2013

The public fight that Representative Lamar Smith (R-Tex.), Chairman of the House Committee on Science, Space, and Technology, picked with the Environmental Protection Agency last week looks like it will continue into the August recess. On 1st August, the committee voted on a party-line vote to authorize the chairman to subpoena the EPA for the data underlying several major epidemiological studies that are used to justify Clean Air Act regulations. Chairman Smith then executed the subpoena and sent it to new EPA Administrator Gina McCarthy, who in September 2011 as Assistant Administrator for Air and Radiation had promised the committee to turn over the data.

Representative Eddie Bernice Johnson (D-Tex.), the ranking Democrat on the Science Committee, sent Chairman Smith a letter on 30th July objecting in lengthy detail to the proposed subpoena. In her letter, Rep. Johnson attacked the credibility of Dr. James Enstrom, who was fired by UCLA after 36 years as a research scientist because his results have sometimes been politically incorrect.  In particular, he has questioned the EPA’s claims of hundreds of billions of dollars of health benefits from its Clean Air Act regulations.

Dr. Enstrom responded to Rep. Johnson’s attack in a letter to Chairman Smith in which he demands that Johnson “immediately withdraw her defamatory statements about me. Furthermore, I request that the Ranking Member identify the person(s) who originated these defamatory statements.” Since both the Chairman and the ranking Democrat are from Texas, the story has been picked up by the Texas media. Chairman Smith has also now replied to Rep. Johnson in an 8th August letter.

Platts Energy Week with Bill Loveless is a weekly treat. In most markets, it comes on early Sunday mornings, but if you sleep through its first broadcast, you can still access the show through its website.

This morning’s show featured a wonderful interview with Larry Nichols, executive chairman of Devon Energy, about the legacy of George Mitchell, the relentless entrepreneur who perfected the technology—known as hydraulic fracturing—that made possible the recovery of vast reserves of oil and natural gas from previously inaccessible (i.e., uneconomic to extract from) geologic formations. Thanks in large part to Mitchell’s work, there’s been a much-reported rebound in American energy production. Mitchell died on July 26^th.

Mr. Nichols is well qualified to comment on Mitchell’s lasting impact. Devon Energy was an innovator in horizontal drilling, which, when coupled with hydraulic fracturing, precipitated the oil and gas boom. Indeed, in the early aughts, Devon invested in Mitchell, and together they pioneered the new technologies.

Highlights of the interview include: Mr. Nichols putting the lie to the mistaken contention that the federal government’s role was instrumental in the development of the technologies that led to the oil and gas boom; and, his belief that it would have been impossible for George Mitchell to have perfected hydraulic fracturing in today’s overbearing regulatory environment.

I highly recommend watching the whole interview here:

The House of Representatives on Friday, 2nd August, passed H. R. 367, the REINS Act, which would require House and Senate votes to approve proposed major regulations, by a vote of 232 to 183.  Six Democrats and 225 Republicans voted Yes, while all the No votes came from Democrats.  Eighteen Members did not vote.  The REINS Act isn’t going anywhere in the Senate.

Earlier in the day, the House voted on an amendment offered by Representative Steve Scalise (R-La.) that would require congressional approval before the executive branch could implement a tax on carbon dioxide emissions using regulatory authority.  That amendment was adopted by a vote of 237 to 176. Again, 225 Republicans voted Yes.  They were joined by twelve Democrats.  All 176 No votes came from Democratic Members.  Eighteen Members did not vote.

Rep. Scalise is chairman of the conservative House Republican Study Committee, which has made a vote on a resolution opposing a carbon tax one of its top priorities.  The amendment is somewhat narrower than H. Con. Res. 24, but the vote does put Members on the record on a carbon tax.  The vote reveals that 176 Democratic Members of the House are not opposed to raising taxes.  That vote could play a role in some districts in the 2014 congressional elections.  A number of House Democrats lost their seats in 2010 because they had voted for the Waxman-Markey cap-and-trade bill.

The twelve Democrats who voted for the anti-carbon tax amendment are: Ron Barber and Kyrsten Sinema of Arizona, John Barrow and Sanford Bishop of Georgia, Henry Cuellar and Filemon Vela of Texas, William Enyart of Illinois, Jim Matheson of Utah, Mike McIntyre of North Carolina, Collin Peterson and Tim Walz of Minnesota, and Nick Joe Rahall of West Virginia.

Whether the executive branch has authority to implement a carbon tax under the regulatory authority of the Clean Air Act or any other statute is highly dubious.  However, several environmental pressure groups have been pushing the idea, and the Obama Administration has proved that it has little regard for the law.

On 1st August, the House also passed the Energy Consumers Relief Act by a vote of 232 to 181.  Again, no Republicans voted against the bill.  Nine Democrats voted for it.  H. R. 1582 tries to set some limits on the Environmental Protection Agency’s authority to promulgate expensive new regulations.  Again, the bill is not going anywhere in the Democratic-controlled Senate.

Today 19 free market organizations released a coalition letter in support of Rep. Steve Scalise’s (R-La.) amendment to H.R. 367, the Regulations From the Executive in Need of Scrutiny Act of 2013. Read the letter below.

[Update: The House passed the anti carbon tax amendment 238-176]

Letter to Congressman Scalise on HR 367 by Competitive Enterprise Institute

Under both the Clean Air Act and Clean Water Act, the EPA has the authority to “disapprove” a state’s strategy to meet national environmental standards. A regulatory disapproval is no small matter as state officials spend countless hours and taxpayer resources crafting plans to comply with a newly finalized EPA regulation. When the EPA issues a regulatory disapproval, the agency effectively throws all of this work out the window.

Since President Obama took office, the number of regulatory disapprovals has skyrocketed. Previously, the EPA issued 44 disapprovals during President Clinton’s second term, 42 during President George W. Bush’s first term and 12 during Bush’s second term. But during President Obama’s first term, the EPA issued an unprecedented 95 disapprovals — more than a 190 percent increase from the average number of disapprovals during the previous three four-year presidential terms.

Even more alarming is the precipitous increase in the number of EPA takeovers of state regulatory programs. “Federal implementation plans,” or FIPs, are the EPA’s most aggressive action, as a FIP entails the complete usurpation of a state’s regulatory authority. From 1997 through 2009, the EPA imposed only two FIPs. But since Obama’s first inauguration in 2009, the EPA has imposed 19 FIPs, representing a 2,750 percent increase in the number of FIPs from the average number of FIPs rate during the previous three four-year presidential terms.

Both the data and the chart comes from a report I recently wrote for the American Legislative Exchange Council, titled “The U.S. Environmental Protection Agency’s Assault on State Sovereignty.”

Sometimes, the sub-headline says it all.

The Wall Street Journal published a telling article yesterday, titled (online) “BMW Launches Its First Mass-Production Electric Vehicle.” That’s a good summation, but the true lede was buried in the sub-headline: “Auto Maker Needs to Boost Sales of Electric Cars To Meet Regulatory Requirements.”

As the sub-headline suggests, BMW didn’t build the i3–the titular electric car–because it plans on making money. In fact, according to reporting by the Wall Street Journal’s Joseph White, ‘The i3, which starts at €34,950 in Germany, could lose €197 million a year on an operating basis…’ So the car is a loser.

BMW’s launch of its new i3 is actually quite instructive on current events. This morning, we reported that newly confirmed EPA administrator Gina McCarthy believes that climate change regulations are an economic stimulus. The i3 is proof to the contrary.

Instead of meeting actual demand, BMW is selling the i3 to meet mandates. In the American market, President Obama’s EPA in 2010 established greenhouse gas regulations that effectively require fuel efficiency improvements. The European Union had already implemented the same sort of regulations. Thus, the international car market has been skewed by the hand of government. BMW, by building the i3, is reacting to this dirigisme. BMW Chief Executive Norbert Reithofer told the WSJ that, “If you look around the world, [at] the emissions regulations, in the United States, in the European Union, even in China…cars like the BMW i3 are a must.” Simply put, the BMW i3 is a real-world industrial response to EPA climate regulations.

Yesterday, EPA administrator McCarthy said the President’s climate plan was ‘an opportunity to “bend the curve” and could “fuel the complementary goals of turning America into a magnet for new jobs and manufacturing.”’ As I explained in the previous paragraph, the agency already has “bent the curve” of the auto market, and the result of these market manipulations is a car company that builds a money-losing car for non-existent customer demand.

Does this sound like wise economic policy?