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Energy Industry Stall Tactic: Embrace EPA

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Obama-jackson1.jpg

President Barack Obama and EPA Administrator Lisa Jackson (WDCpix)

Earlier this year, when it seemed plausible that Congress would address climate change in 2009, energy industry representatives were hyping the need for legislation to fend off regulation from the Environmental Protection Agency. When the EPA first declared carbon dioxide a threat to humankind in April – the necessary first step before they could begin regulating the greenhouse gas – industry groups were quick with the condemnations of EPA action.

“A more potent Anti-Stimulus Package would be difficult to imagine,” wrote Competitive Enterprise Institute senior fellow Marlo Lewis. The American Petroleum Institute called the motion on regulation “an endangerment to the American economy and to every American family.”

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Environment.jpg

Illustration by: Matt Mahurin

But now Congress doesn’t seem likely to pass a new law regulating planet-warming emissions this year. Senate Majority Leader Harry Reid indicated to reporters this week that a climate bill could wait until 2010. And with the delay, attention is turning once again to what the EPA will do to regulated greenhouse gases in the absence of a new law.

But instead of pitching a fit, the same anti-environmental groups that once decried EPA regulation are now welcoming it. The EPA’s regulatory process is by nature slow and deliberate, with each regulation taking months to put in place. Once the regulatory process is completed, rules are often held up in years of litigation. And even if a regulation survives that, it can be reversed by a future administration. On the Clean Air Act specifically, the technologies necessary to meet the obligations of the law don’t yet exist for carbon dioxide. Meanwhile, though many did hope at one time for a climate bill this year, one that would give them more long-term certainty about carbon pricing, the House-passed Waxman-Markey climate bill is tougher than what many in the energy industry have lobbied to pass into law. Thus, the prospect of EPA regulations — once so feared by many in polluting industries — is now being welcomed as a stall tactic.

“I think most people in industry have come to the conclusion that they’d rather deal with the uncertainty of the Clean Air Act rather than the certainty of a very expensive program like you have under Waxman-Markey,” Jeffrey Holmstead, the former assistant administrator in the EPA’s Air and Radiation division during the Bush administration. Holmstead now represents a number of energy-sector clients for the prominent international law firm Bracewell & Giuliani.

“I speak to a lot of industry folks. Most all of them would prefer climate legislation**, **something that gave them certainty,” said Holmstead. “But they would like what they consider to be reasonable legislation … But that’s not the Waxman-Markey bill.”

In April, the EPA followed through with the Supreme Court’s 2007 directive to determine whether carbon dioxide is a threat to human health and welfare. The agency’s finding that it is indeed a threat is expected to be finalized this fall. Once it is, the EPA will be required to begin the process of regulating emissions from a a variety of sources.

Throughout the initial stages of regulation, EPA Administrator Lisa P. Jackson has maintained that she, and the rest of the administration, would prefer not to regulate, as the Clean Air Act was not designed to regulate carbon dioxide and a Congress-passed cap-and-trade bill would better address both environmental and economic concerns. But Jackson and other advocates of passing a bill this year have repeatedly used the threat of EPA regulation to push Congress toward action. “The race is clearly on and time is of the essence,” she told reporters back in April following her testimony before the House Energy and Commerce Committee in support of their climate bill.

Sen. Barbara Boxer (D-Calif.), who is authoring the Senate’s climate bill, offered similarly aggressive warnings. “If Congress does nothing … we will be watching EPA do our job, because they must under the Clean Air Act,” she said in a March press conference.

The industry flip on EPA regulation comes in reaction both to the House bill, which they see as too stringent, and to the widespread understanding that regulation from the EPA is by nature very slow. Regulation of specific emissio sources – like automobiles and power plants – would be issued separately. Each new regulation requires an advance notice of the rule, a comment period of up to 90 days, review of those comments, and then a final announcement of the new rule. And after each new rule is finalized, which generally takes months, it would likely be held up in years of litigation.

“I have heard people in my industry say, ‘You know, I know they use the EPA regulating carbon as a hammer over our heads. What’s so bad about that?’” said Jim Rogers, CEO of Duke Energy, the third largest power supplier in the country and a member of the influential environmental and business coalition United States Climate Action Partnership, at an event this week. “We might be in a much better place because it might take 5 to 6 years to litigate.”

“I’m saying this to you as a guy who doesn’t want the EPA to do it. I want Congress to do it. I want them to do it this year,” Rogers told reporters. “But if you just think through this you can see those who don’t want it to happen can take a lot of comfort in the old command and control.”

Some energy executives are also taking comfort in the fact that the Clean Air Act would only require emitters to curb their emissions using the “best available control technology” – that is, the best technology currently able to capture harmful emissions. The problem with using this to guide carbon dioxide regulations is that no such technology really exists right now. While there’s a much expectation in the industry and in Congress that carbon-capture-and-storage – often called “clean” coal technology – will be commercially available in the future, most experts agree that it’s likely 10 to 15 years away. Rogers himself cast doubt this week as to whether it will ever be commercially viable.

Environmental advocates prefer the legislative route, as it allows for more clear emissions reductions goals, can include additional policy measures with the cap, like a renewable electricity standard, and is often faster. “When [the EPA] get[s] a proposal out, we’re still years from actual implementation. That’s a long process,” said World Resources Institute President Jonathan Lash told TWI.

But with Congress seeming less and less likely to act this year, the administration is charging ahead the rulemaking process. Earlier this week, Jackson and Department of Transportation Secretary Ray LaHood announced the first rules governing emissions from automobiles and light trucks. The administration has said they expect to have those rules finalized by next March.

Jackson again emphasized that her agency is will continue the process, even though it is unlikely to influence the Senate this year. “EPA will continue to do it’s job, which is to respond to the now two-plus-year old ruling about the Clean Air Act,” said Jackson on Tuesday. “I think it is fair to say that today’s announcement is path-breaking … It is the beginning of regulation. We should expect the EPA to continue to do its job.”

Environmental advocates offered support for the EPA is moving forward, though they still expressed optimism that Congress will act before those take hold. “We haven’t given up,” Environmental Defense Fund president Fred Krupp told TWI of the Senate process. While he said they are pleased to see the EPA continue work on regulations, “For us to play a constructive role in inspiring other countries and giving other countries incentives to reduce their own emissions, we need Congressional legislation. There’s no question about that.”

Jackson also made it clear this week that the administration would prefer not to write the regulations. “I hope that doesn’t come to pass,” she said. “I believe that legislation is the preferable route.”

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