Major & Obscure Regulations We’re Watching in 2015

by William Yeatman on December 31, 2014

in Blog

For reasons of self-preservation, 2015 figures to be a very busy year for regulators in the Obama presidency. Under the Congressional Review Act (CRA), Congress has 60 business days from the promulgation of a major regulation to vote on a resolution that would vacate the rule. Due to the Presidential veto, however, the Congress’s CRA prerogative is usually toothless. Indeed, the only practical window for a successful CRA challenge occurs when the 60 day time limit (for Congress to act) overlaps with a new and like-minded presidential administration. And because the Congress only conducts, on average, about 10 business days a month, the Obama administration faces a deadline of about May 2016, by which it must promulgate all of its major regulations, in order to ensure that any one them cannot be subject to a successful Congressional Review Act resolution (under his successor President). As such, the clock is ticking, and most of this administration’s regulatory action will have to be wrapped up in the upcoming year. Below, I’ve listed what we can expect for 2015.

EPA’s Carbon Pollution Standards (Due Date: Any Day Now)

On January 8, 2014, EPA proposed a Clean Air Act rule to control greenhouse gas emissions from new coal fired power plants, known as the Carbon Pollution Standards. In practice, the regulation would effectively ban the construction of new coal-fired power plants, by requiring them to use carbon capture and sequestration, a technology that is far from ready for prime time. Under the Clean Air Act, EPA has one year from proposal to finalize a rule; it is most certain that the agency will miss this deadline (i.e., January 8, 2015). Nonetheless, the regulation is definitively in the pipeline and should be issued in the upcoming days.

The rule’s statutory foundations are sketchy, as we explain in CEI comments to EPA. And here, I give the top six reasons why the regulation is illegal as proposed.

In fact, EPA is taking a big risk if it decides to stay the course, and push the limits of what it could achieve with this rule. If the rule is vacated by Article III courts, then EPA loses its legal basis for its marque climate policy (the Clean Power Plan), as my colleague Marlo Lewis explained yesterday.

EPA’s “Natural Gas Strategy” (Due Date: January)

BNA’s Andrew Childers reports that EPA’s “methane strategy” will be unveiled in January.

It is unclear what EPA is thinking here. On the one hand, the agency could try to regulate methane emissions directly, as a greenhouse gas emission, pursuant to the Clean Air Act. If the agency acted thusly, it would be empowered to promulgate methane limits for new and existing oil and gas production.

However, the agency could also try to mesh a methane regulatory regime with its existing rules to control volatile organic gases. On December 19, the agency issued a pre-publication version of Clean Air Act new source performance standards for VOCs from the oil and gas industry. Having promulgated a standard for new sources, the agency could proceed with a standard for existing sources. Such a rule would be aimed at controlling VOCs, and reducing methane would be a co-benefit.

Interior Department’s Stream Buffer Zone Rule (Due Date: Spring 2015)

SNL Energy’s Taylor Kuykendall reports that the Interior Department Office of Surface Mining is expected to propose the Surface Mining Control and Reclamation Act (SMCRA) “stream buffer zone” rule in the spring of 2015.

I’ve explained the rule and its complicated history here. Suffice it say for this post, it’s a telling example of the “war on coal.” The purpose of the 1977 Surface Mining Control and Reclamation Act (SMCRA) is to sanction surface mining. Yet the “stream buffer zone” rule would interpret SMCRA such that the statute effectively bans surface coal mining. This is plainly absurd.

Also, in a blockbuster opinion piece published earlier this month in the Lexington Herald-Leader, J. Steven Gardner, CEO of science and engineering firm ECSI, affirmed the ultra-political character of the stream buffer zone rule. His company was one of five consultants contracted by the Interior Department to help craft the regulation. According to Mr. Gardner, “Department of Interior officials asked the consultants to change the results,” after the firms had concluded that the rule would lead to thousands of job losses. Upon refusing to do so, the contract was terminated.

EPA’s Clean Power Plan (Due Date: June 2015)

On June 2, 2014, EPA proposed Clean Air Act standards to control greenhouse gases from existing power plants, known as the Clean Power Plan. It is the Obama administration’s marquee climate policy. The agency has a self-appointed deadline to finalize the rule by June 2015.

As I explain in this paper, the rule would effectively federalize oversight of the nation’s electricity market, which for 80 years (since the passage of the Federal Power Act) has been the exclusive preserve of States. In lieu of state control of 50 discrete electricity markets, the Clean Power Plan would impose climate policy, as dictated by the EPA. In comments to EPA, my colleague Marlo Lewis and I explain the rule’s egregious legal flaws.

EPA’s Effluent Limitations Guidelines (Due Date: September 2015)

Pursuant to a “sue and settle” consent decree, EPA has until September 30, 2015, to promulgate final Clean Water Act effluent limitations guidelines for electricity steam generating units, primarily coal-fired power plants. The agency proposed standards in the Federal Register on June 7, 2013.

The regulation targets the “wet handling” of coal combustion residuals, a.k.a. “coal ash.” Some types of coal ash are produced et (for example, the byproduct of “wet” sulfur dioxide “scrubbers”), while some types of coal ash (for example, bottom ash and fly ash) are produced dry, but then sluiced through pipes to surface impoundments.

After treatment, water from these impoundments can be discharged directly to surface waters or piped to publicly-owned water treatment plants. Either way, such discharges are subject to Clean Water Act regulation.

EPA claims that the regulations would cost anywhere from $185 million to $2.3 billion annually (see page 11-5); however, industry comments make a compelling case that the agency far overestimated the cost-effectiveness of the rule.

Conceptually (i.e., from a “war on coal” standpoint), EPA’s effluent limitations guidelines may be construed as the yin to the yang of a recently promulgated Resource Conservation and Recovery Act rule, which also pertains to coal ash (see this primer for an explanation of that rule). Both rules are geared towards making cost prohibitive the “wet handling” of coal. In simple terms: Everything the greens failed to get in the Resource Conservation and Recovery Act rule, they’re poised to reap in the pending Clean Water Act rule.

EPA’s Ozone NAAQS (Due Date: October 2015)

EPA issued a proposed Clean Air Act ozone national ambient air quality standard (NAAQS) on the media-dead Wednesday before Thanksgiving, which is a classic ploy by executive agencies to escape scrutiny. In fact, the extent to which the agency hides a rule from public notice is directly proportional to the adverse impact the rule would have on the economy. Accordingly, EPA’s proposed ozone NAAQS is projected to be one of the most expensive ever promulgated by the agency. The agency has given itself until October 2015 to finalize the ozone rule.

Currently, the standard is set at 75 parts per billion. EPA proposed to lower it to 60-70 parts per billion, which would render 80%-95% of the country subject to what is known as Clean Air Act part D nonattainment. This draconian provision is akin to a de-industrialization mandate. All areas of the country in ozone non-attainment must abide the “offset” provision, whereby it is impermissible to construct any industry without reducing emissions commensurate with those engendered by the project.

Thanks to a host of other EPA regulations issued during the first six years of the Obama administration, all the low-hanging fruit has been plucked (when it comes to reducing ozone emissions). Indeed, EPA’s regulatory onslaught has denuded the compliance tree of both the middle- and high-hanging fruit, as well. Between the offset provision and the absence of readily available compliance mechanisms (itself due to EPA’s regulatory zealousness over the last half decade), there would be no room for economic growth for most of the country, if the ozone NAAQS is finalized as proposed.

EPA’s Regional Haze Reasonable Progress Guidelines (Due Date: October 2015)

More so than any other regulatory regime, Regional Haze is “Evidence A” in the case demonstrating the existence of the Obama administration’s “war on coal.” Regional Haze is a Clean Air Act regulation whose purpose is to improve visibility in federal National Parks and Wilderness Areas. Because it is an aesthetic regulation—and not a public health measure—the Congress gave States a degree of authority (vis a vis EPA) that is unique in the Clean Air Act.

State Regional Haze compliance plans were due in January 2009. Despite the aforementioned state primacy in implementing Regional Haze, the agency rejected more than a dozen state plans, and imposed federal plans in their stead. The agency’s “Federal Implementation Plans” cost billions of dollars more, yet they achieved an imperceptible “improvement” in visibility, as I explain in this study.

The Clean Air Act requires that States demonstrate “reasonable progress” towards to “national goal” of achieving pristine air by 2064. In October 2015, EPA is expected to promulgate guidelines for how States are to comply with their reasonable progress responsibilities. Early signs indicate the agency will continue on draconian path that it established in reviewing the states’ first round of compliance plans. To wit, in December, EPA proposed two federal takeovers of Regional Haze programs in Oklahoma and Texas, and the agency based its action on Regional Haze reasonable progress.

***Obscure Rule-makings We’re Following That Could Be Concluded This Year***

  • Regarding “Upset Emissions”: In two separate rule-makings (docket IDs EPA-HQ-OAR-2009-0234 & EPA-HQ-OAR-2012-0322) EPA is revising its treatment of so-called “upset emissions,” which are exceedances of applicable Clean Air Act emissions standards that occur when a power plant is operating inefficiently (most often during startup, shutdown, or a malfunction). Historically, EPA regulations have provided for “excess emissions” through either exemptions or offering affirmative defenses to regulated entities, in recognition of the fact that these violations cannot be avoided (i.e., they are part and parcel of operating a power plant, and an entity shouldn’t be punished for that which it cannot control). However, a series of recent D.C. Circuit cases have ruled that federally promulgated regulations cannot incorporate exemptions or affirmative defenses, although it remains to be litigated whether a state may incorporate such mechanisms into their Clean Air Act compliance plans. These two rule makings will serve to establish the agency’s position on this unresolved matter.
  • Regarding Area Designations for National Ambient Air Quality Standards: On May 13, 2014, EPA proposed a rule (the Data Requirements Rule for the 1-Hour Sulfur Dioxide Primary NAAQS) that contemplates a shift in the manner that the agency designates area compliance with nationwide air quality standards.  To date, EPA has based these designations on air quality monitoring. In the proposal, EPA expressed an intention to shift to air quality modeling. This is troubling insofar as air quality models are highly dependent on the initial assumptions. Accordingly, EPA’s proposal would empower the agency to expand the scope of its national ambient air quality standards, by manipulating the (necessarily) subjective criteria of air quality models.

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