Plans B and C: EPA regulation and the federal common law

As the Senate continues to wrestle with healthcare reform, some speculation has been flying around that the climate change bill might not make it out this session. So, what would happen if Congress doesn’t pass a climate change bill this year? Will the fossil-fuel polluters be free to run amok?

Maybe not! You may have heard that the EPA now has the legal authority to regulate CO2 as a pollutant under the Clean Air Act. David Roberts at Grist wrote a great explainer on the situation: the aptly-titled “Everything you always wanted to know about EPA greenhouse gas regulations, but were afraid to ask”. So in fact, EPA could regulate CO2 without Congress passing a climate bill — it would just take some really tough rule-making on the agency’s part, which would likely be challenged in court by carbon-intensive industries. However, one potential upshot that Roberts points out is that EPA regulation could mean relatively painless integration of the various existing regional cap-and-trade schemes — something the House climate bill doesn’t account for.

What if EPA regulations don’t pan out? Well, the Second Circuit has stepped into the breach by remanding Connecticut v. AEP, a nuisance suit brought by eight states and New York City, along with NRDC, the Open Society Institute, Audubon Society of New Hampshire, and others. The plaintiffs claimed that the defendant power companies contributed CO2 emissions causing global warming, which constitutes a public nuisance causing myriad injuries and expected injuries (ranging from reduced snowpack in California’s mountains to salinization of marshes and water supplies.) Today, the Second Circuit held that the plaintiffs could bring their claim “unless and until the legislative and executive branches actually regulate that pollution, either under the existing Clean Air Act or the comprehensive new energy and climate legislation bending in Congress,” as David Doniger, policy director of NRDC, explains in his great blog post on the case and what the remand means.

Doniger’s post also points out the disheartening news that Senator Murkowski of Alaska intends to introduce an amendment to prevent EPA from regulating carbon — see how it comes back in a circle? Senator Murkowski will try to add her amendment to the Interior and EPA appropriations bill; thus, EPA’s funding would be conditioned on its not regulating CO2, although Murkowski’s amendment does allow for continued regulation of CO2 from cars. (Note that essentially, this preemptively creates the same “loophole” that I’ve blogged about here before – a “loophole” that I think is less problematic in the context of an actual cap-and-trade statute.) The Senator says she’s offering the amendment to allow Congress the appropriate “breathing space” to properly consider climate change legislation.

But others say that EPA’s authority to regulate GHGs – and now, the people’s right to bring nuisance claims based on global warming – are just what’s needed to get Congress to pass a strong climate change bill.

How the Climate Bill can help protect our waters.

When you try to picture a world where a cap-and-trade scheme for carbon emissions is perfectly implemented, you probably envision cleaner skies, or an end to devastating mountaintop removal coal mining. But as Nancy Stoner at the Natural Resources Defense Council points out, the House climate bill can have major beneficial effects on our beaches and oceans through various requirements that will help reduce extreme storm events. Fewer storm events will also help water quality in all of our nation’s waterways by reducing stormwater, which carries pollutants, sediment, pesticides, chemical fertilizers, and in many communities with combined sewer systems, untreated sewage straight into our rivers, bays and oceans. Nancy Stoner highlights three key ways the climate bill will help protect beaches:

1. It will set firm limits on global warming pollution, which will help minimize the impacts of climate change, including storm events.
2. It calls for protecting the wetlands, coastal dunes, and other natural systems that buffer us from storms and help filter out pollutants in stormwater.
3. It offers funding for water utilities and sewage treatment plants to update their storm drains and make their infrastructure more resilient to climate change.

Another critical effect of global warming is ocean acidification. The Conservation Law Foundation does a great job explaining this phenomenon and how it will affect the American industries that depend on marine resources that depend on healthy ocean waters. Here in Maryland, agencies are struggling to sustainably manage the depleted populations of oyster and crab fisheries already severely stressed by pollution and other factors. Climate change will further stress fish and shellfish populations, constituting an economic threat for all the people whose jobs depend on these natural resources. However, a strong climate bill like ACES can help protect American fisheries, waters, and local jobs.

There is no grandfathering.

Joe Romm at Climate Progress has a great post today arguing against the contention that the climate bill contains a gaping loophole for old coal plants. This is the same conclusion I reached in a previous post, so it’s gratifying for me to see that my interpretation wasn’t completely off-base. Today’s Climate Progress post is in response to a piece written by the leaders of the Sierra Club, Earthjustice, and Environmental Integrity Project which claims that the climate bill gives old coal plants “a free pass to continue business as usual — without making any serious reductions in heat-trapping carbon dioxide for 15 years or more.” In response, Romm explains how ACES/ACELA in fact would result in those very same old coal plants to bear the brunt of the emissions reductions required under the shrinking cap.

In fact, it seems like Pope, Van Noppen and Schaeffer’s concerns are with the mechanism of cap-and-trade and its effectiveness:

Instead of assuring that the oldest, least efficient, and most polluting plants are phased out, Waxman-Markey leaves that up to the cap-and-trade system created by the bill.

As Romm makes clear, the cap-and-trade system is designed to cause the phasing out of those plants. They don’t come out and say it, but it seems like Pope, Van Noppen and Schaeffer would prefer a command-and-control solution — which might be more effective at combating global warming, but is undoubtedly politically unfeasible in terms of passing legislation.

Romm manages to in two sentences sum up how the climate bill works and why it should be passed:

In the real world the much-maligned House climate and clean energy bill would do what clean energy and climate advocates have been demanding for decades: It would set up the framework to allow low-carbon technologies to compete against fairly — and thus steadily replace — existing coal at the lowest possible cost.

Rep. Markey: Obama needs to make the case for ACES in prime time

The Wonk Room also has a brief summary and transcript of remarks by Rep. Markey and Secretary of Energy Chu speaking at the Harvard Kennedy School.

Fear of carbon markets is bipartisan.

A couple weeks ago, Senator Dorgan (D-ND) caused a small kerfuffle in the blogosphere by stating his opposition to a cap-and-trade system for carbon emissions. In an op-ed published in the Bismarck Tribune, Senator Dorgan argued that creating carbon markets is a bad idea because of the possibility of speculation and exploitative trading:

I know the Wall Street crowd can’t wait to sink their teeth into a new trillion-dollar trading market in which hedge funds and investment banks would trade and speculate on carbon credits and securities. In no time they’ll create derivatives, swaps and more in that new market. In fact, most of the investment banks have already created carbon trading departments. They are ready to go. I’m not.

Unless he proposes abolishing all markets out of fear of market speculation, Dorgan’s argument is, of course, unsupportable. Nobel economist and New York Times columnist Paul Krugman explained that the problem is inherent to markets, not carbon emissions allowances:

For example, the fact that wheat is traded means that there’s also a wheat futures market; and because wheat can be stored, futures prices affect spot prices.

So, should fear of speculation lead us to ban trading in wheat? Nobody would say that. Yes, sometimes speculators will get it wrong — but the advantages of having a wheat market vastly overshadow the possible harm that may sometimes come from speculation.

As Joe Romm makes plain, the Waxman-Markey bill already contains provisions against carbon speculation, including lodging regulatory oversight with both the Federal Energy Regulatory Commission (FERC) and the Commodities Future Trading Commission (CFTC) and explicitly criminalizing fraud and manipulation in carbon markets. Permit bidders are also required to publicly disclose information and are limited to purchasing no more than 5% of permits on the market.

Further, steps have already been taken in the Senate towards carbon market oversight. Senators Feinstein (D-CA) and Snowe (R-ME) have introduced a bill to regulate carbon markets under the CFTC: the Carbon Market Oversight Act of 2009 (S. 1399). There are more details on the CMOA at Global Climate Law Blog.

But the unsubstantiated fears of taking action don’t end there! On Thursday, the Senate Environment and Public Works Committee held hearings on the theme of “Climate Change and National Security,” where Senator Barrasso (R-WY) expressed his concern that carbon markets could become a source for “funding streams to international organized criminal elements.” (Behold his stirring oratory on YouTube.)

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Juliet Eilperin and the Politics of Climate Change

Courtesy of the Nation, the Washington Post’s Juliet Eilperin shares her thoughts on the outlook of the climate bill. She draws an interesting comparison to the Clean Air Act and how, after the law’s passage, Congress was able to strengthen its initially weak targets by improving upon its framework.

Loopholes worth worrying about? Exempting old coal plants

Last week, the New York Times ran an editorial bemoaning loopholes in the Waxman-Markey bill.  I don’t think anyone would seriously contend that the final bill out of the House is perfect, but I think there is plenty of room for debate as to what actually counts as a significant weakness as opposed to a provision that just looks funny on first glance.

The Times editorial pointed out two problems: (1) the bill’s grandfathering of existing and already-permitted coal plants, and (2) offsets.  I’ll leave the complex issue of offsets for some hypothetical day in the future and for now, just look at Waxman-Markey’s treatment of existing coal plants.

The Times notes that Waxman-Markey

sets tough performance standards on new power plants permitted after 2009, requiring emissions reductions of 50 percent or more. …

The bill does not, however, impose any performance standards on existing power plants. And it explicitly removes these plants from the reach of the Clean Air Act. This is a mistake. The overall cap on industrial emissions will not be fully effective for a long time, and, meanwhile, the government should be able to impose lower-emissions requirements on the older, dirtiest plants.

You may have heard in the news or from politicians similar statements about how the climate bill removes the EPA’s authority to regulate coal plants, or that it strips the agency of its power under the Clean Air Act to deal with carbon dioxide. Of course, a little context here is useful. After all, the EPA was powerless to regulate CO2 until this past April, when it issued its finding that greenhouse gases endanger public or welfare. Only after making this finding was EPA allowed to regulate greenhouse gases as pollutants under the Clean Air Act – a law that was enacted long before the science of climate change was well-understood. Thus, it’s not surprising that in many ways, the Clean Air Act is not really well-suited for regulating greenhouse gases. Over on Climate Progress, Joe Romm has done a great job explaining why the EPA cannot single-handedly stop dangerous global warming.

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Debating the climate bill: Palin makes an easy target.

Although the Senate Environment and Public Works Committee markup on the climate bill has been postponed to the fall, the public debate on ACES rages on. Yesterday, future ex-Governor Sarah Palin took to the Washington Post’s op-ed page with a diatribe against “President Obama’s cap-and-trade energy plan.” Unsurprisingly, Palin’s take – apparently an attempt to bluster back onto the national political scene – showcased her trademark comfort with ignorance and fundamental misunderstanding of cap and trade in general and the American Clean Energy and Security Act in particular. It’s troubling that one of our nation’s most widely read and respected newspapers found Palin’s piece fit to print, and it’s hard for me to see how distributing such misinformation can be good for democracy or society in general. Luckily, however, the “chattering classes” responded with a barrage of rebuttals and critiques:

Gov. Palin’s Misleading Washington Post Op-ed (Media Matters Action Network)
A handy fact check with helpful links debunking Palin’s most spurious claims and providing actual analysis on the costs of the climate bill.

Palin eschews facts and economics in blasting cap-and-trade bill (Grist)
Grist’s executive editor Russ Walker has a point-by-point rebuttal of Palin’s piece, neatly summed up thusly:

Palin’s thesis comes loaded with plenty of rhetoric and zero facts. It offers nothing more than assertions about the emissions reduction part of the bill, ignores the energy investment and green jobs provisions, blames “Washington bureaucrats” for hampering oil development in the Arctic National Wildlife Refuge (not Congress, where elected lawmakers have repeatedly expressed the American public’s desire to keep ANWR off limits), and fails to even take note of the underlying issue—catastrophic climate change.

What Gov. Palin Forgot (Huffington Post)
Senator Kerry points out that Palin fails to even mention the crisis of global warming, despite its already disruptive effects in Alaska, before going on to emphasize the environmental, economic and security costs of inaction.

An op-ed on Guantanamo policy that fails to acknowledge the existence of terrorists would not be taken seriously. Neither should an op-ed on energy reform that fails to mention the irrefutable reality of climate change.

And, unfortunately, even in the areas Gov. Palin does focus on, she gets things wrong. She focuses on energy production, but ignores the huge expansion of new, clean energy sources made possible through smart energy reform legislation.

Sarah Palin Does Not Understand Cap and Trade (The Daily Dish)
In addition to pointing out that revenues generated from the cap and trade mechanism are designed to benefit the poorest quintile of Americans, Conor Clarke recaps some Econ 101 for Governor Palin’s benefit.

The point of cap and trade is to solve a problem of social cost: As an energy consumer, I am imposing a cost on society (pollution) that I do not take into account when I make the original decision to consume.

This happens all the time. My decision to drive creates traffic that imposes a cost on society. A company’s decision to fish in the ocean imposes a cost on the world’s common stock of fisheries. A banker’s decision to take on a huge amount of risk creates danger for the economy as a whole. The problem is that none of these private actors adequately bears the cost of their decisions. So, the usual solution is to increase the price of these decisions — with congestion charges, or private property rights, or taxes — so that private consumers take into account social costs.

Palin’s Recipe for Baked Alaska (NRDC Switchboard)
NRDC’s Climate Campaign Director Pete Altman weighs in with the effects of dirty energy and global warming on Palin’s home state, as documented by the U.S. Global Change Research Program.

Washington Post, Fred Hiatt turn op-ed page into a “joke” with yet another falsehood-filled piece attacking climate action and clean energy — by GOP quitter-in-chief Sarah “Four Pinocchios” Palin! (Climate Progress)
Joe Romm has a great tirade calling out the Post for its lack of journalistic integrity, and also refutes Palin’s contention that cap-and-trade would stunt economic recovery in the short term.

Let’s set aside the rather obvious fact that the bill that doesn’t even start imposing a cap until 2012, so it’s absurd to assert it will “undermine our recovery over the short term.” The reverse case is, in fact, stronger — see Nobelist Krugman attacks “junk economics”: Climate action “now might actually help the economy recover from its current slump” by giving “businesses a reason to invest in new equipment and facilities.”

Moreover, even in 2012, the total value of the allowances will be under $50 billion (in a $15 trillion economy) and all that money is going to be returned to the economy, so again, like all economic models show, the bill will have no significant negative impact.

Link Roundup: June 28, 2009

Finally, another link roundup! Indulge in post-House passage reporting, recaps and analysis from all around the web – but first things first: where’s the official bill?!

Full text

Updated, Full Text Version of Waxman-Markey Climate Bill (Mother Jones)

If you—like Reps Joe Barton (R-TX) and John Boehner (R-OH)—are having problems locating a full text version of the Waxman-Markey climate bill, HR 2454, complete with amendments, we’ve linked to them here.

Analysis

One brief shining moment for clean energy (Salon)
The inimitable Joe Romm of Climate Progress says passing the House is a transformative first step, but it’s not enough:

While the bill’s targets may seem dramatic, they are in fact less than what the science tells us is required to avoid catastrophic warming. The 2020 target in particular is far too weak and quite easy and cheap for the country to meet with efficiency, conservation, renewables and fuel-switching from coal to natural gas.

We need more than ACES (Grist)
Ted Glick of the Chesapeake Climate Action Network lays out steps for ensuring that the Senate passes a strong bill.

Removal of “citizen suit” provisions eased passage of ACES (Global Climate Law Blog)

Howrey’s climate law blog draws attention to the removal of the citizen suit provision from ACES. Most other major environmental laws, like the Clean Water Act and Clean Air Act, grant standing for citizens to bring suits against polluters. A citizen suit provision in an earlier draft of ACES was stripped out due to the fear of overlitigious environmentalists:

A staff member in the office of Sen. Jim Inhofe (R-OK) had warned that the subsection could result in a flood of “lawsuits filed by environmental groups who perceive some risk—and they undoubtedly will perceive it” and that “this provision will further empower the eco-trial bar to fight the ravages of climate change and the businesses it dislikes, with no effect on the former and disastrous consequences for the latter.”

ACES Puts US and World On Safer Temperature Path (NRDC)
A new Duke University study analyzes the impacts of ACES, concluding that it will lead to stabilizing CO2 levels at 450ppm and a 2-degree increase in global temperatures from 1990 levels.

How The Climate Bill May Spur An Energy Revolution (Huffington Post)
A look at how ACES would affect people’s lives and the economy.

Obama’s Reaction

Obama Warns Against Trade Penalties in Energy Bill (New York Times)
In a stark contrast to yesterday’s strong endorsement of the ACES bill, today, the Times reported Obama as quite critical of ACES’ tariff provisions:

At a time when much of the world is mired in recession, Mr. Obama said, “We have to be careful about sending any protectionist signals.”

He said that certain energy-intensive American industries — like steel, aluminum, paper and glass — had legitimate concerns about competition from developing nations and that he would seek to level the playing field in international negotiations.

But he warned that trade sanctions that are based on the extent to which other countries curb carbon dioxide emissions might be illegal and counterproductive.

Obama Hails Climate Bill, Hopes For Some Changes (Washington Post)
The Washington Post highlights Obama’s characterization of ACES as an “extraordinary first step” and notes that he had little to criticize, except that he hoped to remove a clause that would impose a tax on countries that don’t regulate carbon dioxide emissions.

In a midday interview in the Oval Office, however, Obama had little to criticize as he savored last week’s narrow victory in the House on one of his top domestic priorities: a climate bill that is designed to reduce emissions of greenhouse gases and promote renewable energy and energy efficiency.

Obama Casts Doubt on Call for Climate Tariff (Wall Street Journal)
The Wall Street Journal provides a little more context about the tariff clause, related provisions, and how it pertains to the international negotiations at Copenhagen:

The president suggested that other provisions in the bill would help energy intensive industries. The bill offers free emissions permits to certain trade sensitive industries during a lengthy phase-in period. More broadly, Mr. Obama is headed to Copenhagen for an end-of-year summit aimed at forging a global pact on emissions, and among the issues in those negotiations is whether to create protections for countries that sign onto the deal.

Politics  

House passes climate-change bill (Politico)
Politico recaps and analyzes the political implications of passage in the House, including reporting on fence-sitters as well as vote-switcher Rep. Doggett (D-Tex.)

But the all-hands-on-deck effort to protect politically vulnerable Democrats by corralling the minimum number of votes to pass the bill, 219-212, proves that there are limits to President Barack Obama’s ability to use his popularity to push through his legislative agenda. Forty-four Democrats voted against the bill, while just eight Republicans crossed the aisle to back it.

Climate bill shaped by compromise (via LA Times)
A rundown of the agriculture and coal compromises entailed in passing ACES:

That approach is fast becoming an Obama hallmark, a blueprint for the administration’s battles over healthcare, financial regulation and the climate bill in the Senate: It is a devotion to compromise, and finding a way to maintain strict discipline among hopeful but anxious liberals.

One hurdle down for climate bill, 60 more to go (Grist)
Kate Sheppard emphasizes the narrow win and the challenge ahead:

House Democrats late Friday eeked out a win on the American Clean Energy and Security Act, getting just one more vote than was necessary to pass the sweeping bill. The victory marks the first major action by the U.S. Congress to address climate change, but the narrowness of the vote suggests the fragile nature of the effort to restructure the country’s energy portfolio.

Pelosi, Waxman, Markey, Slaughter Triumph (The Atlantic)
Marc Ambinder calls it a victory:

…in passing the largest and most ambitious overhaul to the nation’s energy policy in decades, Democrats in the House of Representatives are celebrating a genuine policy accomplishment.  The bill is so big, so audacious, even in its watered down form, that if it somehow manages to pass the Senate, it will almost immediately change the lives and lifestyle of every American, the fortunes of major industries, and the economic future of regions, cities and towns.

Climate Change Bill May Be Election Issue (New York Times)
Carl Hulse compares ACES to the doomed 1993 “B.T.U. tax”. Over on Dot Earth, Times environmental reporter Andrew Revkin responds:

There are enormous differences between the two situations and initiatives. The 1993 tax was pursued mainly as a source of revenue to cut the deficit, not a means of reducing American dependence on foreign oil and cutting risks of dangerous climate change. But there is one similarity. Democrats, particularly from coal states, helped set the stage for the failure of the 1993 tax, according to various experts, and according to Mr. Clinton. …Democrats from states that produce or depend on fossil fuels have been slow to buy into the climate bill.

ACES in 60 Seconds (Matthew Yglesias)
Matthew Yglesias embeds a nice 60-second pastiche of the floor debate, and observes:

So what kind of congressman looks at a complicated effort to overhaul a complicated subject matter, then kind of shrugs and says “well this is complicated and I’m too lazy and stupid to be bothered to figure out what’s happening!” Well, I know what kind of congressman does that. But it’s pretty irresponsible.

GOP Senators Pledge to Fight Climate Bill (Roll Call)
Republican Senators took to the Sunday morning talkshows vowing to block passage in the Senate:

Senate Minority Leader Mitch McConnell (R-Ky.), appearing on “Fox News Sunday,” called the measure a jobs killer and argued it would lead to electricity rate hikes.

“If we do have a global warming problem, and many people believe we do, we need to target it on a global basis,” he said, suggesting the need to address foreign polluters like China and India.