Battle Royale: Looming EPA Regulations On Climate Change Pit Obama Against GOP Governors

Matt Vespa
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Posted: Jul 09, 2015 5:35 PM
Battle Royale: Looming EPA Regulations On Climate Change Pit Obama Against GOP Governors

For now, the Obamacare and gay marriage fights are settled. Both decisions from the Supreme Court, which stated that there is a constitutional right to gay marriage, and that state-based Obamacare subsidies can go to citizens who enrolled through the federal exchanges, are–more or less–here to stay (for now). Conservatives can surely try to re-argue their case again, though we shouldn’t be shocked if a) the legal process for round 2 on Obamacare and gay marriage takes a long time b) we’re even able to bring these cases before the Supreme Court again. That’s an ongoing debate. Right now, we should focus on the new federal/state cage match that’s brewing concerning the administration’s onerous regulations on climate change.

You’ve read it before; the Obama administration has a goal to cut greenhouse gas emission by nearly 30 percent by 2025. Yet, overall, the entire climate change agenda the administration has signaled isn’t–as you’d expect–being met with a warm reception from Republican governors. At least five, including two presidential candidates, have signaled that they might simply refuse to implement these new federal regulations that are brewing in the regulatory pipeline (via NYT):

As President Obama prepares to complete sweeping regulations aimed at tackling climate change, at least five Republican governors, including two presidential hopefuls, say they may refuse to carry out the rules in their states.

[…]

Last year, the Environmental Protection Agency unveiled a draft regulation that stands at the heart of the president’s efforts to fight global warming. The proposed rule assigns each state a level by which it must reduce its planet-warming carbon emissions from electric power plants. Under the rule, which the administration expects to release in its final form in August, every state will have one year to draft a customized plan detailing how it will comply.

States, for example, could submit plans to shut down heavily polluting coal plants, replacing them with natural gas plants and wind, solar and nuclear power generators, and to improve energy efficiency in buildings. They could also enact taxes on carbon pollution, or join regional “cap and trade” programs, which require companies to pay for government-issued pollution permits.

[…]

But some governors call the proposal a federal intrusion on their authority.

“The E.P.A.’s latest attempt at imposing burdensome regulations represents an unprecedented meddling with Texas in order to push the Obama administration’s liberal climate change agenda,” said Mr. Abbott, the Texas governor, who has met with Mr. McConnell about his effort to ensure that states do not submit climate change plans, and has announced that he will support the push.

Michael Reed, a spokesman for Mr. Jindal, said in an email: “The president’s Clean Power Plan undermines the role of states in the federal Clean Air Act in an effort to realize a radical, liberal agenda that will lead to increased energy costs. While we believe the proposed rule should be immediately withdrawn, we are considering all options to mitigate the damage if it becomes final, including not submitting a plan.”

In a letter to Mr. Obama, Governor Walker wrote that he feared the “staggering costs it would inflict on Wisconsin’s homes and businesses,” and added that absent major changes to the plan, “it is difficult to envision how Wisconsin can responsibly construct a state plan.”

The Times added that Obama knows some states will reject his proposal, and the EPA has been instructed to draft a state-level model as a secondary protocol for those states that refuse to adopt the new regulations. Oddly enough, the EPA officials say it’s in a state’s best interest “to design their own plans, which would be customized to meet the needs of their local and regional economies.”

The article quoted EPA spokesperson Thomas Reynolds, who said that state-based plans is what the agency wants to see occur, but noted that a federal plan is necessary in moving forward regulations that honor the Clean Air Act.

“E.P.A. has an obligation under the Clean Air Act to develop a model federal plan, something that many states have asked E.P.A. to do so it can provide an example for states developing their own plans,” he said.

Nevertheless, American Action Forum (AAF) crunched some of the numbers on these looming regulations just on trucks and heavy-duty engines–and (spoiler alert!) they’re not good.

EPA has finalized at least 11 rules covering GHGs, including measures for reporting, two major rounds of efficiency standards for cars, and a rule on fuel efficiency for heavy-duty trucks and engines. The 2017 to 2025 standards for cars and light-trucks is one of the most expensive rulemakings in U.S. history, with $10.8 billion in annual costs and more than $150 billion in long-term burdens. Below is a snapshot of the notable GHG final rules from EPA to date.

These are only the current final measures, however, and looming on the regulatory horizon are some of the most expensive measures yet. No one expects the administration to scuttle its GHG standards for new and existing power plants, for example. At $8.8 billion, it would push the administration’s GHGs agenda to roughly $25.1 billion in annual costs and two million paperwork burden hours, arguably more than Waxman-Markey.

The above figure also excludes new measures or those without public cost estimates. The administration’s second round of efficiency standards for heavy-duty trucks will cost $30 billion. In addition, EPA has signaled a willingness to go after methane emissions for fracking, even though fracking emissions are already regulated by EPA and the Department of the Interior regulates possible groundwater concerns. Not to rest on its laurels, EPA will soon begin regulating aircraft emissions, despite annual efficiency improvements of one to two percent and the incredible incentives that airlines have to reduce fuel consumption.

AAF mentioned the failed 2009 Waxman-Markey bill, which was essentially a cap and trade piece of legislation that would have imposed “roughly $22 billion in unfunded private sector and local government burdens.” Keep in mind; we’re just talking about trucks, here.

The 1,428 page-bill would have added $845 million in additional taxes during a ten-year period and more than $820 million in spending during the same time. To date, EPA’s GHG regulation has consumed more than 2,100 pages of regulatory text. The Congressional Budget Office (CBO) analyzed the regulatory implications of Waxman-Markey as part of its obligations under the Unfunded Mandates Reform Act in 2009.

And it was riddled with legal and “practical limitations.” Luckily, this bill hit the skids in the Senate at the time.

Yet, while the Supreme Court ruled that the EPA “unreasonably" interpreted the Clean Air Act regarding the regulation of harmful air pollutants–and must take into account the financial burden when drafting new regulations; it’s sadly not an overwhelming victory. As Ace of Spades' Gabriel Malor noted, most power plants subjected to these regulations* were shut down, and the ones who survived paid heavily in legal fees throughout this ordeal. After all, the regulations challenged were imposed three years ago.

Nevertheless, the EPA’s looming regulations to accommodate Obama’s climate change agenda affects electricity, home finances, and economic vibrancy. Will this become a 2016 issue? It should.

*The regulations mentioned in the EPA v. Michigan case related to ones imposed in 2011.