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Regulatory: Policy battles over control of the nation’s energy supply

Recent developments (and almost-developments) in American energy policy

The most significant disputes concerning regulation arise from federal rules governing energy production and the permissible levels of pollution it generates. This series will discuss the nation’s energy policy and identify the major policy issues facing each of the country’s major sources of energy: coal, oil, natural gas, nuclear and alternative energy sources such as wind and solar power.

The United States does not have an affirmative policy to provide the energy necessary to propel the economy. Instead, we follow a de facto “policy” of obtaining energy under the incentives and constraints that emerge from the highly decentralized process by which Congress resolves competing claims for subsidies and controls for each separate type of energy. This system is easily driven by events, whether it’s the meltdown of the Fukushima nuclear reactors or a revelation of losses on federal loans to subsidize production of solar panels. The Obama Administration has not sought to implement a coordinated energy policy, but has concentrated on funding development of alternative energy sources and adopting more stringent air pollution controls (which have both the highest costs and greatest health benefits of all federal rules).

Ten days in mid-December vividly illustrate the crazy-quilt of often contradictory impulses that can result from this process. In 2011, House Republicans repeatedly passed, and Senate Democrats rejected, appropriations restrictions seeking to block the Environmental Protection Agency (EPA) from adopting or implementing major regulatory initiatives. In particular, Congress rejected efforts to block the EPA’s Utility Maximum Achievable Control Technology rule, which will be issued later this week. The rule will limit emissions of toxins (mercury, acid gases, and dioxin) from coal- and oil-burning power plants. The House also failed to prohibit the EPA from issuing rules controlling greenhouse gas emissions and a rule limiting air emissions of toxic chemicals from industrial boilers.

On the other hand, the EPA’s opponents succeeded in reducing its research, regulatory development and operating budgets. They also forced the agency to adopt a more scientifically sound approach to its Integrated Risk Information System, the process under which it assesses the toxicological health risks presented by chemicals and whose assessments serve as the basis for subsequent regulations, such as those limiting the amount of suspected carcinogens in drinking water. Congress also adopted a related provision that prohibits the Department of Energy from enforcing a lighting efficiency standard that would encourage the phase-out of incandescent bulbs by requiring manufacturers to increase energy efficiency by 30 percent.

One major additional item remains undecided. The Senate version of the bill to extend the payroll tax reduction for two months contained a provision requiring the President to decide within 60 days whether to approve the construction of the XL pipeline to bring oil from Canadian tar sands to Texas refineries. Republicans expected the President to withhold consent, because the environmental assessments have not been completed .But House Republicans unexpectedly rejected the tax measure and left the project hanging.

These recent developments show the difficulty of formulating energy policy in a decentralized, multi-branch democratic system in which citizens, regulated entities, and non-governmental organizations participate actively. The United States government is the most complex human organism on the planet. All energy policies must pass through this process and still obtain the support of people like you and me, who want the benefits of smart rules but would prefer not to pay the costs. The next five columns will address the challenges this dynamic presents to future regulation of the nation’s energy sources.

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John Cooney

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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