Dave Anderson Update for September 18, 2018: As first reported today by E&E News, EPA’s Bill Wehrum has filed a recusal letter that names former clients, including the Utility Air Regulatory Group, Dominion Energy and Duke Energy, he has met with since joining the Trump administration.
Bill Wehrum is leading the development of the Trump administration’s Affordable Clean Energy rule, which proposes “reforms” to the Clean Air Act that would increase pollution from coal-fired power plants sought by Wehrum’s former clients in the electric utility industry.
Since Wehrum’s confirmation as Assistant Administrator for EPA’s Office of Air and Radiation, he has been involved in multiple meetings with utility industry groups, as previously reported by the New York Times and E&E News.
EPA’s own analysis (see page 4-1) confirms that the Affordable Clean Energy (ACE) rule would increase pollution compared to the Clean Power Plan, the Obama-era EPA rule the Trump administration seeks to replace:
As compared to the standards of performance that it replaces (i.e., the 2015 Clean Power Plan) and as documented in Chapter 3, implementing the proposed rule is expected to increase emissions of carbon dioxide (CO2) and increase the level of emissions of certain pollutants in the atmosphere that adversely affect human health. These emissions include directly emitted fine particles sized 2.5 microns and smaller (PM2.5), sulfur dioxide (SO2), nitrogen dioxide (NOX), and mercury (Hg). SO2 and NOX are each a precursor to ambient PM2.5, and NOX emissions are also a precursor in the formation of ambient ground-level ozone.
One way that the ACE rule would increase emissions is through what the Trump administration has dubbed “Permitting Improvements Under New Source Review Program.”
The Sierra Club described these so-called “improvements” as a sneak attack on the Clean Air Act in an explainer by staff attorney Andres Restrepo:
… Congress enacted New Source Review in 1977 on an overwhelming, bipartisan vote, concerned that the construction of new pollution sources could prevent states from meeting the nation’s air quality standards. To avoid this problem, New Source Review directs all new major pollution sources to obtain pre-construction permits requiring state-of-the-art pollution controls. As part of a “grand bargain” with industry, Congress exempted existing sources from these control technology requirements, but specified that any source undergoing a major modification—that is, a physical change that increases its capacity to pollute—would have to meet the same modern pollution control standards as new sources… Under the direction of EPA’s Air Administrator Bill Wehrum, the agency proposes to create a new loophole that would allow existing power plants to make certain modifications that increase their pollution without having to install modern control technology…
While the Clean Power Plan allowed for the use of renewable energy as a way to reduce carbon dioxide emissions from the electricity sector, the ACE rule only allows for heat-rate efficiency improvements made inside the fence line of existing power plants, and then seeks to exempt plants that make those improvements from New Source Review.
In proposing the ACE rule, the Trump administration is seeking to weaken the Clean Air Act through changes sought by Clean Power Plan opponents, including the:
- Utility Air Regulatory Group (UARG): one of Wehrum’s former clients, UARG represents electric utilities in lawsuits against the EPA
- Edison Electric Institute (EEI): a member of UARG that has paid millions of dollars to Wehrum’s old law firm, and the primary national trade association for investor-owned electric utilities
- Electric Reliability Coordinating Council (ERCC), which counts among its members “some of the major electric utilities companies in the country who all possess the shared belief that coal-based energy should play an important role as our nation moves toward a clean energy future.”
Wehrum’s own attacks on New Source Review date back to his earlier stint as a Bush EPA appointee. A 2006 report by Public Citizen noted that Wehrum was previously an attorney at Latham & Watkin, where he represented “‘a few’ clients facing NSR actions.”
The Utility Air Regulatory Group
The Energy and Policy Institute obtained documents containing information about Wehrum’s communications and meetings with the electric utility industry via Freedom of Information Act requests to the EPA.
The documents show that less than a month after Wehrum was confirmed to his new post at EPA, he was back at the offices of his previous employer Hunton & Williams (now Hunton Andrews Kurth) for a meeting with to one of his former clients, the Utility Air Regulatory Group, and its members, including American Electric Power, Dominion Energy, Duke Energy, and the Southern Company:
Wehrum’s presentation to UARG said that the Advance Notice of Proposed Rulemaking on a replacement for the Clean Power Plan would be “coming soon” and that the EPA:
Will solicit information on systems of emission reduction that are in accord
with the legal interpretation in the proposed CPP repeal (i.e ., those that are
applicable at and to an individual source)
This “legal interpretation” was the same one offered in the courts by Clean Power Plan opponents, including UARG.
Wehrum’s presentation also covered the Trump administration’s New Source Review “Streamlining” actions, which were already underway before the ACE rule was announced.
New Source Review has long been a target of UARG, as the group noted in 2017 in a joint briefing on the issue that was filed with the Supreme Court in support of DTE Energy:
The Utility Air Regulatory Group (“UARG”) is a not-for-profit association of individual electric generating companies and national trade associations. UARG participates on behalf of certain of its members collectively in Clean Air Act administrative proceedings that affect electric generators and in litigation arising from those proceedings. The facilities owned and operated by UARG’s members represent a substantial majority of the nation’s electric generating capacity. These facilities are subject to the NSR program under the Clean Air Act, and many UARG members were the targets of a so-called NSR enforcement initiative that has lingered for more than a decade and a half. UARG has participated in every rulemaking related to the NSR program since its inception in 1977, and has represented the utility industry in virtually every judicial review proceeding related to the NSR regulations.
While he was an attorney at Hunton & Williams, Wehrum was involved in DTE’s legal fight with the EPA over New Source Review air pollution violations at the utility’s coal-fired Munroe power plant. A lower court rejected DTE’s arguments and the Supreme Court declined to hear the case, but the Trump administration has sided with the utility on the issue.
“… pending further review of these issues by the courts and the EPA, the agency does not intend to pursue new enforcement cases in circumstances such as those presented in the DTE matter,” according to a December 2017 New Source Review memo from then-EPA Administrator Scott Pruitt.
Wehrum was scheduled to meet again with UARG “re: CPP” on February 16, 2018. Attendees for that meeting included American Electric Power, Duke Energy, Southern Company, Tri-State Generation, and Vistra Energy.
The subject line for the February 16 meeting began “Delegated to Mandy Gunasekara…,” but Wehrum was listed as the “Organizer” and was included on the list of “Attendees” for meeting. Gunaskera is the Principal Deputy Assistant Administrator for EPA’s Office of Air and Radiation.
A few days later, on February 26, 2018, EPA received public comments from UARG on the Advanced Notice of Proposed Rulemaking (ANPR) that would inform the development of the Trump Administration’s replacement for the Clean Power Plan.
UARG’s comments on the ANPR recommended that EPA “reject” any Best System of Emissions Reduction that would “trigger onerous or overly costly New Source Review obligations.”
UARG also argued that “EPA’s previous NSR enforcement actions represent a barrier” to the kind of “on-site, heat-rate efficiency improvements” later found in the ACE rule.
“Without steps from EPA to provide regulatory certainty that these measures will not trigger NSR, EGU owners and operators may still be hesitant to undertake these projects in order to improve their heat-rate,” UARG claimed.
When the proposed ACE rule was announced, it included the exemption from New Source Review for power plants that undertake heat-rate efficiency improvements. EPA’s own fact sheet on the ACE rule admits that “one possible consequence for these more efficient units is that they may be predicted to increase their annual emissions.”
Many of UARG member utilities, included similar comments on New Source Review in their own comments to EPA.
DTE Energy said in its own comments:
DTE Energy has been in litigation on an NSR Notice of Violation/Finding of Violation issued by EPA in 2009. To avoid additional challenges and potential future litigation, we recommend that EPA clearly state that actions taken to comply with the applicable carbon emissions standard in a future Section 111(d) rule would not subject an affected source to NSR permitting provisions.
“EPA must ensure that any § 111(d) rule which promotes maintaining or improving the efficiency of power plants does not simultaneously present risks associated with the New Source Review (“NSR”) program,” Southern Company commented.
Duke Energy recommended that EPA “reject any BSER” that would “trigger New Source Review (“NSR”) obligations” in its public comments on the same date.
“Any final rule that relies on heat rate improvements must expressly provide that those changes do not trigger NSR or NSPS requirements,” FirstEnergy Corp. said.
Other UARG members also targeted the New Source Review program in their comments on the ANPR, including the American Coalition for Clean Coal Electricity, Alliance for Fuel Options, Reliability and Diversity (AFFORD), American Public Power Association, Arizona Public Service Company, Oglethorpe Power Company, Tucson Electric Power, Vistra Energy, and WEC Energy Group.
After the ACE rule was rolled out, one of Wehrum’s former colleagues at Hunton Andrews Kurth praised the EPA for initiating “further rulemaking to provide needed clarity, at least for electric generating units, in its proposed ‘Affordable Clean Energy’ rule.”
The Edison Electric Institute
When the ACE rule was proposed in August, EPA pointed to public comments from Tom Kuhn, the president of the Edison Electric Institute, in making the case for the proposed changes to the New Source Review program.
A 2017 report by the Energy and Policy Institute documented how many utility customers involuntarily fund EEI and UARG through their electricity bills. Wehrum’s former employer, Hunton & Williams, received $64.7 million in payments from EEI from 2008-2015, the report noted. EEI disclosed another $8.7 million in payments to Hunton & Williams for 2016 in an annual filing with the IRS.
A screenshot from EEI’s webpage on New Source Review
Like UARG and Wehrum, EEI has long targeted the New Source Review program for attack. A page about New Resource Review on EEI’s website includes documents from the early 2000s with titles like “Straight Talk About Electric Utilities And New Source Review.” It also links to a password protected, members-only section of the EEI’s website for more information about the issue.
A few days after Wehrum was confirmed by the Senate in November 2017, he received a congratulatory email from Kuhn, which was sent to Wehrum’s EPA and Hunton email addresses.
Documents reveal that Wehrum then spoke at a December 6, 2017 meeting of EEI’s Clean Air Committee held at the EEI’s headquarters in Washington, D.C. Wehrum used the same presentation he would use one day later at his meeting with UARG.
“Questions will likely address GHG regulation/CPP, NSR, haze, NAAQS, interstate transport, MATS/HAPs,” according to an Event Information Form filled out prior to the meeting.
“Bill/EPA Team only speaker and the meeting will conclude at the end of this discussion,” the form also said.
A follow-up email from Quinlan J. Shea III, Vice President for the Environment at EEI, said that Wehrum’s talk was “extremely well received” by EEI members:
Bill: Thanks again for participating last week in EEl’s environmental committee meetings. Based on the extensive feedback I’ve received subsequently from my staff and numerous company officials, your remarks and the ensuing discussion were extremely well received.
A section on New Source Review in EPA’s Federal Register Notice for the ACE rule later quoted the public comments that Kuhn and EEI submitted to EPA on February 26, 2018:
As expressed by one industry representative, “EGUs engaging in HRI projects can face NSR pre-construction permitting requirements consisting of, at a minimum, costly, detailed analyses and permitting delays. In some cases, this has resulted in costly and protracted litigation, and expensive new emission control requirements, both of which result in substantial time delays for these projects. These concerns remain should unit operators pursue HRI upgrades … that could trigger NSR in an effort to comply with … revised CAA section 111(d) GHG emissions guidelines.
The EPA’s Regulatory Impact Analysis for the ACE rule also quotes Kuhn’s public comments. His full comments on the ANPR for the Clean Power Plan replacement rule can be found here, and include several attachments.
“… EPA should take steps to ensure that New Source Review (NSR) concerns do not create disincentives or impede efforts to improve heat rates at existing coal-based units by clarifying that these actions do not trigger NSR,” said one of the attachments, a copy of one of EEI’s public comments on the Clean Power Plan from 2014.
EEI has had little to say about the specifics of the ACE rule when asked by reporters.
The Electric Reliability Coordinating Council
Documents also reveal that Wehrum scheduled a February 21, 2018, lunch meeting with Jeff Holmstead, a partner at the Bracewell law firm, and John Graham, the dean of the School of Public and Environmental Affairs at Indiana University. Holmstead and Wehrum previously worked together at Latham & Watkins, and as Bush appointees to the EPA during the 2000s.
A few days earlier, on February 15, Holmstead emailed Wehrum regarding his testimony at a House hearing on “New Source Review Permitting Challenges for Manufacturing and Infrastructure.”
In his email, Holmstead dismissed what he called “hysterical” concerns about how a New Source Review “reform bills” could increase air pollution levels that were raised at the hearing by John Walke, the Director of the Clean Air, Climate, and Clean Energy Program at NRDC:
I suspect you didn’t have the chance to watch yesterday’s hearing. Nothing you wouldn’t have expected, but I did use my oral statement to respond to John Walke’s hysterical written testimony claiming that the Griffith reform bills would cause either “massive” or “enormous increases in dangerous air pollution” — a claim he repeats 10 different times.
Holmstead was once expected to be President Trump’s pick for the number two position at the EPA, a spot that ultimately went to Andrew Wheeler. He and Graham were among the authors of a 2017 report, “EPA’s New Source Review Program: Time for Reform?” The report “reads like a blueprint for attacking NSR administratively and legislatively”, as Walke told the Energy and Policy Institute in an email.
As recently as 2016, Holmstead was a lobbyist for the Electric Reliability Coordinating Council, and individual utility companies like Ameren, DTE Energy, Duke Energy, Southern Company, and Vistra Energy (then Energy Future Holdings). He has also lobbied for the coal producer Arch Coal, and served as an expert witness in court for Murray Energy.
Holmstead’s emails and lunch with Wehrum came a few days before the ERCC submitted public comments on the ANPR for the Clean Power Plan replacement.
Holmstead later dismissed concerns about the ACE Rule and its changes to New Resource Review as “silly” during a “Lobby Shop” podcast hosted by Scott Segal, a lobbyist and attorney at Bracewell. Segal is also the Director for the ERCC, and lobbies for individual utilities like DTE.
Like EEI and UARG, the ERCC has long targeted the New Source Review program. ERCC joined UARG on the 2017 Supreme Court brief in support of DTE Energy, in which it described its long history of work on New Source Review “reform”:
The Electric Reliability Coordinating Council (“ERCC”) is a not-for-profit association of power generating companies that includes investor-owned utilities and public power providers serving millions of consumers across the United States. Founded in 2001, ERCC has long advocated for sensible environmental policy that balances the need for affordable and reliable electric power with the need to address environmental concerns. ERCC has participated in advocacy related to the U.S. Environmental Protection Agency’s (“EPA”) New Source Review (“NSR”) program since the group first offered witnesses at public hearings addressing NSR clarification and reform sixteen years ago.
Holmstead’s CV highlights his past work on “two rules to reform the New Source Review (NSR) Program” during his tenure as President George W. Bush’s Assistant Administrator for Air and Radiation at the EPA. When Holmstead departed from EPA, Wehrum took over the position from 2005 to 2007.
Utilities weigh in on the ACE rule
Some of coal-burning utilities that Wehrum has met with have shared supportive statements about the ACE rule with reporters.
“The U.S. EPA’s proposed Affordable Clean Energy rule appropriately focuses on actions that can be taken at coal-fired power plants to improve efficiency and provides states with a key role in developing specific requirements for individual sources, both consistent with EPA’s authority under the Clean Air Act,” American Electric Power said in response to a request from Greentech Media.
AEP then pivoted to talking about how it is still investing in clean energy, a tactic recommended in a public relations playbook developed by EEI and its member utilities.
“In general, we support allowing states the ability to determine performance standards for the individual fossil-fueled plants within their borders,” FirstEnergy told Greentech Media. “States have more intimate knowledge than the EPA of the particular characteristics of each plant and would be better able to design performance standards for each unit that control emissions while maintaining a diverse, reliable and affordable electric supply.”
“We see EPA’s proposal as fitting with the agency’s statutory authority while recognizing the important role states play in our generation planning,” Duke Energy said in a statement provided to TransmissionHub. “The ACE rule is the right step toward achieving further regulatory certainty in regulating CO2 emissions – certainty that we have long advocated for.”
Not all utilities are on board with the Trump administration’s approach.
“National Grid believes significant and urgent action is needed to combat climate change and has long supported reasonable decarbonization policies and strategies – including the Clean Power Plan and the Paris Climate Accord,” National Grid said in a statement posted on the company’s website. “Reducing greenhouse gas emissions, while maintaining affordability and resiliency, is paramount for National Grid.”
Matt Kasper, research director for the Energy & Policy Institute, contributed to this article.
Top: A photo of Bruce Mansfield, one of FirstEnergy’s coal-fired power plants, by the Energy & Policy Institute.
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