House Committee Acts To Stop President’s de facto Drilling Moratorium

The House Natural Resources Committee marked up three bills on Wednesday that would require the Obama Administration to stop its obstructive tactics and start producing more oil and natural gas from federal Outer Continental Shelf areas.  Committee Democrats dragged out the mark-up for nine hours by offering and insisting on recorded votes on a series of amendments to weaken or gut the three bills—H. R. 1229, 1230, and 1231.  None of their amendments was adopted.

It is expected that the House will pass all three bills in May.  Committee Chairman Doc Hastings (R-Wash.) plans to introduce additional bills in the next few months to increase domestic oil and gas production on federal lands in Alaska and the Rocky Mountains as part of House Republicans’ American Energy Initiative.

House Leadership Tacitly Endorses Excellent EPA Strategy

Environment and Energy News reported this week that House Speaker John Boehner (R-Ohio) did not rule out attaching something like the Energy Tax Prevention Act (H. R. 910) to the bill to raise the federal debt ceiling.  H. R. 910 would block the Environmental Protection Agency from using the Clean Air Act to regulate greenhouse gas emissions.  It passed the House last week on a 255 to 172 vote, but failed as an amendment in the Senate on a 50 to 50 vote.

Rep. Fred Upton (R-Mich.), Chairman of the Energy and Commerce Committee and main sponsor of H. R. 910, made similar remarks earlier in the week: “No debt limit is going to pass by itself. You’ll have to have some significant pieces with it.”

House Committee Counters Coal Crackdown

The House Energy and Commerce Committee held subcommittee hearings this week on the proposed coal ash rule and on the proposed utility, boiler, and cement Maximum Available Control Technology (or MACT) rules.

Rep. David McKinley (R-WV) has introduced a bill, H. R. 1391, to deny EPA the authority to regulate coal ash as a hazardous waste under the Solid Waste Disposal Act.  Coal ash has many industrial uses, including as a replacement for part of the Portland cement in concrete and in drywall.  Classifying coal ash as a hazardous waste would threaten its commercial use and thereby raise costs of producing coal-fired power.

It has been reported that bills will be introduced next month to block or delay EPA’s proposed three Clean Air Act MACT rules.  Each rule would have devastating economic effects.

For example, Rep. Greg Walden (R-Oreg.) at the hearing raised the example in his district (and in my home county of Baker County, Oregon) of a cement plant that has spent $20 million to install technology to reduce mercury emissions by 95%.  Under the proposed cement MACT rule, the plant would be required to reduce mercury emissions by 98.5%.

Achieving the additional 3.5% reduction would be too expensive and therefore the plant will probably be shut down if the rule goes into effect.  With the closure of the National Forests to commercial timber production, the Ash Grove cement plant is the largest employer (after the taxpayer-funded Forest Service, Bureau of Land Management, and local school district) in the county.

Today, the Environmental Protection Agency proposed a major rule to regulate power plants under the Hazardous Air Pollutants (HAP) Section 112 of the Clean Air Act.

This post is a primer on this consequential and controversial decision.

Section 112 of the Clean Air Act

• In 1970, the Congress added Section 112 to the Clean Air Act, requiring that the EPA list and regulate Hazardous Air Pollutants (HAPs) that could “cause, or contribute to, an increase in mortality or an increase in serious irreversible or incapacitating reversible illness.” The Congress ordered the EPA to establish standards for HAPs that provided “an ample margin of safety to protect public health.”
• Due to difficulties interpreting what should constitute “an ample margin of safety,” the EPA largely ignored Section 112 for two decades.
• In 1990, the Congress, frustrated with the slow pace of HAP regulation, amended the Clean Air Act to remove much of EPA’s discretion over the implementation of Section 112. Lawmakers listed 189 pollutants for regulation. They also legislated HAP pollution controls, known as Maximum Achievable Control Technology (MACT) standards. The Clean Air Act amendments set a “MACT floor” (i.e., a minimum HAP pollution control) at “the average emission limitation achieved by the best performing 12 percent of the existing sources.”
• Section 112 MACT standards apply to both new and existing stationary sources.
• Notably, the Congress required the EPA to proceed with caution before it regulated Electricity Generating Units (“EGUs,” or power plants). The 1990 Clean Air Amendments mandated a study on the public health threats posed by EGU HAP emissions, and the EPA Administrator was authorized to proceed with the regulation of HAPs from EGUs only after evaluating the results of this study, and concluding that “such regulation is appropriate and necessary.”

Clinton’s Lame Duck Machinations

• In 1998, the EPA completed the study on the public health threats posed by EGU HAP emissions. It found a “plausible link” between EGU mercury emissions and harm to public health.
• On this evidence, the Clinton Administration EPA found it was “appropriate and necessary” to regulate HAPs from EGUs under Section 112 of the Clean Air Act. This decision was made during the ex-President’s lame-duck session.

Courts Kill Bush Administration’s Proposed Regulation

• As I explain above, the Congress narrowly defined MACT pollution controls in the 1990 amendments to the Clean Air Act, so the EPA had little discretion in creating a regulatory regime for HAP emissions from EGUs.
• In an effort to impart more flexibility, and thereby reduce costs, the Bush Administration EPA in 2004 proposed to delist EGUs from Section 112, and instead regulate HAPs from power plants under Section 111, the New Source Performance Standards. In particular, the EPA proposed regulation of HAPs from EGUs under Section 111(d), which (possibly) authorizes a cap-and-trade emissions trading scheme for existing sources.
• In February 2008, a federal appeals court struck down the Bush Administration’s proposed cap-and-trade for HAPs. The Court found that the EPA had failed to take a number of procedural steps before it tried to “de-list” EGUs from regulation under Section 112.

HAP Regulations Comport Well with Obama’s War on Coal

• In the wake of the federal appeals court’s decision to strike down President Bush’s proposed HAP regulation, environmentalist special interests sued the EPA to force it to promulgate a new regulation. In April 2010, a federal court approved a settlement between environmentalist litigants and the EPA, which set a March 16 2011 deadline for the proposal of HAP regulations for EGUs. Today is that deadline.
• Of course, environmentalists didn’t have to twist the President’s arm. Then-Senator Barack Obama campaigned for the White House on a promise to “bankrupt” the coal industry. The EPA’s proposed HAP regulation for EGUs is particularly onerous on fossil fuel generation, so it comports well with the President’s war on coal.
• The EPA concedes that the regulation would cost $10 billion a year by 2015. This is likely a low ball. According to the Electric Reliability Coordinating Council, the price tag is as much as $100 billion a year. There are also reliability concerns. In 2010, the North American Electric Reliability Corporation performed an analysis showing that the proposed HAP rule could lead to the retirement of up to 15 gigawatts of electricity generation.

What’s Next?

• Litigation. The aforementioned 1998 study on the public health effect of HAPs emitted by EGUs addressed only the effects of mercury. Today’s rule, however, covers mercury, arsenic, chromium, nickel and acid gases, despite the fact that EPA has yet to demonstrate an incremental health benefit caused by reductions in non-mercury HAPs from EGUs. It is likely that industry will challenge today’s proposed rule for including these non-mercury HAPs from EGUs without also providing evidence that their regulation would improve public health.

The Environmental Protection Agency sprang two surprises last week. First, EPA asked a federal judge to allow them to delay issuing the boiler MACT (Maximum Available Control Technology) rule until April 2012, which would give EPA time to reconsider and rewrite the proposed regulation.  The rule is designed to cut air pollution from approximately 200,000 industrial boilers, process heaters, solid waste incinerators, etc.  Industrial users of boilers have made a good case that the proposed standards were going to be impossible to meet in many cases.

Next, EPA announced that the ozone or smog rule would be delayed until July 2011, while it reconsidered the scientific and health studies on smog’s effects.  The announcement suggests that EPA has bowed to intense opposition from Congress, state and local governments, and industry and is now going to re-write the smog rule so that it is less economically catastrophic.  EPA nonetheless is going ahead with regulating greenhouse gas emissions from major stationary sources on January 1, 2011.  There is little reason to think that those regulations are any less damaging than the smog rule.

The EPA also announced last week that it was holding its second National Bed Bug Summit meeting in early February. You may laugh, but at least with bed bugs EPA is addressing a real environmental health problem.