EPA’s Unmeasurable Rule: Inadequate Analysis Obstructs Public Accountability

May 13, 2014

As part of our ongoing Retrospective Review Comment Project, last week we submitted a comment on the Environmental Protection Agency’s proposed greenhouse gas emissions standards for new coal- and natural gas-fired power plants. Through this comment project, the Regulatory Studies Center examines significant proposed regulations to assess whether agencies propose retrospective review as a part of their regulations, and submits comments to provide suggestions on how best to incorporate plans for retrospective review into their proposals. Our goal is that this new project will encourage regulators to prospectively plan for lookbacks, and provide constructive recommendations to agencies on how best to structure their proposed rules to accomplish these objectives. 

Multiple government guidelines instruct agencies to ensure that future regulations are “designed and written in ways that facilitate evaluation of their consequences and thus promote retrospective analyses and measurement of ‘actual results.’” But there is a major flaw in EPA’s proposal: the outcomes and assumptions are both self-contradictory and unmeasurable, making it difficult for the agency and the public to assess whether this policy will have the intended effect.

The goal of EPA’s proposed rule is to reduce carbon dioxide (CO2) emissions from coal- and natural gas-fired power plants, or electric generating units (EGUs). EPA is setting an emissions standard using a best system of emission reductions (BSER) that requires coal plants to use partial carbon capture and storage (CCS). Early in its rule, EPA states that the EGUs it is proposing to regulate are the largest domestic emitters of greenhouse gases, primarily in the form of CO2. Given this information, reducing emissions from new EGUs should theoretically have a significant effect on domestic CO2 emissions.

However, EPA does not expect that its rule will have any effect on CO2 emissions at all. This is because EPA forecasts that no (or very few) new coal-fired EGUs will be built between now and 2020, and that new power generation will instead come from natural gas EGUs and renewable sources. As a result, “the EPA projects that this proposed rule will result in negligible CO2 emission changes, quantified benefits, and costs by 2022.”

These assumptions pose some difficulty for evaluating the success of EPA’s rule, and contradict some of the outcomes that EPA states will result from its standards. This is problematic because the entire reason this rule is being promulgated is to address stationary source emissions of CO2, and if market factors are already addressing these emissions satisfactorily, there is no remaining problem for this standard to address, and pursuing rulemaking is a questionable use of agency resources.

Furthermore, the reason that EPA determined that partial CCS was BSER was that this system “ensures that any new fossil fuel-fired utility boiler or IGCC unit will achieve meaningful emission reductions in CO2, and it will also encourage greater use, development, and refinement of CCS technologies.” However, given EPA’s own analysis, neither of these goals will be accomplished through promulgation of its rule. Either the reasons why EPA determined partial CCS as BSER are false, and the regulation will not result in significant CO2 reductions, or EPA’s projections for coal-fired power plants are inaccurate, and the regulation will have substantial costs. EPA cannot have its cake and eat it, too.

The agency’s baseline is designed such that there is no possible differentiation between outcomes that resulted from policy changes and outcomes that are unavoidable given the state of the energy market. As such, this rule cannot possibly be considered to be “designed and written in ways that facilitate evaluation of [its] consequences,” posing challenges to public accountability and retrospective review.