William Yeatman

The Senate this week has an opportunity to check one of EPA’s worst regulations: the Mercury and Air Toxics Standards Rule, also known as the Utility MACT. On Wednesday, the upper chamber of Congress will vote on S. J. Res. 37, a Congressional Review Act resolution of disapproval that would effectively block the Utility MACT.

To read more about the merits of S. J. Res. 37, click here and here. Suffice it to say for this post, EPA’s Utility MACT would cost $10 billion annually, making it one of the most expensive regulations ever. It would also ban the construction of new coal-fired power plants. As against these compliance costs, the Utility MACT’s purpose is to protect a supposed population of subsistence fisherwomen, who consume 225 of pounds of self-caught fish, from exclusively the 90^th percentile most polluted bodies of water, during their pregnancies. I sincerely doubt that these women exist. My doubts are exacerbated by EPA’s failure to identify a single member of this putative population. Instead, they are modeled to exist.

For Members of the Senate—but especially among Members of the Minority Party—a “yes” on S. J. Res. 37 should be a no-brainer. After all, the Utility MACT is all pain and no gain. Inexplicably, however, Sen. Lamar Alexander (R-Tenn.) has steadfastly opposed the bill. I say “inexplicably” because Sen. Alexander’s rationale for opposing S. J. Res. 37 makes no sense.

According to Sen. Alexander, the Utility MACT would help Tennessee by reducing upwind air pollution that crosses into the Volunteer State, thereby making more difficult compliance with federal air quality regulations. In a speech last week, Alexander explained his thinking:

“I believe the EPA is right…and the reason is that it will stop dirty air from blowing into Tennessee because they are gong to require utilities from other states to put on the same pollution control equipment that TVA is putting on and we are going to pay for. So if we are going to do it, then they should do it because they are the source of a lot of our air pollution.”

Simply put, this is nonsensical. For starters, Tennessee’s air shed is already protected from upwind pollution by the “Good Neighbor” provision of the Clean Air Act. As its name would suggest, this provision requires that upwind States mitigate any pollution that adversely affects air quality in downwind States. Pursuant to the Good Neighbor provision, EPA last summer promulgated the Cross-State Air Pollution Rule, the purpose of which is to “stop dirty air from blowing into Tennessee” (to borrow Sen. Alexander’s terminology). Given that both the statute and code of federal regulations already protect Tennessee from upwind pollution, Sen. Alexander’s justification for supporting the Utility MACT is basically a call for duplicative regulation.

Sen. Alexander’s anti-S. J. Res. 37 reasoning is rendered even sillier by the fact that Tennessee is not currently victimized by out of state air pollution. If you follow this link to EPA’s website on the Cross-State Air Pollution Rule, there’s an interactive map that demonstrates all the “linkages” between upwind pollution and downwind areas whose ambient air quality is in violation of Clean Air Act standards. If you slide your mouse over Tennessee, it becomes evident that there are no upwind-downwind linkages adversely affecting Tennessee. Rather, the arrows are all pointing outside of the State, meaning that it is Tennessee about which neighboring States should worry.

In light of the fact that Sen. Alexander’s avowed justification for opposing S. J. Res. 37 is wrong, I remain perplexed as to why he seems to be doing everything in his power to protect the Utility MACT.

Here at the Competitive Enterprise Institute, we have been busy trying to inform Members of the Senate about S. J. Res. 37, legislation that would block EPA’s outrageous new Mercury and Air Toxics Standards Rule, also known as the Utility MACT.

EPA’s Utility MACT, simply put, is an affront to common sense. Industry and EPA agree that it would cost electricity ratepayers almost $10 billion per year, making it one of the most expensive regulations ever. Worse, it would effectively ban the construction of new coal-fired power plants, by establishing mercury emissions limits that are a third of detectable levels. Because pollution control equipment vendors cannot even measure the emissions limit required by the Utility MACT, they cannot offer a guarantee that new coal-fired power plants will be in compliance with the regulation. And without such a guarantee, utilities are unable to raise capital to build new coal-fired electricity generating units.

And for what? The regulatory purpose of the Utility MACT is to protect a supposed population of subsistence fisherwomen, who eat 225 pounds of self- or family-caught fish, from exclusively the 90th percentile most polluted fresh, inland water bodies, during their pregnancies. Notably, EPA has never identified a single member of this putative population; rather, they are modeled to exist.

To be sure, politics, not science, is the impetus for the Utility MACT. Environmental special interests form one of President Obama’s core constituencies. They have made no secret of their desire to close every single coal-fired power plant in America. The Sierra Club, for example, runs a “Beyond Coal” campaign that boasts of shutting down almost 43,000 megawatts of coal-fired electricity generation. While campaigning for the Oval Office, then-Senator Barack Obama openly identified with the anti-coal sentiment of his green base. In 2008, he infamously told the San Francisco Chronicle editorial board that he would, as President, “bankrupt” the coal-industry. Now, his EPA is fulfilling this promise.

In order to rein in EPA’s anti-coal agenda, Senator James Inhofe introduced S. J. Res. 37, legislation that would block the Utility MACT. The vote is expected by next Wednesday at the latest, and it could happen as soon as this week.

Yesterday, CEI published a study intended to inform the Senate debate on S. J. Res. 37, titled “All Pain and No Gain: The Illusory Benefits of the EPA’s Utility MACT.” It was authored by my CEI colleagues Marlo Lewis and Dave Bier, and also me.

Last evening, Forbes published an oped about the new study by Marlo Lewis. In the following excerpt, he explains the absurd cost-benefit ratios of the Utility MACT:

The EPA estimates that implementing the Utility MACT Rule will cost $9.6 billion in 2016. The agency also estimates that the required mercury reductions will provide $0.5 to $6 million in health benefits in the same year…For the HAP reductions that are the Rule’s statutory purpose, estimated costs exceed estimated benefits by 1,600 to one or even 19,200 to one.

In this morning’s Washington Examiner David Bier has a piece exposing EPA’s fraudulent economic analysis of the Utility MACT. The following passage aptly summarizes his point:

EPA’s conclusion that the Utility MACT will create coal jobs is based on a single paper by Resources for the Future’s Richard Morgenstern, which studied four industries in the 1980s — pulp and paper, plastics, steel and petroleum — and concluded that for every million dollars they spent on environmental compliance, 1.55 jobs were created in those industries.

Agency officials simply took this finding and plugged in the Utility MACT’s regulatory costs. If this sounds simplistic, they actually show their work in a footnote of their RIA — 1.55 jobs times $10.9 billion adjusted for inflation.

Using this formula, EPA can impose infinite costs on any industry and always claim that it will create jobs. Even if a rule costs trillions of dollars, EPA could still claim job growth!

How does EPA get away with this? With a little help from friendly environmental special interests, that’s how. Here’s how it works: Whenever lawmakers deliberate on a measure that would rein in EPA (be it a vote on EPA’s climate power grab; or its Clean Water Act power grab; or its Regional Haze power grab, or any of its power grabs), well-funded green groups like the Sierra Club, NRDC, or the League of Conservation Voters, immediately take to the airwaves to equate a vote against EPA with child abuse. This is a topic I’ve discussed before on this blog—see here, here, and here. Of course, these ads are nothing but lies. However, they are effective lies. No politician worth his or her salt wants to be accused of harming children. Thus, these green special interests have distorted the debate on environmental policy, such that common sense rarely prevails. As a result, EPA is free to implement the President’s political goals.

By a 293-127 vote, the House of Representatives yesterday adopted a short-term extension of the federal highway bill. Fourteen Republicans voted against it, while sixty-nine Democrats voted for passage. The original highway bill, known as the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, was enacted in 2005. Yesterday’s action was the 10th extension passed by the House since the original SAFETEA-LU surface transportation law expired in 2009.

The House’s bill would extend highway funding for 90 days. In March, the Senate passed a bill that would extend it for 2 years. Next, House and Senate leaders from both parties will convene a conference committee, through which they’ll try to hammer out compromise language acceptable to both Congressional chambers.

Alas, it is extremely likely that little good will come of the Conference, at least with regards to transportation policy. The House bill only perpetuates a broken system. For more on the ills of the status quo, read these articles by my colleague Marcus Scribner. To be fair to the House, the Senate bill is much more terrible. It includes all sorts of special favors and gives-aways to special interests. Thus, the negotiating positions in the Congressional Conference are bad and worse!

The only language in either chamber’s bill that warrants ultimate passage is that pertaining to energy policy, and it comes exclusively from the version approved yesterday by the House. Indeed, these energy policy provisions are excellent.

For starters, the legislation included language that would fast-track the Keystone XL Pipeline, the $7 billion, shovel-ready project to deliver up to 830,000 barrels a day of tar sands oil from Canada to U.S. Gulf Coast refineries. Specifically, the legislation would give the Federal Energy Regulatory Commission thirty days to approve the project. This provision, if enacted, would effectively override the President’s self-serving decision* to veto the project.

The House’s bill also included an amendment that would block EPA from subjecting coal combustion byproducts, known as coal ash, to ultra-stringent regulations meant for hazardous wastes. Such a designation flies in the face of reason, given that almost 50 percent of coal ash is used to supplement cement in the production of concrete. The amendment would protect the coal ash recycling industry from becoming collateral damage in EPA’s war on coal.

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Energy policy in Georgia isn’t made by the State legislature. Nor is it made by Governor Nathan Deal. Indeed, energy policy in Georgia isn’t made by any public official in the State. Instead, the most important energy decisions in Georgia are rendered by unelected EPA bureaucrats and environmentalist lawyers.

Welcome to energy policymaking in the Obama age.

Georgia is one of the fastest growing States in the nation. With more people necessarily comes higher demand for electricity. In order to meet the State’s growing need for power, a consortium of non-profit local utilities known as Power4Georgians (P4G) planned on building two 850 megawatt coal fired power plants, one in Washington County and the other in Ben Hill County.

P4G intended to build the Washington County plant first, but the project has been held in up for two years in the courts by relentless anti-coal environmentalist litigation organizations led by the Sierra Club’s “Beyond Coal Campaign.” This is demonstrated by the following brief timeline:

• On April 8, 2010, the Georgia Environmental Protection Division issued the final air permits for Power4Georgian’s proposed coal-fired power plant in Washington County. They were immediately challenged by environmentalist litigants led by the Sierra Club.
• On December 16, Georgia Judge Ronit Walker ruled in favor of the environmentalist petitioners and rejected the air permit for Power4Georgians’ proposed coal-fired power plant in Washington County.
• On November 21, 2011, Georgia environmental regulators re-issued an air permit for the proposed coal-fired power plant in Washington Country.
• On December 16, 2012 the Southern Environmental Law Center and GreenLaw challenged the Georgia Environmental Protection Division’s air quality permit in the Georgia Office of State Administrative Hearings on behalf of the Fall-line Alliance for a Clean Environment, Ogeechee Riverkeeper, Sierra Club’s Georgia Chapter, and Southern Alliance for Clean Energy.

EPA acted as a de facto intervener on behalf the environmentalist petitioners. As this blog has explained repeatedly, EPA is now waging a regulatory war on the coal industry. The Agency is imposing a series of senseless regulations that serve no public health purpose, and whose only function seems to be to price coal out of the electricity market.

In particular, the challenges brought by Sierra Club et al. relied on EPA’s ridiculous Mercury and Air Toxics Standard. By EPA’s own estimate, the mercury regulation would cost $10 billion annually, and its purpose is to protect America’s supposed population of pregnant, subsistence fisherwomen, who consume more than 300 pounds per year of self caught fish from fresh, inland water bodies. EPA fails to identify any of these purported victims. Rather, they are modeled to exist.

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Citing “adverse market conditions,” BrightSource Energy, a wholesale solar power generator, announced yesterday morning that it would shelve a long-planned initial public offering of 6.9 million shares that the company had hoped would fetch 21 to $23 each. The canceled IPO is a blow to the company’s backers, chief among them the American taxpayer. In April 2011, the Department of Energy awarded BrightSource a $160 million subsidy, from the same program that blew almost half a billion on Solyndra. They sure know how to pick ‘em at the DOE!

BrightSource’s setback stands in stark contrast with this week’s ultra-successful IPO by Forum Energy Technologies, an oil-services provider. The company had hoped to sell 16 million shares, but demand far exceeded expectations, and almost 19 million shares were sold, at the high end of Forum Energy’s hoped-for price. Because the services provided by Forum Energy Technologies engender a product—oil—that people actually want to buy*, the company does not need government handouts.

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In late March, the House Judiciary Committee passed H.R. 3862, the Sunshine for Regulatory Decrees and Settlements Act of 2012, by a 20-10 vote. If enacted, the bill would make it more difficult for the Environmental Protection Agency to negotiate “sue and settle” agreements that effectively exclude States from environmental policymaking, in seeming contravention of the Clean Air Act. By making these “sue and settle” agreements more transparent, H.R. 3862 would spur a welcome rebalancing of American environmental federalism.

Federal environmental regulations pursuant to the Clean Air Act are prescribed or approved by EPA, but they are implemented by the States. This relationship is necessary because, as the law recognizes, “air pollution prevention…at its source is the primary responsibility of States and local governments.” Accordingly, the Act “establishes a partnership between EPA and the States for the attainment and maintenance of national air quality goals,” thereby reflecting the Congress’s intent to “carefully [balance] State and national interests by providing for a fair and open process in which State and local governments, and the people they represent, will be free to carry out the reasoned weighing of environmental and economic goals and needs.” Natural Res. Def. Council, Inc. v. Browner (D.C. Cir. 1995).

It is beyond dispute that the Congress wanted States and EPA to work together to improve air quality. Recently, however, EPA has found a way to ditch the States, and instead render environmental policy with environmentalist litigation groups.

Here’s how it works. An environmentalist litigation outfit like the Center for Biological Diversity sues EPA for missing a deadline to implement a regulation pursuant to the Clean Air Act. Due to the almost absolute discretion that courts give federal agencies to implement laws, EPA could squash this suit in court with ease. All EPA would have to do (and what it has done many times before*) is argue that it possesses limited resources, and, as such, the Agency must be afforded the discretion to dictate how these limited resources are used. Indeed, EPA has nowhere near the manpower nor the budget to comply with all the statutory deadlines established by the Clean Air Act; virtually no regulations are implemented on time. However, instead of challenging the lawsuit (and winning), EPA agrees to settle. Then, EPA and the environmentalist litigant negotiate a settlement (i.e., environmental policy). The resultant consent decree is then approved by a judge, lending it the force of law.

There are several troubling implications of these “sue and settle” consent decrees. For starters, they allow unelected environmentalist lawyers to create policy. Moreover, consent decrees are difficult to reverse, which means that a sitting President can use them to bind the discretion of his or her successor. (This point was aptly explained to the Judiciary Committee by New York Law School Professors David Schoenbrod and Ross Sandler. Their testimony is available here).

Even more alarming, these consent decrees deprive States of due process. As I note above, EPA has limited resources. In practice, “sue and settle” agreements effect a reworking of the priorities that determine how EPA uses its scarce resources. In this fashion, the Agency is negotiating Clean Air Act policy. But it is doing so without allowing the States to have a voice, despite the fact that the Clean Air Act stipulates that States are EPA’s partner on environmental policymaking. In written testimony about the H.R. 3862, Roger Martella of Sidley Austin LLP explains how EPA used a consent decree to circumvent the States’ right to have input on a controversial greenhouse gas performance standard:

On December 23, 2010, EPA announced a consent decree with several NGOs committing the agency to propose and finalize the first ever New Source Performance Standards for greenhouse gases. EPA agreed to promulgate such standards for utilities and refineries without any prior input from stakeholders in those industries. Specifically, EPA committed to propose the first-ever GHG NSPS for these sectors in July and December of 2011, which is an unprecedented quick schedule. In fact, the schedule was so ambitious that six months after the July deadline, the Agency has yet to propose the standards for either sector. Beyond the mere commitment of schedules and timelines, EPA also made various substantive commitments in the agreement that would ordinarily be open for public comment in a rulemaking process, such as a decision to regulate both new and existing sources in these categories, without prior industry input on the feasibility of such controls, the ability to implement in a timely manner, and the lack of adequate data to create such standards. Although the Agency ultimately held listening sessions and took comment on the agreements after finalizing them, the agreements did not materially change before being lodged with the Court.

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How much would you pay for nothing? Personally speaking, I wouldn’t pay a single cent for zero returns, and I think most Americans would agree. It is this shared sentiment that compels me to feel bad for North Dakotans, because EPA is forcing them to pay $12 million annually, for nothing.

I am not exaggerating. EPA last Friday promulgated a final Regional Haze regulation for North Dakota, which requires almost $12 million in annual compliance costs, in exchange for “benefits” that are literally invisible.

I’ve written about the Regional Haze rule many times before on this blog (see here, here, here, and here). It was created by the Congress in 1977 amendments to the Clean Air Act. Its purpose is to improve visibility at federal national parks and wilderness areas. The hallmark of the Regional Haze provision is the unique degree of primacy accorded to the States over EPA. Because Regional Haze is an aesthetic regulation—and not a public health regulation—the Congress intended for the States to be the lead decision makers.

Despite the Congress’s intent, EPA has aggressively interpreted its Regional Haze prerogatives so as to usurp the States’ rightful authority. Indeed, North Dakota is the fourth State subject to a federal implementation plan for Regional Haze. North Dakota Department of Health had spent years creating a visibility improvement plan that was submitted in the summer of 2011. The State plan met all of the criteria established by the Clean Air Act and its implementing rules, so it was eminently approvable. It would have cost $600,000 a year.

Last Friday, however, EPA disapproved North Dakota’s Regional Haze strategy, and imposed almost $13 million/year in additional Regional Haze controls at two power plants. In the rulemaking, the Agency stated that these controls were “cost-effective.” This is an eye-opening declaration, in light of the fact that these supposedly “cost-effective” controls fail to achieve a perceptible improvement in visibility.

Don’t take my word for it! The eyes never lie. Below, I’ve used a visibility modeling software program (WinHaze) in order to demonstrate the difference between North Dakota’s plan and that imposed by EPA. See for yourself:

Can you tell a difference? I can’t, and I’ve been staring at these photos intensely, as if they were Magic Eye posters. As the images above make clear, EPA’s Regional Haze regulation is all pain and no gain in North Dakota.

The green echo chamber is reverberating with reports about a new study claiming that the 468 megawatt Cape Wind project, a planned wind farm off the Cape Cod coast, would save New England ratepayers $7.2 billion through 2036. When I first encountered news of the study, I was surprised, because 75% of Cape Wind’s expected output is already under contract, at rates that are more than twice the average price of electricity in the region. How could it be that adding expensive power to a regional grid reduces electricity rates?

This mystery was solved by Randy Hunt, a Massachusetts state representative and part time myth-buster. In an excellent blog post, Mr. Hunt explains that the new Cape Wind rate impact study suffers from a significant flaw. Namely, it fails to account for the cost of wind power, which seems like a pretty big oversight for an analysis that purports to estimate the cost of wind power.

Then again, the study was commissioned by the developers who stand to make a mint with the Cape Wind project, so it’s not shocking that the analysis would be of such dubious quality. What is somewhat surprising, however, is the alacrity with which environmentalist media has trumpeted this bogus report.