Stimulus spending on environmentalist policy is a green albatross around the neck of President Barack Obama. Inspectors General are having a field day auditing stimulus-funded programs for so-called “green jobs,” and the media LOVES stories about wasted taxpayer money. What started as a sop to his environmentalist base, now threatens to become a slow-drip nightmare of negative press. The timing couldn’t be worse for the President. It takes time to disburse scores of billions of dollars, so we are only now starting to scrutinize stimulus spending. By November 2012, we’ll be able to account for most of the money, and unless the current trend changes radically, the Executive in Chief is going to look conspicuously incompetent.

Here’s the back-story: In early 2009, the Executive and Legislative branches of government had a popular mandate to defibrillate America’s moribund economy with a huge injection of taxpayer dollars. Instead of limiting this “stimulus” to state bailouts and infrastructure spending, the Obama administration (led by climate “czar” and former EPA administrator Carol Browner) and the Congressional majority (led by House Energy and Commerce Chair Henry Waxman (D-Beverly Hills)) also sought to advance environmentalist policy.  As a result, the American Recovery and Reinvestment Act, a.k.a. the stimulus, included almost $70 billion in spending for green jobs and renewable energy infrastructure.

Every single link along the green energy supply chain was showered with subsidies. There was funding for green jobs training, funding for factories to make green products, and funding to incentivize demand for green goods and services. It was as like a green Gosplan!

Most of the money went to the Energy and Labor Departments. Budgets ballooned. To cite a typical example, in 2008, the Department of Energy’s weatherization program budget went from $450 million to $5 billion. Making matters worse, federal bureaucrats were told to spend the stimulus as fast as possible, in order to jumpstart job-creation. Exploding budgets and a mandate to rush money out the door—that’s a recipe for poor stewardship of taxpayer dollars. This is borne out by an increasing number of watchdog reports concluding that stimulus spending for green goals was wasteful. Here’s a laundry list of what they’ve found so far:

• On November 2, Eliot P. Lewis, the Department of Labor’s IG, testified before the House Oversight and Government Reform Committee that the Labor Department received $435 million to train 96,000 people in the renewable energy trade. The goal was to create 80,000 green jobs. Through June 30, according to Mr. Lewis’s testimony, the Labor Department had spent $130 million, which is 30% of the program budget, and created a scant 1,336 jobs, which is 2% of the program target.

• During the same Congressional hearing, the Department of Energy IG Gregory Friedman said that he had launched more than 100 criminal investigations into green energy spending. Each one is a potential scandal.

• GreenWire’s (subscription required) Annie Snider has reported on a series of IG investigations by the Department of Defense faulting the military for wasteful stimulus spending on green energy projects. The report titles say it all: “American Revoery and Reinvestment Act Wind Turbine Projects at Long-Range Radar Site in Alaska Were Not Adequately Planned”; “The Departmnet of the Navy Spent Recovery Act Funds on Photovoltaic Projects That Were Not Cost-Effective”; “U.S. Air Force Academy Could Have Significantly Improved Planning Funding, and Initial Execution of the American Recovery and Reinvestment Act Solar Array Project”; and “Geothermal Energy Development Project at Naval Air Force Station Fallon, Nevada, Did Not Meet Recovery Act Requirements.”

• On November 7, the Department of Energy Office of the Inspector General issued a “management alert” regarding the Western Area Power Administration’s $3 billion, stimulus-created loan program to facilitate the transmission of electricity from renewable energy projects in the west. According to the IG alert, “Western had not implemented the necessary safeguards to ensure its commitment of funding was optimally protected.”

• In October, Resources for the Future released a report suggesting that the $3 billion, stimulus funded “cash for clunkers” program, whereby the government subsidized the purchase of fuel efficient cars for consumers that agreed to junk their less fuel efficient cars, was an economic and environmental failure.

• Since February, the Energy and Commerce Committee has been investigating Solyndra, the California solar panel manufacturer that declared bankruptcy in September, leaving the taxpayer on the hook for a $535 million stimulus-funded loan guarantee from the Department of Energy.

Why is the green stimulus failing? As I note above, ballooning budgets and a mandate to spend fast are conducive to waste.

More fundamentally, central planning of the economy is a loser. Invariably, politics corrupts the process. Members of Congress are less concerned about the economic viability of the industries into which they invest taxpayer money, and much more concerned with getting pork to their districts. Civil servants, no matter how disinterested, know that their political overlords are watching their decisions carefully, so as to ensure that taxpayers give-aways reach their constituents. (For an archetypical example of a Member of Congress browbeating a civil servant, see this post about Sen. Al Franken shaking down Energy Secretary Steven Chu).

When parochial politics isn’t interfering, crony capitalism is. According to “Throw Them All Out,” a new book by Peter Shweizer, $16.4 billion of the $20.5 billion in loans granted by the stimulus-created loan guarantee program (whence the Solyndra debacle) “went to companies either run by or primarily owned by Obama financial backers.” Of course, political payback is a poor substitute for sound financial analysis.

Gross fiscal mismanagement by government attracts media like flies to dung. So far, most coverage is by local papers reporting on local failures. (See “Seattle’s Green Jobs Program a Bust,” by the Seattle Post Intelligencer and “Stimulus Funds Provide Training, But Openings Few in State,” by the Detroit News.) However, even the New York Times, whose editorial board supports green energy subsidies, published a story titled, “Number of Green Jobs Fails to Live up to Promises.” Expect many more of these types of articles as the watchdogs continue to do their work.

As the negative press mounts, the President will become ever-more burdened by his foolish bet on green energy.

Pretty darn near the height of absurdity. That’s not just my opinion. It’s a key premise of EPA’s “Tailoring Rule,” which exempts small greenhouse gas (GHG) emitters from regulation under the Clean Air Act’s (CAA) Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program.

As EPA explains in a brief filed last week with the D.C. Circuit Court of Appeals, once the agency’s GHG emission standards for new motor vehicles took effect on January 2, 2011, “major stationary sources” of GHG emissions became “automatically subject” to PSD and Title V permitting requirements. A facility with a potential to emit 250 tons per year (tpy) of a regulated air pollutant is a “major source” under PSD. A facility with a potential to emit 100 tpy is a “major source” under Title V. Whereas only large industrial facilities emit 100-250 tpy of smog- and soot-forming air pollutants, literally millions of small entities — big box stores, apartment and office buildings, hospitals, schools, large houses of worship, Dunkin’ Donut shops – use enough natural gas or oil for heating or cooking to emit 100-250 tpy of carbon dioxide (CO2).

EPA and its state counterparts lack the administrative resources to process millions of PSD and Title V permit applications. Thus, applying the CAA as written to GHGs leads to “absurd results” — an ever-growing backlog of permit applications that would cripple both environmental enforcement and economic development. Massive increases in the budgets and staff of environmental agencies would be required to handle the mountains of paperwork. From EPA’s brief:

EPA studied and considered the breadth and depth of the projected administrative burdens in the Tailoring Rule. There, EPA explained that immediately applying the literal PSD statutory threshold of 100/250 tpy [tons per year] to greenhouse gas emissions, when coupled with the “any increase” trigger for modifications under 42 U.S.C. §§7479, 7411(a)(4), would result in annual PSD permit applications submitted to State and local permitting agencies to increase nationwide from 280 to over 81,000 per year, a 300-fold increase. 75 Fed. Reg. at 31,535-40, 31,554. Following a comprehensive analysis, EPA estimated that these additional PSD permit applications would require State permitting authorities to add 10,000 full-time employees and incur additional costs of $1.5 billion per year just to process these applications, a 130-fold increase in the costs to States of administering the PSD program. Id. at 31,539/3. Sources needing operating permits would jump from 14,700 to 6.1 million as a result of application of Title V to greenhouse gases, a 400-fold increase. When EPA [in an earlier asssessment] assumed a mere 40-fold increase in applications – one-tenth of the actual increase – and no increase in employees to process them, the processing time for Title V permits would jump from 6-10 months to ten years. Hiring the 230,000 full-time employees necessary to produce the 1.4 billion work hours required to address the actual increase in permitting functions would result in an increase in Title V administration costs of $21 billion per year. Id. at 31,535-40, 31,577 [emphasis added].

For perspective, EPA’s budget request for FY 2012 is $8.973 billion. Hiring the 230,000 bureaucrats needed to process Title V applications from GHG emitters under the statutory definition of “major source” would cost more than twice as much as EPA’s total budget.

As expected, EPA fails to draw the obvious conclusion from its own analysis, namely: Regulating GHGs via the CAA leads to absurd results because Congress never designed or intended for the Act to regulate GHGs.

EPA seeks to avoid absurd results — and an angry, political backlash — by “tailoring” the CAA’s clear, unambiguous, numerical definitions of “major source” to exempt all but the largest GHG emitters from PSD and Title V. But “tailoring” is just bureaucrat-speak for amending. Under the U.S. Constitution, an administrative agency has no power to amend statutes. Certainly the CAA nowhere authorizes EPA to revise statutory provisions to avoid administrative debacles of its own making. The Tailoring Rule just substitutes one absurdity for another.

EPA claims it had no choice but to regulate GHGs once it made an endangerment finding, because the Supreme Court in Massachusetts v. EPA ruled that GHGs “fit well within the Clean Air Act’s capacious definition of air pollutant.” True, but to reach that conclusion, the Court’s 5-4 majority had to play fast and loose with the statutory definition of “air pollutant” in CAA Sec. 302(g). As I explain elsewhere:

The Court argued that, under CAA Section 302(g), CO2 and other greenhouse gases are “air pollutants” because they are “emitted into” or “otherwise enter” the air. The CAA exists, of course, to control and prevent “air pollution.” Therefore, the Court concluded, EPA has authority to regulate such substances if the agency determines that greenhouse gases endanger public health or welfare.

But 302(g) does not define “air pollutant” as anything “emitted.” It says that “air pollution agents” – substances that damage air quality – are “air pollutants” when emitted. The Court decoupled the term “air pollutant” from its plain English meaning – as if any “emitted” substance is an “air pollutant” whether or not it actually damages air quality. Carbon dioxide – like water vapor, the atmosphere’s main greenhouse gas – is a necessary constituent of clean air.

As Justice Antonin Scalia quipped in dissent, as defined by the Court, “everything airborne, from Frisbees to flatulence, qualifies as an ‘air pollutant.’” Indeed, even absolutely clean, pollution-free air qualifies as an “air pollutant” the moment it moves or circulates, which is plainly absurd.

Section 302(g) is only two sentences long. The Court not only ignored a key term (“air pollution agent”) of the first sentence, it also ignored the entire second sentence, which holds that a “precursor” of a previously designated air pollutant is also an “air pollutant.” Congress would not have needed to say that if, as the Court opined, anything emitted per se is an “air pollutant,” because precursors form air pollutants only by being emitted.

Courts are not supposed to assume that Congress pads statutes with surplus verbiage. For a court to ignore a key term and an entire sentence of a two-sentence definition, in a case where the provision’s meaning is critical to the outcome, is not kosher. The entire greenhouse of cards EPA is now putting in place, with all its enormous economic and political ramifications, rests on the Court’s tortured reading of the CAA definition of “air pollutant.”

In addition, the Court would have been less likely to rule that GHGs “fit well within the Clean Air Act’s capacious definition of air pollutant” if counsel for EPA had made clear that such a ruling would set the stage for “absurd results,” and that EPA would have to play lawmaker and amend the CAA to avoid an administrative meltdown. However, not once in the four years when Mass. v. EPA was litigated before the D.C. Circuit Court of Appeals and the U.S. Supreme Court did counsel for EPA mention these ramifications.

Nor did EPA’s counsel make the fundamental point that EPA could not issue an endangerment rule without eventually regulating GHGs from numerous categories of mobile and stationary sources under the CAA as a whole, effectively ‘legislating’ climate policy for the nation. That is obviously not an authority Congress meant to confer on EPA when it enacted the CAA in 1970.

Indeed, even after almost two decades of global warming advocacy, if Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), instead of introducing a cap-and-trade bill, had introduced legislation authorizing EPA to regulate GHGs via the CAA as it sees fit – i.e. do exactly what the agency is doing now — the bill would have been dead on arrival. How absurd, then, to suppose that Congress authorized EPA to legislate climate policy in 1970, years before global warming became a policy issue!

Why did EPA’s counsel pull its punches in Mass. v. EPA? Not being privy to the inter-agency discussions that shaped the Justice Department’s brief, we can only speculate. This much however is clear: By losing the case, EPA gained the truly awesome, economy-restructuring power to regulate CO2, the most ubiquitous byproduct of industrial civilization.

* The Institute for Energy Research posted an excellent commentary on EPA’s brief last Friday. It is available here.

Tomorrow, the House Energy and Commerce Committee will hold its second hearing on Solyndra, the manufacturer of innovative non-silicon-based solar panels that borrowed $527 million only to file for bankruptcy, shutter its brand new Freemont, Calif. factory, and lay off 1,100 employees on September 6. Expect Committee Democrats to blame China and the allegedly unforeseen fall in the price of conventional silicon-based solar panels for the debacle.

That’s the line the Department of Energy’s (DOE) witness, Jonathan Silver, took at the Committee’s first (September 14) Solyndra hearing, noting China’s provision of more than $30 billion in subsidized financing to its solar manufacturers, which rapidly dropped silicon prices, “taking Solyndra, and many industry analysts, by surprise.” DOE’s blog, Energy.Gov, had already adopted this explanation on August 31, the day Solyndra announced it would file for bankruptcy.

Similarly, Solyndra’s August 31 announcement coyly cited the “resources of larger foreign [i.e. Chinese] manufacturers” and a “global oversupply of [mainly Chinese] solar panels” as factors foiling the company’s business plan. Solyndra’s ex-employees have applied to the Department of Labor (DOL) for aid under the Trade Adjustment Assistance (TAA) program, claiming that China put them out of work. If DOL approves the application, Solyndra’s former workers will receive allowances for job retraining, job searching, and health care for up to 130 weeks, or about $13,000 per employee. Blogger Scott Linicom decries such double dipping:

So to recap: massive government subsidies created 1,100 “green jobs” that never would’ve existed but for those massive government subsidies.  And when those fake jobs disappeared because the subsidized employer-company inevitably couldn’t compete in the market, the dislocated workers blamed China (instead of what’s easily one of the worst business plans ever drafted) in order to receive . . . wait for it . . . more government subsidies. Behold, the Circle of Government Life.

Whether it’s Solyndra execs and DOE officials trying to save face, ”progressives” defending the honor of green industrial policy, or former employees looking for more taxpayer freebies, they all would have us believe that Solyndra’s $535 million loan guarantee was a good bet at the time it was made. They need a scapegoat for Solyndra’s crash, so they blame China. Indeed, some (e.g. Grist) claim Solyndra’s collapse shows that the U.S. government isn’t doing enough to help our “clean tech” companies “compete.” Balderdash.    

Solyndra’s business plan was dubious from the getgo. Committee Ranking Member Henry Waxman (D-Calif.) claims that “under both the Bush Administration and the Obama Administration, DOE officials strongly backed Solyndra.” In fact, on January 9, 2009, Bush’s DOE declined to approve Solyndra’s loan guarantee application, citing several “unresolved” issues including lack of an independent study of the company’s long-term prospects, questions about the company’s financial strength, and concern about the scale-up of production assumed in the business plan (Documents Entered into Record, p. 1).

As for the allegedly unanticipated glut in rooftop solar panels, which made Solyndra’s thin-film panels uncompetitive, it was the topic of a January 12, 2009 USA Today article. In an email dated January 13, 2009, Bush DOE staff cited the glut, reported in USA Today, as the reason for the DOE Credit Committee’s “unanimous decision not to engage in further discussions with Solyndra at this time” (Documents Entered into Record, p. 2).

Emails obtained by the Committee suggest that White House pressure for quick approval may have compromised the depth and quality of DOE and Office of Management and Budget (OMB) review of Solyndra’s loan application (Documents Entered into Record, pp. 4, 11, 12):

• “There’s a recurrent problem with the [White House] scheduling office looking for events [loan guarantee approvals] before they are ready to go.” (March 10, 2009)
• “As long as we make it crystal clear to DOE that this is only in the interest of time, and that there’s no precedent set, then I’m okay with it. But we also need to make sure they don’t jam us on later deals so there isn’t time to negotiate those, too.” (August 27, 2009)
• “We have ended up in the situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week). We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around.” (August 31, 2009)

DOE approved the Solyndra loan guarantee on September 4, 2009 — an event timed to coincide with the ground breaking ceremony for the company’s Freemont, California factory. Speakers included DOE Secretary Steven Chu, California Gov. Arnold Schwarzenegger, and Vice President Biden (via satellite feed). But a scant two weeks before, on August 19 and 20, emails between DOE staff note that when Fitch modeled Solyndra’s cash flow over time, the company ”runs out of cash in Sept. 2011 even in the base case without any stress. This is a liquidity issue” (Documents Entered into Record, pp. 8-9). Rarely has a government business forecast been so accurate!

In addition to the liquidity problem, it is unclear whether Solyndra had a viable plan to reconcile its production costs and sale prices. According to an ABC News analysis:

While Energy Department officials steadfastly vouched for Solyndra — even after an earlier round of layoffs raised eyebrows — other federal agencies and industry analysts for months questioned the viability of the company. Peter Lynch, a longtime solar industry analyst, told ABC News the company’s fate should have been obvious from the start.

“Here’s the bottom line,” Lynch said. “It costs them $6 to make a unit. They’re selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan.”

Along the same lines, ELECTRO IQ (November 8, 2010) posed the question: “Can Solyndra reconcile cost-per-watt and sale price?” From the article:

In the last year, there have been numerous stories about CIGS [copper idium gallium selenide] thin-film manufacturer Solyndra’s troubles — a pulled IPO, a restructuring of the executive team, and, most troubling, the high cost of module production. (In an S-1 filing a year ago, the company said its average sales price was over $3.20 a watt, about 65% more than leading crystalline-silicon PV manufacturers. Its cost of manufacturing was over $6 a watt). Solyndra aims at $3.5 per watt by the end of 2011.

Tim Worstall, writing in Forbes (September 17, 2011), argues that, “Yes, it was possible to see this failure coming.” Defenders of the loan argue that the fall in silicon solar prices was unforeseen, hence “Solyndra’s non-silicon technology got bushwhacked by something no one could have anticipated.”

In reality, it was “blatantly obvious” that competitors’ prices would fall. In the mid-2000s demand exceeded supply and the price soared. But as Econ 101 tells us, soaring prices create incentives to increase supply, which then push prices down.

What’s more, says Worstall, by 2008, First Solar, a leading supplier of non-silicon modules, had already achieved lower cost-per-watt than Solyndra hoped to achieve by 2011.

Concludes Worstall: “It wasn’t an unexpected fall in silicon prices that did in Solyndra: they were never even close to being competitive on pricing against non-silicon technologies. They weren’t even in the right ballpark at all.”

Let’s take a closer look at DOE loan program director Silver’s ’don’t-blame-DOE-or-Solyndra’ explanation of why the company went bust:

In 2009, Solyndra appeared to be well-positioned to compete and succeed in the global marketplace. Solyndra manufactured cylindrical, thin-film, solar cells, which avoided both the high cost of polysilicon — a crucial component used in conventional solar panels — and certain costs associated with installing flat panels. But polysilicon prices subsequently dropped significantly, taking Solyndra, and many industry analysts, by surprise. Among the principal beneficiaries of this pricing environment were four of Solyndra’s Chinese competitors, which sell polysilicon panels and received $20 billion in credit from the China Development Bank in 2010.

* * *

Unfortunately, changes in the solar market have only accelerated in 2011, since the restructuring [of Solyndra's loan guarantee in February 2011] — making it more difficult for the company to compete. Chinese companies have flooded the market with inexpensive panels, and Europe — currently the largest customer base for solar panels — have suffered from an economic crisis that has significantly reduced demand and forced cuts in subsidies for solar deployment that were important to Solyndra’s business model. The result has been a further and unprecedented 42% drop in solar cell prices in the first eight months of 2011.

All of that may be correct, but the pertinent issue is whether anyone could have foreseen these changes in the marketplace in 2009 and 2010 when the U.S. government decided to bet taxpayers’ money on Solyndra. Far from being unforeseeable that China would subsidize its ”clean tech” companies to beat out U.S. firms and capture market share, this was a major premise of DOE’s loan guarantee program. We had to fight fire with fire or else lose the “clean energy race,” Obama officials warned. As DOE Secretary Chu said in testimony on October 27, 2009:

China has already made its choice. China is spending about $9 billion a month on clean energy. . . .The United States, meanwhile, has fallen behind. . . .We manufactured more than 40 percent of the world’s solar cells as recently as the mid 1990s; today, we produce just 7 percent. When the starting gun sounded on the clean energy race, the United States stumbled. But I remain confident that we can make up the ground. . . .The Recovery Act includes $80 billion to put tens of thousands of Americans to work developing new battery technologies for hybrid vehicles, making our homes and businesses more energy efficient, doubling our capacity to generate renewable electricity, and modernizing the electric grid.

Moreover, one did not need to be a rocket scientist to predict that if the U.S. government leverages billions of dollars in private investment to compete with Chinese firms, China would up the ante. After all, Beijing is flush with cash, whereas Washington is deep in debt.

Nor was any great acumen required to anticipate that the economic crisis would cut subsidies and thereby reduce demand for solar panels in Europe. In October 2009, the Rheinisch-Westfälisches Institut (RWI) reported that Germany’s feeder tariff system was on course to subsidize solar voltaic modules to the tune of $73 billion from 2000 through 2010, yet solar power was providing less than 1% of the nation’s electricity. Such lavish subsidies are unsustainable, especially during a financial crisis.

One also wonders why Solyndra had to hire 3,000 people to build a brand new factory (“Fab 2″). Wouldn’t it have been cheaper to rent space in an existing building? Ah, but then there would have been no groundbreaking and no photo-op for Secy. Chu, Gov. Schwarzenegger, and Vice President Biden. Mixing politics with business politicized Solyndra’s business plan.

Even if one makes the dubious assumption that Solyndra’s business plan was sound at the time DOE approved the loan guarantee, why did S0lyndra stick to the plan when it became clear the company was going broke?  ”The Fed money was explicitly tied to being *solely* used to build Fab 2. Solyndra could not use the loan proceeds for *anything* else,” according to an anonymous member of Solyndra’s management team. The DOE loan guarantee, it seems, reduced Solyndra’s ability to adapt to changing market conditions.

Sadly, the one lesson Team Obama will never draw from Solyndra’s failure is the most important one: the folly of government trying to play venture capitalist. Heritage Foundation economist David Kreutzer offers some choice words in two recent blog posts:

“We have such a great product that nobody will lend us the money,” was the nonsensical argument from Solyndra and its backers. Those who did not see the logical flaw in 2009 cannot help but see the flawed result in 2011. Unfortunately, some still do not see the logical problem that led to the mess.

Indeed, two of the criteria for the loan program show how silly it is to have government run a bank. One is that the loan must be for a commercially viable project. Another is that the applicants have to demonstrate that they could not get private financing. By definition, the second criterion rules out the first.

The United States imports almost half of its oil (49%), and about 25% of our imports come from one country — our friendly neighbor to the North, Canada. Today, Canada supplies more oil to the USA than all Persian Gulf countries combined.

With an estimated 175 billion barrels of technically recoverable oil, Canada has the world’s third largest oil reserves. About 170 billion of those barrels, or 97%, are located in geologic formations called oil sands — a mixture sand, water, clay, and bitumen, a sticky tar-like form of petroleum.

Unlike “conventional” oil, bitumen is too viscous to be pumped without being heated or diluted.

Last Wednesday and Thursday, courtesy of the good folks at American Petroleum Institute (API), I and other bloggers toured two large Canadian oil sands projects near Fort McMurray, Alberta.

The Surmont Project, operated by ConocoPhillips, uses a technology called steam assisted gravity drainage (SAGD) to melt the bitumen so that it can be pumped back to the surface. At each well site, two parallel pipes descend to about 1,000 feet below the surface and then extend horizontally for several thousand feet. Heated steam in the upper pipe melts the bitumen, which then flows back up to the surface through the lower pipe. Natural gas may also be injected in the upper pipe to further reduce the viscosity of the bitumen. Along with the melted bitumen, the lower pipe brings hot water and natural gas back up to the surface for capture and reuse in a closed cycle.

This process is relatively new but within a few years it is expected to dominate Canadian oil production, because about 80% of Canada’s oil sands are too deep to be mined. The Surmont Project, which started production in 2007, currently produces about 23,000 barrels per day (bpd). It is expected to be producing 136,000 bpd by 2015.

The Millennium site, operated by Suncor Energy, relies mainly on mining to access the bitumen. The oil sands here are at a relatively shallow layer — about 350 feet below the surface. Millennium started production in 1967, making it the world’s first commercially-successful oil sands venture and the longest-running oil sands project in Canada.

Millennium’s scale is truly breathtaking. Suncor’s leases (which also include SAGD drilling sites) cover more than 1,800 square kilometers. A fleet of giant trucks with shovels that remove 100 tons of earth at a bite operate day and night. Some trucks remove the “overburden” — a surface layer composed of muskeg (a peat-like substance), clay, and rock, while others dig up the oil sands beneath. The largest of these trucks, which are built by Caterpillar, haul loads up to 400 tons. Each day, the trucks haul about 2,000 loads of overburden and 1,600 loads of oil sands.

The next photo is me pretending to be the master of all I survey. The distant object to the left of my outstretched hand is a monster truck.

After being mined, the oil sands are sent to massive facilities that use water and steam to extract the bitumen from sand and other minerals, separate the bitumen from water, and chemically treat the bitumen until it has the consistency required for transport as crude oil through pipelines.

My reaction to the Millennium project was one of awe. I could not but marvel at the immense scale of market-driven coordination that has turned an otherwise worthless material – sticky, smelly, black sand – into a valuable resource empowering literally millions of ordinary people to enjoy a degree of mobility unknown to the kings and potentates of old.

Some of course may only see — and decry — the industrial footprint, the “scars upon the land,” as the John Denver song put it. What they may not know is that Suncor also engages in land reclamation on a gigantic scale.

The overburden is not only removed, it is also saved, so that it can used to restore landscapes and create habitat after mining operations are completed. In addition, Suncor has developed a process (Tailings Reduction Operation, or TRO) for accelerating the extraction of suspended particles called “mature fine tailings” (MFT) from its tailing ponds (small lakes where water, sand, and clay are sent after separation from the bitumen). After drying, the MFT hardens and is used as landscaping material.

Suncor’s first tailings pond operated for 40 years from 1967 through December 2006. This 220-hectare area today is a contoured medowland with more than 600,000 planted trees and shrubs. Called the Wapisiw Lookout Reclamation, the area’s rock piles provide habitat for small animals, its tree poles provide habitat for raptors, and its wetland provides habitat for aquatic waterfowl. The picture below shows three raptor poles. While our tour group was there, we spotted a black bear cub moving among the hillocks a few hundred yards away.

Canada already ships almost 2 million barrels of oil a day to the USA, but the existing pipeline infrastructure must be expanded not only to handle the larger volumes that Canada will produce in the future but also to transport Canadian oil to U.S. Midwest and Gulf Coast refineries, where it can be turned into gasoline, jet fuel, and other finished petroleum products.

In March 2008, the U.S. State Department granted TransCanada Keystone Pipeline a permit authorizing the company to construct pipeline facilities from Alberta to refineries in Illinois and Oklahoma.

Then in June 2008, Keystone proposed to build an extension, called the Keystone XL Pipeline, to move Canadian oil to refineries in Port Arthur and Houston, Texas. Initially, Keystone XL would be able to deliver 700,000 bpd of heavy crude to U.S. refineries.

From 2010 to 2035, this “shovel ready” project could create 85,000 U.S. jobs, provide $71 billion in U.S. employee compensation, and boost cumulative U.S. GDP by $149 billion, according to the Canadian Energy Research Institute.

Predictably, green pressure groups and their allies on Capitol Hill have mounted a campaign to block the Keystone project, alleging that the pipeline will expose neighboring communities, aquifers, and wetlands to oil spill risk and increase America’s “dependence” on “dirty” energy. Let’s briefly consider these accusations.

The State Department’s massive April 2010 Environmental Impact Statement (EIS) notes that the pipeline “would be designed, constructed, and maintained in a manner that meets or exceeds industry standards and regulatory requirements” (ES 6.13.3). Although some leaks and small spills are bound to occur, “There would be a very limited potential for an operational pipeline spill of sufficient magnitude to significantly affect natural resources and human uses of the environment” (ES 6.13.2). If zero risk of even minor spills is the only acceptable standard, then no petroleum should ever be shipped anywhere. That may be what green groups ultimately have in mind. Such a standard, however, would condemn mankind to Medieval squalor, not enhance public health and welfare.

By “dirty,” Keystone XL opponents refer to the fact that the process of transforming oil sands into petroleum emits more carbon dioxide (CO2) than conventional petroleum extraction. However, whatever Canadian oil does not get shipped to the United States will eventually go elsewhere — mainly to China and other Asian countries, which are investing billions of dollars in Canadian oil sands projects. Just last month, for example, the Chinese company CNOOC agreed to buy Canadian oil sands producer OPTI for $2.1 billion. On a life-cycle basis, shipping oil to China is more carbon-intensive than shipping oil to the USA, because it must be transported on mammoth CO2-emitting tankers.

As for the Keystone XL Pipeline itself, yes it will deliver more Canadian oil to U.S. refineries, but this will mostly offset declining oil shipments from Mexico and Venezuela. Thus, “the incremental impact of the Project on GHG [greenhouse gas] emissions would be minor,” concludes State’s EIS (ES 6.14.2). Again, if no incremental CO2 emissions is the only acceptable standard, then we should welcome high unemployment rates, because there’s nothing quite like a deep recession for cutting CO2 emissions.

The long and the short of it is that building the infrastructure to deliver oil from friendly, democratic, politically-stable, environmentally-fastidious Canada is in the U.S. national interest, as the State Department concluded in March 2008. The review process has dragged on, with State in March 2011 issuing a Supplemental EIS that affirms the findings of the earlier document. In May, the House Energy and Commerce Committee held a hearing on legislation to expedite a presidential decision on Keystone XL, and in July the House passed H.R. 1938, the North American-Made Energy Security Act, by 279-147. The bill would require the President to issue a final order granting or denying a permit to construct Keystone XL by no later than November 1, 2011.

Global demand for oil is growing and America will continue to import oil over the next 25 years even if biofuels and electric vehicles achieve unexpected breakthroughs. As Mark Milke of the Fraser Institute explains in a new report, what this means is that blocking Keystone XL and restricting U.S. access to Canadian oil would not move the world closer to some imaginary environmental utopia. The effect, rather, would be to increase U.S. imports from unsavory regimes where corruption is the norm, environmental safeguards are weak, autocrats brutally suppress dissent, and women are denied economic opportunity and equal protection of the laws.

Alas, I suspect this is actually one of the main reasons green groups oppose Keystone XL. They would like us to believe (a) that oil is a rapidly dwindling resource from which we will soon have to decouple our economy anyway, and (b) that using oil = sending $$ to OPEC. The vast potential of Canada’s oil sands and Canada’s emergence as the leading source of U.S. petroleum imports fractures both pillars of their gloomy, scaremongering narrative.

Driving is an American pastime on Memorial Day weekend. Indeed, today’s holiday is THE road trip occasion in American culture. This acute association explains why American politicians choose the lead up to Memorial Day to trot out plans to address high gasoline prices.

This year, it was dueling votes in the Senate. Roughly speaking, the Republicans tried to increase the supply of oil by ending the Obama administration’s de facto moratorium on domestic drilling, wrought by bureaucratic foot-dragging. The legislation already had been passed by the Republican-controlled House. On the other hand, the Democrats wanted to raise taxes on “Big Oil” companies, by eliminating tax breaks enjoyed by many—and in some cases, all—businesses. Neither party wooed enough votes to survive a filibuster, so they both failed. Of the two, the Republicans’ ideas were better this time, but there have been instances in the past when both parties were equally bad in the run up to Memorial Day weekend.

In May 2001, for example, President George W. Bush unveiled his administration’s much-hyped “Task Force Report on Energy.” To be sure, there were some great ideas in the unwieldy report, but there were also many awful ideas, foremost among them being the President’s proposal to waste taxpayer dollars on the FreedomCar initiative, a dead-end hydrogen fuel technology. The Task Force Report on Energy also called for a scientific report on the need for more stringent Corporate Average Fuel Economy Standards. This was the first step to the President ultimately signing into law increased fuel efficiency standards in late 2007. As has been covered extensively by my colleague Sam Kazman, CAFE standards are unwarranted violations of consumer choice that have the unfortunate side-effect of killing motorists.

The last Republican President’s transportation policies were losers, but Congressional Democrats are the league leaders in stupid energy policies issued near Memorial Day. Consider their run since 2006:

2006: Senate Democrats scuttled legislation to open ANWR with a promised filibuster.

2007: House Democrats passed the cleverly titled NOPEC (No Oil Producing and Exporting Cartels Act) bill, legislation that would somehow alter the resource acquisition decisions made by sovereign countries, among them allies. That is, the NOPEC bill was pure, unadulterated grandstanding.

2008: Senate Democrats tried to drum up drama over nefarious oil “speculators.” Like the 2007 NOPEC Act, targeting “speculators” sounds furious, but signifies nothing.

2009: House Democrats proposed a novel solution for high gas prices: higher gas prices. With the support of House leadership, Rep. Henry Waxman (D-Beverly Hills) pushed the American Clean Energy and Security Act, a cap-and-trade energy rationing scheme designed to raise the price of hydrocarbon energy like gasoline.

2010: BP’s Deepwater Horizon disaster dominated the energy policy debate for the entire summer. Funny how we don’t talk about that anymore.

California Superior Court judge Ernest Goldsmith ruled on Friday that the state’s Air Resources Board (ARB) must halt “any futher rulemaking and implementation of cap-and-trade” until the agency examines alternatives policies to meet the greenhouse gas-reduction targets established by Assembly Bill 32, the Global Warming Solutions Act. ARB must also, pursuant to the California Environmental Quality Act (CEQA), complete a review of the environmental impacts of its preferred regulatory strategy before adopting it.

Note: The ruling does not challenge AB 32 itself, and petitioners in the case are greenies who think ARB’s plan to curb greenhouse gas (GHG) emissions doesn’t go far enough. Nonetheless, this is a setback to California politicians and cap-and-taxers throughout the land. ARB has 15 months to provide the requisite analyses. ARB says it will appeal the decision. Rots of ruck!

AB 32 requires ARB to establish a statewide GHG emissions tonnage limit for 2020 equivalent to the state’s emission levels in 1990, and to develop a regulatory path, known as a Scoping Plan, to achieve ”maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from sources or categories of sources of greenhouse gases by 2020.” Judge Goldsmith ruled that ARB “committed a prejudicial abuse of discretion when it failed to proceed in a manner required by law by inadequately describing and analyzing Project alternatives [other ways of reducing GHG emissions] sufficient for informed decisionmaking and public participation.”

Judge Goldsmith more extensively discussed the issues in his Jan. 24, 2011 Tentative Statement of Decision. Petitioners, led by the Association of Irritated Residents (AIR), asserted that  ARB “failed to meet the mandatory statutory requirements of AB 32 and the California Environmental Quality Act (CEQA) by essentially treating the Scoping Plan as a post hoc rationalization for ARB’s already chosen policy approaches.” Specifically, petitioners argued that ARB violated AB 32 by:

(1) excluding whole sectors of the economy from GHG emission controls and including a cap-and-trade program without determining whether potential reduction measures achieved maximum technologically feasible and cost-effective reductions; (2) failing to adequately evaluate the total cost and benefits to the environment, the economy, and public health before adopting the Scoping Plan; and (3) failing to consider all relevant information regarding GHG emission reduction programs throughout the United States and the world, as required by AB 32, prior to recomending a cap-and-trade regulatory approach.

The significance for national politics? This is another nail in cap-and-trade’s coffin. AB 32 was a point of pride for both former Gov. Schwarzengger and California Democratic legislators. Indeed, one purpose of the statute was to place California “at the forefront of national and international efforts to reduce emissions of greenhouse gases.” AB 32 became the much-vaunted “California model” that Rep. Henry Waxman (D-Calif.) and Sen. Barbara Boxer (D-Calif.) invoked during their multi-year campaign to sell cap-and-trade on Capitol Hill.

Cap-and-trade has been on the skids since its day in the Sun back in June 2009, when the House narrowly passed the Waxman-Markey bill. After passage, the bill became politically radioactive and never came to a vote in the Senate. The December 2009 Copenhagen climate conference ended in failure, producing no agreement on a successor treaty to the Kyoto Protocol.

In February 2010, Arizona Gov. Jan Brewer issued an executive order stating that Arizona would not implement the Western Climate Initiative (WCI) cap-and-trade plan, scheduled to begin on January 1, 2012. Aside from California, none of the other WCI states (Arizona, New Mexico, Oregon, Washington, Montana, and Utah) is close to implementing cap-and-trade. Yet in August 2010, ARB Chair Mary Nichols said that California would not go it alone: ”We won’t launch this program without partners to trade with. It doesn’t make sense for an economy even as big as California, to try to do this all by ourselves.”

In November 2010 the Chicago Climate Exchange emissions trading pilot program announced it would shut down “for lack of legislative interest.”

And now, thanks to the Irritated and Judge Goldsmith, ARB may not be able to implement cap-and-trade even if Ms. Nichols wants to fly solo.

Political movements fizzle without momentum. Judge Goldsmith just put the Golden State’s cap-and-trade plan on ice.

“California is experiencing the fastest rate of of companies relocating to out-of-state or out-of-country locations since a specialized tracking system was put into place two years ago,” reports business relocation coach Joseph Vranich. Seventy companies completely or partly moved their operations out of California since Jan. 1, 2011 for reasons other than business expansion. 

Vranich says the 70 “disinvestment events” understate the exodus of capital and jobs from California: ”It’s estimated that only one out of five losses becomes public knowledge, if that.”

Why are companies leaving the Golden State? As you might expect, California’s out-of-control spending, high taxes, and burdensome regulations figure among the top 10 reasons. Vranich, however, recently added high energy costs to the list:

The #10 Reason (New!) – Unprecedented Energy Costs: The California Manufacturers and Technology Association states that commercial electrical rates here already are 50% higher than in the rest of the country. However, a law enacted in April 12, 2011 requires utilities to get one-third of their power from renewable sources (e.g., solar panels, windmills) within nine years. Look for costs to increase by another 19% in many places to a whopping 74% in Los Angeles. Such new burdens along with upcoming regulations stemming from the “California Global Warming Solutions Act” set potentially overwhelming obstacles to companies here as they try to meet competition based in other states and in foreign nations.

 For many years, California Democrats — notably Rep. Henry Waxman and Sen. Barbara Boxer — have been at the forefront of congressional efforts to enact cap-and-tax and promote EPA’s greenhouse power grab. Waxman and Boxer have worked tirelessly to export California’s energy (or anti-energy) policies to the rest of the nation. They continue to push the “California model” as the path to a “clean energy future.” Vranich’s report is a sobering reminder of how foolish it would be for the nation to take their advice.

Yesterday, the House Energy and Commerce Committee approved H.R. 910, the Energy Tax Prevention Act, as amended, by 34-19. The bill would stop EPA from ’legislating’ climate policy through the Clean Air Act. All 31 Republicans and three Democrats (Mike Ross of Arkansas, Jim Matheson of Utah, and John Barrow of Georgia) voted for the bill.

Opponents introduced several amendments, all of which were defeated.

Ranking Member Henry Waxman (D-Calif.) offered an amendment stating that Congress accepts EPA’s finding that “climate change is unequivocal.” Rep. Diana DeGett (D-Colo.) offered an amendment stating that Congress accepts as “compelling” the scientific evidence that man-made greenhouse gas emissions are the “root cause” of climate change. Rep. Jay Inslee (D-Wash.) offered an amendment stating that Congress accepts EPA’s finding that greenhouse gas emissions endanger public health and welfare. Rep. Bobby Rush (D-Ill.) offered an amendment limiting H.R. 910′s applicability until the Secretary of Defense certifies that climate change does not threaten U.S. national security interests. Rep. Ed Markey (D-Mass.) offered an amendment allowing EPA to issue greenhouse gas regulations that reduce U.S. oil consumption. Rep. Lois Capps (D-Calif.) offered an amendment limiting H.R. 910′s applicability until the Centers for Disease Control certify that climate change is not a public health threat. Rep.  Inslee also offered an amendment limiting H.R. 910′s applicability until the National Academy of Sciences certifies the bill would not increase the incidence of asthma in children.

These amendments had no chance of passing, but that was not their purpose. The objective, rather, was to enable opponents to claim later, when the full House debates the bill, that a vote for H.R. 910 is a vote against science, public health, national security, energy security, and children with asthma. This is arrant nonsense, as I will explain below.

Markey’s oil demand reduction amendment was perhaps the cleverest. After all, most Republicans are as alarmist about U.S. dependence on foreign oil as are most Democrats. All 31 Republicans voted against Markey’s amendment, but they had trouble explaining why.

Here’s why Markey’s amendment deserved defeat. Congress gave the National Highway Traffic Safety Administration (NHTSA), not EPA, authority to set fuel economy standards for new motor vehicles. Moreover, Congress gave NHTSA that authority under the 1975 Energy Policy and Conservation Act (EPCA) and 2007 Energy Independence and Security Act (EISA). The Clean Air Act provides no authority to any agency to set fuel economy standards.

Yet EPA is effectively setting fuel economy standards by establishing greenhouse gas emission standards for new cars and trucks.  As EPA acknowledges, 94-95% of motor vehicle greenhouse gas emissions are carbon dioxide from motor fuel combustion. And as both EPA and NHTSA acknowledge, “there is a single pool of technologies for addressing these twin problems [climate change, oil dependence], i.e. those that reduce fuel consumption and thereby reduce CO2 emissions as well” (p. 25327).

In short, by setting greenhouse gas emission standards, EPA has hijacked fuel economy regulation. EPCA authorizes EPA to monitor automakers’ compliance with federal fuel economy standards, but it gives EPA no power to set those standards.

The Markey amendment would reward EPA’s power grab by dramatically expanding the agency’s power! As Markey explained, his amendment would authorize EPA to reduce oil consumption throughout the economy — not just cars and trucks but also aircraft, marine vessels, non-road vehicles and engines, and industrial boilers. This exceeds any authority granted to any agency under any existing federal statute.

It is amazing that Markey would propose to make such a sweeping change in national policy in a one-sentence amendment based on five minutes of debate. Congress typically spends many years debating changes in fuel economy policy before enacting them because so many competing interests come into play even when the changes affect just one subset of one sector of the economy — passenger vehicles and light duty trucks. Yes, fuel economy standards may reduce oil consumption somewhat. However, fuel economy standards also increase the cost of motor vehicles and restrict consumer choice. More importantly, by encouraging automakers to produce lighter, smaller vehicles that provide less protection in collisions, fuel economy standards increase traffic fatalities and serious injuries.

What unintended consequences would ensue from applying fuel economy standards to planes, boats, boilers, etc.? Nobody knows. Congress has never held a hearing to find out. If Markey really wants EPA to control oil consumption throughout the economy, then he should draft a bill, try to find co-sponsors, try to persuade the majority to hold hearings, and try to persuade colleagues and the public to support it. Instead, he attempts through a one-sentence provision not only to legalize EPA’s hijacking of fuel economy regulation but expand it across the board to all oil-using machines! This sets a new standard for chutzpah.

All of the hostile amendments were designed to trick H.R. 910 supporters into abandoning their moral high ground. All were designed to suck supporters into affirming controversial positions that H.R. 910 neither presupposes nor implies. Opponents’ strategy was to change the subject so that H.R. 910 supporters would end up debating climate science, climate change risk, or oil dependence rather than the constitutional impropriety of EPA ‘legislating’ climate and energy policy through the regulatory backdoor. More than a few Republicans took the bait, allowing the other team to define, and thereby occupy, the moral high ground.

When the bill finally gets to the House floor, supporters need to do a better job of anticipating and foiling opponents’ rhetorical tricks. If I were writing a floor statement for an H.R. 910 supporter, it would go something like this:

H.R. 910 is called the Energy Tax Prevention Act. It could also be called the Democratic Accountability in Climate Policy Act. Or the Separation of Powers Restoration Act.

What are the premises on which this legislation is based? The Constitution puts Congress, not non-elected bureaucrats, in charge of determining national policy. Congress has never authorized EPA to determine national policy on climate change. The Clean Air Act was enacted in 1970, years before global warming emerged as a policy issue. The terms “greenhouse gas” and “greenhouse effect” do not even occur in the statute. The Clean Air Act is an even less efficient, less predictable, and potentially more costly framework for restricting the American people’s access to affordable energy than the cap-and-trade legislation that Congress and the public rejected last year.

Don’t take my word for it. Ask EPA Administrator Lisa Jackson, Rep. Ed Markey, and others who only last year warned that if we did not preempt EPA by enacting a cap-and-trade bill, we would get a greenhouse gas regulatory system that cap-and-trade critics would like even less.

I hope we can have a candid debate on H.R. 910. So far, however, opponents have tried to avoid the real issue, which is simply: Who shall make climate policy — the people’s representatives, or an administrative agency not accountable to the people at the ballot box? Our Constitution permits only one answer to that question.

Opponents say that Congress should step aside and let EPA make climate policy, because Congress won’t enact cap-and-trade or other measures they support.

That’s a very strange notion of democracy. Opponents seem to think they are entitled to win even if they lose in the halls of Congress and the court of public opinion.

H.R. 910 is designed to safeguard the constitutional separation of powers and the political accountability such separation was intended to secure. Opponents don’t want you to know that. That’s why they keep trying to change the subject. They want to have a debate on climate science. Or on oil dependence. They have their views on these topics. I have mine. What we think about climate science and oil dependence is irrelevant to what we are debating today.

Today we are not debating what climate and energy policy should be. We are debating who should make it. Some seem to think it’s okay for EPA to exercise power beyond any plausible legislative mandate because they and EPA share the same basic agenda. That’s not right.

No agenda is so important that it excuses congressional passivity or even complicity when an agency gets too big for its britches and starts acting like a Super-Legislature.

EPA is initiating major changes in national policy — changes fraught with large potential impacts on jobs and the economy. The Clean Air Act does not authorize EPA to establish or tighten fuel economy standards for new cars and trucks, yet that is effectively what it is doing. And EPA will soon be dictating fuel economy standards for aircraft, marine vessels, and non-road vehicles, even though no existing statute authorizes any agency to do that. If not stopped, EPA will eventually issue greenhouse gas performance standards for dozens of industrial categories, and could even be litigated into establishing national ambient air quality standards for greenhouse gases set below current atmospheric concentrations.

America could end up with a greenhouse gas regulatory regime more costly and intrusive than any climate bill Congress has declined to pass, or any climate treaty the Senate has declined to ratify, yet without the people’s representatives ever voting on it.

Making policy decisions of such economic and political magnitude is above EPA’s pay grade. It is above any administrative agency’s pay grade.

Our opponents claim that we seek to repeal a scientific finding, as if, like King Canute, we were trying to command the tides to halt. That’s very clever, but it’s an outrageous misrepresentation.

H.R. 910 does not repeal EPA’s endangerment finding. Rather, it repeals the Rulemaking in which EPA published its finding. H.R. 910 repeals the legal force and effect of EPA’s finding. H.R. 910 takes no position whatsoever on the validity of EPA’s reasoning or conclusions.

Opponents keep asking, ‘What is your plan’ to address climate and energy issues? That is putting the cart way before the horse. Our first order of business is to restore democratic accountability to climate policymaking. Then and only then can Congress, no longer distracted by EPA’s attempt to narrow our options and prejudge our decisions, consider these issues properly — on their merits.

Congress is a deliberative body. Sometimes Congress does not act as quickly as some Members would like. Sometimes Congress does not enact legislation that some Members support. That, however, does not authorize EPA to implement far-reaching policy changes Congress has not approved.

The legislative process is often frustrating and slow. It is supposed to be! It moderates our politics and promotes continuity in law and policy. This slow, deliberative legislative process is more valuable than any result that an administrative agency might obtain by doing an end run around it. Of all people, Members of Congress should understand this basic precept of our constitutional system.

Last Thursday, the House Energy & Power Subcommittee, on a voice vote, approved H.R. 910, the “Energy Tax Prevention Act.” My colleague Myron Ebell blogged about it over the weekend in a post titled Inside the Beltway.

The present post offers additional commentary. The full House Energy and Commerce Committee marks up the legislation today and tomorrow.

Rep. Henry Waxman (D-Calif.) led the charge for the minority, claiming H.R. 910 “rolls back” the Clean Air Act. Wrong. H.R. 910 restores the Clean Air Act (CAA). Congress never intended the CAA to be a framework for greenhouse gas regulation, and never subsequently voted for it to be used as such a framework. The terms “greenhouse gas” and “greenhouse effect” never even occur in the Act, which was enacted in 1970, years before global warming was even a gleam in Al Gore’s eye. 

The CAA as amended in 1990 does mention “carbon dioxide” and ”global warming potential,” but only once, in the context of non-regulatory provisions, and each time followed by a caveat admonishing EPA not to infer authority for “pollution control requirements” or “additional regulation.” This language would have been superfluous and without legal effect if, as Waxman assumes, EPA already had authority since 1970 to control carbon dioxide as an “air pollutant” or regulate greenhouse gases in general based on their ”global warming potential.” The only time Congress spoke directly to the issue of global warming in the Clean Air Act, it instructed EPA not to jump to regulatory conclusions. For further discussion, see my columns EPA’s End-Run Around Democracy and Endangerment Smackdown: Should Congress Heed Russell Train’s Advice.

Waxman said H.R. 910 “overturns EPA’s scientific finding.” Reps. Ed Markey (D-Mass.) and Jay Inslee (D-Wash.) go further, asserting that Republicans are trying to repeal the law of gravity and the first law of thermodynamics. Rubbish. Nature is what it is. EPA’s assessment of the science is what it is. H.R. 910 takes no position on climate science. It does not presume to command Nature or rescind EPA’s assessment of the scientific literature. Rather, H.R. 910 aims to overturn the legal force and effect of the rule in which EPA published its assessment, the so-called endangerment finding.

As even Rep. Waxman might admit, science should inform, not dictate, policy. EPA, however, is using its allegedly scientific assessment to dictate policy. EPA’s Endangerment Rule obligates EPA to regulate greenhouse gas emissions from new motor vehicles, which then obligates EPA to impose CAA permitting requirements on stationary sources of greenhouse gases. In addition, the Endangerment Rule authorizes or obligates EPA to establish emission standards for other mobile sources (aircraft, marine vessels, non-road vehicles) and New Source Performance Standards (NSPS) numerous industrial source categories. EPA may even be litigated into establishing National Ambient Air Quality Standards (NAAQS) for greenhouse gases set below current atmospheric concentrations.

Thus, by publishing an assessment of the science literature, EPA authorized itself to ‘legislate’ national policy on climate change. America could end up with a climate regulatory regime more costly and intrusive than any cap-and-trade bill Congress has declined to pass, or any climate treaty the Senate has declined to ratify, yet without the people’s representatives ever voting on it. H.R. 910 would stop this trashing of our constitutional system of separated powers and democratic accountability.

Waxman said: “Some Republicans on the committee will argue today that this bill is not a rejection of science, but if they believed in the serious threat posed by climate change, they would have accepted our offer to work together without preconditions to develop a responsible plan for promoting clean energy and reducing carbon emissions.” Two problems here. First, Waxman confuses science with his view of the science. Some scientists, such as University of Alabama in Hunstville climatologist John Christy, who recently testified before the Energy and Power Subcommittee, take a decidedly non-alarmist view. 

Second, a “clean energy standard” (CES), like the failed Waxman-Markey cap-and-trade bill, is just another way of ”skinning the cat,” as President Obama put it. A CES is another way to “bankrupt” coal power plants and cause electricity rates to “necessarily skyrocket.”  Obama’s CES proposal aims at almost exactly the same mix of electricity fuels that the Waxman-Markey cap-and-trade bill would have created. A CES resembles a Soviet-style production quota and would probably be less efficient than cap-and-trade. Why should Republicans and Blue Dog Democrats who oppose cap-and-trade feel obliged to support something even worse?  

Waxman said: “It is hard to know how to respond when the other side calls H.R. 910 the Energy Tax Prevention Act but EPA has no authority to levy taxes, nor does the Agency propose to do so.” Rep. John Dingell (D-Mich.) made the same point, claiming that the sponsors had a “truth in advertising” problem, because EPA is not collecting revenues from taxpayers. This kind of nit-picky literalism misses the point. Granted, rhetoric can distort reality. An apt example is Waxman and Markey’s “American Clean Energy and Security Act,” which would have inflated gasoline prices, destroyed jobs, and increased our reliance on costly and unreliable wind and solar power.

Rhetoric, however, can also demystify convoluted agendas so that the public can understand who’s trying to fleece them. Although economists had long argued that a carbon tax is more efficient, the global warming movement preferred cap-and-trade because its economic impacts are less obvious. Calling it ”cap-and-tax” opened peoples eyes. Even though cap-and-trade was not strictly a tax, it would have some of the same effects as an energy tax, such as causing electric rates to “necessarily skyrocket.” EPA’s regs would similarly penalize fossil energy production and use, raising consumer energy prices. H.R. 910′s title spotlights this valid concern. As Subcommittee Chair Ed Whitfield (R-Ky.) later said, the bill would repeal a “de facto tax on energy.”

Rep. Mike Doyle (D-Penn.) argued that EPA’s greenhouse rules can’t be sending jobs to China because they apply only to facilities that are “new” or “drastically modified.” Two problems here. First, Doyle tacitly concedes that EPA’s rules could send future jobs to China, by discouraging firms to undertake new construction or major modifications. But that means the rules could be sending jobs to China already, because people invest today based on their expectations for the future (duh!). Moreover, EPA has announced that it plans to apply greenhouse gas performance standards to existing, non-modified coal power plants. Besides, the purpose of H.R. 910 is not merely to undo any economic damage that EPA’s greenhouse gas regulations have done since Jan. 2, 2011, when they took effect, but to safeguard America’s economic future for years to come.

Rep. Inslee denounced H.R. 910 as the “dirty air act” (not very original), asserting it would prevent EPA from fighting childhood asthma. If Inslee really believes that, then I have a bridge I’d like to sell him. To restate the obvious, carbon dioxide is not an asthma-triggering or -exacerbating air pollutant. EPA already has all the power it could possibly want under traditional CAA programs to control air pollution. U.S. air quality is not a major factor in childhood asthma. Asthma rates have risen even as air pollution has declined, and hospitalizations for asthma are lowest in July and August — months when smogs levels are highest. For further discussion, see Chapter 7 of Joel Schwartz and Steven Hayward’s book, Air Quality in America: A Dose of Realty on Air Pollution Levels, Trends, and Risks.
 
Rep. Eliot Engel (D-N.Y.) suggested that allowing EPA to regulate greenhouse gases through the CAA would grow the economy: “Since its adoption, the Clean Air Act has reduced key air pollutants by 60 percent, while at the same time the economy has grown by over 200 percent.” Yes, but who today would say that the economy is in great shape? Unemployment hovers near 10%. Imposing virtual taxes on energy can only impede recovery.

Small business is the main job creator. Environmental compliance already “costs 364 percent more [per employee] in small firms than in large firms,” according to the Small Business Administration Office of Advocacy. EPA’s Tailoring Rule shields small greenhouse gas emitters from CAA permitting requirements by effectively amending the statute’s numerical definitions of “major emitting facility.” If courts strike down the Tailoring Rule as a violation of the separation of powers, then small business compliance costs will “necessarily skyrocket.” Even if courts uphold the Tailoring Rule, EPA’s regulations will increase small business energy costs.

Waxman opined that H.R. 910 would jeopardize EPA’s model year 2012-2016 greenhouse gas tailpipe standards, on which auto companies have already based their plans, despite language leaving those standards in place. “The exception doesn’t address the issue of whether those standards can survive legal challenge without the endangerment finding,” he said. His point being that H.R. 910 would overturn EPA’s Endangerment Rule, without which EPA could not legally issue the Tailpipe Rule. True but irrelevant. As Subcommittee Counsel Maryam Brown noted, if Congress via H.R. 910 codifies the Tailpipe Rule, then there can be no legal challenge to it. 
 
Brown’s point also takes care of Waxman’s concern that a decoupling of EPA’s greenhouse gas motor vehicle emission standards from the National Highway Traffic Safety Administration’s (NHTSA’s) fuel economy standards would decrease greenhouse gas reductions by 30% relative to the joint rulemaking the agencies issued in May 2010. I’m not sure where Waxman gets that percentage. P. 25429 of the joint rule says that an automobile air conditioner (AC) system must be 30% more efficient than the current average to qualify for a greenhouse gas reduction credit. That’s the only place in the joint rule where the figure “30%” occurs.
 
EPA and NHTSA confirm that “there is a single pool of technologies for addressing these twin problems [climate change, oil dependence], i.e. those that reduce fuel consumption and thereby reduce CO2 emissions as well” (p. 25327). EPA estimates that 94-95% of motor vehicle greenhouse gas emissions are carbon dioxide from motor fuel combustion, the remaining portion coming from the refrigerants used in automobile AC systems. Thus, even if H.R. 910 did have the effect of decoupling EPA’s greenhouse emission standards from NHTSA’s fuel economy standards, there should be only a small decrease in greenhouse gas reductions relative to the joint rule’s projected baseline. 
 
Let’s also put things in perspective. EPA and NHTSA estimate their joint rule will avert 0.011°C of warming and 0.09 cm of sea-level rise by 2100 (p. 25637). Those effects are too small to be detected and make no practical difference to any public health or environmental concern. A 30% reduction in such puny “climate protection” is irrelevant.
 
Waxman also denounced H.R. 910 because California could not apply for another waiver to set even tougher greenhouse gas emission standards for cars manufactured after the 2016 model year. But EPA should never have granted California a waiver to establish its own greenhouse gas emission standards in the first place. The California program is massively “related to” fuel economy, and, as such, is preempted by the 1975 Energy Policy Act.

In addition, as Rep. Brian Bilbray (R-Calif.) ably argued, the waiver provision established by CAA Sec. 209 has no rational application to greenhouse gases. The CAA authorizes California to obtain waivers to go beyond federal motor vehicle emission standards because those are not tough enough to bring California, with its unique topography and meteorology, into attainment with federal air quality standards. There are no national air quality standards for greenhouse gases. Therefore, California has no need under the CAA to establish vehicle emission standards for greenhouse gases. Moreover, because greenhouse gases are well-mixed in the global atmosphere, greenhouse gases, unlike smog or soot, are no more heavily concentrated in California than anywhere else.

Engel argued that overturning EPA’s endangerment finding would be unprecedented in the history of the CAA. Counsel Brown countered that there is precedent for repealing EPA rulemakings and that EPA’s issuance of a ”stand-alone” endangerment finding, without accompanying regulatory requirements, is itself “unprecendented.” I would put the matter this way. EPA’s Endangerment Rule is “stand-alone” only as a publication. It is the trigger, prelude, and precedent for a cascade of regulations Congress has not approved. If the “finding” were merely that — EPA’s interpretation of climate science – then Congress would not be voting on it. The Endangerment Rule is separate only in the trivial sense that it was published before all the other greenhouse gas regulations that flow from it.

Rep. Markey argued that because H.R. 910 takes away EPA’s authority over greenhouse gases, it also takes away EPA’s authority to reduce oil consumption in aircraft, marine vessels, non-road vehicles, boilers, etc. And that is bad, he reasoned, because NHTSA has no authority to reduce oil consumption from such entities. Markey fails to grasp the implication of his remarks. If the nation’s fuel economy laws (1975 Energy Policy Act, 2007 Energy Independence and Security Act) do not authorize NHTSA to reduce oil consumption from entities other than cars and trucks, then Congress obviously did not authorize EPA to do so through the Clean Air Act, which provides no authority whatsoever to set fuel economy standards.

If Markey thinks EPA should be reducing oil consumption throughout the economy, then he should draft a bill, introduce it, and try building legislative majorities to pass it. But that would be hard work, and it might not succeed. So instead Markey wants EPA to play lawmaker and impose his will on the nation.

I would summarize the core premise of Waxman, Markey, and Inslee’s opposition to H.R. 910 as follows: We know what is good for America and the world. It’s a future without fossil fuels. We can’t persuade the people’s representatives to support our agenda and turn it into law. Therefore, it is necessary for EPA to ‘enact’ our agenda regardless of the defeat of cap-and-trade, the November 2010 elections, and the separation of powers. The triumph of our agenda is more important than any constitutional principle that might interfere with it.

Earlier this week, the House Energy & Commerce Committee held its third hearing on the Energy Tax Prevention Act, a bill to stop EPA from determining national policy on climate change through the Clean Air Act, a statute enacted in 1970, years before global warming was even a gleam in Al Gore’s eye. The hearing, requested by ranking member Henry Waxman (D-Calif.), was entitled Climate Science and EPA’s Greenhouse Gas Regulations.

Although Democrats are now the minority party in the House, they got more witnesses (4) than did the majority (3). I don’t know how Rep. Waxman pulled that off. Did he ever let Republicans have more witnesses when he was in the chair? No. Would he return the favor if Dems regain control of the House? Doubtful.

The most effective minority witness, IMO, was Dr. Richard Somerville, whose testimony updates the continual — and predictable — refrain that ‘climate change is even worse than we previously predicted.’ Much of Somerville’s testimony is drawn from a report he co-authored called the Copenhagen Diagnosis.

It’s not my purpose here to provide an alternative assessment of climate science, though if you’re looking for one, check out Drs. Shirwood and Craig Idso’s Carbon Dioxide and Earth’s Future: Pursuing the Prudent Path. 

My beef, rather, is with Somerville’s claim that he’s simply a spokesman for science, not for an agenda. It’s amazing he can say this with a straight face and in the same testimony spout partisan cant about the Climategate scandal. He writes:

In late November 2009 . . . a crime was committed in which thousands of emails of prominent climate scientists were illegally obtained from a server at the University of East Anglia in the United Kingdom. . . .The short answer is that the hacked emails do not undermine the science in any way [emphasis added].

Now, I always thought scientists deal with facts and evidence. Where’s the evidence that the Climategate emails were hacked rather than leaked by a whistle blower fed up with the Climatic Research Unit’s stonewalling and refusal to comply with the UK Freedom of Information Act (FOIA)? Somerville provides none. Whether the person who leaked the CRU emails was a hacker or a whistle blower remains an open question. For Somerville to assert as a fact what is actually conjecture casts doubt on everything else he purports to say as a “scientist.”

Let’s delve into this a bit further. Somerville says:

The Copenhagen Diagnosis is about climate change science, not policy. For example, we summarize recent research underpinning the scientific rationale for large and rapid reductions in global greenhouse gas emissions, in order to reduce the likelihood of dangerous man-made climate change. However, we have no political or policy agenda, and we do not speak to the issue of formulating policies to achieve such reductions in emissions. As scientists, when climate change research is relevant to public policy, we consider it important to bring that research to the attention of the wider world. We are convinced that sound science can and should inform wise policy. This conviction led us to write The Copenhagen Diagnosis. In this testimony, I also have no political or policy agenda. I am simply summarizing my view of the current state of scientific understanding.

 And again:

Like IPCC, we insisted on being policy-relevant but policy-neutral.

Who does he think he’s fooling? Cap-and-trade, carbon taxes, EPA regulation of greenhouse gases through the Clean Air Act, and President Obama’s “clean energy standard” proposal are all part and parcel of one and the same agenda. They are all means to the same objective, and in public policy, the choice of objective is the most important choice.

How governments choose to ration, restrict, or penalize the carbon-based fuels that supply 85% of U.S. and global energy — or, in Somerville’s words, how governments compel “large and rapid reductions in global greenhouse gas emissions” — is a subordinate issue. The fundamental policy issue is whether governments should coercively limit the production and use of greenhouse gas-emitting fossil fuels. Somerville is emphatically a spokesman for a political and policy agenda — the Kyoto agenda of coercive de-carbonization.

It’s a very old rhetorical trick. Throughout history, partisans of one stripe or another have claimed to speak on behalf of some trans-political moral authority. In antiquity it was the gods. In the Middle Ages it was Holy Writ. Today it’s the “Consensus of Scientists.” Thus we have the spectacle of Al Gore, in An Inconvenient Truth, portraying himself as a non-political Mr. Science while lambasting G.W. Bush and other political opponents. Gore even insinuates as the film begins that Bush appointees on the Supreme Court stole the 2000 year presidential election from him. How very scientifical!

Surely one objective of the Copenhagen Diagnosis report was to buck up those at the 2009 Copenhagen climate conference advocating ”large and rapid” greenhouse gas reductions. That’s “policy neutral” only if you think the Kyoto-inspired campaign to restrict mankind’s access to fossil energy is policy neutral. Somerville’s post-mortem on the Copenhagen conference leaves no doubt that the Copenhagen Diagnosis was designed to drive the negotiations in a specific direction: 

Thus, it is profoundly regrettable that what I must characterize as dithering and procrastination at COP15 in Copenhagen continued a year later in December 2010 at COP16 in Cancun, Mexico.  

Just how “large and rapid” does Somerville think greenhouse gas reductions should be? He says:

To stabilize climate, a decarbonized global society – with near-zero emissions of CO2 and other long-lived greenhouse gases – needs to be reached well within this century. More specifically, the average annual per-capita emissions will have to shrink to well below 1 metric ton CO2 by 2050. This is 80 to 95% below the per-capita emissions in developed nations in 2000.

To be sure, Somerville acknowledges that policymakers, not scientists, get to decide ”how much climate change is tolerable”: 

This choice by governments may be affected by risk tolerance, priorities, economics, and other considerations, but in the end it is a choice that humanity as a whole, acting through national governments, will make. Science and scientists will not and should not make that choice.

But his message is obvious even if not explicit: ‘Morally you have no choice but to adopt my agenda and mandate large and rapid greenhouse gas reductions.’

The irony is that EPA is doing exactly what Somerville professes to believe scientists should not do – presume to determine, rather than merely inform, the direction and even the content of public policy. EPA is now ’legislating’ climate policy through the Clean Air Act, issuing regulations to control greenhouse gas emissions from both mobile and stationary sources. On what authority? The authority EPA conferred on itself by issuing its “Endangerment Rule.”

By issuing an assessment that greenhouse gases endanger public health and welfare, EPA obligated itself to promulgate greenhouse gas emission standards for new motor vehicles. That, in turn, obligated EPA to apply Clean Air Act permitting programs to stationary sources of greenhouse gases. In addition, the Endangerment Rule authorizes or obligates EPA to establish: (1) greenhouse gas emission standards for heavy trucks, marine vessels, aircraft, locomotives, and other non-road vehicles and engines; (2) greenhouse gas performance standards for potentially dozens of industrial source categories; and, (3) national ambient air quality standards (NAAQS) for greenhouse gases set below current atmospheric concentrations. In short, the Endangerment Rule not only sets the stage for a very rapid transition to what Somerville calls a ”decarbonized” society, it also predetermines the options for advancing that agenda.

Even if EPA were an honest broker of climate science, the agency’s greenhouse gas regulations would still amount to a usurpation of legislative power, since, as Somerville says, the job of science is to inform policy choices, not dictate them.

EPA, however, is not an honest broker; it is a stakeholder, a dog in the fight. The scientific assessment EPA made in its Endangerment Rule directly advances the agency’s interest in expanding its power, prestige, and budget. 

An elementary principle of justice is that no one should be judge in his own cause.  Implication: One and the same agency should not have the power to make the scientific assessments that authorize regulation and the power to promulgate rules based on such assessments. Otherwise, the agency has an inescapable conflict of interest. It will always be tempted to assess the science in ways that expand its power.

More importantly, though, an assessment should only inform policy, not dictate it. A good example is the famous 1964 Surgeon General’s Report  detailing the evidence that cigarette smoking causes cancer. A purely scientific assessment, the Surgeon General’s Report did not even offer policy recommendations. How different from EPA’s Endangerment Rule, which triggers a cascade of policy decisions Congress never approved!

If Somerville really believes science should only inform policy, not dictate it, then he should support the Energy Tax Prevention Act! Contrary to the bill’s detractors, the Energy Tax Prevention Act takes no position on climate science. It neither affirms nor denies the reasoning or conclusions EPA sets forth in its Endangerment Rule.

Rather, the bill aims to overturn the legal force and effect of the Endangerment Rule, ensuring that Congress, not bureaucrats posing as custodians of policy-neutral science, make public policy.