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The Greenhouse Protection Racket

Climate policymaking in our nation’s capital is best explained in the lingo of Hollywood mobsters and banditos.

by
Marlo Lewis

Bio

July 9, 2010 - 12:08 am

“Are you gonna come along quietly, or do I have to let the California Air Resources Board (CARB) muss ya up?” That was pretty much the line White House energy and environment czar Carol Browner took to obtain the auto industry’s support for first-time-ever greenhouse gas emission standards and new fuel economy standards, which the EPA and the National Highway Traffic Safety Administration (NHTSA) issued in a joint rule on April Fools’ Day.

We Don’t Need No Stinking Badges

Through the joint rule, the EPA now wields the power to determine the stringency of fuel economy standards for the auto industry. Previously — for the past three decades and more — the EPA’s role was limited to testing automakers’ compliance with fuel economy standards. How did the EPA go from second banana to top dog?

Carbon dioxide (CO2) makes up at least 94% of all greenhouse gas (GHG) emissions from motor vehicles, and there is no commercial technology to filter or capture CO2 emissions from tailpipes. Consequently, the only significant way to reduce an automobile’s GHG emissions per mile is to decrease its fuel consumption per mile, i.e., increase fuel economy. Because miles per gallon and grams of CO2 per mile are tightly correlated, the EPA can now increase the stringency of fuel economy standards by increasing the stringency of GHG emission standards. Yet Congress authorized NHTSA to regulate fuel economy, not the EPA.

Not only does the joint rule put the EPA in the fuel-economy driver’s seat, it also expands the agency’s control over “stationary sources” such as power plants and factories. By adopting GHG motor vehicle standards, the EPA has made CO2 a “regulated air pollutant” under the Clean Air Act, which in turn makes stationary sources of CO2 “subject to regulation” under the Act’s pre-construction and operating permits programs. Potentially millions of previously unregulated buildings, farms, and small businesses face new permitting requirements.

In addition, the endangerment rule that the EPA issued in December 2009 to justify regulating GHG emissions from motor vehicles also obligates the agency to issue GHG “performance standards” for numerous categories of industrial facilities.

In short, by issuing GHG emission standards for motor vehicles, the EPA positioned itself not only to determine fuel economy standards for the auto industry, but also to set climate policy for the nation. Yet the Clean Air Act provides no authority to regulate fuel economy and says nothing about greenhouse gases or global climate change. “We don’t need no stinking congressional authority” would make a fitting motto for this rogue agency.

Mum’s Da Woid

Here’s how the regulatory extortion went down.

In February 2009, EPA Administrator Lisa Jackson commenced a rulemaking to reconsider Bush EPA Administrator Stephen Johnson’s denial of California’s request for a waiver to establish its own GHG emission standards program. Because the waiver would also allow other states to adopt the California program, because GHG emission standards are mainly fuel economy standards by another name, and because automakers would have to reshuffle the mix of vehicles delivered for sale in each “California” state to achieve the same average fuel economy in those states, Jackson’s proceeding threatened to subject automakers to an inefficient, consumer-thwarting, regulatory patchwork.

In the spring of 2009, Czarina Browner conducted closed-door negotiations with automakers, CARB Chairman Mary Nichols, the United Auto Workers, and major environmental groups. Browner required participants to take a vow of silence and forbade anyone to take notes — an “apparently willful and egregious violation” of the Presidential Records Act. The outcome was an “historic agreement” whereby automakers would agree to support the joint GHG/fuel economy standards rule, and California and other states would deem compliance with the federal standards as compliance with their own.

At the same time the Browner-led negotiations were taking place, observes Rep. Darrel Issa (R-Calif.), ”the government was also engaged in bailout talks with General Motors (GM) and Chrysler,” resulting in “an ownership stake for the federal government of 61% of GM and 8% of Chrysler, respectively.” Whether Browner literally made the auto industry an offer it could not refuse, with the sweetener of financial assistance also contingent on the industry’s embrace of GHG regulation, we may never know.

This much is clear. By reconsidering California’s request for a waiver, the EPA created the threat of a regulatory patchwork, enabling the White  House to offer ”protection” in the form of the joint GHG/fuel economy standards rule. The protection “fee” was the auto industry’s unquestioning support for the joint rule and its prerequisite, EPA’s endangerment rule — the regulatory proceeding in which the EPA concluded that GHG emissions endanger public health and welfare.

Thus, the Auto Alliance became the key industry lobby opposing Sen. Lisa Murkowski’s resolution to overturn the EPA’s endangerment rule. The Alliance warned that if the endangerment rule were overturned, the “historic agreement” would unravel, confronting automakers with “the alarming possibility of having to comply with multiple sets of conflicting fuel economy standards.”

That is correct, but only because EPA Administrator Jackson, reversing her predecessor’s decision, granted California the waiver to establish GHG emission standards for new motor vehicles. An obvious solution would be to overturn the waiver. After all, the Energy Policy and Conservation Act, which created the federal fuel economy program, clearly prohibits states from adopting laws or regulations ”related to fuel economy standards,” and the California motor vehicle emissions program is at least nine-tenths fuel economy regulation. By granting the waiver, the EPA effectively repealed a major provision of federal law. To reach the “historic agreement,” Team Obama had to violate the separation of powers. Of course, neither Government Motors nor any other participant in the hush-hush negations will ever fess up to that fact.

Mirage of Regulatory Certainty

The auto industry is not the only target of the greenhouse protection racket. For years, climate activists have been saying that only a legislated cap-and-trade program can end the ”regulatory uncertainty” facing electric utilities and energy-intensive manufacturers. But who created the uncertainty in first place if not the self-same advocates of cap-and-trade? If they were serious about relieving uncertainty, they would disavow their campaign to impose costly new mandates on the economy.

Businesses that lobby for cap-and-trade in the hope of obtaining regulatory certainty should read the fine print.

Consider the much-ballyhooed American Power Act, sponsored by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.). It requires U.S. GHG emissions to decline 83% below 2005 levels by 2050 (p. 266), which supposedly would stabilize atmospheric concentrations at 450 parts per million (ppm) and prevent global warming from exceeding 2°C (3.6°F). However, the bill contains an escalator clause setting the stage for increases in regulatory stringency well beyond the bill’s explicit emission-reduction targets.

Specifically, Kerry-Lieberman requires the EPA to identify (a) all the climate-related risks that won’t be prevented by limiting CO2-equivalent concentrations to 450 ppm or global warming to 2°C, and (b) “alternative thresholds or targets that may more effectively limit the risks” of climate change (p. 274). Thus, the bill sets up the EPA to advocate reducing CO2-equivalent concentrations to 350 ppm — the new politically-correct “stabilization” target endorsed by Al Gore, James Hansen, the Center for Biological Diversity, and numerous other climate activists.

Nor is the Kerry-Lieberman bill’s exemption for small business all that it appears to be. Yes, the cap-and-trade program only applies to large industrial facilities — those emitting at least 25,000 metric tons per year of CO2-equivalent GHGs (p. 473). However, the bill’s “findings,” which present the “scientific” rationale for controlling GHG emissions, would empower eco-litigation groups to sue smaller entities for their alleged contribution to climate-related “injuries.” This is particularly worrisome, because state attorneys general and environmental groups are already suing CO2-emitting companies for their supposed injuries to life and property.

The findings assert that “each increment of emission … causes or contributes … to the acceleration and extent of global warming and its adverse effects,” and that, “accordingly, controlling emissions in small as well as large quantities is essential” to reduce “threats” and “injuries.” Such supposed injuries include disease, death, property damage, bad weather, business losses; harm to forests, plants, wildlife, water resources, and air quality; and — as if that list weren’t inclusive enough — “other harm” (p. 263). Under tort law, if there is an injury, there must be a remedy.

Creating even more opportunity for climate ambulance chasers, the findings go on equate risk of harm with actual harm: “the fact that some of the adverse and potentially catastrophic effects of global warming are at risk of occurring and not a certainty does not negate the harm persons suffer from actions that increase the likelihood, extent, and severity of future impacts” (p. 264). Get that? All plaintiffs will need is some remote, speculative possibility of catastrophic impacts — Al Gore would gladly provide a list — and voilà: harm has been done, injuries cry out for redress.

The Waxman-Markey bill, which the House passed in June 2009, contains the same mischievous provisions. Enact either bill, or any combination thereof, and the only certainty is that regulatory burdens will grow unpredictably.

Too Clever by Half

Last but not least, cap-and-traders sell their policy as protection from even more draconian regulation. Kerry-Lieberman, for example, would exempt stationary sources of GHG emissions from the Clean Air Act’s national ambient air quality standards (NAAQS) and hazardous air pollutants (HAPs) programs, and partly exempt them from the Act’s pre-construction and operating permits programs (pp. 619-623). Proponents warn that if Congress does not enact Kerry-Lieberman, businesses will face an era of litigation-driven, overly prescriptive, needlessly costly GHG regulation under the Clean Air Act.

Permit me to translate: “Pretty nice company you got deah, shame if sumpin’ bad waz to happen to it. Everybody needs protection. You need protection. It’s called Kerry-Lieberman.” Note the familiar pattern. The politicians and activists pushing cap-and-trade as protection from the EPA and the trial lawyers include the same folks who sued the EPA to regulate greenhouse gases in the first place, and who vilified Sen. Murkowski and others for attempting to stop the EPA.

This is all too clever by half. If cap-and-trade dies in the 111th Congress, as seems likely, the Obama administration and its allies on the Hill will take sole ownership of the compliance costs, job and GDP losses, and “absurd results“ arising from the EPA trying to pound the square peg of climate policy into the round hole of the Clean Air Act.

Democratic leaders may not recognize it yet, but they have painted themselves into a corner. They have become the Party of Endangerment — the party endangering the U.S. economy by championing the EPA’s endangerment rule, with all its cascading regulatory effects.

Marlo Lewis is a senior fellow in environmental policy at the Competitive Enterprise Institute
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