September 2010

Another Energy Tax: The RES

by Daren Bakst on September 29, 2010

in Blog

Since cap and trade legislation looks like it is dead, many in Congress are still adamant about imposing an energy tax on Americans.

Senator Bingaman (D-NM), along with a bipartisan group of Senators, is pushing a renewable energy standard (RES).  This particular RES mandates that utility companies generate 11 percent of their electricity from high-cost and unreliable renewable sources such as solar and wind power.

Consumers, of course, pay for these higher energy costs on their electricity bills.

Since the massive subsidies for solar and wind power haven’t been enough to generate demand for renewable energy, Congress wants to mandate that Americans buy renewable electricity, not unlike individual health care mandates.

It is a bit troubling that Republicans, who for the most part, have been opposed to cap and trade, don’t seem to get that this also is a massive energy tax.

Some of the legislators may actually think that forcing Americans to buy renewable energy will help with energy independence.  However, this is a major fallacy and demonstrates an unfortunate lack of understanding regarding energy.

In 2008, electricity generation accounted for only about 1 percent of all petroleum consumption in the United States (Calculation: Petroleum used for electricity generation/total petroleum consumption in the U.S.).  In other words, changing our electricity mix will have no impact on energy independence.

The RES in many ways is like a cap and trade bill and the ObamaCare bill rolled into one.  There is an energy tax.  There are mandates to purchase a service.  Finally, the federal government is ignoring state rights and imposing its wishes on the states.

This issue needs to get on everyone’s radar screen who is interested in freedom.

New EPA rules will cost more than 800,000 jobs, probably far more, according to a newly released congressional report.  That includes the EPA’s first set of rules “for Greenhouse Gas Emissions,” and “new standards for commercial and industrial boilers.”  Indeed, the boiler rules alone could cost close to 800,000 jobs.

This shouldn’t be a surprise.  In 2008, President Obama admitted that under his greenhouse gas regulations, people’s utility bills would “skyrocket,” and coal-fired power plants would go “bankrupt.”  The EPA’s own internal documents show that the administration’s global warming regulations will result in a massive “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”

It’s not just the administration’s global warming regulations that will wipe out jobs. The stimulus package contained so-called “green jobs” funding, 79 percent of which went to foreign firms, replacing American jobs with foreign green jobs.  A recent biofuel program actually wiped out jobs rather than creating them as intended, while costing taxpayers a lot of money.

The administration’s energy policies presume that central planners know better than private citizens and companies about how to create jobs and allocate capital.  But government officials, unlike private companies, have little incentive to make economically wise decisions, since they don’t pay the cost of their own mistakes, but rather pass them on to taxpayers.  The Justice Department, for example, often ignores the misconduct and constitutional violations committed by its own employees, while the federal Energy Department is one of the biggest violators of America’s environmental laws.

In the News

Bob Barr: [un]Principled Supporter of Ethanol
Brian McGraw,, 24 September 2010

America’s Last Bulb Plant Closes
Henry Payne, Planet Gore, 24 September 2010

Is Clean Energy a Good Investment?
Myron Ebell, Politico Energy Arena, 24 September 2010

Why They Go Green
Robert Bradley,, 23 September 2010

The Real Gulf Disaster
Wall Street Journal editorial, 23 September 2010

Courts Should Overturn EPA Climate Rules
Marlo Lewis,, 22 September 2010

Friedman Today
Jonah Goldberg, The Corner, 22 September 2010

Soros To Push Climate Policy
Chris Horner, American Spectator, 21 September 2010

Climate Change Enlightenment Is Dead
George Monbiot, Guardian, 20 September 2010

British Energy Policy Is in Crisis
Christopher Booker, Sunday Telegraph, 18 September 2010

News You Can Use

According to the latest Nongovernment International Panel on Climate Change newsletter, “Estimates of current rates of ice loss for Greenland and Antarctica have been reduced by a factor of two, suggesting that almost none of the sea level rise over the past decade is due to glacial ice loss. Click here to subscribe.

Inside the Beltway

Myron Ebell

Senators Jeff Bingaman (D-NM) and Sam Brownback (R-Ks.) announced this week that they would try to bring a stand-alone renewable electricity standard (RES) bill to the Senate floor during a lame duck session after the November 2nd elections.  Their new 43-page bill would require that electric utilities provide at least 15% of their power from renewable sources by 2021, although up to 4% could come from improvements in energy efficiency.  The new federal standard would be in addition to the many state renewable requirements that have already been enacted.

The bill, S. 3813, now has 20 Democratic and 4 Republican sponsors.  The Republicans besides Brownback are: Collins (Me.), Ensign (Nev.), and Grassley (Ia.).  The Democrats besides Bingaman are: Dorgan (ND), Harkin (Ia.), Bennet (Colo.), Murray (Wash.), Begich (Alaska), Feinstein (Calif.), Reid (Nev.), Tom Udall (NM), Mark Udall (Colo.), Cantwell (Wash.), Franken (Minn.), Kerry (Mass.), Durbin (Ill.), Stabenow (Mich.), Kaufman (Del.), Johnson (SD), Shaheen (NH), Burris (Ill.), and Cardin (Md.).

Two headlines in Greenwire publications sum up the dilemma.  On Thursday, the headline was “Renewable Electricity Standard Bill Stands Alone or Dies, Senate Sponsors Vow.”  On Friday, however, the headline was “Lawmakers See RES Bill as Christmas Tree for Pet Projects.” The fact is that in lame duck sessions, Members become even more focused than they usually are on getting whatever they can for themselves.  This means that trying to keep the bill free of lots of other provisions will be close to impossible.  On the other hand, its slim chances for passage will become virtually nil if other provisions are added by amendment.

One of the possible amendments is Senator Jay Rockefeller’s (D-WV) bill to delay for two years EPA’s implementation of Clean Air Act regulations on greenhouse gas emissions.  Rockefeller said he was thinking about it.  Senator Christopher Bond (R-Mo.) said it was a definite possibility that he would offer it if Rockefeller did not.

Around the World

Pressure Mounts on Pachauri To Resign

Pressure is growing on Intergovernmental Panel on Climate Change Chairman Rajendra Pachauri to resign in the wake of a critical audit released last month by the InterAcademy Council. Although the IAC report didn’t outright call for Pachauri’s resignation, the lead investigator, Harold Shapiro, said that the IPCC has to “re-earn” trust for the chair, which has been taken to mean that Pachauri’s ouster is a necessary reform. This week, former United Kingdom Environmental Minister Tim Yeo told the BBC that Pachauri is “doing more harm than good,” and Mike Hulme, a former IPCC lead author, said that a new chairman would bring “respect” to the panel. Pachauri’s reputation has become so damaged that the UK director of Greenpeace John Sauven told The Times, “the IPCC needs to regain credibility. Is that going to happen with Pachauri? I don’t think so.”

The Cooler Heads Digest is the weekly e-mail publication of the Cooler Heads Coalition. For the latest news and commentary, check out the Coalition’s website,

Bob Barr, the 2008 Libertarian Party presidential nominee, had a piece in yesterday’s Huffington Post titled Extending Ethanol Tax Credit Makes Sense. It’s depressing to see such a high-profile libertarian completely sell out, and I hope he receives flack over this return to special interest politics, as just over a year ago he said “How about the still-active ethanol subsidy scam? Thankfully, the online comments from the left-leaning Huffington Post suggest few are buying into his spiel. If this was some ploy by the ethanol industry to gain support from free-marketers, let me suggest that will not succeed. The entire article is full of misinformation.

Barr attributes a “lack of public awareness,” and the tax credit’s apparent complexity to the trouble ethanol proponents are having in re-securing the tax credits.

I would think a lack of public awareness, if anything, would help the ethanol industry. If the public was even remotely aware of the extent to which government support for ethanol is bad policy, more people would be against it. Right now, all they’re seeing is the occasional advertisement featuring a bright yellow corn-stalk or blabber about how ethanol can’t spill in the gulf (unless we import it from Brazil, then of course the likelihood of a spill approaches 100%). I’d suggest that the ethanol industry get in touch with the sugar lobby for a few pointers on how to maintain horrendous policy.

Barr cites a 2010 CBO report, “Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals“ and concludes that evaluating the benefits of ethanol is daunting and un-objective. Confident that no one will actually find the report and read even the summary, Barr is able to completely misconstrue the conclusions of the report (and he talks of ethanol opponents being disingenuous).

At the risk of repeating myself for the 10th time, let’s look at relevant quotes from the CBO report:

From the conclusions section of their summary:

The costs to taxpayers of using a biofuel to reduce gasoline consumption by one gallon are $1.78 for ethanol made from corn and $3.00 for cellulosic ethanol.

Taxpayers spend $1.78 to reduce consumption of one gallon of gasoline; approximately 66% of current gas prices. Sounds like a great deal to me.

Similarly, the costs to taxpayers of reducing greenhouse gas emissions through the biofuel tax credits vary by fuel: about $750 per metric ton of CO2e (that is, per metric ton of greenhouse gases measured in terms of an equivalent amount of carbon dioxide) for ethanol, about $275 per metric ton of CO2e for cellulosic ethanol, and about $300 per metric ton of CO2e for biodiesel. Those estimates do not reflect any emissions of carbon dioxide that occur when the production of biofuels causes forests or grasslands to be converted to farmland for growing the fuels’ feedstocks. If those emissions were taken into account, such changes in land use would raise the cost of reducing emissions and change the relative costs of reducing emissions through the use of different biofuels—in some cases, by a substantial amount.

Not cost effective at lowering emissions. The Waxman Markley cap-and-trade bill had permits set to be traded at $32. Equivalent carbon permits in the EU are selling for approximately $20. This means that other industries are capable of reducing their GHG emissions at a cost of 23-27 times less.

“In the future, the scheduled rise in mandated volumes would require the production of biofuels in amounts that are probably beyond what the market would produce even if the effects of the tax credits were included. To the extent that the mandates determine levels of production in the future, the biofuel tax credits would no longer be increasing production, but they would still be reducing the costs borne by producers and consumers of biofuels and shifting some of those costs to taxpayers.”

Given the Renewable Fuels Standard, the tax credit doesn’t do much other than secure (little) excess profit for the ethanol industry at taxpayer expense.

Continuing on, Barr discusses subsidies for the oil-companies and job losses. The oil company subsidies are mostly in the form of tax write-offs available to a wide sector of U.S. industry (good summary here) rather than just the oil companies. To the extent to which the oil companies do receive subsidies, they are larger on an absolute level but are dwarfed by all sectors of “renewable energy” (let us not forget that the ethanol industry relies on fossil fuels to produce ethanol) on a per unit of energy produced basis.

Job losses of over 100,000 are a complete falsehood perpetuated by the ethanol industry. See a study here; which explains that job losses are likely to be under 1,000 because of the RFS mandating ethanol production.

Finally, Barr requests a fair and comprehensive debate including the “philosophical pros and cons” of federal tax policy. Then sneaks in the fact that despite the VEETC the ethanol industry is a net contributor to tax revenue. This is probably true, though it ignores the numerous state level subsidies and the years and year of subsidies when net tax revenues were likely negative. Furthermore, the net tax revenue of the ethanol industry would likely be higher under a scenario where the U.S. taxpayers didn’t write a $6 billion check each year supporting them.

Cognitive dissonance is an uncomfortable feeling caused by holding conflicting ideas simultaneously. Let’s hope its not hurting Mr. Barr too much this week as he recovers from a disgraceful opinion piece.

Mr. “Ecomagination” — GE’s CEO Jeffrey Immelt — called on the U.S. to put a long-term price on carbon so this country could compete with China in being “green, green, green, green – four greens,” according to a news article today in Bloomberg.

In his speech, the article notes, Immelt said that a carbon pricing scheme would create jobs:

The U.S. needs to establish a “long-term price signal” on carbon emissions, in order for companies to provide “appropriate funding for innovation” regardless of fuel, as well as revive nuclear energy. Such moves would create jobs rather than shift them overseas, Immelt said.

So taxing energy use — raising the price of energy — will be a job stimulator.  Doesn’t sound like it, if he has in mind a cap-and-tax scheme. (Here’s also a useful primer on costs of global warming policies.)

Immelt seems to be emulating the fictional “thought bullet” leader Martin Lukes, who plunged to his death recently in the Financial Times. Lukes’ most notable contribution to corporate management was “creovation”-combining creativity and innovation, which, according to Lukes’ obituary (registration required) was the basis for GE’s “ecomagination” emphasis. (Satire, of course.)

According to some reports, Immelt may be a candidate to replace Larry Summers as chief economic advisor to President Obama (not a satire).  If so, expect lots of “thought bullets” a la Lukes.

Last Thursday (September 16, 2010), three groups, each led by the Coalition for Responsible Regulation (CRR), filed motions with the D.C. Circuit Court of Appeals to “stay” (put a hold on) the Environmental Protection Agency’s recently finalized greenhouse gas regulations.

The EPA regulations at issue are:

  1. The Endangerment Rule, which finds that greenhouse gas (GHG) emissions endanger public health and welfare, thereby obligating EPA to develop and adopt GHG emission standards for new motor vehicles.
  2. The Tailpipe Rule, which, per the Endangerment Rule, establishes first-ever GHG emission standards for new motor vehicles.
  3. The Triggering Rule, which holds that when the Tailpipe Rule takes effect (Jan. 2, 2011), “major” GHG emitting facilities will be “subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program.
  4. The Tailoring Rule, which amends the PSD and Title V definitions of “major emitting facility” to avoid the “absurd result” of EPA and State environmental agencies having to process an estimated 41,000 PSD permits and 6.1 million Title V permits every year.

The groups filing the motions are: (1) a coalition of business associations led by the National Association of Manufacturers; (2) the State of Texas; and (3) a coalition of public policy advocates. The industry group is asking the Court to stay the Endangerment Rule, the Triggering Rule, and the Tailoring Rule, although not the Tailpipe Rule. Texas and the advocacy groups ask for a stay on all four regulations pending the Court’s review and decision to uphold or vacate the rules.

One point the motion makes is unarguable. Granting a stay can cause no harm to public health, even if one assumes global warming is a big problem. After all, EPA itself estimates that the Tailpipe Rule — the only rule for which environmental effects are estimated — would avert less than 1/100th of a degree Fahrenheit of global warming by 2100. Thus, if the Tailpipe Rule survives judicial scrutiny, delaying its implementation by six months to a year would have no discernible environmental impact. Besides, the stay would not affect the National  Highway Traffic Safety Administration’s (NHTSA) recent revision of fuel economy (CAFE) standards, and the overwhelming lion’s share of emission reductions required by the Tailpipe Rule actually comes from the new fuel economy regulations.

In contrast, the motions argue, EPA’s rules are already harming the economy. The dubious legal basis of both the Tailoring Rule and EPA’s efforts to bully States into immediately amending their permit programs ”now impose a terrible uncertainty tax on our struggling economy, as no business is able to make plans or investments in reliance on a regulatory scheme so clearly at odds with the plain language of the Act.” Businesses and State permitting agencies will incur additional losses if they make investments based on EPA’s rules and the rules are subsequently overturned. Best to put the regs on hold until the Court rules on their legal bona fides.

The Competitive Enterprise Institute (CEI) is a party to the advocacy group motion, which makes a powerful case that the regulations should be stayed and, ultimately, overturned. Lest anyone suspect that I’m tooting my own horn, I had absolutely no role in either developing or drafting the motion.

Big Picture

As can be surmised from the description above, EPA’s four rules are interdependent. The Endangerment Rule authorizes and, indeed, compels EPA to establish GHG emission standards for new motor vehicles. The emission standards, promulgated via the Tailpipe Rule, make GHGs subject to regulation under PSD and Title V, according to the Triggering Rule. To avoid administrative paralysis, economic disruption, and political backlash, the Tailoring Rule exempts all but the largest GHG emitters from PSD and Title permitting requirements over the next six years, raising from 100/250 tons per year to 75,000/100,000 tons per year the cutoff for regulation as a “major” emitting facility.

This custer of regulations is a classic case of bureaucratic self-dealing. As discussed elsewhere, EPA has positioned itself to determine the stringency of fuel economy standards for the auto industry, set climate policy for the nation, and even amend provisions of the Clean Air act—powers Congress never delegated to the agency. The Endangerment Rule is both trigger and precedent for sweeping policy changes Congress never approved. America could end up with a pile of greenhouse gas regulations more costly than any climate bill or treaty the Senate has declined to pass or ratify, yet without the people’s representatives ever voting on it. Overturning EPA’s GHG rules is a constitutional imperative.

The Arguments

The motion to stay advances new arguments — or improved versions of familiar arguments — for overturning each of the four EPA rules. The following sections summarize and excerpt some of the motion’s key insights.

EPA Outsourced Its Endangerment Judgment

Section 202 of the Clean Air Act requires the Administrator to determine the dangerousness of air pollution from motor vehicles based on her “judgment.” Instead, the motion points out, quoting EPA’s Endangerment Rule:

“the Administrator … rel[ied] on the major assessments of USGCRP, IPCC and NRC as the primary scientific and technical basis of her endangerment decision.” 74 Fed. Reg. at 66,510.14
EPA specifically declined to undertake “a new and independent assessment,” id. at 66,511, preferring to “plac[e] primary and significant weight on these assessment reports in making her decision on endangerment.” Id.

Which means:

. . . the only “judgment” EPA really made is that IPCC can be trusted to have made the endangerment assessment required by the Act. But the Act does not authorize entities other than EPA to make that assessment. See, e.g., U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 565 (D.C. Cir. 2004) (“[F]ederal agency officials … may not subdelegate to outside entities—private or sovereign—absent affirmative evidence of authority to do so.”).

In effect, EPA asks the Court and the American people to trust that the IPCC did its job objectively, adhering to U.S. Government standards of scientific integrity. “But neither this Court nor the interested public can determine whether IPCC in fact did so, because the innumerable choices made by its many authors are not in the record.” The Climategate emails reveal instances of behavior inconsistent with U.S. information quality standards, such as Climatic Research Unit Director Phil Jones vowing to keep peer-reviewed research contrary to his views out of the next IPCC report “even if we have to redefine what the peer reviewed literature is.”

Bottom line: The Endangerment Rule embodies “a scientific judgment made by IPCC, and then adopted by EPA, not supported by any record that this Court can review. This is error.”

EPA Fails to Make the Judgment Required by Sec. 202

“Endangerment,” the motion observes, “is not a scientific term with defined endpoints. It is not an objective measure, like the boiling point of water, but a value judgment, like ‘bad.’ And so before EPA finds ‘endangerment,’ it first must define it.” In other words, EPA must explain its judgment in terms of climate-related metrics like temperature, precipitation, or wind speed, such that the public can understand which changes in climatic variables constitute endangerment, and which do not. “EPA has failed to do so.”

To clarify this point, the motion compares EPA’s  endangerment finding for motor vehicle GHG emissions with the agency’s 1973 endangerment finding for vehicular lead emissions. In the earlier rule, EPA provided quantitative information relating lead emissions to atmospheric concentrations, the latter to blood lead levels, and blood levels to brain function. In addition, EPA analyzed how regulation of lead in gasoline would reduce atmospheric concentrations, reduce lead levels in blood, and, thus, improve public health. Thus, “By the end of the rulemaking, EPA had fully explained all of the choices it made along the path of converting available scientific knowledge about lead toxicology and exposure into a policy-based finding of endangerment from automotive lead emissions sufficient to justify regulation, and allow—and survive—judicial review.”

In contrast, EPA “jumps from the tautology that ‘greenhouse gases cause a greenhouse effect’ to ‘greenhouse gases endanger public health and welfare’ sufficient to warrant exactly the level of GHG reductions that happen to result from NHTSA’s imposition of the CAFE standards required by the Energy Policy and Conservation Act.” The motion continues:

It is as though EPA, in Ethyl [Corp. v. EPA, 541 F. 2d1, 1976], were defending a rule to ban leaded gasoline because lead is a poison at some unknown dose; cars burning leaded gasoline can emit lead, which has some unknown effect on atmospheric lead concentrations; and banning leaded gasoline would yield some unknown but trivial reduction in atmospheric lead levels, possibly mitigating by some unknown (but at best trivial) degree the unknown adverse effects that may result from atmospheric lead, although it is very, very possible that the ban would accomplish absolutely nothing at all.

“If anything,” the motion comments, “EPA should face a far greater burden to explain its policy choices here than it did in Ethyl. Lead is strictly a poison, whereas carbon dioxide is a natural component of clean air, ingested by all plants and exhaled by all animals. Life on Earth depends on the very ‘danger’ that EPA is trying to prevent.” Carbon dioxide is not only plant food, it also helps keep the Earth habitably warm.

In short, “An endangerment finding under Section 202(a) does not simply identify a health and welfare risk, as EPA contends; it also establishes the criteria that will inform whether the emission standards adopted to address that risk are rational. . . . EPA here failed to do so, first by rubber-stamping the IPCC’s findings instead of making its own assessment of the evidence, and then by disavowing any obligation to explain the various policy choices it made to reach its ultimate judgment and regulatory response.”

EPA’s Assessment of the Scientific Record Is Logically Flawed

Quoting (or parroting) the IPCC, EPA argues that it is “extremely unlikely” (less than a 5% probability) that the warmth of recent decades can be explained without “external forcing” by greenhouse gas emissions. But this conclusion is inconsistent with other IPCC statements. The IPCC acknowledges three potential drivers of climate change: (1) changes in incoming solar radiation (e.g. due to changes in the Earth’s orbit or the Sun); (2) changes in reflected solar radiation (e.g. due to changes in low-level cloud cover); and (3) changes in outgoing longwave radiation (e.g. due to changes in greenhouse gas concentrations). According to the IPCC, scientific understanding of the Sun’s role in climate change is “low” and there is “significant uncertainty” with regard to cloud behavior and reflectivity. If there is significant uncertainty about two of the three main drivers, it is impossible for EPA — or the IPCC — to be 95% certain which is in the driver’s seat. In the motion’s words:

EPA cannot, and does not, explain how its 95% certainty is justified on the record. There cannot simultaneously be both “significant uncertainty” about primary climate drivers and 95% certainty that anthropogenic GHGs are causing any observed warming, yet EPA concludes there is. This fails even minimal standards of rationality.

EPA’s Administrative Record Fails to Establish Any Non-Trivial Benefits from the Tailpipe Rule

Citing Ethyl Corp. (541 F.2d at 31 n. 62), the motion argues that an administrative agency’s regulatory actions should “fruitfully” attack the problem being addressed. Yet, by EPA’s own admission, the Tailpipe Rule would produce imperceptible benefits, reducing projected global warming by 0.006-0.015°C and projected sea-level rise by 0.06-0.14 cm in 2100.

EPA’s GHG Tailpipe Limits Accomplish No Public Benefit (If Any) that NHTSA’s CAFE Standards Do Not Already Accomplish

About 95% of all GHGs emitted by motor vehicles is carbon dioxide (CO2) from fossil fuel combustion. As EPA’s Tailpipe Rule acknowledges (p. 25327), there is a “single pool of technologies . . .  that reduce fuel consumption and thereby reduce CO2 emissions as well.” Unsurprisingly, the motion argues, “The [new] CAFE standards and EPA’s Tailpipe Rule are virtually identical, with irrelevant differences in how the two standards address air conditioning.”

The case law is not favorable to agencies duplicating the regulations of other agencies. Alas, the Tailpipe Rule is not merely redundant, it also has “profound and pernicious effects” on the economy, if, as EPA contends, it subjects  millions of small stationary sources to Clean Air Act permitting requirements. In sum:

There is no rational basis for EPA to promulgate mobile source rules that do nothing more than reiterate other, independently effective legal requirements, and that offer no added environmental benefit but impose far-reaching and unintended costs on a source population (stationary sources) not even considered in the Endangerment Finding assessment.

The Tailoring Rule Is an Illegal Solution to a Legal Problem of EPA’s Own Creation

This is the most original part of the motion’s argument. To obtain a PSD permit to build or modify a “major” stationary source, the applicant must demonstrate the facility’s compliance with “best available control technology” (BACT) standards. EPA reads Section 165(a)(4) of the Clean Air Act as requiring BACT compliance and PSD permitting for major sources of almost any regulated air pollutant.** Since the Tailpipe Rule makes GHGs regulated air pollutants, major stationary sources of GHGs are subject to PSD and BACT, EPA reasons.

To reach this conclusion, however, EPA had to ignore statutory context. Sec. 165(a)(4) states:

No major emitting facility on which construction is commenced after August 7, 1977, may be constructed in any area to which this part applies unless . . . — the proposed facility is subject to the best available control technology for each pollutant subject to regulation under this chapter emitted from, or which results from, such facility [emphasis added].

In the foregoing, “this chapter” means the Clean Air Act. EPA reads the phrase “each pollutant subject to regulation under this chapter” apart from the qualifying and limiting phrase, ”in any area to which this part applies.” The “part” in question is Part C (Prevention of Significant Deterioration of Air Quality), and the “area” to which it applies is an attainment area. Part C is clearly distinguished from Part D, which addresses permitting requirements in non-attainment areas.

The distinction between attainment and non-attainment areas presupposes, and has no meaning apart from, the adoption of national ambient air quality standards (NAAQS) for the pollutant of concern. Properly construed, Sec. 165(a)(4) creates BACT and PSD obligations only in attainment areas based on a prior NAAQS rulemaking. Since there are no NAAQS for GHGs, there are no GHG attainment areas, hence no areas where Part C BACT and PSD requirements apply to GHG emitting facilities.

Since the Tailpipe Rule does not trigger BACT and PSD for stationary sources, there is also no need for EPA to play lawmaker and “tailor” — that is, amend– the PSD applicability thresholds. Similarly, because “Title V is intended solely to codify otherwise applicable requirements in permits issued to stationary sources,” and stationary sources have no new obligations as a consequence of EPA’s decision to regulate mobile source GHGs, there is no necessity to amend the Title V applicability threshold.

The motion sensibly concludes:

Having applied the Act to a “pollutant” under programs never intended for that “pollutant,” EPA is confronted with the need to undo the “absurd” results that follow by outright defiance of crystal-clear provisions of the statute, those setting forth the applicability thresholds. The far better—and only legal—choice instead is to avoid manufacturing overbreadth in the first place.

(If this argument is correct, then EPA bears a greater responsibility for Massachusetts v. EPA’slegacy of absurd results” than I previously supposed.)

The Triggering and Tailoring Rules Treat the States as Vassals, Not As the Equal Sovereigns Contemplated by the Clean Air Act

EPA assumes it can simply command States to incorporate PSD permitting for GHGs in their State Implementation Plans (SIPs), or face imposition of an EPA-crafted Federal Implementation Plan (FIP). Not so, the motion argues:

Section 110(a)(2)(C) requires each State’s permit program to mandate permits only for “modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in parts C and D….” 42 U.S.C. § 7410(a)(2)(C). EPA has no basis, then, to disapprove a State’s permit program for failing to govern emissions of a pollutant for which there is no NAAQS.

EPA assumes that the Tailpipe Rule and Tailoring Rules will or at least should automatically revise State permitting programs and the SIPs governing them.  In so doing, EPA erroneously views the States as vassals, because “no sovereign can delegate to another the ability to make its laws. The State must by some affirmative act ratify any changes in pollutants and applicability thresholds incorporated from federal laws before they become effective.”

EPA’s rush to incorporate GHGs into State permitting programs also runs afoul of procedural requirements. Section110 of the Clean Air Act “allows at least 18 months after proper adoption of new SIP expectations before requiring their implementation by the States.” In addition, Section 166 allows States 21 months to submit a plan revision following an EPA rulemaking calling for the addition of new pollutants in the PSD program. “EPA, of course, has undertaken no such rulemaking, nor allowed any time for each State to respond.” Indeed, one of the rules EPA recently proposed to bypass the normal SIP revision process would “give States perhaps three weeks in December to respond to a call for revisions to their SIPs, or face a construction ban on January 2, 2011.”

A Stay Would Allow for Rational Policy Development

The House passed a cap-and-trade bill in June 2009, but in 2010 cap-and-trade died in the Senate. Senators mounted an unsuccessful effort to overturn EPA’s Endangerment Rule, but all 41 Republicans and six Democrats voted for the resolution of disapproval. “The 111th Congress evidently will adjourn unable to either ratify the current state of affairs or change it, but the 112th may be rather more willing to announce an opinion on behalf of the electorate. A stay would allow for the possibility that Congress finally will state its intentions to regulate GHGs under the Clean Air Act, or not, so that this Court will not have to speak for it.” ‘Nuff said.

** The Clean Air Act prescribes separate and tougher permitting requirements for major sources of toxic air pollutants and criteria air pollutants in areas failing to meet national ambient air quality standards.

Do green energy and green jobs mandates run counter to World Trade Organization rules?  Japan says “yes” in relation to Canada’s program for renewable energy generation and green jobs in Ontario. Japan is complaining to the WTO that Canadian measures that mandate domestic content requirements for renewable energy generation equipment are inconsistent with WTO rules because they discriminate against equipment produced outside of Ontario and also represent a subsidy prohibited by the WTO. The country has asked the WTO for a formal consultation with Canada on the issues it raises in its September 13, 2010 filing. Consultations are often the first step in trying to resolve an issue before a country opens an official case with the WTO’s dispute settlement body.

Primarily Japan’s complaint hits Canada’s domestic content requirements in its “feed-in tariff” (FIT) program for Ontario, which requires that the renewable energy equipment, such as solar panels, wind turbines, biomass, and waterpower generation equipment, be produced in Ontario in whole or in part. (Feed-in tariffs are renewable energy payments that electric grid utilities obligate themselves to pay to purchase electricity generated from renewable sources.)  Under the program guaranteed prices for renewable energy electricity production are provided through long-term contracts.

According to a provincial government backgrounder on FIT, the domestic content requirements are intended to support “new green jobs in Ontario”:

Domestic content requirements for both FIT and microFIT projects are intended to help support the creation of 50,000 new green jobs in Ontario. MicroFIT projects will help create new local businesses and green jobs as demand grows for technologies such as solar panels, wind turbines, biomass and waterpower generation equipment, and for Ontarians who can design, build, install, operate and maintain these technologies.

And the domestic content requirements can be very specific (and somewhat ridiculous).   Here, for instance, is the one for silicon ingots and wafers:

Silicon ingots and wafer, where silicon ingots have been cast in Ontario, and wafers have been cut from the castings by a saw in Ontario.

From my quick review of the Canadian program, Japan seems to have a real cause for its complaint. Other countries looking to follow Canada’s example for green jobs creation should be wary about including their own protectionist measures.

H/T/ Julie Walsh

Soon the U.S. Circuit Court for Appeals in Washington D.C. is expected to address legal challenges (brought by the Competitive Enterprise Institute, among others) to the EPA’s plan to regulate greenhouse gases under the Clean Air Act. In the meantime, CEI this week filed a motion to delay the implementation of the regulations until the Court makes a decision. To read the motion, click here.

In the News

Fixing the Global Warming Establishment with New Lipstick
Shikha Dalmia,, 17 September 2010

Journalist’s Truthful Climate Reporting Gets Him Fired
Paul Chesser, American Spectator, 17 September 2010

Coal Miners Rally in Washington
Stephen Power, Wall Street Journal, 16 September 2010

Tragedy of the Commons Redux
Sterling Burnett, Planet Gore, 16 September 2010

Inconvenient Truths
Bjorn Lomborg, Wall Street Journal, 15 September 2010

Stand up to the EPA Power Grab
Phil Kerpen, Fox Forum, 14 September 2010

Wind Power on the Firing Line
Jon Boone,, 13 September 2010

News You Can Use

Ineffective Stimulus

According to an audit issued Thursday by Los Angeles Controller Wendy Greuel, the city has created just 55 jobs with $111 million from the 2009 stimulus.

Inside the Beltway

Myron Ebell

EPA Climate Regulations under Assault

There was a fair amount of maneuvering this week on delaying the implementation of EPA’s regulations to limit greenhouse gas emissions.

On Capitol Hill, Senator Dianne Feinstein (D-Calif.), the chairwoman of the Interior and Environment Subcommittee of the Appropriations Committee, cancelled a full committee vote on her subcommittee’s appropriations bill because of the threat that an amendment to delay implementation of EPA’s regulation of stationary sources would pass.  Feinstein said that the committee may not vote on the bill at all this year.  Instead, Interior and EPA appropriations would be rolled into an omnibus spending bill.

Feinstein’s move was quickly countered by Senator Christopher Bond (R-Mo.), whose office let it be known that he might try to attach an amendment to a Defense appropriations bill.  Politico’s Morning Energy quotes an e-mail from a Bond staffer: “Bond believes the Defense authorization bill is the wrong place for a campaign wish list, but we’ll have to see whether Democrats go through with plans to load on extra issues and whether that opens the door to other things.”

Senator Jay Rockefeller (D-WV) chimed in that he was still expecting a vote on the Senate floor before the end of the 111th Congress on his bill to delay EPA greenhouse gas regulations for two years.  Rockefeller told Environment and Energy News that he has 53 votes and expects to get to the 60 required by the time of the vote.  If there is a vote, it will likely occur in a lame duck session after the November 2 congressional elections.

Ohio Governor Ted Strickland sent a letter http this week to his state’s congressional delegation urging them to support a two-year delay.  This would be quite a surprise were not the liberal Democrat trailing in his campaign for re-election.  The Business Roundtable also sent a letter asking for a two-year delay.  This is significant because many companies that belong to the big business lobbying association support cap-and-trade.

Finally, three separate motions were filed in the federal D. C. Circuit Court of Appeals asking the court to delay implementation of EPA’s greenhouse gas regulations until the court rules on the lawsuit seeking to overturn the Endangerment Finding upon which the regulations are based.  One motion was filed by the State of Texas; another (Greenwire subscription req’d) was filed by several non-profit policy and legal groups; and the third (Greenwire subscription req’d) was filed by three industry trade associations.

Across the States


By a 4 to 1 vote, the Riverside County Board of Supervisors approved a resolution supporting Proposition 23, the California ballot initiative to suspend AB 32, the State’s global warming law, until unemployment decreases to 5.5 %. Supervisor John Benoit, who authored a resolution, told the Desert Sun, “AB 32 is a very open law that’s left to the bureaucracy to make the rules. I don’t think we need to be the greenest Third World economy in the world. I’m afraid of where this leads us.” On August 18th, Regional Council of Rural Counties, a coalition of supervisors from northern California counties, voted 21 to 0 to support Proposition 23.

In Sunday’s San Francisco Chronicle, James Kellogg, a prominent union leader, wrote a stirring endorsement of Proposition 23, titled “Like Having a Job? You’ll Love Prop 23.”

Around the World


In order to meet a pledge to reduce energy use per unit of economic output by 20 per cent over the five years ending this December, the Chinese government has ordered energy rationing, resulting in rolling blackouts across the country. More than 2,000 energy intensive industries have been ordered  to close. Despite these extreme measures, China is unlikely to meet the target.

The Cooler Heads Digest is the weekly e-mail publication of the Cooler Heads Coalition. For the latest news and commentary, check out the Coalition’s website,

What state ranks third in unemployment, second in foreclosures, has the nation’s worst credit rating, is running a $19 billion deficit — yet insists on spending billions on a greenhouse gas emissions reduction plan that can’t possibly impact global warming?

Yes, it’s California, land of the Governator, who four years ago signed a bill that will shortly begin saying “Hasta la vista, baby!” to perhaps a million jobs. Yet there’s hope the prosperity terminator can be stopped, with Prop 23 to be voted on in November.

Read about how incredibly bad the legislation is and how the state foisted it on an ignorant (not stupid) public in my new article, “California’s Jobs Terminator” at