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William Yeatman - EPA's Shocking New Mexico Power Grab

William Yeatman - EPA's Shocking New Mexico Power Grab

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President Barack Obama’s Environmental Protection Agency (EPA) has moved aggressively to usurp policy making authority from the states. In West Virginia and Kentucky, for example, the EPA has effectively overhauled Clean Water Act (CAA) permitting regimes, in disregard of administrative procedure rules. Texas Attorney General Greg Abbott has sued the EPA six times over its decision to reject state’s 17-year old “Flexible Permit” air quality permitting program for refineries. Oklahoma Attorney General Scott Pruitt is suing the EPA over its proposal to impose Clean Air Act controls at six coal fired power plants that cost almost $1 billion more than what the Sooner State had proposed. And that is just the beginning.

On August 22, 2011, the EPA committed its most outrageous affront to environmental federalism, with New Mexico as the victim. Specifically, the EPA refused to consider New Mexico’s visibility improvement plan, required under the Clean Air Act (CAA), and imposed a federal plan in its stead. This paper demonstrates how the EPA ran roughshod over New Mexico’s rightful authority, at a cost of almost $340 million to New Mexico ratepayers. Thanks to the EPA’s power grab, 500,000 PNM ratepayers in New Mexico are facing a $120 per year electricity tax (PNM is the state’s largest utility). The “benefit” of this tax, according to peerreviewed research, is a visibility “improvement” that is imperceptible to most people.
President Barack Obama’s Environmental Protection Agency (EPA) has moved aggressively to usurp policy making authority from the states. In West Virginia and Kentucky, for example, the EPA has effectively overhauled Clean Water Act (CAA) permitting regimes, in disregard of administrative procedure rules. Texas Attorney General Greg Abbott has sued the EPA six times over its decision to reject state’s 17-year old “Flexible Permit” air quality permitting program for refineries. Oklahoma Attorney General Scott Pruitt is suing the EPA over its proposal to impose Clean Air Act controls at six coal fired power plants that cost almost $1 billion more than what the Sooner State had proposed. And that is just the beginning.

On August 22, 2011, the EPA committed its most outrageous affront to environmental federalism, with New Mexico as the victim. Specifically, the EPA refused to consider New Mexico’s visibility improvement plan, required under the Clean Air Act (CAA), and imposed a federal plan in its stead. This paper demonstrates how the EPA ran roughshod over New Mexico’s rightful authority, at a cost of almost $340 million to New Mexico ratepayers. Thanks to the EPA’s power grab, 500,000 PNM ratepayers in New Mexico are facing a $120 per year electricity tax (PNM is the state’s largest utility). The “benefit” of this tax, according to peerreviewed research, is a visibility “improvement” that is imperceptible to most people.

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Published by: Competitive Enterprise Institute on Oct 27, 2011
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12/30/2014

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EPA’s Shocking New Mexico Power Grab
By William Yeatman
*
 A Competitive Enterprise Institute/Rio Grande Foundation Working PaperOctober 2011
*
William Yeatman is Assistant Director of the Center for Energy and Environment at the Competitive Enterprise Institute.
 
1President Barack Obama’s Environmental Protection Agency (EPA) has moved aggressively tousurp policy making authority from the states. In West Virginia and Kentucky, for example, theEPA has effectively overhauled Clean Water Act (CWA) permitting regimes, in disregard of administrative procedure rules.
1
Texas Attorney General Greg Abbott has sued the EPA six timesover its decision to reject state’s 17-year old “Flexible Permit” air quality permitting program forrefineries.
2
Oklahoma Attorney General Scott Pruitt is suing the EPA over its proposal to imposeClean Air Act controls at six coal fired power plants that cost almost $1 billion more than whatthe Sooner State had proposed.
3
And that is just the beginning.On August 22, 2011, the EPA committed its most outrageous affront to environmentalfederalism, with New Mexico as the victim. Specifically, the EPA refused to consider NewMexico’s visibility improvement plan, required under the Clean Air Act (CAA), and imposed afederal plan in its stead. This paper demonstrates how the EPA ran roughshod over NewMexico’s rightful authority, at a cost of almost $340 million to New Mexico ratepayers. Thanksto the EPA’s power grab, 500,000 PNM ratepayers in New Mexico are facing a $120 per yearelectricity tax
4
(PNM is the state’s largest utility). The “benefit” of this tax, according to peer-reviewed research, is a visibility “improvement” that is imperceptible to most people.New Mexico’s plight is right out of a Kafka novella: The EPA has never adequately explainedwhat it is trying to do. It is being completely unreasonable yet circumspect. Its proposedrulemaking failed to articulate clearly why New Mexico’s proposal was unacceptable, and thefinal rulemaking addressed comments by citing either passages of its oblique proposedrulemaking
5
or unidentified passages of the final rulemaking.
6
 All we know for sure is that it has crafted an ad hoc regulatory regime for visibility improvementthat treats New Mexico differently from every other state. The EPA has singled out New Mexicofor arbitrary enforcement of the agency’s own dubious interpretations of two related Clean AirAct sections:
 
The Regional Haze provision, which provides that states work together to improvevisibility at federal National Parks and Wilderness Areas, while giving the states a highdegree of control; and
 
The Good Neighbor provision for visibility, which provides that states demonstrate theyhave implemented adequate measures to ensure that their emissions do not “interfere withmeasures required to be included in the applicable implementation plan for any otherstate…to protect visibility.”
7
 In June 2011, New Mexico regulators completed a plan that would have achieved therequirements of both the Good Neighbor and Regional Haze provisions. However, the EPArefused to even consider New Mexico’s plan, based on arbitrary, unnecessary deadlines that theEPA set for New Mexico, and for no other state.Two months later, the EPA imposed a federal visibility plan on New Mexico. It was $700million more expensive than the state plan, which, again, met all of the EPA’s ownrequirements.
8
To put it another way, the EPA’s took the liberty of exceeding its own cost-effectiveness regulations. In order to justify these exorbitant costs, the EPA created a hybridauthority from the Clean Air Act’s Good Neighbor and Regional Haze provisions. Illogically
 
2(and likely illegally), the EPA found that together, these provisions mandate emissions controls10 times as expensive as would have been required by the sum of the individual provisions. Noother state has been subjected to visibility regulations that were far more stringent than theEPA’s own criteria.It gets worse. The EPA alleged that New Mexico violated the Good Neighbor provision forvisibility based on a vague, undefined standard that was more lenient for other states. The EPAfails to explain why it treated New Mexico differently.
New Mexico's Visibility-Improvement Controls Meet EPA's Requirements…
NOX ControlledEmissions Rate(lb/mmBTU)Controls mandated by EPA's Regional Haze provision authority 0.24Controls mandated by EPA's (claimed) Good Neighbor provision authority 0.28New Mexico's proposed controls 0.23Controls imposed by EPA’s federal implementation plan 0.05
...Yet, EPA Is Imposing Controls That Far Exceed Its Own Rules, and Cost $700 Million More
NOXControlledEmissions Rate(lb/mmBTU)Cost($millions)New Mexico's proposed controls (which meet all federal and statelaws and regulations) 0.23
64
Controls imposed by EPA 0.05
779
The EPA’s actions warrant a response. The New Mexico Legislature should express itsdisapproval in the strongest possible terms. Lawmakers should send a message to the WhiteHouse, informing it that New Mexico objects to the EPA’s capricious and arbitrarymachinations. A description of the EPA’s abuse of power regarding each provision follows.
The Regional Haze Provision
In 1977 and 1990, Congress passed amendments to the Clean Air Act providing that states work together to improve visibility at federal National Parks and Wilderness Areas. Together, theseamendments are known as the Regional Haze provision.
9
 Notably, this provision accords states a uniquely high degree of control relative to the EPA.According to the EPA’s 2005 Regional Haze implementation guidelines, “[T]he [Clean Air] Actand legislative history indicate that Congress evinced a special concern with insuring that Stateswould be the decision-makers”
10
on visibility-improvement policy making. The courts, too, haveinterpreted the Clean Air Act such that states have primacy on Regional Haze decision making.In the seminal case
 American Corn Growers
v.
EPA
(2001), which set boundaries between thestates and the EPA on Regional Haze policy, the D.C. Circuit Court remanded the EPA’s 1999Regional Haze implementation guidelines for encroaching on states’ rightful authority.
11
 

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