Regulation:

Bracewell & Giuliani's Segal discusses new air rule delays

As deadlines continue to shift, what's the short-term outlook for new air regulations coming out of U.S. EPA? During today's OnPoint, Scott Segal, head of the policy resolution practice and founder of the strategic communications practice at Bracewell & Giuliani, discusses his expectations for the roll out of key air rules, including Utility MACT and Boiler MACT. He also gives his take on recent comments by EPA Administrator Lisa Jackson on Congress' attempts to block air regulations.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Scott Segal head of the Policy Resolution Practice and founder of the Strategic Communications Practice at Bracewell & Giuliani. Scott is also director of the Electric Reliability Coordinating Council. Scott, always nice to see you.

Scott Segal: Great to be here.

Monica Trauzzi: Scott, EPA says it's close to finishing up its final rule on utility MACT. We've seen a series of delays and hurdles coming from EPA on just about all of its air rules. What are your short-term expectations for utility MACT?

Scott Segal: Well, it's still an open question about how close the EPA really is to finalizing a product that can be implemented and can stand judicial scrutiny with respect to utility MACT rule. I mean, we had 25 attorneys general sign a brief that went into the case on utility MACT just a couple of weeks ago, that basically said the agency had failed to analyze the comments appropriately, had failed to consider the true impact on reliability of the rule, that the agency had failed to consider impacts for manufacturers and for small businesses and that the agency had failed to honor the spirit at least of President Obama's January 2011 executive order to consider the cumulative economic impact of its rules and, therefore, more time was needed. Now, as you know, the EPA said, well, we'll give you an extra 30-we'll give ourselves an extra 30 days to consider it. I don't think those are the kind of problems that can actually be cured in 30 days, but nonetheless, what is it they say, that admitting you have a problem is the first step to resolving those problems? And so the one thing we know for sure is that the agency is not ready with the rule. It even --

Monica Trauzzi: So, will there be another delay?

Scott Segal: Well, it's hard to say. I think the agency has a very steep road to climb to be able to complete that rule and have a rule that is work product that they and the American public can be proud of by December 16, which is now the likely final date for the rule. I think what the agency ought to do is take such time as is necessary as to cover those issues. And we think actually a year is really what's needed. If they must rush to judgment and do this final rule, then they at least have to allow sufficient time for implementation of the rule. Look, the Clinton administration and the Bush administration all proposed large air rules and when they did, they had a minimum of five year implementation programs for those rules. This is the only administration I know of that has varied from as little as six months for implementation, or less now for the cross state air pollution rule, to a very truncated implementation schedule of a year and change for a utility MACT. These are incredibly expensive rules with profound impacts for economic recovery and job creation that need time in order to understand what their impacts on reliability will be. But the administration apparently isn't willing to take that time, 30 days isn't that time.

Monica Trauzzi: Gina McCarthy, the head of EPA's Office of Air and Radiation has said that the final rules should show that many boilers already have the controls needed to comply with the rules. Is that how you see it from where you sit?

Scott Segal: Well, I think that's misleading. The basket of technologies that are necessary to come into compliance with these rules exist at various and different utility boilers out there. The question that should be asked though is what is the universe of utility boilers in the coal-fired fleet of the United States that meets all of the standards for mercury, for non-mercury HAPs, all of them simultaneously, in other words, are true test runs for this rule? And the answer is we don't believe there is a single facility that meets all of the standards for the utility MACT rule. What the law says is it must be achievable in practice when we establish a floor to determine how we will regulate under the maximum achievable control technology standard. That word achievable means achievable in practice and I don't believe that this administration can point to a single facility that achieves all in practice under conditions where we could actually permit a facility these days. And so I think there's profound information to that effect in the regulatory record that the agency I'm not sure will even have time to read by the time they finalize their rule.

Monica Trauzzi: So, boiler MACT, revisions have been delayed until November 30. Is the administration using that extra time to make concessions to industry to sort of make a rule, finalize a rule that appeases all sides?

Scott Segal: Well, we hope the administration is using that time constructively and I want to drill down a little bit on the process that was used with respect to boiler MACT. What the administration did is they went ahead and finalized a rule and then simultaneously entertained a petition for reconsideration of that rule so they could really roll up their sleeves and make changes to the rule that were appropriate in order to come up with a product that could actually be implemented. I want to say that that is still an option that is open in the case of utility MACT as well. They could grant petitions for reconsideration. I'm not suggesting anyone in administration has said that they would, but that is a mechanism that's out there. The question of how constructive that mechanism is really depends on what it is they're using that time to do. And I don't think we have an answer to that question right now, what changes will eventually be wrought to the boiler MACT proposal. I will say this, that people in the industrial boiler industry, and that's about 22 different industrial codes worth of industry, came together in support of legislation on Capitol Hill to go ahead and make changes to the boiler MACT proposal and to change the way or to clarify the way that we set MACT standards, because they perhaps felt that the administration wasn't making all the changes that it should.

Monica Trauzzi: How would you describe the state of affairs at EPA right now? Has there been a significant shift in tone?

Scott Segal: Well, you know, in my 25 years of working this beat, I will tell you that as a general proposition, the EPA is an agency with 19,000 or so employees, more career PhDs that almost any other agency, certainly any other civilian agency, and generally are true believers in the cause that they serve. And I think that's great. What that has meant is, whether we've had Democratic or Republican administrations, the career staff has typically been, in a political sense, to the left of the political staff. This is the first time ever I've seen that the career officials at EPA are saying to themselves things are happening so quickly, particularly in the air program, and at such great cost and in such a way that we can't make the final rules work product that we're proud of, we can't implement them in a way that we would be proud of, that for the first time I'd say, the political staff is actually to the left of the career staff that the agency. That's very dangerous and I would say uncharted territory.

Monica Trauzzi: We've seen congressional action, particularly in the House, on EPA air rules. Is any of that going to amount in legislation passing through both chambers?

Scott Segal: Well, it's an interesting question. As freestanding legislation, it's very difficult to pass anything. I think it's difficult to pass-to name a post office under freestanding legislation. So I think what we have to look to is either "must pass" forms of legislation, things that look at the continuing resolution to keep the government funded, the job the super committee will be doing, etc., things where there will be a tremendous amount of pressure to accept a package, that's one thing. The other item is this, I think of legislation as a guideline or guidepost to the administration of ways that you can constructively solve problems. So, if you have a legislative package which, for example, elongates the timeframe for implementation of one of these major air rules, that is something that the administration could choose to do of its own accord. So, if enough folks support it in both political parties, it may be a good watchword to the administration to go ahead and adopted.

Monica Trauzzi: Let's talk about Lisa Jackson. In a recent L.A. Times op-ed, the administrator pointed a finger at House Republicans saying that they're launching an assault against EPA rules and are essentially using false advertising to convince Americans about what's happening in the House. What do you make of her most recent comments?

Scott Segal: I tell you, I was very, frankly, disturbed by the L.A. Times editorial, because I think it made some material misrepresentations. Now, I happen to like the administrator and I'm just going to assume that this is more of a political production that didn't go through the high level of scrutiny that maybe official pronouncements of the agency do. But among the statements that were made in this editorial were that rules don't cost jobs. The president himself has taken a contrary position when he delayed the Ozone National Ambient Air Quality Standard. He said, "A time of bad economics is not a time to do major rules." The notion that if you do not support EPA rules you are, per se, a conservative Republican I found to be very troubling. You know, 19 Democrats voted for the train act when it was on the floor, over 35 Democrats voted for the coal ash legislation when it was on the floor. We've seen legislation introduced in the Senate, completely bipartisan, four Democrats and four Republicans, again on coal ash in recent days. It just seems to me there are lots of folks, take the labor community for example, who's been very vocal when there were problems, particularly on timeframe here. We cannot say that this is all a partisan gotcha game, which is certainly what her document suggests. Even the mere suggestion that she is handling the first-ever mercury rule does not bear up under the facts. The first ever mercury rule was the Clean Air Mercury Rule, hence the name proposed by the Bush administration and finalized. But because environmentalists opposed it in the DC circuit, it was set aside and we've, therefore, had much of a longer delay in having a mercury rule. So, you know, all in all, I hope we can, and maybe I'm not being a good example of this right now, but I hope we can tone down the rhetoric a little bit on this and make a rule that works, that doesn't potentially injure reliability or cost, you know, potentially millions of jobs.

Monica Trauzzi: Common thinking in Washington is that she'll stay at EPA through the end of Obama's first term. What could her legacy be?

Scott Segal: Well, on the general proposition, I've seen rumors to the contrary, but no action to the contrary that the administrator is planning on leaving. I think she's already racked up a good legacy in one important respect. This is somebody who came out of the career cadre, in this case the region, I mean she also served obviously in New Jersey state government, but came out of the career staff of the region and was an activist administrator. Oftentimes, when career folks are promoted to the administrator job, they're viewed more as caretakers. I don't think anybody can say that of Lisa Jackson. And I think what it proves is, is that this very large agency does have a pretty strong bench strength to draw from for its senior leadership. Now, I don't agree with everything the administrator does, as pretty clear from today, but I do think it proves the point that you can turn to your career bench strength and promote some pretty interesting folks to be senior executives at the agency.

Monica Trauzzi: All right, we're going to and there. Thank you for coming on the show. Nice to see you.

Scott Segal: Good to see you too.

Monica Trauzzi: And thanks for watching. We'll see back here tomorrow.

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