Gina McCarthy — President Obama’s nominee to succeed Lisa Jackson as EPA Administrator — is often described as “straight shooter” and “honest broker.” Is that reputation deserved?

Last week, Sen. David Vitter (R-La.) released a 123 page document containing McCarthy’s responses to hundreds of questions on a wide range of issues. Part 1 of this series examined McCarthy’s responses to Vitter’s questions about the agency’s regulation of greenhouse gases from stationary sources. The key points were:

1. McCarthy and the Air Office over which she presides gave Congress and the electric power sector false assurances that the EPA would not require utilities planning to build new coal-fired power plants to “fuel switch” and build natural gas combined cycle (NGCC) power plants instead.
2. Such misinformation undercut the credibility of critics who warned that the EPA, if left to its own devices, would use greenhouse gas regulation to prohibit the construction of new coal electric generation.
3. The EPA’s dissembling on fuel switching may have swayed votes against measures sponsored by Sen. Lisa Murkowski (R-Alaska) in 2010 and Sen. James Inhofe (R-Okla.) in 2011 to reclaim Congress’s authority to determine climate policy.

Agencies are not supposed to provide false or misleading information to influence how Members of Congress vote. Banning new coal generation — the inexorable effect of the EPA’s ‘Carbon Pollution’ Rule – is a policy Congress would reject if proposed as legislation.

Part 1 concluded that confirming McCarthy as Administrator would reward the EPA’s duplicitous pursuit of an agenda Congress has not authorized. Breaking news of the EPA’s grossly unequal treatment of groups seeking information under the Freedom of Information Act (FOIA) — based on whether the groups support or oppose a bigger, more intrusive EPA — leaves no doubt that this out-of-control agency deserves a kick in the butt, not a pat on the back.

Even the Society of Environmental Journalists – hardly a hotbed of libertarians, conservative Republicans, or fossil-fuel industry lobbyists — recently complained that the Obama administration “has been anything but transparent in its dealings with reporters seeking information, interviews and clarification” on environmental, health, and public lands issues, and that, ”The EPA is one of the most closed, opaque agencies to the press.” 

Today’s post examines McCarthy’s responses to Vitter’s questions about the administration’s motor vehicle mandates. As in Part 1, I begin with an overview of the issues and political back story. For more detailed analyses, see the House Government Oversight and Reform Committee report, A Dismissal of Safety, Choice, and Cost: The Obama Administration’s New Auto Regulations, and my article, EPA Regulation of Fuel Economy: Congressional Intent or Climate Coup?

Background

McCarthy, testifying under oath before the House Government Overight and Reform Committee in October 2011, denied that motor vehicle greenhouse gas emission standards are “related to” fuel economy standards. Yet anyone with her expertise has to know that greenhouse gas motor vehicle standards implicitly and substantially regulate fuel economy.

Why does this matter? The Energy Policy and Conservation Act (EPCA) expressly preempts state laws or regulations ”related to” fuel economy standards. Yet in July 2009, the EPA granted a waiver authorizing California to implement the State’s motor vehicle greenhouse gas emissions statute, AB 1493. McCarthy could not give truthful testimony without casting doubt on the legality of the waiver, AB 1493, and the administration’s motor vehicle greenhouse gas/fuel economy program.

Perhaps as important, the waiver gives the administration power to threaten and intimidate the auto industry — an asset of immense value in global warming politics. The falsehood that motor vehicle greenhouse gas emission standards are not related to fuel economy standards is, therefore, an unshakeable tenet of Team Obama’s company line.

EPCA delegates the power to prescribe fuel economy standards solely to the National Highway Traffic Safety Administration (NHTSA). The waiver did more than authorize the California Air Resources Board (CARB) to poach NHTSA’s statutory authority. It also authorized other states to opt into the AB 1493 program. Consequently, the waiver ginned up the scary prospect of a market-balkanizing, state-by-state, fuel-economy patchwork.

This is somewhat paradoxical, because only two sets of standards are permissible under the waiver: federal and California. However, each automaker would have to reshuffle the mix of vehicles sold in each “California” state to attain the same requisite fleet-average MPG or grams CO2/mile. If all 50 states opted into the AB 1493 program, each auto maker would have to manage 50 separate fleets. A more chaotic fuel-economy regime — and one more repugnant to the letter and spirit of EPCA — would be hard to imagine.

There was, alas, method to CARB and the EPA’s madness. The waiver positioned the White House to demand political fealty from the auto industry in return for protection from the “patchwork.” In May 2009, negotiations led by then-White House environment czar Carol Browner culminated in what President Obama dubbed the “historic agreement.” California and other states agreed to deem compliance with the EPA’s greenhouse gas emission standards as compliance with their own – but only if automakers pledged to support a “national” motor vehicle program jointly administered by EPA, NHTSA and CARB.

Circumstantial evidence suggests that access to bailout money was also tied to auto makers’ support for the “national” program, making the “historic agreement” an offer the auto industry could not refuse. We may never know for sure, because, defying the Presidential Records Act, Browner conducted the negotiations under a vow of silence. “We put nothing in writing, ever,” CARB Chairman Mary Nichols told the New York Times.

The political payoff for the EPA came in June 2010. The auto industry lobbied against Sen. Murkowski’s resolution (S.J.Res.26) to overturn the EPA’s Endangerment Rule, the prerequisite for all the agency’s global warming regulations. The resolution fell four votes short (47-53), allowing the greenhouse gas regulatory cascade to proceed unchecked. The Endangerment Rule triggered the Tailpipe Rule, which in turn triggered Clean Air Act permitting requirements for major stationary greenhouse gas emitters. The Endangerment Rule also underpins the EPA’s proposed ‘Carbon Pollution’ Rule for fossil-fuel power plants and potentially a host of future greenhouse gas emission standards for petroleum refineries, other industrial source categories, marine vessels, aircraft, non-road engines, and fuels. Ultimately, the Endangerment Rule may compel the EPA to establish national ambient air quality standards (NAAQS) for greenhouse gases.

Congress has not approved any of those specific policies, and none would pass if proposed as legislation and put to a vote. All depend, politically if not substantively, on the false pretense that greenhouse gas emission standards are not related to fuel economy standards.

Let’s now examine McCarthy’s responses to Vitter’s questions on auto regulations. Vitter’s questions are in bold type. McCarthy’s responses are indented. My comments are in blue. To make it easier for readers to check facts and sources, I occasionally insert citations and hyperlinks into the text.

Automobile Mandate:

The basic fuel economy statute, the Energy Policy Conservation Act (EPCA), expressly preempts state laws or regulations “related to” fuel economy standards. This is a very broad statement of preemption. It prohibits states not only from adopting fuel economy standards, but also from adopting laws or regulations “related to” fuel economy standards. Do you agree?

Response: EPA can only deny a waiver of the express preemption provision in CAA section 209(a) based on one of the criteria listed in section 209(b).  EPA’s waiver decisions under section 209(b) are based solely on an evaluation of those criteria, and evaluation of whether California emission standards are preempted under EPCA is not among those specified criteria. As a result, in making waiver decisions EPA takes no position regarding whether or not California’s GHG standards are preempted under EPCA.

Comment: Nothing in the Clean Air Act authorizes the EPA to ignore the intent of Congress as embodied in other statutes. McCarthy argues as if the Clean Air Act must expressly prohibit the EPA from flouting the letter and spirit of EPCA or else the EPA is free to connive with CARB to restructure the statutory program Congress created.

Even if one dons statutory blinkers and considers only the criteria contained in section 209(b), the EPA should still have denied California’s request for a waiver, as Bush EPA Administrator Stephen Johnson did in February 2008. Section 209(b)(1)(B) states that “No waiver shall be granted” if the State does not “need” the waiver to meet “compelling and extraordinary conditions.” The waiver provision addresses the historic reality that California’s geography,  meteorology, and automobile culture create “extraordinary” conditions with respect to photochemical smog. In contrast, greenhouse gas concentrations are essentially uniform throughout the globe, and are not affected by California-specific circumstances. In addition, climate change risks are not evidently more “compelling” in California than in other states. As my colleague Sam Kazman quipped, “They call it global warming, not California warming.” 

Moreover, unlike other motor vehicle emission standards California has adopted, which measurably improve air quality in the State, the AB 1493 standards will make no discernible difference to climate change risk in California. The State cannot ”need” purely symbolic emission standards.

Given the strength of Johnson’s argument, why haven’t courts overturned the AB 1493 waiver? To challenge the waiver, petitioners must have standing. In April 2011, the D.C. Circuit Court of Appeals held that the National Automobile Dealers Association and the U.S. Chamber of Commerce do not have standing. Since auto makers are directly subject to the AB 1493 standards, they would clearly have standing to sue, at least during the early phase of the “national” program. However, auto companies forfeited their legal right to challenge the waiver as part of the “historic agreement.”

For the sake of argument, let’s assume that greenhouse gas motor vehicle standards, like those based on California’s motor vehicle emissions law, AB 1493, are “related to” fuel economy standards. I know you don’t think they are, but for now, let’s assume there is a relationship to fuel economy standards. If there was, would it be lawful for California to implement AB 1493? Would it be proper for the EPA to grant California a waiver to implement it?

Response: EPA can only deny a waiver based on one of the criteria listed in section 209(b) of the Clean Air Act. EPA’s waiver decisions under section 209(b) are based solely on an evaluation of those criteria, and evaluation of whether California emission standards are preempted under EPCA is not among those specified criteria. As a result, in making waiver decisions EPA takes no position regarding whether or not California’s GHG standards are preempted under EPCA.

Comment: McCarthy evades the question. Logically, her response implies that even if the Supreme Court ruled that EPCA preempts California’s greenhouse gas motor vehicle standards, the EPA would still have granted the waiver, since (according to McCarthy) the EPA may consider only criteria specified in 209(b) and nothing else. 

Key agency documents and even AB 1493 itself imply that motor vehicle greenhouse gas emission standards and fuel economy standards are closely related. EPA and NHTSA acknowledge in their May 2010 Tailpipe Rule [75 FR 25324, 25424, 25327] that no commercially available technologies exist to capture or filter out carbon dioxide (CO2) emissions from motor vehicles. Consequently, the only way to decrease CO2 per mile is to reduce fuel consumption per mile — that is, increase fuel economy. Carbon dioxide constitutes 94.9% of vehicular greenhouse gas emissions, and “there is a single pool of technologies … that reduce fuel consumption and thereby CO2 emissions as well.” What this analysis tells me is that greenhouse gas motor vehicle emission standards inescapably and primarily regulate fuel economy. Do you agree?

Response: The two are closely aligned but they are different. EPA must follow the language of section 202(a) of the Clean Air Act; the Supreme Court rejected the argument that EPA does not have authority to regulate CO2 from vehicles because it would impact fuel economy. The Supreme Court concluded that, “the two obligations may overlap, but there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.”

Comment: Another evasive response. The fact that the two types of standards are “different” is irrelevant. Two brothers are different people; they are nonetheless related. The Court’s statement — “there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency” — is also irrelevant. The Court was referring to two federal agencies — the EPA and NHTSA. The Court did not affirm that state-level regulations “related to” fuel economy are consistent with EPCA.   

The framework document for the Obama administration’s model year 2017-2025 fuel economy program, the September 2010 Interim Joint Technical Assessment Report published by the EPA, NHTSA, and the CARB, considers four fuel economy standards, ranging from 47 mpg to 62 mpg. Each is the simple reciprocal of an associated CO2 emission reduction scenario. The 54.5 mpg standard for model year 2025, approved by the White House in August 2012, is a negotiated compromise between the 4% per year (51 mpg) and 5% per year (56 mpg) CO2 reduction scenarios. If fuel economy standards derive mathematically from CO2 emission reduction scenarios, and CO2 accounts for 94.9% of all greenhouse gas emissions from motor vehicles, are not the two types of standards related?

Response: The two are closely aligned but they are different. EPA must follow the language of section 202(a) of the Clean Air Act; the Supreme Court in Massachusetts v. EPA, 549 U.S. 497 (2007), rejected the argument that EPA does not have authority to regulate CO2 from vehicles because it would impact fuel economy. The Court concluded that, “the two obligations may overlap, but there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.”

Comment: A third evasive response. No matter what substantive information Vitter provides, McCarthy repeats the same boilerplate. See previous comment for a rebuttal.

Nearly all of CARB’s recommended technologies for reducing greenhouse gas emissions (Table 5.2-3 in CARB’s 2004 Staff Report on options for implementing AB 1493) were previously recommended in a 2002 National Research Council study on fuel economy (Tables 3-1, 3-2). CARB proposes a few additional options, but each is a fuel-saving technology, not an emissions-control technology. These facts tell me that greenhouse gas emission standards inescapably and primarily regulate fuel economy. What conclusion do you draw?

Response: The two are closely aligned but they are different. EPA must follow the language of section 202(a) of the Clean Air Act. The Supreme Court in Massachusetts v. EPA, 549 U.S. 497 (2007), rejected the argument that EPA does not have authority to regulate CO2 from vehicles because it would impact fuel economy. The Court concluded that, “the two obligations may overlap, but there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.”

Comment: McCarthy sounds like a broken record. She is clearly unwilling to engage the issue on the merits. 

In AB 1493 itself, CARB’s greenhouse gas standards are to be “cost-effective,” defined as “Economical to an owner or operator of a vehicle, taking into account the full life-cycle costs of the vehicle.” CARB interprets this to mean that the reduction in “operating expenses” over a vehicle’s average life must exceed the expected increase in vehicle cost (Staff Report, p. 148). Virtually all such “operating expenses” are expenditures for fuel. CARB’s implementation of AB 1493 cannot be “cost effective” unless CARB substantially boosts fuel economy. Do you agree?

This question would be best addressed by CARB since it is directed at the state standard.

Comment: No, this question is best addressed to top EPA officials, who presumably formed an opinion about the content and purpose of AB 1493 before authorizing CARB to implement it. Again, an evasive response.

How does the “national” program created in the wake of this backroom deal comport with congressional intent? Under the statutory scheme Congress created, one agency – NHTSA – regulates fuel economy under one statute – EPCA as amended by the Energy Independence and Security Act (EISA) – through one set of rules – corporate average fuel economy. Today, three agencies – NHTSA, the EPA, and CARB – make fuel economy policy under three statutes – EPCA, the Clean Air Act, and AB 1493 – through three sets of regulations. Where does EPCA as amended authorize this triplification of fuel economy regulation?

Response: In Massachusetts v. EPA, 549 U.S. 497 (2007), the Supreme Court rejected the argument that EPA does not have authority to regulate CO2 from vehicles because it would impact fuel economy and concluded that, “the two obligations may overlap, but there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.” The National Program approach has garnered widespread support from a broad range of stakeholders including the automobile industry, for this joint, harmonized effort.

Comment: More irrelevancies. As noted above, in Mass. v. EPA, the Court did not rule on the appropriateness of CARB adopting greenhouse gas emission standards or implicitly regulating fuel economy.

The fact that the auto industry supports the “National Program” only proves that regulated industries are vulnerable to intimidation and bankrupt industries can be bribed with corporate welfare. Because no notes were taken, we may never know who said what in the negotiations producing the “historic agreement.” But the available evidence suggests the White House made the auto industry an offer it could not refuse. A docudrama re-enacting Browner’s sales pitch to the auto execs might go something like this:

Are yous guys gonna come along quietly, or do I have to let the California Air Resources Board muss ya up? Shame, too, if you waz to go broke. Look, everybody needs prodection. Play ball wit us and nobody gets hoit, and yous can walk outta here knowin’ your companies will get doze bailout checks.

Conclusion

McCarthy’s responses to Vitter’s questions are not those of a “straight shooter.” She serves up evasion after evasion, irrelevancy after irrelevancy. Almost the only ‘reason’ she provides is an argument from authority, invoking the Supreme Court’s opinion in Mass. v. EPA to justify an EPA action – approval of the California waiver – that the Court did not address.

McCarthy’s evasions are of a piece with the agency’s well-known transparency problems, which at bottom are separation of powers problems. Congress’s ability to hold the EPA accountable is impaired when the agency stonewalls FOIA requests, bases regulations on secret science, conducts official business through private channels, and negotiates regulations with friendly litigants behind closed doors. Oversight is also impaired when EPA officials prevaricate under oath. As House Government Oversight and Reform Chairman Darrell Issa put it in a letter to McCarthy following her testimony at the October 2011 hearing:

Your statements under oath misled the Subcommittee in understanding the relationship between fuel economy standards and greenhouse gas regulations. The difference between regulating greenhouse gases and regulating fuel economy is a distinction without a difference. . . . By obstinately insisting that greenhouse gas regulation and fuel economy regulation are separate and unrelated endeavors . . . you impede the Committee’s important oversight work.

Why did she ‘mislead’ and ‘impede’? To avoid having to admit that the EPA turned the EPCA preemption into a practical nullity and, in cahoots with CARB, restructured the fuel economy program Congress created. Such changes are of a legislative nature and, thus, should be beyond an administrative agency’s pay grade to effect.  

Referring to the agency’s greenhouse gas regulations, D.C. Circuit Appeals Court Judge Janice Rogers Brown recently observed that the EPA acts as if its job is to ”steamroll through legislative gridlock” and “upend the Senate’s rejection of the Kyoto Protocol.”

The central issue in the McCarthy nomination debate is not her personal qualifications but the EPA’s record of dissembling, obfuscation, and overreach during her four years of service as one of the agency’s highest ranking officials.

The Governors of Georgia, Texas, Arkansas, Delaware, Maryland, New Mexico, and North Carolina have petitioned EPA Administrator Lisa Jackson to waive the mandatory ethanol blending requirements established by the Renewable Fuel Standard (RFS). The petitioners hope thereby to lower and stabilize corn prices, which recently hit record highs as the worst drought in 50 years destroyed one-sixth of the U.S. corn crop. Corn is the principal feedstock used in ethanol production.

Arkansas Gov. Mike Bebe’s letter to Administrator Jackson concisely makes the case for regulatory relief:

Virtually all of Arkansas is suffering from severe, extreme, or exceptional drought conditions. The declining outlook for this year’s corn crop and accelerating prices for corn and other grains are having a severe economic impact on the State, particularly on our poultry and cattle sectors. While the drought may have triggered the price spike in corn, an underlying cause is the federal policy mandating ever-increasing amounts corn for fuel. Because of this policy, ethanol production now consumes approximately 40 percent of the U.S. corn crop, and the cost of corn for use in food production has increased by 193 percent since 2005 [the year before the RFS took effect]. Put simply, ethanol policies have created significantly higher corn prices, tighter supplies, and increased volatility.

Agriculture is the backbone of Arkansas’s economy, accounting for nearly one-quarter of our economic activity. Broilers, turkeys, and cattle — sectors particularly vulnerable to this corn crisis — represent nearly half of Arkansas’s farm marketing receipts. Arkansas poultry operators are trying to cope with grain cost increases and cattle familes are struggling to feed their herds.

Section 211(o)(7) of the Clean Air Act (CAA) authorizes the EPA to waive all or part of the RFS blending targets for one year if the Administrator determines, after public notice and an opportunity for public comment, that implementation of those requirements would “severely harm” the economy of a State, a region, or the United States. Only once before has a governor requested an RFS waiver. When corn prices soared in 2008, Gov. Rick Perry of Texas requested that the EPA waive 50% of the mandate for the production of corn ethanol. Perry, writing in April 2008, noted that corn prices were up 138% globally since 2005. He estimated that rising corn prices had imposed a net loss on the State’s economy of $1.17 billion in 2007 and potentially could impose a net loss of $3.59 billion in 2008. At particular risk were the family ranches that made up two-thirds of State’s 149,000 cattle producers. Bush EPA Administrator Stephen Johnson rejected Perry’s petition in August 2008.

In the EPA’s Request for Comment on the 2012 waiver petitions, the agency indicates it will use the same “analytical approach” and “legal interpretation” on the basis of which Johnson denied Perry’s request in 2008. This means the regulatory decks are stacked against the petitioners. As the EPA reads the statute, CAA Section 211(o)(7) establishes a burden of proof that is nearly impossible for petitioners to meet. No matter how high corn prices get, or how serious the associated economic harm, the EPA will have ready-made excuses not to waive the corn-ethanol blending requirements.

According to the EPA, Petitioners must show that the “RFS itself” would cause severe economic harm, not merely “contribute” to it. Petitioners therefore must also show that the relief sought would achieve a substantial reduction in the prices of corn, feed, and food.

This reading of the statute effectively prejudges the issue. ”Severe” economic harm typically results from a combination of factors, not one single cause. An ethanol mandate that causes little economic harm when unemployment rates are low, corn production is high, and China’s demand for U.S. corn imports is low could inflict severe harm when the opposite conditions obtain — as they do today.

If Congress wanted the EPA to grant a waiver only when the RFS alone causes severe economic harm, it could have easily said so. The statute specifies no such limitation. CAA Section 211(o)(7) does not tell the EPA to ignore non-RFS factors that might also adversely affect food and feed prices, agricultural employment, and the competitiveness of U.S. livestock producers.

The EPA’s demand that the waiver be a ”remedy for the harm” is the flip side of this same trick coin. By law, the EPA may grant a waiver for only one year at a time. Although a series of waivers might provide a complete remedy, a one-year waiver may have little impact on markets shaped by the RFS’s 17-year (2006-2022) production quota schedule. So the EPA could reject the waiver petitions on the grounds that a piecemeal solution is no solution at all.

Note: The EPA argues the exact opposite when the issue is whether or not to pull a regulatory trigger. In such cases, even small contributions to an alleged harm are considered sufficient grounds for regulation, and even minute regulatory contributions to the hoped-for solution are deemed fully justified and legally required.

Take, for example, the EPA’s heavy-duty truck greenhouse gas (GHG) emission standards. The EPA estimates that the standards for model year (MY) 2014-2018 heavy-duty vehicles will reduce atmospheric carbon dioxide (CO2) concentrations by 0.732 parts per million, which in turn will avert an estimated 0.002-0.004°C of global warming and 0.012-0.048 centimeters of sea-level rise by the year 2100 (Proposed Heavy Truck Rule, p. 74289). Such changes would be too small for scientists to distinguish from the “noise” of inter-annual climate variability. The EPA acknowledges no obligation to demonstrate either that heavy-truck GHG emissions alone harm public health and welfare or that regulating MY 2014-2018 heavy-truck GHG emissions would have a major impact on global warming.

Consider also the EPA’s Utility MACT Rule for coal-fired power plants. The agency acknowledges that U.S. mercury (Hg) emissions constitute only 5% of global anthropogenic Hg emissions and only 2% of the total global Hg pool, and that U.S. power plant emissions account for only 0.6% of the global pool. More importantly, the EPA estimates  — based on dubious epidemiological evidence and questionable demographic modeling – that the MACT Rule’s Hg emission reductions will avert the loss of 0.00209 IQ points per child in a guesstimated population of 240,000 subsistence fishing households. IQ points cannot be measured out to five decimal places. The MACT Rule’s microscopic mercury-related health benefits are literally undetectable and unverifiable. The EPA is completely undaunted by such facts. In the agency’s words (Proposed Utility MACT Rule, p. 24978):

However, as the U.S. Supreme Court has noted in decisions as recently as Massachusetts v. EPA, regarding the problem of climate change, it is not necessary to show that a problem will be entirely solved by the action being taken, nor that it is necessary to cure all ills before addressing those judged to be significant. 549 U.S. 497, 525 (2007).

In stark contrast, when the issue before the EPA is whether to grant regulatory relief, then the regulation itself must be shown to cause severe harm, and even temporary relief must be shown to cure all ills (or most of them). This is not surprising. Being a regulatory agency, the EPA does not accord the harms of over-regulation the same weight as the harms of under-regulation.

So in all likelihood, the EPA will deny the Governors’ waiver requests, even though a waiver would undoubtedly lower and stabilize corn prices to some extent.

This cloud may have a silver lining. If the EPA once again refuses to balance the interests of corn farmers against those of other industries and consumers, it will furnish new evidence that the RFS is a policy disaster. Especially if the drought persists into 2013, an EPA that won’t heed the reasonable requests of domestic livestock producers, seven governors, 156 House members, 26 Senators, the head of the UN Food and Agriculture Organization, and other food security advocates will build support for RFS reform — or repeal.