Barack Obama swept into the Presidency promising a new political order, one characterized by “transparency” and “openness.” Three years later, the President’s lofty campaign promises are belied by the Environmental Protection Agency’s record of suppression.

Federal agencies cannot issue regulations willy-nilly; rather, they are bound to rules stipulating administrative procedure, in order to ensure the voice of affected parties is heard. Obama’s EPA, however, evinces a troubling tendency to circumvent these procedural rules. Regulated entities are being subjected to controversial, onerous regimes, before they even have the opportunity to read the rules, much less voice an objection. The wayward Agency is exercising an unanswerable power, straight out of a Kafka novella.

Consider, for example, EPA’s Cross-State Air Pollution Rule (CSAPR) as it pertains to Texas.  In the August 2010 proposed CSAPR, the Lone Star State was found to be in compliance with the regulation’s particulate matter emissions limits. Without notice, in the July 2011 final CSAPR, EPA imposed on Texas the harshest particulate matter emissions limits of any State. The technology required by EPA’s final CSAPR requires three years to install, but EPA gave the State only 6 months to do so. Recently, the non-partisan operator of Texas’s power grid warned that the CSAPR could lead to blackouts.

Texas was left out of EPA’s deliberations for the CSAPR, but the State will have a voice before the judicial system. In late December, a federal district court in Washington, D.C. stayed implementation of the CSAPR, which was supposed to take effect on January 1, until the court decides on the merits of Texas’s allegations that EPA violated federal laws regarding proper administrative procedure.

The previous example is as blunt a violation of due process as one could imagine. Elsewhere, like in Appalachia, EPA has proven subtler. Mountaintop mining is sanctioned by the 1977 Surface Mining Control and Reclamation Act, and it essential for the competitiveness of Appalachia’s coal industry. Yet it is loathed by environmentalists, which is why EPA has had this industry in its cross-hairs since President Obama took office.

To that end, EPA alleges that West Virginia and Kentucky’s existing water quality standards are unacceptable because they insufficiently protect an insect (the mayfly) from surface coal mining operations. However, EPA already has approved these states’ Clean Water Act permitting regimes, and this complicates matters for the Agency. For environmental federalism conflicts such as this, the Clean Water Act stipulates a resolution process, one that allows states significant participation. EPA, however, didn’t want to delay its crackdown on mountaintop mining removal. Therefore, in April 2010, EPA issued new water quality standards that were officially “non-binding,” but which EPA nonetheless informed States to follow when it issues Clean Water Act permits. And if they do not, EPA has demonstrated that it will veto permits thus granted. The result is that West Virginia and Kentucky are beholden to a regulatory regime characterized by what Rep. Nick Rahall (D-West Virginia) describes as “do or dare permits”: Appalachian States must follow EPA’s “non-binding” guidance, or risk EPA’s veto.

While West Virginia and Kentucky have been shut out of EPA’s deliberations on new water quality standards, they will have their day in court. These States sued EPA, and this spring a federal district court in Washington, D.C. will decide on the merits of their allegations that EPA violated administrative procedure laws in its rush to halt mountaintop mining removal.

EPA is being similarly sneaky in its dealings with New Mexico on a visibility protection policy pursuant to the Clean Air Act. Instead of relying on “non-binding” guidance documents in order to suppress input, EPA is claiming that it has no choice but to ignore New Mexico, due to deadlines established by environmentalist special interest lawyers.

Here’s the background: Under the Regional Haze provision of the Clean Air Act, States are required to improve the view at federal National Parks and Wilderness Areas. On June 2, the New Mexico Environmental Improvement Board unanimously approved a Regional Haze plan that would meet the federal law and EPA’s own rules, at a cost of $34 million.

EPA, however, refused to even consider New Mexico’s visibility strategy. On August 5, the Agency imposed a Regional Haze plan that would cost New Mexico ratepayers $370 million–a nearly tenfold increase over those approved by New Mexico officials. EPA claimed that it did not have the time to consider the state’s plan, because it had to act before an August 22 deadline established by a consent decree with WildEarth Guardians, and environmental litigation organization. At best, EPA’s claim that it had no discretion is malarkey—it has plenty of legal latitude, and EPA’s claim to the contrary is absurd. At worst, this is an incidence of wink*wink* consent decrees, whereby EPA and environmentalist litigation outfits enact policy in the court-house, instead of having to deal with the rigors of proper administrative procedure.

In either case, the result was the same: EPA refused to consider New Mexico’s plan. The state may have been shut out by EPA, but it will be heard by a group of judges. New Mexico has a pending case against EPA in the 10^th federal Circuit Court of Appeals in Denver, Colorado.

For rule-of-law proponents like me, the silver lining is EPA likely will get spanked in the courts. Even so, the country loses, because the President’s campaign talk about transparency and openness has been exposed as mumbo-jumbo.

In a recent blog, I explained how the Environmental Protection Agency is hybridizing disparate provisions of the Clean Air Act in order to engineer greater regulatory authority for itself. EPA is using these “Franken-regs” to trump the states’ rightful authority on visibility improvement policy and impose billions of dollars of emissions controls for benefits that are literally invisible.

Yesterday, for example, EPA relied on this hybrid authority to impose a federal regulatory plan on Oklahoma over the Sooner State’s objection. (A copy of the federal register notice is available here). In February, Oklahoma submitted a visibility improvement plan that would require fuel switching from coal to natural gas at six power plants by 2022, but EPA rejected this approach in March. In its stead, EPA proposed a federal plan that would require almost $2 billion in emissions controls, in addition to fuel switching. EPA’s proposed plan was finalized yesterday.

Although the Clean Air Act clearly gives states primacy over EPA in decision-making for visibility improvement, Oklahoma is one of three states subject to a federal plan. In August, EPA imposed a plan on New Mexico that costs $740 million more than the state’s plan. In September, EPA proposed a federal plan for North Dakota. All three states are challenging EPA in federal court.

On October 17, EPA proposed to disapprove Arkansas’s visibility improvement plan, using the same dubious legal logic that the Agency employed to run roughshod over New Mexico, North Dakota, and Oklahoma. Earlier this week, I submitted comments to the EPA on its proposal. They are available here. They detail the regulatory inconsistencies of EPA’s regulatory regime for visibility improvement. In a nutshell, EPA is evaluating state plans by different criteria, without explaining why it is doing so. Under administrative procedure law, EPA must respond to each unique comment. I look forward to reading the tortuous reasoning the Agency will use to justify its actions.

This blog has kept a close eye on the Environmental Protection Agency’s aggressive expansion of its own authority (see here and here). The latest such power grab is taking place in the western United States, where the EPA is hybridizing disparate provisions of the Clean Air Act in order to engineer greater regulatory authority for itself. These Franken-regs are being used to trump the states’ rightful authority on visibility-improvement policy and impose billions of dollars of emissions controls for benefits that are literally invisible.

In 1977 and 1990, Congress passed amendments to the Clean Air Act providing that states work together to improve visibility at federal National Parks and Wilderness Areas. Together, these amendments are known as the Regional Haze provision. Notably, this provision accords states a uniquely high degree of control relative to the EPA. According to the EPA’s 2005 Regional Haze implementation guidelines, “[T]he [Clean Air] Act and legislative history indicate that Congress evinced a special concern with insuring that States would be the decision-makers” on visibility-improvement policy making. The courts, too, have interpreted the Clean Air Act such that states have primacy on Regional Haze decision making. In the seminal case American Corn Growers v. EPA (2001), which set boundaries between the states and the EPA on Regional Haze policy, the D.C. Circuit Court remanded the EPA’s 1999 Regional Haze implementation guidelines for encroaching on states’ authority.

The important take-aways about Regional Haze are that (1) it’s an aesthetic regulation, and not a public health regulation and (2) it accords states a unique degree of authority. Despite the Congress’s “special concern” that states take the lead on Regional Haze, the EPA in 2011 has proposed to impose a federal plan in North Dakota and Oklahoma, and it has imposed a plan in New Mexico.

• Oklahoma proposed to comply with the Regional Haze rule by fuel switching to natural gas at 6 coal-fired power plants by 2026. In March, the EPA rejected the state’s plan, and issued a federal plan requiring that Oklahoma install sulfur dioxide “scrubbers” that cost $1.8 billion. State officials and the affected utilities claim that the EPA’s preferred controls would increase electricity bills 15% to 20%.

• New Mexico proposed emissions controls that met EPA’s own recommended guidelines for visibility improvement, but the EPA nonetheless refused to even consider the state’s Regional Haze plan.  In August, the Agency imposed a federal plan that cost $700 million more.

• In September, the EPA rejected North Dakota’s Regional Haze submission, and proposed in its stead a plan that is $700 million more expensive. According to peer-reviewed research, the Agency’s preferred plan would affect visibility at the Theodore Roosevelt National Park by such an insignificant amount that only 40 percent of people would be able to perceive the “improvement.”

In light of the fact that the Congress structured the Regional Haze program such that state decision-making is paramount, it’s uncertain whether the EPA has the authority to run roughshod over these states. Indeed, Oklahoma and New Mexico already have filed suit, alleging that the EPA usurped their rightful authority. North Dakota undoubtedly will follow suit when the EPA finalizes the state’s federal implementation plan, as soon as this month. As such, the EPA is going to have to answer for its actions in court.

Presumably in order to preemptively bolster its case against these lawsuits, the EPA attempted to beef up its regulatory power, by claiming that it has an additional, independent source of authority to improve visibility under the Clean Air Act. The first, Regional Haze, is described above. The second is as unprecedented as it is illogical: The Agency claims that the revision of two health-based air quality standards fourteen years ago somehow gives it the authority to impose a federal implementation program for visibility improvement in New Mexico, North Dakota, and Oklahoma.

Here’s what the EPA is arguing. Under the “Good Neighbor” provision of the Clean Air Act, which was added by the Congress in 1990, states must ensure that emissions from upwind states do not impact compliance with federal air quality regulations in downwind states. In 1997, the EPA tightened national ambient air standards for two criteria pollutants–particulate matter and ozone. Accordingly, the Good Neighbor provision requires that states must ensure that their emissions of these two pollutants do not interfere with compliance in downwind states of the 1997 revisions.

Simply put, the EPA updated its emissions limits for two pollutants, so the Good Neighbor provision logically pertains to those two pollutants (particulate matter and ozone). Now, however, the EPA claims that the 1997 revisions to health based standards for particulate matter and ozone requires the agency to ensure that emissions of other regulated pollutants from upwind states do not interfere with downwind states, in addition to particulate matter and ozone. Specifically, the Agency alleges that the Regional Haze plans submitted by New Mexico, North Dakota, and Oklahoma are insufficient to ensure that these states do not adversely affect visibility protection in downwind states.

This is a dubious legal reasoning, because the Regional Haze provision explicitly mandates that states control emissions of haze-causing pollutants that significantly diminish visibility in all federal National Parks and Wilderness Areas, not just ones within their own borders. That is, the Regional Haze provision effectively requires states to meet the Good Neighbor provision. It makes no sense for Congress to create a program requiring states to work together to reduce visibility impairment in the Regional Haze provision, and then to also create a vague, amorphous, ill-defined separate source of authority with one phrase in the Good Neighbor provision, an altogether different section of the law.

More importantly, the EPA has yet to fully approve a single Regional Haze plan. How can the EPA know whether one state is adversely affecting other states’ visibility improvement programs that do not yet exist? Indeed, this is the exact reasoning used by the EPA in 2006, when it published implementation rules for the Good Neighbor provision. In the rules, the EPA said that, “is not possible at this time to assess whether there is any interference with measures in…another State designed to ‘protect visibility’…until regional haze [plans] are submitted and approved.”

New Mexico and Oklahoma already are challenging the EPA’s Good Neighbor Provision power grab in court; North Dakota soon will follow suit. I suspect that they will win. However, if they don’t, and the courts uphold the EPA’s expansive interpretation of the Good Neighbor provision, then the balance of power in America’s system of environmental federalism will have been tipped significantly away from the states and to the federal government. For starters, the EPA would gain a powerful new authority to trump the states’ rightful authority on visibility improvement. But it would affect other air quality regimes, too. On September 15, the EPA used its new interpretation of the Good Neighbor provision to partly justify its plan to impose greenhouse gas regulations for large stationary sources in Texas, over the objection of state officials.

I travelled to Denver twice in the last 7 days to testify before the Senate State Affairs Committee on HB 1291, Colorado’s State Implementation Plan to meet the Regional Haze provision of the federal Clean Air Act.

I told the Committee that HB 1291 is illegal. And I rebutted the distortions peddled by its proponents, who also testified. Illegality and disingenuousness are huge accusations, and I made them twice, in testimonies a week apart, so the bill’s proponents had time to conjure a response. But no one disputed my assertions. Because they were true.

Nonetheless, the Plan passed out of Committee, due to the fact that it enjoys the support of two of Colorado’s richest special interests, for which billions of dollars were at stake. Today, HB 1291 was enacted by the full Senate, by a 25-10 vote. Two weeks ago, by a 58-7 vote, it was passed by the House of Representatives. If there’s one thing a bipartisan, bicameral majority can agree on these days, it’s the importance of currying favor with the deepest pockets.

This is a long blog about the who, what, why, and when of Colorado’s Regional Haze State Implementation Plan, the most outrageous rip-off you’ve never heard of.

The Back Story

Colorado’s Regional Haze State Implementation Plan originated not in the Centennial  State, but in Oklahoma.  It owes its form to Aubrey McClendon, CEO of Chesapeake Energy, a natural gas company headquartered in Oklahoma City.

McClendon is very open about his pursuit of government policies that make people use more of the product he produces. Among the many pro-gas, anti-market policies he supports, are: forcing cars to use gas; blocking the construction of coal plants; and advocating for climate change policies to spur fuel switching from coal to gas for electricity generation.

It was the latter pitch he made to former Colorado Governor Bill Ritter. Ritter aggressively advertised himself as an environmentalist energy policymaker, so he was the perfect mark for McClendon. In July 2009, gas industry representatives, led by Chesapeake Energy, gave a presentation to Governor Ritter explaining how fuel switching from coal to natural gas was the only way that the Governor could reach his greenhouse gas emissions reduction goals established by his “Colorado Climate Action Plan.”

When the gas industry put together its power point presentation for Governor Ritter, a cap-and-trade scheme was making its way through the House of Representatives, and “doing something” about climate change seemed to be politically viable. It wasn’t. The House enacted cap-and-trade legislation in June, just before the July recess. For the rest of the summer, the big political story was the overwhelming public anger directed at sitting Members of Congress during so-called “town hall” meetings. And, in many jurisdictions, the anger was driven in large part by the House’s passage of an energy rationing scheme.

Clearly, “doing something” about climate change was politically dangerous. The upshot is that the Ritter and McClendon needed a better reason for fuel switching if they were going to sell it successfully to Colorado voters.

So they tacked. Instead of climate change, they changed the impetus for fuel switching from climate change to Big Brother.  They claimed that President Obama was waging a war on coal, and that a raft of federal air quality regulations was in the pipeline, and, finally, that the cheapest fashion to comply with this coal crackdown was to switch fuels from coal to natural gas.

To be sure, Obama’s EPA is waging a war on coal (I’ve written about this subject extensively; see here, here, here, and here). However, it is also true that Colorado’s coal powered plants, for the most part, already are equipped with top-of-the-line pollution controls. As such, Colorado’s coal power fleet was well positioned to endure the EPA’s regulatory assault, and remain a source of affordable electricity. That is, fuel switching was an unnecessary and expensive policy to achieve compliance with pending federal air quality regulations.

But the facts didn’t matter, because Ritter wanted his climate kudos and the gas guys wanted fuel switching. To get Xcel Energy (the largest utility in the state) on board, they offered super-generous cost recovery treatment in exchange for participation, including a guaranteed 10.5 percent return on investment and, more importantly, upfront payment (normally, utilities have to wait until an asset is “used and useful” before they can recover costs). In light of the huge capital costs entailed in fuel switching (Xcel gets to recover the cost of the remaining life of the coal plant, the cost of dismantling the plant, and the cost of building new gas plants), Xcel stood to reap at least $130 million in fuel switching profits through 2020.

During the winter of 2009/2010, the “winners” of fuel switching (Xcel, the gas industry, Governor Bill Ritter, and environmentalist non-profits) hammered out the text of a fuel switching bill. The “losers” (the coal industry, ratepayers, and independent power producers) were left out of the negotiations. Indeed, they weren’t even aware of the negotiations until the legislation, ironically titled the “Clean Air Clean Jobs Act,” was finished. The law was enacted in April, 2010.

Perhaps you are wondering: How does this relate to Regional Haze? Well, as I noted above, fuel switching in Colorado was justified as an affordable response to Obama’s war on coal. To be specific, the Clean Air Clean Jobs Act authorized favorable rate treatment for Xcel if the utility met “reasonably foreseeable” federal air quality regulations with a “cost-effective” plan that could include fuel switching. In practice, these “reasonably foreseeable” regulations were defined as Regional Haze and a revised Ozone National Ambient Air Quality Standards, although the former took precedence over the latter. According to Karen Hyde, Xcel Energy’s Vice President for Regulatory Affairs, Regional Haze “precipitated” the Clean Air Clean Jobs Act. As a result, the fuel switching implementation plan was a component of the Regional Haze State Implementation Plan.

[For a primer on the Regional Haze provision of the Clean Air Act, click here.]

Xcel Overreaches

As is explained in this policy paper, the impetus for fuel switching—a federal coal crackdown—was grossly exaggerated. Proponents claimed that there were 11 regulations in the pipeline; in fact, there were two (as noted above, these two regulations were Regional Haze and Ozone). And they could have been met with emissions controls far more cost-effective than tearing down coal plants and building new gas plants. But Colorado lawmakers bought the ruse, or at least they pretended to, and enacted the Clean Air Clean Jobs Act.

It was all well and legal…until the rent seekers made a big mistake. Xcel got greedy. As I noted above, Xcel’s “carrot” to fuel switch was generous cost-recovery treatment, so the utility had a big incentive to cram as much into the fuel switching plan as they could. In this avaricious spirit, Xcel sought to incorporate into the fuel switching plan the cost of controls at plants that were not subject to “reasonably foreseeable” federal air quality requirements, and, therefore, not subject to the Clean Air Clean Jobs Act.

Like other power plants included in the Clean Air Clean Jobs Act plan, the Hayden 1 and 2 coal power plants in Routt County near Steamboat Springs in northern Colorado are subject to Regional Haze regulations. Unlike the other power plants incorporated into the fuel switching plan, Hayden 1 and 2 are not subject to pending Ozone regulations for existing coal fired power plants, because they are not located in Colorado’s ozone non-attainment area. As such, they were not subject to the “reasonably foreseeable” federal air quality regulations stipulated in the Clean Air Clean Jobs Act, and, therefore, should not have been included in the fuel switching plan.

To make matters worse, Xcel could have achieved compliance with Regional Haze for Hayden 1 and 2 with emissions controls that cost roughly $20 million, but it instead pressed for controls that cost $140 million. Its reasoning was simple: The more costs it could cram into the fuel switching plan, the more profit it made. According to the Public Utilities Commission staff, “It…appears that the only reason [Xcel] has included these units [Hayden 1 and 2] in its plan is to be able to receive the special rate recovery treatment provided by the [Clean Air Clean Jobs] Act.”

Xcel’s proposed emissions controls for Hayden 1 and 2 far exceeded what the federal government requires to comply with Regional Haze. That’s a problem, because it is illegal in Colorado for a state implementation plan pursuant to the Clean Air Act (like the Regional Haze State Implementation Plan) to include emissions controls that are more stringent than what the federal government requires. To paraphrase the General Assembly’s Legislative Council, the federal “floor” for emissions controls is the state “ceiling.” As I explain in detail here, Xcel’s proposed Regional Haze controls for Hayden 1 and 2 clearly violate this statutory prohibition, and are therefore illegal.

Despite this conspicuous contradiction with Colorado statute, on November 18, 2010, the Colorado Air Quality Control Commission approved Xcel’s ultra-expensive emissions controls at Hayden 1 and 2 as part of the Regional Haze State Implementation Plan. Notably (or disconcertingly), the legality of the controls was never addressed during the Air Quality Control Commission’s deliberations.

On December 9, 2010, the Public Utilities Commission approved these Hayden controls as part of the Clean Air Clean Jobs Act implementation plan. It then sent this plan to the Air Quality Control Commission for incorporation into the final Regional Haze State Implementation Plan. On January 11, 2011, the Air Quality Control Commission approved the Regional Haze State Implementation Plan, and submitted it to the General Assembly for final approval.

Battle in the General Assembly

The Regional Haze State Implementation Plan was introduced as HB 1291, and it quickly passed the House of Representatives by a 58-7 vote. The vote was overwhelming because the legislation was the number one priority of two of Colorado’s most influential special interests. In effect, HB 1291 was the final step of the Clean Air Clean Jobs Act, so a lot was on the line, and its proponents pressed as hard as they could. The “magnificent” seven lawmakers who voted against HB 1291 deserve a lot of credit for political courage.

The wonderfully principled State Senator Kevin Lundberg also deserves much credit for standing up to Colorado’s biggest special interests. He was outraged by the evident illegality and cost-ineffectiveness of the Regional Haze State Implementation Plan, and he sponsored legislation that would strip it of the Hayden 1 and 2 emissions controls. That legislation was S 237.

And this point, things got a little scandalous. On April 11, the Senate referred HB 1291 and S 237 to the State Affairs Committee, and a hearing on both bills was scheduled for April 25. Despite the fact that HB 1291 enjoyed the support of Colorado’s most influential special interests (gas and Excel) and was therefore almost assuredly going to pass by a wide margin, its proponents decided to leave nothing to chance. On April 12, the State, Veterans, and Military Affairs Committee moved the hearing on HB 1291 up to April 19, but it left consideration of S 237 on April 25. But if the Senate approves the Regional Haze State Implementation Plan by enacting HB 1291 on April 19, then there is no reason to consider changes to that Plan (i.e., S 237) a week later. Senate leadership was trying to silence the opposition!

Senator Lundberg fought these shenanigans, and managed to delay a final vote on HB 1291 until S 237 could be considered. At the Senator’s request, I testified at both the April 19 hearing (on HB 1291) and the April 25 hearing (on S 237), along with Carol Kirkstadt and the Independence Institute’s Amy Oliver Cooke.

Video of my HB 1291 testimony is available here; the S 237 testimony is available here (I start at the 6:00 minute mark, and I have rebuttal testimony at 34:50). They were similar testionies. In each case, I dropped a big matzo ball: I told the Senate State Affairs Committee that the law they were considering is an illegal rip off.

To be sure, that’s a big accusation, one that I don’t make lightly. An Attorney General representative testified at both hearings. So did an Air Quality Control Commission rep. So did Xcel’s VP for Regulatory Affairs and its top environmental officer. So did a Chesapeake Energy attorney representing the gas industry. Surely, if my reasoning was flawed, then they would have corrected it, right? No one rebutted my arguments.

Instead, I rebutted theirs.

All of the fuel switching proponents claimed that the EPA would usurp Colorado’s air quality planning if HB 1291 wasn’t enacted untouched. As I told the Committee, this is the same bogus Big Brother reasoning that galvanized the Clean Air Clean Jobs Act. It was wrong then, and it’s wrong now. If the Hayden controls were stripped from the State Implementation Plan, then Colorado would submit a “conditional” plan (i.e., one without the Hayden 1 and 2 controls), while the Hayden 1 and 2 Regional Haze determinations would be remanded to the Air Quality Control Commission. Thus would begin a process of negotiation. In all likelihood, the Environmental Protection Agency would accept the “conditional” Regional Haze State Implementation Plan (after all, it calls for total emissions reductions far in excess of what is required, due to the incorporation of the fuel switching plan), and then wait to consider the Hayden 1 and 2 emissions controls. The idea that the EPA would swoop in overnight and start kicking ass and taking names simply does not comport with the reality of environmental federalism in the US. As I noted in the hearings, it is akin to saying that the bank will foreclose on your home because you missed a credit card payment.

The gas industry counsel and the Attorney General representative both intimated that Hayden 1 and 2 were subject to the Clean Air Clean Jobs Act, and, therefore, exempt from Colorado’s statutory prohibition on emissions controls pursuant to the Clean Air Act that exceed federal requirements. This was a misrepresentation, and I told that to the Committee. As I explain above, the Hayden 1 and 2 power plants are not in Colorado’s ozone non-attainment zone, so they are not subject to the more stringent ozone regulations under consideration by the Obama administration. As such, they are not subject to the Clean Air Clean Jobs Act. Undoubtedly, the lawyers were aware of this fact, which means they were being disingenuous.

Xcel’s top environmental officer actually told the Committee that the EPA, in disapproving Colorado’s 2008 Regional Haze State Implementation Plan, had “closed the door” on anything but the most expensive emissions controls at Hayden 1 and 2, the ones Xcel had chosen. This was a lie, as I told the Senate in rebuttal testimony. I backed this assertion by providing to the Committee the EPA’s disapproval letter, which I had brought with me. In fact, the rejection was due primarily to a procedural matter (the Air Quality Control Commission had failed to identify all technologically feasible emissions controls, as is required by the Regional Haze provision of the Clean Air Act), and had nothing to do with the Hayden 1 and 2 controls.

Thus, I presented a case that HB 1291 was almost assuredly illegal, and I also exposed the pack of distortions that served as the legislation’s justification. Of course, the ugly truth stood no chance vis a vis the promise of campaign lucre from rent seekers. By a 3 to 2 vote, the State Affairs Committee passed HB 1291 and rejected S 237.

So what is next? In the immediate future, HB 1291 will be sent to the Governor for his signature. There’s no reason to expect that Governor Hickenlooper won’t approve the legislation. But it’s not necessarily over after that. HB 1291 almost certainly violates existing Colorado statute, but this matter was never vetted by regulatory agencies or the General Assembly. As such, the law is ripe for legal challenge from Xcel ratepayers.

The Environmental Protection Agency is using an obscure aesthetic regulation in the Clean Air Act to run roughshod over western states.

East of the Mississippi, President Barack Obama’s regulatory crackdown on coal threatens to shutter up to 40 gigawatts of electricity generation. Yet due to a variety of factors (the low sulfur content of western coal, low population density, and newer plant stock), coal-fired plants west of the Mississippi are in a much better position to withstand the regulatory onslaught .

In order to target western coal, the Environmental Protection Agency is leveraging a long ignored provision of the Clean Air Act designed to improve visibility, known as the Regional Haze rule. Notably, this is an aesthetic regulation, not a health-based regulation. In practice, eastern states are exempt from Regional Haze requirements, because the EPA allows states to meet this aesthetic regulation in the course of complying with health-based regulations.

Here’s a bare bones timeline of the Regional Haze regulation:

• In 1977, the Congress amended the Clean Air Act to include, among other things, a Regional Haze provision to improve visibility at national parks and wildlife areas.
• At the time, however, the science of visibility was highly uncertain. In 1980, EPA deferred promulgating substantive regional haze regulations until the science improved.
• In 1990, the Congress again amended the Clean Air Act, and, in so doing, appropriated funds for a scientific study of visibility that could be used to create Regional Haze regulations.
• In 1999, the EPA promulgated a substantive regional haze regulation. It set forth a national goal of achieving “natural” air quality conditions by 2064.
• In July 2005, the EPA issued a guidance document to assist states in implementing regional haze controls.
• December 17, 2007, was the deadline for states to submit State Implementation Plans to achieve BART. Only a couple states bothered to submit a plan.
• On January 9, 2009, the EPA made a finding of failure to submit all or a portion of their regional haze State Implementation Plans (SIPs) for 37 states. This notice started a two-year countdown to a new deadline for regional haze state implementation plan submissions.
• January 9, 2011 was the second deadline.

And here’s a barebones breakdown of what regional haze regulation entails

• Unique among Clean Air Act provisions, states are accorded primary authority to achieve regional haze rules.
• Regional haze applies to stationary sources, although there is no prohibition of regulating mobile sources.
• The regulation of stationary sources is performed through the “BART” process (Best Available Retrofit Technology).
• A stationary source is subject to regional haze emissions controls if it was built between 1962 and 1977, and if it worsens visibility at a national park by at least .5 deciviews. A deciview is loosely defined as a 10% attenuation of visibility, and peer reviewed scientific research suggests that there is a 17%-35% chance that a human would notice a 1 deciview improvement.
• For BART eligible sources, the state has great latitude in choosing a pollution control, especially for power plants that are less than 750 megawatts.

Despite the fact that states have primacy over this aesthetic regulation, the EPA is aggressively imposing an anti-coal agenda. In so doing, the EPA has engendered a backlash in many western states, but the battle lines are starkest in Oklahoma, where public officials are waging a public battle against the EPA’s Regional Haze machinations.

In late 2010, the Oklahoma Corporation Commission approved a Regional Haze implementation plan that would switch fuels from coal to natural gas in six power plants. Fuel switching is a drastic response, especially for an aesthetic regulation, but it wasn’t good enough for the EPA, which is demanding that the switch take place 10 years sooner. If not, the EPA is requiring pollution controls that would increase electricity prices in Oklahoma by 10 to 12 percent.

Oklahoma public officials are balking at the EPA’s proposed cost—roughly $2 billion—of complying with an aesthetic regulation. In December, Corporations Commission Chair Dana Murphy issued a public letter accusing the EPA of trying to impose a plan that “needless jeopardizes our economy.”

Neither the EPA nor Oklahoma appears willing to back down, so this dispute likely will end up in court.