EPA Lets Special Interest Design Costly New Mandate

By at 10 July, 2014, 1:16 pm

Center for Regulatory Studies

“5,000 conversations” go unheeded…

By Karen Kerrigan-

Earlier this year, in a poll conducted for the Center for Regulatory Solutions, an overwhelming 84% of respondents said “there are too many special interests involved in shaping government regulations.”  A remarkable 84% of Democrats, 85% of Independents and 88% of Republicans agreed with this statement.

With this in mind, consider how EPA developed its carbon mandate for existing fossil-fueled power plants. As the New York Times revealed on July 6th, the Natural Resources Defense Council (NRDC) provided the agency with the basic framework for its proposal. NRDC’s agenda, remember, is not friendly to small businesses. The group has worked relentlessly to stop domestic energy production, and has spearheaded the effort to drive the coal industry out of business. Small businesses within the energy sector are hurt by NRDC’s lobbying. As energy consumers, small businesses are disproportionately burdened by the higher costs that NRDC-supported policies will impose.

This is an organization that, according to the Times, “has a reach that extends from the big donors of Wall Street to the elite of Hollywood (Leonardo DiCaprio and Robert Redford are on its board) to the far corners of the Environmental Protection Agency…” But that reach doesn’t help the thousands of small businesses who will suffer because of NRDC’s policies.

Transparency—which this President and EPA claim to support—took a back seat to NRDC’s carbon plan, which it released in 2012. EPA Administrator Gina McCarthy distanced EPA from NRDC and other like-minded groups. She claimed EPA conducted “unprecedented outreach” to states, utilities, and business groups over the last several months. As Bloomberg BNA reported, “Meeting records obtained by Bloomberg BNA show the agency consulted with hundreds of groups in Washington and held more than 100 events at regional offices as it prepared the proposed rule.” Joe Goffman, EPA’s top clean air lawyer, said, “We had 5,000 conversations.”

Did EPA actually listen?

Despite what it professed for public consumption, it appears that what matters to NRDC trumps all those other conversations. The bottom line is that NRDC had the blueprint EPA wanted. “The NRDC proposal has its fingerprints throughout this, for sure,” Dallas Burtraw, an energy policy expert at Resources for the Future, told the Times.

Three NRDC staffers, as the Times described it, “worked in the group’s green 15th Street office — the space includes an energy-saving lighting system and an indoor garden wall of plants — to conceive the novel idea at the heart of Mr. Obama’s climate-change rule.”

The Times further characterized EPA’s rulemaking as “a remarkable victory for NRDC.” “They were the first out of the gate,” said Adam Kushner, a former top legal official at the EPA, told the Times.   “And the first out of the gate frames the debate.”

At the heart of EPA’s proposal is the agency’s determination of what constitutes the “Best System of Emission Reduction” (BSER) for existing power plants. BSER was used to determine each state’s emissions rate. Under EPA’s proposal, BSER has four pillars, consisting of increasing generation efficiency at existing power plants; switching from coal to natural gas combined cycle power plants; increasing zero-emissions (renewable, non-hydro) power sources and maintaining “at-risk” nuclear power; and relying on end-use, demand response energy efficiency programs.

Similarly, NRDC sought to establish BSER through the following:

  • “Depending on their type and starting point, existing generating units can reduce their own CO2 emission rates by improving generation efficiency (improving heat rates) or by switching to or co-firing with lower-emitting fuels (e.g., natural gas or biomass).
  • Covered units within a state or group of states can reduce their average emission rates through additional tools, including dispatch shifts (e.g., running lower-emitting plants more and higher-emitting plants less).
  • Covered units can reduce their emissions by increasing generation from renewable and other non-emitting plants.
  • Covered units can reduce their emissions by increasing end-use electrical energy efficiency.”

“NRDC recommends that the emission guideline capture these salient fleet characteristics and emission control opportunities in its delineation of the best system of emission reduction (BSER) that is technically feasible and economically reasonable for existing plants.” That “recommendation,” of course, went directly into EPA’s harmful and controversial plan.

To defend itself against the charge that NGOs stole the show, we learned about EPA’s extensive “outreach” and “5,000 conversations.”   Multiple meetings and listening sessions only matter, of course, if you actually intend to incorporate some of what’s been said. To be sure, small businesses—that is, those who have to live with this rule—were left in the cold.

The Center for Regulatory Solutions is a project of the Small Business & Entrepreneurship Council.

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