WSJ, Fox Claim Obama Could “Overrule” EPA's Power Plant Regulations

WSJ: “With An Executive Order, [Obama] Could Exempt All Power Plants” From EPA Rules. A Wall Street Journal editorial stated that “Obama has the power to delay new rules that will shut down 8% of all U.S. power generation,” referring to an informal estimate of the combined impact of numerous EPA rules, many of which have not yet been proposed. From the editorial:

As it happens, those 1990 [Clean Air Act] amendments contain an overlooked proviso that would let Mr. Obama overrule EPA Administrator Lisa Jackson's agenda. With an executive order, he could exempt all power plants “from compliance with any standard or limitation” for two years, or even longer using rolling two-year periods. All he has to declare is “that the technology to implement such standard is not available and that it is in the national security interests of the United States to do so.”

Both criteria are easily met. Most important, the EPA's regulatory cascade is a clear and present danger to the reliability and stability of the U.S. power system and grid. The spree affects plants that provide 40% of U.S. baseload capacity in the U.S., and almost half of U.S. net generation. The Federal Energy Regulatory Commission, or FERC, which is charged with ensuring the integrity of the power supply, reported this month in a letter to the Senate that 81 gigawatts of generating capacity is “very likely” or “likely” to be subtracted by 2018 amid coal plant retirements and downgrades.

That's about 8% of all U.S. generating capacity. [Wall Street Journal, 8/29/11, emphasis added]

Fox News: “The President Could Suspend These Crazy Rules ... With Just A Signature.” From the August 30 edition of Fox & Friends:

STEVE DOOCY, CO-HOST: The Utility MACT rule costs $10 billion annually. The Boiler MACT rule costs 9.5 billion. The Cross State Air Pollution rule costs $1.4 billion and then .8 billion. The thing is, Deneen, the President could suspend these crazy rules that are going to cost so many jobs and so much energy with just a signature on a piece of paper.

DENEEN BORELLI, FOX NEWS CONTRIBUTOR: Through an executive order. And you know, I think this is a political play because what he's going to do is blame the House Republicans and the Tea Party for this if this does not work out to help the economy grow. [Fox News, Fox & Friends, 8/30/11]

In Fact, WSJ Misleadingly Cropped The Text Of The Clean Air Act

The Presidential Exemption Applies Only To Hazardous Air Pollutant Rule. The Journal editorial cropped the quote from the Clean Air Act. Section 112 of the Act states that the presidential exemption clause applies only to regulations under that section, such as the EPA's proposed Utility MACT/Air Toxics rule to limit power plant emissions of mercury and other toxic pollutants. Contrary to the claims made by The Journal and Fox News, this provision does not authorize the President to grant exemptions from other pending EPA rules:

The President may exempt any stationary source from compliance with any standard or limitation under this section for a period of not more than 2 years if the President determines that the technology to implement such standard is not available and that it is in the national security interests of the United States to do so. An exemption under this paragraph may be extended for 1 or more additional periods, each period not to exceed 2 years. The President shall report to Congress with respect to each exemption (or extension thereof) made under this paragraph. [Clean Air Act, Sec. 112]

WSJ And Fox Are Calling For Exemptions From A Rule That Has Not Yet Been Finalized. EPA proposed the Utility MACT/ Air Toxics rule in March, and will issue a final rule by November. [EPA, accessed 8/30/11]

Criteria For Presidential Exemption Are Not Met

Exemption Is An Option Only If Technology Is Unavailable And National Security Is At Stake. The Wall Street Journal claimed that Obama could “easily” exempt power plants from pollution limits:

All he has to declare is “that the technology to implement such standard is not available and that it is in the national security interests of the United States to do so.”

Both criteria are easily met. [Wall Street Journal, 8/29/11]

Pollution Control Technology For Air Toxics Is Readily Available

CRS: Compliance With Proposed Rules Will Not Require “Complicated Or New Technology.” Discussing the impact of the proposed Utility MACT rule on coal plants, an August 8 Congressional Research Service report noted:

In proposing the standards, EPA noted that while the requirements are stringent for those facilities lacking controls, 56% of existing coal-fired power plants already are in compliance. Thus, the standards are expected to level the playing field, bringing older, poorly controlled plants up to the standards being achieved by a majority of the existing units. In this respect, the proposed standards reflect the statute's requirement that existing sources of HAPs should meet standards based on the current emissions of the best performing similar sources.

[...]

This is not complicated or new technology. Other types of facilities (notably solid waste incinerators) have used this technology for the past 15 years to reduce their mercury and other HAP emissions by 95% or more. As a result of state-level pollution control regulations, a growing percentage of coal-fired power plants do the same. [Congressional Research Service, 8/8/11]

CRS: 20 States Already Have Mercury Limits; Most Power Plants Are Already Meeting The Standards. From a March 21 Congressional Research Service Report on EPA regulations initiated since January 2009:

In 2005, EPA promulgated regulations establishing a cap-and-trade system to limit emissions of mercury from coal-fired power plants. The rules were challenged, and the D.C. Circuit Court of Appeals vacated them in 2008. Rather than appeal the ruling to the Supreme Court, EPA agreed to propose Maximum Achievable Control Technology (MACT) standards by March 2011 and promulgate final standards by November 2011. The proposed standards, released March 16, are already being met by 56% of coal- and oil-fired electric generating units; the other 44% would be required to install technology that will reduce mercury and acid gas emissions by 91%, at an annual cost of $10.9 billion. EPA estimates that the annual benefits, including the avoidance of up to 17,000 premature deaths annually, will be between $59 billion and $140 billion. Following promulgation of these standards, existing power plants will have three years, with a possible one-year extension, to meet the standards. About 20 states have already established mercury emission control standards for coal-fired power plants, and other major sources have been controlled for as long as 15 years, reducing their emissions as much as 95%. [Congressional Research Service, 3/21/11]

Energy Companies: “We Know From Experience That Constructing This Technology Can Be Done.” In a joint press release, representatives of several major energy companies asserted that EPA's Utility MACT rule is achievable:

For over a decade, operators of coal-fired generation have known that pollution controls would be required to comply with Clean Air Act (CAA) requirements to reduce hazardous air emissions like mercury, hydrochloric acid, and arsenic. Most of the industry has been preparing for the rule by investing in modern pollution controls and cleaner, more efficient power plants.

“We recently completed the installation of a major air quality control system, including scrubbers, baghouse, and other equipment at one of our major coal facilities in Maryland,” said Paul Allen, senior vice president and chief environmental officer of Constellation Energy. “These systems work effectively and result in dramatically lower emissions of mercury, sulfur dioxide, particulate matter, and acid gases. We know from experience that constructing this technology can be done in a reasonable time frame, especially with good advance planning; and there is meaningful job creation associated with the projects.” [Business Wire, 3/16/11]

Utility Executives: “The Technology Exists To Cost Effectively Control Such Emissions.” In a letter to the editor of the Wall Street Journal, executives representing several major power companies stated:

The electric sector has known that these rules were coming. Many companies, including ours, have already invested in modern air-pollution control technologies and cleaner and more efficient power plants. For over a decade, companies have recognized that the industry would need to install controls to comply with the act's air toxicity requirements, and the technology exists to cost effectively control such emissions, including mercury and acid gases. The EPA is now under a court deadline to finalize that rule before the end of 2011 because of the previous delays.

To suggest that plants are retiring because of the EPA's regulations fails to recognize that lower power prices and depressed demand are the primary retirement drivers. The units retiring are generally small, old and inefficient. These retirements are long overdue. [Wall Street Journal, 12/8/10]

EPA Rules Do Not Threaten National Energy Security

FBR Capital Markets Analysis: Retirement Of 45 GW Would Have “Little Effect” On Reserve Power. From a CRS report on the impact of several EPA regulations on coal-fired power plants:

In the early 2000s, in response to the NOx SIP Call, the industry installed 96 GW of SCR in a five-year period while successfully maintaining system reliability. This was a “much more capital and manpower intensive effort” than the Utility MACT will be, according to David Foerter, the group's Executive Director.

If necessary, as shown in Figure 6, the industry is capable of adding new generating capacity in a short time. From 2000-2003, electric companies added over 200 GW of new capacity, far more than any of the analyses suggest will be needed in the 2011-2017 timeframe.

A December 2010 analysis by FBR Capital Markets concluded that even the incremental retirement of 45 GW by 2014 (which appears to be more than EPA's rules will effect) would have little effect on electricity reserve margins: “Summer reserve margins are currently 26% across the U.S. and are likely to decline only to 24% by 2014 in a draconian scenario in which 45 GW of generation is retired.” FBR offers the caveat that electricity reserve margins are a regional, not a national matter; but its analysis of eight NERC regions found reserve margins of 16.8% to 37.8% under its “draconian” 2014 scenario.

Other studies suggest that proper planning can prevent a train wreck, even in worst-case scenarios. Much depends on whether individual utilities have already begun planning for the implementation of the rules, including lining up engineers to design modifications, and conducting preliminary discussions with permitting authorities and grid operators regarding the required steps. [Congressional Research Service, 8/8/11]

Bipartisan Policy Center: “Scenarios In Which Electric System Reliability Is Broadly Affected Are Unlikely To Occur.” A Bipartisan Policy Center report on the impact of EPA regulations on electric system reliability identified tools available to address localized reliability risk. The report also stated:

BPC analysis indicates that scenarios in which electric system reliability is broadly affected are unlikely to occur. Previous national assessments of the combined effects of EPA regulations reach different conclusions, in part because they make quite different assumptions about the stringency and timing of new requirements and about the availability and difficulty of implementing control technologies. In some cases these assumptions deviate from the specifics of EPA's recent proposals in meaningful ways. Moreover, market factors, such as low natural gas prices, are as relevant as EPA regulations in driving coal plant retirements. [Bipartisan Policy Center, 6/13/11]

CRA Study: “Electric System Reliability Can Be Maintained” With Clean Air Transport Rule And Utility MACT Rule. From a 2010 report by Charles River Associates assessing EPA's Clean Air Transport Rule and the proposed regulation of toxic air pollutants from coal and oil fired power plants:

[W]e conclude that electric system reliability can be maintained while the industry complies with EPA's air regulations. The number of projected coal plant retirements nationwide is relatively small compared to historical US net additions of generation capacity, and the electric sector has demonstrated repeatedly the ability to expand the generation fleet at a rate well in excess of projected capacity needs. Although we predict that a handful of areas will have de minimis or modest shortfalls due to predicted retirements, adequate reserve margins can be maintained by better utilizing existing supply capacity, installing new generation, and increasing load management. Additionally, existing federal statutory, state regulatory, and regional transmission organization (RTO) market safeguards can be utilized to maintain a reliable electric system. [Charles River Associates, 12/16/10]

M.J. Bradley & Associates Report: “Without Threatening Electric Reliability, The Industry Is Well-Positioned” To Meet EPA Requirements. From a report conducted by M.J. Bradley & Associates for the Clean Energy Group:

In this paper, we highlight the impact of EPA's upcoming air regulations, with a focus on the issue of possible power plant retirements on electric reliability. We conclude that, without threatening electric reliability, the industry is well-positioned to respond to EPA's proposed road map to “help millions of Americans breathe easier, live healthier,” provided that EPA, the industry and other agencies take practical steps to plan for the implementation of these regulations and adopt appropriate regulatory approaches. [M.J. Bradley & Associates, August 2010]

Utilities: “Regulations Can Yield Important Economic Benefits ... While Maintaining Reliability.” In a letter to the editor of the Wall Street Journal, CEOs of several major utilities wrote:

Contrary to the claims that the EPA's agenda will have negative economic consequences, our companies' experience complying with air quality regulations demonstrates that regulations can yield important economic benefits, including job creation, while maintaining reliability. [Wall Street Journal, 12/8/10]

Air Toxics Rule Has Been Anticipated For Decades

In 1990 Bush Sr. And Bipartisan Congress Directed EPA To Regulate Mercury And Other Air Toxics. From a December 2010 Greenwire report:

In the first few years after the law [Clean Air Act] hit the books in 1970, U.S. EPA cracked down on airborne lead, soot and smog. Congress had also ordered EPA to figure out the risks posed by toxic contaminants, but the agency did little to stop mercury and other rare but dangerous chemicals from being released into the air.

In two decades, the agency had applied that section of the Clean Air Act to just eight substances.

Lawmakers who wrote the pollution law were fed up; so was President George H.W. Bush. After consultations with environmentalists and industry groups, they prepared a package of amendments that changed the rules for toxic air pollution. It listed mercury and nearly 200 other substances by name and told EPA to regulate them, sparing the agency the challenge of proving that the substances posed a risk.

The amendments sailed through the House, 401-25, supported by many Republicans who are now among EPA's most vocal critics. Bush signed the amendments into law the week before Thanksgiving, saying it was time to “break the logjam that hindered progress on clean air.”

“Every American expects and deserves to breathe clean air,” Bush said at a White House signing ceremony. “And as president, it is my mission to guarantee it for this generation and for the generations to come.”

Fast forward to today. Toxic pollution limits have been set for many industries, but a generation after the last major change to the nation's air pollution laws, EPA still doesn't have standards for coal-fired power plants and other facilities that release most of the nation's mercury. [Greenwire, 12/8/10]

NY Times: George W. Bush Admin Proposed A Rule That Its Own Lawyers Knew Would “Almost Certainly Be Reversed.” The New York Times reported:

The new rules bring to a close a bitter legal and regulatory battle dating back to the passage of the 1970 Clean Air Act, which first directed the E.P.A. to identify and control major industrial sources of hazardous emissions.

By 1990, however, federal regulators had still not set standards for toxic emissions from power plants, and Congress, in the face of stiff resistance from utilities and coal interests, passed legislation directing the E.P.A. to study the health effects of mercury and other emissions, and to detail the cost and effectiveness of control technologies.

In 1998, the agency finally complied, delivering a comprehensive report to Congress detailing the health impact of numerous pollutants, including mercury, which by then had been linked conclusively in multiple studies to serious cognitive harm to fetuses.

In December 2000, in the last days of the Clinton administration, the E.P.A. finally listed power plants as a source of hazardous air pollutants under the Clean Air Act.

The Bush administration E.P.A. faced its own deadlines to devise and put into effect controls for power plant pollution. But rather than issue emissions standards in line with federal law, in 2005, top agency officials instituted a controversial cap-and-trade program for mercury, despite a warning from agency lawyers that the move would throw the issue back into the courts and almost certainly be reversed.

As predicted, a coalition of states and environmentalists sued the agency, arguing that the cap-and-trade program would not limit other toxic emissions like arsenic and would allow the dirtiest power plants to pay for the right to pollute, putting nearby communities at risk. In 2008 a federal judge ruled against the E.P.A., giving the agency three years to develop standards for mercury and other pollutants. [The New York Times, 3/16/11]

Court Ruled That Bush Administration's Version Of The Rule Violated The Clean Air Act. From the August 8 CRS report:

The mercury cap-and-trade rules promulgated in 2005 were a change in policy by EPA. All previous sources of mercury subject to emission standards had been required to meet plant specific Maximum Achievable Control Technology (MACT) standards under CAA Section 112. Section 112 sets out very detailed requirements for MACT standards, including a list of the pollutants that need to be controlled (not just mercury, but any of 187 hazardous air pollutants, or HAPs) and the level of control that the standards must achieve. The 2005 cap-and-trade rules addressed only mercury, and would have allowed many power plants to avoid control provided they obtained allowances from others who achieved lower pollution levels than required, or reduced emissions sooner than required. The ability of plants to avoid emission control by purchasing allowances could lead to the continuation of “hot spots,” areas where mercury concentrations in waterbodies are greater than elsewhere.

By contrast, the statute requires MACT standards applicable at each existing plant to be no less stringent than the average emission limitation achieved by the best performing 12% of existing sources in the industry subcategory. These statutory requirements are referred to as the “MACT floor,” because the agency is not allowed to set less stringent standards, nor may it take economic factors into account in determining what the floor will be.

Whether the agency could substitute cap-and-trade rules for the MACT requirements was challenged by the State of New Jersey and others, and, in a 3-0 decision, the D.C. Circuit Court of Appeals vacated the cap-and-trade rules in 2008. The court found that, under Section 112, unless EPA “delisted” the category of sources, it had to require that each plant in the category meet MACT standards. Under the statute, delisting would have required a finding that no EGU's emissions exceeded a level adequate to protect public health with an ample margin of safety, and that no adverse environmental effect would result from any source.

Rather than appeal the court's ruling to the Supreme Court or attempt to delist the category, EPA proposed what is referred to as the “Utility MACT,” March 16, 2011. [Congressional Research Service, 8/8/11]

EPA Settlement Set November Deadline For Air Toxics Rule. As explained in EPA's proposed Air Toxics Rule:

On December 18, 2008, several environmental and public health organizations (''Plaintiffs'') 10 filed a complaint in the DC District Court (Civ. No. 1:08-cv-02198 (RMC)) alleging that the Agency had failed to perform a nondiscretionary duty under CAA section 304(a)(2), by failing to promulgate final section 112(d) standards for HAP from coal- and oilfired EGUs by the statutorily mandated deadline, December 20, 2002, 2 years after such sources were listed under section 112(c). EPA settled that litigation. The consent decree resolving the case requires EPA to sign a notice of proposed rulemaking setting forth EPA's proposed section 112(d) emission standards for coal- and oil-fired EGUs by March 16, 2011, and a notice of final rulemaking by November 16, 2011. [Federal Register, 5/3/11]

News Corp. Has Repeatedly Misled Public About Clean Air Rules

Using a series of misleading talking points, News Corporation's Wall Street Journal, New York Post, Fox News and Fox Business have accused the Obama administration of waging a “war on coal” because the EPA has moved to limit toxic air pollution from power plants. In reality, the EPA is issuing these rules because the Bush administration's regulations were rejected by courts, and the revised rules are expected to have significant public health benefits. [Media Matters, 8/12/11]