So I’m here in Las Vegas, in beautiful Mandalay Bay Hotel, at Heartland Institute’s 9th International Conference on Climate Change. This morning I gave a Power Point presentation titled “Carbon Tax: A Conservative Idea Whose Time Has Come?”

A ‘conservative’ carbon tax is so loopy that at times I half believe it must be a passing fad, a bad joke, or a piece of blackboard econometric foppery rather than a grimly-determined political agenda.

But shortly after my presentation, a colleague forwarded an email he received from MIT’s Climate CoLab. The message begins:

FRIDAY: U.S. Carbon Price Webinar with former U.S. Secretary of State George Shultz and former Members of Congress Bob Inglis and Phil Sharp. . . . The Webinar will consider “How could a national price on carbon be implemented in the United States?”

The email goes on to describe the Webinar as “an exciting opportunity” for entrants in Climate CoLab’s Carbon Price Contest “to ask questions and get feedback from advisors who will also be serving as judges.” Winners can earn up to $10K in prize money. These folks mean business, and they’re putting some donor’s money where their mouths are.

Most ‘conservative’ carbon-taxers claim they want a tax that is ‘revenue neutral’ (offsets other taxes dollar-for-dollar) and replaces EPA greenhouse gas regulations, federal fuel-economy standards, state renewable energy mandates, etc. But Washington’s big spenders have no interest in tax ‘reform’ that does not ‘enhance’ revenues, and Big Green has no desire to trade away its capture of regulatory agencies — especially not for a tax that couldn’t be used to fund green-energy programs.

A revenue-neutral, regulation-dismantling carbon tax is a pipe dream.

To view my Power Point, click here.

Marlo Lewis Slide Show Carbon Tax

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…]

Post image for The Unbearable Lightness of UARG v. EPA

Utility Air Regulatory Group v. EPA, the Supreme Court global warming case decided on June 23, 2014, gave EPA a slap on the wrist and then sent the agency on its merry way to dictate national policy on climate change. As a check on EPA’s ambition, it has all the weight of a feather pillow. As a defense of the separation of powers, it is unbearably light.

Justice Antonin Scalia assembled a bare majority in favor of a face-saving political compromise. Two sharply opposed views vied for the Court’s approval:

  1. The Clean Air Act (CAA or Act) authorizes EPA to regulate greenhouse gases from stationary sources through the Act’s Prevention of Significant Deterioration (PSD) preconstruction permit program and Title V operating permit program, as Justice Breyer (joined by Justices Ginsburg, Sotomayor, and Kagan) argued in dissent.
  2. The CAA does not authorize PSD and Title V permitting for greenhouse gases, as Justice Alito (joined by Justice Thomas) argued in dissent.

Instead of endorsing one of those alternatives, the Court opined, 5-4, that PSD and Title V permitting do apply to greenhouse gases – but only for sources already subject to the permitting programs as “major” emitters of other (“conventional”) air pollutants.

Winner: EPA

This half-way house ruling, authored by Justice Scalia, allows both sides to claim victory. “In Utility Air Regulatory Group v. EPA, the Justices feed several major climate regulations into the wood chipper,” the Wall Street Journal crowed. “Today’s ruling upholds the heart of EPA’s program for regulating carbon pollution from large new industrial facilities under the [PSD] provisions of the Clean Air Act,” stated Rep. Henry Waxman (D-Calif.).

Alas, Rep. Waxman is correct. UARG v. EPA is a big win for the agency. As the Court states on p. 10, EPA sought to regulate carbon dioxide (CO2) from facilities accounting for 86% of U.S. stationary-source greenhouse gas emissions. The Court trimmed back EPA’s reach to facilities accounting for 83% of stationary-source emissions.

More importantly, the Court’s ruling allows EPA to impose greenhouse gas controls on many diverse sources (power plants, industrial/commercial boilers, pulp and paper mills, cement production facilities, iron and steel mills, refineries, nitric acid plants, and landfills), all in one fell swoop.

In contrast, had the Court nixxed PSD for greenhouse gases, EPA could regulate CO2 from stationary sources only one industry at a time by establishing new source performance standards (NSPS), such as its proposed carbon “pollution” rule for new fossil-fuel power plants. The expansion of EPA’s greenhouse gas regulatory program would have slowed to a crawl. Now, thanks to UARG v. EPA, the program will continue to grow at breakneck speed.

Consider that the carbon “pollution” rule has been more than three years in the making and is still not final. Litigation might put it and other planned greenhouse gas NSPS on hold for several more years.

UARG authorizes EPA to impose CO2 controls on multiple industries between now and President Obama’s departure. This will affect the politics of energy policy. After spending millions on regulatory compliance, industries subject to PSD for greenhouse gases may not want to see their investments go for naught. Worse, some may want EPA to impose CO2 controls on other industries to ‘level the playing field.’ UARG v. EPA will make it harder for future Congresses and the next president to re-limit EPA and roll back Obama’s anti-carbon agenda.

What the Court decided

In UARG, the Court came to the following conclusions: [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, 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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 By Willfully Confusing “Science” and “Policy” Considerations, CASAC Increases Its Power Relative to EPA 

In a previous post, I explained how the technocratic Clean Air Scientific Advisory Council was poised to try to limit EPA’s discretion to revise the national ozone standard by willfully confusing a distinction between “science” and “policy” considerations.

That which was foretold has now come to pass. In a letter dated June 26, CASAC delivered its ozone recommendation to EPA, and it couldn’t be more confusing (by insidious design). I’ve reprinted the pertinent paragraph below; it’s been formatted in order to highlight purposefully obfuscatory language:

In reaching its scientific judgment regarding a recommended range of levels for a revised ozone primary standard, the CASAC focused on the scientific evidence that identifies the type and extent of adverse effects on public health. The CASAC acknowledges that the choice of a level within the range recommended based on scientific evidence is a policy judgment under the statutory mandate of the Clean Air Act. The CASAC advises that, based on the scientific evidence, a level of 70 ppb provides little margin of safety for the protection of public health, particularly for sensitive subpopulations. In this regard, our advice differs from that offered by EPA staff in the Second Draft PA. At 70 ppb, there is substantial scientific evidence of adverse effects as detailed in the charge question responses, including decrease in lung function, increase in respiratory symptoms, and increase in airway inflammation. Although a level of 70 ppb is more protective of public health than the current standard, it may not meet the statutory requirement to protect public health with an adequate margin of safety. In this regard, the CASAC deliberated at length regarding advice on other levels that might be considered to be protective of public health with an adequate margin of safety. For example, the recommended lower bound of 60 ppb would certainly offer more public health protection than levels of 70 ppb or 65 ppb and would provide an adequate margin of safety. Thus, our policy advice is to set the level of the standard lower than 70 ppb within a range down to 60 ppb, taking into account your judgment regarding the desired margin of safety to protect public health, and taking into account that lower levels will provide incrementally greater margins of safety.

In fact, CASAC is acting pursuant to the incentives established by the judiciary. Regarding the setting of Clean Air Act national ambient air quality standards (NAAQS), the D.C. Circuit in Mississippi v. EPA (2013) established a dichotomy between “science” considerations, which are the primary preserve of CASAC (alas), and “policy” considerations, over which EPA has much greater discretion. Under this federal common law regime, CASAC’s advice is controlling when it comes to science matters. As such, CASAC can increase its own power by conflating “science” and “policy” considerations when it delivers its advice.

And that’s precisely what CASAC has done. In the June 26 letter (excerpted above and reposted below), CASAC blends the two concepts. On the one hand, CASAC claims that the dividing line between “science” and “policy” is 70 ppb ozone (“thus our policy advice is to set the level of the standard lower than 70 ppb”). On the other, the letter is infused with language suggesting that “science”/”public health” considerations justify a standard below 70 ppb (see the bold in the above passage from the letter).

FWIW, I predicted this would happen in the immediate wake of the D.C. Circuit’s Mississippi ruling.

Unfortunately, CASAC’s coup d’EPA is bad public policy. There are literally trillions of dollars at stake; by EPA’s own accounting, a 60 ppb ozone would cost about $100 billion per year. CASAC, an unelected body of technocrats, has no business rendering decisions of such gravity for all Americans. Readers of this blog might find it bizarre that I support a relative expansion of EPA discretion. Low as my opinion is of the agency’s political agenda, a CASAC alternative is even worse.

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Post image for A Festivus Review of UARG v. EPA

Infused with the Festivus spirit, I’m airing the following grievances regarding the Supreme Court’s ruling in UARG v. EPA, which was rendered Monday:

Grievance #1, to the Supreme Court: Why Didn’t You Heed Your Own Words!?!

The first part of Justice Scalia’s opinion of the Court presents a cogent case that statutory provisions must be read in context. Alas, this first part was completely ignored by the second part of the opinion, which effectively gave EPA everything it wanted.

In Section A of the ruling, the Court rejected EPA’s claim that greenhouse gases triggered PSD and Title V requirements under the unambiguous terms of the Clean Air Act. Moreover, the court in this first part found that the agency’s interpretation was unworthy of deference because it was “inconsistent with the design and structure of the Act as a whole.” So, a fundamental takeaway from Section A of the UARG ruling is that the courts and EPA must bear in mind the “fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.”

However, in the very next Section (B), the Court reverses itself. To be precise, the Court found that EPA could proceed with “Best Available Control Technology” requirements for greenhouse gases, even though the statutory context makes plain the fact that Congress never intended to authorize such a regulatory regime.

For starters, BACT is the primary regulatory requirement of the PSD program, and it’s pretty strange that the trigger for PSD is narrower than the trigger for the primary regulatory requirement pursuant to the PSD program. This is counter intuitive: If GHGs don’t trigger PSD, then why would they trigger PSD’s primary requirement (i.e., BACT)? That’s one strange Venn Diagram, no? Given this statutory context, it seems obvious that GHGs don’t belong in the PSD program, including any of its constituent provisions.

Second, under the terms of the Clean Air Act, BACT is a site-specific determination. In rendering a BACT determination, the permitting authority must weigh the costs versus the environmental benefits of implementing pollution controls at the proposed facility. But you can’t do that for greenhouse gases, because there are no environmental benefits attendant to the technology. Indeed, EPA administrator McCarthy has conceded to Congress that the agency’s rules won’t actually impact the climate. Thus, when you read the statute in context—that is, if you do what the court prescribes in the first part of the ruling—then it is obvious that BACT and GHGs are “fundamentally incompatible.”

Grievance #2, to the Petitioners: Stop Pretending That You Won!!!

As reported, UARG must seem like an amazing ruling: The stakes were huge, and no one thinks they lost. For example, here’s EPA’s claim that it won, and here’s the Wall Street Journal saying that EPA lost. The Journal’s sentiment was backed by virtually all the petitioners, including Attorneys General and the U.S. Chamber of Commerce. EPA’s position was backed by all the respondents.

My organization, CEI, was among the petitioners, and, much as it pains me, I agree with EPA and the environmental special interests. In my humble opinion, we just got our asses whipped. Allow me to elaborate.

[click to continue…]

A policy’s gravity is roughly proportional to the hyperbole it engenders from its opponents. By this admittedly loose metric, H.R. 4012, the Secret Science Reform Act, is of great import. Consider the following charges leveled by House of Representatives Science, Space,  & Technology Committee Ranking Member Eddie Bernice Johnson in her opening remarks during a committee markup of the bill on Tuesday:

  • The Secret Science Reform Act is a “pernicious assault” on EPA
  • It is “anti-science”
  • H.R. 4012 is an “insidious attack” on the agency.

Ranking Member Johnson’s purple tone is echoed by a chorus of special interests, including all of the major green groups and also the fake white coats at both the American Lung Association and the Union of Concerned Scientists.

The essence of this “pernicious assault” on EPA is aptly summed by the bill’s sponsor, Rep. David Schweikert: “public data for public policy.” In fact, EPA justifies billion dollar regulations on putative health benefits derivative of epidemiological research that the agency won’t share with the public. Instead, the agency will share the underlying data only with parties sympathetic to the agency’s regulatory agenda. Hence, the Secret Science Reform Act, which would make “publicly available” all “scientific and technical information relied on to support” a given regulation. Again, the simple purpose is public data for public policy.

Quite contrary to what the ranking member would have the public believe, the notion of “secret science” isn’t some wild-eyed Tea Party fantasy. Recently, Committee Chairman Lamar Smith received a letter in support of H.R. 4012 from 80 scientists, including George Wolff, former chair of the EPA’s Clean Air Scientific Advisory Committee in the Clinton administration and Forrest J. Remick, former commissioner of the U.S. Nuclear Regulatory Commission in the George H.W. Bush administration. They wrote that the bill would “make the agency’s regulations more accountable, credible, and enforceable.”

The bill passed out of Committee on a party line 17-13 vote. I attended the markup and what follows are some scattered thoughts: [click to continue…]