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CEI's William Yeatman Summarizes “EPA's Illegitimate Climate Rule”

Recently, the Environmental Protection Agency (EPA) released a new regulation that mandates the reduction of carbon dioxide emissions from existing power plants. This regulation was originally designed by the Natural Resources Defense Council, a New-York based firm that employs over 350 attorneys and activists, is incredibly complex.  

Recently, William Yeatman, a scholar with the Competitive Enterprise Institute, produced a paper explaining the rule for non-attorneys. He explains that the regulation goes beyond Congressional authority, is contrary to the Americans preferences, and will lead to a takeover of state electric grids by the federal government.

As Yeatman explains, the rule is built on the following four building blocks:

  • Building Block 1: A 6 percent efficiency improvement to each existing coal-fired power plant;

  • Building Block 2: Operating combined cycle natural gas plants at 70 percent capacity utilization;

  • Building Block 3: A green energy production mandate calculated regionally;

  • Building Block 4: A 1.5 percent annual reduction in electricity demand. 

EPA Regulation Lacks Congressional Authorization

These four building blocks imply that EPA has wide regulatory latitude, but that is not case. In fact, EPA’s claimed regulatory authority for this rule is dubious at best. Congress set up the Clean Air Act with two major air quality programs: the National Ambient Air Quality Standards (NAAQS) and a program to regulate hazardous air pollutants. The NAAQS program regulates ozone, particulate matter, carbon monoxide, nitrogen oxides, sulfur dioxide, and lead. While the hazardous air pollutant programs regulates pollutants that cause cancer and have other serious health effects.

EPA isn’t claiming it has the authority to regulate carbon dioxide under those programs, but instead an obscure section of the Clean Air Act—§111(d). This section of the Act has only been used four times in the past forty years to regulate four very uncontroversial pollutants in the past. It is unlikely that Congress would intend EPA use this “obscure” section for a rule that will essentially federalize control of electricity generation in the United States.

Congress has also repeatedly considered legislation that would have implemented a national climate change mitigation plan similar to what EPA is proposing without new authority in this rule, and it is has always failed in a bipartisan fashion. In fact, in 2009, Yeatman explains that 20 percent of the Senate Democratic Caucus wrote Sen. Boxer stating they could not support her cap-and-trade bill. Congress has considered authorizing the type of regulation EPA is seeking to implement, but has always refrained—even when Democrats controlled the House and Senate in 2009 and 2010. 

This Regulation was Crafted by Big-Money Backed Special Interests

According to the New York Times, the “blueprint” for this regulation was crafted by the National Resources Defense Council. NRDC essentially started as a law firm by 5 attorneys and today the New York-based firm brings over $120 million in revenues a year. Regulations by EPA should not be written by outside big-money special interest groups like NRDC.

Call to Action

Yeatman argues that Congress should take the following steps to investigate the impact of EPA’s power plants mandate:

  • Request that the Energy Information Agency study the retail impact of electricity rates running all combined cycle natural gas plants at 70 percent capacity utilization.

  • Request the Congressional Research Service investigate what an EPA federal implementation plan would look like under an electric system-wide CAA§111(d) regulatory regime for greenhouse gases.

  • Support Senate Environment and Public Works committee requests for information about the extent of EPA and NRDC collaboration.

Conclusion

The impact of EPA’s power plant regulation is not yet clear. We do know, however, that it will be very costly. Because of the dubious legal authority for their plan, before EPA goes forward, at very least, the American people’s representatives in Congress should authorize EPA to take these steps. Anything less would be undemocratic.

IER Policy Associate John Glennon authored this post.

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