EIA Reports On Energy Financial Interventions & Subsidies

Aug 1: The U.S. Energy Information Administration (EIA) has released a report entitled, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010. The report responds to a November 2010 request to EIA from U.S. Representatives Roscoe Bartlett (R-MD), Marsha Blackburn (R-TN), and Jason Chaffetz (R-UT) for an update to a 2008 report prepared by EIA that provided a snapshot of direct Federal financial interventions and subsidies in energy markets in fiscal year (FY) 2007, focusing on subsidies to electricity production. As requested, the report updates the previous report using FY 2010 data and is limited to subsidies that are provided by the Federal government, provide a financial benefit with an identifiable Federal budget impact, and are specifically targeted at energy markets. Subsidies to Federal electric utilities, in the way of financial support, are also included, as requested. The criteria do exclude some subsidies beneficial to energy sector activities which EIA details in a separate summary. EIA notes that this fact should be kept in mind when comparing the report to other studies that may use narrower or more expansive inclusion criteria.

    Energy subsidies and interventions discussed in the report are divided into five separate program categories:

• Direct Expenditures to Producers or Consumers. These are federal programs that involve direct cash outlays which provide a financial benefit to producers or consumers of energy.
• Tax Expenditures. These are provisions in the federal tax code that reduce the tax liability of firms or individuals who take specified actions that affect energy production, consumption, or conservation.
• Research and Development (R&D). These are federal expenditures aimed at a variety of goals, such as increasing U.S. energy supplies or improving the efficiency of various energy consumption, production, transformation, and end-use technologies. R&D expenditures generally do not directly affect current energy consumption, production, and prices, but, if successful, they could affect future consumption, production, and prices.
• Loans and Loan Guarantees. These involve federal financial support for certain energy technologies. The U.S. Department of Energy (DOE) is authorized to provide financial support for "innovative clean energy technologies that are typically unable to obtain conventional private financing due to their 'high technology risks.' In addition, eligible technologies must avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases."
• Electricity programs serving targeted categories of electricity consumers in several geographic regions of the country. Through the Tennessee Valley Authority (TVA) and the Power Marketing Administrations (PMAs), which include the Bonneville Power Administration (BPA) and three smaller PMAs, the federal government brings to market large amounts of electricity, stipulating that "preference in the sale of such power and energy shall be given to public bodies and cooperatives." The federal government also indirectly supports portions of the electricity industry through loans and loan guarantees made by the U.S. Department of Agriculture's Rural Utilities Service (RUS) at interest rates generally below those available to investor-owned utilities.

    According to the report, the value of direct federal financial interventions and subsidies in energy markets doubled between 2007 and 2010, growing from $17.9 billion to $37.2 billion. In broad categories, the largest increase was for conservation and end-use subsidies (approx. $4 billion to $15 billion), followed to a lesser degree by increases in electricity-related subsidies and subsidies for fuels used outside the electricity sector (approx. $6.2 billion to $10.5 billion). Electricity-Related increased from  $7.7 billion to $11.9 billion.

 

    The report indicates that a key factor in the increased support for conservation programs, end-use technologies and renewables was the passage of several pieces of legislation responding to the recent financial crisis and subsequent economic downturn, particularly the American Recovery and Reinvestment Act of 2009 (ARRA) and the Energy Improvement and Extension Act (EIEA). Some of the ARRA-related programs that account for a large portion of the growth in subsidies and support between FY 2007 and FY 2010 are temporary and the subsidies associated with them are scheduled to phase out over the next few years. Other recent legislation impacting energy subsidies included the Food, Conservation, and Energy Act of 2008, which provided significant new subsidies to biofuels (primarily ethanol and biodiesel) producers, and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended the sunset dates for several tax expenditure programs, as well as the grant program for qualifying renewables.

    The report indicates that conservation and end-use subsidies experienced rapid growth in both absolute and percentage terms, more than tripling in real terms between FY 2007 and FY 2010. The increase in subsidies and support was led by growth in direct expenditures and tax expenditures. The home energy efficiency improvement tax expenditure accounts for most of the increase in conservation-related subsidies between FY 2007 and FY 2010. Conservation subsidies were almost equally divided between direct expenditures and tax expenditures, with estimated tax credits for energy efficiency improvements to existing homes totaling $3.2 billion. These tax credits funded investments in energy-efficient windows, furnaces, boilers, boiler fans, and building envelope components. End-use subsidies, nearly all of which were provided through direct expenditures of appropriated funds, were boosted by a doubling of expenditures in the Low Income Home Energy Assistance Program (LIHEAP) spending between FY 2007 and FY 2010.

    The report indicates that relative to their share of total electricity generation, renewables received a large share of direct federal subsidies and support in FY 2010. For example, renewable fuels accounted for 10.3 percent of total generation, while they received 55.3 percent of federal subsidies and support. However, caution should be used when making such calculations because many factors can drive the results. For example, many of the programs that showed the largest increases in subsidies between FY 2007 and FY 2010 are supporting facilities that are still under construction, including energy equipment manufacturing facilities that may not affect energy consumption or production for several years. Furthermore, the ARRA 1603 grant program, that allows investors to choose an upfront grant instead of a 10-year production tax credit, tended to lead to much higher overall electricity subsidy estimates for renewables in FY 2010 than would have occurred had they continued to rely on the existing production tax credit program, which does not front-load subsidy costs. Focusing on a single year's data also does not capture the imbedded effects of subsidies that may have occurred over many years across all energy fuels and technologies.

    Additionally, the report indicates that biofuels receive most of the subsidies and support for fuels used outside the electricity sector. Based on the subsidy categories used in this report, subsidies and support for fuels used outside the electricity sector, at $10.4 billion, accounted for 28 percent of total energy subsidies. In this category, biomass and biofuels received the largest subsidy in FY 2010, at $7.6 billion. Under the Volumetric Ethanol Excise Tax Credit (VEETC), blenders receive a $0.45-per gallon credit for each gallon of ethanol that is blended with gasoline for use as a motor fuel. Internal Revenue Service regulations require that blenders apply for VEETC refunds to offset gasoline excise tax payments, but they may submit a claim for payment or take a credit against other taxes if their VEETC credits exceed their gasoline excise tax liability. Based on its implementation rules, the Treasury reports VEETC as a $5.7-billion reduction in excise tax revenues for FY 2010. For purposes of this report, VEETC is classified as tax expenditure.

    Finally the report notes, natural gas and petroleum liquids also received significant subsidies and support for fuels used outside the electricity sector. They accounted for 20.7 percent of the fuel specific subsidies and support and, together with biofuels, accounted for nearly 94 percent of the subsidies and support going to fuels not supporting electricity production.

    Access the complete 105-page report (click here). Access an Executive Summary and Tables with links to footnotes (click here). [#Energy/Subsidies]

The Infamous Bipartisan Debt Deal Is Finalized

Aug 2: Following weeks of debate on the highly controversial issue of raising the United States debt ceiling, a deal was finally reached on Sunday (July 31), and the U.S. House voted in bipartisan fashion, 269-161, to approve the measure last evening (August 1). The bill, the Budget Control Act of 2011 (S.365), was voted on in the U.S. Senate today (August 2) and also passed with a bipartisan vote of 74-26. The President signed the bill shortly following the Senate approval. Below, we have included excerpts from summaries released by the White House and House Republicans, because there is different emphasis and interpretations by both.

 

    A White House fact sheet indicates that the "Bipartisan Debt Deal: A Win for the Economy and Budget Discipline" as follows:

• Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation's first default now, or in only a few months, for political gain;
• Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
• Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
• Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
• Stays true to the President's commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks. 

    According to the White House summary the bill will:

• Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
• President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
• Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011 [the day before Thanksgiving Day], which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
• Enforcement mechanism established to force all parties -- Republican and Democrat -- to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 -- split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.  

    The White House summary also emphasizes that: "The deal puts us on track to cut $350 billion from the defense budget over 10 years; The enforcement mechanism would not be made effective until 2013, avoiding any immediate contraction that could harm the recovery; The deal provides specific protection in the discretionary budget to ensure that the there will be sufficient funding for the President's historic investment in Pell Grants without undermining other critical investments; Any recommendation of the Committee would be given fast-track privilege in the House and Senate, assuring it of an up or down vote and preventing some from using procedural gimmicks to block action; To Meet This Target, the Committee Will Consider Responsible Entitlement and Tax Reform. This means putting all the priorities of both parties on the table – including both entitlement reform and revenue-raising tax reform."

 

    The White House said, "The deal is designed to achieve balanced deficit reduction, consistent with the values the President articulated in his April Fiscal Framework. The discretionary savings are spread between both domestic and defense spending. And the President will demand that the Committee pursue a balanced deficit reduction package, where any entitlement reforms are coupled with revenue-raising tax reform that asks for the most fortunate Americans to sacrifice. . . The enforcement mechanism in the deal exempts Social Security, Medicaid, Medicare benefits, unemployment insurance, programs for low-income families, and civilian and military retirement."

 

    House Republican Speaker John Boehner (R-OH) issued a summary saying, "The final agreement to cut spending and avoid default meets Republicans' criteria to (1) cut government spending more than it increases the debt limit; (2) implement spending caps to restrain future spending; and (3) advance the cause of a Balanced Budget Amendment -- all without tax hikes on families and job creators.  It is largely consistent with the bill House Republicans passed last Friday [July 29], and reflects the principles of Cut, Cap, & Balance."

 

    The Republican summary emphasizes that, "As further protection against any tax hikes, the Joint Committee of Congress (described below) will be scored on a current-law baseline.  The committee would have to raise taxes by more than $3.5 trillion above today's rates before it would begin to count as 'deficit reduction.'  Since that is unlikely, there is little chance the Joint Committee will produce a bill that increases taxes."

 

    The Republican summary indicates, "The bill would cut and cap discretionary spending immediately, saving $917 billion over 10 years – as certified by the nonpartisan Congressional Budget Office CBO) – and raise the debt ceiling by less – $900 billion – to approximately February. Congress must vote to cut spending FIRST.  Then, the President may ask for debt authority of up to $900 billion, which will be subject to a vote of disapproval by the House and Senate that can be vetoed by the President."

 

    Regarding the "Balanced Budget" issue, the Republican summary indicates, "The bill advances the cause of a Balanced Budget Amendment by requiring the House and Senate to vote on the measure after October 1, 2011 but before the end of the year, allowing the American people time to build sufficient support for this popular reform. This is the same as the House-passed bill.  Also, similar to the House-passed bill, the measure authorizes the President to request a second tranche of debt limit increase of $1.5 trillion if the Joint Committee's proposal is enacted OR if a Balanced Budget Amendment is sent to the states."

 

    One of the key elements of the deal is the 12-member Joint Committee of Congress [a.k.a. the Super Committee] that is required to report legislation by November 23, 2011, that would produce a proposal to reduce the deficit by another $1.5 trillion over 10 years. House and Senate Republicans would each appoint 3 members to the Committee. Each chamber would consider the proposal of the Joint Committee on an up-or-down basis without any amendments by December 23, 2011. Many observers predict the Super Committee will result in another deadlock because their is no tie-breaking mechanism and the mandatory across-the-board cuts will be enacted.

 

    If the Joint Committee fails to achieve at least $1.2 trillion, then the President may request up to $1.2 trillion for a debt limit increase. The deal includes an automatic sequester on certain spending programs to ensure that -- between the Committee and the trigger -- that at least an additional $1.2 trillion in deficit reduction by 2013. If the Joint Committee recommendations are not implemented then across-the-board spending cuts would apply to FYs 2013-2021, and apply to both mandatory and discretionary programs. The final agreement specifies that total reductions would be equally split between defense and non-defense programs. The across-the-board cuts would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side.

 

    Access the White House fact sheet (click here). Access a video and the President's remarks (click here). Access the complete House Republican summary (click here). Access the 74-page final version of S.365 (click here). Access legislative details for S.365 including the roll call votes (click here). [#All]

U.S. "Nuclear Waste Management Program Is At An Impasse"

Jul 29: The President's Blue Ribbon Commission on America's Nuclear Future (BRC) released the draft full commission report for public comment. The draft report represents the work and recommendations BRC to date. BRC said, "It is important to note that we expect this document to continue to change and take form as we receive additional comments." The public comment period will be open through October 31, 2011. On May 13, the BRC held a day-long meeting in Washington, DC, and released its draft recommendations from subcommittees on: Reactor & Fuel Cycle Technology; Disposal of Nuclear Waste; and Transportation and Storage of Nuclear Waste [See WIMS 5/16/11].

 

    The draft recommendations respond to questions presented to the three subcommittees. The BRC was co-chaired by: Lee Hamilton, former Democratic U.S. Representative from Indiana from January 1965-January 1999; and, Brent Scowcroft, a Republican who served as the National Security Advisor to both Presidents Gerald Ford and George H.W. Bush. Thirteen additional members included former Senators Chuck Hagel (R-NE); and Pete Domenici (R-NM) and long-time chair of the Senate Energy & Natural Resources Committee; John Rowe, CEO of Exelon Corporation; MIT Physics Professor Ernie Moniz and others.

 

    According to the BRC final draft report, "America's nuclear waste management program is at an impasse. The Obama Administration's decision to halt work on a repository at Yucca Mountain in Nevada is but the latest indicator of a policy that has

been troubled for decades and has now all but completely broken down. The approach laid out under the 1987 Amendments to the Nuclear Waste Policy Act (NWPA) -- which tied the entire U.S. high-level waste management program to the fate of the Yucca Mountain site -- has not worked to produce a timely solution for dealing with the nation's most hazardous radioactive materials. The United States has traveled nearly 25 years down the current path only to come to a point where continuing to rely on the same approach seems destined to bring further controversy, litigation, and protracted delay.

 

    "The Blue Ribbon Commission on America's Nuclear Future (the Commission) was chartered to recommend a new strategy for managing the back end of the nuclear fuel cycle. We approached this task from different perspectives but with a shared sense of urgency. Put simply, this nation's failure to come to grips with the nuclear waste issue has already proved damaging and costly and it will be more damaging and more costly the longer it continues: damaging to prospects for maintaining a potentially important energy supply option for the future, damaging to state–federal relations and public confidence in the federal government's competence, and damaging to America's standing in the world -- not only as a source of nuclear technology and policy expertise but as a leader on global issues of nuclear safety, non-proliferation, and security. Continued stalemate is also costly -- to utility ratepayers, to communities that have become unwilling hosts of long-term nuclear waste storage facilities, and to U.S. taxpayers who face mounting liabilities, already running into billions of dollars, as a result of the failure by both the executive and legislative branches to meet federal waste management commitments.

 

    A new strategy is needed, not just to address these damages and costs but because this generation has a fundamental ethical obligation to avoid burdening future generations with the entire task of finding a safe permanent solution for managing hazardous nuclear materials they had no part in creating. At the same time, we owe it to future generations to avoid foreclosing options wherever possible so that they can make choices -- about the use of nuclear energy as a low-carbon energy resource and about the management of the nuclear fuel cycle—based on emerging technologies and developments and their own best interests.

 

    "Almost exactly one year after the Commission was chartered and less than five months before our initial draft report was due, an unforeseen event gave new urgency to our charge and brought the problem of nuclear waste into the public eye as never before. A devastating earthquake off the northeastern coast of Japan and the unprecedented tsunami that followed set off a chain of problems at the Fukushima Daichii nuclear power station that eventually led to the worst nuclear accident since Chernobyl. In the

weeks of intense media coverage that followed, many Americans became newly aware of the presence of tens of thousands of tons of spent fuel at more than 70 nuclear power plant sites around this country -- and of the fact that the United States currently has no physical capacity to do anything with this spent fuel other than to continue to leave it at the sites where it was first generated.

 

    "The strategy we recommend in this draft report has seven key elements:

1. A new, consent-based approach to siting future nuclear waste management facilities.
2. A new organization dedicated solely to implementing the waste management program and empowered with the authority and resources to succeed.
3. Access to the funds nuclear utility ratepayers are providing for the purpose of nuclear waste management.
4. Prompt efforts to develop one or more geologic disposal facilities.
5. Prompt efforts to develop one or more consolidated interim storage facilities.
6. Support for continued U.S. innovation in nuclear energy technology and for workforce development.
7. Active U.S. leadership in international efforts to address safety, waste management, nonproliferation, and security concerns.

    The elements of this strategy will not be new to those who have followed the U.S. nuclear waste program over the years. All of them are necessary to establish a truly integrated national nuclear waste management system, to create the institutional leadership and wherewithal to get the job done, and to ensure that the United States remains at the forefront of technology developments and international responses to evolving nuclear safety, non-proliferation, and security concerns. . .

 

    "Overall, we are confident that our waste management recommendations can be implemented using revenue streams already dedicated for this purpose (i.e., the Nuclear Waste Fund and fee). Other Commission recommendations -- particularly those concerning nuclear technology programs and international policies -- are broadly consistent with the program plans of the relevant agencies. A second overarching point concerns timing and implementation. All of our recommendations are interconnected and will take time to implement fully, particularly since many elements of the strategy we propose require legislative action to amend the NWPA and other relevant laws . . ."

 

    Acting Department of Energy (DOE) Press Secretary Damien LaVera issued a brief comment on the BRC "Interim Recommendations" saying, "The Obama Administration continues to believe that nuclear energy has an important role to play as America moves to a clean energy future. As part of our commitment to restarting the American nuclear industry and creating thousands of new jobs and export opportunities in the process, we are committed to finding a sustainable approach to assuring safe, secure long-term disposal of used nuclear fuel and nuclear waste. Secretary Chu appreciates the hard work done by the members of the Blue Ribbon Commission, and thanks them for a very thoughtful report. The interim report issued today is a strong step toward finding a workable solution to the challenges of the back end of the fuel cycle."

   

    The Nuclear Energy Institute's (NEI) senior vice president for governmental affairs, Alex Flint issued a statement on the report saying in part, "The Blue Ribbon Commission has rightly recognized that the national nuclear waste management system must be truly integrated and that the United States should remain at the forefront of technology developments and international efforts to responsibly manage nuclear materials. A number of recommendations in the report strike the nuclear energy industry as sensible, desirable and, given time, achievable. The industry is particularly gratified to see the recommendations calling for the establishment of one or more consolidated interim storage facilities for used nuclear fuel; development of a permanent underground repository for commercial used fuel and high-level radioactive waste from U.S. defense programs; creation of a new management organization that will assume the U.S. Department of Energy's role in managing this material; and legislation providing full access to nuclear waste fee revenues and the federal Nuclear Waste Fund. These should be among the nation's top energy policy priorities.The industry concurs with the Blue Ribbon Commission's assertion that the availability of consolidated interim storage will provide 'valuable flexibility' in the nuclear waste management system. . . the nuclear energy industry continues to believe that . . . review of the Department of Energy's license application for the proposed Yucca Mountain, Nevada, repository should continue."

 

    Access the complete 192-page final draft report (click here). Access the BRC website for additional draft reports, background and an online commenting form (click here). Access the DOE statement (click here). Access the NEI statement (click here). [#Energy/Nuclear, #Haz/Nuclear]

 

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President Makes 54.5 MPG CAFE Proposal Official

Jul 29: Approximately 20 minutes after he addressed the nation on status of debt ceiling negotiations, President Obama announced an historic agreement with thirteen major automakers to pursue the next phase in the Administration's national vehicle program, increasing corporate average fuel economy (CAFE) standard to 54.5 miles per gallon for cars and light-duty trucks by Model Year 2025 [See WIMS 7/28/11]. The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo – which together account for over 90 percent of all vehicles sold in the United States -- as well as the United Auto Workers (UAW), and the State of California, who were integral to developing this agreement.

 

    Immediately following the nationally televised debt ceiling announcement, the President opened the CAFE announcement saying, "I've been having a lot of fun this week, but -- nothing more fun and more important to the future of the American economy than the agreement that we're announcing today. I am extraordinarily proud to be here today with the leaders of the world's largest auto companies, and the folks who represent autoworkers all across America. . .

 

    "For decades, we've left our economy vulnerable to increases in the price of oil. And with the demand for oil going up in countries like China and India, the problem is only getting worse. The demand for oil is inexorably rising far faster than supply.  And that means prices will keep going up unless we do something about our own dependence on oil. That's the reality. . .

 

    "I've laid out an energy strategy that would do that. In the short term, we need to increase safe and responsible oil production here at home to meet our current energy needs. And even those who are proponents of shifting away from fossil fuels have to acknowledge that we're not going to suddenly replace oil throughout the economy. We're going to need to produce all the oil we can. But while we're at it, we need to get rid of, I think, the $4 billion in subsidies we provide to oil and gas companies every year at a time when they're earning near-record profits, and put that money toward clean energy research, which would really make a big difference. Those are all short-term solutions, though.  In the long run, we're going to have to do more.. .

 

    "And that's why we're here today. This agreement on fuel standards represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil. Think about that. Most of the companies here today were part of an agreement that we reached two years ago to raise the fuel efficiency of their cars over the next five years. And the vehicles on display here are ones that benefited from that standard.  Folks buying cars like these in the next several years will end up saving more than $3,000 over time because they can go further on a gallon of gas. And today, these outstanding companies are committing to doing a lot more. The companies here today have endorsed our plan to continue increasing the mileage on their cars and trucks over the next 15 years. We've set an aggressive target, and the companies here are stepping up to the plate.

 

    "By 2025, the average fuel economy of their vehicles will nearly double to almost 55 miles per gallon. So this is an incredible commitment that they've made.  And these are some pretty tough business guys. They know their stuff. And they wouldn't be doing it if they didn't think that it was ultimately going to be good business and good for America. . . Think about what this means. It means that filling up your car every two weeks instead of filling it up every week.  It will save a typical family more than $8,000 in fuel costs over time. And consumers in this country as a whole will save almost $2 trillion in fuel costs. . .

 

    "And just as cars will go further on a gallon of gas, our economy will go further on a barrel of oil.  In the next 15 years, we're going to reduce the amount of oil we need by 2.2 million barrels per day. And this will help meet the goal that I've set for America:  reducing our dependence on foreign oil by one-third. Using less oil also means our cars will produce fewer emissions. So when your kids are biking around the neighborhood, they'll be breathing less pollution and fewer toxins. It means we're doing more to protect our air and water. And it means we're reducing the carbon pollution that threatens our climate. Lastly, these standards aren't just about the bad things we'll prevent; it's about the good things that we'll build.  As these companies look for ways to boost efficiency, they'll be conducting research and development on test tracks. They're going to look to startups working on biofuels and new engine technologies. They're going to continue to invest in advanced battery manufacturing. They're going to spur growth in clean energy. And that means new jobs in cutting-edge industries all across America. . ."

 

    The oil savings, consumer, and environmental benefits of this comprehensive program are detailed in a new report entitled Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil, which the Administration released today. 

 

    U.S. Transportation Secretary Ray LaHood said, "These standards will help spur economic growth, protect the environment, and strengthen our national security by reducing America's dependence on foreign oil. Working together, we are setting the stage for a new generation of clean vehicles." EPA Administrator Lisa Jackson said, "This is another important step toward saving money for drivers, breaking our dependence on imported oil and cleaning up the air we breathe. American consumers are calling for cleaner cars that won't pollute their air or break their budgets at the gas pump, and our innovative American automakers are responding with plans for some of the most fuel efficient vehicles in our history."

    The White House indicated in a release that a national policy on fuel economy standards and greenhouse gas emissions provides regulatory certainty and flexibility that reduces the cost of compliance for auto manufacturers while addressing oil consumption and harmful air pollution. Consumers will continue to have access to a diverse fleet and can purchase the vehicle that best suits their needs.

    EPA and the National Highway Traffic Safety Administration (NHTSA) are developing a joint proposed rulemaking, which will include full details on the proposed program and supporting analyses, including the costs and benefits of the proposal and its effects on the economy, auto manufacturers, and consumers. After the proposed rules are published in the Federal Register, there will be an opportunity for public comment and public hearings. The agencies plan to issue a Notice of Proposed Rulemaking by the end of September 2011. California plans on adopting its proposed rule in the same time frame as the Federal proposal.

 

    Given the long time frame at issue in setting standards for MY2022-2025 light-duty vehicles, EPA and NHTSA intend to propose a comprehensive mid-term evaluation. Consistent with the agencies' commitment to maintaining a single national framework for vehicle GHG and fuel economy regulation, the agencies will conduct the mid-term evaluation in close coordination with California.

 

   In achieving the level of standards described above for the 2017-2025 program, the agencies expect automakers' use of advanced technologies to be an important element of transforming the vehicle fleet. The agencies are considering a number of incentive programs to encourage early adoption and introduction into the marketplace of advanced technologies that represent "game changing" performance improvements, including:

• Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
• Incentives for advanced technology packages for large pickups, such as hybridization and other performance-based strategies;
• Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures. 

In addition, EPA plans to propose provisions for:

• Credits for improvements in air conditioning (A/C) systems, both for efficiency improvements and for use of alternative, lower global warming potential refrigerant;
• Treatment of compressed natural gas (CNG);
• Continued credit banking and trading, including a one-time carry-forward of unused MY 2010-2016 credits through MY 2021.

    Access the full text of the President's comments (click here). Access a background document listing all auto company attendees, legislators, and officials (click here). Access a White House press release (click here). Access the Driving Efficiency report (click here). Access a CAFE overview from the NHTSA website (click here). Access EPA's Fuel Economy website (click here). Access the May 10 FR announcement (click here). Access the NHTSA docket for this action (click here). [#Energy/CAFE]

 

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House Republicans Press EPA For Explanation On Ozone NAAQS

Jul 28: House Energy and Commerce Committee Chairman Fred Upton (R-MI), Energy and Power Subcommittee Chairman Ed Whitfield (R-KY), and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) are pressing U.S. EPA Administrator Lisa Jackson for more information concerning the Agency's "discretionary reconsideration of ambient air quality standards for ground-level ozone and its proposal to issue costly new standards." The lawmakers said they object to the Agency's decision to voluntarily revisit and reissue the standards -- a regulatory choice which they say "is expected to destroy jobs, cost tens of billions of dollars, and stifle economic development in local communities across the nation."
 
    In a letter to Administrator Jackson they said, "If finalized, these standards will impose unprecedented costs, ranging from $19 billion to $90 billion annually by your agency's own estimates, and result in new regulatory burdens for employers, businesses and already cash-strapped states and communities struggling to grow their local economies and create jobs. These would be the single most expensive environmental standards ever to be imposed by any Administration on the U.S. Economy." 

 

    EPA announced on July 26, that it would not meet its July 29 deadline for releasing new National Ambient Air Quality Standard (NAAQS) for ozone [See WIMS 7/26/11]. An Agency spokesperson said that although it would not issue the final rule on July 29th, which it had intended, it would be finalizing this standard shortly and would be "based on the best science and meet the obligation established under the Clean Air Act to protect the health of the American people. In implementing this new standard, EPA will use the long-standing flexibility in the Clean Air Act to consider costs, jobs and the economy."

 

    They House Republicans said in their letter, "We are committed to continuing our nation's progress towards a cleaner environment and seeing related improvements to public health. It is well documented that, under existing standards and regulations, air quality in the United States has improved considerably and will continue to do so," the members wrote. In light of the economic climate, it is important to note that your decision to issue these onerous regulations at this time is a choice -- it is completely discretionary on your part. There are already stringent ozone ambient air quality standards in place that were issued as recently as 2008. Your choice to promulgate alternate costly new standards outside of the Clean Air Act's normal five-year review cycle defies common sense. The discretionary basis for such expensive decisions also raises serious questions about the Administration's priorities at a time when the nation's focus should be on economic recovery and job creation. The appropriate approach for the agency would be to follow the Clean Air Act's normal five year review process."
 
    The letter requests Administrator Jackson's participation in future committee hearings that will examine the standards and their economic consequences and asks her office to provide written responses to a series of questions concerning the development of the proposed ozone standards.

 

    Following EPA's announcement of a delay in releasing it proposal, the Union of Concerned Scientists (UCS) issued a release saying the White House should let EPA do its job on ozone and called the delay "unacceptable." Francesca Grifo, director of UCS's Scientific Integrity Program said, "The science has been in for three years. It's past time to set the new standard. The law says the Environmental Protection Agency (EPA) has to base its decision on the science. At this point, setting a standard outside the range scientists have determined is a clear violation of the Clean Air Act. The first step to protecting public health is setting the standard based on science."

    UCS said that according to the Clean Air Act -- and reinforced by a 2001 Supreme Court decision in Whitman v. American Trucking Associations (Nos. 99-1257, 99-1426) -- ground-level ozone standards must be set solely according to the findings of EPA scientists and the EPA's Clean Air Scientific Advisory Committee, an independent panel of experts. According to the law, states and localities can take economics into consideration during the implementation process. UCS said, "The Obama administration promised in 2009 to revisit an unscientific Bush administration decision to define dangerous levels of ozone at 75 parts per billion. That decision, which was later challenged in court, disregarded public health scientists' finding in 2007 that only a standard of 60 to 70 parts per billion was scientifically justifiable. In 2010, the EPA issued a proposed rule in that range. However, a final rule with a specific numerical standard has been repeatedly delayed." [See WIMS 12/9/10]. 

    Access a release from House Republicans and link to the complete letter (click here). Access a release from UCS with links to related information (click here). Access EPA's ground-level ozone regulatory website for complete background (click here). [#Air]

Keystone XL Pipeline Bill Passes House 279-147

Jul 26: The U.S. House passed the controversial Keystone XL pipeline -- the North American-Made Energy Security Act (H.R.1938) by a vote of 279-147 [See WIMS 7/26/11]. The bill, authored by Representatives Lee Terry (R-NE) and Mike Ross (D-AR), is designed to expedite the permitting process the pipeline and would require that the final Presidential Permit be issued by November 1, 2011. The vote included 232 Republicans and 47 Democrats -- 3 Republicans and 144 Democrats voted against the measure.

 

    Representative Terry issued a release stating, the bill requires the President through the Secretary of Energy to set a schedule for the analysis and decision process regarding the construction and operation of the Keystone XL pipeline. It now moves to the Senate for consideration. Terry indicated, "This pipeline has been the subject of more than 1000 days of consideration and a coordinated review by more than a dozen federal agencies. All other cross-border pipelines which have received Presidential permits have taken between 18 and 24 months. In June, the International Brotherhood of Teamsters, the Laborers' International Union of North America, the International Union of Operating Engineers, and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the U.S. and Canada wrote a letter urging the passage of the bill. The letter pointed out the project will directly create 20,000 high-wage jobs and generate $6.5 billion in income for workers."

    He said, "This bipartisan bill has a simple and straightforward objective – set a schedule, coordinate that schedule, and execute a decision process. The more we delay this decision, the more reliant we become on oil from countries in the Middle East. This bill means less reliance on foreign oil, more jobs, and an energy policy which doesn't rely on less-than-friendly foreign nations. We cannot afford any more delay."

    House Energy and Commerce Committee Fred Upton (R-MI) said, "This pipeline, Keystone XL, if approved, would dramatically improve our energy security. According to the Department of Energy, the pipeline would "essentially eliminate" our Middle East oil imports. It would provide a massive influx of stable oil into the market – something desperately needed as threatened supplies in North Africa send prices into orbit. This country needs the president to make a decision on the Keystone XL's permit. The uncertainty has gone on too long, and if we don't act, these energy supplies will go some place else. This is why we have this legislation, H.R. 1938. This bipartisan bill doesn't tell the president how to decide, it just requires him to make a decision. I commend Representatives Terry and Ross for finding a commonsense, and yes, bipartisan solution. If we don't build this pipeline, Canada will find another buyer. The Chinese have expressed significant interest in Alberta's oil sands. Are we going to stand by and watch China receive imports from our ally while we are forced to rely on imports from unstable countries? I sure hope not."

    Cosponsor, Representative Mike Ross said, "The unrest in Libya and the indecisiveness of OPEC are proof that it is in our nation's financial and national security interests to reduce our dependence on Middle Eastern oil as soon as possible. We will never fully revive our economy until we lower gas prices in the short term, and stabilize gas prices in the long term. This Canada-to-Gulf pipeline will carry about one million barrels of North American oil a day to refineries on the Gulf, creating jobs here at home and lowering the price of fuel for all Americans. I'm pleased the House passed this bill and I remain hopeful it will pass the U.S. Senate. The federal government has dragged its feet for way too long on this project and we are simply asking that it set a timetable and make a decision by November 1, 2011."

    On July 22, the State Department outlined a schedule that would lead to a decision by the end of the year. The State Department said, ". . .the Administration hasn't issued a formal statement of Administration position yet on that, so can't give you a formal Administration opinion. From our perspective here at the State Department, we think it's unnecessary, since we've already committed publicly to finishing his process by the end of the year, which is 60 days after November the 1st." [See WIMS 7/25/11]. An amendment to H.R.1938 to extend the deadline for permit decision to 120 days after final environmental impact statement or until January 1, 2012, failed on a voice vote.

    On July 22, U.S. Senator Mike Johanns (R-NE.) who has continually pressed the State Department to adequately review the project, said he was pleased with the Department's announcement of two public meetings in Nebraska. Sen. Johanns indicates on his website, "As your U.S. Senator, it is my duty to review federal actions that might impact resources critical to the State of Nebraska. I have repeatedly raised my concerns with federal regulators to urge the involvement of the correct agencies and experts in the permit review. We must ensure that regulatory actions related to this application safeguard the irreplaceable natural resource of the Ogallala Aquifer."

    Noah Greenwald, endangered species director at the Center for Biological Diversity (CBD) said, "This bill circumvents environmental protections that keep our air, land, water and wildlife from being polluted. Rushing construction of this pipeline before a full environmental review can be completed is a shameless giveaway to the oil industry. This pipeline is an environmental disaster in the making. Critical habitat for endangered species will be destroyed and hundreds of miles of wild landscapes, rivers and streams from Canada to the Gulf Coast will be recklessly put at risk from a spill. Instead of pushing building of the Keystone XL pipeline, legislators need to move toward more sustainable, less polluting sources of energy."

    Jeremy Symons, National Wildlife Federation (NWF) senior vice president said, "The oil companies behind this bill are playing a high stakes game of hide the ball. They are desperate for Congress and the administration to rush the approval of this pipeline before its full costs comes to light. Keystone XL will turn the U.S. into the middlemen of world dirty fuels market. We inherit the risks and higher costs while Canadian oil giants reap the rewards. The real answer is homegrown U.S. clean energy that creates jobs and makes us energy independent." An NWF senior attorney said the bill is legally unworkable says , since it would attempt to bypass existing provisions of cornerstone environmental laws."

    Access a release from Rep. Terry (click here). Access a release from Rep. Ross (click here). Access legislative details for H.R.1938 including amendments and roll call votes (click here). Access the full text of the State Department 7/22 briefing including the questions and DOS responses (click here). Access the State Department Keystone Project website for complete information (click here). Access a release from Senator Johanns and link to extensive information on his website (click here). Access a release from CBD (clickhere). Access a release from NWF and link to a teleconference the legal aspects of the bill (click here). [Energy/OilSands]

Government Deadlock: No Agreement On Debt Crisis

Jul 25: In a nationwide, primetime address President Obama outlined two approaches to the looming debt crisis and indicated that with just eight days to go, the nation faces an unprecedented financial crisis if the issue is not resolved. He stressed the need for a bipartisan solution and reminded Washington that compromise is not "a dirty word." He spoke to the frustrations ordinary Americans feel with the political process. Reactions from Republican leaders indicate no change in their position and the Federal government deadlock prevails.

 

    The President said, "The first approach says, let's live within our means by making serious, historic cuts in government spending.  Let's cut domestic spending to the lowest level it's been since Dwight Eisenhower was President.  Let's cut defense spending at the Pentagon by hundreds of billions of dollars.  Let's cut out waste and fraud in health care programs like Medicare -- and at the same time, let's make modest adjustments so that Medicare is still there for future generations.  Finally, let's ask the wealthiest Americans and biggest corporations to give up some of their breaks in the tax code and special deductions. This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt.  And the cuts wouldn't happen so abruptly that they'd be a drag on our economy, or prevent us from helping small businesses and middle-class families get back on their feet right now. . ."

 

    Then he continued, "The only reason this balanced approach isn't on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a different approach -- a cuts-only approach -– an approach that doesn't ask the wealthiest Americans or biggest corporations to contribute anything at all.  And because nothing is asked of those at the top of the income scale, such an approach would close the deficit only with more severe cuts to programs we all care about –- cuts that place a greater burden on working families.

    "So the debate right now isn't about whether we need to make tough choices.  Democrats and Republicans agree on the amount of deficit reduction we need.  The debate is about how it should be done. Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don't get.  How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need and didn't ask for?

    "That's not right.  It's not fair.  We all want a government that lives within its means, but there are still things we need to pay for as a country -– things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research. And keep in mind that under a balanced approach, the 98 percent of Americans who make under $250,000 would see no tax increases at all.  None. . ."

 

    Despite the President's pleas, House Speaker John Boehner (R-OH) held firm on the Republican stalwart position of no tax increases and/or no revenue increases. Speaker Boehner said, "Where most American businesses make the hard choices to pay their bills and live within their means, in Washington more spending and more debt is business as usual. I've got news for Washington – those days are over. . . What we told the president in January was this: the American people will not accept an increase in the debt limit without significant spending cuts and reforms. And over the last six months, we've done our best to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country. . .something that will boost confidence in our economy, renew a measure of faith in our government, and help small businesses get back on track. . .

 

    "The president has often said we need a 'balanced' approach -- which in Washington means: we spend more. . .you pay more. Having run a small business, I know those tax increases will destroy jobs. The president is adamant that we cannot make fundamental changes to our entitlement programs. As the father of two daughters, I know these programs won't be there for them and their kids unless significant action is taken now. The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen. . .

 

    ". . .this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill – one that was developed with the support of the bipartisan leadership of the U.S. Senate. I expect that bill can and will pass the Senate, and be sent to the President for his signature. If the President signs it, the 'crisis' atmosphere he has created will simply disappear. The debt limit will be raised. Spending will be cut by more than one trillion dollars, and a serious, bipartisan committee of the Congress will begin the hard but necessary work of dealing with the tough challenges our nation faces. . ."

    Many Washington inside observers wondered why the President was still discussing the idea of revenue increases, when apparently the White House has indicated it would support a proposal by Senate Majority Leader Harry Reid (D-NV) which calls for $2.7 trillion in cuts and no revenue increases. Considering the two basic proposal currently on the table in the House and Senate, neither of which call for any revenue increases; it would appear that Republicans have won a significant portion of the battle. It seems the only major issue yet to be resolved is whether the debt ceiling increase will be "short term" (6-9 months) which Republicans are supporting; or, "longer-term (through 2012) which the President and Democrats are supporting.

    Frustrated by the stalemate, President Obama said, "The American people may have voted for divided government, but they didn't vote for a dysfunctional government.  So I'm asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your member of Congress know. If you believe we can solve this problem through compromise, send that message."

    Access an overview, video and full text of the President's remarks (click here). Access the full text of Speaker Boehner's remarks (click here). Access the Senate Democratic proposal (click here). Access the House Republican proposal (click here). [#All]

EPA Can't Achieve Children's Health Goals With A Voluntary Program

Jul 21: U.S. EPA's Office of Inspector General (OIG) issued a report entitled, EPA's Voluntary Chemical Evaluation Program Did Not Achieve Children's Health Protection Goals (No. 11-P-0379, July 21, 2011). OIG indicates that it conducted the review to determine the outcomes of EPA's Voluntary Children's Chemical Evaluation Program (VCCEP) toward meeting its original goal and the goals outlined under the Chemical Right-to-Know Initiative (ChemRTK).

 

    Executive Order (EO) 13045 directed Federal agencies to place a high priority on protecting children from environmental and safety risks. The goal of the 1998 ChemRTK was to give citizens information on the effects of chemicals to enable them to make informed choices in the home and marketplace. ChemRTK satisfied EO 13045 by directing EPA to undertake testing on chemicals to which children are disproportionately exposed. EPA accordingly established the VCCEP pilot.

 

    OIG found that the VCCEP pilot did not achieve its goals to design a process to assess and report on the safety of chemicals to children. The pilot's design did not allow for desired outcomes to be produced. Specifically, the pilot had a flawed chemical selection process and lacked an effective communication strategy. Programmatic effectiveness was hampered by industry partners who chose not to voluntarily collect and submit information, and EPA's decision not to exercise its regulatory authorities under the Toxic Substances Control Act (TSCA)  to compel data collection. EPA has not demonstrated that it can achieve children's health goals with a voluntary program. The VCCEP is no longer operational, and the Agency has no plans to revive, replace, or terminate the program. As a result, the Agency is not meeting the intent of EO 13045, ChemRTK, or the VCCEP pilot, and there remains no readily understandable source of chemical exposure information that the general public can access to determine potential risks to children.

 

    OIG recommends that EPA design and implement a new process to assess the safety of chemicals to children that: (1) identifies the chemicals with highest potential risk to children; (2) applies TSCA regulatory authorities as appropriate for data collection; (3) interprets results and disseminates information to the public; and (4) includes outcome measures that assure valid and timely results.

 

    OIG reported that the Agency concurred with the findings, indicating that work ongoing by the existing chemicals program addresses many of OIG's concerns. EPA agreed with OIG recommendations related to improving its chemical selection process and developing performance measures for children's health protection. EPA did not explicitly agree to develop a workable data collection strategy for applying TSCA regulatory authorities or a communications strategy for public information dissemination, but provided information on the program's current activities. Also, no target dates were provided by which to assess the completion of EPA's actions taken to address the OIG recommendations.

 

    Access the complete 30-page report (click here). [#Toxics]

Michigan Delegation Warns President On CAFE Standards

Jul 22: The entire Michigan delegation, with the exception of Rep. John Conyers Jr. (D), sent a letter to President Obama saying the Administration's current proposals for new corporate average fuel economy (CAFE) are overly aggressive and may exceed what is technologically achievable for U.S. automakers. The said the proposal would put U.S automakers at a disadvantage and may prevent them from selling larger vehicles that U.S. consumers want to buy. The Administration is on schedule to complete a CAFE proposal this September and plans to make a final decision by July 2012. The complete letter follows:

 

    "We write to you today on the issue of a single national program for vehicle fuel economy and greenhouse gas emissions for model years 2017-2025. This issue, if handled in the wrong way, would have a negative effect on our economy, stalling our economic recovery, and would result in critical American job losses with no benefit to the environment. The Center for Automotive Research recently published a report, based on data from the National Academy of Sciences, which suggested that overly stringent standards would cost approximately 260,000 jobs and add $10,000 to the cost of a new vehicle. An unsound program would both negatively impact U.S. jobs and drive consumers to used car lots for vehicles that are less fuel efficient, which would be a loss to environmental progress.

 

    "We are deeply concerned that the Administration's 'starting' proposal of a five percent annual increase for cars and light trucks -- to reach a goal of 56.2 miles per gallon in 2025 -- is overly aggressive and not reasonably feasible. Such a proposal would push beyond the limits of reasonably feasible technology development and would have significant negative ramifications for U.S. jobs and competitiveness. Technology and economics must reasonably support the targets and goals for fuel economy improvement and greenhouse gas emissions reductions, and we are concerned that the Administration's current approach is not leading in that direction. With that in mind, as members of the Michigan delegation, we want to bring to your attention several issues of concern in the ongoing discussions and suggest an approach to help bring the parties to an agreement.

 

    "We understand that the Administration is now considering a 3.5 percent annual increase for light duty trucks for 2017-2021 and is working with the auto manufacturers to determine what flexibilities would be required to achieve that target. We also understand that the Administration is considering the possibility of a different approach for certain work trucks. While we appreciate the Administration's efforts to understand the auto manufacturers' future product plans, to understand the constraints the companies would face in meeting aggressive targets, and to offer credits and flexibilities to help with compliance, we believe that the overall targets currently proposed may exceed what is technologically achievable for the U.S. automakers that produce and sell the majority of the larger pickup trucks and sport utility vehicles that U.S. families and businesses -- and tens of thousands of autoworkers -- depend upon.

 

    "More significantly, we are concerned that the Administration's current approach for light duty trucks may have a discriminatory impact on these U.S. manufacturers. An approach to higher fuel economy that relies on the generation of credits from other than truck classes to reach compliance is not sustainable over the long-term and could have detrimental effects on U.S. automakers by expanding the gap between the regulatory requirements and what is technologically and economically achievable. This approach will put an increasingly heavy burden on U.S. auto manufacturers, who already must rely on credits earned for high fuel economy passenger cars to reach the aggressive fuel economy targets for light duty trucks in the regulatory requirements for model years 2012-2016, and may prevent them from selling these larger vehicles that U.S. consumers want to buy. Meanwhile, manufacturers that produce primarily smaller vehicles will have an unfair competitive advantage and will still be able to sell these larger vehicles that are no more fuel efficient. In other words, this has the potential to negate the significant reforms achieved by the Congress in 2007 that eliminated the discriminatory features of the old corporate average fuel economy (CAFE) system.

 

    "We are also deeply concerned about the Administration's plans for model years 2022-2025. As you know, the proposed standards cover a time horizon that is unprecedented in the history of fuel economy rulemaking. The initial year of the new standards is five model years away, and the endpoint stretches nearly fifteen years into the future. No previous fuel economy rulemaking has exceeded five model years or had a starting point so far into the future. That is why Congress has limited the authority of NHTSA to set fuel economy standards to no more than five model years at a time -- in this case, 2017-2021. The purpose of the five-year limitation was to prevent standards being set too far out into the future, based on speculation or unreliable market and technology projections including the cost of technology, the cost of fuel, and consumer acceptance. Some of the undersigned question EPA's authority to regulate motor vehicle fuel economy, directly or indirectly. However, if that authority is accepted, we believe that the same limitation of five years is appropriate for EPA regulation of greenhouse gas emissions.

 

    "At a minimum, if the White House insists upon setting standards for 2022-2025, those standards should only go into effect if a mid-term review confirmed that the underlying assumptions were met and should specify that, in the absence of that confirmation, both agencies would commence a new rulemaking for that period. The burden of proof should be on the longer period -- not the shorter one. Furthermore, there must be a clear mechanism for ensuring that any EPA regulations that go into effect are coordinated with the NHTSA rulemaking process and harmonized to continue a single national program for 2022-2025. Similarly, allowing California to be able to wield undue influence is simply not acceptable. Finally, we believe that the mid-term review should include a comprehensive joint agency assessment of the auto manufacturers' experience with the 2012-2016 and 2017+ rules to date at the time of the review to determine whether there have been any problems or concerns that would suggest a need for mid-course adjustments.

 

    "We need a balanced approach to fuel economy regulation with reasonable and achievable targets that will reduce our consumption of oil and greenhouse gas emissions while preserving U.S. jobs and promoting U.S. manufacturing. We do not believe the Administration's current proposal will achieve that balanced approach and believe instead it could have a detrimental effect on the U.S. economy. We urge you to consider further the Administration's thinking in these areas -- with special focus on the two issues we have raised -- and consider carefully the potential impact on U.S. jobs and U.S. manufacturing.

 

    "As a delegation, we bring to the table a range of views on this issue. However, with the Michigan unemployment rate standing at 10.5 percent, we are unanimous in our concern about the consequences of an excessive proposal, and we urge you to continue to work closely with U.S. manufacturers who have the most at stake. In that regard, we urge the Administration to sit down promptly and at one time with all three domestic auto manufacturers and the United Auto Workers to work through an acceptable solution to these issues."

 

    The letter was signed by Sens. Carl Levin (D) and Debbie Stabenow (D), as well as Reps. Fred Upton (R), John Dingell (D), Dale Kildee (D), Dave Camp (R), Mike Rogers (R), Sandy Levin (D), Candice Miller (R), Gary Peters (D), Thaddeus McCotter (R), Justin Amash (R), Tim Walberg (R), Bill Huizenga (R), Hansen Clarke (D) and Dan Benishek (R). Rep. John Conyers Jr. (D) did not sign the letter.

   

    On May 10, 2011, NHTSA issued a Notice of Intent to prepare an Environmental Impact Statement [76 FR 26996-27000] to consider the potential environmental impacts of new fuel economy standards for model years (MY) 2017–2025 passenger cars and light trucks that NHTSA will be proposing pursuant to the Energy Independence and Security Act of 2007. The action will be part of a joint rulemaking with EPA, in which EPA plans to issue greenhouse gas standards for the same model year vehicles. This is the second phase of a National Program under which the two agencies establish harmonized requirements to improve the fuel economy and reduce the GHG emissions of new passenger cars and light trucks sold in the U.S.

   

    In a related matter, Ceres, a national coalition of leading institutional investors and environmental groups, launched an ad campaign today (July 22) promoting the economic benefits of higher fuel efficiency standards, citing recent expert research and polling. The ad campaign, which begins with radio spots in Washington DC and Michigan, is in response to news that the Alliance of Automobile Manufacturers (AAM) had launched a radio ad campaign claiming adverse economic impacts from strong CAFE standards. Ceres President Mindy Lubber said, "The facts are clear, a 60 mpg standard will restore American automakers to a place of global leadership. Higher standards will create new jobs by encouraging automakers to build more of the fuel efficient cars and trucks that drivers want to buy."

    The Ceres radio spots are part of a multiplatform campaign that includes radio, print and online social media advertising in heartland states and the nation's capital. John DeCicco, a faculty fellow at the University of Michigan's Energy Institute said, "American's overwhelming support for higher fuel efficiency standards matches what is technologically feasible. His report, "A Fuel Efficiency Horizon for US Automobiles," shows how optimal use of available and affordable technologies can push new fleet efficiency as high as 74 mpg assuming adequate lead time.

    Recent polling commissioned by Ceres of likely Michigan and Ohio voters shows: 80% of likely Ohio voters and 76% of likely Michigan voters believe a national 60 mpg standard will encourage American car makers to innovate, boosting sales and protecting American auto jobs. Ceres said in Michigan and Ohio -- the heart of the American auto industry -- likely voters overwhelmingly support the 60 mpg fuel efficiency standard. They cite: 78% of likely Michigan voters and 79% of likely Ohio voters say they support 60 mpg; 68% of likely voters in Michigan auto industry households and 72% of likely voters in Michigan manufacturing households support 60 mpg; and 84% of likely voters in Ohio auto industry households and 74% of likely voters in Ohio manufacturing households support 60 mpg.   

    Access the letter (click here). Access a CAFE overview from the NHTSA website (click here). Access EPA's Fuel Economy website (click here). Access the May 10 FR announcement (click here). Access the NHTSA docket for this action (click here). Access a release from CERES with multiple links to related information (click here). [*Energy/Efficiency, *Transportation/CAFE, *Climate] 

 

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Bipartisan Senate Bill Would Extend Time On "Boiler MACT" Rules

Jul 20: U.S. Senators Susan Collins (R-ME), Ron Wyden (D-OR), Lamar Alexander (R-TN), Mary Landrieu (D-LA), Mark Pryor (D-AR), and Pat Toomey (R-PA) introduced bipartisan legislation (S.1392) which they say would allow the U.S. EPA the time it has said it needs to adequately consider new "Boiler MACT" rules [See WIMS 6/24/11]. The bill has been referred to the Senate Committee on Environment and Public Works (EPW), Chaired by Senator Barbara Boxer (D-CA).

    In April 2010, pursuant to court orders, EPA first announced new Maximum Achievable Control Technology (MACT) regulations on many fossil fuel and biomass-fired boilers in the United States. Recognizing that it needed more data and time to write the rule, in December 2010, EPA requested a 15-month extension to rework and finalize the rule, and to receive further public comment, which was rejected by a court. When EPA issued the rule in February of 2011, it immediately proposed that it be open to comment and revision. The bill introduced by the Senators would establish a clear timetable and conditions for reissuance of the regulations.

    Specifically, the bipartisan legislation would:

• Give EPA 15 months from the bill's date of enactment to re-propose and finalize the Boiler MACT regulations.
• Extend compliance deadlines from three years to at least five years which would allow facilities adequate time to comply with the new standards and install necessary equipment.
• Clarify that renewable and carbon-neutral materials remain classified as fuel and not solid waste.
• Direct EPA to ensure that the new rules are achievable by real-world boilers, process heaters, and incinerators, and impose the least burdensome regulator alternatives consistent with the President's Executive Order.

    Senator Collins said, "The EPA performs vital functions in helping to protect the public health by ensuring that the air we breathe is clean and the water we drink is safe. We need, however, to make sure that as the EPA issues new regulations, it does not create so many roadblocks to economic growth that it discourages private investment, which is the key to maintaining and creating jobs. At a time when manufacturers are struggling to retain jobs, it is essential that this rule not jeopardize thousands of jobs in manufacturing, particularly in the forest products industry, by imposing billions of dollars of new costs. Our legislation provides common sense solutions to the challenges the EPA is facing in attempting to implement these complicated rules, which if written without proper data, analysis, and consideration, would cost the industry billions of dollars and potentially thousands of jobs."

    Senator Wyden said, "EPA itself has admitted that its boiler rules need to be fixed. As they are written now, the rules will stymie the burgeoning biomass energy industry and make it very difficult for existing lumber and wood products mills to operate. This legislation directs the EPA to go back to the drawing board and craft boiler rules that are more in line with what is realistic for mills and factories and does not restrict future use of biomass energy."

    The legislation is supported by the American Forest and Paper Association, National Association of Manufacturing, U.S. Chamber of Commerce, National Federation of Independent Business, Business Roundtable, Biomass Power Association, and approximately 25 other national associations.

 

    On June 24, as part of a filing with the U.S. Court of Appeals for the DC Circuit, U.S. EPA has set a schedule for issuing updated air toxics standards for boilers and certain solid waste incinerators (i.e. "Boiler MACT" rules). EPA said that to ensure that the standards are based on the best available data and the public is given ample opportunity to provide additional input and information, it would propose standards to be reconsidered by the end of October 2011 and issue final standards by the end of April 2012. EPA said that "this is the best approach to put in place technically and legally sound standards that will bring significant health benefits to the American public." [See WIMS 6/24/11].

 

    On June 22, responding to what they say are "urgent calls from job creators across a range of industries, bipartisan members of the U.S. House Committee on Energy and Commerce have introduced H.R.2250, the EPA Regulatory Relief Act of 2011. The proposal would direct EPA to develop achievable standards affecting non-utility boilers and incinerators and grants additional time for development of and compliance with the rules. The legislation would stay the boiler and incinerator rules and calls for EPA to repropose the rules within 15 months and extend compliance times from 3 to 5 years [See WIMS 6/22/11].

 

    Access a release from Senator Collins including a link to the industry support letter (click here). Access legislative details for S.1392 (click here). Access legislative details for H.R.2250 (click here). Access complete information and background on the Boiler MACT rule from EPA (click here). [*Air]

 

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