Thursday, January 19, 2017

Imminent Utility Rules Could Test EPA Vow To Coordinate Compliance

EPA is slated to release next week the first in a series of highly anticipated proposals for regulating the environmental impacts of the utility sector -- measures that could test the agency's recent vow to ease compliance and ensure coordination among its pending rules to avoid what the industry says is a reliability "train wreck."

Under the terms of a consent decree with environmentalists EPA is slated to sign its proposed cooling water rule for existing facilities and manufacturing plants no later than March 14. Update: The proposal has been delayed until March. 28.

EPA also faces a court-ordered deadline to sign by March 16 a proposed national emission standards for hazardous air pollutants (NESHAP) to cut power plant air toxics. The agency will issue a new source performance standard (NSPS) to cut utility criteria pollutant emissions alongside the NESHAP.

In addition to the cooling water and air rules, EPA is also preparing to issue in July its final Clean Air Transport Rule (CATR) to create a cap-and-trade program for cutting nitrogen oxide and sulfur dioxide emissions from power plants in 31 Eastern states and the District of Columbia. EPA has also proposed a first-time Resource Conservation & Recovery Act (RCRA) for coal combustion waste disposal, but is unlikely to issue a final rule this year.

Utility officials and others have raised major concerns about the number of rules facing the sector, with some critics warning that the costs of complying with the rules will be so high that some power plants will choose to shut down rather than invest in expensive pollution controls to meet the regulatory requirements. Those utility shutdowns could cause major electricity grid reliability problems, according to several recent studies on the issue.

The North American Electric Reliability Corporation in an analysis late last year warned that the pending cooling water rule will be the most costly and disruptive of all pending EPA rules for utilities.

To address the concerns, EPA air chief Gina McCarthy says the agency is working to coordinate the suite of pending regulatory requirements to help the industry comply with the rules and spur investments toward President Obama's vision of expanded clean energy deployment in the 21st Century.

"This agency is doing its best to tell the utility industry everything you need to achieve moving forward, so that one investment decision can be made over the next few years that will achieve compliance with the suite of rules that the agency is moving forward to address public health," she told a Feb. 14 meeting of the National Association of Regulatory Utility Commissioners.

McCarthy has also sought to downplay the reliability impacts of the regulatory package. She noted recently that preliminary results of modeling the agency is performing with other agencies show no adverse electric grid reliability impacts as a result of pending EPA rules for the utility sector, contrary to several reports raising concerns that the air, water, and waste rules for the power sector would drive plant shutdowns that undermine reliable electricity supplies.

Environmentalists' Lobbying

Even before the rules' release, environmentalists are lobbying to ensure both rules adopt strict standards. In the case of the cooling water rule, which will apply to around 1,200 existing electric generating and manufacturing plants, activists are seeking to limit regulators' ability to develop plants' standards on a case-by-case basis instead of more consistent national requirements that apply to plants that will be subject to the rule.

Environmentalists are meanwhile pushing for EPA to set strict limits on mercury and other air toxics in its pending NESHAP, which will establish a maximum achievable control technology standard (MACT) to cut toxic emissions from power plants.

The rule will replace a Bush EPA cap-and-trade program to cut mercury emissions that was vacated by the U.S. Court of Appeals for the District of Columbia Circuit after activists sued over the rule.

EPA's utility MACT may avoid the uniform outcry over the agency's recent boiler MACT due to several key factors, including better EPA data on utilities' emissions and a split among the power sector and regions over support for strict utility limits, sources say.

Yet elements of the utility MACT may still prove highly controversial and prompt major industry outcry, particularly if EPA rejects an industry push for a so-called health-based compliance alternative in the rule.

The combined NESHAP and NSPS must under the court-ordered deadline by signed by EPA Administrator Lisa Jackson March 16. On EPA's "Rulemaking Gateway" website of pending rules the agency says, "Combining the two rules in a single action provides interested parties the opportunity to provide comments on the combined requirements of the two rules. It also avoids double-counting either costs or environmental benefits of the separate rules."

Although EPA is under a court-ordered deadline for issuing its utility air and cooling water rules, and is unlikely to delay the roll-out of CATR, the agency is not slated to issue its utility coal waste final rule in 2011.

EPA has proposed a rule with two options for regulating coal ash, either as hazardous under RCRA subtitle C subject to strict regulation or as solid waste under RCRA subtitle D subject to less stringent controls.

Industries that reuse ash in products have warned that the stigma associated with a hazardous designation would decimate the reuse industry, and that it would be contrary to past EPA efforts to promote safe reuse of ash in products.

Jackson told a March 3 House Appropriations Committee interior panel hearing on the agency's fiscal year 2012 budget request that EPA "continues to support the beneficial use of that material."

But the fate of EPA's coal waste rule is unclear. While the proposal was published in the June 21 Federal Register, Jackson said at the hearing that the final rule is delayed due to the agency having to process more than 450,000 comments on the proposal -- echoing comments by McCarthy who told a Feb. 16 energy event in Washington, DC, that the number of comments is the reason that EPA cannot predict when it will issue the rule.

Jackson told the March 3 hearing a final rule is unlikely in 2011 given the work involved in processing the comments. "And so we remain committed to rulemaking on this matter and we're going to analyze that information and make a final decision based on comments, science and the law. But we will almost certainly not do that this calendar year. I think it is going to take quite a bit of time," Jackson said. -- Anthony Lacey

Last Updated on Monday, 14 March 2011 13:41

Activists Resist Case-By-Case Reviews For EPA Cooling Water Permits

Environmentalists are concerned that EPA's upcoming cooling water rule will provide existing power plants and some manufacturing facilities with too much flexibility, allowing standards to be developed on a case-by-case basis instead of more consistent national requirements that apply to plants that will be subject to the rule.

"We've said time and time again that the rule has to lay down clear standards that have to be applied," an environmentalist following the rule says. "If you just decide on a case-by-case" basis, the source says, issuing permits will drag on forever.

Some environmentalists met with White House Office of Management & Budget (OMB) staff, as well as EPA staff, March 3 to discuss the upcoming cooling water rule, as well as a "willingness to pay" cost-benefit study pertaining to the rule that is also under review at OMB. EPA is under judicial deadline to issue the proposed rule by March 14, the first in a series of rules EPA is poised to propose addressing environmental releases from the utility sector. Update: The proposal has been delayed until March. 28.

While agency and White House staff did not reveal the contents of the rule, several environmentalists are concerned that Administrator Lisa Jackson's public commitment to allow for some case-by-case flexibilities would allow plants to avoid installation of closed-circuit cooling technologies on all plants.

But an industry source says they expect EPA to use this rulemaking to adopt stricter standards than those in the agency's 2006 version of the rule, the so-called phase III rule, which covered certain existing facilities and new offshore and coastal oil and gas extraction facilities and allowed for case-by-case permitting of manufacturing facilities using "best professional judgement." While industry has argued for case-by-case permitting, as was used in the previous version rule, the source says that many would be content with a common federal standard with a de minimus threshold for discharges to be considered that could favor plants with smaller discharges.

At issue is EPA's proposed cooling water rule. The new rulemaking will apply to around 1,200 existing electric generating and manufacturing plants, EPA says in its regulatory information posted on OMB's website with the rule. The new rule will cover facilities that were formerly covered in the phase II and phase III cooling water rules, which federal courts remanded to EPA.

The proposed rule is intended to implement section 316(b) of the Clean Water Act, regulating structures used to draw in water and cool industrial operations, and/or generate steam to drive turbines. Adult fish can become trapped on intake screens, fish eggs and larvae can become drawn into the cooling water system and heated water released into waterbodies can be harmful to aquatic life.

To address this, environmentalists favor closed-loop cooling systems that limit water withdrawals — currently required on new plants. But retrofitting for such a system can be extremely costly and often would necessitate tearing a plant down entirely.

Industry, especially nuclear power generators, favors once-through systems that draw more water but use less energy. Industry officials have warned that the cooling water rules may be among the most costly and detrimental of the suite of air, water and waste rules that EPA is crafting for the power sector. One industry study estimated that as much as 35 gigawatts of electricity generation could be lost as plants choose to shut down, rather than comply with the cooling water rule.

Late last year, Jackson told House Energy & Commerce Committee Chairman Fred Upton (R-MI) that the cooling water rule "will reflect a common-sense approach that reasonably accommodates site-specific circumstances while keeping faith with the need to minimize adverse environmental impact."

Environmentalists Raise Concerns

But environmentalists are concerned that Jackson's assurances, together with flexibilities in the 2004 version of the rule that allows regulators to use their "best professional judgment" to select control technologies, may result in less-stringent requirements.

Amy Sinden, a scholar at the Center for Progressive Reform (CPR) and an associate professor of law at Temple University Beasley School of Law, warned in a recent blog on the group's website that Jackson's statements hint at a "relatively toothless case-by-case permitting regime rather than simply mandating the more environmentally protective close-cycle cooling technology that some plants already use."

There's "no question that the technology that all new facilities have to use, the technology that virtually all plants have built in the last 20 years" is closed-circuit cooling, the first environmentalist says. The "question... [is] whether these old dinosaur plants will have to come up to that in this lifetime."

Activists say a strict EPA rule is essential because many state-issued permits are decades old even though the Clean Water Act requires permits to be renewed every five years. Some permits in New York, for instance, are now 25 years old, "late 80s or early 90s vintage," the source says, "because states can't make these decisions without EPA."

The activist attorney noted that the misperception is that "we want every plant in the country to immediately switch," when activists are interested in long-term solutions.

Environmentalists are also concerned about the survey EPA is conducting of consumers' willingness to pay for the cost of new controls, a survey that will inform EPA's cost-benefit of any rule.

Cost-benefit analysis "chronically tends to undercount the benefits of environmental protection in relation to the costs because the benefits — things like fish or ecosystems or human lives—are just harder to count and put a dollar value on," Sinden says. In this case, "all signs seem to be pointing toward a highly formalized cost-benefit analysis resulting in a weak rule — and a lot of dead fish," CPR's Sinden says. The study "will suck up a lot of resources and provoke a lot of controversy, but ultimately fail to produce meaningful results."

She says the agency's 2002 draft version of its rule required 59 of the largest and most damaging plants — around 10 percent — to use closed cycle cooling. But the provision did not make it past the White House Office of Information and Regulatory Affairs (OIRA), which reviews rules to ensure they are not overly costly, because the agency's cost estimates ($413 million) apparently outweighed its benefits estimates ($146 million).

Another environmentalist attorney, however, is not as worried about the willingness-to-pay survey. The numbers that are skewed, the source says, are the cost numbers. "Industry always finds a way to comply with the regulations as cheaply as possible," and "you're only putting a dollar value on the smallest portion of the benefits."

Nevertheless, the source says a stated preference survey will get to some of the less easily counted benefits. "Hopefully it will be a reasonably effective" study, the source says.

Last Updated on Wednesday, 20 July 2011 16:33

Industry Renews Call For EPA To Assess Rules' 'Cumulative' Impacts

With support from GOP lawmakers, industry officials are renewing their calls for EPA and the White House budget office to assess the cumulative economic effects of proposed rules and identify the most affected industry sectors, measures that have long been encouraged in regulatory review orders but which have never been strictly implemented.

At a March 9 hearing focused on the cumulative impacts of EPA air toxics regulation on the manufacturing industry, chemical industry officials called on members of the House Oversight & Investigations Committee's Subcommittee on Regulatory Affairs, Stimulus Oversight & Government Spending to help their long-standing effort to require cumulative impact analysis in EPA and White House guidance implementing President Obama's recent regulatory review order.

It is "imperative that we have an accurate understanding of the impact of proposed regulations on industry," said Michael Walls, vice president for regulatory affairs at the American Chemistry Council (ACC), adding that the "full regulatory burden for a particular sector can only be known if the cumulative impact of overlapping regulations is identified."

ACC says the Office of Management & Budget (OMB) or agencies like EPA should develop guidance on the methodology for assessing cumulative regulatory impacts, including benefits, that can be uniformly applied. "It is unlikely that we will see much change in regulatory impact assessments without such guidance or methodology," according to Walls' testimony.

The group could press EPA to adopt such approaches in guidance when the agency holds hearings beginning March 14 on how to implement portions of President Obama's regulatory review executive order. And the group also called for stricter implementation of the approach in a Jan. 18 letter to OMB chief Jacob Lew.

At the March 9 hearing, Republican lawmakers generally expressed support for the industry calls but the lawmakers gave no indication of how they plan to proceed. Rep. Darrell Issa (R-CA), chairman of the House oversight committee, for example, asked industry witnesses about their ability to be competitive when dealing with multiple EPA regulations, while also raising concerns about the increased cost of energy from clean sources.

Former committee chairman Dan Burton (R-IN) said regulations seemed to be hindering business, similar to a golfing handicap. "We have handicapped our [industry] to the point of not being competitive," Burton said.

Key Democrats said they too support cumulative impacts analysis but argued that such assessments should also weigh the benefits of agency regulations. "I support a comprehensive review of the impacts of regulations but I stand firm in my belief that any assessment of cumulative impacts must take into account the benefits of those regulations -- and not just the costs," Rep. Elijah Cummings (D-MD), the ranking member of the oversight committee.

At issue is language in various executive orders detailing how the White House and federal agencies should assess the cost and benefits of regulations. President Clinton's Executive Order 12866 called on agencies to "tailor its regulations to impose the least burden on society . . . taking into account, among other things, and to the extent practicable, the costs of cumulative regulations."

President Obama generally reiterated the approach in his recent regulatory review order, E.O. 13563, which the White House issued Jan. 18. The E.O. "emphasizes the crucial importance of simplifying and harmonizing regulations and acknowledges that, at times, regulated entities might be subject to requirements that, even if individually justified, may have cumulative effects imposing undue, unduly complex or inconsistent burdens," White House regulatory review chief Cass Sunstein explained in a Feb. 2 memo to agencies implementing the E.O.

Industry Pushes For Guidance Changes

Despite the Obama administration's commitment to conduct cumulative assessments, industry is pushing for the measures to be codified. Walls' testimony laid out a number of ways OMB, OIRA and agencies like EPA could update their guidance on regulatory impact analysis to better capture potential impact on industry, including by reaffirming their commitment to transparency as outlined in the recent E.O. "The regulated community and the public should be able to easily understand the reasons why, or why not, an Agency has assessed these particular impacts, and in what detail," the written testimony says. "Such written guidance should be developed only after public notice and comment and external, independent peer review."

Walls' testimony further says agencies should analyze the cumulative effect of multiple agencies on the economy, including indirect impacts of the rules. To this end, agencies should begin identifying and cataloging the industry sectors being impacted by new rules, and OIRA should work with agencies to evaluate paperwork burdens from new rules.

The ACC also says agencies should be "required to demonstrate why regulatory requirements already in place are inadequate to achieve the policy objective" and says analysis of alternatives should include a "no change" option. The group says agencies should consider impacts on employment and produce analysis on these impacts.

Walls further said agencies like EPA should affirm a commitment to following the weight of scientific evidence when developing regulations intended to reduce risk. "The agencies should also provide the public, the regulated community, and their own risk assessors examples of a weight-of-the-evidence approach through guidance, to promote a more certain regulatory environment and create an incentive for scientific information," according to the testimony.

The group also testified that Congress "may wish to identify and reconsider the existing statutory limitations on the consideration of costs in Federal agency rulemaking authority," which would include laws like the Clean Air Act. "Removal of those limitations could lead to improved regulatory outcomes," the testimony says.

Memo Stresses 'Open Exchange'

The industry suggestions come as OIRA and the agencies are ramping up plans to implement E.O. 13563, including new measures promoting coordination of regulatory requirements among agencies. "Efforts at harmonization might occur within agencies, as efforts are made to coordinate various rules," the Feb. 2 memo says. "Such efforts may also occur across agencies, as agencies work together to produce greater simplicity and predictability. Such interagency efforts may be promoted or assisted by OIRA."

The E.O. also asks agencies to craft plans for retroactively reviewing "existing, significant" regulations to determine "whether any such regulations should be modified, streamlined, expanded, or repealed" to make the regulatory programs less burdensome.

Agencies are required to respond to OMB within 120 days of issuance with a plan for how they will implement the various aspects of the E.O., including the lookback and other provisions. EPA is holding a March 14 meeting for public input into the agency's review of existing regulations in Arlington, VA, and is accepting written comments on its plan through March 20.

The E.O. also asks agencies to develop an "open exchange" of information among government officials, experts, stakeholders and the public during the rulemaking process. According to the memo, the open process "refers to a process in which the views and information provided by participants are made public to the extent feasible, and before decisions are actually made."

The E.O. "thus seeks to increase participation in the regulatory process by allowing interested parties the opportunity to react to (and benefit from) the comments, arguments, and information of others during the rulemaking process itself." The memo further says a "central goal" of the push toward an open exchange and greater public participation is "to improve the content of rules, and open exchanges of information by interested parties can be helpful in that endeavor."

One regulatory expert largely in favor of the changes says a more open exchange could result in a more information being shared among commenters at an earlier stage in the process, while previously groups seeking to comment on a rule had to coordinate comments among themselves before the period ended.

But some question the "open exchange" push, saying it could raise costs for groups looking to comment on agency rules. A source with the Center for Progressive Reform, a think tank that supports stricter health and environment protections and is critical of centralized regulatory review, says there are problems with how comments are submitted to the agencies, but says the "open exchange" process will lengthen the period of time an agency takes comment on a rule and the amount of information the agency has to respond to after the comment period.

The source further raises concerns that the more involved process could make it increasingly expensive for stakeholders to comment on a rulemakings. "You don't fix it by putting more of a premium on having Washington lawyers," the source says. -- Aaron Lovell

Last Updated on Friday, 11 March 2011 12:20

Key Democrat Weighs Bill To Limit Activists' Ability To Recoup Court Costs

Rep. Collin Peterson (D-MN), the ranking member on the House Agriculture Committee, says he may introduce legislation that would limit the ability of environmental groups to get the government to pay their legal fees in settlement agreements that oftentimes force EPA to promulgate new environmental rules.

Peterson questioned EPA Administrator Lisa Jackson March 8 on the criteria the agency uses before settling lawsuits or petitions brought by activists. He suggested that the agency seeks quick settlements with activists to implement new priorities that may not have been explicitly authorized by Congress, before allowing courts to determine the validity of activists' claims. "What about if the lawsuit's not litigated, it's just settled? Then all of a sudden, you're basically doing a settlement that requires you to do rulemaking," he said. "We didn't authorize it or probably agree to it."

Jackson defended EPA's approach to settlements, saying the agency first considers the requirements of the law and its likelihood of succeeding in fighting a lawsuit before deciding whether to settle. "One of the questions is whether you would lose if you went to court, and either we would be best served settling early and trying to agree on a schedule for rulemaking," she said. "Oftentimes, that rulemaking . . . we can live with rather than the courts impose it on us."

Peterson also suggested that it was inappropriate for EPA to pay legal fees of environmental groups that sue the agency. He pointed in particular to a May 2010 settlement EPA reached with several environmental groups in litigation over permitting requirements for concentrated animal feeding operations, in which EPA agreed to pay $95,000 in legal fees.

Such payments are routine in EPA settlement agreements. For example, in an unrelated settlement reached this week over a water permit for commercial ships, EPA paid more than $120,000 in legal fees to three groups that had petitioned the agency.

Peterson told Inside EPA after his questions that he was considering legislation to limit the extent to which large organizations and law firms that specialize in environmental litigation can recoup their fees. He cited provisions in the Equal Access to Justice Act (EAJA) that make individuals worth less than $2 million and businesses worth less than $7 million eligible to have their legal fees paid for by the government in successful litigation. The law does not apply those caps to nonprofit 501(c)(3) organizations, which covers most environmental organizations and trade associations.

"I think those numbers are excessive, and I don't see that there's authorization to pay environmental groups or law firms," he said in a brief interview. "Earthjustice has filed 80 percent of these lawsuits. They're a 150-person law firm. Maybe we can change the law [so it] says law firms don't qualify."

An Earthjustice spokesman says Peterson is wrong to target EAJA awards to environmental groups, saying that most litigation cost awards go to social security recipients, small businesses, targets of racial discrimination and veterans. The spokesman says that environmental and industry groups are covered equally by the law: "Environmental cases constitute approximately 1 [percent] of EAJA awards, and those awards go both to those who seek greater environmental protection and those who seek less, i.e., conservation organizations and timber trade groups have similarly benefited from EAJA awards."

Peterson also said he has heard suspicions that "there are folks in the EPA that are actually asking these groups to sue them, so they can settle it and then do a regulation. I don't know if that's true or not."

Jackson said during the hearing that she had never solicited lawsuits from activist groups and was unaware of such requests being made by any EPA staff.

Peterson said he would be requesting from EPA copies of every settlement agreement the agency has reached, noting that such settlements do not seem to appear in any central clearinghouse on EPA's website or elsewhere. However, Jackson noted that most agreements do have to go out for public notice and comment before they are finalized.

Last Updated on Thursday, 01 September 2011 16:33

GOP Says Repeal Of EPA's GHG Rules Marks First Step In Gas Price Agenda

House Republican leaders said March 10 that subcommittee passage of legislation to curb EPA's greenhouse gas (GHG)authority was the first step in a broader campaign to combat rising gas prices, setting the stage for a confrontation with Democrats who are ramping up arguments that the GOP bill could boost oil dependence.

Framing the effort to repeal EPA's rules as a gas price issue -- an argument that was far more muted prior to recent spikes in prices at pump -- comes as the House GOP leadership promises an "American Energy Initiative" to address gas costs and energy supply.

Components of that agenda include more domestic drilling, nuclear energy, incentives for vehicles to use natural gas and perhaps multiple bills to obtain "regulatory relief" from EPA, Speaker John Boehner (R-OH) and other GOP leaders said March 10.

As a part of that agency, the Energy & Commerce power subcommittee March 10 approved legislation by voice vote curbing a wide range of EPA GHG authorities, a prelude to markup of the legislation in full committee sometime next week.

In his opening statement, Committee Chairman Fred Upton (R-MI) said "our first order of business is to stop EPA's gas-price-raising global warming regulations," adding that "this committee and others will soon turn our attention to removing other Obama administration roadblocks to domestic energy production."

As a basis for linking the EPA rules to higher gas prices, Upton cited prior oil industry testimony that the rules would boost costs for refiners.

The gas price arguments drew attacks from Democrats, including the committee's ranking Democrat, Rep. Henry Waxman (D-CA), along with Rep. Ed Markey (D-MA) and other committee Democrats, who countered that blocking the rules could actually hamper efforts to reduce dependence on oil and therefore boost prices.

An analysis of the bill released by Waxman and subcommittee ranking member Bobby Rush (D-IL) cites several possible impacts from the legislation, including provisions that would derail future GHG rules for vehicles, leaving less stringent or less enforceable fuel economy provisions in place at the Department of Transportation.

Just minutes after the subcommittee approved the bill, Upton joined Boehner and other House Republican leaders at a press conference to launch an "American Energy Initiative" with a heavy dose of messaging on gas prices. They promised multiple activities in the coming weeks and months on the issue.

While not specific on schedule, Boehner downplayed chances for one large energy measure, saying, "The days of big comprehensive bills I think should be over."

Boehner said he would prefer action on "bite size chunks" and suggested several stand-alone options, including a bill to encourage natural gas use by vehicles, a bill to encourage more oil and gas exploration with royalties going to boost "green energy development" and a bill on "nuclear energy."

Upton at the event called the EPA rules repeal bill the "first gas price bill" and announced plans to mark it up in full committee the week of March 14. He also cited other areas he wants the committee to tackle, including streamlining the permitting process for energy exploration. Upton cited exploratory drilling by Shell in Alaska that has been slowed by disputes over requirements for non-GHG pollutants.

Upton said his panel plans to seek testimony from all Nuclear Regulatory Commission members to determine why it takes a decade to build a new nuclear plant.

House Natural Resources Chairman Doc Hastings (R-WA) pledged to pursue ways to open up energy production on federal lands, the Outer Continental Shelf and Alaska, including a raft of hearings on the issue this month, and efforts to attack a "de facto moratorium" on drilling in the Gulf of Mexico.

House Majority Leader Eric Cantor (R-VA) declined to elaborate on the floor schedule for the EPA GHG bill or other measures. However, he said the EPA bill would come to the floor at some point and committees are "hard at work." Cantor told reporters to expect "we will see some regulatory relief bills as far as EPA is concerned," but did not elaborate. -- Doug Obey

Last Updated on Thursday, 10 March 2011 18:32

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