Oversight panel gives platform to agency’s economic and legal critics

By Jean Chemnick, Annie Snider | 02/23/2015 07:04 AM EST

A House Oversight and Government Reform Committee subpanel will hear this week from an economic consulting firm that has warned repeatedly of the expense of U.S. EPA air and water rules, and from state attorneys general suing to stop their implementation.

The witness list for Thursday’s Interior Subcommittee hearing includes two senior staff from the Washington, D.C.-based NERA Economic Consulting, a firm that has studied the economic consequences of EPA’s proposed Clean Power Plan, its first-ever utility mercury standards, a tighter ozone standard and its cooling water intake rule.

All those analyses found that EPA restrictions would be costly, as NERA Senior Vice Presidents David Harrison and Anne Smith are likely to tell the subcommittee Thursday.


The analyses are frequently commissioned by industry and conservative organizations critical of EPA, then touted by congressional Republicans.

A U.S. Chamber of Commerce analysis by NERA released in February 2013 argued that EPA routinely underestimates the cost of its rules by using a "partial economy" formula that fails to consider indirect costs (Greenwire, Feb. 28, 2013).

Sen. James Inhofe (R-Okla.) later released legislation that would have directed EPA to use NERA’s more expansive cost-benefit methodology in its rulemakings. He is likely to reintroduce the language this Congress, perhaps as part of a broader overhaul of the Clean Air Act (E&E Daily, April 9, 2014).

Another NERA report written for the U.S. Chamber found that the Mercury and Air Toxics rule would cost as many as 215,000 jobs in 2015. A NERA study for the National Association of Manufacturers last year found that if EPA lowers its ozone limit to 60 parts per billion — as environmentalists and public health advocates urged it to do — it will cost the U.S. economy $270 billion a year and a third of its remaining coal-fired power fleet (Greenwire, July 31, 2014). The agency’s proposal last year called for a limit of between 65 and 70 ppb.

And the firm has conducted cost-benefit analyses for industry groups on the water intake rule, including a case study of Entergy Corp.’s Pilgrim Nuclear Power Station on Cape Cod, where species impacts were part of a contentious debate over renewing the plant’s license. The EPA rule, finalized last spring, seeks to reduce the number of fish, larvae and other aquatic species sucked into power plant cooling systems.

Smith and Harrison will share the witness table with two attorneys general who are currently suing EPA over its air and water rules.

Montana State Attorney General Tim Fox (R) is likely to discuss the Obama administration’s regulatory proposal aimed at clearing up years of confusion over the scope of the Clean Water Act.

The proposed "Waters of the U.S." rule would increase the number of streams and wetlands that currently receive automatic protection under the Clean Water Act. It has drawn fierce opposition from a range of industry groups, as well as from state and local authorities.

Fox joined a group of at least 11 attorneys general in arguing that the rule would impinge on state sovereignty (E&ENews PM, Oct. 9, 2014).

In comments to the rule filed last fall, Fox said his state recognizes the importance of its waters and has taken steps to protect "that priceless resource." The issue, he argues, is not the specific protections EPA and the Army Corps of Engineers are proposing but that the state should be the one determining what protections to implement and how.

"Montanans long ago decided our waters are worth protecting and acted accordingly," Fox wrote. "The problem is that your overreach impinges directly on our state sovereignty."

Arkansas Attorney General Leslie Rutledge (R), who will also testify, has joined with 11 other attorneys general in intervening in a lawsuit brought by Murray Energy Corp. to prevent EPA’s Clean Power Plan from going into effect. Rutledge said in a statement that the draft rule would "negatively impact existing industry, future economic development and electric ratepayers in the State of Arkansas."

She noted that Arkansas faces one of the tougher targets under the rule, which requires the state to cut its power-sector emissions by 44 percent by 2030 compared with a national average of 30 percent by that year.

Schedule: The hearing is Thursday, Feb. 26, at 2 p.m. in 2154 Rayburn House Office Building.

Witnesses: Montana Attorney General Tim Fox, Arkansas Attorney General Leslie Rutledge, NERA Economic Consulting Vice President Anne Smith and NERA Economic Consulting Vice President David Harrison.

Reporter Robin Bravender contributed.

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