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Increasing Environmental Regulations

The Executive Branch agencies and offices tasked with environmental issues—the Environmental Protection Agency (EPA), the Council on Environmental Quality (CEQ), the Department of the Interior (DOI) and others—are undertaking a wide range of new rules and regulations that either tighten existing environmental standards or impose entirely new environmental obligations on the business community. Often, these agencies give little or no consideration to cost on businesses or jobs that might be lost. American businesses are increasingly feeling suffocated by the volume, scope and cost of all of these new regulations.

Here are some of the worst examples:

Greenhouse Gas Regulation

Congress did not pass a comprehensive energy and climate bill in 2010, so a host of agencies are moving forward with regulation under existing laws. The result will almost certainly be higher compliance costs, more litigation, and less regulatory certainty than any piece of legislation would have brought. In 2011 and beyond, EPA plans to roll out a wide range of new greenhouse gas regulations on emitters of all shapes and sizes under the Clean Air Act. EPA is also evaluating whether to regulate greenhouse gas emissions under the Clean Water Act, due to their connection to ocean acidification. CEQ has expanded the National Environmental Policy Act (NEPA) and its provisions to greenhouse gases and projects that emit them. DOI continues to grapple with application of the Endangered Species Act to greenhouse gases. And the Securities and Exchange Commission recently issued guidance requiring publicly traded corporations to disclose material risks related to climate change or resulting legislative, regulatory or international efforts to address the issue.

Revised NAAQS

The Clean Air Act requires EPA every five years to revise the National Ambient Air Quality Standards (NAAQS) for each of six criteria pollutants: ozone, lead, particulate matter, carbon monoxide, nitrogen oxides, and sulfur dioxide. Right now EPA is in various stages of revising five of the six NAAQS—including what is essentially a “do-over” of the ozone NAAQS, which EPA just revised in 2008. Even worse, EPA is not required to take into account the very significant costs of implementation of NAAQS revisions, costs that include huge penalties for counties unable to meet the NAAQS. Nonattainment counties can lose coveted federal highway and transit funding. Restrictive permit requirements deter companies from building new manufacturing plants or modifying existing ones. Mandated federal pollution control measures will inhibit business expansion as local plans for economic development are put on hold. And in some cases, consumers can be affected, due to special requirements for vehicles and fuels sold in the area, and for commercial and consumer products. Counties in non-attainment are essentially “redlined” and could lose business permanently. Compliance with a single NAAQS is a costly undertaking; compliance with five is a recipe for regulatory overload.

Boiler MACT

The “Boiler Maximum Available Control Technology” or “Boiler MACT” air emissions rule sets emission limits for air pollutants from industrial boilers and process heaters used by a wide range of manufacturers, such as forest products mills, universities, hospitals, small municipal power plants, Federal facilities and many others. The proposed Boiler MACT rule would set emission limits at levels which are barely detectable and possibly unachievable. It would require installation of up to four different air pollution control devices that will conflict with other existing control requirements. And it will impose costs to many industries of a magnitude that could result in lost jobs.

Water

EPA recently declared the cement-lined Los Angeles River—the concrete ditch of Grease and Terminator 2 car chase fame—a “navigable” water subject to the reach of the Clean Water Act. EPA is unhappy with Supreme Court jurisprudence defining what is navigable (and therefore under the Clean Water Act’s purview), and has simply decided to make up new definitions. Businesses fear this is the first of many EPA actions to extend the Clean Water Act and its permitting provisions to waters clearly not intended for regulation by Congress. CEQ, meanwhile, proposed a new set of principles and standards for Army Corps-controlled water resources projects (e.g., dams, levees) that reads like a laundry list of environmental and social reasons not to complete a project, and tips the economic/environmental balance in such a major way that the Army Corps will be unable to maximize sustainable economic development, as is required by governing law.

Chemicals

Congress has begun debating legislation to modernize the Toxic Substances Control Act (TSCA). Not happy with Congress’ 2010-2011 timeline, EPA is issuing “Chemical Action Plans” for selected chemicals. There is very little transparency with respect to EPA’s selection of chemicals for action plan development. EPA also recently announced that it would deny Confidential Business Information claims for the identity of chemicals in health and safety studies filed under TSCA, unless the chemical identity explicitly contains “process information” or discloses “mixture information” that is expressly protected under TSCA. Finally, EPA recently announced that it will increase the frequency of chemical reporting and broaden the scope of the chemicals that must be reported. EPA is pushing TSCA toward a more “precautionary principle” type approach, similar in application to the European chemical law, REACH.

Coal Production

Not content to just pressure companies to stop using coal in America, environmentalists instead want the entire coal industry dead—and EPA is contemplating a number of regulatory steps that would help their cause. The first is a proposed rule that considers regulating coal ash as a hazardous waste under the Resource Conservation and Recovery Act (RCRA). Coal ash is currently regulated as a non-hazardous waste under RCRA, and hazardous waste classification could place in jeopardy a number of beneficial uses of the product, such as ingredients in concrete and drywall. The American Coal Ash Association reported that 43 percent of the 131 million tons of coal combustion products generated in 2007 found beneficial uses. The second major anti-mining regulatory step by EPA is the retroactive veto of a previously-approved Clean Water Act permit to Arch Coal’s Spruce Mine in Logan County, West Virginia. EPA’s decision to revoke a permit after it has been validly issued by the Army Corps not only threatens the integrity of the entire Clean Water Act permitting program but could also stifle development and investments nationwide. EPA is sending a message to permit applicants and current permit holders that the continuation of their operations is subject to the whim of the Agency, a level of regulatory uncertainty that no business will want to tolerate.