Latest posts by Andrew Barr (see all)
- Binders Full of Distortion: Smoke, Mirrors and Decision 2012 - October 28, 2012
- The Dollars and Sense of Tax Havens: The Necessity of the Offshore Economy - July 24, 2012
- Heartland, the Art of Protest, and the Desire for Real Debate - May 31, 2012
Like many of the EPA’s regulatory forays, the Clean Air Act of 1963 is fundamentally well intentioned, but has been subject to so many amendments and new rules through the years that distort original purpose. Two such changes are the newly proposed Clean Air Transport Rule and the Utility Air Toxics Rule, were recently the subject of a hearing organized by Sen. Tom Carper (D-Del.), chairman of the Clean Air and Nuclear Safety subpanel.
The Utility Air Toxics Rule aims to cut back on mercury emission from coal-powered electricity generators, while the Clean Air Transport Rule ventures to reduce sulfur dioxide and nitrogen oxide emissions by thousands of tons.
Though noble in spirit, the economic burden these costs will impose on businesses raises concerns over the prudence of such restrictions. In particular, American Electric Power (AEP), an Ohio-based utility company, faces a difficult road ahead in adapting to the Clean Air Transport Rule.
As AEP is forced to conform to the EPA’s new rules, Indiana customers can look forward to rate hikes of as much as 30 percent, and three-fourths of the company’s Lawrenceburg plant is expected to close. If the Agency’s regulations are approved in their current state, AEP estimates the costs in compliance to be as high as $8 billion (in addition to the $7.2 billion the utility has spent since 1990 on filters and other means of reducing emissions from its coal-powered generators.
Because roughly 65% of the company’s power production is coal-based, massive job losses and plant closings seem inevitable should the EPA’s plans succeed. And AEP isn’t the only entity feeling the heat from the EPA’s anti-coal campaign; Bryan Shaw, chairman of the Texas Commission on Environmental Quality voiced his reservations at the hearing:
Businesses should be subject to reasonable and appropriately protective regulation. For citizens to be protected from harmful pollution, both federal and state governments need to focus their resources on real risks, instead of creating false crises that frighten the public and misuse public resources.
Indeed, the “false crises” that Shaw alludes to have been used time and time again by the Agency as a reason for increased regulation. In reality, the situation is nowhere near as bad as it sounds. Despite the U.S’s GDP increasing 195%, vehicle miles traveled increasing 178%, energy consumption increasing 178 percent and the total population growing 42 percent, the U.S.’s emissions of six principal air pollutants has decreased by 53% between 1970 and 2005.
There has been a 31 percent decline in concentrations of particulate matter (PM10) since 1988 and a 10 percent decrease of fine particulate matter (PM2.5) in the U.S. since 1999. Only 3 U.S. counties, out of 3,142 counties in the United States, only 3 have exceeded levels of lead and carbon monoxide. This was not the result of a regulatory rampage, but the free market at work.
The forces of the market should be allowed to work, rather than allow the EPA’s crusade against coal to cost utilities billions. In fact, much of the industry (AEP aside) was gradually making a shift to cleaner emissions standards; Duke Energy and Vectren, also of Indiana, have slowly but surely made the shift to installing scrubbers and nitrogen oxide emission-controlling equipment.
Some see the issue as a tradeoff between energy efficiency and the health of the American public. Indeed, the health effects of emissions (soot in particular) have been widely disputed. When the American Heart Association published a study linking exposure to certain types of particulate matter to increased rates of lung cancer, it was criticized as “junk science” by doctors.
Nonetheless, the Agency persists in arguing that the benefits outweigh the costs. According to Reuters:
An EPA analysis anticipates that the air toxics rule could cost the industry about $11 billion annually. Electricity rates are estimated to rise as much as 3.7 percent in 2015 and 2.6 percent by 2020, though those numbers will vary by geographic region.
On an annual basis, EPA expects the rule to prevent 17,000 premature deaths, 11,000 heart attacks, 12,000 emergency room visits and hospital admissions and 850,000 days of illness-related workdays missed.
The NERA recently released a report that examines the aforementioned cost-benefit analysis used by the EPA; in an interview with Environment & Energy Publishing, NERA Senior Vice President David Montgomery argued that the $2 trillion in estimated savings from a marginally “healthier” America doesn’t justify the damage done to business:
I think [the EPA is] misleading [the public] because there is so much focus on jobs and the economy right now. Every program is being justified based on jobs. The president announced that I am going to go through regulations and I am going to do something about the regulations that are killing jobs and slowing the economy. So everybody wants to claim that they’re creating jobs. And so EPA, they’re not saying something that’s technically incorrect, but what they’re doing is they’re putting things together in a way that creates exactly the wrong impression.
Though Steve Milloy’s proposal in the Washington Times to defund the EPA’s ability to regulate may be a bit extreme, he makes an important point. These regulations, like so many others, are made with little regard to American jobs.
In a hearing on April 14 of this year, Rep. Cory Gardner (R-Colo.) asked EPA assistant administrator for the Office of Solid Waste and Emergency Response Mathy Stanislaus if an EPA economic study on the impact of new coal ash regulations factored in potential job losses.
“Not directly, no.” was Stanislaus’s response. Gardner pressed the issue, asking “Is it standard procedure for an economic analysis to ignore the impact on jobs?” to which Stanislaus replied, “Well I can get back to you on the specific details of how we do economic analysis.”
Though it would be unfair to judge the practices of an entire agency on the words of one assistant administrator or one new proposal, Stanislaus’s words and the new proposed rules are representative of a troubling trend in the agency’s recent regulations; well intentioned, ideologically gallant, but economically disastrous policies.
As Reinhold Niebuhr once observed, “All human sin seems so much worse in its consequences than in its intentions.” Indeed, the EPA should return to the values upon which it was founded and use its power and intentions for the good of all American society; the health of Americans, the health of the environment, and the health of American industry.