On Wednesday, April 6, 2011, the House is scheduled to consider H.R. 910, the Energy Tax Prevention Act of 2011, under a rule.  The rule provides for one hour of debate, equally divided.  The rule makes 12 amendments in order and provides one motion to recommit with or without instructions.   

The bill was introduced by Rep. Fred Upton (R-MI) on March 3, 2011, and was referred to the House Committee on Energy and Commerce.  The Committee held a markup of H.R. 910 on March 15, 2011, and ordered the bill to be reported by a vote of 34-19.  

H.R. 910 would prohibit the Environmental Protection Agency (EPA) from regulating greenhouse gases (GHG) to address climate change under the Clean Air Act.   More specifically, the bill would prohibit the EPA from regulating: water vapor; carbon dioxide; methane; nitrous oxide; sulfur hexafluoride; hydrofluorocarbons; perfluorocarbons; and any other substance subject to regulation, action or consideration under the Clean Air Act to address climate change.  The bill would also repeal a number of EPA rules and actions, including the mandatory reporting of greenhouse gases.

According to the bill, the term “air pollutant” would not include a GHG.  However, the bill would allow the term “air pollutant” to include a GHG for the purpose of addressing other concerns. 

The bill would include the following exemptions from the prohibition:

1.     Implementation and enforcement of the “Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards” rule, and finalization, implementation, enforcement, and revision of the proposed rule, “Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles”;

2.     Implementation and enforcement of the renewable fuel program;

3.     Statutorily authorized federal research, development, and demonstration programs addressing climate change;

4.     Implementation and enforcement of stratospheric ozone protection to the extent that such implementation or enforcement only involves one or more class I or II substances; and

5.     Implementation and enforcement of requirements for monitoring and reporting of carbon dioxide emissions. 

H.R. 910 would provide that none of aforementioned exemptions would cause a GHG to be subject to regulations relating to the prevention of significant deterioration of air quality, or would be considered an air pollutant for purposes of air pollution prevention and control permits. 

The bill would not limit or affect the authority of a state to adopt, amend, enforce, or repeal state laws and regulations pertaining to the emission of a GHG.  State provisions are defined as: a state implementation plan that authorizes or requires a limitation on, or imposes a permit requirement for, the emission of a GHG to address climate change; or an operating permit program under Title V, or a permit issued pursuant to Title V, that authorizes or requires a limitation on the emission of a GHG to address climate change.  State actions would not be affected so long as the provisions are not federally enforceable or part of federal law.  The bill would prohibit the EPA Administrator from approving or making federally enforceable any such state law. 

H.R. 910 would state that it is the sense of Congress that:

1.     There is established scientific concern over warming of the climate system based upon evidence from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level; 

2.     Addressing climate change is an international issue, involving complex scientific and economic considerations; 

3.     The United States has a role to play in resolving global climate change matters on an international basis; and 

4.     Congress should fulfill that role by developing policies that do not adversely affect the American economy, energy supplies, and employment. 

According to the EPA, the new rules being proposed are premised on the Supreme Court’s five to four decision in Massachusetts vs. Environmental Protection Agency.  However, because the Supreme Court did not require the EPA to make an endangerment finding for GHGs, the agency’s regulations are not mandated by the decision.  GHG emission controls under the CAA have in the past been considered and rejected by Congress. 

In December 2009, the Administrator of the EPA issued an “endangerment finding,” concluding that the atmospheric concentrations of the combination of carbon dioxide and five other GHGs endanger public health and welfare and that emission of such GHGs from vehicles are contributing to atmospheric concentrations and therefore endangering public health and welfare.  After the “endangerment finding,” the EPA implemented GHG emission standards for motor vehicles, including the “Light Duty Vehicle” rule and the medium and heavy-duty vehicle rule.  The EPA is currently considering actions to reduce GHG emissions from other transportation sources. 

Since they have not been challenged on the regulations of GHG emission for vehicles, the EPA contends that it should have the authority to regulate GHG emissions for stationary sources (i.e. fossil fuel fired plants, manufacturing plants, etc.) under two CAA permitting programs.  The two programs are known as the Prevention of Significant Deterioration (PSD) preconstruction permit program, and the Title V operating permit program.  Regulated entities are required to get these permits when they make a major modification or build new projects.  EPA itself called the potential regulatory result “absurd” and said that it would lead to a grid-locking of the permit system.  Without permits, facilities cannot construct or modify, leading to what are likely devastating economic consequences. 

In December 2010, the EPA announced plans to set new GHG “New Source Performance Standards” (NSPS) for existing petroleum refineries and fossil fired power plants.  The EPA previously advised that the agency is also considering petitions or requests to regulate such emissions from cement plants, nitric acid plants, utility boilers, oil and gas production, landfills and concentrated animal feeding operations. 

In October 2009, the EPA issued mandatory GHG rules pursuant to the CAA.  The EPA estimated the costs of the rule to be $132 million in the first year, and $89 million annually.  The EPA estimated that over 10,000 facilities in the U.S. would be covered by the rules and would have to begin annual reporting requirements.  Since then, the EPA has supplemented the reporting rule four times, increasing the number of affected sources. 

H.R. 910 would prevent the ever expanding EPA regulations of stationary sources and return climate change policymaking responsibility to Congress.

Because certain EPA activities associated with regulating GHGs would be prohibited under the bill, CBO estimates that enacting this legislation would save $57 million in 2012 and about $250 million over the  2012-2016 period, assuming that appropriations in those years were reduced accordingly.  Pay-as-you-go procedures do not apply to H.R. 910 because the bill would not affect direct spending or revenues.

Three hearings were held in House Energy and Commerce Subcommittees during February and March of 2011, and each hearing strengthened the conclusion that EPA’s GHG regulations under the CAA would be extremely costly and ineffective in addressing climate change.

Fossil fuels:  While America’s fossil fuel-based energy supplies are facing already rigid regulations, the EPA is beginning the process of rolling out a new set of regulations to address carbon dioxide and other GHG emissions.  As the Committee on Energy and Commerce points out, this amounts to nothing short of a “dramatic transformation of the American economy,” and “amounts to a massive energy tax.”  The price of gasoline has nearly doubled since the beginning of 2009 and today’s prices are particularly challenging given that many households are struggling in the current economy. 

On February 9, 2011, the Committee on Energy and Commerce received testimony from an Arkansas oil refiner, who testified that a major refinery expansion project at his company had been put on hold, and that “the uncertainty and potentially prohibitive costs associated with possible cap-and-trade legislation and EPA’s GHG regulations were a critical factor leading us to delay the completion of the expansion.”  Furthermore, the refiner pointed out that the PSD and NSPS portions of the GHG regulations are “the most immediate concern.” 

Coal:  EPA’s GHG regulations also threaten to raise electricity costs.  During the February 9^th hearing, electricity providers testified that GHG regulations, along with others, threaten “premature shutdown of significant amounts of the existing U.S. coal fleet; increases in electricity prices; risks to electric reliability; job losses; and harm the U.S. economy.”  At a March 1, 2011 hearing, the president of the Ohio Coal Association stated that “allowing the U.S. EPA to regulate GHG will increase the cost to power our country, cause massive transfers of wealth, and result in huge job losses that will not be recovered.”

Natural Gas:  Further testimony illustrated that the costs of natural gas fired electricity, responsible for nearly 20 percent of the U.S. electricity generation, would rise due to EPA GHG regulations as well. 

Jobs:  EPA’s regulations and associated cost of compliance would raise gasoline and electricity costs, harming both consumers and businesses.  The uncertainty of the regulatory scheme will likely have a chilling effect on plant expansions and other job-creating investments.  Given the backdrop of global competition in the manufacturing sector, these unilateral EPA regulations would have American jobs migrating to nations like China, India, and other foreign nations that have made clear that they have no plans to impose similar global warming measures on their industries.  At the February 9^th hearing, the senior vice president and chief economist for the American Council for Capital Formation testified that the uncertainty created by the proposed EPA rules has discouraged the investment necessary for robust recovery and job growth, estimating that “in 2014 there would be an economy wide job loss of 476,000 to 1,400,000 when direct, indirect, and induced effects are included.”  Additional testimony concluded that “EPA’s new regulations will create losses throughout the economy that more than offset any gains for specific industries that receive new orders because of EPA regulations.”

Under the rule, the following 12 amendments are made in order.  Each amendment is debatable for ten minutes.

Amendment No. 1—Rep. Jackson Lee (D-TX): The amendment would strike the prohibition on regulating greenhouse gases (GHG) under the Clean Air Act and would require an EPA study to determine the long term impact of a complete ban on its authority to regulate greenhouse gases.

Amendment No. 2—Rep. Jackson Lee (D-TX): The amendment would strike the prohibition on regulating greenhouse gases (GHG) under the Clean Air Act and would require that the EPA provide considerations and procedures in finalizing greenhouse gas regulations. 

Amendment No. 3—Rep. McNerney (D-CA): The amendment would clarify that voluntary programs addressing climate change classify as exceptions to the bill’s prohibitions.

Amendment No. 4—Rep. Cuellar (D-TX): The amendment would change the definition of greenhouse gas by removing “water vapor.”  The amendment would also change the Act by striking the removal of existing EPA findings and rules, and would exempt all auto standards from the legislation.

Amendment No. 5—Rep. Murphy (D-CT): The amendment would clarify that the EPA can continue to provide technical assistance to states taking action to limit greenhouse gas emissions.

Amendment No. 6—Reps. Waxman (D-CA), DeGette (D-CO), Inslee (D-WA): The amendment would state that “Congress accepts the scientific findings of the EPA that climate change is occurring, is caused largely by human activities, and poses significant risks for public health and welfare.”

Amendment No. 7—Rep. Quigley (D-IL): The amendment would require the Government Accountability Office to report to Congress the results of a study of health care costs in the U.S. as affected by the elimination of EPA regulation under this Act, as compared to health care costs in the U.S. as would be affected by the EPA “proceeding with regulation in its role as determined in Massachusetts  v.  EPA.” 

Amendment No. 8—Rep. Polis (D-CO): The amendment would allow the EPA Administrator to issue a rule to temporarily suspend provisions of the Act if a “detailed analysis and review by the Administrator of the latest credible and peer-reviewed science shows ground level ozone will pose significant dangers to public health, extreme weather events pose significant danger to public health, an increase in food and waterborne pathogens pose significant danger to public health, or there are other significant threats to public health.”

Amendment No. 9—Rep. Markey (D-MA): The amendment would ensure that any prohibition on or limitation to EPA’s Clean Air Act authority contained in the bill would not apply to any action EPA could take to reduce demand for oil.

Amendment No. 10—Rep. Rush (D-IL): The amendment would prevent the provisions of this Act from going into effect until the EPA Administrator, in consultation with the Secretary of Defense, certifies that the consequences of not regulating greenhouse gas emissions, and its subsequent impact on climate change, “including its potential to create sustained natural and humanitarian disasters and its ability to foster political instability where societal demands exceed the capacity of governments to cope,” do not jeopardize security interests of the U.S.

Amendment No. 11—Reps. Doyle (D-PA), Ryan (D-OH): The amendment would require the Administrator of the EPA to conduct a study to determine how the EPA regulations repealed by this Act would “cause greenhouse gas leakage, and reduce the international competitiveness of the U.S. producers of energy-intensive products.”  The amendment would require that the Administrator submit a report on the results of the study to Congress, including recommendations for legislative, administrative, or other actions to mitigate any greenhouse gas leakage identified, or any reduction in international competitiveness. 

The amendment would define “energy-intensive product” as iron, steel, aluminum, cement, bulk glass, paper and pulp, chemicals, or industrial ceramics; any other manufactured product sold in bulk for purposes of manufacturing; or any other product that would generate direct and indirect greenhouse gas emissions through manufacturing. 

The amendment would also define “greenhouse gas leakage” as “an increase in greenhouse gas emissions abroad because of the movement of the production of economic goods from the U.S. to other countries.”

Amendment No. 12—Reps. Kind (D-WI), Owens (D-NY): The amendment would codify the Environmental Protection Agency’s Tailoring Rule to exclude from the effects of greenhouse gas regulations farms, small businesses, and small- and medium-sized stationary sources.  The amendment would also remove water vapor from the definition of greenhouse gas.