Mark Mills

Another Oldie But Goodie: Mark Mills 1998 CO2 Compliance Burden Study

by Marlo Lewis on May 4, 2010

in Global Warming

In the interest of ensuring public access to climate-related documents that may be hard to find, I am posting here the original, June 1998 study by technology analyst Mark P. Mills of the sprawling compliance burdens of EPA regulating carbon dioxide (CO2) as an air pollutant under the Clean Air Act (CAA).

The study, entitled A Stunning Regulatory Burden: EPA Designating CO2 As A Pollutant, estimated that applying CAA permitting requirements to CO2 would compel EPA to regulate over 1 million small- and mid-size businesses.

In September 2008, Mills and his daughter Portia updated the study for the Chamber of Commerce in a report entitled A Regulatory Burden: The Compliance Dimension of Regulating CO2 as a Pollutant.

Although superceded by the later report, the June 1998 report remains highly relevant to the climate policy debate.

A Stunning Regulatory Burden was a direct response to the April 1998 Memorandum by then EPA General Counsel Jonathan Z. Cannon asserting EPA’s authority under the Clean Air Act to regulate CO2 and other greenhouse gases (GHGs). Petitioners in Massachusetts v. EPA partly relied on the Cannon memorandum to press their claim that EPA had a statutory obligation to issue an endangerment finding and regulate GHG emissions from new motor vehicles under Sec. 202 of the Act.

Most importantly, the June 1998 Mills study reminds us that EPA had to know all along that a victory for petitioners in Massachusetts v. EPA would dramatically expand its regulatory reach beyond any plausible delegation of regulatory authority from Congress.

Yet during all the years when the case was being litigated (Sep. 2004 – April 2007), EPA never pointed out the regulatory ramifications of a victory for petitioners. Only long after losing case, in its Advanced Notice of Proposed Rulemaking (July 2008) and Tailoring Rule (October 2009), did EPA acknowledge that the endangerment finding tees up the very sorts of regulatory excesses Mills warned about a decade earlier. 

The 5-4 majority in Mass v. EPA decided in favor of petitioners partly in the belief that an endangerment finding would not lead to ”extreme measures” (p. 531). But according to the Tailoring Rule, unless EPA “tailors” — that is, amends — the CAA, the endangerment finding will lead inexorably to a host of “absurd results” that conflict with and undermine congressional intent.  

The question arises: Why didn’t EPA explain this when it really mattered? Why did EPA pull its punches in Mass. v. EPA? Why didn’t EPA make the case that the endangerment finding sought by petitioners would lead a regulatory cascade that Congress never intended and would not approve?

I think the answer is obvious. For EPA, losing the Massachusetts case meant gaining the power to regulate fuel economy for the auto industry and, more importantly, the power to determine climate and energy policy for the nation. Strong circumstantial evidence suggests that EPA wanted to be thrown into the greenhouse briar patch all along.

EPA proposes illegal rule

by Marlo Lewis on September 2, 2009 · 2 comments

in Global Warming

Yesterday, the U.S. Environmental Protection Agency (EPA) sent a draft proposed rule to the Office of Management and Budget (OMB) that would exempt small emitters of carbon dioxide (CO2) from Clean Air Act (CAA) pre-construction permitting requirement, Greenwire reports.

The proposed rule, as described in Greenwire, is blatantly illegal. It is a tacit admission that the Supreme Court decision in Massachusetts v. EPA set the stage for an economic disaster. It is additional evidence that Mass v. EPA was wrongly decided. It confirms CEI’s warning that the Court’s ruling imperils a core constitutional principle — the separation of powers.

In Mass. v. EPA, the Supreme Court, by a narrow 5-4 majority, decided that CO2 and other greenhouse gases (GHG) are “air pollutants” within the meaning of CAA, and gave EPA three options: (1) issue a finding that GHG-related “air pollution” “may reasonably be anticipated to endanger public health or welfare,” (2) issue a finding of no endangerment, or (3) provide a “reasonable explanation” why the agency cannot or will not exercise its discretion to make such a determination.

The Court further held that if EPA makes a finding of endangerment, then it has a duty, under CAA Sec. 202, to develop and adopt GHG emission standards for new motor vehicles.

EPA picked option (1), and last month, it sent OMB a draft proposed rule to establish GHG emission standards for new motor vehicles.

Although the Court majority asserted that an endangerment finding could not lead to “extreme measures” and would only require a cost-constrained adjustment of existing federal fuel-economy standards (see. p. 28 of the decision), in fact the endangerment finding will trigger a chain reaction throughout the CAA — a regulatory cascade potentially exceeding in cost, scope, and intrusiveness the Kyoto Protocol and many other GHG-control schemes Congress has never seen fit to pass.

For starters, establishing GHG emission standards for new motor vehicles will by definition make CO2 a CAA-regulated air pollutant. As such, CO2 would automatically be ”subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program (CAA Sec. 165). Under the CAA, any firm that plans to build a new “major” stationary source, or modify an existing major source in a way that would significantly increase emissions, must first obtain a PSD permit from EPA or a state environmental agency.

A PSD source is “major” if it is in one of 28 listed categories and has a potential to emit 100 tons per year (TPY) of an air pollutant, or if it is any other type of establishment and has a potential to emit 250 TPY (CAA Sec. 169). 

And there’s the rub. Whereas only large industrial facilities have a potential to emit 250 TPY of air contaminants such as sulfur dioxide or particulate matter, an immense number and variety of entities – office buildings, hotels, big box stores, enclosed malls, small manufacturing firms, even commercial kitchens – have a potential to emit 250 TPY of CO2. A September 2008 report commissioned by the U.S. Chamber of Commerce  estimates that 1.2 million buildings and facilities – most of them currently unregulated under the CAA – actually emit 250 TPY of CO2. All would be vulnerable to new PSD regulation, controls, paperwork, penalties, and litigation.

To obtain a PSD permit, firms must document their compliance with ”best available control technology” (BACT) standards. Even apart from any technology investments needed to comply with BACT, the PSD permitting process is costly and time-consuming.  In a recent year, each permit on average cost $125,120 and 866 burden hours for a source to obtain,  EPA estimates. No small business could operate subject to the PSD administrative burden.

The costs, uncertainties, and delays from applying PSD and BACT to CO2 would have a chilling effect on economic development and construction activity. It would turn the CAA into a gigantic Anti-Stimulus Package in a period of financial crisis and high unemployment. Definitely not something the Obama administration wants on its record in the 2010 election season.

EPA’s July 2008 Advanced Notice of Proposed Rulemaking (ANPR) outlined several administrative remedies to shield small entities from PSD requirements, all of doubtful legality. But if the Greenwire article is accurate, EPA is opting for the most brazenly illegal option of all. It proposes to revise, on its own authority, the PSD threshold from 250 TPY to 25,000 TPY.

Now friends, under the 1984 Supreme Court case of Chevron v. NRDC, EPA has considerable discretionary authority in interpreting the CAA where the statute is “silent or ambiguous with respect to the specific issue.” But there is nothing ambiguous about the number 250. No matter how you squint at the page, 250 is 100 times smaller than the threshold EPA proposes to put in its place.

According to Greenwire, Sierra Club’s David Bookbinder, a counsel for petitioners in Mass. v. EPA, “said the rule would also deflect claims from Republican lawmakers and industry groups that the Obama administration is seeking to regulate small emission sources such as doughnut shops, schools, and nursing homes.” But the Obama administration’s intent is not the issue. The issue is whether EPA, as a matter of law, must apply PSD requirements to doughnut shops, etc. once it starts regulating CO2 under Sec. 202.

Greenwire then quotes Bookbinder: “Putting this rule in place deflates a lot of political rhetoric about regulating CO2.” Well, I hope industry and the GOP are not so naive as to put their trust in an illegal rule. A rule that flouts clear statutory language of the CAA can provide no durable protection from the regulatory cascade that an endangerment finding and EPA adoption of motor vehicle GHG emission standards would unleash.

EPA’s proposed draft rule is a tacit admission of what CEI has said all along: EPA cannot regulate CO2 under the CAA without endangering the U.S. economy — unless EPA plays lawmaker, amends the Act, and violates the separation of powers. When the Supreme Court handed down the Mass. v. EPA decision, it set the stage for a constitutional crisis.

Of course, the bigger constitutional crisis stemming from Mass. v. EPA is that we could end up with an energy suppression regime far more costly than Kyoto or Waxman-Markey, yet without the people’s elected representatives ever voting on it.

For the gory details, see my blog post on MasterResource.Org and my comment (pp. 28-56) on EPA’s proposed endangerment finding.

Digital economy increases emissions: Mark Mills gets last laugh

by Marlo Lewis on May 14, 2009

in Global Warming

Back in 1999 and 2000, a fierce debate raged as to whether digital networks and devices increase or decrease electricity consumption and emissions.  Does the growth of the digital economy jeopardize the Kyoto agenda by increasing emissions? Or is the Internet a “green” force reducing our energy and carbon intensity?

On one side of the debate, researchers at the Lawrence Berkeley National Laboratory argued that the Internet could help reduce emissions by, for example, promoting telecommuting, online shopping, and efficient supply-chain management. On the other side, technology analyst Mark Mills and co-author Peter Huber argued that the rapid proliferation of digital devices and networks was increasing demand for high-quality (largely coal-based) power.

The Berkeley Lab researchers directed a lot of fire at Mills’s ”ballpark” estimate that Internet-based equipment and networks already accounted for 8% of U.S. electricity demand. I won’t try to settle that part of the controversy.

However, a just-published study by the International Energy Agency (IEA) shows that Mills was right about the big picture. Climatewire (subscription required) gives the gist of the study in its headline: “Soaring electricity use by new electronic devices imperils climate change efforts.” Herewith a few highlights:

  • Efforts by countries worldwide to reduce greenhouse gas emissions and increase energy security are in trouble if nothing is done to check the energy gobbled by both information and communication technologies and consumer electronics.
  • Energy used by computers and consumer electronics will double by 2022 and increase threefold by 2030.
  • The projected increase is equivalent to the current combined total residential electricity consumption of the United States and Japan.
  • To operate these new devices, households around the world will spend around $200 billion in electricity bills and require the addition of approximately 280 Gigawatts (GW) of new generating capacity between now and 2030.
  • The number of people using PCs will exceed 1 billion over the next seven months, and nearly 2 billion television sets are in use worldwide, averaging more than 1.3 sets per each household with access to electricity.
  • More than 3.5 billion people will be mobile phone subscribers by 2010.
  • In many households in OECD countries, electronic devices–a category that includes televisions, desktop computers, laptops, DVD players and recorders, modems, printers, set-top boxes, portable telephones, answering machines, game consoles, audio equipment, clocks, battery chargers, mobile phones and children’s games–consume more electricity than do traditional large appliances.
  • Household use of electronic devices is the major reason that residential electricity consumption is increasing in most countries.
  • Computers, related equipment and consumer electronics are responsible for close to 15 percent of total residential electricity consumption today, a share similar to that of other major appliance categories such as water heating or refrigeration.
  • Even with improvements foreseen in energy efficiency, consumption by electronics in the residential sector is set to increase by 250 percent by 2030.
  • “The share of electricity consumption by these appliances is therefore increasing to the extent that they will most likely comprise the largest end-use category in many countries before 2020, unless effective steps are taken,” said IEA Executive Director Nobuo Tanaka in a press release.
  • “These estimates suggest that total residential electricity consumption will increase more than many previous forecasts, and therefore pose a serious challenge to all governments with policy ambitions to increase energy security and economic development, and to mitigate climate change,” states the report.

Criticism of Huber and Mills got pretty nasty at times. But, as the old adage says: He who laughs last, laughs best.