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Last Friday, 12 Attorneys General filed a lawsuit challenging EPA’s recently proposed greenhouse gas regulations for existing power plants, known as the Clean Power Plan. Putting aside the significant procedural and jurisdictional matters attendant to the case, the meat and potatoes of the AGs’ complaint is that 1990 amendments to the Clean Air Act prohibit EPA from issuing the rule.

In response to a reporter’s query, NRDC’s David Doniger called the lawsuit “laughable.” And in a follow up post for NRDC’s blog, Doniger used the modifier “lame” to describe the litigation’s substantive allegations regarding the 1990 Clean Air Act Amendments.

In reality, however, it is Doniger’s comments that are “lame.” They’re actually worse than lame; they’re the epitome of legal cynicism. This is because NRDC used to make the same argument that is now being advanced by the States. Simply put: NRDC used to argue that EPA doesn’t have the authority to issue the Clean Power Plan. Talk about your all-time flip-flops!

In a previous post, I explained the legislative backstory:

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” …

As originally enacted in 1970, §111(d) included an exclusion that prohibited EPA from prescribing §111(d) regulations for any hazardous air pollutant already regulated under §112 of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…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.

In a nutshell, the 1990 Clean Air Act Amendments contained two provisions that circumscribe EPA’s authority under §111(d)—one originating in the House and one in the Senate. The House version prohibits EPA from issuing §111(d) standards for source categories subject to §112, while the Senate version prohibits EPA from issuing §111(d) standards for pollutants subject to §112.*

This “§112 Exemption” is important because EPA in 2012 subjected power plants to §112 standards. Due to the fact that this source category—power plants—is now subject to §112, it is exempt from §111(d) standards, pursuant to the aforementioned House version of the “§112 Exemption.” That is, the Clean Power Plan is illegal if the House provision is given any meaning. To this end, the Attorneys General argue** that the House and Senate provisions can co-exist cogently, such that each retains its meaning. Thus read, the 1990 Clean Air Act Amendments prohibit EPA from issuing the Clean Power Plan.

According to Doniger, this legal reasoning is “lame.” Yet NRDC used to make the exact same argument! Seven years ago, NRDC opposed a Bush-era rule that would have regulated mercury pursuant to Clean Air Act §111(d), and, in this capacity, Doniger’s employer argued that EPA doesn’t have the authority to issue §111(d) regulations for power plants.

Don’t take my word for it! Below, I’ve reprinted this key paragraph from NRDC’s brief seeking to overturn the Bush-era rule:

EPA fails to refute Environmental Petitioners’ argument that the plain statutory reading that most readily ‘fit[s]… all parts into an harmonious whole’ prohibits EPA from setting § 111 standards for pollutants like mercury “emitted from a source category which is regulated under section 112” or included on the §112(b) list of pollutants... [Formatting added; internal citations omitted].

NRDC’s words speak for themselves. The organization argued before the D.C. Circuit Court of Appeals that EPA does not have the authority to establish §111(d) standards for pollutants like greenhouse gases, which are “emitted from a source category which is regulated under section 112.” This raises an important question: How can the AGs’ argument be “lame” if the NRDC used to make it?***

In a July 6th New York Times article, Cora Davenport reports that David Doniger was one of three NRDC lawyers who wrote the “blueprint” for EPA’s Clean Power Plan. It is “laughable” that the NRDC would write the “blueprint” for a regulation whose legality it used to contest. [click to continue…]

Two events last Wednesday morning demonstrate well the EPA’s dichotomous approach to collaboration: If you’re an environmental special interest that helped Obama get elected, EPA welcomes you with open arms; if you’re anybody else, EPA will spurn you.

DOEThe first such event was a House Science, Space, and Technology Committee hearing on EPA’s regulatory regime for climate change. Panelists included Charles McConnell, who was assistant secretary for fossil energy at the Energy Department until early 2013. His office was responsible for facilitating federal assistance in the development of carbon capture and sequester (CCS) technology. In fact, EPA proposed to require CCS technology in its controversial carbon rule for new coal-fired power plants, the Carbon Pollution Standard. You’d think that the agency would welcome the Energy Department’s assistance, given that the EPA possesses no expertise in CCS technology. Alas, you’d be wrong. McConnell told the committee that “a true collaborative effort would have been far different from what I observed.” According to Mr. McConnell, EPA viewed the interagency process as a “box-checking exercise” and he called the agency’s attitude “disingenuous.”*

Thus, EPA rejected collaboration with a sister agency. Moreover, as I’ve long noted on this blog, Obama’s EPA has had an unprecedentedly poor relationship with States, which are supposed to be the agency’s partners under the cooperative federalism framework established by the Clean Air Act and other enabling statutes.  And it goes without saying that this EPA treats “dirty” industry with contempt. The upshot is that this EPA refuses to play nice with either the public or the private sector.

The second Wednesday event served to demonstrate that there’s at least one sector to which EPA is solicitous, and that’s environmental special interests. At 11:30 AM, the Senate Environment & Public Works minority staff released an informative new report, “Billionaire’s Club,” that neatly explains the web of elite political donors, green groups, and EPA political appointees that together have effectively seized the reins of policy-making at the agency. I found particularly edifying the EPW report’s section on the “revolving door” between environmental special interests and EPA, a subject that has been broached before on this blog.

Further evidence to this end—that of demonstrating regulatory capture of EPA by green special interests—is lent by a July 6th New York Times article, which reports that three lobbyists at the NRDC wrote the “blueprint” for EPA’s greenhouse gas regulations for existing power plants.   [click to continue…]

Cellulosic ethanol is a transportation “bio”fuel made from anything other than food. There was no cellulosic industry in the U.S. in 2007, when Congress decided to create one from scratch with the passage of the Energy Independence and Security Act. To this end, lawmakers simply mandated ever-increasing volumes of production, until 2022, when cellulosic ethanol is supposed to account for about 10% of the total market for transportation fuels.

In 2014, for example, the statutory mandate is 1.75 billion gallons. So how’s that working out for us?

No so well, according to Platts Senior Editor Herman Wang. In an interview in this Sunday’s Platts Energy Week with Bill Loveless, Mr. Wang estimates that the market has produced a paltry 50,000 gallons of cellulosic ethanol so far in 2014, or .003% of the requirement codified by law. Nor is there much hope of a production breakout in the second half of the year, as the industry is in total disarray, reports Mr. Wang.

This is an industry that has been billed a game changer in the U.S. transportation fuels sector, but reality has yet to catch up to the hype. Last year, there were signs this industry may be turning the corner. There was a company Kior that in March said it had generated its first renewable credits, called RINs…and in July, we had another company, Ineos Bio, say that they had produced there first commercial quantities. So things were looking up. Since then, it’s been bad news. Ineos bio has since said that it’s suffering what it called “unexpected startup problems.” And Kior had to shut down its facility due to finance problems…The EPA, which tracks biofuel production from month to month, just announced that in June, 0 gallons of cellulosic biofuels were produced. This is the second month in a row, there’s been no production.

In practice, EPA has been revising Congress’s impossible targets such that they become only somewhat less impossible. In 2011, for example, EPA revised the Congress’s 250 million gallon target to 6 million gallons, but, in fact, 0 gallons were produced. For 2012, Congress’s original target was greater than 500 million gallons but it was reduced down to 10.45 million gallons, which was still outrageous because the industry produced only 20,000. According to Mr. Wang, EPA revised the 2014 target to 17 million. This is, obviously, far higher than the 50,000 gallons that are likely to represent total production for 2014.

As I explain here, the absence of a breakthrough by the cellulosic industry presents a quintessential example of how the government is incapable of creating markets by command. This point is demonstrated visually in the graphic below, which plots the statutory requirements against EPA’s revised targets (which themselves are a proxy for actual production). As is readily evident, the gulf is widening between the congress’s command and reality. [click to continue…]

Cooler Heads Digest 1 August 2014

Post image for IMF Calls for $1.60/Gal. Hike in Motor Fuel Taxes

The International Monetary Fund (IMF) has just published a 277-page report advocating carbon taxes. Titled Getting Energy Prices Right: From Principle to Practice, the report is described by IMF officials as “an effort to push countries into action well ahead of new treaty negotiations,” according to Climatewire ($).

I have ordered a copy from Amazon.Com, but it won’t arrive until Monday. In the meantime, let’s review some of the arguments put forward by IMF spokespersons in media coverage of the report.

My overall impression is that the report doesn’t offer any new rationales for carbon taxes that I haven’t already rebutted in previous posts (here, here, and here).

For starters, IMF assumes that, despite “many controversies and uncertainties,” the social cost of carbon (SCC) is a knowable quantity, enabling benevolent central planners to ‘get energy prices right’ and, therefore, improve overall economic efficiency. To quote IMF Managing Director Christine Lagarde, setting corrective taxes to make businesses and consumers pay for environmental damage is “not rocket science” and “straightforward in principle.”

In reality, the SCC exists only in the eye of the beholder. It is a guesstimate derived from non-validated climate parameters, made-up damage functions, and (usually) below-market discount rates. Worse, SCC analysis is computer-aided sophistry designed to make uneconomic renewables look like a bargain at any price and make fossil energy look unaffordable no matter how cheap.

For the U.S., ‘getting energy prices right’ reportedly means hiking motor fuel taxes by an additional $1.60/gal. That implies an SCC of nearly $180/metric ton of carbon dioxide (CO2).* Yet the U.S. Interagency Working Group, on whom IMF relied last year for SCC estimates (and probably still does today), proposes a central estimate of $33/ton.

Ms. Lagarde says the costs to be “corrected” include not only local pollution and CO2 but also traffic accidents and congestion. Accidents and congestion are real costs but they have nothing to do with the carbon content of gasoline or motor-fuel emissions. If every car on the road today were replaced with an all-electric vehicle, there would still be accidents and congestion. [click to continue…]

Two Wednesdays ago, the Senate Environment & Public Works Committee held a hearing on EPA’s illegitimate Clean Power Plan, about which I reported in last week’s Cooler Heads Digest. For the details, check out the Digest; for this post, my purpose is only to draw attention to the brilliant opening statement made by Sen. John Barrasso (R-WY). He took aim at the role special interests played in crafting the rule. Below, I’ve provided a partial transcript:

On July 6th of this year, the NYT wrote a piece about the outsized role that the Natural Resources Defense Council had in developing the EPA’s new regulations to curb power plant emissions…The article says it was a remarkable victory for the NRDC. Now, for those outside the beltway, NRDC is a $120 million a year lobbying machine, backed by Hollywood elites. It is absolutely shameful to me that the EPA, under the direction of this administrator, would allow a team of lawyers and lobbyists to draft their regulations…

…EPA has decided to push a rule that was drafted behind closed doors by powerful, wealthy Washington lawyers and lobbyists at the NRDC. Let’s be clear, NRDC is a wealthy, elite, powerful lobbying machine with more influence over decision making in Washington than any ordinary U.S. citizen. They have millions which gives them access. The EPA has turned a deaf ear on those that don’t.

…If I’m wrong, then NRDC and the EPA and its Administrator can and should provide all records and documents that are requested by Members of this Committee and my House colleagues on how these new regulations for coal-fired power plants were crafted. Because right now, it sure looks like a trio of high powered Washington lobbyists write their regulations for them.

If what the [New York] Times is reporting is what the EPA Administrator has called “preposterous,” then the EPA must comply with any committee and FOIA requests for these docs. Comply [with these requests], so we can know the truth. If the answer is no, that you will not comply, or that there are more record keeping mishaps, broken hard drives, or lost files, then we’ll know the truth as well.

Sen. Barrasso’s challenge is a welcome development. I wish his staff good luck and Godspeed in its efforts to uncover the extent to which special interests were given the run of the mill at EPA after having helped get the President elected. Alas, the staff’s task will prove a slog, something we know from experience.

[click to continue…]

Christopher Monckton of Brenchley yesterday posted an excellent commentary about the warming “pause” on Watts Up With That. In previous posts on this topic, Monckton has tracked the pause in the Remote Sensing Laboratory (RSS) satellite dataset. For example, in June, he reported that the global warming trend of the previous 17 years 9 months — September 1996 through May 2014 – was “zero.”

Monckton No Warming 17 Years 9 Months

In yesterday’s post, Monckton plots the average of five datasets: the RSS and UAH (University of Alabama in Huntsville) satellite datasets and the GISS (NASA), HadCRUT4 (UK Climate Research Unit), and NCDC (NOAA) surface station datasets. The averaged datasets show a period of 13 years 4 months with no net warming.

Monckton No Warming in Combined Datasets 13 Years 4 Months

This all flies in the face of the ‘worse than we thought’ school. Nearly a quarter of all fossil-fuel carbon dioxide (CO2) emissions since the dawn of the industrial revolution occurred during 2001-2010 (see chart below). Yet in the past 13-plus years, not only has there been no acceleration in warming, there has been no warming trend.

global_fossil_carbon_emissions_google_chart

Source: Carbon Dioxide Information Analysis Center

Now to the heart of the matter. Monckton compares the observed warming in the five datasets with the projected warming in IPCC reports. [click to continue…]

[EPA's Clean Power Plan] has the potential to comprehensively reorder the jurisdictional relationship between the federal government and states as it relates to the regulation of public utilities and energy development. . . . .[States] will have entered a comprehensive “mother-may-I?” relationship with the EPA that has never before existed. – FERC Commissioner Tony Clark

Five Commissioners of the Federal Energy Regulatory Commission (FERC) testified today on EPA’s Clean Power Plan before the House Energy and Commerce Subcommittee on Energy and Power.

FERC's Tony Clark

FERC’s Tony Clark

EPA’s Clean Power Plan establishes carbon dioxide (CO2) emission reduction targets for the electric power sectors of 49 states. The Plan outlines four “building block” strategies states are likely use to meet their respective targets: (1) improve the efficiency of coal power plants, (2) shift base load generation from coal to natural gas, (3) shift electric generation from fossil fuels to renewables and nuclear, and (4) reduce electricity consumption through demand-side management (DSM) programs.

In his briefing memo, Subcommittee Chairman Ed Whitfield (R-Ky.) asserts that EPA’s proposed rule “would require significant changes to the way electricity is generated, transmitted, and consumed in States across the country.” Two witnesses spoke directly to that point.

FERC Commissioner Philip D. Moeller described the fundamental change contemplated by the Clean Power Plan as a switch from “economic dispatch” to “environmental dispatch”:

For decades we have relied on the concept of “economic dispatch” of electric generation. Simply put, the power plants with the lowest operating cost are called first to generate electricity — with various reliability requirements and other factors as part of the decision, depending on the structure of various markets. By moving to what is essentially “environmental dispatch,” units will be called to generate primarily based upon the emission profile of the unit.

It is hard to imagine how giving low-carbon generation priority over low-cost generation would not increase electric rates. It is also not hard to imagine how pushing renewables higher in the “merit order of dispatch” could complicate the task of balancing loads and ensuring grid reliability.

Commissioner Tony Clark views the basic change in political terms. The Clean Power Plan replaces cooperative federalism with a hegemonic system in which EPA has final say on how states generate, transmit, and consume electricity: [click to continue…]

Yesterday, CEI published a new study by me, on EPA’s Clean Power Plan. In a nutshell, I argue that the EPA’s rule lacks an electoral mandate, contravenes congressional intent, and was crafted by special interests. In a word, the regulation is illegitimate.

William Yeatman – EPA Climate Rule – FINAL

Yesterday I participated on a Heritage Foundation panel on ‘Extremism at the EPA: A Discussion on Federal Overreach, Regulation Costs, and Climate Realities.’ Fellow panelists were Rep. Mike Kelly (R-Penn.) and Heritage’s David Kreutzer. The event was hosted by Heritage Fellow Nicolas Loris. I’ve reposted the video below.

Rep. Kelly started things off with a rousing speech in defense of affordable energy. Kreutzer then debunked the so-called “social cost of carbon,” the dubious statistic on which EPA relies in order to justify its climate regulations. Finally, I discussed the illegitimacy of EPA’s recently proposed Clean Air Act regulations for greenhouse gases from existing power plants, known as the Clean Power Plan. Kreutzer starts at the 44th minute; I start at the 58th minute. Over at the Daily Signal, Natalie Johnson wrote a story on the panel.