Features

There’s a very interesting legal argument that the Clean Air Act forbids EPA from regulating greenhouse gases from existing power plants, which is the purpose of a major climate change rule proposed by the agency on June 2. In a nutshell, the argument goes like this:

  • EPA’s climate regulatory regime for existing sources is authorized by §111(d)
  • In 1990 Amendments to the Clean Air Act, Congress barred EPA from issuing §111(d) regulations for any source category that is also subject to §112 standards for hazardous air pollution. This exclusion is found in 111(d)(1)(A)(i)*
  • In February 2012, EPA promulgated §112 standards for power plants (the ridiculous Utility MACT).
  • Therefore, EPA is prohibited from subjecting power plants to §111(d) regulations.

Environmental special interests, on the other hand, currently claim that this line of reasoning has no merit. To this end, they point to the existence of a drafting error rendered during the Conference Committee to reconcile the House and Senate versions of the 1990 Clean Air Act Amendments. According to leading environmental lawyers, there are, in fact, two versions of §111(d)(1)(A)(i) as it pertains to the §112 exclusion, and, as a result, the text is ambiguous. Statutory ambiguity, in turn, is a classic trigger for judicial deference to agency interpretation.

Consider, for example, David Doniger, Policy Director and Senior Attorney, Natural Resources Defense Council Climate and Clean Air Program. Here’s what he said about the matter at a May 23 Federalist Society event (video above):

[At the 59:20 mark] When you look at this statute, it turns out that Congress really kind of screwed up in 1990. They adopted two provisions in two different sections of the 1990 Clean Air Act Amendments that both modified the same sentence of §111(d), and the codifiers didn’t know what to do. So they tried, and picked one version of it, and put it in the US code. But it turns out that what is really the law of the land, is the Statute at Large. So you have to reconcile these two inconsistent amendments adopted at the same time to a single sentence of the CAA. If there ever was a place when the Chevron doctrine applies, it’s gotta be that, where the statute is literally a mutation in the process in dividing and combining between the House and Senate. And the agency is going to end up with the leeway to resolve that. The EPA did produce a resolution to that in the [pause] I believe it was the mercury regulations or maybe it was a recent one. And I think the Supreme Court will spend five minutes on that one.

I’ve added the formatting to highlight Doniger’s correct claim that the EPA has indeed “produce[d] a resolution” to this textual discrepancy. The agency first did so in 2005, as part of its Clean Air Mercury Rule. Briefly, EPA’s 2005 mercury rule would have exempted power plants from §112 hazardous air pollution controls, and instead subjected them to §111(d) controls for mercury. NRDC, for whom Doniger works, opposed the 2005 Clean Air Mercury Rule. And a key component of NRDC’s legal reasoning–at that time, at least–was that the Clean Air Act bars EPA from imposing §111(d) requirements on a source that is already subject to §112 standards. See for yourself: At the bottom of this post, I’ve reposted NRDC’s reply brief in opposition to the 2005 mercury standards. (See Part II, “EPA May Not Adopt §111 Standards for EGU Emissions of Listed HAPS,” p 13, where the environmental plaintiffs state that the Clean Air Act “…prohibits EPA from setting §111 standard for pollutants like mercury “emitted from a source category which is regulated under section 112”…”)

[click to continue…]

[Editor’s Note“Primary Document Dump Fridays” is a new weekly feature at globalwarming.org. Every Friday, we’ll post all the primary documents relevant to a major issue]

For this week’s Primary Document Dump, we’ve chosen to highlight an ongoing “sue and settle” outrage that demonstrates everything insidious about this practice that has proliferated in the Obama Age.

Sue and settle refers to sweetheart lawsuits between EPA and environmental groups. The victims are States, which get left out of negotiations with a material impact on policy-making, despite the fact that they—the States—are EPA’s rightful partners (rather than green groups).

How Sue & Settle Works

In fact, the opportunity for such sue and settle shenanigans is created by the Congress’s overreliance on deadlines in environmental statutes. The Clean Air Act, in particular, contains far many more date-certain duties than the agency has proven capable of performing. Since 1993, of 200 date-certain duties pursuant to three core Clean Air Act programs, only 2% were completed on time, and the agency was, on average, late by almost 6 years.

Missed deadlines, per se, wouldn’t be problematic. However, they have become a policy problem because the Clean Air Act empowers environmental special interests to sue in order to compel the agency to perform any nondiscretionary duty. In the case of a “sue and settle,” an environmental group sues over a missed deadline, and, instead of litigating (and thereby defending its prerogative to set its own priorities), the agency immediately agrees to settle.

If the EPA is out of compliance with virtually all its Clean Air Act deadlines, as is demonstrated by the data above, then clearly the agency has limited resources relative to its responsibilities. As a result, establishing any deadline determines how the EPA deploys its limited resources, which is no different than rendering policy. Of course, if the EPA wants to give priority to its many outstanding responsibilities, it should do so in cooperation with the states, which have to actually implement these regulations, rather than the likes of environmental special interests like the Sierra Club and NRDC.

For more on sue and settle in general, see these studies:

Today’s Case Study—Sierra Club, et al. v. McCarthy—Is Especially Bad

The lawsuit we highlight today is unusually harmful to States. It’s one thing to establish the agency’s priorities, in the fashion described above. It’s a whole different matter to actually negotiate substantive policy behind closed doors under the auspices of consent decree discussions, to the exclusion of affected parties. Yet this is precisely what happened in Sierra Club et al. v. McCarthy, Civil Action No. 3:13-cv-3953. Below, I describe the case, in the course of presenting every primary document of import that is related to the case. [click to continue…]

Executive agencies weren’t present at the creation. Rather, they are creations of Congress, and they enjoy no powers outside those that are delegated to them by Congress.

In delegating its authority, the Congress is quite literally granting a piece of its policy-making power to the Executive. In fact, such a delegation is a practical necessity: Congress can’t legislate every foreseeable scenario, so it must allow agencies the discretion to act within bounds established by the enabling statute (if it is to create regulatory regimes). Courts understand this; delegation is the basis of the judiciary’s deference to executive action.

Of course, a policy-making executive comports poorly with the Founding Father’s distrust of executive authority and also their view of the Congress as the primary policymaker. Simply put, policy in America should have a popular mandate. Accordingly, a federal agency’s exercise of its powers, especially when involving an expansion of authority, should have been a policy that the President campaigned on, or at least highlighted in some fashion when he or she is being vetted by the voters. That way, the American people have a say. No less an authority than the Supreme Court has identified the President’s popular mandate as a basis for deference to agency decision-making.

All this brings me to my point: the conspicuous absence of a popular mandate for EPA’s climate plan for existing power plants, which will be unveiled today. Consider:

  • The President campaigned to the right of Mitt Romney on energy and environment. During the 2012 Presidential debates, Obama never once mentioned global warming.
  • As noted by my colleague Marlo Lewis, the Congress explicitly considered the policies that EPA is now proposing to impose. As such, the people’s representatives have spoken to the issue, and they didn’t proceed with policy.
  • As if that’s not enough, poll after poll demonstrates that the American electorate gives ultra-low priority to global warming.

Taken as a whole, the available evidence strongly indicates the President’s climate plan is illegitimate.

When it comes to the expansion of federal power, Barack Obama is a once-in-a-generation President. According to data compiled by globalwarming.org, President Obama’s EPA has executed as many Clean Air Act regulatory takeovers of State programs than the previous three administrations combined, multiplied by 10.

The charts below depict the number of Clean Air Act federal implementation plans imposed by EPA, broken down into presidential terms and also by year.* A federal implementation plan, or FIP, is the most extreme action the EPA can take against a State under the cooperative federalism scheme created by Congress. A FIP entails a complete EPA takeover from the state of the regulatory regime in question. With this in mind, the chart below speaks volumes about cooperative federalism as practiced in the Obama era.

FIP Chart 2 [click to continue…]

Post image for The West Antarctic Ice Sheet Is Doomed — but don’t sell the beach house!

Three recent studies on the West Antarctic Ice Sheet (WAIS) are making waves in the media, re-stoking fears of catastrophic sea-level rise, and putting a spring in the step of many a carbon-taxer.

Thomas Sumner summarizes two of the studies in a Science magazine commentary titled “No Stopping the Collapse of the West Antarctic Ice Sheet.” The studies, he writes, conclude that:

Thwaites Glacier, a keystone holding the massive West Antarctic Ice Sheet together, is starting to collapse. In the long run, they say, the entire ice sheet is doomed. Its meltwater would raise sea levels by more than 3 meters.

Specifically, Joughin et al., writing in Science, find that “in as few as 2 centuries Thwaites Glacier’s edge will recede past an underwater ridge now stalling its retreat. Their models suggest that the glacier will then cascade into rapid collapse.” Rignot et al., writing in Geophysical Research Letters (GRL), “describes recent radar mapping of West Antarctica’s glaciers and confirms that the 600-meter-deep ridge is the final obstacle before the bedrock underlying the glacier dips into a deep basin.”

In addition, McMillan et al., also writing in GRL, report that Antarctica as a whole is losing about 159 billion tons of ice per year. That’s an amount larger than previous estimates and translates to an overall sea-level rise contribution of 0.45 mm/year (1.7 inches per century).

The first two studies expressly conclude that the Thwaites and neighboring outlet glaciers have retreated to a point of no return and that, once gone, nothing can prevent the rest of the WAIS from flowing into the sea.

My initial reaction was: What’s really new here?

Conway et al. (1999), a study of the relentless retreat of the WAIS grounding line since the early-to-mid Holocene (i.e. 9,000 years ago or more), and Bindschadler (2006), a study of the inexorable melting of submarine glaciers in contact with warm ocean currents, both concluded that the WAIS is doomed.*

[click to continue…]

Post image for Federalism Red Alert: President’s Reported Climate Plan Would Subject State Energy Planning to EPA Control

President Obama reportedly is considering a climate change plan that would upend oversight of the electric industry in all 50 States– without a popular mandate from either the Congress or a single State Legislature.

The regulation of electricity provision has been the primary preserve of the States since the New Deal. With the passage of the Public Utility Holding Company Act in 1935, the Congress facilitated State oversight of electric utilities; the law was intended to inhibit speculation in electric utilities, a cause of the Great Depression, by dividing the market into 50 parts (i.e., States).  As such, all 50 States have a regulatory body, usually known as a “Public Utilities Commission,” that functions to overlord electricity production within State borders. If, for example, a utility needs to build a power plant or raise rates, it must get PUC permission. And if a State Legislature were to enact a law affecting the electricity industry, such a mandate would be implemented by the PUC. Thus, States control the electricity industry within their borders.

This state-centric model for electricity oversight would be altered radically by the climate plan President Obama reportedly is considering for release next month. Per Bloomberg:

According to two people familiar with the discussions, the administration is considering an approach that would require a cut of 25 percent in emissions in two stages. In the five years starting in 2019, only limited reductions at the plants would be mandated. Deeper cuts would required from 2024 to 2029 to reach 25 percent, one of the people said…

The rules could achieve steeper cuts at a lower cost if the targets are based on a more holistic view of an electrical system—the operating generating units, power lines, opportunities for renewable energy, and even reductions in use by customers.

Setting aside the conspicuous legal problems attendant to such a “beyond the fence” approach under the Clean Air Act,* the President’s reported proposal raises huge federalism concerns. In practice (as reported by Bloomberg), the President’s plan would bind the hands of all 50 PUCs, by requiring them to re-orient their energy planning to meet a 25% reduction in emissions. In order to achieve the President’s goal, State PUCs would be forced to adopt from among a suit of bad policies, including:

  • Soviet-style green energy production quotas;
  • silly demand-side management programs that force consumers to use less energy;
  • and  regressive ratepayer subsidies to owners of rooftop solar systems.

Because the President’s climate plan is based on the Clean Air Act, EPA would have the authority to impose a Federal Implementation Plan—i.e., a regulatory take-over—if the agency disagrees with a State on energy policy. Pursuant to this authority, EPA would have the power to impose energy Federal Implementation Plans on the States.

[click to continue…]

Post image for Irwin Stelzer’s ‘Conservative’ Carbon Tax. What Would Reagan Do?

Irwin Stelzer has a column in the Weekly Standard titled “Let’s tax carbon: It’s the worst form of energy policy except for all the others that have been tried.” Clever but not wise.

Whether or not a carbon tax is better than other ‘green’ energy schemes, it is not better than the free-market policy President Obama and Sen. Majority Leader Harry Reid won’t let us try: A broad-based strategy to “unleash” what Manhattan Institute scholar Mark Mills calls the “North American energy colossus.”

Stelzer worries the feds will run out of money and be forced to raise other taxes if they can’t tax carbon. He doesn’t explain why taxing carbon is preferable to taxing income, except for a glib remark that it’s better to have “taxes on bad stuff rather than on work and investment.” But carbon taxes are a tax on carbon-based (fossil) fuels, which supply 82% of U.S. commercial energy, and energy, like labor and capital, is a factor of production. In fact, without carbon-based energy, few of us would be employed — or even exist. A carbon tax is an indirect tax on labor and production — the good stuff.

Moreover, as Institute for Energy Research scholar Robert Murphy points out, the smaller the base on which a tax of a given size is levied, the more distortionary the effects. The base of a carbon tax — particular commodities or industries — is narrower than the base for retail sales, income, and labor taxes. Stelzer’s got it backwards. Substituting carbon taxes for income taxes – and especially adding carbon taxes on top of income taxes, as he envisions – would make the tax system less “efficient.”

Besides, there is no hope of avoiding fiscal ruin without sustained robust economic growth, and fossil energy development is one of the few bright spots in the economy. Tax a thing, and you get less of it: Econ 101.

Stelzer professes to like fracking and oil and even coal, but somehow sees nothing problematic about promoting a tax the basic premise of which is that fossil fuels are destroying the planet and should be suppressed. Especially in an election year, conservative politicians cannot adopt an agenda so deeply conflicted without dividing the movement and demoralizing its base. [click to continue…]

Post image for Renewable Fuel Standard: The False “Certainty” of a Rigged Market

The Hill (May 16, 2014) reports that almost 8 in 10 U.S. biodiesel producers have cut back production this year. According to a National Biodiesel Board (NBB) survey, 78% of producers reduced output, 57% of companies have idled or shut down plants, and 66% have downsized workforces or are considering it. 

NBB blames the downturn on “uncertainty” over federal biodiesel programs. Specifically:

Almost all of the surveyed companies attribute the industry’s decline to two recent policy developments: the expiration at the end of last year of the tax credit to produce biodiesel and a proposal last year by the Environmental Protection Agency not to increase the biodiesel mandate in the Renewable Fuel Standard.

This, however, is a tacit confession that the biodiesel market is rigged and begins to fall apart as soon as government relaxes its grip on taxpayers and the industry’s involuntary servants.

Two things should be obvious to biodiesel producers.

(1) What the state can giveth the state can taketh away. Everybody has a natural right to compete for willing buyers in the marketplace. Nobody has a natural right to compel others to buy his products. The Renewable Fuel Standard (RFS) fabricates such rights, but entitlements exist at the pleasure of the powers that contrive and administer them. It is foolish to regard RFS blending targets as property rights that can’t be taken from you — especially when the whole system depends on violating the property rights of others, namely refiners, whose facilities the RFS commandeers to process and sell your product!

(2) The RFS is heading for a crackup. The statutory target for 2014 (18.15 billion gallons) exceeds by approximately 3 billion gallons the amount of biofuel that can actually be sold given the size of the U.S. motor fuel market and the incompatibility of most vehicles and retail fueling infrastructure with blends higher than 10% ethanol. This “blend wall” problem will get worse if refiners’ obligations increase in lockstep with the statutory targets while overall motor-fuel demand declines as forecast. When Soviet-style production quota get too far out of whack with actual market conditions, central planners will make adjustments to avoid outright policy failure and political embarrassment. It is foolish to suppose they will sacrifice their careers to protect biofuel producers’ bottom lines.

Naturally, special interests complain when technical or fiscal constraints intrude on their gravy train. But why should the rest us of bail them out?

We would all be better off in the long-run if government stopped trying to pick energy market winners and losers. The RFS is a system of legal plunder and should be abolished.

In his 1850 classic, The Law, Frederic Bastiat asks: How is legal plunder to be identifed? He answers, in part: “See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” A sales rep of any company who forced you to buy its products would go to jail.

The pertinent passage from The Law is reproduced below. The final two paragraphs are an apt commentary on the wailing and whining over EPA’s scaleback of the RFS blending targets. [click to continue…]

Post image for Regulatory Capture Comes Full Circle at the EPA

By 1970, it was commonly held that New Deal era regulatory agencies had been “captured” by the industries they were supposed to oversee. According to this influential school of thought, industry’s political spending and also its close cooperation with regulators led to cozy relationships that undermined effective oversight. The most conspicuous manifestation of regulatory capture was a “revolving door” of employment between regulatory agencies and industry.

The 1970 Clean Air Act was supposed to be the antidote to regulatory capture. The law was unusually long and detailed; it was, moreover, replete with deadlines, which were then a novel legislative tool. Most consequential of all, Congress empowered environmental special interests to litigate in order to enforce the law’s many duties. By so crafting the statute, Members of Congress intended to supplant agency discretion with legislative direction and public oversight, and thereby curtail the possibility of regulatory capture.

Since the enactment of the Clean Air Act, environmental special interests have prospered, primarily by leveraging the unique authorities they were accorded in the statute. In 2012, for example, NRDC and Sierra Club had revenues of approximately $100 million and $80 million, respectively. Thus enriched, both organizations now operate sophisticated campaign to influence political outcomes.**Moreover, by employing a legal strategy known as “sue and settle,” these environmental groups have seized EPA’s regulatory initiative. (Paradoxically, “sue and settle,” which is a means of contemporary regulatory capture, is made possible only by virtue of the Clean Air Act’s many deadlines—i.e., the supposed “solution” to regulatory capture in 1970.) In short, environmental special interests are exhibiting virtually all of the behaviors that defined regulatory capture 40 years ago…

…including a revolving door. Consider the following, non-comprehensive list of current and recent EPA political appointees that have come from green litigation groups (and vice-versa): [click to continue…]

Post image for Will EPA’s Carbon “Pollution” Rules Implement the Defunct Waxman-Markey Bill?

Will EPA’s Carbon Rules implement the defunct Waxman-Markey cap-and-trade bill?

That’s a question I addressed in a previous post and more recently in a comment letter to EPA on its proposed Carbon Rule for new fossil-fuel power plants. Today’s post offers a more complete discussion.

The Waxman-Markey bill (H.R. 2454), officially titled the American Clean Energy and Security Act (ACESA) of 2009, aimed to rapidly phase-out coal-based power in the U.S. via three types of carbon dioxide (CO2) regulation:

  1. New source performance standards (NSPS) for coal-fueled power plants (section 116). New coal power plants permitted between Jan. 1, 2009 and Jan. 1, 2020 would have to achieve a 50% reduction in CO2 emissions. The only technology capable of meeting that standard is carbon capture and storage (CCS), which can make new coal power plants 5 times more expensive than new natural gas combined cycle (NGCC) plants (see Table 2 of this EIA report). Unless heavily subsidized, utilities planning to build coal power plants would “fuel switch” and build new NGCC plants instead.
  2. A cap-and-trade program covering all major emitters (Title III). Existing coal power plants and other major emitters would have to achieve aggregate CO2-equivalent greenhouse gas emission reductions of 3% below 2005 levels by 2012, 17% below by 2020, 42% below by 2030, and 83% below by 2050.
  3. A combined efficiency and renewable electricity standard (Title I). Utilities would have to supply increasing percentages of electricity from a combination of efficiency upgrades and renewable sources (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 20% in 2020-2039).

Let’s consider the parallels — both obvious and tacit — between the Waxman-Markey regulatory Troika and EPA’s Carbon Rules. [click to continue…]