Does the 2005 Energy Policy Act Undercut EPA’s Carbon Pollution Standard?

by William Yeatman on January 11, 2014

in Blog

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Earlier this week, EPA finally published in the Federal Register the proposed Carbon Pollution Standard, a regulation that would effectively ban the construction of new coal-fired power plants. Publication in the Federal Register kicks off a 60 day period during which the agency will take comment on the rule. The Clean Air Act requires that EPA finish the rule within a year, although that’s a highly doubtful prospect, given EPA’s woeful record on deadlines.

As I explained last week, EPA completed the regulation last September, yet it remained suspended in some sort of executive branch limbo for three and a half months prior its publication, for reasons unknown. One speculated cause for this unusual delay is a November letter sent to EPA by leading members of the House Energy and Commerce Committee, informing Administrator Gina McCarthy that virtually all of the agency’s evidence supporting the technical feasibility of the rule is legally impermissible.

In a previous post, I gave the backstory:

The proposed regulation would require new coal-fired power plants to install carbon capture and sequestration (CCS). And yet, under the Clean Air Act, EPA cannot require a technology that isn’t commercially viable. On the one hand, industry claims that CCS isn’t market-ready, citing as proof the fact that there isn’t a single CCS system in operation. EPA, on the other hand, claims that CCS is adequately demonstrated. As evidence, the agency referenced three CCS pilot projects in the U.S. that are either in planning or under construction in Mississippi, California, and Texas.

Last week, leading members of the House Energy and Commerce Committee pulled the rug out from under EPA’s evidence. In a November 15th letter to EPA Administrator Gina McCarthy, Reps. Fred Upton (R-Michigan), Ed Whitfield (R-Kentucky), Joe Barton (R-Texas), and Steve Scalise (R-Louisiana) brought to her attention a little-known provision of the 2005 Energy Policy Act that prohibits the agency from basing an “adequately demonstrated” determination on CCS projects that received subsidies pursuant to the law. As they helpfully note, each of the CCS projects in Mississippi, California, and Texas were beneficiaries of such subsidies, and are, therefore, inappropriate foundations for the Carbon Pollution Standard. The letter is available here.

I’d been completely ignorant of this provision of the 2005 Energy Policy Act. Evidently, I wasn’t alone. According to InsideEPA, the letter caught both EPA and the White House off guard. It was, moreover, the rumored cause of the delay between the prepublication version of the Carbon Pollution Standard and its appearance in the Federal Register. If correct, the letter would deal a fatal blow to the regulation.

So, the $64,000 question is: Does the 2005 Energy Policy Act undercut the Carbon Pollution Standard?

The answer, alas, is to be determined by the courts, and it could go either way.

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Cooler Heads Digest 10 January 2014

by William Yeatman on January 10, 2014

in Blog

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In the News

Cold Comfort on Global Warming
Myron Ebell, Standpoint, January/February 2014

Oil Export Ban and Capitalists against Capitalism: When Will They Ever Learn?
Marlo Lewis, GlobalWarming.org, 11 January 2013

Global Warming’s Glorious Ship of Fools
Mark Steyn, The Spectator, 10 January 2014

Video: Incandescent Light Bulbs, the Dumbest New Ban in 2014
Reason TV, 9 January 2014

Lavish Energy Lifestyles
Lawrence Solomon, Financial Post, 9 January 2014

House Looks at Sue and Settle
William Yeatman, The Hill, 8 January 2014

Speaking Truth to Wind Power
Robert Bradley, Jr., Master Resource, 7 January 2014

Good Riddance to the Wind Energy Subsidy
Washington Post editorial, 6 January 2013

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Oil Export Ban and Capitalists against Capitalism: When Will They Ever Learn?

by Marlo Lewis on January 10, 2014

in Features

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Capitalists against capitalism are a bane of modern society. Although sometimes clever, anti-market business lobbying is neither honorable nor genuinely prudent. Government would be smaller and our economy more prosperous if business leaders eschewed all forms of rent-seeking and corporate welfare.

What makes this evergreen reflection timely and even urgent is the debate over energy exports.

National Journal’s Amy Harder reports that, on Wednesday, independent refiner New Jersey-based PBF Energy hosted a phone call with six competitors to consider joint lobbying against repeal of the decades-old ban on U.S. crude oil exports. Other participants on the call included Valero, Marathon Petroleum, Philadelphia Energy Solutions (PES), and Delta Airlines’ Monroe Energy. According to one account, Valero and Marathon indicated they would not join the lobbying effort. Harder notes the similarity between PBF Energy’s agenda and that of Dow Chemical, which last year organized a coalition of chemical companies to restrict natural gas exports.

Freedom to export is an essential component of free enterprise. Economic liberty primarily means the right to offer one’s goods and services for sale. Exporting is just competing for customers on the other side of lines drawn on maps. In reality, every sale to anyone living outside the walls of your domicile is an export. What we today call capitalism Adam Smith more accurately called the “system of natural liberty” — the spontaneous order that flourishes when government protects rather than suppresses people’s freedom to “truck, barter, and trade.”

Somebody should remind PBF and Dow that private property is the bedrock institution of capitalism, and that export bans and restrictions violate property rights. Such policies are inherently confiscatory. [click to continue…]

House Passes HR 2279, the REDO Act

by William Yeatman on January 10, 2014

in Blog

By a 225 to 188 vote, the House of Representatives yesterday passed H.R. 2279, the Reducing Excessive Deadline Obligations Act.

This is excellent news. I posted about this worthy bill two days ago. Yesterday, I spoke at length about the bill to my colleague Ryan Young on his Liberty Week podcast. Have a listen here.

New York Magazine’s Jonathan Chait Emits Highly Flawed Response to George Will Column on Determinants of Consumer Preference

by William Yeatman on January 10, 2014

in Blog

Yesterday, George Will wrote a column delighting in the fact that the # 1 selling vehicle in the U.S., for the 32nd year in a row, is the Ford F-150. He related the truck’s triumph to the President’s first term promise to put 1 million electric vehicles on the road by 2015. To this end, the administration gave subsidies to manufacturers and regressive tax credits to buyers. Despite these goals and the carrots to achieve them, the American car-buying public largely has shunned electric vehicles, and instead has continued its love affair with large, powerful cars of the sort that are loathed by environmentalists. Will concludes that consumers won’t be forced by Big Brother.

I, for one, liked the column, and would add only that the President’s pledge for 1 million green cars was part of an equally silly promise to create 5 million green jobs. Of course, his administration fell embarrassingly short of meeting either goal. An evident corollary to the fact that the government can’t dictate consumer preferences is the state’s inability to centrally plan an industry, like “green energy.”

New York Magazine’s Jonathan Chait, however, took issue with the piece. After condescending to Will for a few paragraphs, Chait asks & answers:

“So, are Americans on the whole flocking toward gas-guzzling vehicles? No, just the opposite”

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Graph: Obama’s EPA Is Killing Cooperative Federalism

by William Yeatman on January 9, 2014

in Blog

EPA’s primary enabling statutes, the Clean Air Act and the Clean Water Act, are founded on cooperative federalism. Simply put, Congress intended for EPA and States to serve as partners in the mitigation of environmental pollution attendant to economic development.

Of course, in the four decades since these foundational environmental laws were enacted, there have been disagreements between States and EPA as to how best to clean the air and water. Nonetheless, the system for the most part worked as intended: The two governmental entities cooperated.

This changed on or about January 20th, 2009.

Elsewhere, I’ve explained the means by which EPA has been usurping the States’ rightful authority. Follow the embedded link to learn the “how”; as for the “what,” see the chart below. It depicts the number of federal implementation plans imposed by EPA, broken down  into presidential terms. A federal implementation plan, or FIP, is the most extreme action the EPA can take against a State under the cooperative federalism scheme created by Congress. A FIP entails a complete EPA takeover from the state of the regulatory regime in question. With this in mind, the chart below speaks volumes about cooperative federalism as practiced in the Obama era:

a.1 [click to continue…]

H.R. 2279, the REDO Act, Would Strike against Sue & Settle

by William Yeatman on January 8, 2014

in Blog

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Over at The Hill’s Congress Blog, I’ve a post regarding H.R. 2279, the Reducing Excessive Deadline Obligations (REDO) act, which House leadership is expected to bring to the floor on Thursday. As is indicated by the bill’s title, the REDO act would cull needless and impractical statutory deadlines, and thereby limit opportunities for “sue and settle” policymaking.

I’ve excerpted the post below. Read the whole thing here.

Republican leadership in the House of Representatives has scheduled floor action this week on H.R. 2279, the Reducing Excessive Deadline Obligations (REDO) Act. ‘Redo’ is an apt acronym for this worthy bill, which would afford Congress an opportunity to revise a decades-old mistake, and thereby strike at the heart of an insidious legal strategy known as “sue and settle.”

To be precise, H.R. 2279 would allow Congress to mitigate the ills caused by an overabundance of deadlines in environmental laws enacted during the 1970s. At the time, statutory deadlines, by which time federal agencies must execute their duties, were perceived as an innovation in Congressional oversight. In practice, however, they’ve wreaked havoc on the regulatory process.

…

You might wonder: How could missed deadlines cause harm? The answer is a function of another unfortunate legislative innovation dating to the disco era. At the behest of environmental litigation groups, Congress during the 1970s included in many regulatory laws a provision granting the public the right to sue EPA over the non-performance of non-discretionary duties. As a result, groups like Sierra Club are empowered to sue the agency in order to compel the agency to act on a past-due responsibility.

Because EPA is out of compliance with virtually all of its deadlines, it follows that establishing any deadline through litigation determines how EPA deploys its limited resources. Of course, giving priority among regulatory initiatives is no different than effectuating policy. To this end, impossible deadlines are conducive to a legal strategy known as “sue and settle.” The process starts when an environmental litigation group sues EPA over a missed deadline. Rather than contest the suit and defend the agency’s discretion, EPA immediately enters into settlement negotiations. Due to a revolving door between green groups and the EPA, parties to these suits often used to be colleagues. Thus, unelected bureaucrats and environmental special interests render policy by establishing agency priorities, far removed from voter accountability. In fact, most of EPA’s regulatory responsibilities pursuant to the Clean Air Act are dictated by sue and settle litigation.

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CEI Submits Initial Comments on EPA’s Proposed Carbon Pollution Standard

by William Yeatman on January 8, 2014

in Blog

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As reported yesterday, EPA finally published the proposed Carbon Pollution Standard in today’s Federal Register, thereby initiating a 60-day period during which the agency accepts comment from the public.

This morning, I submitted initial comments. Below, I posted the comments; above, I posted a screen shot of the agency’s confirmation receipt. In them, I argue that the rule is illegal, due to a number of flaws. For starters, it’s based on speculative technology, known as carbon capture and sequestration. More fundamentally, the Carbon Pollution Standard would result in an increase in greenhouse gas emissions, the very “pollutant” that is supposed to be controlled. EPA projects that CO2 captured from a power plant will be used to enhance oil drilling. But the agency failed to take into account the greenhouse gas emissions caused by the combustion of oil. According to my calculation, every kilogram of CO2 captured engenders 1.6 kilograms of CO2 from combusted oil. Of course, a regulation that worsens the supposed problem is absurd.

Every comment matters, even if you are not steeped in legal and regulatory minutiae. If you’d like to comment, go to www.regulations.gov and then type into the search box “EPA-HQ-OAR-2013-0495.” This will take you to the website where EPA stores all its supporting information about the regulation. In the top right corner of this page, there’s a blue button that says “comment now.” You can take it from there.

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Video: CEI’s Chris Horner Debates Cause of Big Chill on Hannity

by William Yeatman on January 8, 2014

in Blog

My colleague Chris Horner appeared on Fox News’s Hannity last night to discuss the cause of the big chill that’s gripped much of the nation. His debate with clean tech investor Howard Gould starts about four minutes in.

Sen. Murkowski Calls for Lifting Crude Oil Export Ban

by Marlo Lewis on January 7, 2014

in Features

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In a keynote speech at the Brookings Institution today, Sen. Lisa Murkowski (R-Alaska) called for an end to the decades-old ban on U.S. crude oil exports.

Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, also released a white paper on U.S. energy export policy, A Signal to the World: Renovating the Architecture of U.S. Energy Exports.

Total U.S. energy production reached its highest level ever in July 2013, Murkowski noted in her speech. As a consequence, U.S. exports of coal, dry natural gas, and finished petroleum products are at their highest levels on record.

However, those welcome developments came about “in spite of the federal government, not because of it, as the president frequently seems to imply,” she said.

More importantly, U.S. energy trade rules “were written long ago for a now bygone world in which scarcity, not abundance, was the prevailing mindset,” Murkowski noted. Outmoded regulations hamper exports of liquefied natural gas and virtually prohibit exports of crude oil and condensates. This antiquated policy architecture holds back the leading source of new investment, job creation, and competitive advantage in the U.S. economy.

Worse, the current regime creates significant economic risk. U.S. refineries were not built to handle the light sweet crude produced in the Bakken and Eagleford shale plays. The export ban could soon create a glut, forcing producers to choose between losing money on sales or leaving the oil in the ground. The oil boom could become a bust, warns International Energy Agency executive director Maria van der Hoeven, whom Murkowski cites.

Status-quo defenders claim lifting the ban would increase gasoline prices by reducing the discount at which crude oil trades in U.S. markets. That reasoning is flawed. As Blake Clayton of the Council on Foreign Relations points out, the discount currently benefits a handful of refiners, not consumers, because gasoline prices reflect global crude and finished petroleum product prices, not domestic refiners’ production costs:

As it stands, the primary beneficiaries of the export ban are a few fortunate oil refineries in the central United States—not U.S. consumers—that are able to buy crude oil at depressed prices before selling it at prevailing market rates. Current law arbitrarily works to the benefit of these companies.

Crude oil exports would likely benefit consumers not only by fueling GDP growth but also by moderating gasoline prices. By spurring investment in production, freedom to export would accelerate the increase in global petroleum supply. That, in turn, would put downward pressure on global petroleum prices — the chief factor determining gasoline prices. As Murkowski’s white paper explains:

First, gasoline is a petroleum product and petroleum products are subject to global pricing, just like crude oil. To the extent that greater U.S. production of crude oil puts downward pressure on inter-national oil prices (e.g., the Brent benchmark), then production increases have benefited U.S. consumers by marginally lowering gasoline and crude oil prices.

By the same token, retaining the ban puts consumers at risk. A shale oil glut would depress production and slow the growth in global supply, putting upward pressure on gasoline prices:

To the extent that the crude oil export ban contributes to supply disruptions and decelerating oil production (which affects employment), then the American consumer will suffer the consequences. If the refining mismatch causes production to become shut-in, as some analysts suggest, then prices could actually rise and increase U.S. dependence on imports.

Murkowski believes the Obama administration already has the authority to lift the ban: [click to continue…]

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