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EPA Rules Snaring Entergy, Weyerhaeuser Spur 'Blowback' Threat
2010-12-21 05:00:02.2 GMT
By Kim Chipman
Dec. 21 (Bloomberg) -- Entergy Corp. says the U.S.
Environmental Protection Agency may force it to spend $1.2
billion building two cooling towers as tall as Yankee Stadium at
its nuclear plant along the Hudson River north of Manhattan.
Weyerhaeuser Co. says meeting standards being considered by
the EPA to cut emissions from boilers at pulp mills may cost it
$100 million. The American Petroleum Institute, the biggest
lobbying group for the oil and gas industry, does them both one
better: It says the EPA's proposal to tighten national smog
standards may cost the U.S. economy $10 trillion.
President Barack Obama's EPA has made final 18 "major
rules," defined as regulations costing industry at least $100
million, this year through November, compared with an average of
11 a year during the Bush administration, according to data
compiled by Bloomberg. Republican lawmakers, who have vowed to
rein in the agency, claimed a victory this month when it
postponed action on two proposed rules.
"The EPA may slow down or be slowed down by Congress,"
Kenneth Green, a scholar at the Washington-based American
Enterprise Institute, which advocates free-market policies, said
in an interview. "Obama's eye is on 2012. He has to get the
economy moving again, and the last thing he wants are job-
killing rules and growth-strangling regulations."
The economic impact of EPA rules is central to the agency's
disputes with companies. While business groups say its actions
threaten jobs and the economy, the EPA says benefits from air-
pollution measures, including reduced medical expenses to treat
diseases such as asthma, have far exceeded the costs.
40-to-1 Return
"For every one dollar we have spent, we get more than $40
of benefits in return," EPA Administrator Lisa Jackson said in
a September speech commemorating the 40th anniversary of the
U.S. Clean Air Act.
The EPA, which had been set to issue the new boiler-
emissions limits next month, asked a federal judge to extend the
deadline by more than a year so it would have time to rethink
the proposal after receiving industry reaction and almost 5,000
public comments.
The agency also has said it will delay a decision on the
revised smog standards, which would place tighter restrictions
on ground-level ozone.
Jackson wants to ensure the rulings are "grounded in the
best science," agency spokesman Brendan Gilfillan said.
Even with the delays, the agency will face "serious
blowback" starting next month when Republicans take over the
House of Representatives and strengthen their sway in the
Senate, Green said.
Hearings, Subpoenas
"Hearings, subpoenas and letters demanding information
could tie up so much of the EPA's resources that they won't be
able to move forward," he said.
"The threat of the EPA's reach into the economy is so
great that it deserves special attention in the new Congress,"
Representative Jim Sensenbrenner, a Republican from Wisconsin,
said in an e-mailed statement.
The agency says such criticism is an old tactic.
"Throughout EPA's 40-year history we've heard the same
predictions from the same lobbyists, and those doomsday
predictions have always turned out to be wrong," the EPA said
in a statement.
While public debate has focused largely on the EPA's plan
to regulate carbon emissions, business is equally unnerved by
the range of rules coming out of the agency, said William
Kovacs, senior vice president for environment, technology and
regulatory affairs at the Washington-based U.S. Chamber of
Commerce, the nation's largest lobbying group for business.
"I've been dealing with the agency since the 1980s, and I
don't ever remember this many major rules coming out at one
time," Kovacs said.
'Back on the Job'
Obama took office pledging to "green" the U.S. economy, a
promise he backed with a proposed $10.5 billion EPA budget, a 34
percent increase and the agency's largest funding. Congress
ultimately approved a record fiscal 2010 budget of $10.3
billion.
"EPA is back on the job for the American people,"
Jackson, 48, the agency's administrator, said in a March 2009
speech. Requiring cleaner air won't hurt the economy because it
will create green jobs while helping to increase the nation's
energy independence, Jackson has said.
"She is doing a great job making sure we get a handle on
some of the very worst of the pollutants," said Frank
O'Donnell, president of Clean Air Watch, a Washington-based
environmental advocacy group.
'Fairly Moderate'
David Crane is among business leaders who agree. While the
agency is "significantly more active" now than under former
President George W. Bush, it was "starting from a very low
bar," said Crane, chief executive officer of Princeton, New
Jersey-based NRG Energy Inc.
"They've listened to business, and it seems to us the
things they are putting out there are fairly moderate," Crane
said in an interview. "We think EPA can be worked with."
The North American Electric Reliability Corp., which sets
standards for transmission lines providing power in the U.S.,
Canada and parts of Mexico, said in an Oct. 26 report that rules
being considered by the EPA pose a risk to the stability of the
national power grid and may force utilities to shut plants.
"Taken together, these rules pose a serious threat to
electric reliability in certain regions of the country," said
Scott Segal, a Washington lawyer at Bracewell & Giuliani LLP who
lobbies for utilities such as Atlanta-based Southern Co.
Cooling Towers
Entergy's concern is that the EPA may adopt rules like
those already being sought by New York state to protect fish and
other marine life killed when power plants suck in water to cool
their operations. The agency has said it is gathering
information on the issue.
The state and federal regulators may require power plants
to build cooling towers that take in less water at a slower
speed than current systems. Entergy, which wants regulators to
let it use less costly alternatives, says it would have to build
two structures 168 feet (51 meters) tall at its Indian Point
nuclear power plant.
Yankee Stadium is 134 feet tall at its highest point,
according to the New York Yankees baseball team's 2009 media
guide.
Exelon Corp. this month agreed to shut its Oyster Creek
reactor in New Jersey in 2019, a decade before its federal
license expires, in a deal with state regulators rather than
having to build cooling towers.
Industrial Boilers
Industrial boilers would come under tighter hazardous-
emissions standards under an EPA rule that the Council of
Industrial Boiler Owners, a trade group based in Burke,
Virginia, said may put more than 300,000 jobs at risk.
The EPA, before taking more time to study the issue,
proposed a blanket approach instead of accounting for variations
among industries, said Sara Kendall, vice president for
corporate affairs and sustainability at Weyerhaeuser of Federal
Way, Washington, the largest publicly traded U.S. timberland
company by revenue.
"The EPA took each pollutant and decided what was the most
stringent control technology for that pollutant and packaged
that together and said that's what all boilers have to do,"
Kendall said in an interview.
The EPA's pending rule to reduce limits for ozone would
cost 7.3 million jobs in about 10 years and $1 trillion a year
from 2020 to 2030 as states work to comply with the rule and
manufacturing plants install new equipment, according to the
study by the Manufacturers Alliance that the American Petroleum
Institute helped fund.
The EPA has estimated the ozone regulations would cost
industries led by utilities and oil companies $19 billion to $90
billion, while saving $13 billion to $100 billion in medical
expenses and missed work.
Assumptions on Technology
The chasm in cost estimates stems in part from different
assumptions about the cost of technology that the EPA and
business agree will need to be developed to reduce ozone levels
as much as the regulations demand, according to Tony Costello, a
financial analyst for Bloomberg Government who is a former
analyst with the U.S. Small Business Administration and Osprey
Partners Investment Management of Shrewsbury, New Jersey.
The EPA assumed costs will be similar to that of current
technologies, and the industry estimated the necessary
innovations will be far costlier, according to Costello.
While the EPA didn't estimate job losses or effects on the
economy, business didn't incorporate reduced costs in medical
and other expenses. The agency says those savings make
controlling pollution a good deal for the nation.
"Say what you want about EPA's business sense, but we know
how to get a return on an investment," Jackson said in the
September speech.
For Related News and Information:
Top EPA Stories: TNI TOP EPA <GO>
North American environmental markets: EMUS <GO>
A menu of world energy statistics: ENST <GO>
To chart the performance of the Bloomberg Americas Electric
Index: BUSELEC US <Index> GPO D <GO>
--Editors: Larry Liebert, Joe Winski
To contact the reporter on this story:
Kim Chipman in Washington at +1-202-624-1927 or
kchipman@bloomberg.net
To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
lliebert@bloomberg.net
