William Yeatman

This week’s Platts Energy Week with Bill Loveless started with an interview with the co-chairman of the newly formed congressional refinery caucus, Rep. Pete Olson (R-TX). I’d never before heard Olson speak; he’s a peculiar monotone cadence that sounds sorta like Boomhauer from King of the Hill.

I’d like to draw attention in particular to Rep. Olson’s extremely impressive discourse on risk. About a third of the way through the interview, Host Bill Loveless referenced a couple recent refinery accidents, and questioned Rep. Olson about whether the industry should be subject to greater regulatory scrutiny.

Rep. Olson first executed some clever political jujit-su. He assured Loveless that the industry is safe, and then waxed lyrical about growing up near refineries along the Gulf Coast, even going so far as to recall how much enjoyed and appreciated as a child the refineries strewing Christmas lights during the holiday season.

The host pressed and then Rep. Olson got serious and delivered a great answer. He said, in effect, that refining entails the manipulation of volatile gases under high pressures at high temperatures and, as such, it cannot be risk-free. However—and this is his key insight—this state of risk is equally true for much of the advanced engineering on which modern society relies—from driving cars to building houses.  Humans make mistakes; ergo risk. The question then becomes: Is [further] federal regulation based on reasonable risk-management? Or is it championed by special interests for which fossil fuels are “dirty” and therefore evil, per se? Rep. Olson’s interview is posted below.

After Rep. Olson, Bill Loveless interviewed U.S. Department of State “energy envoy” Carlos Pascual. The segment was interesting insofar as it demonstrated how climate change policy is incompatible  with the art of diplomacy.

Ambassador Pascual is no doubt a brilliant mind. I suspect he learns languages as easily as I get sunburned. And whenever he discussed non-climate diplomacy, he demonstrated great agility of mind. But when he veered into environmental policy, he sounded loopy.

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Last Friday morning, the Energy and the Economy subcommittee of the House Energy and Commerce Committee held a fascinating hearing aptly titled “Constitutional Considerations: States vs. Federal Environmental Policy Implementation.”

Witnesses included law professors Jonathan Adler (Case Western University School of Law), Rena Steinzor (University of Maryland School of Law), and Richard Revesz (New York University School of Law), as well as the Congressional Research Service’s Robert Meltz. (testimonies hyperlinked). Click here for a background memo. Subcommittee chairman John Shimkus’s opening statement is available here. I’ve reposted video of the hearing at the bottom of this post.

My purpose today is not to describe the entire hearing; rather, it’s to highlight one particular exchange, concerning a putative “race to the bottom” among States on environmental standards absent federal regulations.

According to the “race to the bottom” thesis, unless the federal government intervenes, States would compete with one another to lower environmental standards in order to better attract industry. This proposition took hold in the mid-1970s, and was a major intellectual influence of the 1977 and 1990 Clean Air Act Amendments.

Simply put: The presumed existence of a “race to the bottom” justifies a federal presence in state environmental policymaking.

Thus aware, now consider the following exchange between Ohio Representative Bob Latta and professor Jonathan Adler, which casts considerable doubt on the very existence of a “race to the bottom” (!!!):

Representative Bob Latta: Is there any empirical evidence to support the assertion that leaving environmental regulation to the States will precipitate a race to the bottom.

Professor Jonathan Adler: No there actually really isn’t such evidence.

There’s one study that relies upon survey data that shows state officials are responsive to competitive concern, but that’s not sufficient in terms of showing a race to the bottom.

Professor Revesz [N.B.: A fellow panelist; his testimony is linked to above] has written what is probably the seminal article on the theoretical arguments related to race to the bottom, showing quite compellingly that, as an analytical matter, the race to the bottom theory rests on a lot of assumptions that aren’t justified.

As an empirical matter, I’ve done work in the area of wetlands showing that the pattern of state wetland regulation prior to federal regulation is the exact opposite of what the race to the bottom theory would predict.

There is a significant amount of literature, in both the economic literature and the political science literature, looking empirically at patterns of state regulation, again, showing that the patterns of state regulation are not consistent with the idea of a race to the bottom.

In fact, there is some scholarship that suggests that states in fact learn from each other. When one state…regulates more stringently in order to enhance environmental protection, that neighboring states become more likely to follow suit…as they learn from the positive experience of their neighbor.

There is also some work…suggesting that even non-preemptive federal regulation alters the incentives that state regulators face, and, in some cases, will discourage states from being innovative and being more aggressive and more experimental to confront aggressive environmental problems because of the way it alters incentives.

To which I say: WOW! Very notably, Professor Steinzor, who was the minority witness, had no rebuttable when afforded the opportunity to speak, despite the fact that her written and oral testimony both cited the “race to the bottom” as a key justification for federal environmental regulation. [click to continue…]

Weekend Media Roundup

by William Yeatman on July 14, 2014

in Blog

Platts Energy Week with Bill Loveless: The invaluable Platts Energy Week ran a revelatory interview with Retired Vice Admiral Dennis McGinn, the Navy’s assistant secretary for energy, installations and environment. McGinn is the point man on the Navy’s pointless “Farm to Fleet” program, the purpose of which is to achieve “energy independence” by increasing use of biofuels. For the Navy, this means buying large volumes of ultra-expensive “advanced” biofuels, despite the fact that there’s an oil and gas boom in America.

About a minute into the interview, the host got down to brass tacks.

Bill Loveless: One of the requirements of this solicitation is that the bids be cost-competitive…as you know, the navy has taken some heat in the past for testing biofuels that cost as much as $30 a gallon. How do you expect these prices to come in this time?

Retired Vice Admiral Dennis McGinn: We have got a very good set of analyses that shows it [the price] will come in at under $3.50 per gallon. And we’ve verified that several different ways. We are absolutely confident and we are moving forward based on the assumption that it is going to be competitive with petroleum.

Hmmm…..Call me a cynic, but there are some big red flag code words in the Vice Admiral’s answer. Among them: “a very good set of analyses”, “we’ve verified that several different ways,” “absolutely confident,” “based on the assumption.” Pretty much the whole thing. It was a straightforward question—“how much will it cost?—of the sort to which the armed forces have long given obtuse responses.

The host then asked Retired Vice Admiral Dennis McGinn whether the premise of the program, which is the need for “energy independence,” wasn’t undercut by the American energy renaissance. Retired Vice Admiral Dennis McGinn responded that the Navy has to look far forward, beyond the present, when it assesses threats. This raises an obvious question: Why didn’t they foresee the oil and gas boom. Watch the whole interview below.

 

Other weekend media highlights: [click to continue…]

Cooler Heads Digest 11 July 2014

A popular Government without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or perhaps both. Knowledge will forever govern ignorance. And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives. 

James Madison

Regulating is an inherently legislative exercise, in that it entails the promulgation of rules that control private behavior. Indeed, most policy now is rendered via regulation, thanks to the geometric growth of the executive branch during the post-war years.*

However, unlike legislators in congress, executive agency bureaucrats are unaccountable to the electorate. As a result, there’s a danger that executive agencies are effectuating policy absent a popular mandate and away from the public eye.

In theory, the hazard of unaccountable policy-making could be mitigated largely by the 1966 Freedom of Information Act, which enables any person to request, without explanation or justification, access to existing, identifiable, and unpublished executive branch agency records.

b(5), e.g.

b(5), e.g.

In practice, however, federal agencies routinely circumvent information requests, and the censors’ primary tool for achieving opacity is a statutory exemption from disclosing “deliberative process.” Colloquially, it’s known as the “b(5)” exemption, after its statutory provision (5 U.S.C. §552(b)(5)); among information seekers, it’s known as the “withhold it because you want to” exemption.

To be precise, the b(5) exemption covers any “intra-agency” or “inter agency” pre-decisional communications. Its general purpose is to prevent injury to the quality of agency decisions, by preventing agencies from being forced to “operate in a fishbowl.” Whatever its underlying merits, the broad scope of b(5) lends itself to abuse by agencies seeking to hide errors and failures.

According to the Associated Press, the Obama administration’s use of this “deliberative process” exemption set all-time records in 2012 and 2013. Nate Jones, the FOIA coordinator at the National Security Archive and ace blogger, has compiled a list of the Obama’s administration’s most dubious uses, including:

  • Censoring the names of victims in the ongoing VA scandal
  • Nazi protection
  • Refusing to divulge information about the Bay of Pigs fiasco

The continued abuse of the b(5) exemption has engendered bipartisan backlash in the Congress. In late June, Chairman of the Senate Judiciary Committee Patrick Leahy (D., Vt.) and Ranking Member John Cornyn (R., Texas) introduced a bill to reform the b(5) exemption. Pursuant to their FOIA Improvement Act of 2014, agencies (and courts) now must balance the benefit to the public interest against the benefit of government employee confidentiality before withholding documents. For more on the bill, see this report by Washington Free Beacon’s CJ  Ciamarella (who, I might add, edits an edifying weekly FOIA newsletter).

Sens. Leahy & Cornyn’s effort is a laudable start, but I argue it doesn’t go far enough. If I had my druthers, Congress would exempt entire agencies from the b(5) exemption, starting with the EPA. [click to continue…]

Yesterday, I noted a New York Times article about how the Natural Resources Defense Council crafted the “blueprint” for EPA’s recently released Clean Power Plan.

Formerly at NRDC

Formerly at NRDC

So, NRDC is influencing policy, per the paper of record. With that in mind, now consider NRDC’s political exertions.

In 2003, NRDC started a 501c(4) advocacy group, NRDC Action Fund, to “work to educate and mobilize voters…” To date, most of its influence has been wielded behind the scenes. Although it dabbled in ad hominem attacks, ad hoc polling,and other political tricks during the last election cycle, “NRDC Action Fund primarily operated by encouraging its donors to donate directly to candidates or environmental advocacy groups,” according to an April article by the Washington Post’s controversial Juliet Eilperin.

Now, NRDC’s “c4,” as such groups are colloquially known inside the beltway, is taking on a more conspicuous role. Reports the Posts’s Eilperin:

The League of Conservation Voters and the Natural Resources Defense Council Action Fund are starting LeadingGreen, a collaboration that will steer donations to federal candidates and enlist the help of major donors in lobbying elected officials…”It underscores the fact we need more environmental money in politics, and we need more environmental donors doing advocacy to make sure politicians understand they feel strongly about these issues, and that’s what the new alliance is all about,” Karpinski said in an interview.” [money quote formatted]*

Political spending by special interests is but one manifestation of a phenomenon known as “regulatory capture” by those special interest of regulatory agencies. Another is the existence of a “revolving door” between special interests and agencies; to this end, NRDC is well represented at the EPA among political appointees. The spoils of regulatory capture include policy-making prerogatives of the sort described in the aforementioned New York Times article about the NRDC’ “blueprint.”

In the 1970s, there was widespread belief that industry had captured New Deal-era regulatory agencies, resulting in lax oversight. Today, the nature of regulatory capture is different, at least it is at the EPA. There, environmental special interests have captured the agency in order to co-opt state power in the persecution of industrial foes. The result is mindless, industry-specific regulations, like the Clean Power Plan, Utility MACT, Regional Haze, and many more.

*I’d be remiss if I failed to give mention to the political contributions of the Sierra Club to the Obama Administration in particular. On Sierra Club’s Politics & Elections webpage, the organization boasts of how, “Working closely with Obama for America, we recruited more than 12,000 members to join Environmentalists for Obama, to participate in “Get Out the Vote” (GOTV) shifts on Election Day, and to plug into the Obama campaign dashboard to make over 30,000 phone calls…It worked. On November 9, the Obama campaign acknowledged our contribution this cycle, stating the Club was “an integral part of (the) win.” Sierra Club is no less well represented at the EPA than is the NRDC.

On the one hand: In a previous post, I explained how the Natural Resources Defense Council used to argue that EPA does not have the authority to regulate greenhouse gases from power plants under §111(d) of the Clean Air Act.

On the other: In Sunday’s New York Times, there’s a hagiography of the NRDC lawyers—“combatants”—who, according to the paper of record, wrote the policy brief that served as the “blueprint” for the EPA’s recently released plan to regulate greenhouse gases from power plants pursuant to  §111(d) of the Clean Air Act, a.k.a. the “innovative and audacious” Clean Power Plan.

That’s a gross inconsistency that these esquires would be kind to explain. Of course, I’m not holding my breath. 

Below, I’ve reposted the first few purple paragraphs of the New York Times profile; here’s the link. See here for a more detailed look as to whether EPA has the authority to issue the Clean Power Plan. (The agency doesn’t, fyi).

WASHINGTON — In November 2010, three combatants gathered in a sleek office here to build a carbon emissions policy that they hoped to sell to the Obama administration. [click to continue…]

Last Friday, EPA issued a pre-publication version of the agency’s 51st regulatory takeover of a state Clean Air Act program, also known as a Federal Implementation Plan (“FIP”). This time, the victim was Arizona. To be precise, the agency imposed visibility improvement requirements, known as Regional Haze, on at a number of stationary sources in Arizona, including: Tucson Electric Power’s Sundt Generating Station Unit 4, Lhoist North America’s Nelson Lime Plant Kilns 1 and 2, ASARCO Inc.’s Hayden Smelter, Freeport-McMoran Inc.’s Miami Smelter, Phoenix Cement Co.’s Clarkdale Plant Kiln 4 and CalPortland Cement’s Rillito Plant Kiln 4. Compliance will cost the affected entities millions of dollars; the “benefits,” alas, are apparitional. The regulation won’t engender a discernible improvement in visibility.

Below, I’ve provided an ongoing analysis compiled by globalwarming.org, of Clean Air Act FIPs rendered by each of the last four Presidents. As is rendered clear by the chart, President Obama has taken a very different view of Clean Air Act cooperative federalism than has his predecessors. Evidently, Obama’s is the age of uncooperative federalism.

Indendence Post

Today, CEI submitted comments on EPA’s Proposed Consent Decree in Sierra Club et al. v. McCarthy, Civil Action No 3:13-cv-3953-SI (N.D. Cal.) Docket ID: EPA-HQ-OGC-2014-0421. I explained the underlying matter in a previous post for Document Dump Fridays. I’ve reposted the comment below.

Competitive Enterprise Institute Comments on Proposed Consent Decree in Sierra Club Et Al

Background: Three Types of Laws

There are three types of “official” laws, and their differences figure prominently in the fate of EPA’s recently proposed Clean Power Plan.

  • Slip Laws: These are the individual acts and resolutions passed by Congress & signed into law by the President.
  • Statutes at Large: All slip laws during a given Congress are bundled into session laws, which are compiled into the Statutes at Large.
  • United States Code: Statutes at Large are terrible for searching purposes; since 1926, the Statutes at Large have been organized in the United States Code so as to make easier legal research.

The United States Code establishes “prima facie” the laws of the United States (1 U.S.C. § 54 (a)), but the text of the Statutes at Large is “legal evidence” of the laws enacted by Congress (1 U.S.C. §112).. It follows that the Code controls, unless it is “inconsistent” with the Statutes at Large, the ultimate authority. (Stephan v. U.S., 319 US 423, 426).

Background: A Brief Legislative History of 111(d)

EPA’s  recently proposed climate rule for existing power plants is based on Clean Air Act §111(d). This provision authorizes the agency to prescribe “regulations” for “any air pollutant” from “any existing source.” These regulations, in turn, guide the States formulation of “standards of performance” to control pollution from the source in question.

In what turns out to be a common happenstance (more on that below), Clean Air Act §111(d)’s legislative history resulted in an inadvertent textual discrepancy between the United States Code and the Statutes at Large.

As originally enacted in 1970, §111(d) included an exclusion that prohibited EPA from prescribing §111(d) regulations for any hazardous air pollutant already regulated under §112 of the Clean Air Act. The idea behind this “§112 Exclusion” was to avoid duplicative regulation.

In 1990, Congress amended the Clean Air Act. If you’ll recall the ‘how a bill becomes a law’ jingle, the House and Senate each pass a version of the bill. Often, the texts of these bills are different. Any differences between the House and Senate versions are then reconciled in a Conference Committee.

The House of Representatives passed a bill that fundamentally changed the nature of the §112 exclusion. Before the 1990 Clean Air Act Amendments, the exclusion from 111(d) applied to hazardous air pollutants regulated under §112; under the House bill, this exclusion applied to §112 source categories (rather than §112 pollutants).

Unlike the House, the Senate bill left unchanged the pre-1990 §112 Exclusion. That is, the Senate version maintained a prohibition on EPA’s issuance of 111(d) regulations for §112 hazardous air pollutants. However, in order to harmonize the pre-1990 §112 Exclusion with the language of the 1990 Clean Air Act Amendments, the Senate passed a “conforming” amendment to 111(d). Thus, the Senate’s amendment was a ministerial change.

The Conference Committee adopted the House’s substantive amendment. Logically, the adoption of the House language rendered moot the Senate clerical language. However, the Conference Committee failed to remove the Senate’s conforming amendment. As a result, the Statutes at Large contain both the House’s substantive amendment and the Senate’s conforming amendment.

The United States Code, on the other hand, contains only the House version of the §112 Exclusion (which, again, applies to categories rather than pollutants). Notably, in omitting the Senate language, the codifier stated that the Senate’s conforming amendment “could not be executed.”

Taken at face value, the House language—as codified in the U.S. Code—would outlaw EPA’s climate change rules for existing power plants. This is due to the fact that the agency, in February, 2012, published a regulation (the ridiculous Utility MACT) that subjected power plants to §112 requirements. Therefore, pursuant to the House version of the 1990 Clean Air Amendments/U.S. Code, power plants are a “source category” excluded from §111(d) regulations.

Dueling Legal Theories: EPA v. State AGs (led by West Virginia AG Morrisey)

EPA, of course, has an interpretation of the Clean Air Act that differs from a plain reading of the U.S. Code. After all, the agency did propose major climate regulations based on its 111(d) authority; this regulation would be illegal at face value pursuant to a strict reading of the U.S. Code.

Recall from the first section of this post that the U.S. Code establishes “prima facie” the laws of the U.S., unless it conflicts with the Statutes at Large, which are the ultimate authority. In a legal memo issued concomitantly with the proposed rule, EPA argues that the Statutes at Large are inconsistent with the U.S. Code on §111(d), due to the presence of the Senate’s ministerial language in the former but not the latter. Due to this “inconsistency,” EPA claims that the Statutes at Large, rather than the U.S. Code, are the controlling text.

Turning to the [putatively controlling] Statutes at Large, the agency reads the House’s substantive amendment as conflicting with the Senate’s conforming amendment. Under EPA’s interpretation, this incompatibility creates a statutory ambiguity. Due to this statutory ambiguity, the agency claims it possess the discretion to render a reasonable interpretation. Not surprisingly, EPA’s interpretation ignores the House’s substantive amendment that would have prohibited the agency’s Clean Power Plan.

West Virginia Attorney General Patrick Morrisey’s office has been leading the charge against EPA’s interpretation of the “§112 Exclusion.” In a June 7 letter, AG Morrisey first presented his case; new evidence was added in a June 26th amicus brief, to which AGs from Ohio, Oklahoma, Kentucky, Alaska, South Carolina, Wyoming, and Nebraska were cosignatories. Both documents are reposted at the bottom of this blog.

In a nutshell (explained further below), the AGs argue that EPA is willfully mistaking the distinction between a “conforming” amendment and a “substantive” amendment. They present compelling evidence that the 111(d) “conforming” amendment in the Statutes at Large is, in fact, a “drafting error” that cannot be given any force. As a result, the AGs argue, there is no “inconsistency” between the States at Large and the U.S. Code, and the latter must control. And, again, pursuant to the U.S. Code, the agency has no authority to prescribe §111(d) regulations for power plants.

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