EPA Changing the Rules as They Go

Posted on Fri 01/21/2011 by

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By Nicolas LorisEPA Sign

Congress isn’t the only entity that knows how to pick winners and losers for energy sources and technologies. The Environmental Protection Agency (EPA) is doing its best to follow suit by imposing new rules on the natural gas industry and providing exemptions to the biomass industry.

For natural gas, the EPA evasively posted a new rule on hydraulic fracturing, requiring a company to obtain permits if the company uses diesel when fracking. Hydraulic fracturing, a long-proven process by which pressurized water and other substances are injected into wells to extract natural gas, has been the subject of much debate between environmentalists and industry because of those “other substances.”

An exemption in the 2005 Safe Drinking Water Act protects natural gas companies from disclosing proprietary information regarding the chemicals they use to when fracking. Environmentalists are pushing for full disclosure because of the concern that hydraulic fracturing is a threat to America’s drinking water. But in this instance, with the EPA’s new rule on diesel disclosure, perhaps more unsettling than the new rule is the way in which the EPA issued the rule. Mike Soraghan of Greenwire reports:

Federal agencies usually change policies with a multistep process that begins with the Federal Register and does not end for a year or more. But the fracturing permit change happened without so much as a press release. It was quietly posted amid an increasingly noisy debate about fracturing, a process in which chemical-laced water is injected underground at high pressure to crack rock formations and release oil or gas.

EPA has launched a multiyear study of the safety of fracturing. Hundreds of people showed up last summer at EPA hearings about the practice in New York and Pennsylvania. It has been the subject of a piece on “60 Minutes,” an HBO documentary called “Gasland” and even an episode of “CSI: Crime Scene Investigation.”

The casual nature of the posting, and the lack of any date, left oil and gas industry attorneys puzzling over what the change applied to and whether it applied only for the future, or retroactively. Of particular concern was that companies had been ordered to give documentation to Congress about their fracturing practices, and EPA was ordering disclosure, as well.

If they had disclosed that they had used diesel—legally—but did not get a specific permit, could they be penalized? Was there any way to get such a permit? What should states, who administer the program, do about regulating fracturing?

The story gets more complicated from there, mostly because of a series of loopholes with regards to the EPA regulating the use of diesel for fracking. Having the EPA close the loophole and create a clear definition with regards to diesel use isn’t necessarily bad, but it sets a dangerous precedent for the EPA quickly changing the rules of the game for industry with no consideration for debate and public comment.

Reining in the EPA’s regulatory overreach and unilateral decision making should be a priority for the 112th Congress. Congress should thoroughly evaluate and question the EPA’s newly implemented rules and have EPA Administrator Lisa Jackson justify her agency’s decision not just when it comes to hydraulic fracturing but other rules as well, most notably the regulation of carbon dioxide (CO2) and other greenhouse gases under the Clean Air Act.

Speaking of which, Congress should ask Jackson why the EPA exempted biofuel refineries from obtaining permit requirements for CO2 emissions. This year the EPA will start regulating emissions from new power plants and major expansions of large greenhouse-gas-emitting plants (more than 25,000 tons of CO2 per year) and will finalize regulations for existing refineries and fossil fuel electric utilities by November 2012. But not biofuel plants. The reason given is that the science clearly shows that biofuel production is net neutral when it comes to CO2 emissions.

Right. Just like the science clearly shows increased CO2 emissions will result in sea level rises, stressed water resources, increased size and quantity of wildfires, insect outbreaks, threats to ecosystems and national security, and other catastrophic events.

New studies, however, are showing that biofuel production is not carbon-neutral. A report from Rice University notes that when you account for land use conversion, the use of fertilizers, insecticides, and pesticides (which emit much more potent methane and nitrous oxide), as well as the fossil fuels used for production and distribution, biofuel production becomes quite carbon-intensive. For an industry that built its business model around subsidies, tariffs, and federal protection, it’s no surprise that the EPA threw the biofuel industry another bone. Now it’s time for Congress to put the EPA on the stand and ask why.

Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.

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