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The “Best” Regulatory System Money Can Buy: Lessons from North Carolina’s “Regulatory Reform” Movement

For years, Duke Energy has enjoyed virtual free rein to contaminate North Carolina’s surface and ground waters with arsenic, lead, selenium, and all of the other toxic ingredients in its coal ash waste in clear violation of the Clean Water Act and other federal environmental laws.  And it seems that both North Carolina’s regulators and state legislators are determined to keep it that way.

Last year, the state’s environmental agency actively thwarted citizens’ efforts to sue Duke for violating the Clean Water Act by intervening in the lawsuit at the last minute and then settling with the company for just over $99,000—chump change for a company worth more than $50 billion—and no obligations to clean up their coal ash waste sites or prevent future pollution.  As detailed previously on CPRBlog, the head of the state’s environmental department—appointed by Gov. Pat McCrory, a former executive at Duke who had worked for the company for nearly three decades—promised that he would work as a “partner” to regulated industries in the state.  Federal prosecutors are now looking into whether North Carolina’s environmental regulators engaged in any criminal activity in their efforts to shield Duke.

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Enforcement of Environmental Laws a Victim of Obama’s Budget Proposal

EPA’s budget is in free-fall.  Members of Congress brag that they have slashed it 20 percent since 2010.  President Obama’s proposed budget for 2015, released on Tuesday, continues the downward trend.  The budget proposal would provide $7.9 billion for EPA, about $300 million, or 3.7 percent, less than the $8.2 billion enacted in fiscal year 2014.

To cope with these cuts, the agency plans to fundamentally change the way it enforces environmental laws.  A draft five-year plan released in November signals that the agency is retreating from traditional enforcement measures, such as inspections, in favor of self-monitoring by regulated industries.  Specifically, the agency aims to conduct 30 percent fewer inspections and file 40 percent fewer civil cases over the next five years as compared to the last five.

Even before releasing the draft plan, the agency had already begun cutting down on enforcement.  In February, the agency reported a decrease in the number of in-person inspections and investigations in 2013 compared to the previous year.  According to the EPA’s own report, enforcement actions in 2013 resulted in the reduction of 1.3 billion pounds of pollution, down from a high of more than 2 billion pounds in 2012.  EPA conducted 2,000 fewer inspections and evaluations and initiated about 2,400 civil cases last year, continuing a downward trend since fiscal 2009 when the agency opened about 3,700.

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North Carolina’s Coal Ash Spills: A Glimpse of the Future under OIRA’s Weak Option

Yesterday, we wrote about OIRA’s role in delaying and diluting the EPA’s long-awaited coal ash rule, in part by introducing and promoting a weak option that would rely on voluntary state implementation and citizen suits, instead of nationwide requirements and federal oversight, to protect the public from dangerous leaks and spills.

Anyone who thinks the states can be entrusted with regulating toxic coal ash need only take a passing glance at North Carolina’s track record—a virtual “how to” guide for regulatory dysfunction. Governor Pat McCrory himself worked at Duke Energy for 28 years, and Duke-connected sources donated over a million dollars to get him elected in 2012. Once in office, he appointed several former Duke employees to high-level posts, and the newly appointed head of the state’s environmental department saw himself as a “partner” to regulated industries rather than a cop on the beat. The department took no action even after Duke’s own test results showed that the ponds were polluting nearby groundwater.

Citizen suits fared no better. Even in the best circumstances, these lawsuits are expensive and time-consuming for organizations to bring, and unlike comprehensive regulations, they are sporadic in their coverage. But the situation in North Carolina was even worse: environmentalists filed three separate notices of intent to sue Duke in federal court over groundwater pollution, and each time the lawsuits were stymied by the state’s environmental department.

Federal law gives state regulators 60 days after such notices are filed to assert their own jurisdiction over the issue by bringing an enforcement action, which prevents the citizen suits from proceeding. North Carolina’s environmental department brought actions against all of Duke’s remaining waste sites, effectively blocking any additional coal ash suits against the company. The state negotiated a settlement with respect to two sites, under which Duke would pay just $99,111 (the company is worth $50 billion) and wouldn’t even be required to move or close the dumps.

The state has recently backed away from the embarrassing settlement in light of Duke’s high-profile spill. But with all this attention now focused on their improper relationship, both Duke and the North Carolina government have become the subjects of a federal criminal investigation that will examine years’ worth of their emails and memos.

This is the kind of regulatory protection we can expect to see more of if the EPA decides to issue a weak rule under Subtitle D.

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Mounting Coal Ash Spills Will Be OIRA’s Legacy

Two and a half weeks ago, a Duke Energy ash pond in North Carolina spilled up to 39,000 tons of coal ash and 27 million gallons of contaminated water after a stormwater pipe underneath the pond broke. The spill coated the bottom of the Dan River for 70 miles with gray sludge—five feet thick in some places. Now, investigators have discovered a second pipe underneath the pond that appears to have been leaking contaminated water into the river for a long time, with levels of arsenic 14 times higher than what would be considered safe for humans.

These spills were accidents waiting to happen. The dangers of toxic coal ash have been flashing loudly on the nation’s radar screen ever since 1.1 billion gallons of wet ash spilled from a ruptured dam in Kingston, Tennessee at the end of 2008. At the time, the EPA promised to quickly adopt new regulations that would protect the public against catastrophic spills from unstable ash ponds, groundwater contamination from unlined waste sites, and the spewing of dry ash into the air.

Fast forward five years: the spills continue (this is the third-largest coal ash spill in the nation’s history), and the regulations have yet to be finalized. There are plenty of villains in this case, from Duke Energy, which has refused to close its poorly maintained and leaking ash ponds, to North Carolina’s environmental department, which turned a blind eye to the warning signs.

But there’s another player with ash on its hands: the White House Office of Information and Regulatory Affairs (OIRA). Not only has OIRA been a major participant in the stalling of federal coal ash regulations that may have prevented this spill had they been in place already, but OIRA has also made it much more likely that the final rule, when it comes out, will be too weak to prevent disasters like this from happening on a regular basis.

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Executive Fiat or Business as Usual? Claims of Presidential Overreach are Just Politics

In his State of the Union Address President Obama announced that, while he intended to work with Congress to achieve various goals, he will act unilaterally, invoking his “executive authority,” pending congressional action.  There followed a laundry list of initiatives that he said he would take on his own.  Predictably, Republicans have railed against the President’s proposed actions, accusing him of subverting the rule of law.  It’s all just politics.

First guilty party: President Obama.  For all his touted exercise of executive authority, there is nothing revolutionary there.  Most of the initiatives are simply the use of the bully pulpit to call upon various groups and constituencies to do the right thing.  For example, the White House hosting a Summit on Working Families, asking the Vice President to lead a “full review” (as opposed to a partial review, I guess) of America’s job training programs, asking every business leader to help the long-term unemployed find jobs, and mobilizing leaders from business, labor, community colleges and other training providers to boost the number of apprenticeships in this country.  Not that those are not good things, but they are hardly strong medicine.  The rest of the initiatives involve the exercise of existing, well-established statutory authorities, not the use of some free-floating constitutional “executive authority.”  For example, the first out of the box was the President’s order requiring new contracts with the federal government to establish a $10.10 minimum wage for contractor employees.  However, at least since 1979, when the D.C. Circuit upheld President Carter’s maximum wage and price controls for government contractors, it has been well established that the Federal Property and Administrative Services Act authorizes the government to dictate the wages of contractor employees.  Another announced initiative is the launching of four new manufacturing innovation institutes, but this is just the direction of the use of appropriated funds consistent with the statutory restrictions on their use.  Likewise, the so-called “myRA,” or the poor man’s IRA, is justified in reality by Treasury Department authorities regarding the sale of government bonds, and it is entirely voluntary for employers.  In other words, the President is guilty of hype – portraying himself as the sole person with the power to do these things.  It would not be nearly so dramatic if he said that he was utilizing already existing statutory authorities.  

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Fixing Virginia’s toxic chemical problem

In the wake of the toxic chemical spill in Charleston, West Virginia that contaminated the city’s water supply, citizens across the country are wondering if it could happen to them.

Given gaps in our environmental and chemical regulation regime, the answer is a resounding yes.   For the past year, I’ve been investigating problems of chemical storage and contamination in Virginia, and this week, the University of Richmond School of Law released a new report authored by me and law student Ryan Murphy, “A Strategy to Protect Virginians from Toxic Chemicals.”  

This report is the first comprehensive study of chemical dangers in the Commonwealth and calls for major reforms.

Virginia has a self-image as a pristine, primarily agricultural state but we found that Virginians are subjected to a wide variety of risks from industrial chemicals.  The reality is that Virginia ranks worryingly high in the amount of toxic chemical releases into our water and air compared to other states.  Two million Virginians live in communities that fail at least one federal health standard for air pollution. Fish consumption advisories have been issued for nearly all major Virginia waterways due to toxic contamination. 

The chemical spill in West Virginia should be a wake-up call for the Commonwealth to address the toxic threats in our own backyard.

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The coal ash rule rises like the phoenix: Judge Reggie Walton orders EPA to get the rule back on track within 60 days, congratulations to Earthjustice and its clients

Congratulations to our friends at Earthjustice and their clients for a tremendous victory in federal district court today.  Judge Reggie Walton (a George W. Bush appointee) ordered the Obama Administration to provide a schedule for regulating coal ash within the next 60 days.   This epic battle now shifts back to the White House and Congress where nearly hysterical electric utilities that depend on coal-fired power plants will sweep in, aided by some very twisted economics from strong regulation’s staunch nemesis, the Office of Information and Regulatory Affairs (OIRA).

The coal ash crisis burst onto the national scene shortly before Christmas day, 2008, when the contents of an enormous impoundment containing coal-ash slurry from the Tennessee Valley Authority’s (TVA) Kingston Fossil Fuel Plant poured into the Emory River. The proximate cause of the spill was the bursting of a poorly reinforced dike holding back a pit of sludge that towered 80 feet above the river and 40 feet above an adjacent road.  The volume and force of the spill were so large that 1.1 billion gallons of the inky mess flowed across the river, inundating 300 acres of land in a layer four to five feet deep, uprooting trees, destroying three homes, and damaging dozens of others. Miraculously, no one was killed.

The Kingston spill was the worst of its kind in U.S. history, but it was not the first, nor would it be the last. For a brief period of time, the catastrophe focused the nation’s attention on the health and environmental risks posed by dumping coal ash in unlined pits in the ground euphemistically dubbed “surface impoundments.”

The slurry contained both fly and bottom ash from scrubbers that are mandatory on coal-fired plants.  Because scrubbers trap fumes before they are emitted into ambient air, the fly-ash portion of the spill contained significantly more than the quota of toxic heavy metals that typically result from burning coal.  Or, in other words, in an inevitable but ironic twist, the benefits to breathers were obtained at the expense of walkers and drinkers. The Kingston Spill had released around 2.6 million pounds of toxic pollutants into the Emory River.  By way of comparison, all of the other power plants in the United States released just over 2 million pounds of toxic pollutants during all of 2007.

Prominent national environmental groups demanded greater protection from Congress and the Environmental Protection Agency (EPA), both of which had long skittered away from confronting the problem in the face of unyielding resistance by electrical utilities.  Any hint of regulatory intervention that would compel the safer disposal of coal ash and the reinforcement of old, poorly designed dumps was pounced on by industry and carelessly maintained coal-ash dumps remain the status quo. 

Enter OIRA.  Its review of EPA’s proposal to regulate coal ash involved 33 meetings with industry representatives who argued that the most effective regulatory option proposed by EPA—requiring coal ash that is not recycled to go to lined pits with leak detection systems--would impose a ruinous “stigma” on the beneficial recycling of coal ash.  EPA insisted that in decades of implementing the Resource Conservation and Re­covery Act, the agency had never observed such an effect.  Nevertheless, the revised cost-benefit analysis that emerged from OIRA review predicted that a stigma effect would result in $233.5 billion in “nega­tive benefits” (i.e., costs) to society.  Far weaker regu­latory alternatives that would treat coal ash as if it was no more dangerous than ordinary household garbage were thus presented as the only cost-effective options.

We can only hope that Judge Walton’s deadline and a Congress preoccupied with preventing each other from ruining the nation’s economy will leave this issue to be resolved by the experts at EPA.  Wishful thinking, to be sure.  Stay tuned.  

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Pushing back against anti-regulatory forces, safety and environmental protections long overdue

Finally!  After far too much hullabaloo about the cost of regulations, there was a U.S. Senate hearing today on why public health regulations are important, and how delays by Congress and the Administration have serious negative consequences for people’s lives.  Senator Richard Blumenthal (D-CT) called the hearing entitled “Justice Delayed: The Human Cost of Regulatory Paralysis,” the first one conducted by the Senate Judiciary Committee’s newly created Subcommittee on Oversight, Federal Rights and Agency Action.  The witnesses included a parent-turned advocate for automobile safety, AFL-CIO director of safety and health Peg Seminario, and law professor Rena Steinzor of the Center for Progressive Reform.

Steinzor kicked off her testimony with a short litany of regulatory successes:

”One does not need to look far to see how essential regulations are.  Just ask anyone whose life was saved by a seat belt, whose children escaped brain damage because the EPA took lead out of gas, who turns on the faucet knowing the water will be clean, who takes drugs for chronic illness confident the medicine will make them better, who avoided have their hand mangled in machinery on the job because the emergency switch was there to cut off the motor, who has taken their kids to a heritage national park to see a bald eagle that was saved from the brink of extinction—-the list goes on and on.”

She went on to skewer industry lobbyists for the attacks on EPA’s efforts to regulate green house gas emissions, air quality standards, coal ash, stormwater runoff, PBDE’s and other chemicals.  Steinzor’s testimony is punctuated throughout with powerful prose, such as:

· [Former EPA Administrator Lisa Jackson] “did not take a trip to the basement of the building where the agency is housed and get drunk on her own whiskey, writing down her best fantasies for torturing industry.  Rather, she did her best–at long last–to satisfy congressional mandates instructing her agency to impose more stringent controls on power plants, automobile fuel, boilers, etc.”

· “The truth is that these rules, and the civil servants who write them, do not sweep industry’s hard-earned money into a pile and set it on fire for no good reason.  The regulations impose costs, but they also deliver tremendous benefits.  Ignoring those benefits has become standard practice in the House of Representatives…”

· “Self-rightous crusaders against regulators have become fond of railing against the “costs” that come with regulatory decision-making, but they conveniently ignore the most critical questions: Costs for whom?  Industry or the public that suffers from industry’s polluting activities?  By ignoring this question, opponents of regulation are free to continue pretending that if we dismantled the regulatory system, we would suffer no negative consequences and instead reap a windfall in saved money.”

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CPR President to Testify at Senate Hearing on the Costs of Regulatory Delay

Today, Center for Progressive Reform President Rena Steinzor will testify at a Senate Hearing hosted by the Judiciary Committee entitled "Justice Delayed: the  Human Cost of Regulatory Paralysis."

Steinzor's testimony can be read in full here.

According to the testimony:

The subcommittee deserves tremendous credit for airing the truth about the public health regulations that agencies are writing as directed by Congress. The costs of delay are as real as they should be unnecessary, given the clear mandates of the law. Unfortunately, the overwhelming clout of Fortune 100 companies and their relentless, self-serving effort to ignore the great benefits provided by these essential protections has dominated the airwaves.

One does not need to look far to see how essential regulations are. Just ask anyone whose life was saved by a seat belt, whose children escaped brain damage because the EPA took lead out of gas, who turns on the faucet knowing the water will be clean, who takes drugs for a chronic illness confident the medicine will make them better, who avoided having their hand mangled in machinery on the job because an emergency switch was there to cut off the motor, who has taken their kids on a trip to a heritage national park to see a bald eagle that was saved from the brink of extinction—the list goes on and on.

The EPA’s regulations are among the most beneficial safeguards the U.S. regulatory system has ever produced.  For example, a 2011 EPA analysis assessing Clean Air Act regulations found that in 2010 these rules saved 164,300 adult lives and prevented 13 million days of work loss and 3.2 million days of school loss due to pollution-related illnesses such as asthma. By 2020, if the rules are issued promptly and Congress resists shrill demands that it derail them yet again, the annual benefits of these rules will include 237,000 adult lives saved as well as the prevention of 17 million work loss days and 5.4 million school loss days. Even the most conservative practitioners of cost-benefit analysis, including John Graham, President Bush’s regulatory czar, acknowledge what an amazing bang for the buck these regulations deliver in relationship to the costs they impose.

Conversely, because Clean Air Act regulations have been so long delayed—after all, Congress passed the Clean Air Act Amendments in 1990 and we sit here 23 years later—thousands of additional lives have been lost, hundreds of thousands of people have had heart attacks and visited the hospital because of respiratory illness, and people have lost millions of days off work and out of school.

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Senate Hearing to Bring Some Sanity to the Debate Over Federal Regulatory Policy

Tomorrow, a new panel in the Senate Judiciary Committee—the Subcommittee on Oversight, Federal Rights, and Agency Action—will bring some much-need sanity to the discussion of federal regulatory policy when it holds a hearing entitled “Justice Delayed: The Human Cost of Regulatory Paralysis.” What’s so refreshing about this hearing is that it starts from the premise that blocked and delayed safeguards are a problem that needs to be solved. 

Crucially, this hearing will provide an opportunity to shine a light on the costs that are imposed on the public when regulations aimed at protecting people and the environment are unnecessarily delayed. These costs represent real harm to real people—and they are by definition preventable.

Previously, in this space, I examined the costs to the public that would result from the new delays to three rules that were announced in the Spring 2013 Regulatory Agenda. These included at least 300 premature deaths from the delay of the National Highway Traffic Safety Administration’s (NHTSA) Rearview Mirror Rule and at least 1,000 premature deaths and 1,467 non-fatal heart attacks that would result from the delay of the EPA’s updated ozone National Ambient Air Quality Standard (NAAQS). All of these costs are preventable, but not prevented.

Several of the scheduled witnesses for tomorrow’s Senate Judiciary hearing will help to provide a clear picture of what the costs of regulatory delay entail. CPR President Rena Steinzor will testify about how environmental regulations have benefited the public greatly, and how the continued delay of several pending safeguards—such as the Environmental Protection Agency’s (EPA) rules to control disposal of hazardous coal ash waste and to require cleaner-burning automobile fuel—produce great harm.

Tomorrow’s hearing is a welcome development, because when it comes to the issue of federal regulatory policy, sanity has been in short supply on Capitol Hill for the last four-plus years. And the timing of the hearing couldn’t be better, as it takes place during what House Republicans are calling “Stop Government Abuse Week,” a week dedicated to bashing public servants and voting on ill-conceived bills, including the REINS Act and the Energy Consumers Relief Act, which if passed, would make it all but impossible for the EPA and other agencies to carry out their congressionally mandated missions of safeguarding the public.

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