Comparing the candidates
How much will your environmental compliance obligations change if Mitt Romney seizes the White House? Probably not as much as you would like, at least not in the early years of a new presidency. Federal environmental rules take a long time to develop and become well rooted. Finalizing sweeping deregulatory amendments, particularly to major rules, is equally time consuming, and such changes face the certainty of judicial challenges from battle-hardened environmental groups. What you can expect is that your current requirements will probably not increase, at least not precipitously. Also, with expected input from industry, in the near term there will likely be many minor technical adjustments to larger rules that will simplify some requirements and may not provoke enviros to go to court.
Prospects are brighter for those of you in the business of developing energy resources. In contrast to environmental rules that are promulgated under federal statutes, the executive branch has far more discretionary authority to issue permits to extract oil and gas (O&G) and conduct mining. Governor Romney has made it clear that he is all about developing every component of the nation’s conventional energy reserves, except those in the most protected areas. And, in the case of the currently protected Arctic National Wildlife Refuge (ANWR), he has called for an end to a congressional prohibition on drilling.
On the other hand, what does your future look like if President Obama is reelected? While Obama has infuriated much of U.S. industry, particularly with his greenhouse gas (GHG) rules, he has also disappointed environmentalists by dropping out of the GHG cap-and-trade campaign. Following the Deepwater Horizon spill, he angered the O&G industry by placing a 6-month moratorium on deepwater drilling in the Gulf of Mexico. But the Department of Interior now asserts that it has substantially increased issuance of drilling permits, a claim that Republicans dispute. There are two questions to ask about a second-term Obama presidency. One, will he fulfill his many stated or implied promises to environmentalists? Or, two, will he dial down the volume on the environment to quell distractions to his economic growth programs? Also, if the November election results in a divided Congress, neither man can expect lawmaking that will meaningfully alter the nation’s bedrock environmental statutes.
In that context, following are capsules of the contrasting views of the two candidates on major environmental issues.
The EPA
Obama. With one glaring exception, the president has not interfered with EPA’s pursuit of the seven environmental priorities named by Administrator Lisa Jackson. Late last year, Obama decided to stall EPA’s imminent issuance of a more stringent national ambient air quality standard (NAAQS) for ozone, citing the uncertainty that would result in “this economically challenging time.” That decision nearly prompted Jackson’s resignation. The White House said the EPA should revisit the standard in 2013, which would be in line with the 5-year NAAQS review cycle specified by the Clean Air Act.
In response to the several presidential Executive Orders (EOs) instructing federal agencies to take a retrospective look at regulations with the intention of eliminating those that are redundant or unnecessary, the EPA has taken many actions, including initiating rulemaking to repeal outdated or ineffective regulatory requirements for wastewater facilities; reducing the burden for gas stations by eliminating regulatory requirements that call for the use of redundant vapor recovery systems; amending new source performance standards for grain elevators to accommodate the increase in ethanol production; and simplifying the Title V permitting process. You can read EPA’s complete list of retrospective reviews in response to the president’s EOs.
Romney. Romney claims the EPA has “gotten completely out of control” and has become a “tool in the hands of the president to crush the private enterprise system, to crush our ability to have energy, whether it’s oil, gas, coal, nuclear.” The EPA is the Obama administration’s “most active regulator,” according to Romney. In addition to the economic burden of the administration’s climate change rules, Romney cites EPA’s Utility MACT, Boiler MACT, and impending revisions to the 2008 ozone NAAQS as prime examples of overregulation. Regarding the ozone NAAQS, “the result could be up to $90 billion in new costs on American industry annually and the loss of more than 7 million jobs,” according to Believe in America, the Romney team’s Plan for Jobs and Economic Growth . “It is this kind of reckless regulatory behavior that makes the American economy inhospitable to investment.”
While not joining the call to dismantle the EPA, Romney is sensitive to worries expressed by his supporters in the O&G sector that an EPA under his administration would simply press on in the same direction. Romney instead claims that his EPA would be more like the agency that was headed by Mike Leavitt, who led the EPA for 14 months under President George W. Bush. Leavitt was a strong advocate of transferring authority from the EPA to the states, a position held by Romney in many areas of regulation. Romney says that O&G executives have told him that the EPA was better under Leavitt than it is today.
Greenhouse gases
Obama. Obama entered office expressing enthusiasm about the possibility of adopting a national cap-and-trade program that mirrored international agreements, but the failure of Congress to pass the needed legislation in 2010 effectively pushed the policy down the administration’s environmental agenda. Instead, the president used his administrative authority to issue a series of actions that began with a finding that CO2 endangers human health and the environment and therefore meets the definition of a pollutant under the CAA and is subject to federal regulation. The endangerment finding was challenged by industry and eventually upheld by the U.S. Supreme Court. The administration followed this victory with major national rules to limit CO2 emissions from light-duty vehicles, actions that were largely supported by auto manufacturers.
Following issuance of the vehicle CO2 standards, the Obama EPA said it was compelled by instructions in the CAA to regulate CO2 under the statute’s prevention of significant deterioration (PSD) and Title V permitting programs. The subsequent CO2 rules currently apply to only the largest stationary sources. While industry has fought these regulations in court–currently without success–the real concern of business leaders is EPA’s commitment to expand the requirements to a much larger population of smaller sources. The EPA has stated that it is postponing issuing such regulations until at least April 2016.
Romney. Even though the administration has placed cap-and-trade on the back burner, Romney insists on reminding the public about how Obama once avidly sought its statutory implementation, a debate that “created uncertainty among consumers and enterprises alike,” according to Romney. While ambivalent on whether human activity is causing climate change, Romney is a passionate opponent of cap-and-trade, a policy he briefly supported as governor of Massachusetts. According to Romney, the plan supported by Obama and ultimately rejected by Congress would have resulted in losses of $9.4 trillion in GDP and 2.5 million jobs over the next quarter century.
The governor also opposes the vehicle CO2 standards (along with the new corporate average fuel economy standards [CAFÉ] standards promulgated at the same time by the National Highway Transportation Safety Board). Following the most recent federal actions covering model years 2017 to 2025, a Romney spokesperson announced that the rules will limit the choices available to American families. “The president tells voters that his regulations will save them thousands of dollars at the pump, but always forgets to mention that the savings will be wiped out by having to pay thousands of dollars more upfront for unproven technology that they may not even want," said Andrea Saul, the Romney campaign press secretary.
Romney has reiterated objections voiced by virtually every conservative that signing up the nation to a mandatory international program to control GHG emissions without equal participation by China and India is economic suicide.
Energy
Obama. In a February 2012 address, President Obama stated: “If we’re going to take control of our energy future and avoid these gas price spikes down the line, then we need a sustained, all-of-the-above strategy that develops every available source of American energy–oil, gas, wind, solar, nuclear, biofuels, and more.” What is now called the president’s all-of-the-above energy strategy places an emphasis on increasing drilling in the Gulf of Mexico, opening limited areas offshore of the north slope of Alaska, and expediting permitting for onshore drilling on federal lands. In a recent speech, Interior Secretary Ken Salazar noted that under federal oversight O&G production on public lands has increased 13 percent over the past 4 years.
The president’s strategy also includes significant federal subsidies for alternative energy, including a congressionally authorized production tax credit (PTC) for wind energy. The PTC is scheduled to expire at the end of the year, significantly raising this normally low-profile item to front page news in states with significant wind power capacity, such as Iowa. President Obama has made multiple campaign trips to Iowa to repeatedly voice his support for the PTC.
The absence of the word “coal” in the president’s all-of-the-above address has caused critics to question the credibility of the statement. Indeed, in March 2012, the EPA proposed CO2 emissions standards for new sources that would make it virtually impossible to construct a coal-fired power plant without installing carbon capture and sequestration, a highly advanced technology with as-yet questionable commercial viability. Also, the president has called for the end of the federal $4 billion federal tax break enjoyed by the O&G sector. Obama is seeking to redirect those funds into alternative energy sectors.
In April 2012, the president issued an EO forming an interagency working group to support the “Safe and Responsible Development of Unconventional Domestic Natural Gas Resources.” While hydraulic fracturing is not specifically mentioned, the EO, has been interpreted as an endorsement of the practice. However, multiple federal agencies are also engaged in developing regulations affecting fracking. The EPA has already issued rules compelling control of air emissions from fracking wells. Also, the Bureau of Land Management has proposed a rule to require companies to publicly disclose the identity of chemicals used in fracking operations on public land and also to address issues related to flowback water.
Romney. Romney has attacked the administration’s nonapproval of the Keystone XL pipeline and pledges to ensure its rapid progress as well as the construction of additional pipelines to accommodate the expected growth in the Canadian supply of oil and natural gas.
The governor believes that the federal government is overregulating fracking. He states that the process has been effectively overseen by the states for decades, which suggests that a Romney presidency would seek to diminish federal control of fracking.
Romney would also provide the states with more authority to permit energy development on federal land. “Federal land open for exploration has declined nearly 20 percent on [Obama’s] watch, and the rate of permitting is down 37 percent,” according to the campaign’s (Energy Independence white paper ). It now takes a “shocking” 307 days to receive the permits to drill a new well, according to the paper, while the state of North Dakota can permit a project in 10 days and Colorado does it in 27 with no greater risks to the environment. The paper adds that some unspecified federal lands would be off-limits to development.
While the Romney documents do not offer soaring endorsements of coal-fired energy, the campaign states that “rules affecting coal power plants could be streamlined to achieve the necessary environmental protection while avoiding job-killing plant closures.” A Romney presidency would likely yank EPA’s proposed CO2 emissions limits for new coal-fired power plants.
Romney says he has no problem with alternative energy, but believes it should compete on a level playing ground with traditional forms of energy, meaning no federal subsidies should be provided.
Green Jobs
In conclusion and in anticipation of good debate material, Romney will also likely attack the president’s promise in his 2008 campaign to create 5 million green jobs and the major failure associated with that program–the $535 million Department of Energy loan guarantee to Solyndra, a California solar energy company that subsequently declared bankruptcy. While Romney claims the president’s green jobs efforts are causing more jobs overall to be lost, the president will likely point to his own statistics, which tell a different story (see Green Jobs Fact Sheets).
William C. Schillaci
BSchillaci@blr.com