Waxman Markey

Post image for Why Courts Should Repeal EPA’s ‘Carbon Pollution’ Standard (and why you should care)

Note: A nearly identical version of this column appeared last week in Forbes Online. I am reposting it here with many additional hyperlinks so that readers may more easily access the evidence supporting my conclusions.

The November 2012 elections ensure that President Obama’s war on coal will continue for at least two more years. The administration’s preferred M.O. has been for the EPA to ‘enact’ anti-coal policies that Congress would reject if such measures were introduced as legislation and put to a vote. Had Gov. Romney won the presidential race and the GOP gained control of the Senate, affordable energy advocates could now go on offense and pursue a legislative strategy to roll back various EPA global warming regulations, air pollution regulations, and restrictions on mountaintop mining. But Romney lost and Democrats gained two Senate seats.

Consequently, defenders of free-market energy are stuck playing defense and their main weapon now is litigation. This is a hard slog because courts usually defer to agency interpretations of the statutes they administer. But sometimes petitioners win. In August, the U.S. Court of Appeals struck down the EPA’s Cross State Air Pollution Rule (CSAPR), a regulation chiefly targeting coal-fired power plants. The Court found that the CSAPR exceeded the agency’s statutory authority. Similarly, in March, the Court ruled that the EPA exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mine No. 1 in Logan County, West Virginia.

A key litigation target in 2013 is EPA’s proposal to establish greenhouse gas (GHG) “new source performance standards” (NSPS) for power plants. This so-called carbon pollution standard is not based on policy-neutral health or scientific criteria. Rather, the EPA contrived the standard so that commercially-viable coal plants cannot meet it. The rule effectively bans investment in new coal generation.

We Can Win This One

Prospects for overturning the rule are good for three main reasons. [click to continue…]

Post image for EPA’s ‘Carbon Pollution Standard’: Bait-and-Fuel-Switch

Bait-and-switch is one of the oldest tricks of deceptive advertising. The used-car dealer “baits” you onto the lot with an ad promising low interest payments on the car of your dreams. When you get there, the dealer regretfully informs you the car has already been sold. But, no, you haven’t wasted your time, because he’s got this other great car – the “switch” — which has so many superior features and it will only cost you a little more per month.

An even less ethical variant of this tactic is employed in politics. Party A in a negotiation gives an assurance or promise to obtain Party B’s support for a law or regulation. Party A then reneges on the deal once the policy is on the books. EPA’s recently proposed “Carbon Pollution Standard” Rule is a posterchild for this tactic. [click to continue…]

Post image for If Al Gore Can Outgrow the Ethanol Fad, Why Can’t Conservatives?

The Senate is expected to vote on S. 520, a bill to repeal the 45 cents per gallon volumetric ethanol excise tax credit (VEETC). The bill is co-sponsored by Sens. Tom Coburn (R-Okla.) and Benjamin Cardin (D-Md.). Sens. Diane Feinstein (D-Calif.) and Jim Webb (D-Va.) have also introduced S. 530, which would limit the VEETC to “advanced biofuels,” thus ending the subsidy for conventional corn ethanol. S. 530 would also scale back the 54 cents per gallon ethanol import tariff commensurately with the reduction in the tax credit.

The VEETC adds about $6 billion annually to the federal deficit. Unlike many other tax credits that reduce a household’s or a business’s tax liability, the VEETC is a “refundable” tax credit. That means the VEETC is literally paid for out of the U.S. general fund with checks written by the Treasury Department. The protective tariff, for its part, prevents lower-priced Brazilian ethanol from competing in U.S. markets. It increases the price of motor fuel at the pump.

Now, you would think supporting S. 520 and S. 530 would be a no-brainer for conservative lawmakers. But some are reportedly getting cold feet. To remind them of their duty to put the general interest of consumers and taxpayers ahead of the special interest of King Corn, I offer the following observations. [click to continue…]

A recent study by the Manufacturer’s Alliance/MAPI finds that EPA’s proposed revision of the “primary” (health-based) national ambient air quality standard (NAAQS) for ozone would have devastating economic impacts, such as:

  • Impose $1 trillion in annual compliance burdens on the economy between 2020 and 2030.
  • Reduce GDP by $687 billion in 2020 (3.5% below the baseline projection).
  • Reduce employment by 7.3 million jobs in 2020 (a figure equal to 4.3% of the projected labor force in 2020).

In a companion report, the Senate Republican Policy Committee estimates the job losses and  ”energy tax” burden (compliance cost + GDP reduction) each State will incur if EPA picks the most stringent ozone standard it is considering.

The costs of tightening ozone standards are likely to overwhelm the benefits, if any, as Joel Schwartz and Steven Hayward explain in chapter 7 of their book, Air Quality in America: A Dose of Reality on Air Pollution Levels, Trends, and Health Risks

So let’s see — we have emission regulations that function as de-facto energy taxes, and the costs far outweigh the putative benefits. Sound familiar? The resemblance to Waxman-Markey is more than superficial, because if stringent enough, air pollution regulations can restrict fossil energy use no less than carbon taxes or greenhouse cap-and-trade schemes.

For more information on EPA’s proposed ozone NAAQS and the MAPI study, see my post today on CEI’s Open Market.Org.

Senators David Vitter (R-Louisiana) and John Barrasso (R-Wyoming) today called attention to a remarkably broad delegation of authority to the President in the Kerry-Boxer and Waxman-Markey energy-rationing bills that would require shutting down the U. S. economy beginning in 2015. Section 705 of Kerry-Boxer, S. 1733, requires that the EPA Administrator must submit a report to Congress every four years beginning in 2013 including a determination of whether the legislation and other policies in place are sufficient to avoid greenhouse gas concentrations above 450 parts per million of carbon dioxide equivalent (ppm CO2-e). Since concentrations are already at 430 ppm CO2-e and rising every year, there is no way that the policies in Waxman-Markey or Kerry-Boxer can keep them below 450. The U. S. economy could shut down completely, and emissions from other countries would soon push atmospheric levels past 450.

That’s where section 707 of Kerry-Boxer is triggered. Section 707 directs the President to use existing authority to keep atmospheric concentrations of greenhouse gases below 450 ppm CO2-e. Senators Vitter and Barrasso repeatedly asked EPA about this target beginning last summer. A few days ago they finally got answers to their questions from the Department of Energy’s Pacific Northwest National Laboratory. PNNL’s modeling shows that 450 ppm CO-e will be reached in 2010. Therefore section 707 will inevitably be triggered on July 1, 2015 if these provisions in Kerry-Boxer and Waxman-Markey are enacted.

What does that mean? Well, EPA Administrator Lisa Jackson was not willing to speculate when asked by the Senators. But it’s easy to see that the complex mechanisms of the cap-and-trade program in Kerry-Boxer and Waxman-Markey will have to be scrapped as of 2015. All those free ration coupons that big companies like Duke Energy and Exelon and P G and E are hoping to get won’t be worth anything because the President will be obligated to use whatever statutory authority exists to reduce emissions and get greenhouse gases back down to below 450 ppm CO2-e. All the command-and-control tools of the Clean Air Act will have to be used to require emissions reductions.

The kicker is that Senator Vitter also sent letters today to the heads of the big corporations that support Kerry-Boxer warning them that: “beginning July 1, 2015, the President would be mandated to deny discretionary permit requests for any activity that results in greenhouse gas emissions if the global greenhouse gas concentration of 450 ppm has been reached. Under this mandate, environmental groups will seek to block all new economic activities that require discretionary permits. Any allocated carbon credits (that is, ration coupons) …would be useless if discretionary permits are required.”

Then Senator Vitter’s letter plays the Sarbanes-Oxley card: “I wanted to ensure that you were aware of the impact sections 705 and 707 would have on your company’s operations and investments. Given your fiduciary duties, I know that you will advise your shareholders and others of the impairment of your financial condition and the value of any credit allocation that these sections’ enormous mandates and restrictions would create.” I hope James Rogers, CEO and Chairman of Duke Energy and the biggest corporate promoter of cap-and-trade legislation, has a hard time sleeping tonight. Ditto Peter Darbee of P G and E, John Rowe of Exelon, Jeff Sterba of PNM Resources, Andrew Liveris of Dow Chemical, Jeff Immelt of General Electric, and all the other members of the U. S. Climate Action Partnership.