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The most absurd aspect of the Environmental Protection Agency’s War on Coal is their repeated denials that it’s happening. No matter how many onerous rules they release, each time they claim that the regulation will not only save the environment, but also create jobs in the industry. For example, EPA’s Regulatory Impacts Assessment (RIA) for their mercury regulation known as the Utility MACT—which was (until possibly this week) the most draconian of the coal regulations—argues that the regulation will create almost 10,000 coal jobs.

Specifically, EPA’s Utility MACT regulation requires plants to install “maximum achievable control technology” (MACT)—otherwise known as scrubbers—to remove mercury and other toxins from exhaust. The rule is one of the most expensive in history: EPA estimates it will cost almost $11 billion annually to implement. Already, these compliance costs have led to the shutdown of dozens of coal-fired power plants. Yet, EPA supporters parrot EPA’s claim that this regulation will create thousands of jobs as if it had scientific authority.

EPA’s science is based on a Resources for the Future (RFF) study (Morgenstern, et al) of environmental expenditures in four industries in the 1980s—pulp and paper, plastics, petroleum, and steel—which found “a net gain of 1.55 jobs per $1 million in additional environmental spending” in those industries. EPA then took this formula and just multiplied times the estimated cost of the Utility MACT—$10.9 billion adjusted for inflation—to get their result. They show their work in this footnote on page 9-8 of the RIA:

Highly scientific! In other words, EPA took someone else’s paper, which studied environmental expenditures over three decades old (1971-1991), and applied them to a totally unrelated sector of the economy, the coal industry, and then utilized the old “plug and chug” method. This work wouldn’t survive peer review in a kindergarten class.

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Last week, property-rights advocates were ecstatic with the Supreme Court’s ruling in Sackett v EPA that citizens subject to EPA Clean Water Act “compliance orders” can have their day in court. Before, EPA had interpreted its power in a Kafkaesque fashion, whereby the Agency could levy fines for alleged Clean Water Act violations without any recourse for the accused. (My colleague Hans Bader wrote an excellent blog on the case here).

Because that high profile case captured all the attention, it was little noticed last Friday when property rights advocates won a similarly consequential victory. That afternoon, United States District Court for the District of Columbia Judge Amy Berman Jackson ruled that EPA overstepped its authority when it vetoed a Clean Water Act permit that had already been issued to the Mingo Logan Coal Company, a subsidiary of Arch Coal, for a mountaintop removal mining project in Logan County, West Virginia. The profound matter at hand was whether EPA could revoke a Clean Water Act permit, after it became the possession of the applicant. Had EPA carried the day, permit (i.e., property) owners nationwide would be subject to the cessation of business, depending on EPA’s whims.

Here’s the background: The Clean Water Act prohibits the discharge of pollution into navigable waters of the United States, unless the polluter has a permit. There are two kinds of permits: (1) Section 402 permits for “point-sources,” which are basically any singular discharge outlet for pollutants (like a pipe); and (2) Section 404 permits for “dredge and fill” activities, like mountaintop removal mining*. The former permits are issued by States after their permitting regimes are approved by EPA. The latter permits are issued by the U.S. Army Corps of Engineers, in accordance with guidance established jointly with EPA. Importantly, the Clean Water Act affords EPA a veto over the U.S. Army Corps of Engineers decision to permit.

The case that was decided last Friday pertained to a Section 404 permit that was issued in late 2009 by the U.S. Army Corps of Engineers to Mingo Logan Coal Company for the Spruce No 1 Mine in Logan County, West Virginia. EPA retroactively vetoed this permit on January 2011. Mingo Logan Coal Company then sued in the U.S. District Court for the District of Columbia. The coal company argued that the Clean Water Act only authorizes EPA to veto a pending Section 404 permit (i.e., while the Army Corps deliberates). EPA countered that the veto power was everlasting. Judge Jackson agreed with the petitioners. She wrote,

“Based upon a consideration of the provision in question, the language and structure of the entire statutory scheme, and the legislative history, the Court concludes that the statute does not give EPA the power to render a permit invalid once it has been issued by the Corps. EPA’s view of its authority is inconsistent with clear provisions in the statute, which deem compliance with a permit to be compliance with the Act, and with the legislative history of section 404.”

Notably, the Court did not rule on EPA’s scientific rationale for the permit veto. If Judge Jackson had ruled that EPA has the authority to retroactively veto a Section 404 permit, next she would have considered whether the veto itself was reasonable. In a 2011 study, I argued at length that the “science” behind EPA’s veto was unacceptably shoddy. In a nutshell, EPA claims that the Spruce No. 1 Mine would significantly harm wildlife up and down the food chain—including fish, salamanders, and birds–while in fact the Agency only presents evidence of harm to a single order of insects (Ephemeroptera, a.k.a. the mayfly). Moreover, the scientific literature suggests that overall insect biodiversity isn’t adversely impacted by surface coal mining in Appalachia. That is, hardier species readily thrive in the wake of the mayfly’s decline.

Judge Jackson’s ruling will no doubt come as a relief to the people of West Virginia. In May 2010, I attended EPA’s public hearing on its proposed veto at the civic center in downtown Charleston. The floor was packed with hundreds of people. Conservatively, I’d estimate that the crowd was 99 percent outraged by EPA’s “jobs for bugs” permit veto. I wrote about that experience here.

This is the second consecutive victory for the Appalachian coal industry over EPA in the U.S. District Court for the District of Columbia. Last October, Judge Reggie Walton ruled that EPA had overstepped its authority when it implemented an extra-layer of oversight over Clean Water Act permitting deliberations by States and the U.S. Army Corps of Engineers for applications from the coal industry in Appalachia.

*Pursuant to the 1977 Surface Mining and Control Act, mountaintop removal mining practitioners must recreate the approximate original contour of the mining area. To put it another way, they have to replace the mountaintop as best they can. However, it is an engineering impossibility to recreate the mountaintop perfectly. There is always leftover dirt and spoil. This “overburden” is deposited at the base of the mountain, becoming a “valley fill.” Invariably, valley fills bury intermittent streams that form in valleys whenever it rains. As such, a valley fill requires a Section 404 dredge and fill permit (because it “fills” intermittent streams).

After speeches the last three weeks (reported here, here, and here) on why he isn’t to blame for high gasoline prices, I thought President Barack Obama would be moving on to other issues.  But in a sign of how desperate the White House is becoming about the threat gas prices pose to the President’s re-election, the President on Thursday, 15th March, gave yet another speech on the topic.

At Prince George’s Community College in Largo, Maryland, a few miles east of Washington, D. C., Mr. Obama took credit (completely undeservedly) for increasing domestic oil production, but then argued that increasing oil production won’t solve the problem of high gasoline prices.  According to the President, the only lasting solution is to continue pouring taxpayer dollars into subsidizing alternatives to oil.  Once we replace gasoline and diesel with other fuels, then we will have solved the problem of recurring spikes in gasoline prices.

The problem with the President’s argument is that the alternatives are likely to cost more, not less, than the oil they are replacing.  That is certainly the case with ethanol.  And hybrid electric vehicles still take many years of gas savings to pay for their much higher prices.

President Obama lashed out at those who disagree with him: “If some of these folks were around when Columbus set sail, they must have been founding members of the Flat Earth Society.  They would not have believed that the world was round.”

His critics are simply stuck in the past and don’t see the new clean, green energy economy his policies are creating: “The point is, there will always be cynics and naysayers who just want to keep on doing things the same way that we’ve always done them….  But that’s not who we are as Americans.  See, America has always succeeded because we refuse to stand still.  We put faith in the future.  We are inventors.  We are builders.  We are makers of things.  We are Thomas Edison.  We are the Wright Brothers.  We are Bill Gates.  We are Steve Jobs.  That’s who we are.”  That sounds good, but in real life the President’s heroes are not inventors, builders, and makers of things; they are crony capitalists and subsidy suckers like Jeff Immelt, Warren Buffett, Vinod Khosla, George Soros, T. Boone Pickens, George Kaiser, James Rogers, and Lloyd Blankfein.

President Obama also reiterated his claim that producing more oil isn’t going to solve the problem because the United States consumes over 20% of the world’s oil, but has only 2% of the world’s oil reserves.  Even the Washington Post has had enough.  On 15th March, Glenn Kessler dissected this technically true, but utterly misleading claim in a long Fact Checker piece.