Why EPAct 2005 May Invalidate EPA’s GHG Regulations

By | Energy | No Comments

On Friday November 15 Congressmen Upton, Scalise, Whitfield and Barton sent a letter to EPA Administrator Gina McCarthy identifying a section of the Energy Policy Act of 2005 (EPAct 2005) that could invalidate EPA’s September GHG proposed regulation for new power plants. At issue is the agency’s identification of three U.S. projects participating in the Clean Coal Power Initiative (CCPI) to make the determination that CCS is an “adequately demonstrated” technology.

The CCPI is intended to help bring advanced coal technologies, like carbon capture and sequestration (CCS), to the point that they are commercially viable. The Department of Energy (DOE), the agency that administers CCPI, described the intention of the program in its 2009 Funding Announcement after passage of the American Recovery and Reinvestment Act of 2009:

“By overcoming technical risks associated with bringing advanced technology to the point of commercial readiness, the CCPI accelerates the development of new coal technologies for power and hydrogen production, contributes to proving the feasibility of integrating carbon dioxide (CO2) management and power production and facilitates the movement of technologies into the marketplace that are emerging from the core research and development activities.” U.S. Department of Energy, Financial Assistance Funding Opportunity Announcement, Clean Coal Power Initiative – Round 3 (June 9, 2009).

CCPI is starting to pay dividends as several U.S. projects are utilizing the program to help advance promising technologies, like CCS. Three projects of particular note include:

  • Southern Company’s Kemper County Energy Facility in Kemper County, Mississippi
  • Texas Clean Energy Project in Odessa, Texas
  • Hydrogen Energy California Project in western Kern County, California

These three projects could be the first utility scale power plant projects in the United States to deploy CCS. They also happen to be the three U.S. projects that EPA pointed to in their proposed GHG rule for new power plants to conclude that CCS is an adequately demonstrated technology – a necessary finding before it can require the use of the technology in these regulations.

Here is the hitch: EPAct 2005 contains explicit language stating that projects receiving assistance through CCPI cannot be the sole factor in determining that a technology is adequately demonstrated for the purposes of these particular regulations.

Some have argued that the EPAct language only bars the use of CCPI projects if they are the only basis for the adequately demonstrated determination. They point out that EPA relied on others factors like industry experience capturing CO2 and technical studies in proclaiming CCS commercially viable. While examples of similar albeit different industrial processes and technical studies have played a role in advancing CCS technologies for power plants to where they are today, the best and most logical basis for determining commercial readiness would be actual deployment the technology. In EPA’s GHG rule for new power plants, the agency relies on still-in-development projects that are participating in a DOE program specifically intended for technologies that are not yet commercially viable, and certainly not adequately demonstrated.

At some point simple logic has to win the day. In this case, neither logic nor law supports EPA’s determination that CCS has been adequately demonstrated. If this interpretation is correct, the September 20, 2013 proposed GHG regulation for new power plants, the first major component of the President’s Climate Action Plan, would be void.

It is time for the Administration to reevaluate the path it is pursuing under this regulatory regime. There is limited environmental benefit and considerable societal costs to the perpetual regulatory uncertainty caused by trying to expand the limits of regulatory authority.

EPA To Hold Listening Sessions on GHG Rule

By | Energy | No Comments

While the Environmental Protection Agency (EPA) is developing regulations for greenhouse gas (GHG) emissions for existing power plants, the Agency is holding 11 listening sessions in cities across the country. The scheduled date, time and location for each listening session are included below. Additional information can be found on the EPA’s website, which can be accessed by clicking here.

Manufacturers consume one-third of the nation’s energy and are directly impacted by any regulation that increases the cost or reliability of electricity. Additionally, manufacturers stand “next in line” for GHG regulations and the precedents set by the GHG rules for power plants could serve as a model for similar regulations of other sectors. The NAM encourages the EPA to consider the following as they develop GHG rules for existing power plants:

  1. We Need An All Of The Above Energy Strategy: Energy markets are ever changing. The world of energy five years ago looked considerably different than it does today; and the world in five years from now will be different as well. The best way to adjust to changing energy markets while keeping American manufacturing competitive is by having a diverse energy mix, which gives us a wide-variety of options to choose from.
  2. Energy Can Be Our Competitive Advantage: Energy has increasingly become a bright spot for U.S. manufacturing. Regulations that cause the premature retirement of plants in our existing power fleet will increase energy prices for manufacturers and turn a potential competitive advantage to a disadvantage.
  3. Reliability Matters: We already know that because of regulations already on the books, a significant portion of our existing power fleet will retire in the next several years. Manufacturers depend on reliable sources of electricity to operate. Any interruption in the supply of electricity, even if for a very short duration, disrupts the manufacturing process and is incredibly costly. It is critical that the EPA take adequate time to consider the impact GHG regulations will have on grid reliability.
  4. We Cannot Address Climate Change On Our Own: GHGs are global by nature, and any effort to materially reduce emissions will require global commitment and participation.  Led by manufacturers’ innovations in energy development and efficiency, U.S. GHG emissions are as low today as they were in the mid-1990s, this while manufacturing gross output increased 29% during that period. Even more remarkable is that these emissions reductions have taken place while China, the world’s largest emitter, has seen emissions more than double over that same time period. EPA regulations to limit GHG emissions will have little or no impact on climate change if the rest of the world operates without similar restrictions.


EPA Listening Sessions:

Atlanta, GA

October 23, 1013
Session 1 – 2:00-5:00 pm EST
Session 2 – 6:00-9:00 pm EST

Sam Nunn Atlanta Federal Center
Bridge Conference Rooms
61 Forsyth St. SW
Atlanta, GA 30303
Point of contact: Dorothy Riddell – (404) 562-8080

Boston, MA

November 4, 2013
10:00 am-3:00pm EST

U.S. EPA New England Offices
Memorial Hall
5 Post Office Square
Boston, MA 02109
Point of contact: Dan Abrams – (617) 918-1067

Chicago, IL

November 8, 2013
9:00 am-4:00 pm CST

U.S. EPA Region 5 Offices
Metcalfe Federal Building
Lake Michigan Room
77 W. Jackson Blvd.
Chicago, IL 60604
Point of contact: Megan Gavin – (312) 353-5282

Dallas, TX

November 7, 2013
10:00 am-3:00 pm CST

J. Erik Jonsson Central Library
Auditorium – 1st Floor
1515 Young St.
Dallas, TX 75202
Point of contact: Jennah Durant – (214) 665-2287

Denver, CO

October 30, 2013
9:00 am-5:00 pm MST (last 2 hours for call ins)

U.S. EPA Region 8 Offices
1595 Wynkoop St.
Denver, CO 80202
Point of contact: Environmental Information Center – (303) 312-6312

Lenexa, KS

November 4, 2013
4:00-8:00 pm CST

U.S. EPA Region 7 Offices
11201 Renner Blvd.
Lenexa, KS 66219
Point of contact: Toni Gargas – (913) 551-7193

New York City, NY

October 23, 2013
Session 1 – 9:00 am-12:00 pm EST
Session 2 – 2:00-5:00 pm EST

U.S. EPA Region 2 Offices
Room 27A
290 Broadway
New York, NY 10007
Point of contact: Jennifer May-Reddy – (212) 637-3658

Philadelphia, PA

November 8, 2013
10:00 am-4:00 pm EST

William J. Green, Jr. Federal Building
600 Arch St.
Philadelphia, PA 19103
Point of contact: Pat Egan – (215) 814-3167

San Francisco, CA

November 5, 2013
9:00 am-4:00 pm PST

U.S. EPA Region 9 Offices
75 Hawthorne St.
San Francisco, CA 94105
Point of contact: Niloufar Glosson – (415) 972-3684

Seattle, WA

November 7, 2013
3:00-6:00 pm PST

Henry M. Jackson Federal Building
915 2nd Ave.
Seattle, WA 98104
Point of contact: Caryn Sengupta – (206) 553-1275

Washington, DC

November 7, 2013
9:00 am-8:00 pm EST

U.S. EPA Headquarters
William Jefferson Clinton East
Room 1153 (Map Room)
1201 Constitution Ave. NW
Washington, DC 20460
Point of contact: Angela Hackel – (919) 541-5262


EPA Dropping Efforts to Finalize WOTUS Guidance

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The Environmental Protection Agency (EPA) quietly announced today that they are abandoning efforts to finalize “waters of the United States” guidance, which they have spent the last several years working on in conjunction with Office of Management and Budget (OMB).

Under the now defunct rule, the EPA asserted their authority to regulate water wherever it may fall, whether it be a ditch, an ephemeral stream, a farm pond or snow melt.  The NAM believed this expansion is overly broad and goes far beyond the original intent of the Clean Water Act.

In the end, the EPA acquiesced to manufacturers, other stake holders, the Army Corps of Engineers, and the White House announced late yesterday that they are dropping their efforts to publish guidance to define “waters of the United States.”

Oddly enough, after numerous meetings and years of debate, the EPA made the announcement in the seventh paragraph of a blog, stating that “the final version of this report will serve as a basis for a joint EPA and Army Corps of Engineers rulemaking aimed at clarifying the jurisdiction of the Clean Water Act. A draft of this rule was sent today to the Office of Management and Budget for interagency review. The proposed joint rule will provide greater consistency, certainty, and predictability nationwide by providing clarity for determining where the Clean Water Act applies and where it does not.”

While the EPA doesn’t seem to give much weight to this announcement, it could not be more important to manufacturers. The NAM will continue to work with our partners and the EPA/Corps on this rule to ensure the EPA does not pursue what we consider to be another drastic regulatory overreach by the federal government.


New EPA Administrator will be Tested Early

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Today, the Senate confirmed Gina McCarthy to be the next Administrator of the Environmental Protection Agency (EPA). Administrator McCarthy will almost immediately have the opportunity to show how she intends to run the Agency for, perhaps, the remainder of President Obama’s second term. Will she pursue a reasonable approach to regulations, ensuring they are designed with care, input from stakeholders and without unnecessarily harming the economy? Or, will we have more of the same partisan-driven regulations, unattainable standards and astronomical compliance costs that so often occurred during the President’s first term?

One of the very first tests will be the Agency’s “re-proposal” of the carbon standards for new power plants pursuant to the President’s Climate Action Plan. In their first crack, the Agency proposed a rule that would have required all power plants irrespective of fuel to meet the same standard, effectively mandating plant design and fuel-type for all new plants. Strongly opposed by this organization and many others, the one-size-fits-all approach would have been an unprecedented attempt at using an environmental statute to set U.S. energy policy. After substantial input from several entities (and direction from the President), it is now widely believed that the Agency will try again and reissue the proposed power plant rule in September, setting separate standards for different fuels. A step in the right direction? Maybe. The answer will lie in the details.

EPA can set a separate emission standard for every fuel-type, unit design, and plant size, but if those standards cannot be achieved through existing, commercially viable technologies, the result will be the same as the last proposal: energy policy, not environmental regulation; one-size-fits-all, not all of the above. We stand ready to work with Administrator McCarthy in her new role, one that we hope will lead to a reasonable and balanced approach to environmental regulations.

A Lower Ozone Standard Will Hurt Entire Economy

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Later this year the EPA Environmental Protection Agency EPA could move forward with a new regulation that could essentially grind economic growth to a halt and cost millions of jobs. The (EPA) will consider lowering the National Ambient Air Quality Standards (NAAQS) for ozone following a five year review process under the Clean Air Act (CAA). The EPA is expected to consider setting the standard between 60 to 70 parts per billion (ppb), or even lower. The EPA just lowered the standard to 75 ppb in 2008, which has yet to be fully implemented.

So what does this mean for the average business owner? Well if they are in a county or area that has been classified as a “non-attainment” they will have an extremely difficult time expanding or even making modifications to their facility. Manufacturers will be faced with strict area-wide emission limits, increased costs, delays and uncertainties caused by restrictive permit requirements.

Earlier today, the American Petroleum Institute (API) released new maps that project areas likely to be classified as non-attainment should the standard be lowered to 60 ppb – an ozone level EPA considered in 2010 before ultimately holding off. As these maps show, manufacturers in nearly every region of the country could end up in a non-attainment inhibiting economic growth across the country. Such a result could cost millions of jobs, billions of dollars and send our economy back into recession.

When the EPA last considered lowering the standard in 2010 and 2011, EPA’s estimated compliance costs were as much as $90 billion per year, with industry estimates even higher. The Obama Administration temporarily backed off this plan after an aggressive campaign from the business community.


EPA: Emissions Lower in 2011

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Yesterday, the Environmental Protection Agency (EPA) released its annual Inventory of U.S. Greenhouse Gas (GHG) Sources and Sinks. The Inventory estimates all of the anthropogenic – caused by man – sources and sinks of GHG emissions in the U.S.

Two weeks ago yesterday, in an alternative universe, the very first allowance “true-up” was held for companies regulated under the Waxman-Markey climate bill. In that universe, a mandatory cap was placed on U.S. GHG emissions, assuring that 2012 emission were 3 percent lower than that of 2005 emissions.

So how are we doing in reality, without the benefit of the 1,400 page Waxman-Markey legislation?

Well, EPA’s estimates only calculate emissions through 2011, however, emissions in that year were estimated to be 6.9 percent lower than 2005 emissions. And expectation is that 2012 emission will be even lower – all while our economy continues to grow. Emissions per unit of GDP are down – and way down from 1990; and emissions per-capita are down as well. But how are we doing it?

Innovation. The emergence of hydraulic fracturing and horizontal drilling technologies has made the extraction of shale gas more technically feasible and more cost-effective. Power plants of all types – coal, gas, oil and renewables – are operating more efficiently. Manufacturers are producing more, while consuming less energy. And through creative financing mechanisms buildings are being built to be more energy efficient and existing buildings are being retrofitted to use less energy.

I point all this out not to rehash the heated debates that surrounded Waxman-Markey and its predecessor and successor legislative proposals, but simply to suggest that the goals of growth and prosperity are not contrary to those seeking lower emissions and greater sustainability. In order to remain competitive in a global marketplace U.S. businesses, and manufacturers in particular, have to create innovative new processes, use energy more efficiently and operate more sustainability – and that’s exactly what they are doing.

Greg Bertelsen is director of energy and resources policy, National Association of Manufacturers.

House Subcommittee Holds a Hearing on EPA Bill

By | Economy | No Comments

Today, the House Energy and Power Subcommittee held a hearing on a discussion draft legislation from Representative Ed Whitfield (R-KY) that would require increased transparency regarding the economic impacts of EPA regulations. Since 2009, EPA has issued or proposed an unprecedented number of regulations which increase the cost of energy, limit fuel diversity and place tremendous economic burdens on manufacturers. In a 2012 study released by NAM, it was estimated that, by conservative estimates, the cost of just six EPA rules would cost roughly $100 billion annually and more than 2 million jobs. In a worst-case scenario, the regulations could mean the loss of $630 billion, 4.2 percent of GDP and more than 9 million jobs.

The Energy Consumers Relief Act of 2013 would require EPA to submit a report to Congress projecting energy cost increases and employment effects on any EPA rule estimated to cost more than $1 billion. In addition, the discussion draft would prohibit EPA from finalizing any of these billion dollar rules if DOE, in consultation with FERC and EIA, determine that they would cause significant adverse economic effects.

As manufacturers await rules regulating everything from water used for cooling systems to greenhouse gas emissions, we need more transparency in rulemakings, and checks and balances to ensure we are not regulating the economy back into recession.

Greg Bertelsen is director of energy and resources policy, National Association of Manufacturers.


Manufacturers Keep a Close Eye on Energy Amendments in Senate Budget

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Today the Senate is holding votes on a series of amendments to the chamber’s first budget in four years. Several of the amendments on the floor address energy issues. Manufacturers use one-third of the energy consumed in the United States which makes access to affordable energy essential. Regulations and other policies which drive up costs are extremely concerning for manufacturers.

Senator Roy Blunt has filed an amendment that opposes a carbon tax. Last month the NAM released a study by NERA economic consulting that showed a carbon tax could have a devastating impact on our economy and jobs. Placing unilateral restrictions or prices on U.S. GHG emissions, without similar regulations in operation on other major emitting nations, would disadvantage U.S. manufacturers, impact millions of jobs, and result in higher prices for natural gas, electricity, gasoline and other energy commodities.

Senator Inhofe has filed an amendment that would prevent EPA from implementing costly greenhouse gas regulations for power plants, refineries and other industrial facilities.

Senator Barrasso has an amendment that would protect exports from being blocked by unnecessarily broad environmental reviews under the National Environmental Policy Act (NEPA). Expanding NEPA to consider the environmental impact of the cargo could hamper exports of many products, such as cars, tractors, agricultural products, electronics, toys, steel, chemicals, pumps, air conditioners, elevators and airplanes.

Also, Senator Hoeven has an amendment on the floor to approve the Keystone XL pipeline. Keystone XL would create tens of thousands of manufacturing and construction jobs and provide manufacturers with an affordable source of energy. We have continued to urge the Administration to approve the pipeline as soon as possible.

EPA May Rewrite New Power Plant Regulation

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Whispers that the EPA is taking a closer look at their 2012 proposed rule to regulate greenhouse gases (GHGs) from new power plants are increasing in volume. Today, the Wall Street Journal reported that the EPA was “weighing changes” to the proposed rule “in a preemptive move to protect against possible court challenges.” The NAM has been saying since this rule was first offered that it was bad policy, standing on shaky legal ground.

At issue is the requirement that all new base-load power plants (plants that run continuously to provide a constant source of electricity) achieve the same emission limits, irrespective of plant or fuel type. In practice, the rule would function as national energy policy by handpicking which fuels and technologies are used to power our country, while barring others. This is far beyond the scope of what is delegated to EPA through any existing authority and will hurt jobs.

The NAM strongly believes that an “all of the above” strategy is necessary to keep energy affordable and the U.S. competitive in the global economy. We also believe this strategy will result in increased efficiencies and lower greenhouse gas emissions.

Revolutionary advancements are being made in power plant efficiency for all types of fuels and technologies. Supercritical coal-fired power plants, natural gas combined-cycle plants and improvements in renewable technologies have all led to greater efficiency of the power generation system and helped lower emissions. Manufacturers need a regulatory environment that supports the continued development of all of these fuels and technologies and does not siphon their contribution to our sustainable energy future by banning them at the permitting stage.

Greg Bertelsen is director of energy and resources policy, National Association of Manufacturers.

EPA Fracking Regs Would Drive Up Costs, Add Red Tape

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This morning Politico reported that former Clinton EPA Administrator and former Obama Director of the Office of Energy and Climate Change Policy Carol Browner said that the EPA should regulate fracking.

It’s a highly technical, complicated issue and I actually believe that EPA should be the one regulating it,” she said today at a BGov-NEI event in downtown Washington, noting that that step would require legislation from Congress. “I think that some states may be up to the task, [but] at the end of the day, if history is any guide, not all states will be up to the task.”

Manufacturers believe that states should be the primary regulators of hydraulic fracturing and the federal government should not be regulating fracking, unless it can prove that a compelling need exists for federal intervention. Fracking has already changed the manufacturing landscape and helped us become more competitive and it will continue to change the landscape in terms of our ability to be more energy self-sufficient. The access to affordable natural gas can create a million manufacturing jobs by 2025.

If the EPA were to get involved in regulating fracking it could drive up compliance costs, damage a strategic advantage and provide very little value added. The Bureau of Land Management is already trying to get involved in the regulation of fracking at the state level and they are essentially putting forth a solution without a problem that is completely unnecessary. EPA regulations would only duplicate existing state regulations and create confusion and additional red tape. The costs would significantly outweigh the benefits.