Climate Policy and State Environmental Officials; Follow the Politics or Respect the Law?

Remarks by William K. Reilly

ECOS at Omni Shoreham Hotel, Washington, DC

October 21st, 2015

I am pleased to join you today.  If I recall correctly, ECOS grew out of what we used to call the State-EPA Committee with regular meetings to discuss issues and exchange views among EPA and state officials.  When I accepted Martha’s invitation to speak to ECOS, I assumed I’d be with just the state commissioners.  This is a full house, with many of the parties and the economic interests represented that have deep interest in the Clean Power Rule and other environmental matters.  ECOS, you’ve come a long way!

Since I left EPA what is now just shy of 25 years ago, I’ve kept active on environmental issues.  Along with chairing the board of World Wildlife Fund, I started an equity fund that invested in the water sector in developing countries; I co-chaired with Florida Senator Bob Graham the President’s BP oil spill commission; and I now serve on the President’s Global Development Council. 

And to the point of today’s agenda, I also serve on the board of the largest electric utility in Texas, Energy Future Holdings.  It’s no small matter to meet the customer’s needs for clean, safe, reliable, and affordable energy, while implementing new rules and trying to stay atop the shifting economics of coal and natural gas and nuclear and renewables – we have them all. So I’m under no illusion that meeting the objectives of the Clean Power Rule will be easy or straightforward.  Today I speak only for myself, not for EFH or any other institution with which I have worked.

Joseph Schumpeter’s observed that “creative destruction” fosters economic change, economic progress.  We are seeing it now in the energy sector and it’s not the first time that our country, our economy, has gone through potentially wrenching changes, lest we would still be riding horses and buggies.  The historian John Steele Gordon has written that the history of consumption of energy has involved the search for new, alternative, and presumably better sources to fuel human activities.

Nations across the globe are confronting the all too real effects of a changing climate.  And that is driving an energy transition -- new calculations about what matters, new technologies, new policies, new concerns and new challenges. 

The Clean Power Rule is the federal government’s principal instrument for mitigating climate change.  

The Clean Air Act which is the statutory authority, under which it is promulgated, is far from an ideal tool to enforce the reduction of carbon dioxide.  But Congress’ failure to legislate a specific regime to control greenhouse gases has ceded to EPA the responsibility to act using the only tool it has. Once the Supreme Court ruled that CO2 is a pollutant and directed EPA to determine whether it posed a risk to public health, the policy process leading to a rule was set and irreversible.  EPA had to regulate CO2.  The purpose of the Clean Air Act -- to protect the health of the American public – defines what any EPA rule must achieve.  Though one may contest the means the EPA must now achieve a reduction in CO2.  And it will not get one if it leaves out 40% of the sources, i.e. existing power plants. So reducing CO2 must fall heavily on the electric generating industry. 

The burden is especially heavy in states like Kentucky, West Virginia, Ohio, and Indiana where 90 percent or so of generation is from coal. 

And it is heavy on utilities such as Texas’ Energy Future Holdings and its generation company Luminant where more than a third of its capacity is coal-fired.  Added to a series of demanding and expensive rules, promulgated and soon to be forthcoming — methane, mercury, ozone, coal ash, cross state air pollution along with tightening controls on conventional pollutants — one must respect the motivations behind resistance to the Clean Power Rule.

That resistance is typically taking two forms.  One is to contest EPA’s authority to regulate a pollutant not specifically listed in The Clean Air Act and to reject such a consequential reshaping of America’s energy economy in the absence of Congressional prescription.

The second basis often given for opposing The Clean Power Rule is to cite the notable reductions in CO2 and other pollutants already achieved by electric generators.  In the words of industry spokesman Tom Kuhn, president of the Edison Electric Institute, “Today’s utilities are focused on the transition to a cleaner generating fleet. 

In 2014, utilities reduced carbon dioxide emissions by 15 percent below the 2005 levels, and nearly one third of US power generation came from zero emissions sources – nuclear and renewables. 

In addition, between 1990 and 2014, emissions of nitrogen oxides were cut by 74 percent and sulfur dioxide emissions were reduced by 80 percent, during a period when electricity use grew by 36 percent.”  He added that electricity from wind doubled between 2010 and 2014 and we are now seeing utilities embrace large scale solar generation: 60% of installed solar is now utility scale.

The industry’s message is familiar to all of us who have been regulators when we are explaining ourselves to impatient legislators and stakeholders.  “Well, our performance is directionally correct!”

The electric utility industry in the United States is a highly successful sector.  Reliability, safety and innovation are exemplary.  And the environmental record is one of measureable and significant success.  But two things must be said about the trajectory that the world, the country and the electric utility industry are on.  First, it is not enough.  Such a major generator of CO2 must move farther faster to avert potentially catastrophic climate events.  And secondly, the revolution in natural gas due to fracking has made gas a plentiful, cleaner, economically affordable alternative to coal.  Plentiful gas makes the present moment a more propitious time to accelerate a transition already underway as coal is ceding to gas across the country. 

The Clean Power Rule is more flexible than the proposal it replaces, as several state officials have acknowledged to meet its requirements will involve collaboration and partnerships among states, regional groupings, faster adoption of renewables, greater efficiency, all of which can play a role in satisfying the rule.  As EPA Administrator I favored regulatory negotiation for the implementation of some contentious rules.  And I sometimes agreed to deferral of compliance schedules in return for more ambitious pollution reductions. In fact, prior to issuance of the rule I advocated negotiations to defer costly interim pollution control upgrades in return for firm phaseout schedules in the 2020’s.

The current situation of binary politics is more serious than the nation has seen in several generations.  EPA is defending a major rule to address a problem the Congressional majority does not believe exists. 

All of the Republican presidential candidates except Senator Lindsay Graham have pledged to repudiate the rule, the only difference being whether it’s on day one of the new administration.  Many of the governors take a similarly dim view of the science of climate change and also would repudiate the rule.  Several governors and legislators have said they will not allow their regulators to submit state implementation plans.  That would be a bad idea and I suspect that in the end none of the governors and attorneys general, who include the most virulent critics of EPA, will want to see the agency write their implementation plan. 

Every state’s situation is different, local circumstances, local politics, the mix of power plants, the economy, the geographic realities that, for example make the newly promulgated ozone standard a tall achievement for may western states because of background levels.

That is precisely why the authors of the original clean air law, Republican Senator Howard Baker foremost among them, insisted on a federal-state partnership.  The Clean Air Act of 1970 directed the newly created EPA to set national standards for key air pollutants to protect public health.  That legislation, while authorizing EPA to set national standards, deliberately and explicitly gave states the lead responsibility to devise and implement plans to meet those standards.

Giving states this responsibility was key to the legislative compromise that resulted in its passage by overwhelming majorities in both houses.  Congress recognized that states were closer to the problems they faced and often had a better sense for how solutions could be tailored to meet the specific challenges in more cost-effective ways than the federal government could.

Although states were given the lead in meeting these standards, if states failed to act, Congress gave EPA the power to craft and implement plans on its own. The unmistakable message from Congress to EPA:  protect the people’s health.

This model -- national standards with state implementation -- has defined EPA’s approach and has brought enormous progress in reducing pollution and protecting public health.  The levels of six key air pollutants – ground-level ozone, particulate matter, carbon monoxide, nitrogen oxides, sulfur dioxide, and lead -- are down dramatically since the Clean Air Act went into force 45 years ago, some by as much as 90 percent, even while the U.S. economy grew by more than 300 percent.  This impressive record did not come via a snap of the fingers, but with great effort on the part of EPA, the states, communities, and companies across the land. 

Indeed, progress has come in fits and starts, via trial and error, with costs and delayed benefits.  But the record of accomplishment is clear and the endeavor spawned innovations in technology and policy and analytic methods that serve us well today.

Now in the face of such uncertainty what is a regulator to do? Follow the politics or follow the law?  Those with state administrators hostile to the Clean Power Rule face that dilemma.  They are in a particularly sensitive position though I can’t help noticing that some governors on record for disparaging climate science and the Clean Power Rule are quietly sending their officials to consult with EPA on implementation options.

My advice is to move ahead with planning and assume the rule will survive, in part if not in whole.  Discontinuing a rule is not a small matter; it cannot in fact be done in a day.

Were a new Administration to disavow carbon regulation now that EPA has made the formal finding that CO2 is a pollutant will create its own dynamic, at least for substitution of another regulation.

The Clean Power Rule is already under consideration by the Circuit Court in Washington.  Critics of the Rule have requested it be stayed or suspended.  To grant such a request the Court must decide both that allowing it to go into force would cause irremediable damage and that the opponents of the Rule are likely to prevail on the merits.  For a rule allowing up to two years prior to submission of an implementation plan any “damage” is a long way off.

Of course there is no certainty about the rule’s prospects in the Circuit or eventually the Supreme Court but my own expectation is that even if elements of the rule are disapproved much of what it contemplates will survive.

No matter the fate of the Clean Power Rule in the courts those working in government at the state and local level will have to confront climate change.  Officials in Miami and Dade County are investing in pumps and drainage systems to clear the streets of Miami Beach of accumulated water as the sea level rises.  As early as 1996 Major Daley of Chicago oversaw preparation of the Chicago Climate Action Plan.  The Plan assumed a possible tripling of summer days with temperatures in excess of 95 degrees: 45 95 degree days in the 21st Century compared with 15 95+ degree days in the 20th century.  Chicago’s parks department no longer will plant ash, maple, and spruce – trees that evolved in a different climate. The plant zone now accommodates Alabama sweet gum.  Rain is anticipated to fall primarily between November and April, much like in California, with a long dry spell in between.  New resilient paving material has been designed to be porous and allow water to permeate.

New insulation and hvac systems are being required in New York and many other cities.  Climate action and adaptation has been most notable and imaginative at the state and local levels and if the Clean Power Rule is overturned it will continue to be.  But as the Chicago climate Action Plan noted, it is about adaptation. Mitigation must come from rules on power beyond the reach of cities and often practically beyond the control of states. 

As I watch state officials grapple with expectation and work to accommodate so many environmental rules while adjusting to tight budgets and insufficient new funding I admire the creativity and efficiency and enterprise. 

We have seen just in the past few months abandoned mine spills, toxic algae blooms in Lake Erie and the Gulf of Mexico, severe flooding in South Carolina and near Los Angeles and huge forest fires in Northern California and Oregon -- one fire in Lake County, CA was fought by 1000 firefighters, and at a time when there were some 60 forest fires burning in the state!  The new climate era is an era of volatile and extreme weather and emergency response budgets and capabilities have not been designed for what is to come.  Emergency response capacity is its own emergency.  And staffing to implement vastly increasing responsibilities is the unsung challenge, the unremarked elephant in the room.

I will conclude by underscoring the importance of the enterprise to which many of you and I have devoted our careers.  In the late 1960s, air quality in many cities was harmful to health, waters were deteriorating, there were few if any controls on toxic chemicals. 

The American public rose up and thanks to previous Administrations and Congresses laws were enacted, institutions created, partnerships developed and we have made enormous strides.

Perhaps two-thirds of Americans alive today were either not born at the time of the first Earth Day in 1970 or were too young to appreciate what conditions were like.  That goes for many in elected office.  They don’t know the history, the trials, nor the background of how the air act and other laws have achieved the progress we’ve witnessed.

Earlier in my career, I headed an organization called The Conservation Foundation, a small think tank in the resource and conservation field.  The founder Fairfield Osborn wrote a prophetic book in 1947, Our Plundered Planet, to sound the alarm about the degradation of the natural resources he saw as he traveled the globe. 

He argued eloquently that we need to keep before today’s urban civilization basic questions about these resources, lest in our own time we become so dazzled by our creations that we forget that healthy, functioning natural systems are the basis for all our wealth, all our activities, and all our lives.  This is a fundamental truth that each generation of Americans must rediscover for itself and take to heart.

What you are engaged is a noble enterprise that will shape how hospitable this land remains for future generations.  You are among the unsung heroes on whom we all depend, and I thank you for that.  You have the great good fortune and privilege to do genuinely consequential work -- not everybody can claim that but you can.  Among other advantages researchers have discovered that having a purpose, a goal, a sense that what you do is important will prolong your life! So I wish you a continued sense of purpose and a long life -- with a benign climate.

          I once asked Senator Daniel Patrick Moynihan what advice he would give me as I began my tenure at EPA.  He said, “Above all do not allow your agency to become transported by middle class enthusiasms.”

He also said “In some 40 years of government work, I have learned one thing for certain…the central conservative truth is that it is culture not politics, that determines the success of a society.  The central liberal truth is that politics can change a culture and save it from itself.  Thanks to this interaction we’re a better society in nearly all respects than we were.”