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Why Courts Should Repeal EPA’s ‘Carbon Pollution’ Standard (and why you should care)

by Marlo Lewis on November 19, 2012

in Features

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Note: A nearly identical version of this column appeared last week in Forbes Online. I am reposting it here with many additional hyperlinks so that readers may more easily access the evidence supporting my conclusions.

The November 2012 elections ensure that President Obama’s war on coal will continue for at least two more years. The administration’s preferred M.O. has been for the EPA to ‘enact’ anti-coal policies that Congress would reject if such measures were introduced as legislation and put to a vote. Had Gov. Romney won the presidential race and the GOP gained control of the Senate, affordable energy advocates could now go on offense and pursue a legislative strategy to roll back various EPA global warming regulations, air pollution regulations, and restrictions on mountaintop mining. But Romney lost and Democrats gained two Senate seats.

Consequently, defenders of free-market energy are stuck playing defense and their main weapon now is litigation. This is a hard slog because courts usually defer to agency interpretations of the statutes they administer. But sometimes petitioners win. In August, the U.S. Court of Appeals struck down the EPA’s Cross State Air Pollution Rule (CSAPR), a regulation chiefly targeting coal-fired power plants. The Court found that the CSAPR exceeded the agency’s statutory authority. Similarly, in March, the Court ruled that the EPA exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mine No. 1 in Logan County, West Virginia.

A key litigation target in 2013 is EPA’s proposal to establish greenhouse gas (GHG) “new source performance standards” (NSPS) for power plants. This so-called carbon pollution standard is not based on policy-neutral health or scientific criteria. Rather, the EPA contrived the standard so that commercially-viable coal plants cannot meet it. The rule effectively bans investment in new coal generation.

We Can Win This One

Prospects for overturning the rule are good for three main reasons. [click to continue…]

Ethanol Mandate Waiver: Decks Stacked Against Petitioners

by Marlo Lewis on September 10, 2012

in Blog, Features

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The Governors of Georgia, Texas, Arkansas, Delaware, Maryland, New Mexico, and North Carolina have petitioned EPA Administrator Lisa Jackson to waive the mandatory ethanol blending requirements established by the Renewable Fuel Standard (RFS). The petitioners hope thereby to lower and stabilize corn prices, which recently hit record highs as the worst drought in 50 years destroyed one-sixth of the U.S. corn crop. Corn is the principal feedstock used in ethanol production.

Arkansas Gov. Mike Bebe’s letter to Administrator Jackson concisely makes the case for regulatory relief:

Virtually all of Arkansas is suffering from severe, extreme, or exceptional drought conditions. The declining outlook for this year’s corn crop and accelerating prices for corn and other grains are having a severe economic impact on the State, particularly on our poultry and cattle sectors. While the drought may have triggered the price spike in corn, an underlying cause is the federal policy mandating ever-increasing amounts corn for fuel. Because of this policy, ethanol production now consumes approximately 40 percent of the U.S. corn crop, and the cost of corn for use in food production has increased by 193 percent since 2005 [the year before the RFS took effect]. Put simply, ethanol policies have created significantly higher corn prices, tighter supplies, and increased volatility.

Agriculture is the backbone of Arkansas’s economy, accounting for nearly one-quarter of our economic activity. Broilers, turkeys, and cattle — sectors particularly vulnerable to this corn crisis — represent nearly half of Arkansas’s farm marketing receipts. Arkansas poultry operators are trying to cope with grain cost increases and cattle familes are struggling to feed their herds.

Section 211(o)(7) of the Clean Air Act (CAA) authorizes the EPA to waive all or part of the RFS blending targets for one year if the Administrator determines, after public notice and an opportunity for public comment, that implementation of those requirements would “severely harm” the economy of a State, a region, or the United States. Only once before has a governor requested an RFS waiver. When corn prices soared in 2008, Gov. Rick Perry of Texas requested that the EPA waive 50% of the mandate for the production of corn ethanol. Perry, writing in April 2008, noted that corn prices were up 138% globally since 2005. He estimated that rising corn prices had imposed a net loss on the State’s economy of $1.17 billion in 2007 and potentially could impose a net loss of $3.59 billion in 2008. At particular risk were the family ranches that made up two-thirds of State’s 149,000 cattle producers. Bush EPA Administrator Stephen Johnson rejected Perry’s petition in August 2008.

In the EPA’s Request for Comment on the 2012 waiver petitions, the agency indicates it will use the same “analytical approach” and “legal interpretation” on the basis of which Johnson denied Perry’s request in 2008. This means the regulatory decks are stacked against the petitioners. As the EPA reads the statute, CAA Section 211(o)(7) establishes a burden of proof that is nearly impossible for petitioners to meet. No matter how high corn prices get, or how serious the associated economic harm, the EPA will have ready-made excuses not to waive the corn-ethanol blending requirements. [click to continue…]

Inside the Sausage Factory: The Obama Administration’s Auto Regulations

by Marlo Lewis on August 22, 2012

in Features

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Earlier this month, the House Oversight and Government Reform Committee issued a staff report on the Obama Administration’s fuel economy/greenhouse gas (GHG) regulatory program. The report, A Dismissal of Safety, Choice, and Cost, is the product of a “multi-year Committee investigation” that includes three hearings, a transcribed interview of EPA Assistant Administrator Gina McCarthy, and a review of more than 15,000 documents obtained by the Committee from the EPA, the National Highway Traffic Safety Administration (NHTSA), the California Air Resources Board (CARB), and 15 automobile manufacturers.

Some key findings:

  • The Administration performed an end-run around the law and ran a White House-based political negotiation, led by “czars” who marginalized NHTSA, the federal agency charged in statute with setting fuel economy standards.
  • Contrary to the statutory scheme Congress created, the EPA became the lead agency in fuel economy regulation and NHTSA was sidelined. Contrary to Congress’s preemption of State laws or regulations “related to” fuel economy, CARB became a “major player” and an “aggressive participant in the process,” allowing unelected state regulators in Sacramento to set national policy outside the federal rulemaking process.
  • The Administration violated the spirit – and possibly the letter – of the Administrative Procedure Act, Presidential Records Act, and Federal Advisory Committee Act by negotiating agreements on both the Model Year (MY) 2012-2016 and MY 2017-2025 standards behind closed doors with only a select group of stakeholders.
  • The new fuel-economy/GHG standards will add thousands of dollars to the cost of new vehicles. Consumers are likely to incur net financial losses unless annual gasoline prices reach $5-$6 per gallon.
  • Compliance with the new standards will require mass reductions that will, in turn, compromise vehicle safety. EPA and CARB officials mocked and belittled safety concerns raised by NHTSA.

In a law journal article and regulatory comment letter, I also make the case that the administration’s fuel-economy agenda trashes the separation of powers and administrative procedures. But the Committee’s report provides the first, detailed behind-the-scenes chronology of Team Obama’s fuel economy machinations, confirming what other critics suspected but could not document.

Some secrets of the sausage factory, though, may never come to light: “Despite multiple requests, the Executive Office of the President refused to provide any information on its involvement in developing the fuel economy and GHG emissions standards.”

[click to continue…]

Reasonable Estimates of Cellulosic Biofuel Production

by Brian McGraw on August 22, 2012

in Blog

Yesterday The Hill‘s Energy Blog reported on a brief filed by the EPA in the U.S. Court of Appeals for the District of Columbia:

The documents filed Monday with the U.S. Court of Appeals for the District of Columbia reveal the reasoning behind EPA’s move to shoot down the American Petroleum Institute’s (API) challenge of the renewable fuel standard (RFS). EPA determined that enough advanced biofuels — generally understood to be made from non-food products — existed to meet that portion of the RFS for 2012.

“EPA reasonably considered the production capacity likely to be developed throughout the year, while API would have EPA rely narrowly and solely on proven past cellulosic biofuel production,” EPA said in its brief. “EPA reasoned that lowering the advanced biofuel volume in these circumstances would be inconsistent with EISA’s [the Energy Independence and Security Act of 2007] energy security and greenhouse gas reduction goals, and decided to leave the statutory advanced biofuel volume unchanged.”

The (main) question here is what the 2012 cellulosic biofuel requirements should be set at. The EPA is arguing that they took a reasonable look at capacity production and put out what they thought could be developed, while the American Petroleum Institute is only looking at historic cellulosic biofuel production. So who is being reasonable? [click to continue…]

Court Vacates EPA Cross State Air Pollution Rule

by Marlo Lewis on August 21, 2012

in Features

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Today, the D.C. Circuit Court of Appeals vacated the EPA’s Cross State Air Pollution Rule (CSAPR), also known as the Transport Rule. The Rule’s purpose is to implement the Clean Air Act’s ‘good neighbor policy,’ which prohibits upwind states from contributing significantly to downwind states’ non-attainment with National Ambient Air Quality Standards (NAAQS).

The Court vacated the CSAPR because . . . (drum roll, please) . . . the EPA regulated beyond its statutory authority. Dog bites man.

From the decision, filed for the Court by Judge Brett Kavanaugh:

Absent a claim of constitutional authority (and there is none here), executive agencies may exercise only the authority conferred by statute, and agencies may not transgress statutory limits on that authority.

Here, EPA’s Transport Rule exceeds the agency’s statutory authority in two independent respects. First, the statutory text grants EPA authority to require upwind States to reduce only their own significant contributions to a downwind State’s nonattainment. But under the Transport Rule, upwind States may be required to reduce emissions by more than their own significant contributions to a downwind State’s nonattainment. EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute. Second, the Clean Air Act affords States the initial opportunity to implement reductions required by EPA under the good neighbor provision. But here, when EPA quantified States’ good neighbor obligations, it did not allow the States the initial opportunity to implement the required reductions with respect to sources within their borders. Instead, EPA quantified States’ good neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act.

For each of those two independent reasons, EPA’s Transport Rule violates federal law. Therefore, the Rule must be vacated.

 

EPA’s Carbon Pollution Standard — One Step Closer to Policy Disaster

by Marlo Lewis on June 25, 2012

in Features

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Today (June 25th) is the deadline for submitting comments on the EPA’s proposed Carbon Pollution Standard Rule, which will establish first-ever New Source Performance Standards (NSPS) for carbon dioxide (CO2) emissions from fossil-fuel electric generating units.

The proposed standard is 1,000 lbs of CO2 per megawatt hour (MWh). The EPA claims that 95% of all new natural gas combined cycle power plants can meet the standard — maybe, maybe not. One thing is clear — no conventional coal power plant can meet the standard. Even today’s most efficient coal power plants emit 1,800 lbs CO2/MWh on average.

A coal power plant equipped with carbon capture and storage (CCS) technology could meet the standard, but the EPA acknowledges that  CCS is prohibitive, raising the cost of generating electricity by as much as 80%.

So what the proposal is really telling the electric utility industry is this: If you want to build a new coal-fired power plant, you’ll have to build a natural gas combined cycle plant instead. Not surprising given President Obama’s longstanding ambition to “bankrupt” anyone who builds a new coal power plant.

In a comment letter submitted today on behalf of the Competitive Enterprise Institute, I recommend that the EPA withdraw the proposed regulation for the following reasons: [click to continue…]

CEI’s Myron Ebell Discusses the Utility MACT Vote

by Brian McGraw on June 18, 2012

in Blog

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CEI’s Myron Ebell appeared on E&E-TV this morning to discuss the upcoming vote on Senator Inhofe’s (R-OK) CRA vote to end the EPA’s mercury and air toxic’s rule. You can watch the video here. Here is a snippet of the conversation:

Monica Trauzzi: Myron, the Senate is expected to take up a measure this month that would change the future of EPA’s mercury and air toxics rule. There are two proposals that are actually being discussed on the Hill right now and the first is by Senator Inhofe and that would scrap the rule entirely. The second is by Senators Alexander and Pryor, and that would give utilities a little extra time to comply with the rule. What’s your take on the proposals and the overall impact on industry?

Myron Ebell: Well, first, the House has already passed legislation with a quite significant majority to block the utility MACT rule. Senator Inhofe’s resolution is brought under the Congressional Review Act and, therefore, it only requires a majority of those voting and it cannot be blocked by the Majority Leader or require a 60 vote, procedural vote. So, his is actually doable in the Senate. The Alexander Pryor legislation, I think Senator Alexander, who we might think of as the next Dick Lugar, is trying to provide cover for Democrats in tough election races to say that they’re voting for something that has absolutely no chance of passage, because their bill would take 60 votes, whereas Senator Inhofe’s much better resolution, which would block the rule entirely, only takes 50. The Alexander-Pryor legislation would only delay the implementation by a couple of years. So, instead of giving utilities four years, they would have six years in order to shut down their coal-fired power plants essentially.

Monica Trauzzi: But isn’t that a good thing? I mean couldn’t that help industry if they had a little extra time to comply and apply some of these technologies?

Myron Ebell: Sure, it could, but the fact is that there is no technology that will help these coal-fired power plants comply. So, we’re just essentially extending the killing off of coal-fired power plants. This bill has no chance of passage. That’s the key thing. It’s only being introduced to try to peel votes off of the Inhofe resolution.

Monica Trauzzi: So, you’re talking about the Alexander-Pryor bill?

Myron Ebell: Yes, it has, it would require 60 votes and there aren’t, if there aren’t 50 votes for the Inhofe resolution, there certainly aren’t going to be 60 for the Alexander bill.

Watch the rest here, or read the entire transcript here.

EPA’s ‘Carbon Pollution Standard’: Bait-and-Fuel-Switch

by Marlo Lewis on April 13, 2012

in Blog, Features

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Bait-and-switch is one of the oldest tricks of deceptive advertising. The used-car dealer “baits” you onto the lot with an ad promising low interest payments on the car of your dreams. When you get there, the dealer regretfully informs you the car has already been sold. But, no, you haven’t wasted your time, because he’s got this other great car – the “switch” — which has so many superior features and it will only cost you a little more per month.

An even less ethical variant of this tactic is employed in politics. Party A in a negotiation gives an assurance or promise to obtain Party B’s support for a law or regulation. Party A then reneges on the deal once the policy is on the books. EPA’s recently proposed “Carbon Pollution Standard” Rule is a posterchild for this tactic. [click to continue…]

EPA’s “Carbon Pollution” Standard for Power Plants: Four Ways Weird

by Marlo Lewis on March 28, 2012

in Blog, Features

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Yesterday, EPA proposed its first-ever “carbon pollution standard rule” for power plants. The rule would establish a new source performance standard (NSPS) for carbon dioxide (CO2) emissions from fossil-fuel electric generating units (EGUs). The proposed standard is an emission rate of 1,000 lbs CO2 per megawatt hour. About 95% of all natural gas combined cycle (NGCC) power plants already meet the standard (p. 115). No existing coal power plants do. Even today’s most efficient coal plants emit, on average, 1,800 lbs CO2/MWh (p. 134). EPA is effectively banning investment in new coal electric generation.

Like the rest of EPA’s greenhouse agenda, the proposed rule is an affront to the Constitution’s separation of powers. Congress never voted to prohibit the construction of new coal power plants. Indeed, Congress declined to pass less restrictive limits on coal electric generation when Senate leaders pulled the plug on cap-and-trade. Congress should reassert its constitutional authority, overturn the rule, and rein in this rogue agency. [click to continue…]

New Greenhouse Regs for Power Plants: Will EPA Go to Extremes?

by Marlo Lewis on January 13, 2012

in Features

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Greenwire (subscription required) reports that EPA has sent its proposed regulation establishing greenhouse gas (GHG) New Source Performance Standards (NSPS) for new and modified power plants to the Office of Management and Budget (OMB) for review.

The stringency of the regulation is unknown to outsiders at this time. Environmental lobbyists hope EPA will set the bar so high that only natural gas power plants, or coal-fired plants equipped with carbon capture and storage (CCS) technology, can comply. Industry representatives want EPA to propose separate standards for coal- and gas-fired electric generating units reflecting the different carbon intensities of coal and natural gas.

No previous NSPS has ever required new power plants to use natural gas rather than coal, and none has ever required modified plants to switch from coal to natural gas. Industry representatives contend that Congress never intended the NSPS program to block construction of coal power plants or mandate fuel switching. They’re right. [click to continue…]

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