Tag Archives: United States Environmental Protection Agency

Crucify! Crucify!

The EPA was directed to set standards for radi...

The EPA was directed to set standards for radioactive materials under Reorganization Plan No. 3 (Photo credit: Wikipedia)

I know we are still in the season of Easter but this is not an Easter story.  By now you’ve heard the news report of EPA Region 6 Administrator Al Armendariz’ remarks at a local Texas government officials meeting in 2010 where he used a crude analogy to describe his “philosophy of enforcement.”

“It was kind of like how the Romans used to conquer villages in the Mediterranean. They’d go in to a little Turkish town somewhere, they’d find the first five guys they saw, and they’d crucify them. And then, you know, that town was really easy to manage for the next few years. You make examples out of people who are in this case not complying with the law … and you hit them as hard as you can” — to act as a “deterrent” to others.”

Apologies have dutifully now been issued disclaiming these remarks and called them out as not reflecting the Administration’s policy on enforcement.  But the reason the video clip went viral is that it rings so true of what many have come to believe is, in fact, the Administration’s policy.

This comes on the heels of a unanimous Supreme Court Decision in Sackett v US EPA where the Court overturned an enforcement order of the EPA which sought to fine a couple thousands per day in civil penalties for the temerity of challenging an EPA decision that building a house on their own property was a violation of the Government’s wetlands policy.  The decision overturned longstanding precedent that enforcement orders must be challenged administratively before an action is taken to court.

The Regulatory Process is Not Serving the Public Interest

These examples are easy to focus on, but the bigger issue is the pervasive, creeping and creepy over reach of regulation that once just strangled the economy but now is being used to pursue a political agenda the Administration has been unable to get approved by the Congress.

There is a de facto war on fossil fuels being pursued by the EPA.  The rush of new regulations is focused on getting as much done in the first term as possible administratively, perhaps out of fear there may not be a second terms or that the Democrats will lose the Senate.

Congress is also to blame big time for this mess.  It writes laws that are vague or ill-considered and leaves it up to bureaucrats to define the details and sort out the problems.  The Code of Federal Regulations now consists of thousands of pages of rules bearing only a vague resemblance to their authorizing legislation.

We can do better than this:

  1. Require that rules must either be incorporated directly into legislation or proposed as a companion rulemaking by affected parties BEFORE Congress passes the law. Force the parties to work out their differences before the law is passed and embody the rules in the law.
  2. Require that EVERY regulation contain a sunset date of not more than 7 years.  The law and every rule adopted pursuant to it should expire unless it is reauthorized by Congress.  This requirement would be applicable to EVERY existing rule which should be subject to sunset review.
  3. Require that NO rule may be proposed without a cost benefit analysis based upon standard objective criteria applicable to all regulation for calculating cost and benefits.  No rule may be published if the results of the cost benefit analysis show that the costs outweigh the benefits.  The cost benefit study may be challenged as not meeting the standard objective criteria before an Administrative Law Judge to decide whether the rule meets the cost benefit test.
  4. Require that Congress much approve EVERY regulation imposing a cost of more than $100 million on an up or down vote to be taken within 90 days of submittal of the rule to Congress or else it is automatically rejected.

These steps would clarify that regulations are designed to cost effectively and fairly implement specific policies adopted by Congress.  It clarifies that rules are not a separate process for pursuing political agendas.  It levels the playing field giving business an equal opportunity in the rule making, enforcement and sunset review process with other interest groups.  It forces ALL SPECIAL INTERESTS to work out their differences BEFORE laws are passed and rules proposed or have those interests framed to be decided in an up or down vote for all to see.

Mr. President: Prepare Three Envelopes!

Official presidential portrait of Barack Obama...

Image via Wikipedia

The Hits Just Keep Coming for President Obama.

There must be times when President Obama must wonder “what was I thinking”!  The piling on of bad news just keeps digging the economic hole President Obama must climb out of before it is time for voters to mark that ballot in November 2012.

Even God seems a little grumpy these days sending an earthquake and then a hurricane through Washington DC .  Who could blame him after this list of body blows:

Holy Gallup Polls!

  • Net Zero Jobs ‘Created or Saved’ in August. There were zero net nonfarm payroll jobs created in August with 58,000 fewer net jobs created during July and June.
  • Solyndra Goes Dark.  Solar energy darling Solyndra visited by the president last year and granted a $535 million US DOE loan guarantee filed for bankruptcy, shut down its Fremont, California plant visited by the President and laid off its 1, 100 workers.
  • Emissions reporting—Not on My Watch! In addition on August 19 US EPA postponed for four years the controversial greenhouse gas emissions reporting rules that require emitters to release internal data about their operations to the public. Industry groups squealed loudly about the costs and opposed sensitive information to competitors.
  • The Tea Party Strikes Back—Well in the House at Least. In an Aug. 30 letter to Speaker of the House John Boehner, President Barack Obama said his administration is considering seven proposed regulations that would have an estimated cost to the nation’s economy in excess of $1 billion each.  In response, House Majority Leader Eric Cantor, R-Va., proposed a legislative agenda to repeal the 10 “most harmful job-destroying regulations” includes several proposals affecting coal-fired power plants the Administration is trying to save for the next term by withdrawing them.
  • Show Me the Money!!! September 30 is the end of the Federal fiscal Year and while the House passed its budget the Senate has not so a new spending battle looms over appropriations or continuing resolutions for the Transportation Department, FAA extension and other spending.
  • Consumer Spending Increased but Only Because We ate Savings. Personal spending increased 0.8% in July from June but annualized 3-month moving average of real consumer spending held at July’s low 0.4 percent pace as energy prices rebounded. But to get even this small increase in real spending, consumers had to eat savings since personal savings rates fell to 5.0 percent from 5.5 percent, as real disposable income fell 0.1 percent from July.
  • Consumer Confidence Tanks.  Consumer confidence plunged 14.7 points in August to 44.5. The drop in the index was the largest since October 2008 in the aftermath of the Lehman Brothers collapse and the main wave of the financial crisis. Uncertainty surrounding the debt-ceiling agreement, S&P downgrade and volatile stock market performance caused consumer confidence to fall.

Prepare Three Envelopes

You remember that old joke, don’t you?  The new guy finds three envelopes in his desk the day he starts his new job.  The instructions say: open them in the number ordered when you get in trouble.

Envelop # 1: Blame your predecessor!  Ok that didn’t work and after three years no one believes it any more!

Envelope #2:  Re-organize.  OK, Mr President you had a chance with the Deficit Reduction Commission report prescribing all manner of bad medicine.  It seemed awful at the time so you rejected its recommendations.  Maybe it’s time to call them back for a do-over.  Your economics team except for Treasury Secretary Geithner are all gone but it didn’t help.  Defense Secretary Gates “retired” but everyone thought he did a great job so leaving does not help you, Mr. Obama.  EPA Administrator Lisa Jackson’s proposed regulations are hammering you and you keep withdrawing them but your base still likes them so firing her is only half a loaf.  If you fire Hilary Clinton she might run against you again.

There is only one thing left to do Mr President.

Envelope # 3: Prepare Three Envelopes and leave them in the top drawer of the desk!  Besides retiring now will get you lifetime health care with no death panel and a nice pension.

Then you can tell your critics to sit on it and twirl!  The Republicans will be nonplussed since none of their candidates have a chance unless they can run against you.  Your party will have a food fight over replacing you—it is such poetic justice!

New York Gets Fracking

Marcellus Acquifers

New York State’s Department of Environmental Conservation released recommendations on hydraulic fracturing on July 1, 2011 designed to remove the moratorium on use of the technique for recovering oil and natural gas from the Marcellus and Utica Shales that underlie the state.

Concerns had been raised about the impact of fracking on drinking water in New York, and the recommendations are designed to respond to that concern by prohibiting surface drilling within 2,000 feet of public drinking water supplies; on the state’s 18 primary aquifers and within 500 feet of their boundaries; within 500 feet of private wells, unless waived by landowner; in floodplains; on principal aquifers without site-specific reviews; and within the Syracuse and New York City watersheds.

What’s left after all those limitations, you ask?

According to NYDEC more than 80 percent of the Marcellus Shale where oil and gas drilling is viable would are still accessible under these recommendations with permits that assure drillers meet the recommended guidelines.

NYDEC’s draft Supplemental Generic Environmental Impact Statement reviewed the experience and regulations in other states and got 13,000 public comments in considering real or imagined impacts.

The NYDEC says its fracking recommendations are ‘the most comprehensive measures in the country to protect not only drinking water but land, air and environmentally sensitive areas’.

Why New York is Lifting its Fracking Moratorium?

The bottom line is simple, while environmental activists may hate hydraulic fracturing for making more fossil fuel available economically, the potential for economic recovery, growth and job creation from the rapidly growing investment in unconventional oil and gas is very real.  New York does not want to miss out of the jobs, tax revenue and economic growth that the resurgence of America’s domestic energy production is producing.

Nothing concentrates the mind of politicians nearly as well as the near term prospect of being left out of a good news story.  Not even the US EPA has found reason to object to hydraulic fracturing.  The practice has been used since the 1980’s with little evidence of adverse impact.

The benefits are, on the other hand, real and tangible and green—as in dollars and jobs and tax revenue!

Give the President what He wants and Give it to Him Hard!

AEO 2011 Electric Generation by Fuel

That was the message from American Electric Power in announcing that it will retire 6,000 MW of coal fired power generation to comply with new US EPA regulations.  The stunning announcement by AEP on June 9th rattled power markets and sent politicians running for cover.  The decision will cost more than 600 jobs and $40 million per year in payrolls.

On June 10th US EPA spokesman Roy Seneca said:

“These long-overdue Clean Air Act standards will slash hazardous emissions of mercury and other acid gases, preventing thousands of asthma and heart attacks and premature deaths. Utilities have known for decades that these standards — which are still in the proposal stage and have a built-in 3-year-compliance timeline, have been coming for decades. They also know that they are free to approach EPA with serious, fact-based compliance plans, and that state governments also have the ability under the law to seek more time for the plants in their jurisdictions.”

AEP Chairman and CEO Mike Morris said the utility will take other actions in its proposed compliance plan including adding advanced emissions reduction equipment on 10,100 MW of remaining coal capacity, converting 1,070 MW of coal generation to 932 MW of natural gas, and adding 1,220 MW of new natural gas-fueled generation to restructure its power portfolio.

AEP to Replace coal with Natural Gas Generation

AEP said in a press release that the cost of the EPA compliance plan was between $6 billion to $8 billion in capital investment over the next 8 years but could go higher because of the high demand for labor and materials caused by EPA’s aggressive 3-year compliance time frame which AEP has called unreasonable. The costs of the compliance plan could also change based on the final form of the EPA regulations and the actions by state regulatory commissions that must approve the plan and fund it likely through higher rates.

48,000 MW of Coal Power Plants Affected by EPA Rules

AEP’s announcement is the first of what likely will be a string of bad news stories resulting from the proposed EPA’s Clean Air Transport Rule (CATR) and Utility Maximum Achievable Control Technology (MACT) rulemaking to limit nitrogen oxides, sulfur dioxide and mercury emissions by the electric power industry.

EPA Rules Cost the Economy $184 Billion

A economic impact study of the proposed EPA rules done by NERA, a nationally recognized economic analysis consultant, hired by a power industry trade group, the American Coalition for Clean Coal Electricity said the rules will force 48,000MW of coal fired generation to shut down at a cost of about $18 billion per year or $184 billion total to consumers for added coal unit compliance costs, fuel price impacts, and the costs of replacement energy and capacity including the stranded cost of power plants that still have substantial remaining useful life and thus revenue requirements that will also have to be recovered in higher rates.  NERA estimated average U.S. retail electricity prices in 2016 would increase by about 12%, making the CATR and MACT rules the most expensive EPA regulations ever imposed on power plants.

So what?

So stumping for votes for reelection in West Virginia, Ohio, Virginia, Kentucky and Indiana just got a lot tougher for President Obama who must not only defend these new EPA rules but also the economic impacts they cause on industry, job creation and economic recovery in Midwest, South and Texas where coal is important.

US EPA and the Five Fictions

Spilled Milk Felon Escapes

US EPA Administrator Lisa Jackson made a rare appearance on Capitol Hill March 10th unable to avoid running the gauntlet any longer over growing criticisms of overreach by her agency.  She tried her best to deny the allegations and diffuse expected criticism by taking on the “five fictions” as she called them about EPA intent.

Those five fictions are that EPA seeks to:

  1. Impose a so-called “cow tax,” in which emissions from cows will be regulated.
  2. Regulate spilled milk under regulations for oil containment facilities
  3. Expand regulations on dust from farms
  4. Regulations blocking pesticides from drifting away from farms
  5. Impose limits on pollution from “nutrients” like fertilizer and animal manure.

Do you see a pattern here?  This was not the energy and utility crowd going after Ms Jackson.  It was not the coal or natural gas or oil lobby.  It was not truckers or auto manufacturers.

No!  Lisa let her agency step in the farm business and she is having a tough time getting it off her shoes. She did her best to deny that EPA was engaged in any of these ‘regulatory fictions’ but the facts were clear to the farmers, ranchers and their lobbyists who had successful beat back attempt to impose new rules in each of these areas.

They were only too happy to give the Republicans in Congress the ammunition to throw manure on the EPA attempts to go after them and make sure the stink sticks long enough to convince Ms Jackson to leave them alone.

Reading the Energy TEA Leaves after the Election

While the results of the 2010 midterm elections are still be digested, the impact on the energy industry seems likely to be net positive if you believe in a balanced energy future that includes using more of America’s domestic energy potential.  If you are the American Wind Energy Association you probably are still drinking to ease your pain.  This gallows humor is meant to suggest that the GOP and TEA Party view that America should have a well rounded, domestic product focused energy strategy is likely to move forward in search for common ground with the Democrat view of climate change action and renewable energy.

From RES to CES. The panel said that AWEA’s push for a national renewable energy standard (RES) had little chance of passing but a modified clean energy standard (CES) that included tax support for building new nuclear power plants and investing in clean coal technology along with continued tax credits and loan guarantees for renewable energy might find common ground. As you can imagine adding tax supported competition for new baseload generation from zero emission nuclear power and low emissions from clean coal carbon capture and sequestration was not what the wind boys wanted to hear on top of their other problem competing with China.  But that is where they are like it or not so the debate is shifting toward finding a compromise number higher than the 15% RES proposed by AWEA but allowing nuke and clean coal to count.  Unless you raise the target it becomes a zero-sum game with the larger baseload plants swamping the smaller wind and solar plants.  Do I hear 33% anybody?

Waxman-Markey is Dead and AB32 Got a Stay of Execution. It seems clear that hell will freeze over before any kind of carbon tax bill makes it out of Congress.  Even the president admitted this was dead until at least after the next Presidential election.  Even in California where voters rejected Proposition 23 to suspend AB32 the California Global Warming Solutions Act those same voters approved Proposition 26 which reclassified administrative fees and impact fees just like CARB expects to impose to tax carbon releases under AB32 as a “tax” and thus requires a 2/3 vote of the Legislature or voter approval.  Carbon taxes are going to be radioactive in this new political environment.

New Nukes. It is time to step up the nuclear licensing, standards and regulatory approval process for new standard technologies for smaller scale, safe nuclear power plants. We should create a competitive market among the major architect-engineers and take advantage of the construction experience in other countries while America has been on the nuke sidelines to accelerate our go-to-market strategies.  America needs more baseload power for the future and now is the time to build the next generation of nukes to expand the current fleet and progressively replace the oldest units.  And we need to do this BEFORE inflation eats our lunch and sends us déjà vu into the same death spiral cost overrun conditions that hurt the first generation nuclear units.

Drill Baby Drill. Domestic oil and gas production won new champions in this election in the belief that America should produce more of its own energy book and put its best technology to work to do so efficiently, cleanly and effectively.  Horizontal drilling and hydraulic fracturing are America’s current technology wonder of the world and we should use to our own advantage.  States like New York and Pennsylvania that seek to restrict the use of these technologies in the Marcellus shale risk being left behind with higher price energy costs and lower tax revenues.

Will Clean Coal still be King? The technology risk associated with carbon capture and sequestration and other clean coal technologies make them very costly and commercially un-viable today.  More R&D is needed to unlock that potential and drive down the cost.  There is a role for the government in encouraging and supporting such R&D efforts but the coal industry must now step up and spend more of its own money to extend its useful life.  Similarly, creating a market for the captured carbon and turning it into useful CO2 gathering products makes perfect sense and also need to be supported.  Meanwhile, add scrubbers and other pollution control equipment to the current units and mitigate their negative impacts.

EPA and New Rules for Regulatory Accountability.  A likely scenario to a wounded President unable to get his energy and environmental agenda through a disbelieving Congress is to use his executive authority to regulate everything that moves in the energy industry through the US EPA and other Federal agencies.  The new Republican majority in the House will need to guard against this over-reach.  And the TEA party members will probably welcome one more revolutionary idea—all Federal regulations must reasonably balance policy objectives intended with the public and economic interests of the nation and be submitted to Congress for an up or down vote.  Give Congress 90 days from submittal to act or the rules go into effect but force legislative accountability for regulatory actions.  Also sunset every regulation at least every ten years so we have to rethink this stuff periodically.  If the goal is to control the size and reach of government and force it to balance interests reasonably the Congress must fix the problem of regulatory free will.

There ends the rant!