Regulatory Reform

EPA’s Assault on State Sovereignty Part II

Obama’s recently released climate change initiative calls for the U.S. Environmental Protection Agency (EPA) to unleash yet another energy regulation aimed at reducing greenhouse gases from existing power plants, severely threatening the generation of affordable and reliable energy. This is only one piece of an unprecedented EPA regulatory assault unleashed in the past few years as detailed by ALEC’s latest report, The U.S. Environmental Protection Agency’s Assault on State Sovereignty.

In yesterday’s blog post, examples of how the EPA has consolidated and centralized regulatory control at the expense of the states were provided.  In this second blog post, we highlight a few of the EPA regulations coming in the next few years that are analyzed in ALEC’s report.

Examples of such regulations include: (1) new ozone and carbon dioxide standards, (2) federal control over hydraulic fracturing, and (3) standards that would effectively render it impossible to generate electricity from coal.

New Ozone and Carbon Dioxide Standards

Currently, the EPA’s most onerous air quality regulations are for areas that are in “nonattainment” of a Clean Air Act provision known as “National Ambient Air Quality Standards,” or “NAAQS.” The EPA is currently working on an ozone standard that could plunge 76 to 96 percent of the country into NAAQS-nonattainment. As a result, virtually all states’ ability to develop industry would be seriously compromised. The compliance costs with a new ozone standard would be staggering. According to a National Association of Manufacturers study, a proposed 60 ppb ozone standard would lead to a total of $1 trillion in annual compliance costs and 7.3 million jobs lost.

Moreover, in April 2012, EPA proposed a regulation, known as the Carbon Pollution Standard, which would essentially ban the construction of new coal-fired power plants. Also, President Obama noted in his recent speech that he wants the EPA to regulate carbon emissions from existing power plants as well. Currently, coal is used to generate about 40 percent of the nation’s electricity, and the percentage is much higher in states with significant coal resources.  The EPA’s Carbon Pollution Standard effectively bans new coal-fired power plants by requiring them to capture their greenhouse gas emissions; such a technology has never been proven to be commercially viable.  Regulation of existing plants will likely increase electricity rates significantly.

Hydraulic Fracturing Regulations

For now, hydraulic fracturing—the process whereby oil and natural gas is extracted from layers of rock by a pressurized liquid—is regulated primarily by the states. The EPA, however, is actively trying to expand its own authority to regulate fracking. In 2012, Fred Hauchman, director of EPA’s Office of Science Policy within the Office of Research & Development, said that the agency is doing “a pretty comprehensive look at all the statutes to determine where “holes” may allow for additional federal oversight.”

In 2010, Congress requested that EPA study fracking, in order to determine whether the practice poses any threat to drinking water. This has been a point of contention between industry and environmentalists. The latter claims the process is safe, citing the fact that there has never been a proven instance of aquifer contamination. Green groups claims the process threatens utility-scale water supplies, but they’ve yet to produce any evidence. The EPA study is meant to clarify the matter and will likely determine whether the Agency is afforded more authority to regulate the process. The effort is ongoing, and the results are expected to be released in 2014.

Assault on Coal

As time goes on, the EPA has continued to implement rules that will severely damage the American coal industry.  In February 2012, for example, the EPA promulgated a rule known as the Utility MACT. It will cost the power industry—and, ultimately, electricity ratepayers—almost $10 billion annually.

Similar regulations have also been proposed by the EPA.  One, known as the Cooling Water Intake rule under the Clean Water Act, would cost up to $4.8 billion every year, in order to protect fish larvae from being sucked into the cooling systems of coal- and nuclear-fired power plants. Pursuant to a “sue and settle” agreement, the EPA is under a court-ordered deadline to finalize the rule Cooling Water Intake rule by July 2013. Another pending regulation, known as the Coal Combustion Residual rule, could result in the classification of coal ash as a toxic substance, at a total cost of $55 billion to $76 billion.

These regulations would come in addition to the carbon pollution standard and Obama’s newly proposed carbon emission regulation for existing power plants. If allowed to be finalized, these combined regulations may be the final nails in the coffin for the U.S. coal industry.

For more information about the proposed and pending EPA regulations that are threatening the use of affordable and reliable energy, please read The U.S. Environmental Protection Agency’s Assault on State Sovereignty available here.


In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

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