Co-written by Research Associate Anthony Ward.
President Obama has nominated Gina McCarthy to succeed Lisa Jackson as EPA administrator. When the Senate takes up her confirmation, lawmakers should be aware that McCarthy, the current chief of air regulation at EPA, has a history of misleading Congress and the public about her agency’s greenhouse gas regulations.
At a hearing of the House Oversight and Government Reform Committee in October 2011, McCarthy denied motor vehicle greenhouse gas (GHG) emission standards are “related to” fuel economy standards. In so doing, she denied plain facts she must know to be true. She did so under oath.
Why does this matter? As we explain below, the falsehood that GHG standards and fuel economy standards are unrelated gave the EPA legal cover to grant a waiver authorizing California to implement its own de-facto fuel economy program. The waiver threatened to subject the auto industry to a “patchwork” of state-by-state fuel economy requirements.
The patchwork threat gave the White House leverage to offer regulatory protection in return for the auto industry’s support in legislative battles over the administration’s climate policies. Auto industry lobbying helped kill a key legislative effort to rein in the EPA and reclaim Congress’s authority to determine climate policy. As we also explain, McCarthy and the Air Office gave false assurances future GHG permitting requirements would not operate as a ban on new coal-based power. This deception too undermined legislation to curb the EPA’s greenhouse power grab.
To repeat, McCarthy in testimony (along with two other administration witnesses) asserted GHG standards and fuel economy standards are not related. But key agency documents show GHG standards implicitly regulate fuel economy.
According to the agency’s May 2010 Tailpipe Rule, co-authored with the National Highway Traffic Safety Administration (NHTSA), no commercially available technologies exist to capture or filter out carbon dioxide (CO2) emissions from motor vehicles. Consequently, the only way to decrease CO2 emissions per mile is to reduce fuel consumption per mile — that is, increase fuel economy. Carbon dioxide constitutes 94.9 percent of vehicular GHG emissions, and “there is a single pool of technologies . . . that reduce fuel consumption and thereby CO2 emissions as well.”
The framework document outlining the administration’s fuel economy options for model years 2017-2025 calculates a vehicle’s MPG from its CO2 emissions. Co-authored by the EPA, NHTSA and the California Air Resources Board (CARB), the September 2010 Interim Joint Technical Assessment Report examines four fuel economy standards for model year 2025, ranging from 47 MPG to 62 MPG. Each standard is the simple reciprocal of an associated CO2 emission reduction scenario. The 54.5 miles per gallon standard adopted by the administration in July 2011 is a compromise between the 4 percent-per-year (51 MPG) and 5 percent-per-year (56 MPG) CO2 reduction scenarios.
Not convinced yet?
CARB’s 2004 staff report presenting the agency’s plan to implement AB 1493, California’s GHG motor vehicle emissions statute, is another smoking gun. Nearly all of CARB’s recommended technologies for reducing GHG emissions were previously recommended in a 2002 National Research Council study on fuel economy. CARB proposes a few additional options, but each is a fuel-saving technology, not an emissions-control technology.
At the hearing, McCarthy argued that GHG standards and fuel economy standards are not related because they are “different.” One might as well argue that brothers aren’t related because they are different.
Why the not-so-artful dodging?
The EPA has no statutory authority to regulate fuel economy. More importantly, the federal Energy Policy and Conservation Act prohibits states from adopting laws or regulations “related to” fuel economy. Yet in 2009, the EPA granted California a waiver authorizing CARB to implement AB 1493. McCarthy could not testify accurately without casting doubt on the legality of the waiver and AB 1493.
The waiver did more than authorize California to poach NHTSA’s statutory authority to prescribe fuel economy standards. It also authorized other states to follow suit. Consequently, the waiver threatened to create a market-balkanizing administrative morass. Each automaker would have to reshuffle the mix of vehicles sold in each “California” state to attain the requisite fleet-average MPG or grams CO2/mile (see the National Automobile Dealers Association report, “Patchwork Proven”).
Having imperiled the financially distressed auto industry, the Obama team could then offer regulatory protection (and bailout money) in return for political fealty. In May 2009, hush-hush negotiations culminated in what President Obama dubbed the “historic agreement.” California and other states agreed to deem compliance with the EPA’s emission standards as compliance with their own – but only if automakers pledged to support a “national” motor vehicle program jointly administered by EPA, NHTSA and CARB.
The political payoff for EPA came in June 2010. The auto industry lobbied against a resolution, sponsored by Sen. Lisa Murkowski, R-Alaska, to overturn the EPA’s Endangerment Rule, the prerequisite for the EPA’s climate regulations. The resolution fell four votes short (47-53), allowing the GHG regulatory cascade to proceed apace. The Endangerment Rule triggered the Tailpipe Rule, which in turn triggered Clean Air Act permitting requirements for major stationary GHG emitters. As a font of regulatory overreach, the fiction that GHG standards and fuel economy standards are unrelated ranks right up there with the Supreme Court’s fantasy that Congress “spoke directly” to the issue of anthropogenic global warming when it enacted the Clean Air Act in 1970.
McCarthy also misled the public and policymakers about the EPA’s plans to regulate GHG emissions from stationary sources.
According to Greenwire (April 14, 2010), McCarthy gave assurances best available control technology standards for major GHG emitters would require only efficiency upgrades, not fuel switching from coal to gas. “We haven’t done [fuel switching] in the past, and there’s been good reason why we haven’t done [it] in the past,” she reportedly said.
The EPA reiterated this position in two guidance documents – one published in November 2010, the other in March 2011. Both documents affirm that BACT for CO2 will not require a permit applicant “to switch to a primary fuel type” different from the type the applicant planned to use for its main combustion process. The documents also disavow plans to “redefine the source [category]” such that coal boilers are held to the same standard as gas turbines.
Note in this connection that BACT standards, which apply to individual facilities on a case-by-case basis, are typically more stringent – and by law may not be less stringent – than the EPA’s industry-wide new source performance standards. So the last thing people who trust their government would expect is for the EPA to propose NSPS that redefine the source and require fuel switching. Yet that is exactly what the EPA does in its “carbon pollution standard,” published in March 2012.
The proposal lumps gas turbines and coal boilers into the same source category, and it holds coal power plants to a CO2 performance standard that nearly all natural gas combined cycle plants and exactly zero commercial coal power plants can meet.
In April 2011, the House passed H.R. 910, the Energy Tax Prevention Act, by a vote of 255-172. H.R. 910 would overturn all of the EPA’s GHG regulations except those in which the auto and trucking industries already had invested in compliance. The Senate companion bill sponsored by Sen. James Inhofe, R-Okla., failed on a 50-50 tie vote. As mentioned, in June 2010, Sen. Murkowski’s resolution to strip the agency of its power to regulate GHGs failed by a narrow margin.
One or both of those measures might have passed had McCarthy and the Air Office come clean about their agenda and acknowledged before votes were cast that the agency planned, in 2012-2013, to propose and adopt CO2 performance standards that effectively ban the construction of new coal generation. In hindsight, her assurances and the guidance documents were the setup for a bait-and-fuel-switch.
The bottom line: As EPA administrator, McCarthy is the perfect choice for a “put nothing in writing, ever” administration that claims to be the most open and transparent in history.