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EPW Policy Beat: The Utility MACT Blackout
December 15, 2011

Posted by Katie Brown Katie_Brown@epw.senate.gov 

EPW Policy Beat: The Utility MACT Blackout

EPA's long-promised Utility MACT rule is expected to be unveiled tomorrow. Given the projections of how this rule will affect electric reliability and jobs, there may be blackouts not only for our electric grid, but also our economy.

Economic Blackout

With an unprecedented price tag of $11 billion, Utility MACT is projected to be one of the most expensive rules in the Agency's history.  It will cause a large number of plant closures, significantly increase electricity rates, and, along with the Cross-State rule, destroy nearly 1.4 million jobs.

It is not surprising that the rule has garnered concern on both sides of the aisle.  Bipartisan legislation to rein in Utility MACT has passed in the House with 19 Democrats supporting the measure, and a bipartisan bill sponsored by Senators Joe Manchin (D-WV) and Dan Coats (R-IN) has been introduced in the Senate.  According to Representative Dingell, a Democrat, and the author of the Clean Air Act amendments, this rule is "unparalleled in its size and scope" and it "presents a set of new regulations with possible wide-reaching impacts on the way our country generates and consumes electricity."

Electric Blackout

Even EPA has said that the Utility MACT rule will result in a significant number of plant closures.  The rule by itself is projected to shut down up to 20 percent of America's coal-fired power capacity; this will put an enormous strain on our electric grid, resulting in blackouts across the country.

Knowing this, EPA claimed that the Agency was collaborating with the Federal Energy Regulatory Commission (FERC) to model the potential for coal-fired power plant closures from Utility MACT, but the EPW minority staff learned in May that no such modeling took place.  In fact, FERC Commissioner Moeller went as far as to say that "the Commission has not acted or studied or provided assistance to any agency, including the EPA," a statement that was later confirmed by EPA staff.

When faced with serious questions about reliability from Senators Inhofe and Murkowski, who sent three letters that went unanswered for months, it became apparent that EPA was considering inserting a 'safety valve' into the rule, reportedly to help ameliorate reliability concerns. 

EPA's actions lead to some obvious questions: If EPA is so sure that Utility MACT will not cause blackouts, why is the Agency considering a last minute 'safety valve'? If they are so certain that electric reliability is not in peril, then why did the Senators' letters demanding answers to reliability questions go unanswered?

Politico provided some insights: emails between the White House and FERC reveal that EPA disregarded FERC's concerns about the effect of Utility MACT on power grid reliability.  As FERC senior economist David Kathan wrote in a March 15, 2011 email,

"EPA continues to make a lot of assumptions and does not directly answer anything associated with local reliability. They provide the standard response that there will be enough time and they are confident that regional processes will accommodate any local capacity deficiency problem early in the process, or they do not directly respond to the question."

So rather than engage in a rigorous, collaborative process to ensure that we keep the lights on, EPA is working under assumptions in their efforts regulate coal out of existence.

Cutting Corners

On top of the threat of blackouts, EPA is not exactly shining the light of transparency on its rulemaking process.  The EPW minority staff recently discovered that EPA cut corners on the review procedures for the Utility MACT Technical Support Documents (TSD), which include a Mercury Risk Assessment and Non-Mercury Case Studies.  Specifically, the Mercury Risk Assessment has been criticized for incoherence and conflicting data, and EPA has yet to seek peer review for the Non-Mercury Case Studies.  Of course, this discovery comes on the heels of a report by the EPA Office of Inspector General, released September 28, 2011, which revealed that EPA did not follow the Data Quality Act or its own peer review procedures while issuing the TSD for the endangerment finding, EPA's regulatory determination for greenhouse gasses.  A clear pattern is emerging here.  EPA's improper "peer review" of these critical Utility MACT studies, along with its failure to adhere to the required procedures for the endangerment finding TSD calls into question the scientific integrity of EPA's decision-making, showing that EPA's process is about politics and assumptions, not sound science.

Lights Out

We can expect the announcement of this rule tomorrow and all eyes are on the White House.

President Obama has already received the message that his war on fossil fuels and affordable energy not only destroys hundreds of thousands of American jobs - it also puts his own job in peril.  His acknowledgement of this is apparent from his decision to withdraw EPA's tightened ozone standard in order to reduce "regulatory burdens and regulatory uncertainty, particularly as our economy recovers" and when his administration delayed the most economically destructive rules of all: greenhouse gas regulations.

Yet, he seems determined to go through Utility MACT.  Mr. President, there's still a chance to avert an economic blackout.  We hope you make the right choice. 

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