US Chamber of Commerce Blog
Notice to Voters: EPA is Clobbering Ohio, Florida, Illinois, Missouri and North Carolina | Mar 10 2016
Ohio, Florida, Illinois, Missouri and North Carolina are taking their turn in the election spotlight, as voters in those five states prepare to cast their ballots in the Democratic and Republican primaries on Tuesday. It’s a moment that political pundits believe represents the best (and perhaps last) opportunity for challengers to turn the momentum swelling behind Hillary Clinton and Donald Trump, and there will surely be any number of important issues weighing on the minds of voters.
One issue that resonates in all five states? The flood of onerous and overreaching regulations that have in recent years been pouring out of the Environmental Protection Agency.
In the past year, EPA regulators have floated and finalized several rules that provide little or no environmental or health benefits, that threaten to shutter businesses and eliminate thousands of jobs, and that stretch the agency’s authority beyond recognition (and in some cases, potentially beyond the letter of the law). They include new ozone emissions restrictions, onerous new regulations on coal plants and a radical expansion of the agency’s authority over streams, creeks and riverbeds.
Not surprisingly, given the sweeping nature of these rules, every voter who will head to the polls on Tuesday lives in a state that has been hammered by the EPA’s recent regulations. Here’s a look at how businesses in those states have already been hit hard by the regulations.
“John Cooper, a former mechanic in the Marine Corps, has spent the past fifteen years working for Ameren, an energy utility company in the Midwest. He started out as a laborer at the firm’s Meramec power plant in 2000, and in the years since has worked his way up to shift supervisor at that same facility in St. Louis. He now supervises the operation of all plant systems. Soon, there won’t be any systems -- or employees -- left to supervise.”
“Activists are taking to Facebook and Twitter with messages telling EPA to #DitchTheRule, and the Missouri Farm Bureau is taking things to another level with its #DitchCam that spotlights some of EPA’s WOTUS claims with the help of a few mythical people and creatures… The proposed rule wouldn’t just be hard on farmers, it would be hard on businesses, states, and local governments.”
“Some, such as the Tampa-based Seminole Electric Cooperative, went deeply into debt to build the coal-fired power plants U.S. officials demanded years ago, and now they are stuck with facilities that can’t meet the new standards and can’t be easily upgraded or replaced. “We can’t just run out and invest in some new technology,” said Seminole General Manager Lisa Johnson, who oversees an electric grid that supplies dozens of small towns and farming communities across north-central Florida.
“These potential rules will affect different areas of the country differently depending on what fuel sources they rely on and are able to tap for electricity generation… If you live in the South power region - much of the Southeast from Tennessee to Florida - expect to see the highest increases: $6.6 billion on average annually and $111.4 cumulatively from 2014-2030.”
“I try not to think about the irony,” said Janet Kaboth, president of Whitacre Greer, the family-owned brick manufacturer in Alliance, Ohio that in 1980 churned out more than a million candlelight-colored bricks that still stretch from the White House to the Capitol. “It’s frustrating. Very, very frustrating.” What’s threatening Kaboth’s company, which will celebrate its 100th year in business this year, are onerous new regulations finalized last year by the EPA – regulations that business leaders expect to wreak havoc on an already troubled American industry.
“About the only thing worse for Ohio than EPA imposing a stricter ozone standard would be a Michigan win over Ohio State. According to the Center for Regulatory Solutions (CRS), 34 counties in Ohio will not meet federal ozone air quality standards if EPA lowers the standard from 75 parts per billion (ppb) set in 2008 to somewhere between 65 and 70 ppb… For a state like Ohio still trying to lift itself up after the Great Recession, a stricter ozone standard would be a major hit.”
“A stricter EPA ozone standard is bad news for the Windy City, by threatening jobs and making it harder to fight poverty, a report finds… With their significant manufacturing bases, McHenry, Lake, and Kane Counties will be hit particularly hard.
“Proposed changes to tighten national ozone standards could put local jobs at risk and limit opportunities for economic development in Illinois.”
“EPA’s methodology for calculating a unit’s capacity value is completely foreign to the electric utility industry. North Carolina electric utilities develop their resource plans to secure capacity to meet the single coincident peak demand modeled over the planning horizon. In North Carolina, this is typically the summer seasonal peak. However, from time-to-time, North Carolina utilities have observed all-time system peak demands during the winter months. While utilities are obligated to meet the peak demand regardless of when it occurs, they typically must plan for more generation in the summer than winter.”
"In a 5-4 decision, the U.S. Supreme Court blocked a carbon emission proposal by the Environmental Protection Agency (EPA) that would harm the nation’s job creators and add more red tape to an already burdensome federal regulatory climate. Last year, the NC Chamber joined the National Association of Manufacturers, the U.S. Chamber of Commerce, and other pro-growth organizations to urge national leaders to stand against this proposal. While the Court’s decision Tuesday will only temporarily block the EPA’s proposal, it provided job creators with an encouraging sign that judicial leaders are exercising a healthy level of skepticism toward the out-of-control regulatory overreach the executive branch has attempted to exert in recent years."
President Barack Obama is winning his regulatory war on coal, even though public opinion supports it as a beneficial part of America’s energy mix.
It’s not often that a presidential campaign moment is applicable eight years later. In 2008, then-candidate President Barack Obama told The San Francisco Chronicle, if elected president, “if somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them."
Fast-forward to today. The Energy Information Administration (EIA) points out almost 14 gigawatts (GW) of coal-fired power plants were retired in 2015.eia_powerplantretirements_2015.jpg Energy Information Administration chart: Power plant retirements in 2015.Source: Energy Information Administration.
There’s no doubt that some of this stems from market forces. The shale boom has unleashed so much natural gas that its price has been driven down, making it a very competitive fuel source for electricity generation.
But no one can seriously argue that the Obama’s regulatory attacks on coal haven’t played a major role. Here’s one example from the Energy Information Administration:
About 30% of the coal capacity that retired in 2015 occurred in April, which is when the U.S. Environmental Protection Agency's Mercury and Air Toxics Standards (MATS) rule went into effect.
This rule was struck down by the Supreme Court in July 2015, but as EPA Administrator Gina McCarthy bragged, the damage was done. "Over 50 GW of affordable, reliable power plants have been shuttered by an illegally crafted" mercury rule, writes Heath Knakmuhs of the Institute for 21st Century Energy.
Another example is the Goliath of regulatory attacks on coal: EPA’s Clean Power Plan. The regulations will force states to abandon reliable coal-fired power plants and reconfigure their electrical systems to reduce U.S. carbon emissions.mci_cpp_stay_support_topline_2016-03-08.jpg Morning Consult poll on Supreme Court stay of EPA's Clean Power Plan.Source: Morning Consult.
American Coalition for Clean Coal Electricity poll shows a majority of Americans support coal for electricity generation.Source: Morning Consult.
Americans must be scratching their heads at this administration’s regulatory onslaught. A poll for the American Coalition for Clean Coal Electricity found that a majority (54%) of voters support using coal to generate electricity.
This makes total sense. Coal-fired power plants work. They produce reliable electricity at an affordable price. As families and businesses use more devices like smart phones, computers, televisions, along with the rise of the Internet of Things, the need for dependable electricity will only increase.
President Obama’s eight-year war on coal may have fulfilled a campaign promise, but it runs counter to an economy relying more on electrons and bits than atoms. The public gets this even if the president doesn’t.
On the evening of February 9th, 2016, a collective sigh of relief was heard in state capitals across the country. In response to requests from 27 states, the U.S. Chamber, and numerous other business and labor organizations, the U.S. Supreme Court issued an order that blocked EPA from implementing the Clean Power Plan (CPP), the agency’s unprecedented takeover of America’s electricity sector, until after the courts have a chance to review its lawfulness.
The legal effect of such a court order – a “stay” – is to press pause, effectively resetting the world to the day before a rule was finalized so that states and regulated parties are not forced to sink extraordinary resources into complying with a rule that might not even be lawful. Or at least, that’s what it is supposed to be, as explained in a new legal white paper released today.
In response to the Supreme Court’s stay of the CPP, EPA Administrator Gina McCarthy has engaged in an escalating pattern of defiant rhetoric, culminating in her outrageous statement earlier this week that “[l]ife is continuing [in] the exact same direction it was before the stay,” that the stay “didn't mean that anything on the ground really had changed,” and that the stay “is not going to slow us down.”. Her most recent claims follow on the heels of the agency’s equally outrageous suggestion that the stay won’t push back the CPP’s compliance deadlines.
EPA’s claims that the stay hasn’t really changed anything seem calculated to goad utilities and state air regulators into continuing to work towards compliance with the CPP during the period of judicial review, despite the stay. Whether the CPP deadlines are extended by the length of the stay – or “tolled,” to use the legalese – matters tremendously, because it has the potential to put states in a serious pickle. If the deadlines are not “tolled” by the stay, as EPA claims, then EPA could jam states with truncated compliance deadlines in the unlikely event that the courts uphold the Rule.
Notwithstanding EPA’s blustery claims to the contrary, the law is crisp and clear that a court stay of a regulation delays (or tolls) all of the deadlines included in a rule for at least as long as the amount of time that a rule is stayed. What’s more, EPA itself already admitted to this in its own filings with the U.S. Supreme Court and the D.C. Circuit.
A new legal white paper by the U.S. Chamber coalition's law firm, Sidley Austin LLP, spells it out:
As described below, we believe the proper interpretation of the Court’s order is that the Stay tolls all the Rule’s deadlines—not just those that actually fall during the Stay—for at least the period of time the Stay is in place. In the hypothetical scenario in which the courts might eventually uphold the Rule, EPA is required to move all the Rule’s deadlines into the future by at least the amount of time between the Stay’s issuance and its expiration. Tolling of the deadlines is required by straightforward operation of the Stay; indeed, EPA itself represented to the Supreme Court that the Stay would toll all of the Rule’s deadlines if granted. This conclusion is also consistent with Supreme Court and D.C. Circuit case law, which holds that a stay preserves the status quo and that deadlines must therefore be tolled, and with EPA’s own past statements regarding the impact of a stay on deadlines. It is further necessary to toll all of the Rule’s deadlines in this case to avoid the concerns expressed by EPA in the Rule itself that the states and industry must be given sufficient time to prepare for compliance in order to avoid “compromising electricity system reliability” and other adverse impacts.
In other words:Requesters of the stay asked for tolling; In opposing the stay request, EPA itself warned that granting the stay would force tolling; Existing court precedent requires tolling; and Upon finalizing the Rule, EPA itself stated that it had given states and utilities the bare minimum amount of time possible to comply with the rules without threatening grid reliability, inherently acknowledging that shortening such timelines could in fact cause reliability problems.
So what’s in it for EPA to engage in this public relations campaign dismissing the effect of the stay on the CPP and its deadlines? Well, EPA has already learned from experience that if it can enforce compliance while the courts are reviewing a rule (judicial review often takes years), then it can achieve its goals regardless of the legality of its rules. Under this scenario, it doesn’t really matter whether the courts ultimately hold that a regulation is unlawful: the irreversible damage from a rule has already been done by the time the courts catch up.
The most recent example of EPA’s “Catch Me If You Can” regulatory strategy was on full display just last year, when the Supreme Court invalidated EPA’s MATS regulation, but not until the Rule contributed to the shutdown of up to 20% of the country’s coal-fired power plants.
On the eve before the Court held that the MATS rule was unlawful, HBO’s Bill Maher asked Administrator McCarthy what EPA would do if the Court invalidated the rule. McCarthy seemed nonplussed by the possibility, explaining that the rule was finalized “three years ago” and that “[m]ost of [the utilities] are already in compliance, investments have been made…”
In other words, EPA already forced the irreversible compliance investments and power plant retirements it wanted out of the rule – so what did it matter if the Court now found the rule to be unlawful?
That’s why the U.S. Supreme Court’s stay of the CPP is important—it keeps EPA from relying on its “Catch Me If You Can” regulatory strategy yet again. States deserve to have the complete picture about the real legal effect of the Supreme Court’s stay before they fall for EPA’s misinformation campaign. EPA should have admitted to the states directly that the Agency had already told the courts that the deadlines must be tolled by a stay.
In the interest of transparency the EPA must tell states, utilities, and electricity users that it will honor the tolling requirements inherent in the stay decision.
Editor's note: This originally appeared on the Institute for 21st Century Energy's blog.