This morning, Environmental Protection Agency (EPA) Administrator Scott Pruitt issued a directive designed to end the practice known as “sue and settle.” The agency-wide directive requires the EPA to:
- Publish any notices of intent to sue the agency within 15 days of receiving the notice;
- Publish any complaints or petitions for review in regard to an environmental law, regulation or rule in which the agency is a defendant or respondent in federal court within 15 days of receipt;
- Reach out to and including any states and/or regulated entities affected by potential settlements or consent decrees;
- Publish a list of consent decrees and settlement agreements that govern agency actions within 30 days, along with any attorney fees paid, and update it within 15 days of any new consent decree or settlement agreement;
- Expressly forbid the practice of entering into any consent decrees that exceed the authority of the courts;
- Exclude attorney fees and litigation costs when settling with those suing the agency;
- Provide sufficient time to issue or modify proposed and final rules and take and consider public comment; and
- Publish any proposed or modified consent decrees and settlements for 30-day public comment and provide a public hearing on a proposed consent decree or settlement when requested.
Manufacturers have long sought greater transparency and public participation in the settlement process. In fact, we requested a great deal of this relief four and a half years ago in an April 2013 letter to then-EPA Administrator Gina McCarthy. As the entities primarily regulated by these settlement agreements and consent decrees, it is simply not fair that manufacturers are regularly left in the dark as the EPA and other non-regulated entities work out the terms of our regulation behind closed doors. Allowing an open, transparent settlement process that abides by the law is the right policy, and we’re grateful to Administrator Pruitt for today’s action.
Yesterday’s New York Times shined a light on Environmental Protection Agency (EPA) Administrator Scott Pruitt’s 2017 calendar and the meetings he has been taking with the business community and nonprofit groups. On the list: a visit in March to the National Association of Manufacturers’ (NAM) spring board of directors meeting in Scottsdale, Arizona.
Administrator Pruitt met with our board members on March 6. Because manufacturers are heavily regulated entities, particularly on the environmental side, we regularly invite the head of the EPA to address our board. We invited Gina McCarthy, the EPA administrator during President Barack Obama’s second term, to address our board members three times: September 2014, December 2014 and September 2015. She declined every time. Had she joined us, she would have been able to receive direct input from the CEOs and senior executives of the manufacturers her agency’s rules directly impact. It certainly would have been helpful as the EPA put the finishing touches on the ozone standard (final rule, October 2015), the “Waters of the U.S.” regulation (final rule, June 2015) and the Clean Power Plan (final rule, August 2015), the latter two of which were held up by federal courts and are receiving thorough reexaminations.
This year, we extended a speaking invitation to Administrator Pruitt, and we are glad he said yes. And by the way, Administrator Pruitt didn’t just hear about the regulations we want to see fixed under his leadership. He heard about the areas where the EPA is doing great work that we support. We asked him to put resources into the Office of Chemical Safety and Pollution Prevention, so it can properly implement the Lautenberg Chemical Safety Act, the overwhelmingly bipartisan chemical safety law put into place in 2016. The room included the men and women running the operations of hundreds of manufacturers the EPA regulates. They represent all points of view on the political spectrum, and, most importantly, can actually tell the administrator what it’s like to implement the regulations the EPA puts out.
That’s what we should want: good government based on the best data. A steady flow of information between manufacturers and the agencies that regulate them. The EPA would have been well served to talk to our board, for instance, when it issued the “Boiler MACT” regulation in 2012, a rule governing the type of boilers manufacturers operate and how they use them. It didn’t, and manufacturers are still feeling the after-effects.
We’ll continue to invite EPA leadership to address our board, no matter who is in charge. Manufacturers strongly support the EPA’s mission to protect health and the environment.
This Friday is Manufacturing Day, when more than 2,500 manufacturers (and counting) will open their doors and show the world what modern manufacturing looks like. When it comes to energy and the environment, modern manufacturing and the solutions we provide are the key to solving the many challenges that confront us.
The good news is that we’ve come a long way already. Disruptive technologies have already changed the way we produce and use energy and will continue to do so in the future. Hydraulic fracturing and horizontal drilling unlocked vast natural gas resources and changed the face of manufacturing in America. Advanced technologies like battery storage, demand-side management, electric vehicles, small modular nuclear reactors and many others will almost surely do the same.
It’s great to talk about those transformational technologies, and while a competitive market is generally the best way to encourage their development, the reality is that both the public and the private sector have roles to play. For instance, government can play a positive role in support of the research and development (R&D) of alternative energy sources or technologies at a pre-commercial stage. There is also an important federal role to be played in basic R&D of new high-risk energy efficiency and waste minimization technologies in energy-intensive industries, particularly where private-sector incentives may be inadequate.
That brings us to the Advanced Research Projects Agency – Energy (ARPA-E), a 10-year-old program that has found itself in the middle of a debate over the role of federal spending on energy R&D programs. Manufacturers have long supported ARPA-E, which we believe is a valuable program to fund high-risk, transformational energy technologies that the private sector may not yet be ready to invest in. The Department of Energy reports that, since 2009, ARPA-E has provided more than $1.5 billion in financing to more than 580 projects. Fifty-six of those projects have formed new companies; 68 projects have partnered with other government agencies to further development; and 74 projects have attracted more than $1.8 billion in follow-on funding.
The National Academy of Sciences (NAS) recently completed an assessment of the program and concluded that ARPA-E has been successful and deserves a longer timeline to pursue its statutory mission. The NAS found that ARPA-E “has the ability to make significant contributions to energy R&D that likely would not take place absent the agency’s activities.”
Several case studies bring this point home. ARPA-E funding helped enable a company called Smart Wires to develop a device that clamps onto existing transmission lines and controls the flow of power within the lines. This is an area of major need for manufacturers, who demand always-on electricity despite a rapidly changing power grid. ARPA-E’s funding allowed Smart Wires to build prototype devices and deploy them for testing. Since this successful test round, Smart Wires has undertaken several rounds of successful fundraising, including $30.8 million in 2015 to bring its PowerLine Guardian product to commercial production.
ARPA-E provided partial funding for a company called 1366 Technologies to develop a novel silicon wafer manufacturing process that could dramatically reduce the cost (and increase the durability) of solar panels. Not only did this company succeed, but the product developed ultimately replaced the leading technology options that had received venture capital funding. ARPA-E’s funding allowed 1366 Technologies the freedom to pursue the basic science that helped lead to commercialization of this technology.
Finally, ARPA-E provided funding for Harvard University to develop slippery surface technologies that yielded extreme energy savings in many industrial settings. After two years, the research had progressed well enough to enable the launch of a startup company, SLIPS Technologies, Inc. (STI), to broadly commercialize the technology. STI was launched in October 2014 with venture capital financing led by the venture capital arm of chemical manufacturer BASF Corporation.
The National Association of Manufacturers supports legislation to keep ARPA-E funded and operating at a high level. In the Senate, Sens. Lisa Murkowski (R-AK) and Maria Cantwell (D-WA) included a provision reauthorizing ARPA-E in their comprehensive energy bill, the Energy and Natural Resources Act of 2017 (S. 1460). In the House, Rep. Eddie Bernice Johnson (D-TX) has introduced the ARPA-E Reauthorization Act of 2017 (H.R. 3681), which contains similar language to the Senate provision.
This week, the U.S. Court of Appeals for the District of Columbia rejected a challenge by the Sierra Club to the Freeport LNG facility, a natural gas export project in Texas. The Sierra Club’s strategy was fairly typical in the playbook of challenges to infrastructure projects: argue that the permitting agencies didn’t consider X, Y or Z and hope the court either forces the agency to start over or take more time to review. Every extra day of waiting increases the chances the project will be shelved. Read More
On June 28, the House Energy and Commerce Committee will mark up H.R. 806, the Ozone Standards Implementation Act of 2017. This bill would create a more flexible glide path for manufacturers to comply with the 2015 ozone standard, harmonizing the compliance process for the 2015 standard with the behind-schedule process for the 2008 standard. In doing so, it would allow real ozone reductions to continue through 2025 without the unnecessary economic pain of ozone nonattainment. H.R. 806 would change the five-year review cycle for new standards to a more reasonable 10-year cycle, which is the typical time the Environmental Protection Agency (EPA) needs to complete these reviews. The bill also takes positive steps to address manufacturers’ permitting challenges as they pertain to ozone standards and requires real examination of the impact of international air pollution on domestic ozone levels.
The Clean Air Act has successfully improved air quality across the United States over the past four decades, leading to major reductions of virtually every single air pollutant. Ozone levels have declined roughly one-third since 1980, and the precursors that contribute to ozone—nitrogen oxides and volatile organic compounds—have been cut in half. In fact, the Obama EPA projected that the United States would achieve nearly the same air quality by 2025 even if the 2015 ozone standard was never implemented.
However, incremental improvements in ozone are now coming at an exponential cost. Even though most states can meet the 2015 standard by 2025, they would be unnecessarily thrown into “nonattainment,” a sort of economic penalty box, if the 2015 standard’s deadlines were to stay in place. H.R. 806 solves this problem by phasing the 2015 ozone standard implementation to align with air quality improvements that the Obama EPA found will occur anyway by 2025.
The NAM supports H.R. 806 and looks forward to working with the committee to get this important legislation to the president’s desk.
The White House is making this week “Energy Week” and is putting the focus on America’s diverse energy mix and benefits it provides. Manufacturers are seeing this firsthand, as U.S. energy dominance is making manufacturers more competitive.
A recent study sponsored by the National Association of Manufacturers found that as a result of the increase in domestic shale gas production, we saw real GDP increase by $190 billion and 1.4 million more jobs. Just the construction of new natural gas pipelines to transport all this new energy meant more than 347,000 jobs in 2015, with almost 60,000 in manufacturing. Downstream, the benefits are even more striking: our friends at the American Chemistry Council estimate that abundant natural gas and natural gas liquids from shale resources have driven the chemical industry to invest in 294 new projects representing $294 billion in new economic output and 462,000 new jobs.
The energy renaissance is not limited to oil and gas. More than 100,000 workers contribute to the energy production at the nation’s 99 nuclear power plants, including manufacturers providing on-site repair, operations and maintenance as well as replacement components, modifications and upgrades when necessary. Pending retirements are spurring the industry to hire another 25,000 employees over the next few years, and in anticipation of new nuclear plant construction, U.S. companies have created in excess of 15,000 new U.S. jobs since 2005, which include manufactured products like turbines, polar cranes, pumps, valves, piping and instrumentation and control systems. Renewable energy sources have also steadily grown—consumption from wind, solar and geothermal energy sources have increased more than 400 percent over the past decade—now accounting for about 10 percent of total U.S. energy consumption and about 13 percent of electricity generation. Overall energy intensity in manufacturing (i.e., energy consumed per each dollar of goods produced) has steadily improved as manufacturers have grown more energy efficient. And even though the coal industry has faced its share of headwinds in the electric power sector—and is receiving much-needed regulatory relief—coal use in the non-electric-generation manufacturing sector has remained relatively stable, at around 43 million short tons of coal per year.
Manufacturers use a tremendous amount of energy, accounting for roughly one-third of the energy consumed in the United States. For energy-intensive manufacturers like chemicals, paper, metals and refining, energy is one of the largest costs. Manufacturers also make up the supply chain for every single energy source and technology, from fossil fuels, to renewables, to energy efficiency. The bottom line: when the energy sector is competitive, manufacturers are competitive. And that’s certainly what we are experiencing today.
Manufacturers appreciate the Trump administration’s focus on energy and look forward to a great week.
This afternoon, the Environmental Protection Agency (EPA) informed governors that the agency will grant states an additional year for initial compliance designations under the 2015 ozone standard. This is welcome regulatory relief for manufacturers, who are working hard to comply with the 2008 and 2015 ozone standards but run the risk of falling into “no-grow zones” if their states do not reach the 2015 levels quickly enough.
The 2015 ozone regulation could be one of the most expensive regulations ever issued by the U.S. government. The 2008 standard of 75 parts per billion (ppb)—the most stringent standard ever—was never even fully implemented, while emissions are as low as they have been in decades and air quality continues to improve. The EPA itself admitted that implementation of the previous standard of 75 ppb, when combined with the dozens of other regulations on the books that will reduce ozone precursor emissions from stationary and mobile sources, will drive ozone reductions below 75 ppb (and close to 70 ppb, the current standard set in 2015) by 2025.
Throughout the 2015 ozone rulemaking, hundreds of governors, mayors, local development officials, manufacturers and other leaders warned the EPA that they could not comply with a tighter standard under the strict timelines the EPA requires. Air quality officials from cities and states across the country have testified before Congress that they may run out of controls before they even reach the levels mandated by the EPA. Manufacturers appreciate that the EPA is acknowledging this very real problem.
The EPA also announced it would continue to look into three issues the NAM raised in its comments on the 2015 rule and in subsequent requests to the agency: (1) how the EPA calculates background ozone; (2) the impact of emissions from outside the United States on local ozone levels; and (3) timely consideration of exceptional events designations. Fixing these issues will go a long way toward more flexibility for manufacturers as they continue to reduce their emissions.
This afternoon, the Senate Environment and Public Works Committee will hold a hearing to examine the implementation of the 2015 Environmental Protection Agency (EPA) ozone standard and to discuss legislation to improve the challenges this new regulation has created for manufacturers. In late 2015, in the face of overwhelming opposition from governors, mayors, economic development councils, transportation authorities and all segments of the industry, the EPA tightened the ozone standard to 70 parts per billion (ppb), down from 75 ppb. This move was certain to place counties across the United States into nonattainment, essentially turning them into “no-grow zones” that businesses typically avoid.
The National Association of Manufacturers (NAM) didn’t like the new standard—in fact, we were forced to enlist our own Manufacturers’ Center for Legal Action to litigate the final rule—but if that standard is to stay in place, we certainly need help implementing it. More importantly, we need help now, since the 2015 rule’s deadlines are still running. For many areas, the pain could start very soon.
For instance, the San Joaquin Valley Air Pollution Control District told a House subcommittee last year that, to reduce ozone, it already has taken such extreme steps as banning residents from using their fireplaces in most winter months and implementing regulations that limit the amount of time lids can be off paint cans. Even with these measures, they will not meet the current ozone standard even if they eliminate emissions from all stationary and area sources, off-road equipment, farm equipment, passenger vehicles and heavy-duty trucks. It’s not just California that has these problems. The Georgia Department of Natural Resources noted in its 2015 comments to the proposed rule that there were no effective control measures left available to the state, beyond those already identified and being implemented, to reduce ozone levels in the Atlanta nonattainment area.
The committee will examine two bills designed to address Ozone implementation issues: the Ozone Standards Implementation Act of 2017 (S. 263) and the ORDEAL Act of 2017 (S. 452). Both would create a more flexible glide path for manufacturers to comply with the 2015 standard, allowing reductions to continue through 2025 without the unnecessary economic pain of ozone nonattainment. Both would also change the five-year review cycle for new standards to a more reasonable 10-year cycle, which is the typical time the agency needs to complete these reviews. S. 263 also takes positive steps to address manufacturers’ permitting challenges as they pertain to ozone standards and requires real examination of the impact of international air pollution on domestic ozone levels.
The NAM looks forward to working with the committee to fix the implementation challenges related to the 2015 ozone standards.
The American Society of Civil Engineers’ (ASCE) most recent report card gave our nation’s energy infrastructure a D+ grade, pointing out that most U.S. energy infrastructure predates the 21st century. The ASCE says aging electricity infrastructure contributed to 3,571 total outages in 2015, and oil refineries have been operating at around 90 percent capacity. The future presents even bigger challenges: a changing electric grid, new technologies and new sources of energy and changes to where and how energy is being produced will all require improved infrastructure, and it’s not clear that we can keep up. The ASCE projects the investment gap for energy infrastructure to be $177 billion from 2016 to 2025.
The NAM’s “Building to Win” blueprint puts forward several recommendations to improve our energy infrastructure. Recommended actions include the following:
- Reform existing laws and regulations to facilitate a more transparent, streamlined and coordinated regulatory process for the siting and permitting of all energy delivery infrastructure, including oil and natural gas pipelines, energy transport by rail, energy export terminals and interstate electric transmission infrastructure.
- Promote new energy infrastructure investments as a means of increasing U.S. infrastructure’s resilience to climate change by designing for projected future climate conditions. Regulators should work to more quickly approve smart investments.
- Examine innovative financing mechanisms for new energy infrastructure to encourage private investment.
- Coordinate underground infrastructure work for road, water, gas, electric and broadband to yield construction savings and reduce traffic disruptions from construction work.
- Invest in regions without a developed pipeline network to bring down home heating costs in places like New England and make manufacturers more competitive.
The National Association of Manufacturers has been encouraged that lawmakers are focusing on energy as a key component of a broader infrastructure package. We’ll be at the table working to drive solutions that make manufacturers more competitive.