Governors' Wind Energy Coalition

Senate Minority Leader Mitch McConnell (R-Ky.) said that like the controversial 2010 health care law, the utility rule would open the door for Washington, D.C.’s power elite to expand its control over the American middle class, particularly in states like his own where coal-fired power plays a leading role.

“It’s a dagger aimed right at the heart of the American middle class, at a time when our constituents are already struggling under the weight of so many of this administration’s other failed policies,” said McConnell, adding that President Obama’s “energy tax” would drive up utility costs and shift manufacturing jobs overseas. The effect would be as dire for the economy as the health care law, he said, dubbing the pollution rule “Obamacare 2.0.”

He also questioned whether the rule would yield any environmental benefit.

“It’s not really about science or global warming at all,” McConnell said this morning on the Senate floor. “It’s about making privileged elitists, elitists who may not feel the pinch of a higher utility bill or the pain of a lost job, feel like they did something.”

McConnell announced that he would introduce legislation that would place the rule on hold until the secretary of Labor, the Congressional Budget Office and other arbiters certified that it would have no negative effect on employment, energy rates or supply reliability.

McConnell’s previous bid to use the Congressional Review Act (CRA) to strike down EPA’s proposal for new power plants ended last week when the Government Accountability Office ruled that a draft rule did not meet the law’s criteria (E&E Daily, May 30).

But another Republican critic of EPA carbon regulation, Sen. James Inhofe (R-Okla.), today pledged at a Senate Environment and Public Works Committee hearing that he would offer a CRA resolution to knock down the existing power plant rule as soon as it is finalized next year.

“We know the American people know that the rule will be expensive. It is very alarming,” Inhofe said.

Inhofe referenced an economic analysis released last week by the U.S. Chamber of Commerce, which estimated that EPA could craft a rule that would cost in excess of $51 billion annually between now and 2030. The estimate was widely criticized at the time for some of the assumptions it made about regulatory requirements and future demand for power, and it assumed EPA would set a target of 42 percent compared with 2005 levels by 2030. Yesterday’s proposal aims for a 30 percent reduction by that date.

While Inhofe and McConnell dubbed the proposal an “energy tax,” it does not levy a fee on carbon — though it would allow states to choose a carbon tax or participation in a cap-and-trade program as a means of compliance. It does set emissions intensity targets for states around the country based on an estimate for the on-site and systemwide potential states have to reduce emissions after 2012.

Kentucky is assigned the second easiest carbon intensity rate in the nation after Montana. Its coal-dominated utility sector would be required to meet an emissions rate of 1,763 pounds per megawatt-hour by 2030, though it could opt for a mass-based standard that would allow averaging. Its state environmental regulators are still assessing whether the proposal is achievable.

McConnell, who is up for re-election this November, hails from a state that has implemented the federal health care law. Kentucky’s health insurance exchange has also become relatively popular, leading McConnell to say the state might choose to keep it if he and fellow Republicans succeed in killing the federal law.

But while the health care law does take a top-down model, the same is not true for EPA’s power plant proposal. Agency officials including Administrator Gina McCarthy and others have made it clear that states will take the lead in writing implementation plans, and that existing efficiency, renewable energy and carbon policies will be counted as compliance mechanisms.

Yesterday’s proposal postpones previous deadlines for when those plans must be submitted. Although a preliminary document will still be required by the end of June 2016, states can wait until 2017 to submit a formal plan if they need the extra time to promulgate new regulations or to pass legislation that will help them comply. And they can submit a plan as late as 2018 if they plan to participate in a regional program.

EPA also surprised some by not offering a “model rule” for the proposal, though the Air and Radiation Office’s top lawyer Joseph Goffman and others previously said that there did not appear to be an appetite for one among stakeholders.

And although the Clean Air Act allows EPA to step in with a federal rule if states don’t submit a plan that meets its requirements, senior agency officials said on a call yesterday that they are not yet thinking about what such a federal implementation plan might look like.

“States will want to be in the driver’s seat in developing those plans rather than looking to EPA to do it,” one official said yesterday, adding that the agency is “a long way” from trying to take the reins itself to set federal implementation plans.

“We have a lot of good conversations to have with the states before then,” the official said.