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November 3, 2011

TRANSCRIPT: Johanns Aims to Ease Unreasonable EPA Compliance Deadline

Mr. Johanns: Mr. President, few things provide me with greater clarity than conversations I have with people back home in Nebraska. I rise today to discuss a few of those conversations I had just last week during our work period back home. I use this opportunity to meet with electricity providers serving Nebraskans from the most populated areas to the smaller communities like Hastings, Nebraska. It comes as no surprise that the focus of their frustration, their anger is with EPA they feel they have been treated unfairly. They feel that the agency has not been straightforward or transparent. They feel that they now have a target on their backs. And they know that compliance with the latest EPA regulatory bombshell is going to have a crushing impact on the communities that they serve.


Their latest concern is a rule known as cross-state air pollution rule, or cross state. The rule addresses airborne emissions that EPA claims cross state lines and may affect air quality in another state. EPA issued the final rule in July of this year. Let me repeat that. EPA issued the final rule in July of this year and then demanded compliance by January 2012. That's six months. That is an impossibility, and EPA knows it.

Well, here's why it's an impossibility. This is especially relevant to my state. Nebraska was not included in the old version of the same rule, the so-called clean air interstate rule. We weren't a part of it. And the final rule changed dramatically from the proposed version. For example, the required reductions increased dramatically from the proposed rule that was published in July of 2010. So Nebraska first found itself subject to this type of EPA rule in the proposed rule in July of 2010. Then the final rule arrives a year later, and, boom, dramatically different rule. More severe reductions in compliance in an almost laughable six months. So basically Nebraska gets a final rule thrust upon them, and no opportunity to comply.

That could not be more unjust. Draconian changes made in a final rule that departs so significantly from the proposed rule defeat the very purpose of our laws that prescribe how agencies are supposed to make rules. And i ran one of those agencies as secretary of agriculture. This process makes a mockery out of the rulemaking process. It makes public comments absolutely meaningless. What good does review of a proposed rule do when the final rule is so radically different from the original proposal? And it also means that the community regulated cannot plan and cannot fix the problem. This is our government we're talking about. Utilities cannot go to their ratepayers and say, look, we have to make changes.

It's going to take some time and money, but here's our plan and here's how much it will cost you as a ratepayer. And EPA has totally shoved aside the traditional role that some state regulators play as an EPA partner in establishing clean air plans known as state implementation plans. In fact, in this case the EPA established a federal implementation plan, a one-size-fits-all national plan that completely rejects state efforts to manage compliance. Our power providers and regulators are echoing the same message. There just isn't enough time for them. Instead of three or five or ten years that is really needed by administrative fiat, EPA has said, you get six months to rebuild a power plant. And let me be crystal clear about what Nebraska's power providers did and didn't say. They did not say we can't change and we won't change. They did not say "just leave me alone." what they did say to me very clearly is "we can't wave a magic wand. We cannot do the impossible. We cannot put together the finance plan in six months. We cannot put a request for bid out and get the work done in six months. We cannot get a design plan written by a competent engineering firm. We cannot arrange for a plant shutdown. We cannot get the construction crews to our facility, especially as cold weather sets into our state, between today and January 1 to rebuild the power plant. It simply isn't humanly possible.

So what options are possible? Someone listening to me today might ask what options do they have? Well, unfortunately, the first thing our providers are doing is just trying to understand the rule. That in itself is no small task, because as i explained, the rule is essentially brand-new. The ink is barely dry. The EPA did a head fake. They said here's the rule and then completely changed it in the final rule. Secondly, electricity providers are making plans -- get this. They're making plans all across this country to decrease electric generation because of this rule.

In Hastings, Nebraska, ratepayers have been told to expect an increase in operating costs of at least $3.8 million per year, including costs of retro fits for this rule and two others that are in the works by EPA Hastings figures $40 million to $50 million will be spent over the next five years. Now, think about that for a second. Imagine $40 million to $50 million for a community of 25,000 people. And that's for Hastings. And only if the utility can figure out how it can get it done. And guess who bears the brunt of these costs? Every Hastings resident with an electricity meter. Not shareholders. This is not a big electric company. No shareholder equity be drawn down. No preferred stock to be newly issued. We are in our state a 100-% public power state. Just those folks in Hastings, Nebraska, because they got swept into an EPA rule last July with a January deadline.

Fremont, Nebraska, another great Nebraska community, caught in the cross hairs, has indicated to cross state rule and two other EPA rules will cost customers about $35 million over the next three years. Now, in New York City or Washington, D.C., $35 million may seem insignificant, but to the 25,000 residents of Fremont, Nebraska, it is a huge deal. Similarly, the cross-state rule will cost the Nebraska public power district our largest electricity provider about $6 million next year in reduced we've knew as well as mandating about $40 million in costs before the end of 2012. Electricity providers across the state are all looking at purchasing power from other generators. The only way they can get compliance now is to reduce generation. of course many neighboring utilities in the state are subject to the same final rule.

And guess what? This is the problem across the country. So everybody's in the hunt. The short compliance time frame is likely to drive the price of energy even higher. Another option includes purchasing on the open market. No one knows how much it will cost because the same compressed time line affects the markets for credits. You may have also noticed I have not mentioned the bid, the design, the implementation, the installation of pollution control equipment as a strategy because in our state that possibility isn't an option for us because of the EPA time line. Six months is not enough time especially when the labor, the technical knowledge, the contractors, the financing are all being chased by other utilities subject to the same rule. Is it any wonder that people are frustrated? Is it any wonder at all?

That's why today I’m introducing legislation that addresses the way the EPA handled this rule. My bill takes a couple of reasonable steps to address this unfair treatment not only in my state, but in 27 other states. First, under my bill, the EPA is prohibited from dictating federal implementation plans unless the agency has given the state a sufficient amount of time to develop a plan. The state must be given two years to put a plan in place. In addition, if my bill as enacted, EPA cannot choose to reject a state's plan if as a result compliance would immediately follow. In other words, my bill prohibits EPA from jamming states by rejecting their plans and require an unreasonable compliance time frame.  Finally, my bill says EPA's compliance deadlines are set aside for three years while states get a chance to put this together.

The message of my bill is straightforward. Don't freeze out states. Don't jam us with a compliance schedule that everybody knows won't work. Nebraskans, like everybody else, are tired of being treated as second-class citizens by an agency that has really run amok. And i suspect the same is true of 27 other states. Nebraskans simply cannot believe EPA is hitting the accelerator on a rule that will drive up electricity bills in more than half the country with no way for states to comply. I share their frustration. The EPA is in a constant thirst for power. I urge my colleagues to cosponsor this legislation, to introduce one small dose of common sense to this out-of-control agency.

I yield the floor, Mr. President.

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