The Supreme Court just decided “the most closely watched environmental case in decades,” West Virginia v. U.S. Environmental Protection Agency. In the 6-3, opinion, the Court holds that the EPA cannot use Clean Air Act §111(d) to set power-sector-wide greenhouse gas emissions standards for state power plants. The Court also explains that the Major Questions Doctrine is crucial to this analysis and reflects both “separation of powers principles and a practical understanding of legislative intent.”
A Justice Gorsuch concurrence, joined by Justice Alito, lays out their view of history and application of clear statements doctrines and the major questions doctrine specifically. Justice Kagan wrote a dissenting opinion, joined by Justice Breyer and Justice Sotomayor.
As a reminder, here is a summary of how the case got to the court from a blog post and webinar I did last December, in anticipation of the Supreme Court argument:
Under the Clean Air Act, the Environmental Protection Agency regulates greenhouse gas emissions from various sources including new cars and new industrial sources. But a large proportion of the country’s greenhouse gas emissions come from existing sources, such as the nation’s coal and natural gas power plants, which provide over half of American electricity.
In 2015, the Obama administration issued a regulation for existing fossil fuel power plants under Clean Air Act §111(d), which allows the EPA to “establish a procedure” for each state to adopt “standards of performance” for existing sources of air pollutants. The administration called this rule the “Clean Power Plan.” It was controversial, in part, because it went beyond asking states to make their existing power plants run more efficiently. Instead, it went “beyond the fenceline” of the power plant to encourage non-fossil sources of electricity such as wind and solar power and shrink the fossil-fuel power sector.
The Clean Power Plan never went into effect because the Supreme Court stayed its implementation on February 9, 2016. The D.C. Circuit heard more than 7 hours of argument on the validity of the Clean Power Plan but never ruled on it because the Trump administration repealed it and replaced it with its own rule, which it called the “Affordable Clean Energy Rule,” and was limited to promoting efficiency measures at existing fossil fuel plants. The D.C. Circuit then heard 9 more hours of argument on this new rule, before striking it down on January 19, 2021. The court held that EPA’s authority was not so limited.
The Supreme Court granted certiorari to decide whether Clean Air Act §111(d) gives “the EPA authority not only to impose standards based on technology and methods that can be applied at and achieved by that existing source, but also allows the agency to develop industry-wide systems like cap-and-trade regimes.” The case is an important sequel in the Court’s lines of cases on how much deference executive agencies should receive to decide major questions of policy and whether Congress might authorize dramatic agency action from relatively obscure provisions—hiding an elephant in a mousehole.
The opinion can be found here: https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf
The Supreme Court emphasized that “the only interpretive question before” it was “narrow”: “whether the ‘best system of emission reduction’ identified by EPA in the Clean Power Plan was within the authority granted to the Agency in Section 111(d) of the Clean Air Act.” Some had thought it might explicitly limit the Chevron doctrine or return to the non-delegation doctrine. This is a narrower ruling, but may rule out some of the more aggressive steps the Biden administration might have considered to reduce sector-wide greenhouse gas emissions in areas such as utilities, refineries, and oil and gas development.
Daniel talks about his recent book, which evaluates common concerns about fracking, including polluted water supplies, diesel emissions, increased risks of earthquakes, and greenhouse gas emissions. Daniel explains how recent studies support or do not support these concerns. Daniel also explains how these risks can be addressed, noting how shale gas can be used to reduce greenhouse gas emissions in some circumstance but can raise emissions in other circumstances.
Tonight, CNN will air seven hours of back-to-back townhalls from the ten top Democratic candidates on their climate plans. So far coverage of these plans has focused on initiatives that would require Congress to pass new laws, such as various versions of the “The Green New Deal,” proposals to take over or clean up the power sector, and plans to spend trillions fighting climate change. None of these proposals would pass the Senate in anything like their proposed form.
If you want to understand what the candidates would actually
do on climate, you should focus on three things:
How they would change federal permitting of oil and gas extraction and transport;
How much they hope to spend on climate change; and
How they approach tradeoffs between climate regulation and the economy.
Here’s a guide to what the candidates have said on these
issues and the key questions that should be asked of their plans in coming months.
How Candidates Would Change Federal Oil & Gas Permitting
By far the most important question for the candidates on climate change is how they would use existing presidential authority—particularly through executive orders. The candidates can be held to these promises because they don’t require any action from Congress.
By contrast, all the candidates’ proposals for legislation would need to be passed by the Senate, which currently has a Republican majority. Even if the Democrats somehow gained a Senate majority next year, they would still need to win over moderate Democrats such as Joe Manchin who famously won his seat by shooting President Obama’s cap-and-trade bill to advertise his opposition to climate regulation. There are no such obstacles to executive authority so the most important question for candidates is how they’d use it.
The most important executive action proposed to date is Vice
President Biden’s plan to ban “new oil and gas permitting on public land and
water” by executive order on his first day in office. This would have three dramatic
effects:
It would ban new oil and gas leases across all federal land, including centers of the energy industry such as the Gulf of Mexico.
It would ban new drilling on existing leases, because every new oil and gas well needs a permit.
It would ban new oil and gas pipelines from Canada and to Mexico, because these require a federal permit. It would ban new liquefied natural gas exports to Europe and Asia. And it could even ban new domestic pipelines, because even intra-state pipelines typically cross federal streams and rivers, which a fully comprehensive permitting ban would forbid.
So Biden’s ban would entirely shut down the oil and gas
industry on public lands. And it would choke off the private energy industry by
cutting off the new pipelines and gas export facilities that it needs to get its
products to market.
The argument against Biden’s ban is that there are far less economically damaging ways to cut U.S. carbon emissions. As I explain in this new op-ed, this ban would cause serious economic pain to Americans. And a ban on new fossil fuel transport would cut off U.S. gas more than oil—oil can easily be shipped by rail, truck, barge, or tanker but gas can only be shipped on pipelines or as liquefied natural gas. And U.S. gas exports are bringing huge environmental benefits to the world by replacing dirtier fuel sources in places with air quality problems, so Biden’s ban could damage the global environment.
Here’s a chart of the Democratic candidates climate policies, ordered by their current standing in national polls. (This is drawn from the candidates websites and their responses to questions here and here.) As you can see, many of the top candidates also support a ban on federal oil and gas leasing, but many have not said whether, like Biden, they would ban all new permitting—including new wells on old leases and new international and domestic pipelines. This is the single most important issue for the candidates to discuss in tonight’s town halls and it should be the focus of savvy reporters’ questions moving forward.
I am keeping this chart updated as candidates and climate plans evolve. (Last Update 3/1/2020)
How Much Candidates Would Spend on Climate Change
Although new spending requires congressional action, Congress
must regularly reach agreement with the President to fund the federal government,
which gives a new President some leverage to spend money on his or her priorities.
The Democratic candidates have widely varying goals on climate spending, from Mayor
Buttigieg’s plan to spend $25 Billion per year on green research &
development to Senator Sanders plan to spend $16.3 Trillion to transform the energy
economy.
To understand those massive numbers, let’s put them in
context. There are 128 million American households. So Mayor Buttigieg is
planning to spend $219 per household per year and Senator Sanders is planning
to spend $127,344 per household. Vice President Biden’s plan to spend $1.7
trillion would be $13,281 per household.
It would be helpful to hear more about how the candidates
will prioritize their climate and environmental spending. If Congress will only
give them so much money, would they prioritize spending it on research &
development, on climate change projects abroad, or would they consider other
environmental issues such as improving air quality and removing lead from the water
and soil? This should be a secondary focus of reporters’ questions.
How Candidates Would Balance Climate Regulation
and the Economy
So far, the candidates have said little about how they would
balance their climate and economic goals, in part because media coverage has
focused on the Green New Deal, which asserts that there is no tradeoff between
environmental and economic goals. But a new president would make countless
decisions on how much to cut greenhouse gas emissions from cars, from power
plants, and from industrial sources using existing regulatory authority. So we
need to know what the candidates will do when their economic and environmental
goals come into conflict.
As I explain in this podcast with UCLA’s Ann Carlson, the fundamental innovation of the Green New Deal is that it promises to achieve environmental and economic goals simultaneously. It will remove 100% of greenhouse gas emissions from the power sector in ten years. And it will “guarantee[] a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.” What it doesn’t say is what it will do when those goals come into conflict.
There are many possible ways to manage tradeoffs between the environment and the economy. Historically, environmental laws have often mandated the cleanest technology that is “available” or “demonstrated.” And government regulators have interpreted those standards as requiring that industry cut emissions as much as it can without risking plant closures or job losses.
Another way to manage environmental and economic tradeoffs
is with carbon pricing: a carbon tax or a cap-and-trade system. These systems
make polluters pay for their greenhouse gas emissions. But if a product is so
valuable to society that consumers are willing to pay the cost of manufacturing
it plus its environmental cost, then they can still purchase it.
Almost all the candidates have said they support the Green New Deal, but they should be asked how they will balance their climate and economic goals. Will they use traditional standards that asks the fossil fuel industry to clean up but doesn’t shut it down? Or do they think that industries should only survive if they can pay the price of their carbon emissions? Or, like Vice President Biden, do they think that some industries should be shut down regardless of the cost? These questions arise every day for climate regulators so reporters should ask the candidates how they will manage these energy tradeoffs.
Sheila talks about two challenges of doing cost-benefit analysis on climate regulation. First, she describes why the bulk of benefits from carbon rules actually are indirect benefits of reduced air pollution, not climate benefits from reduced carbon emissions. Second, she talks about why many studies on the effects of air pollution depend on private health data that cannot be released to the wider public for replication. She also describes what she sees as hopeful avenues for regulatory reform.
The Energy Tradeoffs Podcast can be found at the following links: Apple | Google
Today the United States Supreme Court held that the Environmental Protection Agency (EPA) improperly refused to consider costs when determining whether it was “appropriate and necessary” to regulate mercury emissions from power plants under the Clean Air Act. Ultimately, EPA may be able to keep the same rules after going back and explaining why the cost of the regulations is justified in the circumstances. But the decision is an important victory for advocates of cost-benefit analysis and those who think environmental agencies should pay more attention to the costs of regulation.
Section 112 of the Clean Air Act directs EPA to regulate hazardous air pollutants from power plants if it finds “regulation is appropriate and necessary.” 42 U.S.C. §7412. EPA said that regulation was “appropriate and necessary” even without considering costs because 1) power plant emissions posed risks to human health and the environment that were not eliminated by other provisions of the Clean Air Act and 2) there were controls available to reduce those dangerous emissions. So there was no need for EPA to consider costs to make its initial decision to regulate, but it promised to consider costs when adopting the actual final regulations for power plants.
Although EPA said it ignored costs when it made its initial decision to regulate, it still estimated the costs and benefits of the final rules that it adopted. EPA estimated that its rules would cost power plants $9.6 billion dollars a year. EPA couldn’t estimate all the possible benefits of limiting mercury emissions, but the little it could quantify came to about $5 million a year—less than 0.1% of the cost of the rule. On the other hand, EPA said that cleaning up mercury would have massive side benefits: it would lower sulfur dioxide emissions and these reductions would be worth between $37 and $90 billion per year. So these ancillary benefits far outweighed the costs of EPA’s rule, but if you didn’t count them, EPA’s rule imposed costs far in excess of its benefits.
Justice Scalia, writing for a 5-4 majority, held that EPA must consider the costs of regulation before making its initial decision to regulate, reasoning that “No regulation is ‘appropriate’ if it does significantly more harm than good.” The four dissenters conceded that, generally speaking, “an agency must take costs into account in some manner before imposing significant regulatory burdens” but agreed with EPA’s argument that the agency could consider those costs later when adopting regulations for specific source categories.
The Supreme Court’s decision may not have much impact on mercury regulation. Power utilities are already complying with the mercury rules that the court struck down in this case. And the case will now go back to the appellate court, which could decide to leave the rules in place while the agency rethinks whether these rules are “appropriate and necessary” factoring in the costs that they impose. EPA already determined that the benefits of the rules far outweighed their costs if you consider ancillary benefits, so it will probably reach the same decision. On the other hand, the Court’s decision raises very important questions for the future.
First: Can agencies consider ancillary benefits? At oral argument, some justices seemed to suspect it was inappropriate to consider the benefits associated with pollutants other than mercury. After all, if the other pollutants are the problem, why not adopt regulations aimed at the other pollutants? On the other hand, it has long been standard practice for agencies to consider ancillary or “co-benefits” of reducing pollutants other than the main target of regulation. If an agency is going to consider all the important costs of a regulation, why shouldn’t it consider all the important benefits? In some ways, the mercury rule may just be an outlier case because EPA estimated that the co-benefits of reducing sulfur dioxide were 10,000 times greater than the direct benefits of reducing mercury itself. But over half of the benefits of EPA’s Clean Power Plan come from co-benefits in reducing pollution other than greenhouse gases, so the question does have wider importance.
Second: How much cost-benefit analysis will the Court require for other regulations? Today’s decision may be seen as part of a trend that is making cost-benefit analysis a kind of default background principle for agency decision-making. Just fourteen years ago, Justice Scalia wrote an opinion for eight justices, holding that EPA could not consider the cost of regulation when the Clean Air Act demanded a standard at the level “requisite to protect the public health.” In that case, Justice Scalia explained that EPA could consider costs later when it implemented the standard. Last year, the Court held that EPA could consider the cost of emissions controls when it decided whether a State “contributed significantly” to air pollution in another state; Justice Scalia dissented. Now, the Court holds that EPA must consider the cost of regulation when it determines whether regulation is “appropriate and necessary.” Justice Scalia writes the opinion, and all justices agree that EPA must consider costs at some stage. Observing this trend, litigants will feel increasingly bold to demand that EPA consider the costs at each stage of adopting new environmental regulations.
With about a fifth of the world’s population, China plays a crucial role in the world’s energy and climate futures. Right now, the developed world comprises an outsized portion of global energy use and greenhouse gas emissions compared to its population, (http://bit.ly/1bDyIIp), but per capita energy use in developing countries like China will gradually converge with levels in the developed world because of 1) catch-up growth in the developing world, 2) climate and efficiency regulations in the developed world, and 3) movement of heavy industry from the developed world to the developing world. So one way of thinking about global energy futures is that Chinese policy may some day be of comparable importance to the policies of North and South America, Western Europe, and Australia combined. (Or maybe “US policy is to China’s policy as Turkey’s policy is to US policy.”)
Map of the world divided into five regions, each with the same population as China.
So China’s climate policy is crucial. And it is currently in flux. Many years of rapid growth in coal-fired power have produced acute particulate matter air pollution problems in China: a recent study estimated that this air pollution reduced the life expectancy in northern China by 5.5 years. http://bit.ly/19aFY91. As a result, China has been seeking to develop alternative power sources such as natural gas and renewable power. Some hope that this will help slow China’s rapidly rising greenhouse gas emissions. Citi Research recently put out a report with the hopeful title, “The Unimaginable: Peak Coal in China” (http://citi.us/1cpecdP), and Bloomberg New Energy Finance published one titled “The Future of China’s Power Sector: From Centralized and Coal-Powered to Distributed and Renewable?” Two recent analyses, however, show why China’s energy policy remains a daunting challenge.
The first analysis, from Armond Cohen and Kexin Liu at the Clean Air Task Force, http://bit.ly/16tPtlf, offers a bracing reality check by simply digging into the Bloomberg and Citi studies. What they find is that China’s coal-fired plants will be a climate challenge for decades to come. As a result of the recent boom China now has 750 GW of coal-fired capacity, and even as construction slows, it is due to add 343-450 GW of new coal-fired plants by 2030. By comparison, the U.S., which until 2008 was the world’s biggest emitter of greenhouse gases, has only 300 GW of coal-fired capacity. So, China will soon have 3.5-4 times the coal-fired capacity of the United States. And unlike, the United States where most coal plants are aging, Chinese plants will still be in their prime, and may continue to operate for decades.
The second analysis, published in Nature Climate Change, analyzes China’s plans to produce synthetic natural gas (SNG) from coal at over 40 massive plants. http://bit.ly/1a675Ru. Burning SNG instead of coal would lower particulate matter pollution in China’s cities, but SNG takes large amounts of energy to produce, which means that, all things considered, it leads to even more greenhouse gas emissions than coal. (SNG has roughly seven-times the greenhouse gas impact of regular natural gas, and 136-182% the impact of coal-fired plants.) Thus, if coal is replaced with SNG, it will just make the world’s climate problems worse.
The Clean Air Task Force analysis suggests that carbon capture & storage may be the only viable option to control greenhouse gas emissions from China’s burgeoning coal plants. And the SNG paper suggests that shale gas might be a viable alternative to SNG within China. Both potential solutions have detractors. What is clear, however, is that Chinese energy policy will be a crucial and daunting challenge for decades to come.
