to the precedent established by the 10^th Circuit’s decision, the States, as regulators with initial responsibility under the Clean Air Act, are denied the discretion to conduct reasonable fact-finding. In this scenario—which is now reality—cooperative federalism will cease to have any functional meaning, because the States would become a second class partner. I discuss this matter at length here.

What are the regulatory regimes that will be affected?: [click to continue…]