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Calendar No. 283
114th Congress } { Report
SENATE
1st Session } { 114-159
======================================================================
AFFORDABLE RELIABLE ELECTRICITY NOW ACT OF 2015
_______
October 29, 2015.--Ordered to be printed
_______
Mr. Inhofe, from the Committee on Environment and Public Works,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 1324]
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was
referred the bill (S. 1324) to require the Administrator of the
Environmental Protection Agency to fulfill certain requirements
before regulating standards of performance for new, modified,
reconstructed fossil fuel-fired electric utility generating
units, and for other purposes, having considered the same,
reports favorably thereon without amendment and recommends that
the bill do pass.
General Statement and Background
On June 25, 2013, President Obama announced his ``Climate
Action Plan'' which provided three main categories of action:
cut carbon emissions in America, prepare the U.S. for the
impacts of climate change, and lead international efforts to
address global climate change. As a part to this plan, the
President issued an Executive Order directing the EPA to set
standards of emissions reductions for new and existing fossil
fuel-fired power plants.
New Source Performance Standard: On September 20, 2013, the
EPA re-proposed CO2 emissions limits for new power
plants. The proposal, entitled ``Standards of Performance for
Greenhouse Gas Emissions for New Stationary Sources: Electric
Utility Generation Units'' would limit emissions from coal-
fired power plants to 1,100 pounds (lbs) of CO2 per
mega-watt hour (MWh) and either 1,000 or 1,100 lbs per MWh at
natural gas-fired power plants. The average coal plant emits
2,249 lbs of CO2 per MWh.
The proposed New Source Performance Standard (NSPS) was
published in the Federal Register January 8, 2014, and had a
120-day comment period. EPA received around 2 million comments
and missed the finalization deadline, which was January 8,
2015. EPA issued a press release stating the agency planned to
finalize the NSPS rule by ``mid-summer.''
Existing Source Performance Standard: On June 2, 2014, the
EPA proposed a rule to limit CO2 emissions from
existing power plants, entitled ``Emission Guidelines for
Existing Stationary Sources: Electric Generating Units,''
referred to by the agency as the ``Clean Power Plan.'' The
proposal set emission rate targets each state would be required
to meet in an interim period from 2020 to 2029 and a final
target to be met by 2030. Using 2012 CO2 emissions
as a baseline, the proposal's stated goal was to reduce U.S.
greenhouse gas (GHG) emissions by 30% when compared to 2005
levels.
The EPA calculated a state's emissions reduction target
based on 4 main assumptions, referred to by the agency as
``building blocks,'' that ranged from heat-rate efficiency
improvements to expansion of certain low and zero-emitting
power sources, primarily renewables, to demand-side efficiency
programs. EPA proposed to give states a one-year deadline to
submit implementation plans with a possible one or two year
extension.
The agency held a 165-day comment period for the proposed
Existing Source Performance Standard (ESPS), which received
over 4 million public comments. On January 7, 2015, EPA
announced it would publish the existing plant final rule by
``midsummer'' along with the new plant final rule and a model
Federal Implementation Plan (FIP).
Modified and Reconstructed Sources: On June 2, 2014, the
EPA also announced a proposal to limit CO2 from
modified and reconstructed power plants. The proposal sets the
qualifying standards by which any qualifying modification or
reconstruction made at an existing plant would require
compliance with an emission standard based on a combination of
best operating practices and equipment upgrades. After a 120-
day comment period, the proposal received 235 public comments.
Final Carbon Rules: On August 3, 2015, the EPA announced a
prepublication version of the final carbon standards for new,
modified, reconstructed, and existing power plants. While the
final rules, and primarily the existing source standard,
represent a significant revision of the proposed rules, many of
the technical, legal and procedural concerns remain. Further,
the agency has announced it will not formally publish the final
rules until ``mid to late October'' delaying both legal and
certain legislative challenges.
Stakeholder Concerns and Legal Status of Carbon Rules: The
agency has embarked on an unprecedented misuse of the Clean Air
Act (CAA) to perpetuate a presidential agenda that could not be
achieved legislatively. The agency attempts to use creative
legal arguments that would vastly expand EPA's authority under
section 111 of the CAA. A diverse and expansive list of
impacted stakeholders has expressed serious concerns over the
proposed and final carbon rules. These concerns have led to
multiple legal challenges at both the state and federal level
that raise basic technical concerns and questions regarding
procedural integrity of our regulatory system.
The New Source Proposal. To comply with the proposed and
final carbon standard, a newly constructed coal-fired power
plant would have to install carbon capture and storage (CCS)
technology. CCS is in the early stages of development and has
yet to be proven on a commercial scale. Given the infancy of
CCS technology, the agency failed to meet basic legal standards
required under section 111--that the system of emission
reduction be ``adequately demonstrated.''
Counter to restrictions in the Energy Policy Act of 2005,
the agency cites three U.S. CCS projects heavily reliant on
government support through the Department of Energy's Clean
Coal Power Initiative as proof that CCS is a demonstrated
technology. Because of the government support, these projects
cannot be used to make that demonstration. Further, since the
new source standard was initially proposed, only one of the
three U.S.-based projects continues today after DOE decided to
pull support from the California and Illinois projects.
Beyond legal obstacles, numerous technical experts agree
CCS is neither technically feasible nor viable. Many experts
have testified before House and Senate committees, including an
October 2013 hearing before the House Committee on Science,
Space, and Technology where DOE's former Assistant Secretary
for Fossil Energy, Charles D. McConnell, testified that ``it is
disingenuous to state that the technology is ready.'' In
January 2015, the National Coal Council released a study
assessing the state of CCS in response to a request from DOE
Secretary Moniz. The study concluded that ``the DOE CCS/CCUS
program has not yet achieved critical mass'' and ``without
adequate demonstration there can be no commercialization.''
Requiring use of a technology that is not available amounts to
a de facto ban on new coal plant construction in the U.S.
The Existing Source Standard: Given significant legal
concerns raised by the proposed and now final rule, the
existing source standard has been subject to numerous
challenges. A basic threshold issue is whether EPA has
authority to proceed with the rules under Section 111(d) at
all. Per the express language of the U.S. Code, EPA is
precluded from regulating existing power plants under Section
111 because they are already subject to the EPA's Mercury and
Air Toxics Standard under section 112.
EPA's existing source standard is also counter to the
limited historic application of authority under 111(d). Since
the establishment of the CAA, section 111 has only been
successfully used five times. Previous uses assigned emission
reduction responsibility to a specified source. In contrast,
under the power plant existing source standard, the agency
attempts a drastic expansion of authority ``beyond the source''
or ``beyond the fence-line'' resulting in federal regulatory
control over energy generation, dispatch and use.
The rule intrudes on state authority and undermines the
concept of cooperative federalism whereby states and the
federal government are meant to work as partners to achieve
environmental objectives. Per the Federal Power Act, states
have exclusive jurisdiction over intrastate electricity
matters. Under the existing source rule, the EPA is attempting
to regulate a state's entire electricity industry, from
generation to consumption, thereby undermining the states
longstanding autonomy over such matters. If a state chooses to
submit a State Implementation Plan (SIP) it would cede to EPA
approval authority over matters traditionally set by state
legislatures, including renewable portfolio standards, building
codes, and energy efficiency standards. Such actions raise
additional questions about how EPA plans to enforce plans that
address areas where EPA lacks institutional expertise and legal
authority. In addition to state intrusion, the existing source
standard potentially complicates the prerogatives of the
Federal Energy Regulatory Commission (FERC), which is charged
with primary regulatory jurisdiction over the interstate
transmission of electricity.
Beyond the legal arguments, technical experts at the local
and state level have expressed concerns over the practical
application of the existing source standard. Compliance would
force a rapid and unnatural restructuring of local energy
systems undermining grid reliability at exorbitant costs. A
significant amount of existing coal-fired generation would be
shut down. Separate analyses by the EPA and the Energy
Information Administration estimate fifty gigawatts would
retire, with the majority of retirements occurring well before
the 2030 final deadline. Of further concern in both the
proposed and final versions of the rule is that this massive
reduction in reliable electricity generation is expected to
largely be replaced by intermittent renewable generation, like
wind. During the proposed version's comment period, numerous
stakeholders raised concerns about reliability including the
Southwest Power Pool, which warned the rule would cause
``cascading outages'' and ``voltage collapse.''
Alongside reduced reliability, the existing source standard
comes at a high compliance cost and will increase the price of
electricity. In the proposed version, EPA estimated costs to
range from $5.5 billion to $8.8 with a four to seven percent
increase in retail electricity prices on average. Other
estimates place costs at a much higher range of $366 to $479
billion with double digit electricity price increases occurring
in over 43 states.\1\
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\1\NERA Economic Consulting, ``Potential Energy Impacts of the EPA
Proposed Clean Power Plan,'' October 2014 available at http://
www.nera.com/content/dam/nera/publications/2014/
NERA_ACCCE_CPP_Final_10.17.2014.pdf
---------------------------------------------------------------------------
Committee experts testified that such increases would be
especially harmful to low and fixed-income households that
already spend a larger portion of their household budgets on
energy costs.\2\ Various analyses and surveys have found that
in the face of increased energy costs, these household make
decisions adverse to their own health and welfare including
foregoing food, prescription use and medical care.\3\ At a
hearing before the Clean Air and Nuclear Safety Subcommittee on
June 23, 2015, the President of the Black Chamber of Commerce
also testified that increased energy costs are particularly
harmful to minority communities. The existing source rule alone
would increase Black poverty by 23% and increase Hispanic
poverty by 26%. Unemployment rates of Blacks and Hispanics
would increase with an estimated loss of nearly 200,000 jobs
held by Black workers and more than 300,000 jobs held by
Hispanic workers.
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\2\See Testimony of Eugene Trisko, available at http://
www.epw.senate.gov/public/>cache/files/4204e97b-87b8-4629-ab45-
ac55d475fd36/spw-062315.pdf
\3\Id.
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Such technical, procedural and legal shortcomings are why
32 states opposed the proposed rule and sixteen states
alongside leading industry stakeholders brought multiple
challenges. The final rule was published in the Federal
Register on October 23, 2015, a total of 81 days after it was
initially announced. The publication date initiated an influx
of legal petitions against the rules, including challenges by
over half the states.
There are also numerous concerns from stakeholders
regarding limited opportunities to meaningfully participate in
the regulatory process. The final rules evolved from a
settlement agreement that limited substantive involvement to a
select group of environmental activists and some state and
local governments. In the rush to comply with the arbitrary
deadlines, the agency deviated from established policies and
circumvented transparency laws and basic public participation
requirements. The ensuing technical, legal and policy
challenges are the result of the one-sided and insular approach
used to develop these regulations.
Initial findings of an ongoing Committee investigation into
the role environmental activist organizations played in EPA's
rulemaking process further solidified these concerns.
Preliminary findings were documented in a 72-page Majority
Staff Report on August, 4, 2015, entitled ``Obama's Carbon
Mandate: An Account of Collusion, Cutting Corners, and Costing
Americans Billions.''
Finally, while the existing source standard is being
labeled as the core component of the President's domestic
climate agenda, the EPA failed to measure whether it would
produce any meaningful environmental benefits. Industry
analysis using EPA's numbers and methods, found that
CO2 concentrations would be reduced by less than 0.5
percent, global temperature rise would be reduced by 0.016
degrees Fahrenheit, and sea level rise would be reduced by the
thickness of three sheets of paper.\4\ For the final rule, the
same analysis found CO2 concentrations would be
reduced by 0.2 percent, global temperature would be reduced by
0.01 degrees Fahrenheit and sea level reduced would be reduced
by the thickness of two human hairs.\5\ Even more concerning is
that the CO2 reductions achieved over the 11-year
life of the existing source rule would be rendered pointless by
a few months of CO2 emissions in China.\6\
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\4\American Coalition for Clean Coal Electricity, ``Climate Effects
of EPA's Proposed Carbon Regulations,'' June 2014, available at: http:/
/www.americaspower.org/sites/default/files/
Climate%20Effects%20Issue%20Paper%20June%202014.pdf
\5\American Coalition for Clean Coal Electricity, ``Climate Effects
of EPA's Final Clean Power Plan,'' August 2015, available at: http://
americaspower.org/sites/default/files/Climate-Effects- Paper-August-6-
2015.pdf
\6\See Testimony of Stephen Eule on behalf of the U.S. Chamber,
June 2015 available at https://www.uschamber.com/sites/default/files/
150624_steveeule_ testimony_eia_analysis_
of_epa_clean_power_plan_house_science_sbcmt.pdf
---------------------------------------------------------------------------
Objectives of the Legislation
Given the range of technical, procedural and legal concerns
regarding the President's carbon mandates, S. 1324 repeals the
final rules and sets forth new requirements the agency must
follow in setting replacement standards under section 111. The
bill reinstates balance and a range of protections for impacted
stakeholders through the following provisions.
First, S. 1324 requires EPA set standards for new, modified
and reconstructed plants based on existing technology. In
particular, the bill requires that any new technology be used
for at least 12-months at 6 separate power facilities
throughout the country. The bill also prevents the EPA from
using any demonstration projects--projects that are reliant on
federal support as specified in the Energy Policy Act of 2005--
from being used to set the standard.
Second, S. 1324 requires EPA to measure the environmental
impacts of any proposed standards. Specifically, the bill
requires EPA to submit a report to Congress that includes
projected domestic and global GHG reductions alongside measured
impacts on any associated ``climate indicators.''
Third, the S. 1324 prevents EPA from mandating a one-size-
fits-all approach to compliance. The bill requires EPA issue
state-specific model plans that account for a state's energy
needs, existing infrastructure and local laws.
Fourth, S. 1324 extends compliance dates. The bill would
extend deadlines for compliance, including deadlines for state
plan submissions, until after any legal challenges raised
during the first 60 days of Federal Register publication have
been resolved.
Fifth, S. 1324 provides a safe harbor for states to protect
their ratepayers. The bill prevents a state from being forced
to implement a SIP or FIP that the state's governor determines
would negatively impact economic growth, negatively impact the
reliability of their electricity system, or negatively impact
electricity costs for ratepayers.
Sixth, S. 1324 prevents highway fund sanctions for
noncompliance. The bill would prevent the EPA from withholding
highway funds from any state that chooses to forego or opt-out
of standards set under section 111.
Finally, S. 1324 restates existing law. Existing power
plants are already subject to regulation under the Mercury and
Air Toxics rule. The Clean Air Act explicitly prevents this
type of double regulation. This is a restatement of existing
law to prevent EPA from attempting to rewrite the law to
support their illegal and unprecedented actions.
Despite the multitude of concerns raised by stakeholders
regarding basic legal authority, costs, reliability and
stakeholder input, the agency is pushing forward with its now
final rules and associated deadlines. States have already and
will continue to be forced to assess and develop a plan of
action for rules that were developed with limited state
involvement, lack basic legal backing, and will cause harm to
their local communities. However these plans of action are
characterized, they will be extremely complex and require
significant time and resource investment.
Section-by-Section Analysis
Section 1. Short title
This section designates the title of the bill as the
``Affordable Reliable Electricity Now Act of 2015''
Section 2. Definitions
This section defines ``Administrator'' as the Administrator
of the Environmental Protection Agency; ``Demonstration
project'' as a project to test or demonstrate the feasibility
of carbon capture and storage technologies that have received
government funding or financial assistance; ``Existing Source''
as the meaning given the term in section 111(a) of the Clean
Air Act; ``Greenhouse gas'' as any of the following: carbon
dioxide, methane, nitrous oxide, sulfur hexafluoride,
hydrofluorocarbons or perfluorocarbons; ``Modification'' as the
meaning given the term in section 111(a) of the Clean Air Act;
``Modified Source'' as a stationary source that undergoes a
modification after enactment of this Act; ``New source'' as the
meaning given such term in CAA section 111(a); and
``Reconstructed Source'' as any stationary source that
undergoes reconstruction as defined in section 60.15 of title
40, Code of Federal Regulations after the date of enactment of
this Act.
Section 3. Standards of performance for new, modified, and
reconstructed fossil fuel--fired electric utility generating
units
This section provides direction relating to the
establishment of standards for new, modified, and reconstructed
fossil fuel-fired electricity generating units (EGUs). This
section provides that the EPA Administrator must establish
separate source categories for new EGUs fueled with coal and
natural gas. This section also provides that for any fossil
fuel-fired electric generating units, the EPA Administrator may
not set a standard unless it has been achieved for a continuous
12-month period by at least 6 EGUs located at different power
plants in the United States, which EGUs collectively are
representative of the operating characteristics of EGUs at
different locations in the U.S. and which have operated for the
entire 12-month period on a full commercial basis. This section
sets a subcategory for EGUs fueled by lignite coal and
restricts standards based on results from a demonstration
project.
Section 4. Standards of performance for existing fossil fuel-fired
electric utility generating units, compliance extension, and
ratepayer protection
This section provides direction relating to the
establishment of standards for existing fossil fuel-fired
electricity generating units (EGUs). This section provides that
the Administrator must submit a report to Congress describing
the quantity of projected GHG emissions reductions and
assessing the impacts of a rule to EPA's climate indicators.
The section further requires EPA to issue state-specific model
plans, extends compliance dates until legal questions are
resolved, and allows States to opt-out of compliance if the
rule would have negative impacts on economic growth,
reliability or result in electricity rate increases.
Section 5. Limitation on effect of noncompliance
This section provides that noncompliance by a State with
any proposed, modified, or final rule described within shall
not be subject to highway sanctions under Section 179(b)(1) of
the Clean Air Act.
Section 6. Repeal of earlier rules and guidelines
This section provides that the EPA's proposed standards for
new, modified and reconstructed, and existing fossil fuel-fired
EGUs, and any substantially similar rules that do not meet the
requirements of the Act, are of no force and effect.
Section 7. Restatement of existing law
This section provides a restatement of existing law that
existing sources regulated under section 112 of the Clean Air
Act are precluded from being regulated under Section 111 of the
Clean Air Act.
Legislative History
On May 13, 2015, Senator Capito, introduced S. 1324, the
ARENA Act. Senators Inhofe, Manchin, Alexander, Barrasso,
Blunt, Boozman, Cassidy, Coats, Cornyn, Cotton, Crapo, Cruz,
Daines, Enzi, Fischer, Hoeven, Isakson, McConnell, Paul,
Perdue, Risch, Roberts, Rounds, Thune, Tillis and Wicker were
original cosponsors of the legislation. The bill was referred
to the Senate Committee on Environment and Public Works.
On August 5, 2015, the Senate Committee on Environment and
Public Works conducted a business meeting to consider S. 1324.
The bill, as amended, was favorably reported out of Committee
by voice vote.
Hearings
During the 114th Congress, the Committee held three full
committee hearings and two subcommittee hearings to conduct
oversight and hear from stakeholders regarding concerns related
to the proposed and now final carbon emission standards.
2/11/2015 Full Committee Hearing: ``Examining EPA's
proposed carbon dioxide emissions rules from new, modified, and
existing power plants''
3/11/2015 Full Committee Hearing: ``Examining State
Perspectives of the EPA's proposed carbon dioxide emissions
rule for existing power Plants''
3/23/2015 Full Committee Field Hearing: ``Regional Impacts
of EPA Carbon Regulations: The Case of West Virginia''
5/5/2015 Subcommittee on Clean Air and Nuclear Safety
Hearing: ``Legal Implications of the Clean Power Plan''
6/23/2015 Subcommittee on Clean Air and Nuclear Safety
Hearing: ``The Impacts of EPA's proposed Carbon Regulations on
Energy Costs for American Businesses, Rural Communities and
Families, and a legislative hearing on S. 1324''
Rollcall Votes
The Committee on Environment and Public Works met to
consider S. 1324 on August 5, 2015.
The committee did not agree to an amendment by Senator
Merkley by a rollcall vote of 9 ayes, 11 nays, and 0 not
voting. Voting in favor were Senators Booker, Boxer, Cardin,
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse.
Voting against the amendment were Senators Barrasso, Boozman,
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan,
Vitter and Wicker.
The committee did not agree to an amendment by Senator
Whitehouse by a rollcall vote of 9 ayes, 11 nays, and 0 not
voting. Voting in favor were Senators Booker, Boxer, Cardin,
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse.
Voting against the amendment were Senators Barrasso, Boozman,
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan,
Vitter and Wicker.
The committee did not agree to an amendment by Senator
Markey by a rollcall vote of 9 ayes, 11 nays, and 0 not voting.
Voting in favor were Senators Booker, Boxer, Cardin, Carper,
Gillibrand, Markey, Merkley, Sanders and Whitehouse. Voting
against the amendment were Senators Barrasso, Boozman, Capito,
Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, Vitter and
Wicker.
The committee did not agree to another amendment by Senator
Markey by a rollcall vote of 9 ayes, 11 nays, and 0 not voting.
Voting in favor were Senators Booker, Boxer, Cardin, Carper,
Gillibrand, Markey, Merkley, Sanders and Whitehouse. Voting
against the amendment were Senators Barrasso, Boozman, Capito,
Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, Vitter and
Wicker.
The committee did not agree to an amendment by Senator
Gillibrand by a rollcall vote of 9 ayes, 11 nays, and 0 not
voting. Voting in favor were Senators Booker, Boxer, Cardin,
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse.
Voting against the amendment were Senators Barrasso, Boozman,
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan,
Vitter and Wicker.
The committee did not agree to another amendment by Senator
Whitehouse by a rollcall vote of 9 ayes, 11 nays, and 0 not
voting. Voting in favor were Senators Booker, Boxer, Cardin,
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse.
Voting against the amendment were Senators Barrasso, Boozman,
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan,
Vitter and Wicker.
The Committee on Environment and Public Works ordered S.
1324 reported favorably to the Senate by voice vote with a
quorum present.
Regulatory Impact Statement
In compliance with section 11(b) of rule XXVI of the
Standing Rules of the Senate, the committee makes evaluation of
the regulatory impact of the reported bill. The committee finds
that S. 1324 does not create any additional regulatory burdens,
nor will it cause any adverse impact on the personal privacy of
individuals.
Mandates Assessment
In compliance with the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), the committee note that the Congressional
Budget Office found, `S. 1324 contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act.'
Cost of Legislation
Section 403 of the Congressional Budget and Impoundment
Control Act requires that a statement of the cost of the
reported bill, prepared by the Congressional Budget Office, be
included in the report. That statement follows:
October 8, 2015.
Hon. Jim Inhofe,
Chairman, Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1324, the Affordable
Reliable Electricity Now Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Susanne S.
Mehlman and Jon Sperl.
Sincerely,
Keith Hall.
Enclosure.
S. 1324--Affordable Reliable Electricity Now Act of 2015
S. 1324 would repeal or require changes to rules and
guidelines issued by the Environmental Protection Agency (EPA)
that address greenhouse gas emissions from power plants that
use fossil fuels. Under the bill, before proposing any new
rules or guidance related to those emissions, EPA would need to
meet certain standards and follow certain procedures. Final
rules that would be affected by this legislation include:
Standards of Performance for Greenhouse Gas
Emissions from New, Modified, and Reconstructed Stationary
Sources: Electric Utility Generating Units, signed by the
Environmental Protection Agency on August 3, 2015;
Standards of Performance for Greenhouse Gas
Emissions from New Stationary Sources: Electric Utility
Generating Units, published in the Federal Register on January
8, 2014;
Carbon Pollution Emission Guidelines for Existing
Stationary Sources: Electric Utility Generating Units,
published in the Federal Register on June 18, 2014; and
Carbon Pollution Emission Guidelines for Existing
Stationary Sources: EGUs in Indian Country and U.S.
Territories; Multi-Jurisdictional Partnerships, published in
the Federal Register on November 4, 2014.
Before developing any rules or guidance for existing power
plants, the legislation would require EPA to provide a report
to the Congress that describes the level of emissions
reductions a rule is projected to achieve both globally and
domestically, conduct modeling of the effect of the rule on
climate indicators, and issue state-specific plans for
reductions in greenhouse gas emissions.
In addition, when developing any rules or guidance for
power plants that are new, modified or reconstructed, this
legislation would require EPA to create separate categories for
power plants that use natural gas as a fuel source and for
power plants that use coal as a fuel source, and to base any
new emissions standards on actual emissions levels achieved by
at least six different electric generating units across the
United States when operating for a continuous 12-month period.
CBO expects that under S. 1324, EPA would likely propose a new
rule for carbon emissions from new, modified, and reconstructed
power plants, consistent with the requirements of this
legislation.
The bill would not prohibit EPA from continuing to work on
activities related to power plants, such as developing guidance
and providing technical assistance to states. Based on
information from EPA, CBO estimates that implementing this
legislation would not have a significant effect on EPA's
workload or spending related to power plant emissions.
Enacting S. 1324 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
S. 1324 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contacts for this estimate are Susanne S.
Mehlman and Jon Sperl. The estimate was approved by H. Samuel
Papenfuss, Deputy Assistant Director for Budget Analysis.
MINORITY VIEWS OF BOXER, CARPER, CARDIN, SANDERS, WHITEHOUSE, MERKLEY,
GILLIBRAND, BOOKER, AND MARKEY ON S. 1324, AS REPORTED BY THE EPW
COMMITTEE
Power plants are the largest source of the nation's harmful
carbon pollution, accounting for nearly 31% of U.S. greenhouse
gas emissions. The final Clean Power Plan standard that
President Obama announced on August 3, 2015 is the first rule
to limit the amount of carbon pollution that can be released
into the air from existing power plants. On August 3, 2015,
President Obama also announced final standards for carbon
pollution from new, modified, and reconstructed power plants
(NSPS).
When it is fully implemented in 2030, the final Clean Power
Plan will cut emissions from power plants 32% below 2005
levels. In addition, the Clean Power Plan will increase the
percentage of our electricity generating capacity from
renewables to 28% in 2030.
S. 1324 blocks implementation of the President's Clean
Power Plan and the standards for new, modified, and
reconstructed power plants. Furthermore, the bill allows states
to opt out of complying with any future plan. The bill creates
giant loopholes that make it nearly impossible to take any
meaningful action to address climate change and reduce harmful
carbon pollution from power plants. Turning away from the
President's Clean Power Plan, as S. 1324 would do, would not
only move us toward the most devastating impacts of climate
change, but hurt the health of the American people.
S. 1324 would block the climate pollution reductions and
public health benefits of the Clean Power Plan and it would
alter the Clean Air Act in several significant and harmful
ways:
Place new restrictions on the ability of the
Environmental Protection Agency (EPA) to issue any
carbon pollution standards for both new and existing
power plants;
Repeal all previous EPA proposals and rules
controlling carbon pollution from new, modified, and
existing power plants;
Change the way EPA is able to regulate new
power plants by limiting the technologies EPA can
consider in setting the standards;
Alter the Clean Air Act by allowing states to
opt out of any new climate rule under Section 111 for
existing power plants;
Delay any new carbon regulation from being
implemented until all the lawsuits are resolved--which
could take a number of years; and
Alter the Clean Air Act to require EPA to
take a ``pick your poison'' approach by prohibiting EPA
from regulating power plants for both air toxics, such
as mercury, and carbon pollution.
Letters opposing this bill from dozens of public health,
business, environmental, and religious groups were entered into
the record at the legislative hearing. These letters criticized
the damaging changes to the Clean Air Act that would result
from S. 1324 and highlighted the benefits of the Clean Power
Plan, which are addressed below.
THE CLEAN POWER PLAN
Public health benefits
The Clean Power Plan will deliver important health benefits
for our families in 2030 and every year after. By cutting the
air pollutants that are emitted along with climate pollution
the Clean Power Plan will avoid:
3,600 premature deaths;
1,700 heart attacks;
90,000 asthma attacks; and
300,000 missed workdays and schooldays by
2030.
In addition, for every dollar invested through the Clean
Power Plan, American families will see up to $4 in health
benefits from the soot and smog pollution reductions achieved.
Employment
The EPA estimates that the Clean Power Plan will create
thousands of jobs, including jobs in the energy efficiency
field. The final plan includes the Clean Energy Incentive
Program (CEIP), which incentivizes early expansion of
renewables and investment in energy efficiency. This program
will help accelerate job growth in those important sectors. EPA
estimates that improving demand-side energy efficiency will
create approximately 53,000 to 84,000 jobs in 2025 and about
52,000 to 83,000 jobs in 2030.
Consumer savings and benefits to low-income communities
The Clean Power Plan will lower household electricity bills
by encouraging energy efficiency. By 2030, the EPA estimates
families will save, on average, $85 a year. There will also be
benefits for low-income communities through the CEIP, which
prioritizes early investment in energy efficiency projects in
low-income communities. In addition, implementation of the plan
will accelerate the development of clean, renewable energy and
reduce pollution from power plants, which has a
disproportionate negative effect on low-income, minority
communities.
According to a statement issued by the NAACP on August 4,
2015:
``Power plants are the country's single biggest
source of carbon pollution-responsible for up to 40% of
the country's emissions of greenhouse gases. According
to the plan, these measures will reduce the pollutants
that contribute to life-threatening soot and smog by
70% which would have significant implications for
communities of color. Three out of every four African
Americans live within 30 miles of a coal-fired power
plant. These communities are disproportionately
represented among those with respiratory illnesses,
such as lung cancer and pulmonary disease. In fact,
African American children are 3 times more likely to be
admitted to the hospital for an asthma attack and twice
as likely to die of asthma.''
The NAACP Director of Environment and Climate Justice
specifically addressed the harms of carbon pollution to
minorities and low-income communities:
``We stridently refute the contentions of those who
have used an equity and civil rights frame to oppose
regulations on carbon pollution by claiming undue cost
burden on vulnerable communities. The cost these
communities are paying from their close proximity to
polluting plants and from choking down toxins daily is
the toll that compromised health, negative educational
outcomes and challenged work performance takes on
community well-being and growth potential. Still others
see the devastating climate change impacts from
pollution including disasters, rising sea levels, and
decreasing availability of affordable nutritious foods,
all of which disproportionately affect our most
vulnerable communities.''\1\
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\1\(August 4, 2015). NAACP Statement on President Obama's Clean
Power Plan. National Association for the Advancement of Colored People.
Retrieved from http://www.naacp.org/press/entry/naacp-statement-on-
president-obamas-clean-power-plan.
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Economic benefits outweigh costs
The EPA estimates that the combined health and climate
benefits of the Clean Power Plan in 2030 are worth an estimated
$34 billion to $54 billion. These benefits far outweigh the
estimated costs of $8.4 billion. As it has with other Clean Air
Act regulations, industry has made extreme claims about the
costs of the proposed rule. The U.S. Chamber of Commerce
analysis of the proposed rule, which provides the basis for
industry's criticism of the rule, has been roundly criticized
as it applied to the proposed rule; it is not relevant to the
final rule.\2\
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\2\(August 26, 2015). Why Media Should Stop Citing NERA's Flawed
Study on the EPA Climate Plan. Media Matters for America. Retrieved
from http://mediamatters.org/research/2015/08/26/why-media-should-stop-
citing-neras-flawed-study/205177.
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Broad public support for the Clean Power Plan
The final Clean Power Plan drew strong support from a broad
range of religious organizations and public health groups\3\
and is strongly supported by voters. An August 2015 poll shows
60% of voters support the plan, while just 31% oppose it.
``[T]hose who strongly support this plan outnumber those who
strongly oppose it by eight percentage points (27% to
19%).''\4\ Another poll from August 2015 shows that 59% of
voters say states should move forward and develop a plan to cut
carbon pollution from power plants.\5\
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\3\See, e.g., (August 3, 2015). APHA applauds the Clean Power Plan.
American Public Health Association. Retrieved from http://www.apha.org/
news-and-media/news-releases/apha-news-releases/apha-applauds-the-
clean-power-plan; (August 3, 2015). National Religious Organizations
Praise Clean Power Plan. The National Religious Partnership for the
Environment. Retrieved from http://www.nrpe.org/uploads/2/4/4/7/
24473122/nrpe_cpp_release_august_2015.pdf.
\4\(August 13, 2015). Support for the Clean Power Plan. Hart
Research Associates and Chesapeake Beach Consulting. Retrieved from
http://www.lcv.org/issues/polling/clean-power-plan-poll.pdf.
\5\(August 4, 2015). Americans Strongly In Favor of Plan to Limit
Carbon Emissions. Public Policy Polling. Retrieved from http://
aufc.3cdn.net/ae95ea4da2c00733cc_9am6ib5ns.pdf.
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The opposition to the proposed rule has been overstated and
claims that 32 states opposed the proposed rule have been
refuted.\6\ States, including some that express concern with
the rule, (MI, GA, ND, MT) are moving forward with developing
their plans.\7\
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\6\Doniger, D. (March 11, 2015). 32 States, What? Senator Inhofe's
Fuzzy Math on States and EPA. Retrieved from http://
switchboard.nrdc.org/blogs/ddoniger/
32_states_what_senator_inhofes.html.
\7\See, e.g., http://www.eenews.net/interactive/clean_power_plan/
states/montana.
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The Clean Power Plan reflects an inclusive process and incorporates
public comments
EPA received more than 4.3 million comments on the proposed
Clean Power Plan. The final rule differs from the proposal in
several significant ways that address issues raised in the
comments. The final rule affords states additional time to
submit State Implementation Plans to EPA, providing up to 3
years rather than 1-2 years. States also have additional time
to begin making reductions in emissions--the initial compliance
date is now 2022 instead of 2020. The final rule also provides
for a more gradual phase-in of reductions to avoid concerns
about the steep reductions in the proposed rule.
Flexibility for states to implement the Clean Power Plan
In the Clean Power Plan, EPA establishes specific goals for
each state to reduce the carbon pollution from its power
producing system based on separate standards for both gas and
coal-fired plants. Each state is given broad flexibility on how
it will meet its state-specific goal. Various approaches range
from improving the efficiency of existing coal and natural gas
power plants, expanding the use of renewable energy,
implementing emissions trading plans, increasing energy
efficiency, upgrading transmission, or including nuclear and
hydropower uprates in their plans.
The final rule also gives states two options for developing
their plans--rate-based goals which apply to each power plant
in the state or mass-based goals which set an emissions target
for the state. These options allow states to customize a path
forward for achieving reductions in carbon pollution. Finally,
the CEIP encourages investment in energy efficiency in low
income communities and the development of renewable energy that
will begin generating power between 2020 and 2022, which will
enable states to generate credits toward compliance.
EPA also issued a draft Federal Implementation plan that
states can use to guide the development of their own plans.
Reliability is addressed in the Clean Power Plan
Climate change is a threat to the reliability of our
electricity system. According to the Department of Energy
(DOE), severe weather is the number one cause of power outages
in the U.S. and costs the economy billions of dollars a year in
lost output and wages, spoiled inventory, delayed production,
inconvenience and damage to grid infrastructure. Between 2003
and 2012, roughly 679 power outages, each affecting at least
50,000 customers, occurred due to weather events.\8\
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\8\(August 2013). Economic Benefits of Increasing Grid Resilience
to Weather Outages. Executive Office of the President. Retrieved from
http://energy.gov/sites/prod/files/2013/08/f2/
Grid%20Resiliency%20Report--FINAL.pdf.
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The Clean Power Plan includes several provisions that are
intended to ensure reliability of the nation's electricity
supply as states implement the rule. Some of the changes in the
final rule, such as starting reductions in 2022 and the
flexibility states and utilities have to plan for and achieve
reductions, including trading and multi-state approaches to
achieve emissions reductions, will ensure that compliance with
the rule provides reliable electricity. In addition, state
plans must consider reliability and the final rule allows
states to revise a plan if there is an unanticipated or
significant reliability challenge that arises. Further, the
rule includes a ``safety valve'' provision in the final rule
for emergency situations.
Along with the final rule EPA issued a memo of coordination
with DOE and the Federal Energy Regulatory Commission (FERC).
This memo describes steps that will be taken to ensure reliable
electricity generation and transmission as the Clean Power Plan
is implemented and provides for ongoing communication and
cooperation between EPA, DOE and FERC.
FINAL STANDARDS FOR NEW, MODIFIED, AND RECONSTRUCTED POWER PLANTS
On August 3, 2015, the EPA also issued final standards for
new, modified or reconstructed power plants under section
111(b) of the Clean Air Act. This rule complements the Clean
Power Plan by setting carbon pollution standards for new coal
or gas fired plants as well as modified or reconstructed plants
that require the application of the best system of emission
reduction (BSER).
Given that the Clean Air Act calls for standards for new
plants to be technology forcing, the final standard for new
coal plants is based on partial carbon capture and storage
(CCS) technology as BSER. CCS technology is being utilized at
facilities in Canada and the U.S.\9\ According to EPA, the
final rule is consistent with the current investment trends in
the industry and the standards ``are not expected to have
notable costs and are not projected to impact electricity
prices or reliability.''\10\
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\9\Duffy, J., & Weeks, A. (June 15, 2015). Let's Go EPA--Remain
Strong on Power Plant Rules. Clean Air Task Force. Retrieved from
http://www.catf.us/blogs/ahead/2015/06/15/lets-go-epa-remain-strong-on-
power-; see also (July 10, 2015). Technical Support Document.
Environmental Protection Agency. Retrieved from http://www3.epa.gov/
airquality/cpp/tsd-cps-literature-survey-carbon-capture-technology.pdf.
\10\EPA Fact Sheet: Carbon Pollution Standards, http://
www3.epa.gov/airquality/cpp/fs-cps-overview.pdf.
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LEGAL AUTHORITY FOR CARBON POLLUTION STANDARDS
Both the Clean Power Plan and the final standards for new,
modified, and reconstructed power plants are promulgated
pursuant to EPA's established authority under the Clean Air Act
to regulate carbon pollution. The U.S. Supreme Court has ruled
three times in support of EPA's legal authority to control
carbon pollution under existing law. In 2007, the Supreme Court
confirmed in Massachusetts v. EPA that the Clean Air Act
covered carbon pollution. Four years later, the Supreme Court
in American Electric Power v. Connecticut, specifically found
that the Clean Air Act has provisions (Section 111) in place to
limit carbon pollution from power plants--the very provisions
EPA is using in its proposed existing power plant carbon
standards. Lastly, on June 23, 2014, the Supreme Court in
Utility Air Resources Group v. EPA again confirmed that the
Clean Air Act covers carbon pollution. The case upheld EPA's
rules requiring that if an individual industrial source needs a
pre-construction air permit (known as a PSD permit) because of
the amount of conventional air pollutants it will emit, EPA can
require that the same source consider how it will also best
control carbon pollution.
AMENDMENTS TO S.1324
During markup, as noted in the Rollcall Votes section
above, the Committee considered six amendments that addressed
the impacts of climate change, the need to ensure the benefits
of implementing the Clean Power Plan, the need for federal
action, as well as the need to express the sense of the Senate
regarding the science of climate change.
Each amendment was rejected on a party line vote of 9 yeas
and 11 nays.
Senator Markey offered an amendment that recognized the
significant public health benefits that will come with
implementation of the Clean Power Plan, including the
prevention of 3,600 premature deaths, 90,000 asthma attacks,
and the avoidance of 300,000 missed days of work or school. The
amendment stated that S. 1324 does not take effect before a
plan is in place to achieve the health benefits created by the
Clean Power Plan. All of the Republicans voted against the
amendment; the amendment was defeated.
Senator Markey offered another amendment to ensure S. 1324
would not apply if the bill has a negative impact on clean
energy jobs. The EPA estimates that the Clean Power Plan will
create thousands of jobs, and in particular EPA estimates that
improving demand-side energy efficiency will create the need
for about 53,000 to 84,000 jobs in 2025 and about 52,000 to
83,000 jobs in 2030. All of the Republicans voted against the
amendment; the amendment was defeated.
Senators Gillibrand and Markey offered an amendment
recognizing that climate change is a threat to our coasts as
sea levels rise. The American Meteorological Society issued its
State of the Climate in 2014 Report noting that numerous key
climate change indicators were at or near record levels in
2014, including a record high for sea levels--2.5 inches above
1993 levels. The amendment prohibited the Act from taking
effect if its implementation contributes to an increase in sea
level rise and coastal erosion. All of the Republicans voted
against the amendment; the amendment was defeated.
Senator Merkley offered an amendment to express the sense
of the Senate that climate change is real and due to human
activity. The amendment recognized that leading scientists
worldwide, as well as our own government experts at NASA and
NOAA, tell us that climate change is real and that human
activity is causing it. In addition, the amendment recognized
that the climate change impacts that scientists predicted years
ago are happening now, including record heat, droughts,
wildfires, storms, and sea ice melt. All of the Republicans
voted against the amendment; the amendment was defeated.
Senator Whitehouse offered an amendment to create a new
findings section in S. 1324 stating the sense of the Senate
that climate change is real and not a hoax, and human activity
significantly contributes to it; and the federal government has
a responsibility to act. According to a Washington Post-ABC
poll, a bipartisan majority of the American people want federal
limits on carbon pollution. Approximately 70 percent say the
federal government should require limits on carbon pollution
from existing power plants, and 70 percent support requiring
states to limit the amount of carbon pollution within their
borders. Further, 97% of scientists agree human activity is
leading to dangerous climate change that threatens our
families. All of the Republicans voted against the amendment;
the amendment was defeated.
The second amendment offered by Senator Whitehouse would
have required the federal government to have another program or
legislative proposal in place that would reduce carbon
pollution by at least as much as the EPA's power plant rules
before the Act can take effect. When the Clean Power Plan is
fully implemented it will cut carbon pollution from the power
sector by 32%. These reductions are an essential element of
President Obama's Climate Action Plan and this amendment would
require an alternative plan to be in place to secure equivalent
reductions. All of the Republicans voted against the amendment;
the amendment was defeated.
Barbara Boxer.
Thomas Carper.
Benjamin Cardin.
Bernard Sanders.
Sheldon Whitehouse.
Jeff Merkley.
Kirsten Gillibrand.
Cory Booker.
Edward Markey.
Changes in Existing Law
In compliance with section 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill
as reported are shown as follows: Existing law proposed to be
omitted is enclosed in [black brackets], new matter is printed
in italic, existing law in which no change is proposed is shown
in roman:
* * * * * * *
CLEAN AIR ACT
standards of performance for new stationary sources
Sec. 111. (a) For purposes of this section:
(1)* * *
* * * * * * *
[(d)(1) The Administrator]
(d) Standards of Performance for Existing Sources; Remaining
Useful Life of Source.--
(1) In general.--The Administrator ;shall prescribe
regulations which shall establish a procedure similar
to that provided by section 110 under which each State
shall submit to the Administrator a plan which (A)
establishes standards of performance for any existing
source for any air pollutant (i) for which air quality
criteria have not been issued or which is not included
on a list published under [section 108(a) [or emitted
from a source category which is regulated under section
112][or 112(b)]\24\ but]section 108(a) or emitted from
a source category that is regulated under section 112,
but (ii) to which a standard of performance under this
section would apply if such existing source were a new
source, and (B) provides for the implementation and
enforcement of such standards of performance.
Regulations of the Administrator under this paragraph
shall permit the State in applying a standard of
performance to any particular source under a plan
submitted under this paragraph to take into
consideration, among other factors, the remaining
useful life of the existing source to which such
standard applies.
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\24\US Code executes the amendment as follows: ``(1) The
Administrator shall prescribe regulations which shall establish a
procedure similar to that provided by section 7410 of this title under
which each State shall submit to the Administrator a plan which (A)
establishes standards of performance for any existing source for any
air pollutant (i) for which air quality criteria have not been issued
or which is not included on a list published under section 7408(a) of
this title or emitted from a source category which is regulated under
section 7412 of this title but (ii) to which a standard of performance
under this section would apply if such existing source were a new
source, and (B) provides for the implementation and enforcement of such
standards of performance. Regulations of the Administrator under this
paragraph shall permit the State in applying a standard of performance
to any particular source under a plan submitted under this paragraph to
take into consideration, among other factors, the remaining useful life
of the existing source to which such standard applies.'' 42 USC
7411(d)(1).
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[(2) The Administrator]
(2) Authority of the administrator.--The Administrator shall
have the same authority--
(A) to prescribe a plan for a State in cases where
the State fails to submit a satisfactory plan as he
would have under section 110(c) in the case of failure
to submit an implementation plan, and
(B) to enforce the provisions of such plan in cases
where the State fails to enforce them as he would have
under sections 113 and 114 with respect to an
implementation plan. [In promulgating a standard]
(3) Considerations.--In promulgating a standard of
performance under a plan prescribed under this
paragraph, the Administrator shall take into
consideration, among other factors, remaining useful
lives of the sources in the category of sources to
which such standard applies.
(4) Prohibition.--The Administrator shall not
regulate as an existing source under this subsection
any source category regulated under section 112.
