2009

In a New York Times opinion piece published last Sunday, Senators John Kerry (D-Massachusetts) and Lindsey Graham (?-South Carolina) seem to resort to blackmail as an argument for climate legislation.

Here’s what they wrote:

Failure to act comes with another cost. If Congress does not pass legislation dealing with climate change, the administration will use the Environmental Protection Agency to impose new regulations. Imposed regulations are likely to be tougher and they certainly will not include the job protections and investment incentives we are proposing.

The first half of this paragraph amounts to a threat: Act now on climate change, or the EPA will, and those guys are crazy. The last sentence includes a bribe: Kerry and Graham are proposing “job protections and investment incentives,” no doubt tailored to your constituents and financed by the general public. Of course, it’s the American taxpayer who is getting extorted. Threats, bribes, extortion…That’s a lot of racketeering, even for Senators.

P.S. My colleague Marlo Lewis amply explains (here, here, especially here, here, and this one‘s good, too) why the Senators’ threat is toothless.

Detractors of capitalism decry that it caters to special interests. The opposite is actually true. Just look at what’s happened in the last year.

Most of Wall Street came to government asking for a bailout when the government-created housing bubble popped.

The Big Three automakers also went to Washington for largesse when their customers came to prefer Toyotas and Hondas.

Health insurance companies stand to make a killing if Obamacare passes.

T. Boone Pickens and Al Gore would make millions from environmental legislation.

Ludwig von Mises explained the reason for all of this corrupt behavior with a single sentence back in 1949: “It is precisely the fact that the market does not respect vested interests that makes the people concerned ask for government interference.”
–Human Action, 4th Edition, p. 337.

“Clean Energy Splits France: It’s Carbon vs. Countryside in Environmental Battle Over Plan for Windmills Near Coastal Shrine.” So reads the Washington Post headline.

But is it?

The article concerns three windmills that some fear will obstruct the view of the awesome Mont St. Michelle Abby on the French coast, which becomes an island at high tides. Yet the article also points out that France is very accepting of nuclear power, which provides about 80% of the nation’s energy needs. Another 10% comes from hydro. And the number of windmills in question, three, provide less energy than the smallest nuclear plant made — which is to say those on naval warships.

No, this isn’t really about energy. It’s about politics. It’s making a statement. And quite

USA Today reports that at least nine states (and probably more) are not meeting their renewable portfolio standards. What coulda happened?

In their quest to draw more renewable power, states have come up against obstacles such as the recession, red tape and an outdated transmission system that makes it difficult to move solar or wind power from where it’s made to where it’s needed.

Some states, including Delaware and New Hampshire, require power companies that don’t buy enough renewable energy to make payments to a fund for renewable-energy projects. That allows companies to comply with the rules but doesn’t help move a state toward greater reliance on alternative energy.

You know how it goes: government imposes unattainable mandates on business, collects fines as a result, higher costs passed to customers.

Whatta bunch a dolts the utilities are to back this stuff! Good thing we can take our business elsewhere…wait a minute…

Last week I posted several excerpts from EPA’s “Tailoring Rule,” which confirm that the Supreme Court, in Massachusetts v. EPA (April 2007), set the stage for an economically ruinous administrative quagmire.

To reiterate:

• EPA, in response to Mass v. EPA, proposes to establish greenhouse gas (GHG) emission standards for new motor vehicles.
• Once those standards are adopted, carbon dioxide (CO2) automatically becomes a “pollutant subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program.
• A firm must obtain a PSD permit in order to build or modify a “major emitting facility” defined as a source with a potential to emit 100 tons per year (tpy) of a regulated pollutant (if the facility is in one of 28 listed industrial categories) or 250 tpy (if the facility is any other type of establishment).
• A firm must obtain a Title V permit in order to operate a “major emitting facility” defined as a source with the potential to emit 100 tpy of a regulated pollutant.
• An estimated 1.2 million buildings and facilities — big box stores, office buildings, enclosed malls, even commercial kitchens — actually emit 250 tpy of CO2. Millions more have a potential to emit 100 tpy of CO2.
• EPA and state environmental agencies currently process approximately 280 PSD permits and 14,700 Title V permits annually.
• EPA estimates that permitting agencies would have to process 41,000 PSD permits and 6.1 million Title V permits annually for CO2 sources meeting the statutory definitions of “major emitting facility.”
• The enormous volume of permit applications would “immediately and completely overwhelm” EPA and its state counterparts, bringing the permitting process — and much economic activity along with it — to a screeching halt. 

In the Tailoring Rule, EPA proposes to suspend, over a six-year period, the PSD and Title V requirements for GHG sources emitting less than 25,000 tpy, on a CO2-equivalent basis. During the next five-years EPA will develop “streamlining” options enabling smaller and smaller sources to comply without going broke (we hope — currently the average PSD permit costs $125,120 and 866 burden-hours for a source to obtain). Oh yes, let me guess, EPA will also lobby Congress for exponential increases in staff and other “administrative resources.”

Although EPA does not put it this way, the Agency is proposing to amend the Clean Air Act. EPA invokes the judicial doctrines of  ”absurd results” and “administrative necessity” to justify this assertion (usurpation?) of legislative power.

In a later post, I may analyze the cases EPA cites to defend its proposal to flout clear and unambiguous statutory language. In today’s post, I simply want to excerpt passages from the Tailoring Rule showing how regulation of CO2 under the Clean Air Act as written, rather than as re-imagined, leads to absurd results — that is, produces insoluble conflicts between provisions of the Clean Air Act and generates outcomes contrary to congressional intent.

The gist of these excerpts is as follows. When Congress enacted the PSD and Title V provisions, it did not intend to create a paralyzing administrative quagmire. That, however, is what we’ll get if permitting agencies apply the PSD and Title V provisions as written to CO2. Sources that Congress never wanted EPA to regulate would be regulated, while others that Congress did want EPA to regulate would not be, due to the immense backlogs. The administrative morass would also create an enormous roadblock to economic development. Yet Congress wanted the Clean Air Act to enhance the nation’s productivity.

PSD

• CAA section 165(c) is particularly important in this regard. It requires that the permitting authority grant or deny “[a]ny completed permit application for a major emitting facility . . . not later than one year after the date of filing of such application.” A literal interpretation of CAA sections 165(a)(1) and 169(1) to apply at the 100/250 tpy levels would render compliance with this provision impossible by requiring far more permit applications than permitting authorities could process under the 12-month deadline … [p. 88]
• A literal interpretation of CAA sections 165(a)(1) and 169(1) to apply at the 100/250 tpy level would also be directly inconsistent with the PSD-purpose in CAA section 160, in particular, section 160(3), which is “to insure that economic growth will occur in a manner consistent with the preservation of existing clean air resources” . . . Because PSD is a preconstruction requirement, increasing permitting authorities’ workload from 300 to 41,000 permits would severely undermine this purpose of facilitating economic growth . . . Each year, many thousands of sources would face multi-year delays in receiving their permits, and as a result, for all practical purposes, they would be forced to place on hold their plans to construct or modify. [p. 89]
• . . . a literal application of the applicability provisions would lead to results that are diametrically inconsistent with Congress’s expressed intent . . . Congress was focused on sources of criteria pollutants — primarily sulfur dioxide (SO2), particulate matter, nitrogen oxides (NOx), and carbon monoxide (CO) — and not GHG emissions. This focus stems from the basic purpose of the PSD program, which is to safeguard maintenance of the NAAQS [national ambient air quality standards], combined with the limited awareness at the time of the problem of climate change. [p. 90]
• Congress designed the PSD provisions to impose significant regulatory requirements, on a source-by-source basis, to identify and implement BACT [best available control technologies] . . . Congress was well aware that because these requirements are individualized to the source, they are expensive. Accordingly, Congress designed the applicability provisions to apply these requirements to industrial sources of a certain type and size . . . Congress’s limitation of PSD to larger sources was quite deliberate, and was based on its determination to limit the costs that PSD permitting entails to larger sources in certain industries . . . ”facilities, which due to their size, are financially able to bear the substantial regulatory costs imposed by the PSD provisions and which, as a group, are primarily responsible for emissions of the deleterious pollutants that befoul the nation’s air” [quoting Alabama Power v. Costle; pp. 90-91]
• However, applying the 100/250 tpy threshold literally to CO2 emissions would frustrate congressional intent by subjecting to PSD sources that Congress specifically intended not to include. [p. 95]
• . . . the extraordinary number of sources subject to PSD would preclude the permitting authorities from processing permit applications for all sources, including those Congress intended to subject to PSD. Because PSD is a preconstruction program, those sources would face many years of delay before they could construct or modify, which would undermine congressional [intent] to allow economic growth in PSD areas. [p. 100]

Title V

• . . .a literal application of the 100 tpy threshold requirement in CAA sections 502(a), 501(2)(B), and 302(j) would be in tensions with a specific CAA requirement, that of CAA section 503(c), which imposes a time limit of 18 months from the date of receipt of the completed permit application for the permitting authority to issue or deny the permit. It would be flatly impossible for permitting authorities to meet this statutory requirement if their workload increases from 14,000 permits to 6.1 million. [p. 101]
• As noted elsewhere, Congress intended through Title V to facilitate compliance [with other Clean Air Act requirements] by establishing an operating permit program that requires the source to combine in a single permit all of its CAA requirements. [p. 101] [However] . . . the great majority of these [6.1 million] sources will not be subject to any CAA requirements, so that although they would need to apply for and receive a permit, there would be no applicable requirements to include in the permit and the exercise would not improve compliance. [p. 103]
• Thus, as with PSD, a literal interpretation of the Title V threshold provisions would apply Title V to millions of sources that Congress did not intend be covered, and the ensuing administrative burdens — at least initially — would impede the issuance of permits to the thousands of sources that Congress did intend be covered. [p. 104]

What would be funny about all of this, if the threat to our economic and constitutional system of separation of powers did not loom so large, is the spectacle of EPA carefully tip-toeing around the real source of the absurd results: Mass. v. EPA.

It’s not only the case that Congress did not intend to apply PSD and Title V to small entities. Congress never intended for EPA to control CO2 emissions under the Clean Air Act!

The one limited exception (which occurred after Mass v. EPA was decided) is the renewable fuel standard (RFS) established by the 2007 Energy Independence and Security Act (EISA). The RFS mandates the sale of renewable fuels, which must achieve specified percentage reductions in GHG emissions, based on a life-cycle analysis, compared to petroleum-based fuels. However, section 210(b)(12) of EISA makes clear that the RFS does not establish precedent for any additional regulation of CO2 under any other provision of the Clean Air Act:

Nothing in this subsection, or regulations issued pursuant to this subsection, shall affect or be construed to affect the regulatory status of carbon dioxide or any other greenhouse gas, for purposes of other provisions (including section 165 [i.e., the PSD program] of this Act [i.e., the Clean Air Act].  

Conclusion

EPA writes as if Congress, when it enacted or amended the Clean Air Act, somehow inserted malicious code — the regulatory equivalent of a computer virus — into the text of the statute. This self-destruct program, we are to suppose, was lurking in there all this time. Then all of a sudden, the dormant bug became active, and now the Clean Air Act is going haywire, working at cross purposes with itself, subverting congressional intent, and imperiling the nation’s economic future. Therefore, EPA must step in, play lawmaker, and amend the Act.

And if you believe any of that, dear reader, I’ve got a bridge to sell you!

As I said in my earlier post, when a court decision leads to absurd results, there are only two possibilities. Either (1) the absurdity was embedded in the statute from the beginning, and the court just brought it to light. Or (2) the court manufactured the absurdity by mis-reading of the statute.

The absurdities EPA’s Tailoring Rule describes exists only by virtue of the Massachusetts Court’s agenda-driven decision. The real issue in Mass. v. EPA, which the Court never addressed, was whether Congress, when it enacted and amended the provision in dispute — section 202 of the Clean Air Act — in 1970 and 1977, intended for EPA to apply the Act as a whole, including PSD and Title V and the NAAQS program, to carbon dioxide for global warming purposes. To ask this question is to answer it.

Moreover, as I explain in my comment (pp. 28-23) on EPA’s endangerment proposal, the Court’s entire argument rests on a tortured reading of the Clean Air Act definition of ”air pollutant,” in section 302(g).

Here’s the semantic game the Court majority employed to empower EPA to Kyotoize the U.S. economy: (i) The EPA has authority to regulate air pollutants; (ii) an “air pollutant” is anything “emitted” into or otherwise entering the air; (iii) carbon dioxide is emitted; ergo (iv), EPA has authority to implement regulatory climate policy.

The lynchpin of the argument is step (ii). Justice Scalia quipped that under the majority’s reading of 302(g), anything airborne, “from Frisbees to flatulence,” qualifies as an air pollutant. It’s actually worse than that. On the majority’s reading, even totally clean air, air that is 100% pollution-free, is an “air pollutant” if it is “emitted” into or otherwise enters the ambient air. That is absurd. From absurd premises come absurd results.

Phelim McAleer, co-director/producer of “Not Evil Just Wrong” and asker of difficult questions, reportedly just had his microphone turned off as he queried Al Gore at the Society of Environmental Journalists conference in Madison, Wisc.

Yesterday, energy secretary Steven Chu told reporters at a solar energy conference in Washington, D.C.  “it’s wonderful“ that Apple Inc., Exelon, Nike, PG&E, and PNM Resources have quit the U.S. Chamber of Commerce or its board. He also encouraged other companies to leave, according to Reuters.

This crosses the line. The Secretary of Energy is not supposed to use the authority of his taxpayer-funded office to advocate the breakup of the Chamber of Commerce, or of any lawful private association, for that matter.

Chu is of course free to criticize the Chamber’s positions on climate policy. Even then, however, such criticism should be generic, focused on the positions, not on the organization, lest it have a chilling effect.

But when Chu praises companies for leaving the Chamber, he is not only injecting himself into a quarrel that is none of his business; he is taking hostile action against the organization.

Imagine the outcry from congressional Democrats, the liberal media, and the environmental community if Bush energy secretary Samuel Bodman had urged companies to quit U.S. CAP, or if Bush EPA Administrator Steven Johnson told Sierra Club members to cancel their memberships.

Chu has been in office too long to still think of himself as an academic free to spout off on any topic he likes. He is a cabinet secretary, and unless we’re now living in a banana republic, cabinet heads are not authorized to threaten people over policy differences.

Threaten how? DOE does business with Chamber members. DOE therefore has the power to affect the bottom lines of Chamber companies.

Let’s also not put blinders on here. Environmental lobbying groups are waging a campaign of intimidation against the Chamber because it refuses to put the short-term special interest of energy-rationing profiteers ahead of the long-term general interest of business in limited government, economic growth, and affordable energy. Chu’s remarks make him a de-facto partner in this intimidation campaign.

Most importantly, when Chu speaks, he speaks for the Obama administration, which wields vast regulatory and prosecutorial powers over the business community. It is precisely because the executive branch is inherently coercive that we expect cabinet secretaries to avoid even the appearance of trying to suppress political dissent.

Chu should apologize to the Chamber and then do the decent thing: resign.

A few weeks back (and in subsequent op-eds) I introduced the latest student indoctrination effort to fight global warming, via the Alliance for Climate Education, which seeks invitations from high schools to deliver assembly presentations during class time. The group, which has started out targeting six regions of the country (the San Francisco Bay area, Southern California, Houston, Chicago, New England, and Washington, D.C.), presents climate misinformation and lies (To students: “You’ve lived through the ten hottest years ever recorded in history”) so as to recruit teens for the cause of further spreading alarmism.

Last week a report in the student newspaper for the private Loomis Chaffee School, near Hartford, Conn., illustrated that the presentations ACE educators deliver are heavily scripted. For confirmation, you might watch the group’s promotional video trailer, note the script highlights delivered by San Francisco rapper Ambessa Contave, and then catch the reported remarks from ACE’s New England educator Rouwenna Lamm:

• “We all need to lower our emissions and raise our voices.”
• “In 2009, we’ve inherited a world that’s all about living large.”
• “Did you know that the average American teenager uses 20 football fields just to live?”
• “You can’t see that, but what it means is ‘living large’ cranks up the world’s thermostat way too hot.”
• “Climate change is real, it is dangerous and it was be stopped. You didn’t start it, you don’t want it, but you have to fix it.”
• “Don’t discount the power you have as individuals and collectively.”

Most of the bulleted remarks copycat Contave’s recorded points. The outcome at Loomis? After giving classroom lectures on the science of climate change (certainly excluding the lack of upward change during the last decade), and at the end of Lamm’s evening presentation, many students immediately signed online ACE’s “Declaration of Independence from Fossil Fuels.”

Next up: Grade school global warming warning songs to the tune of “We Are the World.”

In today’s ClimateWire (subscription required), reporter Jessica Leber describes a biofuel industry still totally dependent on government handouts and still pleading for more special favors.

First a bit of background.

In December 2007, Congress passed and President Bush signed the Energy Independence and Security Act (EISA). Among other things, EISA boosted the existing (2005 Energy Policy Act) Renewable Fuel Standard (RFS) from 7.5 billion gallons a year by 2012 to 36 billion gallons a year by 2022. Of those 36 billion gallons, 21 billion gallons must come from “advanced biofuels.”

The RFS is essentially a Soviet-style production quota. Congress, prodded by campaign contributions from the corn lobby, and by presidential candidates jockeying for support in the Iowa Caucuses, decided that central planning of the nation’s motor fuel markets was an idea whose time had come.

To qualify as “advanced” under EISA, a biofuel must (1) be made from plant matter other than corn kernels and (2) achieve a 50% reduction in greenhouse gas (GHG) emissions compared to gasoline, based on a “life-cycle” (wells-to-wheels) analysis. EISA also allows 15 billion gallons a year by 2022 to come from plain old corn ethanol, although to qualify as a “renewable fuel,” corn ethanol from newer plants must achieve a 20% reduction in GHG emissions relative to gasoline — again, based on life-cycle analysis.

EISA mandates the sale of 100 million gallons of advanced biofuel in 2009 and 200 million gallons in 2010 (see p. 6 of this presentation). For years, biofuel lobbyists have been telling us that advanced biofuels are “just around the corner.” But, Matt Carr of the Biotechnology Industry Organization estimated last month that in 2010 volumes will, optimistically, reach only 12 million gallons, Leber reports.

In a sop to the corn lobby, the Waxman-Markey cap-and-trade bill would suspend for five years the EISA requirement for life-cycle analysis to determine whether biofuels qualify as “advanced” or even as “renewable.” Several life-cycle analyses indicate that corn ethanol produces more greenhouse gases than the gasoline it replaces, once emissions from land use changes are taken into account (for a summary, see pp. 4-6 of this report).

The Kerry-Boxer cap-and-trade bill does not contain the five-year hold on life-cycle analysis, and the uncertainty as to which biofuels will qualify under future EPA implementing rules ”chills the investment community,” Carr complains. I’d put the point differently: Strong evidence that corn ethanol is not “climate friendly” jeopardizes the political rents that corn growers and ethanol distillers hoped to extract from climate hysteria.

Leber also notes that, “the industry is also concerned about ambiguous language in both the Senate and House versions of the bill that does not clearly exempt the biofuels component of blended petroleum fuels, such as E10 and E85, from an economy-wide carbon cap.”

Did you get that? The corn-ethanol lobby invoked climate doom to sell biofuel mandates to Congress and the public. But now they say the centerpiece of regulatory climate policy — the cap in “cap and trade” — should not apply to biofuels, even though biofuels emit CO2, and even though several life-cycle analyses indicate that corn-ethanol is more carbon-intensive than gasoline. One law for me, another for thee!

Producers of “advanced” ethanol also complain that they must compete for climate-tech loan guarantees against companies developing solar, wind, and compressed natural gas technologies. The outrage! Why should ethanol producers have to share the greenhouse gravy train with anybody else?

This just in: Sens. Barbara Boxer (D-CA) and Susan Collins (R-ME) today released Biofuels: Potential Effects and Challenges of Required Increases in Production and Use, an August 2009 study by the Government Accountability Office (GAO). One of GAO’s conclusions is that the 45-cent/gallon tax credit that refiners receive for blending ethanol into motor gasoline “may no longer be needed to stimulate conventional corn-ethanol production because the domestic industry has matured, its processing is well understood, and its use capacity is already near the effective RFS limit of 15 billion gallons a year of conventional ethanol.”

The Renewable Fuels Association “panned” the GAO study, Leber reports. Well, what else did you expect? Without the blenders’ credit, a national market for ethanol would not exist. In their PR (if not in their own minds), corn ethanol will always be an infant industry in need of special tax breaks to compete with the big bad oil companies.

What happens if, as seems likely, the industry falls farther and farther behind the EISA ”advanced” biofuel requirements? Here’s my prediction: The Renewable Fuels Association will not lobby to scale back the overall 36-billion RFS; rather, they’ll lobby to raise up the 15 billion gallon ceiling on corn ethanol.