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House Testimony, Manufacturing Caucus Bookend Busy Week on Ozone

Despite the fact that it’s widely expected to be among the most costly regulations in our nation’s history – if not the most costly – the EPA’s proposal to tighten ozone standards has managed to stay somewhat below the radar in recent months.

For the manufacturers that make up our membership, this is a big problem, because the administration’s proposal threatens to badly undermine the circumstances that have helped to spur our nation’s manufacturing comeback. The impacts would be no less profound for the public at large, which would face higher energy prices, the prospect of millions of lost jobs, and well over a hundred billion dollars each year in costs. Given the stakes, we are eager to raise the profile of this critical issue. This week, we hit Capitol Hill alongside hundreds of our members to help make sure that lawmakers are listening to their constituents, and that they recognize the danger that this new rule represents.

On Wednesday, NAM and several of its member companies participated in a briefing for the House Manufacturing Caucus aimed at illustrating for lawmakers the concerns harbored by businesses large and small about the new ozone standard. In that meeting, we heard from NAM members and policy experts, who told members, staff and stakeholders more about the struggles that ozone nonattainment will mean for their communities.

Also on Wednesday, the Senate Environment and Public Works Committee heard from local regulators, air quality managers, and more regarding the EPA’s proposal.

And finally, on Thursday, I testified before the House Committee on Science, Space, and Technology regarding the impact of EPA regulatory overreach on American competitiveness. In my testimony, I pointed to the drain that burdensome environmental regulations are causing for American businesses especially manufacturers.

“Why does this proposed ozone regulation matter? Because nonattainment is a significant barrier to growth. Nonattainment is a significant deterrent to manufacturers to build or expand in an area because the permits are so difficult to obtain compared to those in an attainment area. Companies building or expanding facilities in nonattainment areas are required to install specific technologies regardless of cost, and projects cannot move forward unless ozone is reduced from other sources.

These “offsets” are neither cheap nor easy to obtain. Currently, offset prices in the Houston-Galveston-Brazoria nonattainment area are close to $175,000 per ton of NOx and $275,000 per ton of VOC. Offset prices in southern California nonattainment areas are approaching $125,000 per ton of NOx. Rural areas, which could become new nonattainment areas under a tighter standard, may lack offsets altogether, making the offset requirement a total barrier to new projects.

“Even manufacturers not looking to expand will be subject to restrictive new regulations in nonattainment areas. For instance, in the Houston nonattainment area, existing facilities are subject to additional controls under the Highly Reactive VOC (HRVOC) rule, and combustion units, such as boilers and ethylene crackers, must install SCRs and low-NOx burners. In the most severe cases, states with nonattainment areas could lose federal highway and transit funding.”

The surge of attention paid to this issue over the course of the last few days is encouraging. It means that leaders and newsmakers inside the Beltway are picking up on the chorus of concern growing at the state and local level, not just from our members and others the business community, but from local regulators, mayors, and countless others that are staring down the barrel of this rule.

But despite a productive week, we have a long way to go. We’re less than four months out from the issuance of the costliest rule in the history of the United States – a regulation that threatens to stop the manufacturing comeback in its tracks. We – along with our members and countless other stakeholders concerned by this rule – will continue our work to highlight the importance a stable regulatory environment to our nation’s economic outlook.

The stakes, after all, have never been higher.

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Rep. Scalise, Sen. Capito introduce Legislation to Improve Air Permitting

Last week, Rep. Steve Scalise (R-LA) and Sen. Shelley Moore Capito (R-WV) introduced H.R. 2557/S. 1425, the “Promoting New Manufacturing Act,” in the House and Senate. The NAM has been a longtime supporter of this bill, on which we testified and supported with a Key Vote Letter in the 113th Congress.

The Promoting New Manufacturing Act would make a series of relatively simple enhancements to the air permitting process to enable manufacturers to get their permits quicker while allowing the EPA to continue to protect the environment. It would create a permitting dashboard, requiring EPA to publish information on the regarding the estimated number of permits issued annually and timelines for making final permit decisions; it would require that if the EPA Administrator establishes or revises a national ambient air quality standard (NAAQS), the agency publish implementing regulations and guidance at the same time, including information regarding the submittal and consideration of preconstruction permit applications; and it would require EPA to report annually to Congress on actions being undertaken by the agency to expedite the processing of permit applications. (continue reading…)

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President Signs Energy Efficiency Legislation into Law

Manufacturers use almost 30 percent of the energy consumed in the U.S., and in many instances it is our single largest expenditure. To continue to be competitive in a global economy we need to be more energy efficient. Yesterday the President signed into law S. 535, the Energy Efficiency Improvement Act of 2015, from Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH). The bill will loosen efficiency standards for grid-enabled water heaters, increase efficiency in government data centers and promote efficiency in commercial, residential and federal government–owned buildings. Previously in the 114th Congress, a version of the legislation, S. 128, was adopted as an amendment to a separate bill (S. 1, to approve the Keystone XL pipeline) but was vetoed by the president on February 24. The House passed a similar energy efficiency bill, H.R. 2126, in the 113th Congress by a vote of 375-36, but the Senate never acted on that measure.

The new law will establish a program called “Tenant Star” that will certify and recognize commercial building tenants for achieving high levels of energy efficiency, as well as require the General Services Administration to develop model commercial leasing provisions to encourage commercial building owners and tenants to invest in cost-effective energy and water efficiency measures. Energy efficiency and conservation offer immediate and cost-effective opportunities to reduce energy cost inputs both in the public and private sectors. Today’s commercial, public and residential buildings use almost 40 percent of the energy consumed in this country. The NAM has long supported this bi-partisan effort to strengthen the public/private partnership to support a more energy-efficient economy, while driving economic growth and private sector job creation. While this is a great first step for energy efficiency in this Congress, we hope it will not be the last.

Manufacturers are leading the way in the area of energy efficiency. Our facilities, shop floors, production, and transportation systems much more efficient than they were 10 or 20 years ago. And many of the products we make enable other sectors such as industrial, commercial, government, residential and retail to be more energy efficient as well through the use of advanced technologies and innovations pioneered by manufacturers and their supply chain. Everyone agrees that we need to be smarter about the way we use our energy resources. And manufacturers are pleased to see this Congress not allow politics to get in the way of sound energy efficiency policy.

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Timing is Everything: Why Changing the Ozone Standard Now is All Cost with Little Gain

Last week, I wrote an editorial on Inside Sources highlighting the EPA’s chronic underestimation of the economic costs of its largest regulations. The largest of these by far has been the EPA’s proposal to tighten the National Ambient Air Quality Standards (NAAQS) for ozone from the current level of 75 parts per billion (ppb) to a point somewhere between 65 and 70 ppb. Over the past year, the NAM modeled the costs of a potential standard at 65 ppb and 60 ppb, each time concluding that the regulation would be the “most expensive regulation ever.” Recently, EPA Administrator Gina McCarthy testified before Congress that only eight counties would fail to meet a new ozone standard of 70 ppb in 2025 in a business as usual scenario—in other words, if EPA simply let states and businesses comply with the 75 ppb standard set in 2008 and the dozens of other regulations on the books that will drive ozone levels lower. (continue reading…)

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Cost Estimates for EPA’s Greenhouse Gas Regulations Continue to Rise

Last week, the Obama Administration’s former regulatory gatekeeper, Cass Sunstein, penned what I thought was a very realistic article on climate change attitudes in the U.S. He noted, quite correctly, that it is a paradox: a majority of Americans believe we need to act, but they also refuse to pay anything in exchange for that action. This, as Sunstein notes, is not a new problem, but rather one that stretches as far back as the Kyoto Protocol in 1990.  We found this in a poll of our own just a few months ago: more than half of the respondents polled on the EPA’s greenhouse gas regulations were unwilling to pay a single dollar more for energy to accommodate the new requirements. (continue reading…)

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Manufacturers support H.R. 4795, the Promoting New Manufacturing Act

The Environmental Protection Agency (EPA) is just weeks away from proposing a new ozone standard that the NAM estimates could impose over $2 trillion in compliance costs for manufacturers. With so much at stake, manufacturers need improvements to the air permitting process so that when these new standards take hold we can still get our permits and operate our facilities. We support H.R. 4795, the Promoting New Manufacturing Act, which is on the House floor this morning.  (continue reading…)

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Beyond Keystone, troubling signals from the White House on infrastructure permits

This week’s Keystone XL Senate vote has grabbed almost all the media attention, and for good reason: it’s fundamentally unfair to make any business wait six years for a permit. (Seriously – you could have seen “You Can’t Mess With the Zohan” in the theater the same day TransCanada filed its permit application. That’s just not right.) (continue reading…)

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New study shows EPA greenhouse gas regulation would raise electricity prices, impose massive new costs on manufacturers

This week, NERA Economic Consulting released an economic study on the impact of the Environmental Protection Agency’s (EPA) proposed new greenhouse gas regulation for existing power plants. The study was supported by groups from most sectors of the U.S. economy, including the American Farm Bureau Federation, American Fuel & Petrochemical Manufacturers, American Coalition for Clean Coal Electricity, National Mining Association, Association of American Railroads, Electric Reliability Coordinating Council and Consumer Energy Alliance.

NERA’s report confirms many of our fears about this new regulation: 43 states will experience double-digit increases in the price of electricity, and overall compliance costs exceed $360 billion. Some states could see price increases that exceed 20 percent. In addition, NERA found that all consumers will have to make major new upfront investments in order to reduce overall electricity demand from their power plants. For manufacturers, that is money that could often be better spent on product development.

Manufacturers are committed to addressing global climate change and have taken strong steps to reduce our emissions, promote energy efficiency and new technologies, and become more sustainable. Those steps are working. But we must also remember that many manufacturers are trade exposed and can rarely stomach major new costs (like higher energy prices) that make us less competitive against our international competitors who don’t play by the same environmental rules. Manufacturers urge EPA to revise its greenhouse gas rule for existing power plants to avoid the higher energy prices and other consequences predicted in NERA’s report.

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Recent approvals signal “new normal” for LNG exports

Last week, the Federal Energy Regulatory Commission (FERC) quietly issued a final environmental impact statement for Cheniere Energy’s Corpus Christi liquefied natural gas (LNG) export facility in Texas. It required Cheniere to agree to 104 special conditions to ensure that the environment is protected, and it allowed the project to move forward. Ten days prior, FERC issued a similar approval for Dominion’s Cove Point LNG export facility in Maryland. Like the Cheniere approval, FERC required Dominion to adhere to 79 special conditions to protect the environment. It will do that, and the project is moving forward.

No drama. No congressional hearings or presidential proclamations. It was all so…normal.

Kind of nice, isn’t it?

A couple things happened to get us to this point. The meritless arguments from “not in my back yard” opponents and law firms masquerading as environmental groups didn’t hold water with FERC. The protests petered out.  (Which, for what it’s worth is what happens when you protest FERC on a Sunday, when it is closed.) The Department of Energy finally figured how to get itself out of the way and stop causing unnecessary delays. Freed from these regulatory constraints, the environmental permitting process was allowed to work properly. And so it did.

So with an election just a few weeks away, and with it the hope that the 114th Congress can actually work together on energy policy, it’s reassuring to see that on LNG exports at least we have reached a “new normal” whereby companies wanting to take on these projects actually get a yes or no answer in a reasonable amount of time.  However, it’s worth reminding everyone that Keystone XL has been waiting on a final permit decision for six years, coal exports in the Pacific Northwest are fighting uphill to just get their permits heard, and countless other projects are caught in permit limbo. Getting infrastructure projects moving and getting shovels in the ground is a bipartisan priority. Let’s use this “new normal” on LNG as a stepping stone to even better things.

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Eastman Chemical, Merck, Janssen R&D LLC win EPA Energy Star CHP Award

NAM board members Eastman Chemical Company and Merck & Co., along with Pennsylvania manufacturer Janssen R&D LLC, won the Environmental Protection Agency’s ENERGY STAR Combined Heat and Power (CHP) Award for their highly efficient CHP systems, which greatly exceed the operating efficiency of similar conventional systems. CHP provides both electric power and thermal energy (heat) from a single fuel source, as opposed to conventional systems that expel the steam as waste heat. A CHP system captures the energy that would normally be waste heat and uses it to provide heating and cooling.

The NAM supports policies that encourage CHP systems, which promote energy efficiency while also reducing emissions. CHP and similar technologies have allowed manufacturers to reduce our environmental footprint while increasing our productivity. Congratulations to Eastman, Merck and Janssen on today’s award.

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