In a major victory for states and business groups including the U.S. Chamber, the U.S. Supreme Court has agreed to hear arguments on whether the Environmental Protection Agency overstepped its authority in developing carbon emissions limits for sites like factories and power plants. Although the EPA’s first step is to regulate factories and power plants, the agency’s power grab is even more far-reaching: the agency claims it has the authority to regulate the greenhouse gas emissions of small facilities such as hospitals, small farms, churches, restaurants, hotels and office buildings.
The U.S. Supreme Court will consider whether the EPA’s authority to regulate vehicle emissions, which came out of a 2007 Supreme Court ruling, can be applied to stationary sources.
Last year, the U.S. Court of Appeals for the District of Columbia Circuit upheld the EPA’s regulations aimed at reducing greenhouse gas emissions.
By accepting [U.S.] Chamber of Commerce v. EPA, the high court breathes new life into a case questioning the EPA’s authority under a federal law regulating tailpipe emissions to also regulate CO2 emissions from stationary sources like power plants. The Supreme Court won’t be hearing a challenge to the scientific conclusion that greenhouse gases are dangerous pollutants, however, and it may proceed with limiting carbon emissions from stationary sources under other laws regardless of how the Supreme Court rules.
The Wall Street Journal explains the nitty gritty of the case:
When Congress wrote the Clean Air Act, it created numerical thresholds specifying that the government could only start regulating after a plant was shown to be putting out more than 100 tons a year of a pollutant. Congress had in mind traditional pollutants like sulfur dioxide or ozone, but in the case of greenhouse gases like carbon dioxide 100 tons a year can be reached by 40 lawyers breathing. (OK, maybe a few more.)
By the EPA's own estimates, applying that 100-ton threshold to greenhouse gases would require some six million buildings to get environmental permits, including such grand polluters as churches and farms. Recognizing that such a rule would create "absurd results" like shuttering the entire economy, the EPA rewrote Congress's numbers and adjusted the threshold to 75,000 tons from 100 tons. EPA's clear political purpose was to escape a large political backlash to its new rules by unilaterally limiting their reach.
The EPA says that its rewrite is no big deal, and that plaintiffs should have no standing to sue since the agency was doing everyone a favor by lifting the thresholds. But regulatory agencies don't have the power to rewrite laws on their own without the authority granted by Congress. All the more so when that rewrite is intended to limit political accountability for a rule that could cost the economy $300 billion to $400 billion a year.
U.S. Chamber President and CEO Tom Donohue issued the following statement:
“The Chamber is encouraged that the Court has decided to hear its challenge to EPA’s regulatory overreach. From the very beginning, the Chamber has argued that the Clean Air Act is the wrong vehicle to regulate greenhouse gases and that EPA exceeded its regulatory authority under the Act. We believe we have a winning argument and look forward to making our case before the Justices.”
Oral arguments are likely to be heard early in 2014 with a ruling issued by the end of June. As Reuters notes, that’s right around the time that the EPA is due to propose a major rule that would limit the emissions of greenhouse gases from the country's existing fleet of more than 1,000 power plants.
President Obama’s decision on the Keystone XL pipeline is an “inflection point in our economic recovery,” say business leaders. In a letter to the President, they argue that approving the pipeline that will transport Canadian oil sands crude to U.S. refineries will “send a powerful signal of this Administration’s commitment to getting America back to work.” The letter reads:
Investor confidence is shaped heavily by perceptions of business climate – whether governments take actions that enable capital investment and job growth. Studies by your administration have demonstrated that construction of Keystone XL will directly result in the investment of $3.3 billion in the U.S. and support tens of thousands of American jobs, across diversified sectors, which will in turn add billions of dollars to the national and regional economies.
The letter goes on to state that the pipeline “would also enhance America’s competitiveness by helping to realize the long-standing goal of increased North American energy security.” The economy would be helped by “creating efficiencies and reducing overall energy prices for households and businesses.” All this would be done with minimal environmental impact, according to a State Department analysis.
Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, added in a statement:
The American business community and an overwhelming majority of citizens support the Keystone XL pipeline. Hundreds of thousands of miles of pipeline carrying oil, gas and other materials already exist, so there is no reason to further delay Keystone. Businesses understand that it will create jobs and reduce our dependence on oil from unfriendly nations. President Obama should act now.
The letter was signed by the U.S. Chamber’s Energy Institute, the National Association of Manufacturers, and the Business Roundtable along with a diverse array of companies including GE, Wyndham Worldwide, Arch Coal, AT&T, and Boeing.
In related news, anti-energy environmental groups, including the Sierra Club, lost their federal court appeal arguing that the southern leg of the Keystone XL pipeline running from Oklahoma to the Texas Gulf Coast shouldn't have been approved. The nearly-completed Gulf Coast Pipeline Project could begin transporting oil by the end of 2013.
The electric power industry is often referred to as the most critical infrastructure sector.
While interdependencies across key sectors of the economy make it foolish to declare one the “most critical,” the Edison Electric Institute’s electric company members understand their responsibility to deliver a product that is essential to our daily lives and to our national security.
Electricity is our most prevalent energy source, and maintaining the high level of reliability that is expected requires constant planning and vigilance. Our companies constantly ask, “What could go wrong, and are we prepared to respond?” We never stop working to make the grid stronger, more reliable, and more resilient in the face of any threat.
While storms, physical attacks, and other threats to reliability are something the electric power industry has worked to mitigate for more than a century, cyber risks and vulnerabilities are relatively new.
Cybersecurity has been a growing priority over the past decade. The industry employs threat mitigation actions focused on preparation, prevention, response, and recovery in its operations.
The North American electric grid is one machine with thousands of owners and operators. I am proud of the sector’s history of working together to address threats to the reliability of this shared and critical infrastructure system. I am also proud that all segments of the sector, from the largest investor-owned electric utility to the smallest electric cooperative or municipally owned utility, are working together to meet the cyber threat.
The electric power industry does not operate alone, however. Given our reliance on other critical sectors, such as rail, fuel, finance, telecommunications, and government, it is clear that all sectors and our federal partners need to work closely to defend critical infrastructure from cyber attacks.
In the vernacular of the legislative debate, this falls under “information sharing,” but I believe it is so much more. It requires close coordination between those who operate critical infrastructure and those with the responsibility to protect the nation.
To that end, the electric power sector has made great strides during the last year in bringing senior executives from both the industry and the government together. We recently formed a new and improved Electricity Subsector Coordinating Council (ESCC) that will serve as the primary venue for CEOs and senior Administration officials to address key issues that will improve security, response, and readiness. Specifically the ESCC will:
There is substantial value that comes from the close relationships being forged with the cabinet agencies and regulators that have direct oversight responsibility for our industry, but it is the improved operational relationships with the intelligence and law enforcement communities that will make the biggest difference.
Further, this government-industry partnership has helped to address the silos that naturally occur across large organizations. By pulling senior executives and their teams together from across the sector and the government, resources are being allocated effectively and efficiently while identifying roles and responsibilities before a disaster strikes.
In addition to these high-level discussions, electric utilities also are engaged in several public-private partnerships that help us to strengthen our capabilities on the front lines of the cyber threat. One example is the Electricity Sector Cybersecurity Capability and Maturity Model. This program brings together the Departments of Energy and Homeland Security, public policy experts, and the private sector. The model is a benchmarking tool that a utility can use to measure the overall effectiveness of its cybersecurity program. Last year, 20 utility companies participated in a pilot to prove this model.
Our industry’s current collaboration on cybersecurity is robust, but it is natural to ask how we can perform even better. The debate often turns to new legislation, new regulation, or new action by executive branch officials to help us meet the cyber threat.
The maxim, “if it ain’t broke, don’t fix it,” certainly applies to additional regulatory authorities over our industry. Our companies already are subject to mandatory and enforceable cybersecurity standards under the jurisdiction of the Federal Energy Regulatory Commission, while the Atomic Energy Act and Nuclear Regulatory Commission have created a similar regime for nuclear power plants. We urge leaders in Congress to leverage existing regulatory processes for making any necessary changes and leave the actual standards-drafting and enforcement mechanisms to the sector-specific framework that already is serving our country well.
Instead the focus should be on how to further facilitate the public-private partnerships that we have built. This will ensure that the right people have access to timely, sensitive, and actionable information that could help us to further protect the grid and remove legal roadblocks and liability concerns that prevent electric utilities from sharing information with each other and with the government.
I know that the American business community takes cyber threats seriously. With the leadership of the U.S. Chamber and business, I am optimistic that by working together with the government we can build on the experience and expertise we each bring to bear. That spirit of cooperation will be imperative to ensure that we can meet not only the cyber threats we see today, but also those that we will meet in the years to come.
Tom Kuhn is president of the Edison Electric Institute.
The success of the shale energy boom is making the United States the world's top oil and natural gas producer, pulling past Russia, according to the Wall Street Journal:
U.S. energy output has been surging in recent years, a comeback fueled by shale-rock formations of oil and natural gas that was unimaginable a decade ago. A Wall Street Journal analysis of global data shows that the U.S. is on track to pass Russia as the world's largest producer of oil and gas combined this year—if it hasn't already.
The U.S. produced the equivalent of about 22 million barrels a day of oil, natural gas and related fuels in July, according to figures from the EIA and the International Energy Agency. Neither agency has data for Russia's gas output this year, but Moscow's forecast for 2013 oil-and-gas production works out to about 21.8 million barrels a day.
In light of the success brought about by shale energy boom and hydraulic fracturing, one of the technologies needed to tap these sources, 20 state chambers of commerce sent a message to EPA Administrator Gina McCarthy: Lay off. Midwest Energy News reports:
“Common sense, effective regulations are necessary to govern the use of hydraulic fracturing and we have embraced this responsibility through regulation particular to the unique characteristics of our respective states,” the letter reads. “This is why we oppose any new federal intervention that would disrupt the regulatory frameworks of the states.”
“No one knows the local geology, land and water better than state agency staff and there is no doubt that different states have different areas of focus when it comes to regulating hydraulic fracturing,” they add in the letter.
State chamber officials worry that EPA’s Washington-knows-best approach to regulation “will be too difficult to manage with such a dichotomy of environmental issues in states.” In addition, as innovation advances in shale energy development, “individual states are more than nimble enough to react and amend the regulatory models so they provide the appropriate protections for the land and its citizens.”
Hydraulic fracturing has led to the shale energy boom and has resulted in more domestic energy, more jobs, and economic growth. This is an American success story that will continue if federal regulators don’t get in the way.
The letter from state chambers of commerce in Alabama, Alaska, Arkansas, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Montana, New Mexico, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and West Virginia is below:
President Obama has repeatedly called for an all of the above strategy that develops every source of American energy. But he’s also pushing the Environmental Protection Agency to move forward on an aggressive new Climate Action Plan that would take steps toward eliminating our most abundant and affordable energy resource—coal.
Last month EPA unveiled a revamped proposal calling for the first-ever greenhouse gas emissions limits for new power plants, which would be virtually impossible for even the most modern coal plant. By requiring the use of technology that isn’t commercially viable, the new rule is really a de facto ban on new coal plant construction.
This rule is the latest in an ongoing regulatory assault on America’s coal industry, which certainly was never intended by Congress. Regulations are an essential part of a complex economy. But when done wrong, regulations can bring compliance costs that threaten entire industries. The U.S. Chamber of Commerce has long said that a basic and commonsense premise for any regulation is that the benefits should outweigh the costs. In this case, the economic costs of sidelining our coal resources would be devastating, with very little benefit.
Coal is our largest source of domestically produced energy, responsible for about 40% of our electricity. Some want to see coal replaced with alternative energy sources. These new forms of energy have an important place, but today, they are far from ready to replace the abundant and affordable coal resources that have long powered our nation.
Coal is also vital to our economy. The coal industry is responsible for nearly 550,000 U.S. jobs. If adopted, this and other EPA rules would cause sweeping job losses, reduce our coal-fired electricity-generating capacity by 20% or more, and drive up U.S. electricity costs, which would impact all businesses, industries, and families.
Next year the agency will issue performance standards for existing power plants that are sure to put further pressure on the backbone of our existing electric generation fleet. And, unfortunately, the threats don’t stop with coal. The federal government is proposing new regulations on shale development—even though shale is already effectively regulated at the state level. Such regulations could hamstring the shale boom and cost our economy more than $100 billion in the next few years. The government continues to place 87% of our offshore oil and gas off limits, and a cumbersome permitting process holds back energy development.
As long as EPA pushes anti-coal rules and jeopardizes the development of other crucial sources of domestic energy, the administration’s calls for an all of the above energy strategy ring hollow.