In order to survive judicial review, federal rules must be reasonable, per se, and also the product of a reasonable rulemaking process. EPA’s recent climate regulation for new power plants, known as the Carbon Pollution Standards, is neither.

  1. EPA’s Carbon Pollution Standards rule is irrational because its purpose is to decrease greenhouse gas emissions, but its effect it to increase greenhouse gas emissions

The purpose of the Carbon Pollution Standards rule is to reduce greenhouse gases from new coal-fired power plants. To this end, the agency based the regulation on the installation of emissions controls known as “carbon capture and sequestration.” These “CCS” systems work by capturing greenhouse gases emitted from a power plant’s smokestack and then piping them to empty underground reservoirs, where the emissions are injected for long term storage.

However, the technology is not yet market ready, and, as such, it is exorbitantly expensive. In order to mitigate the monumental costs of CCS, the EPA is relying on the oil industry. In some parts of the country, geological conditions exist that make it profitable for oil producers to buy carbon dioxide, inject it into wells, and thereby extract more oil. This process is known as “enhanced oil recovery,” or EOR. In the rulemaking for the Carbon Pollution Standards, EPA repeatedly explained that it expects power plant owners to defray the tremendous cost of CCS by selling captured carbon dioxide to oil producers for use in EOR. In fact, EPA’s expectation comports with mainstream analysis, as the International Energy Agency projects that 70% of new CCS projects worldwide will be linked with EOR.

So, the purpose of EPA’s Carbon Pollution Standards regulation is to decrease greenhouse gas emissions. And the rule would do so by boosting oil production. [click to continue…]

Early in 2015, SolarCity, a solar panel merchant, filed a whopper of a complaint in federal court alleging that it had suffered antitrust violations at the hands of the Salt River Project, an Arizona electricity provider. SolarCity’s complaint is rich in Alanis Morissettean irony, given that the company’s business plan, like that of all solar power retailers, is based primarily on political favoritism. Were it not for government tilting the market in their favor at the expense of conventional energy sources, SolarCity and its ilk would not exist. The company, as such, is a function of anti-competitive behavior. In this cosmic context, SolarCity’s antitrust lawsuit is like myriad spoons when you only need a knife.

Consider the case at hand. Thanks to a federal statute, the 2005 Energy Policy Act, public utilities akin to the Salt River Project are required to offer incentives, known as “net-metering,” for producers of electricity from rooftop solar panels. As I explain here, net-metering usually entails the overpayment to owners of rooftop solar panels for their electricity in a manner that redistributes wealth from those that don’t own solar panels, to those who do. In response to this legislative command to coddle an industry favored by Congress, the Salt River Project instituted a net-metering program that was very generous. And SolarCity took advantage of this generosity to grow its market share.

However, SRP’s net-metering ratepayer subsidies were too generous, such that they threatened to lead to the under capitalization of grid infrastructure. In practice, SolarCity and its customers benefited financially from the grid without having to invest commensurately in the grid. Thus, these beneficiaries were getting a “free ride.” Taken to its logical end, if all SRP ratepayers installed rooftop solar panels and thereby enjoyed the terms of the old deal, then there would be no capital to maintain the grid, and it would fall apart. [click to continue…]

Post image for EPA Increases Renewable Fuel Blending Targets: Corporate Welfare Clients Demand More

Overview: EPA for the first time has set an overall Renewable Fuel Standard (RFS) blending target below the statutory target. The biofuel lobby threatens to sue. If they win and courts rule EPA may not consider market constraints (a.k.a. the blend wall) when setting RFS blending requirements, harsh consequences could ensue for consumers, the economy, and, ironically, biofuel manufacturers themselves.

EPA yesterday announced final volume obligations (RVOs) under the Renewable Fuel Standard (RFS) program for the years 2014, 2015 and 2016, and final volume requirements for biomass-based diesel for 2014 to 2017. EPA was two years late setting RVOs for 2014 and one year late setting RVOs for 2015.

RFS Final RVOs 2014-2017





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There has been a flurry of reports of late about how President Obama has staked his “legacy” on the success of the ongoing UN climate confab in Paris. And no doubt these reports are true. This White House has been promoting the Paris talks in earnest since late August. Indeed, the putative threat of global warming has received more of the President’s public attention than any other foreign policy issue during his second term.

So I’ve been asking myself: would Obama be president today if he’d been forthcoming about climate change during his reelection campaign in 2012?

After all, it would have been impossible for voters three years ago to have expected that Obama would make climate change his top priority, as the president refused to reveal his true intentions. Consider the following headlines from October 2012:

  • San Francisco Chronicle: “Obama, Romney Quiet on Climate”
  • Guardian: “U.S. Presidential Debates: Abortion, Climate Change, and other Missing Issues”
  • Associated Press: “Guns, Climate, Gays Missing in Presidential Race”

Far from making climate change a priority, Obama in 2012—the guy trying to get elected—was an avowed champion of all fossil fuels, which, of course, are the alleged cause of supposedly terrifying global warming. During the debates, for example, Obama tried to outflank Romney’s right on energy. That Obama—the guy trying to win over American voters—was pro-gas, pro-oil, and even pro-coal. It was only in the immediate wake of reelection, after which he no longer faced voter scrutiny, that Obama pivoted to legacy-making on the climate.

To recap: Obama in 2012 trumpeted his record on fossil fuel production and ignored climate change in order to get elected; then, once he was elected, he made climate change his number one priority. So he actively misled the American people. Such a naked bait and switch is unprecedented in modern presidential politics. It is also crassly cynical, and should put to shame any notion that Obama cares about “hope” or “change” or any of that jazz.

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Post image for Paris Climate Conference: Fact Checking Obama’s Renewables Boast

Overview: At the COP21 conference in Paris, President Obama claimed wind and solar are “finally cheaper” than fossil-fueled electricity in “parts” of America. He offered no evidence for that boast. Central station solar generation is clearly not cheaper on a levelized cost basis. Wind is not cheaper either once transmission, intermittency, fossil-fuel backup, and “broken window” costs are taken into account.

Addressing the First Session of the COP21 Paris climate conference today, President Obama took credit for helping create markets where wind and solar power “are finally cheaper” than coal and gas.

Over the last seven years, we’ve made ambitious investments in clean energy, and ambitious reductions in our carbon emissions.  We’ve multiplied wind power threefold, and solar power more than twentyfold, helping create parts of America where these clean power sources are finally cheaper than dirtier, conventional power.

Implication: There’s no risk of harm in regulating the world beyond coal- and gas-fired electricity, because renewables are already cheaper in “parts of America,” and in time they’ll be cheaper in most markets — maybe everywhere. But is it even true for “parts” of America today?

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Post image for 2014: Lowest U.S. Severe Weather Death Toll in Ten Years

Severe weather caused 333 fatalities in the United States in 2014, according to the National Weather Service (NWS). More evidence climate change is “worse than we thought”? Quite the contrary, the 2014 severe-weather death toll was the lowest in ten years:

For the third consecutive year, weather-related deaths dropped significantly. In 2014 there were 333 weather-related deaths, down from 446 in 2013 and 528 in 2012. The 2014 number is below the 10-year average (2005-2014) of 638 deaths.

But wait, wasn’t 2014 the warmest year on record? Maybe, maybe not. There was a 48% probability 2014 was the warmest year in NOAA’s land and sea-surface records, and a 38% probability in NASA’s. However, 2014 was the 3rd warmest and 6th warmest year, respectively, in the University of Alabama Huntsville (UAH) and Remote Sensing Systems (RSS) satellite records.

In any event, the relative warmth of 2014 had no discernible impact on U.S. weather-related fatalities. Indeed, with 57 victims, rip currents at beaches were the leading weather-related cause of death in 2014. Global warming connection: zero. As explained on HowStuffWorks.Com:

A rip current is a narrow, powerful current of water running perpendicular to the beach, out into the ocean. These currents may extend 200 to 2,500 feet (61 to 762 m) lengthwise, but they are typically less than 30 feet (9 m) wide. Rip currents can move at a pretty good speed, often 5 miles per hour (8 kph) or faster. . . . Rip currents are caused by the shape of the shoreline itself, and they may be sudden and unexpected.

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Post image for Reports: Renewable Fuel Standard Imposes $22 Billion Ethanol Tax on Illinois, $42 Billion Tax on California


New reports by the Center for Regulatory Solutions (CRS), the research arm of the Small Business & Entrepreneurship Council (SBEC), detail the devastating impacts of the federal Renewable Fuel Standard (RFS) program on California and Illinois. The reports could not be more timely. EPA is expected next week to publish its final rule establishing biofuel quota (known as Renewable Volume Obligations or RVOs) for 2015 and 2016.

According to Fields of Deception: How the Corn Ethanol Mandate Harmed the Prairie State (released today), the RFS imposed roughly $5 billion in higher fuel costs on the people of Illinois between 2005 and 2014, with another nearly $17 billion to come through 2024. The ripple effects of those costs will depress labor income by almost $7 billion over 20 years, depress labor demand by more than 7,000 jobs annually, and impose hundreds of millions of dollars in higher feed costs on Illinois dairy and poultry farmers. Due to all those RFS impacts, Illinois will lose $12 billion in GDP growth by 2024.

“Contrary to conventional wisdom, our report shows that Illinois, an early supporter of ethanol, has lost thousands of jobs and incurred enormous economic costs as a result of the ethanol mandate,” said SBEC President Karen Kerrigan.

According to The Big Corn Sellout: How National Politics and Ethanol Mandates Are Hurting California’s Economy (released 11/17/2015), the RFS has imposed $13.1 billion in higher fuel costs on Golden State consumers since 2005, with another $28.8 billion to come over the next 10 years. The vast majority of that $42 billion “fuel tax” is a wealth transfer to out-of-state ethanol producers. The ripple effects of those costs will depress labor income by almost $18 billion over 20 years, depress labor demand by more than 17,000 jobs every year, and impose hundreds of millions of dollars in higher feed costs on California’s dairy and poultry farmers. Due to all those RFS impacts, California will lose $31.6 billion in GDP growth by 2024.

Both reports detail many other adverse economic and environmental effects of the RFS. Key findings follow.

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Post image for Manchin Shoots Hole Through EPA Power Plant Rule


On Tuesday, the Senate passed S.J. Res. 23 and 24, Congressional Review Act (CRA) resolutions to overturn EPA’s so-called Carbon Pollution Standards rule and Clean Power Plan rule. CRA resolutions cannot be filibustered, so require only simple majorities to pass. Each resolution passed 52-46.

West Virginia Senator Joe Manchin is the chief Democrat co-sponsor of resolution 23. His floor statement, which summarizes a letter he recently sent to EPA Administrator Gina McCarthy, provides new information showing that carbon capture and storage (CCS) technology is still not “adequately demonstrated” as commercially viable — hence that the “Carbon Pollution Standards” rule is unlawful.

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Post image for NY AG Schneiderman vs. Peabody Energy: Climate Thuggery, Part 2


As discussed in Part 1 of this series, New York Attorney General Eric Schneiderman has begun a Martin Act investigation of Exxon Mobil. He wants to prove Exxon Mobil defrauded its shareholders by lying about climate change and the associated political risks to the oil industry. At a minimum, he wants to cow other companies into preaching “consensus” climatology in their annual reports.

Schneiderman’s thesis — that Exxon Mobil concealed from investors the financial risks created by the “Keep It In The Ground” global warming movement — is loony. Nonetheless, he poses a real threat to the shareholders he pretends to be protecting. That’s because the Martin Act sets a very low bar for establishing guilt and places no limit on economic losses an AG may impose via damage awards and fines.

To win the case, Schneiderman does not have prove that Exxon Mobil intended to defraud anyone. Nor does he have to show that any shareholder was actually injured, that any shareholder relied on the company’s “misrepresentation” when purchasing stock, or that the company made false statements. He just has to persuade a jury that Exxon Mobil failed to present “material” facts — such as, presumably, the gloom-and-doom assessments of consensus climatology.

Schneiderman’s probe of Exxon Mobil is conveniently timed to feed off the green campaign to indict fossil-fuel industry executives under the Racketeer Influenced Corrupt Organizations (RICO) Act, and recent media reports claiming Exxon has known since the 1970s how bad its products are for the global climate system.

But the probe also appears to be part of a long-term strategy. Earlier this week, Schneiderman announced he had reached a Settlement Agreement with coal giant Peabody Energy — the culmination of a three-year Martin Act inquiry. Maybe he chose to go after the smaller opponent first to establish climate-related precedents for hunting bigger prey.

Let’s review the Settlement Agreement (SA) and consider how Peabody should respond to it.

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Post image for NY Attorney General Schneiderman Targets Exxon Mobil: Climate Thuggery, Part 1



New York attorney general Eric Schneiderman could severely depress Exxon Mobil stock values while piously claiming to protect shareholders from fraud. Welcome to the Orwellian world of climate-policy sanctimony.

Schneiderman “has begun an investigation of Exxon Mobil to determine whether the company lied to the public about the risks of climate change or to investors about how such risks might hurt the oil business,” the New York Times reported last week. According to the Times, Schneiderman is investigating the company under the State’s 1921 Martin Act, the envy of regulatory bullies throughout the land. The statute gives New York’s AG “extraordinary powers and discretion” that “exceed those given any regulatory in any other U.S. State” (Wiki). As one commentator describes it:

The purpose of the Martin Act is to arm the New York attorney general to combat financial fraud. It empowers him to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act’s powers exceed those given any regulator in any other state.

Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded. Plus, when the prosecution is over, trial lawyers can gain access to the hoards of documents that the act has churned up and use them as the basis for civil suits. “It’s the legal equivalent of a weapon of mass destruction,” said a lawyer at a major New York firm who represents defendants in Martin Act cases (and who didn’t want his name used because he feared retribution by [former AG Eliot] Spitzer). “The damage that can be done under the statute is unlimited.”

According to Deschert LLP, the Martin Act sets a low bar for establishing guilt. To convict a company of fraud, the AG does not have to show evidence of scienter — an intent to mislead. All he has to show is that the company misrepresented a “material fact” about its securities, and the Act defines “misrepresentation” broadly to include omissions of material facts as well as affirmations of false facts. By that logic, if Exxon Mobil’s public statements on climate-change or oil-market projections omit worst-case scenarios the company does not regard as credible, then it is guilty of defrauding shareholders.

Apparently, Schneiderman wants to build a case that Exxon Mobil misrepresented the seriousness of climate change risks, hiding from investors the financial risks the company will face when science triumphs over denial and governments act to curb the production and use of fossil fuels. It’s a preposterous green fairy tale. [click to continue…]