Regulation / Uncategorized

Utility MACT Rule, Destroying Jobs and Saving Lives?

A Cast of Characters            

An Native American and an Evangelical walk into a bar… Or let me rephrase that; an Native American and an Evangelical walked into the Rayburn House Office Building on February 8, 2012 to act as a part of a panel put together by the Subcommittee on Energy and Power. The panels included the assistant administrator for Air and Radiation at the Environmental Protection Agency (EPA), and others from private and public companies such as NERA Economic Consulting and RMB Consulting & Research, Inc.

Coming to offer their testimonies, these experts gave their statements on how the EPA should, or should not implement the Maximum Achievable Control Technology initiative.  The overarching goals of the hearings (on its fifteenth day, with more to come) are to discover the total and net cost of the Utility MACT Rule, identify potential impacts on electricity prices on costs of goods and services, on jobs and the economy, and any additional costs associated with the implementation of the rule.

Stumbling For an Answer 

Only a short time into the hearing, a mere 20 minutes after her testimony, The Honorable Gina McCarthy was asked a string of questions regarding the overall cost of the rule.  To give Ms. McCarthy credit, she was interrupted multiple times by Chairman Whitfield, but it still does not excuse the easy questions that the EPA should have already answered before the hearings even began. The estimated cost of the rule is 9.4 billion in 2016, the first year the ruling would be implemented, the EPA has not estimated the cost for the plan past that date.  Chairman Whitfield then asked what the estimated cost for the program would be in 2017 and 2018, but Ms. McCarthy stumbled over herself saying that they did not have the exact figures of yet.

Another issue that Whitfield pushed McCarthy to answer was if the term “cost” included any jobs lost by the new ruling.  During an attempt to use circumlocution, McCarthy stated that in terms of cost calculations the EPA looked as the costs associated with control equipment, electricity, and the creation of short and long term jobs.  Frustrated by McCarthy, Whitfield followed up by again asking if they looked at lost jobs, and the cost of a worker who loses their healthcare, and by proxy their family’s’ health care.  Yet, sticking to her guns McCarthy reiterated that during the estimation of cost the EPA looked at the increase of jobs both short and long term.

Destroying Jobs and Saving Lives

Anne E. Smith, Ph.D. and Vice President of National Economic Research Associates (NERA), an economic consulting practice, gave her input to how she believed the EPA was going about their process. She stated that despite its 2016 budget of 9.6 billion, the rule would likely destroy hundreds of thousands of jobs. Additionally, of the estimated 33 to 90 billion dollar benefits from the program, 90 percent of it will come from the 4,200 to 11,000 premature deaths that would be avoided per year with the ruling.  She also mentioned that the EPA benefit cost for the MATS Rule was non-credible, and the costs of the ruling cover a regulation of non-hazardous air pollutants (HAP), which is already under regulation.

A Heart of Steel

Darren MacDonald, the Director of Energy within the Gerdau Long Steel North America, gave his testimony on the effect of the program on electricity. The steel sector is concerned about the increase in electricity costs and reliability issues that may come to reality due to the new regulation. He also fears the reality that all compliance costs and reliability risks will fall upon the consumers. MacDonald instead suggests that the EPA should instead give companies more time to adjust to the MACT Rule, this not only benefits the companies, but also the electric industry. If all companies had to change their policies within a short amount of time, the electricity costs and reliability will be unstable and unreliable.

If and when the MACT Rule goes into effect, billions of investment dollars will have to be spent on electricity production, facilities, and the upgrades for said new buildings.  The Gerdau Long Steel North America business, along with many other electric industries believe the cost for the implementation for MACT will not be only 9.6 billion, but much more.

The EPA and the Navajo Nation

Overall the overall Navajo Nation, represented by Attorney General, Harrison Tsosie, supports the goal of the MACT Rule to reduce HAP emissions from stationary sources. However, he is firm in his belief that the United States Government fell short when it came to their relations with the Navajo Nation. The MACT Rule poses as a critical economic interest to the Navajo peoples and their continued operation of power plants within their lands.  According to Tsosie, the EPA has failed to fulfill its obligations the Navajo Nation by keeping them in mind as to how it will have economical impacts to their nation, and the “one size fits all” mentality that the EPA had been giving the Navajo Nation in relation to other non-Indian lands. Tsosie wants the EPA to do is for them to utilize all the measures they can under the Clean Air Act (CAA), and when appropriate, to make changes to allow compliance extensions for businesses.

By: Conor O’Malley

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