Complexity Equals Uncertainty and Vulnerability

The proposed power plant rule is one of the most complex rules ever drafted by EPA. The complexity creates a vulnerability and significant risk that it fall or get substantially modified. There is a significant likelihood that the rule cannot be finalized by the time President Obama leaves office. If that is the case, and Republicans capture the Senate in the fall and the White House in 2016, this regulation will never see the light of day.

Because of the rules complexity and unprecedented scope, there will certainly be a number of legal challenges that will delay progress on finalizing it on the time line set by EPA.

While the Supreme Court, wrongfully in the view of many, concluded that EPA had the authority to regulate CO2 as a pollutant, some lawyers question whether the Clean Air Act provision chosen by the Agency for the proposed regulation is appropriate to regulate beyond specific facilities. EPA is using section 111(d) of the Clean Air Act that some lawyers contend can only be used for existing sources of emissions, not state wide sources. This section has never been used to regulate major sources and an emission that is widespread and in some instances uncontrollable—breathing, termites, animal flatulence. Challenges are also likely to be mounted on the target rates that EPA has set and how it has set and allocated them. Courts will have to decide whether on these matters the language in the Clean Air Act is unambiguous. If not, history suggests deference to the Agency.

A related legal issue is whether the Clean Air Act allows EPA to go beyond imposing limits on power plants and indirectly impose emission rates on other sources. A rule supposedly aimed at power plants could be undermined by actions taken against other sources. There is no precedent, according to some legal experts, for the type of action EPA proposes.

While attacks are made on the proposed rule, there are also challenges to a regulation proposed last year covering new sources of CO2 and the other pollutants. The reason is that under the Clean Air Act, EPA cannot regulate existing sources until it regulates new ones. If the 2013 proposed rule is over turned or sent back to the Agency, this rule cannot be implemented.

The process of setting separate standards for each state creates at least two areas of vulnerability. The first is determining that the relative burdens on states are fair, reasonable, and balanced. The analysis underlying EPA’s determination must be extremely complex and filled with assumptions that can easily be challenged. More important is the fact that most state environmental departments do not have the authority under state law to take some actions required by compliance plans. So, state legislatures would have to pass and governors sign authorizing legislation. If they don’t, EPA would have to write plans for non-compliant states.

Beyond the legal hurdles that will have to be cleared are questions related to the substance of the regulation—climate change and air quality. EPA regulatory analysis shows that the greatest asserted benefits come from air quality improvements. This raises the question of whether EPA is attempting to use CO2 regulation to go after pollutants that it might not be able to regulate under other provisions of the Clean Air Act.

Criteria pollutants continue to decline and the major health benefits associated with those reductions have mostly been achieved. In issuing air quality regulations, EPA continues to assert that they will save thousands of lives and avoid health effects like asthma. Those assertions are based solely on statistical associations and not empirical data. Mortality estimates drawn from assumptions about epidemiological studies and concentration-response relationships are a weak basis for imposing large costs on the economy. It is doubtful that EPA would be willing to subject its health effects analyses to a truly independent review process.

As for the impact on climate, it has been demonstrated that the effect of this regulation on global CO2 concentrations is virtually imperceptible. For those who believe that there is a direct correlation between emission levels and global warming, there has to be an assumption that by implementing this regulation, China and emerging economies that are the major sources of emissions will take corresponding actions. Such an assumption has zero credibility. As a result, this regulation represents all cost and no benefit.

EPA continues to demonstrate a level of zealotry that should be a cause for serious concern. It shows little regard for economic or unintended consequences associated with its actions while simultaneously acting to create precedents for control over all economic activity. It truly has become a rogue agency.
This article appeared on the National Journal Energy Insiders weblog at  http://disqus.com/wokeefe/

Partner & Fellow Blogs