Tag: Climate

Can Weak Manchin Permitting Bill Be Strengthened?

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After authorizing $370 billion in new funding for new, cleaner energy sources, Congress is turning to permitting reform: All the money in the world will not help if projects don’t have permission to build. Wednesday evening, Senator Manchin released proposed text for his permitting bill, which he apparently negotiated in return for his vote to authorize the energy funding. Unfortunately, the bill is not well-designed to speed up construction of new energy sources. But with a few strategic additions it could go a long way toward speeding up permitting to secure a cleaner, more reliable, and affordable energy future for the United States.

The biggest roadblock to energy sources is not financial; it is receiving permission to build. And many of the projects that we most need for a clean energy transition face particular permitting difficulties because they need permits from multiple states or local communities and the federal government. Our traditional energy commodities, oil and coal, are less dependent on building long-distance infrastructure because they can rely on existing railroads and pipelines, and they are easier to ship by multiple pathways using rail, road, and water transport. By contrast, cleaner energy products such as renewable electricity, natural gas, and hydrogen can only be shipped by new long-distance infrastructure.

Think of a long-distance power-line designed to bring renewable energy to market, a pipeline shipping natural gas to communities hoping to move away from coal, or a hydrogen pipeline designed to help replace fossil fuels. These linear infrastructure projects often need approvals from each state they cross and may also need approval from the federal government as well whenever they cross federal lands, borders, or streams.

There are two huge legal permitting challenges for these new cleaner energy projects.

So if we want to clean up our energy system and address the global energy crisis, which is causing energy shortages and price spikes around the globe, we need to speed up permitting. If the $370 billion authorized by Congress just goes to the few projects that would already have passed the permitting gauntlet, it will be money wasted. So we’ve seen a growing chorus of voices demanding reform to the permitting process to ensure this money isn’t squandered and that we can build a cleaner energy future.

The federal and state permitting challenges are linked because perhaps the most common proposal to speed permitting is to replace state and local siting processes with federal processes. For example, in 2005, the U.S. Congress gave the federal Department of Energy the power to designate areas that particularly needed more electricity transmission and gave the Federal Energy Regulatory Commission power to, in some circumstances, permit power-lines that hadn’t been approved by the states in those areas. Senator Manchin’s bill leans heavily on this method of speeding permitting: it gives federal government more power over permitting new power-lines and hydrogen pipelines.

The problem is that this is not an improvement at all when federally-approved projects are facing Kafkaesque challenges when they seek approval to actually build their projects. The energy sector where federal permitting is most common is in interstate natural gas permitting and these projects are routinely stopped by local objections even when they have federal approval. In fact, the two highest-profile recent gas pipeline projects—the Atlantic Coast Pipeline and the PennEast Pipeline—eventually had to give up on building their projects after years of expense and struggle, even though the federal government repeatedly backed both pipelines and both pipelines won blockbuster decisions in the U.S. Supreme Court.

If the Manchin bill passes as is, the gas pipeline industry can welcome the power-line and hydrogen industries to national regulation with this unwelcome news: “Even if the federal government backs you on every permit, and even if the Supreme Court backs you in every decision, no matter how long you wait, or how much you spend, states and lower courts will make life so difficult that your proposed project will never be built.”

The dysfunctions of federal permitting under court review are well known in energy policy. Congress’s 2005 grant of power to the Department of Energy and the Federal Energy Regulatory Commission was eviscerated by two federal appeals court decisions over the next six years. This is why the single project that really will be helped by the current Manchin proposal is the Mountain Valley Pipeline. The bill makes special provision for this project, directing that all actions “necessary for the construction and initial operation at full capacity of the Mountain Valley Pipeline shall not be subject to judicial review.”

The Manchin bill does almost nothing to help other energy projects stop endless court demands for further environmental review. The bill does address some less important timing issues so it’s important to keep straight three kinds of time limits:

  1. Time limit for the federal government to complete environmental review. The proposal directs a two year limit for environmental review of major projects and a one year limit for minor projects. Unfortunately, such deadlines are unenforceable—the federal government routinely misses even the statutory deadlines it is trying to meet. The deadlines may even be counterproductive if they encourage courts to stop projects and order further reviews because of concern that review was rushed to meet an artificial deadline.
  2. Time limit for plaintiffs to challenge a project after it receives its permit. This kind of “statute of limitations” is not harmful but of very little use. Smart plaintiffs hoping to stop infrastructure generally sue at the earliest opportunity because the best chance to stop an infrastructure project is before construction begins. So big projects are almost never held up by plaintiffs that waited years after the project was approved to bring their lawsuit.
  3. Time limit for courts to order more review on projects that have already been under review for years. Unfortunately, the Manchin proposal does not put any time limits on courts’ ability to hold up nationally-approved projects other than the Mountain Valley Pipeline. The federal environmental review law, the National Environmental Policy Act (NEPA), is a procedural statute simply intended to ensure the government did sufficient environmental review of a project. If the federal government has been reviewing the environmental consequences of a project for years and has approved it, and the court would still like more review, the court can order the government to do more review. But it is not reasonable to make a nationally-approved project, and all the consumers and producers that depend upon it, wait for the court and government to reach agreement on how much environmental review is enough.

The crucial importance of a time limit on judicial delay of projects is well explained in the Institute for Progress’s excellent recent report on “How to Stop Environmental Review from Harming the Environment“:

The time limit that would likely have a major impact on outcomes is restricting the ability of the courts to issue injunctions against projects that have undergone extensive environmental review under NEPA. This change would provide developers the certainty they need to invest in large-scale build outs of solar, wind, transmission and other clean energy infrastructure. Without a time limit on judicial injunctions, developers have a sword of Damocles perpetually hanging over their head, threatening the entirety of the project.

As it stands, the Manchin permitting proposal would be a serious lost opportunity that would be unlikely to significantly speed up construction of new energy projects. The focus on federalizing review of clean energy projects is particularly unhelpful when the proposal doesn’t address the problems that are making federal review the bane of energy project developers.

The good news is that the Manchin proposal could be improved relatively simply if it added limits on federal court and state delays on federal projects. Speeding up permits for nationally-approved projects would accelerate construction of all the new energy projects that it designates for federal review.

Permitting Reform to Put New Energy Funding To Use

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On Sunday, August 7, the U.S. passed new legislation that provides $370 billion dollars for a wide variety of technologies in the energy and climate sector, including renewable energy, carbon capture, and electric vehicles. The House of Representatives is expected to pass this legislation tomorrow, Friday, August 12, so it may soon be enacted into law.

The strange thing about this huge spending on new energy sources is that high energy prices already promise financial rewards to anyone who can build the new energy infrastructure America needs for more reliable, affordable, and secure energy supplies. Unfortunately, these power-lines, pipelines, and clean energy projects are being held up by our sluggish permitting system. To put its new spending to good use, Congress must adopt permitting reforms that will make it easier to build America’s future energy system.

Our energy infrastructure is aging because it is simply too difficult to build new energy projects. More than half of American crude oil pipelines were built before the National Environmental Policy Act, which mandates lengthy environmental reviews was adopted in 1970; they are more than 50 years old. The nation’s largest grid manager, PJM, recently requested a two-year pause before adding any new solar projects because of how far behind it is in updating its grid to accommodate new energy sources. Opponents of new energy sources are finding more and more ways to ensure that new projects cannot get built.

Much of the massive new funding for energy will be in vain if projects cannot get the approval they need to begin construction. In the run up to the legislation, lawmakers and the media often cited models showing the bill would reduce U.S. emissions 40% by 2030. But although studies find that the average new transmission project takes over ten years to complete, these models “assume many of these projects will be built” in the next seven years to bring more renewable energy to the grid.

The good news is that, in return for supporting the energy spending bill, Senator Manchin reportedly received a commitment from Senator Schumer and Speaker Pelosi to support a bill to speed permitting for energy projects. The bad news is that the outline of the permitting bill released by Senator Manchin’s office does not yet specify serious steps to speed permitting. For example, it would “set maximum timelines for permitting reviews, including two years for National Environmental Policy Act reviews for major projects.” If accomplished, this would be a huge improvement over the current system where, as I explain in this video, National Environmental Policy Act average over five years.

The problem is that simply telling the federal government it has a two year deadline for its review will not accomplish much because the federal government routinely misses such deadlines. And courts could still strike down the review if they believed it was rushed or incomplete.

The key to watch is whether an emerging compromise imposes hard limits on courts and states’ ability to slow down federally-approved energy projects. In the past, I have proposed that if the federal government has approved a project, and more than five or six years have passed since the government began considering it, the courts should no longer be able to prevent the project from beginning construction. (Proposal is at pp. 304-305.) I defended that position in the Congressional testimony below. (My five-minute testimony starts at 49:28.)

If Senator Manchin’s permitting bill doesn’t take real steps to speed up permitting, it will be an important missed opportunity to build a better energy future.

Supreme Court: EPA Can’t Cap Greenhouse Gas Emissions From Power Plants

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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.

The opinion can be found here: https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf

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.

Energy Tradeoffs Podcast #37 – Eric Biber

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Another week, another EnergyTradeoffs.com podcast episode. This week, the University of California at Berkeley’s Eric Biber talks with David Spence about his research on “How Law Must Change in the Anthropocene.”

Eric explains his argument that as humans change the global environment, legal doctrines will have to change to accommodate regulatory responses as well as to address wider problems triggered by environmental harm. Eric describes the comprehensive challenges that will arise from climate change and other global environmental challenges and how they are caused by the “full range of human activity.” As a result, he argues that these challenges will require, in David’s words, “fundamental changes in the relationship between governments and individuals.” Eric describes how governments might be forced to rethink traditional approaches to legal rules for tort causation, federalism, and state coercion.

The conversation builds on Eric’s 2017 article on “Law in the Anthropocene Epoch” , which was published in the Georgetown Law Journal.

The Energy Tradeoffs Podcast can be found at the following links: 
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History’s Biggest Oil Boom: “The Third Age Of Oil & Gas Law”

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The oil boom happening now in Texas is the biggest commodity boom the world has ever seen. We all know the stories of history’s oil and gold rushes—the heroes and villains, fortunes made and lost. But this boom dwarfs every previous commodity boom.

I’ve just posted my new Indiana Law Journal article, which shows how this new boom is transforming oil and gas law; it’s titled The Third Age of Oil and Gas Law. But it starts by explaining how oil and gas has always been the crucible and catalyst for the most important legal trends of the modern world: the transition from common law to regulatory state, the rise of private governance, and the shift to a multi- polar international order.

The article shows how modern oil and gas law was born on private land in the United States, explaining the economic logic of the oil and gas lease, which was the legal innovation that made the modern world possible. It shows how the center of gravity shifted overseas as the Middle East came to dominate oil production. Finally, the article concludes by showing how public and private landowners can ensure maximum benefit from the unprecedented oil boom now transforming the United States.

As you read the article, keep the following visualizations handy. The first shows how the oil and gas industry started in the United States, spread to Russia and the Middle East, and is now shifting back to the United States.

The second shows how the new boom has transformed the U.S. oil and gas industry, with new production concentrated in Texas.

Here are chart versions of those two visualizations, which focus on more recent years.

Here’s production by country since 1950.

Here’s production by state since 2005.

Here is the abstract for the article.

History’s biggest oil boom is happening right now, in the United States, ushering in the third age of oil and gas law. The first age of oil and gas law also began in the United States a century ago when landowners and oil companies developed the oil and gas lease. The lease made the modern oil and gas industry possible and soon spread as the model for development around the world. In the second age of oil and gas law, landowners and nations across the globe developed new legal agreements that improved upon the lease and won these resource owners a larger share of the benefits of oil and gas production. The third age of oil and gas law, which is now beginning, will be defined by three forces. First, fracking is transforming the common law doctrines that underlie oil and gas law and policy. Second, both private and public landowners are perfecting agreements that can win them a greater share of the oil and gas under their land. Third, public landowners are beginning to seek ways to balance their efforts to extract maximum value from their oil with their efforts to limit climate change.

This Article is the first to identify these ages of oil and gas law, which have been central to the development of law, the global economy, and the modern world. It also reveals the legal and economic logic of agreements between oil and gas companies and public and private landowners, and how they have evolved over the past century. And it describes how landowners can ensure maximum benefit from the unprecedented oil boom now transforming global oil production.

Cite as: James W. Coleman, The Third Age of Oil and Gas Law, 95 Ind. L.J. _, _ (forthcoming 2020) https://ssrn.com/abstract=3367921.

TransCanada Sues U.S. Government For Rejecting Keystone Pipeline

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Courtesy of the <a href="https://www.aer.ca/about-aer/media-centre/photos">Alberta Energy Regulator</a>

Courtesy of the Alberta Energy Regulator

On Wednesday, TransCanada filed a complaint against the United States in a federal district court in Houston alleging that the President’s rejection of the Keystone XL pipeline was invalid and unconstitutional because it was not authorized by Congress. If successful, this claim would allow construction of the pipeline.

On the same day, TransCanada filed a notice of intent to submit a claim to arbitration under the North American Free Trade Agreement (NAFTA). Even if successful, this claim would not allow construction of the pipeline, but could entitle TransCanada to money damages from the United States. The company is asking for $15 billion in damages.

Like most private lawsuits against the government, these lawsuits face long odds, but both raise important and novel legal issues that will be difficult to decide. TransCanada’s constitutional claim could change the way that the United States approves international oil pipelines. And TransCanada’s NAFTA claim could endanger the United States’ long winning-streak in NAFTA arbitrations.

TransCanada’s Constitutional Claim

The most unexpected part of TransCanada’s legal salvo was the lawsuit that it filed asking a U.S. district court to rule that President Obama’s rejection of the Keystone XL pipeline was unconstitutional. TransCanada notes that Congress has never passed a statute that gives the President authority to reject international oil pipelines and says that, without such a law, the President had no authority for his unilateral rejection of the pipeline.

Congress has never provided a legal framework for regulating oil pipelines that cross the United States’ international borders. By contrast, there are laws that establish a process for the President to decide on international natural gas pipelines and electricity transmission.

In the absence of Congressional authorization, President Lyndon Baines Johnson simply issued an executive order in 1968, Executive Order 11423, that established a process for issuing permits to proposed oil pipelines that “would serve the national interest.” Then in 2004, President George W. Bush issued a new unilateral order, Executive Order 13337 that expedited review of border crossings. Both executive orders delegate decisions on these cross-border permits to the U.S. Secretary of State.

On November 6, the current Secretary of State, John Kerry rejected the Keystone XL pipeline after seven years of review. The official U.S. Record of Decision stuck by the State Department’s controversial previous conclusion that the pipeline would improve U.S. energy security, benefit the economy, and would be unlikely to increase greenhouse gas emissions in Canada. (It also suggested that the pipeline might even decrease greenhouse gas emissions in the United States by moving oil transport from railroads to pipelines, making oil transport more efficient.) But the U.S. concluded that the pipeline was ultimately not in the national interest because it could undercut the nation’s leadership in climate talks because the pipeline was “perceived as enabling further [greenhouse gas] emissions globally.”

TransCanada’s key argument is that, in the absence of any law, the President does not have unilateral authority to reject an international oil pipeline based on this kind of consideration. Although Presidents have claimed power to decide whether a pipeline is in the national interest since President Johnson in 1968, TransCanada argues that this power has never been fully tested because the President has never rejected an international pipeline.

This creates something of a puzzle: if Congress has never passed a law governing international oil pipelines and the President does not have authority to reject an oil pipeline, then who may, in fact, regulate pipeline border crossings?

One possible answer is that international oil pipelines are primarily regulated by the states, just like domestic oil pipelines. The U.S., unlike Canada, primarily relies on state-by-state regulation for interstate oil pipelines. That is, if no law has been enacted governing international oil pipelines, then the only laws that govern them are the same ones that govern domestic oil pipelines.

President Obama’s administration will raise several counterarguments. First, it will argue that the President has inherent and unilateral constitutional authority to control the nation’s borders, so he must have some kind of ability to control international border crossings. Second, if Congress has not established any criteria for the President to use in this decision, then he is free to create his own criteria. Third, President Johnson established this process almost fifty years ago and it has been frequently used to approve pipelines so Congress has, with the passage of time, acquiesced to this process. Fourth, federal district courts have upheld the President’s unilateral decision to approve international pipelines.*

TransCanada will respond that, whatever power the President has, it does not allow him to reject a pipeline based solely on international perceptions that are inconsistent with the government’s own environmental analysis. TransCanada’s complaint also argues that, far from acquiescing in the President’s unilateral authority to reject international pipelines, recent Congresses have repeatedly sought to constrain the President’s authority, citing Congress’s frequent attempts to approve the Keystone XL pipeline. Finally, TransCanada will point to federal court decisions and executive branch opinions from nearly a century ago, which concluded that in the absence of Congressional authorization the President had, at most, limited authority to control border-crossing facilities. Though old, these opinions may remain relevant in the unusual situation where, as with oil pipelines, Congress has not established a process for permitting border crossings.

The continuing saga of the Keystone XL drama overlaid with a tangle of old and new precedents and conflicting constitutional powers will make TransCanada’s U.S. lawsuit a case to watch. If a Republican is elected President this coming November, then the issue will likely be moot because the Republican contenders say they would reverse President Obama’s decision on the pipeline. But if not, then the U.S. courts will have to resolve the thorny issues raised by TransCanada.

TransCanada’s NAFTA Claim

TransCanada’s other action, its notice of intent to submit a claim to NAFTA arbitration, alleges that the U.S. discriminated against Keystone XL’s Canadian investors, violating its obligations to afford them national and most-favored-nation treatment under Article 1102 and Article 1103 of NAFTA. TransCanada also argues that by delaying a decision on the pipeline for seven years, and then denying it, the U.S. government destroyed the value of its investment, expropriating its property in violation of NAFTA Articles 1110 and 1105.

NAFTA claims are decided by three independent arbitrators. These arbitrators are not bound by the decisions of the arbitrators that decided previous claims. Thus, it is very difficult to predict whether a NAFTA claim will be successful.

If past cases are any indication, a Canadian company like TransCanada begins at a serious disadvantage. The United States has never lost a NAFTA decision to a foreign investor. And arbitrators have sometimes gone to great lengths to avoid a finding of discrimination. In one case, California passed a law that, it admitted, used “narrowly crafted language intended to prevent approval of a specific mining project” owned by Canadian investors. But the NAFTA panel for that case held that the law was not discriminatory because, in theory, that narrowly crafted language could apply in the future if another company proposed a similar project.

On the other hand, the extraordinary facts of the Keystone XL review process could end the United States’s NAFTA winning streak. First, throughout the seven-year review, President Obama repeatedly responded to complaints from pipeline supporters by admonishing them to remember “this is Canadian oil, this isn’t U.S. oil.” And the President’s administration was, at the same time, moving to expedite domestic oil pipelines. Second, after repeatedly delaying the decision on Keystone XL and repeated environmental impact studies, the U.S. denied the permit on the basis of a perception that was not supported by the seven years of analysis it had done. It will be difficult to explain why it took seven years to analyze the pipeline if, in the end, the government chose to ignore that analysis.

Finally, TransCanada’s lawsuits may operate in tandem because one relevant set of laws that Congress has passed concerning international energy trade is the set of laws approving and implementing NAFTA. In U.S. court TransCanada will argue that even if Congress has not prescribed a specific process for international oil pipelines, it has, at least ruled out any discriminatory or arbitrary treatment of Canadian investors in those pipelines. One of the chief challenges for U.S. lawyers will be to explain why the federal government should impose a uniquely lengthy and unpredictable process on Canadian oil pipelines while expediting domestic oil pipelines.

Regardless of the outcome, TransCanada’s Keystone XL challenges set the stage for potential blockbuster decisions that will have a lasting impact on energy, constitutional, and trade law.

 

You can see more legal documents & analysis related to the Keystone XL pipeline and other North American oil pipelines at Oil Transport Tracker (Shortcut link: http://j.mp/OilTransportTracker).

 

 

*Full disclosure: Before my academic career, I worked in private practice and represented TransCanada in two of these earlier cases. 

Legal Debate on EPA’s Power Plan Takes Center Stage

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Screen Shot 2015-03-30 at 4.26.49 PMFor the past two weeks, the U.S. Environmental Protection Agency’s “Clean Power Plan” for power sector carbon emissions has been the center of an ongoing debate between some of the nation’s foremost constitutional and environmental law scholars.

As described in previous posts, the Clean Power Plan aims to place caps on greenhouse gas emissions (or emissions intensity) from each of the 50 states in the U.S. To comply, states will have to use their coal plants less, increase their use of natural gas and renewable fuels, and improve their energy efficiency. A state can focus its effort more or less on each of these methods, so long as it meets its target.

In two earlier posts, I explained the Clean Power Plan, noting that it would attract legal arguments that the Environmental Protection Agency (EPA) has overstepped its legal authority, and explained how the Supreme Court’s decision in Utility Air Regulatory Group v. EPA would bolster these arguments.

Those arguments are now in full swing. Here is the back-and-forth between Professor Larry Tribe, one of the nation’s most prominent constitutional law scholars, and Professors Jody Freeman and Richard Lazarus, two of the nation’s most prominent environmental law professors. These arguments are framed as a disagreement over the constitutionality of the Clean Power Plan, but many of the arguments are really about whether EPA has the statutory authority that it claimed in the Plan.

On March 17, Harvard Law School Prof. Larry Tribe testified to the House Committee on Energy and Commerce’s Subcommittee on Energy and Power arguing that the Clean Power Plan is unconstitutional.

On March 18, Harvard Law School professors Jody Freeman and Richard Lazarus strongly disagreed, responding in an op-ed published at Harvard Law Today, titled “Is the President’s Climate Plan Unconstitutional?”

This started a significant back and forth that included:

You may also want to check out:

  • The testimony of Prof. Richard Revesz, another of the country’s foremost experts on environmental law and federalism, who testified at the same March 17 hearing in favor of the Clean Power Plan.

These arguments are just the opening skirmish in a running legal battle. If the Obama administration (and the administration that follows it) stays the course on the Clean Power Plan, the arguments will finally be resolved in court.

 

Smooth It Out Now (or We Need Analog Climate Policy Analysis)

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In my first year after university, I had five roommates who were extremely smart basketball fans.  I’m your typical Minnesotan hockey player, so I had a lot to learn about basketball.  I often asked my roommates questions like: Is Scott Pollard a good center? Are the Hornets hard to beat?  Does zone defense work?  They made fun of me, noting that all my questions reduced to: is X good or bad?
At the time, I thought: “Fine-grained knowledge can come later, right now I need the basics, and good versus bad is important info.”  But over the years I’ve grown to appreciate how digital thinking–i.e. 0 versus 1, on versus off, good versus bad–can lead conversations astray.
Climate policy thinking is in need of more analog thinking.  That is, we need to be more careful to note the continuous gradations between total climate policy failure and climate policy success.  Analog climate policy thinking would give us a 1) clearer picture of current climate policies and likely future policies, and 2) let us design more effective climate regulations going forward.  Let me give two examples.
1. Current and Future Climate Policies: A Continuous Spectrum
 
When you talk climate policy you’re usually talking about unilateral national, state, provincial, or local regulations, because there’s no enforceable international greenhouse gas treaty.  At the same time, greenhouse gas emissions are global, so one of the primary goals of these domestic regulations is to encourage other countries to adopt stricter climate regulations.
When I present research on domestic climate regulations around the world, I almost always get a very digital question: “How can you encourage other countries to act?  Good countries will help out voluntarily, and you’ll never convince the bad actors.”  When I present to an audience of U.S. generalists, they generally mention China as an example of a bad actor, and when I present outside the U.S. (or to U.S. environmentalists) they usually mention the U.S. as a bad actor.  Almost everyone mentions Europe as a good actor.
This question makes clear that the good actor/bad actor frame is actively confusing the questioner.   Even if we could say that some countries are doing better than others, every country is constantly striking a balance between climate and economic goals, and each could regulate incrementally more or less.  Europe has a cap & trade system, it’s true; but it doesn’t cover all emissions, and its permit price to emit a ton of carbon has fallen below 5 EUR.  (That’s less than half Alberta’s 15 CAD carbon price, although Alberta’s regulation applies to far fewer emissions.)  And on the flip side, China has adopted numerous policies that will slow its rising greenhouse gas emissions, including massive deployment of renewable energy.  (Here’s a useful Congressional Research Service summary from 2011: http://bit.ly/1dIi1Je).  Even Saudi Arabia is planning a gigantic expansion of clean energy. (http://bit.ly/1dIi1Je).  Digital thinking is giving academics an inaccurate view of the world.
2. Climate Policy Mechanisms: Encouraging More Action in a Continuous Climate Policy World
 
Digital on/off thinking has infected our climate policy design as well.  Again, one of the most important goals for unilateral climate regulations is encouraging action elsewhere.  And one of the most promising ways to do that is with matching commitments: adopting climate regulations that automatically grow more strict when other countries strengthen their own climate regulations.  As I explain in this paper, http://bit.ly/uniclimreg (see pp. 15-21), these matching policies would encourage other countries to act by rewarding them with increased environmental benefits.

But the limited attempts at using matching commitments so far have been fatally flawed by on/off thinking.  For instance, the EU has said it will increase its greenhouse gas reductions from 20% to 30% if developed nations adopt “comparable” reductions through a “global agreement.”  And Australia has a similar scheme.  But these matching commitments provide no incentive to the actual policymakers around the world who are struggling with decisions to marginally tighten or loosen greenhouse gas regulation almost every day, because no individual regulator can secure a global agreement.  These on/off commitments should be replaced with matching commitments that target climate regulations that foreign regulators can actually deliver, and smoothly ratchet up in response to stricter commitments.  Perhaps the EU could commit to match a specific percentage of reductions in the US, Canada, or Australia.  And these commitments could even target regulators in important states or provinces like California and Alberta that are calibrating the strictness of their climate policies.

Analog thinking also reveals the problems with the current global treaty paradigm. No country can credibly commit to years of “good” climate regulation in a single treaty.  Climate policy is too complex and covers too many politically-charged areas.  Often even countries that have “model” policies, like Australia’s ill-fated carbon tax, have found loopholes with major climate impacts, such as coal exports.  (See also, British Columbia’s tax and its proposed LNG exports.)  And even on their own terms emissions pledges will always be fragile in a democracy, as has been repeatedly shown in Australia, Canada, and Japan.
This same problem will likely hamper more modest plans for climate clubs.  I share the general interest in the recent climate pact between California, Oregon, Washington, and British Columbia.  But remember the Western Climate Initiative: it was formed by Arizona, California, New Mexico, Oregon, and Washington in 2007 . . . and then abandoned by Arizona, New Mexico, Oregon, and Washington in 2011.  Fool me twice, shame on me:  analog climate thinking says we cannot be surprised when other states and countries do not live up to their climate commitments.  We need to find ways to continuously encourage them to adopt somewhat stricter regulation, whether or not they are living up to the terms of these commitments.  We need to focus more on analog matching commitments and less on promises to be good.
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And yes, I’m still working on my analog basketball analysis.  But my former roommates still make fun of me.  After watching this recent clip (starting at 1:30), one told me I was simply ahead of my time: http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/the-daily-show-with-jon-stewart—october-29-2013/#clip1033595. (U.S. version: http://huff.to/18Tm0xu.)

Obama Climate Speech Sets New Standard for Keystone Pipeline

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On June 25, President Obama unveiled a Climate Action Plan in a speech at Georgetown University (see here). This plan highlighted upcoming U.S. greenhouse gas standards for fossil-fuel power plants, directing the U.S. Environmental Protection Agency to issue new proposals for both new and existing power plants.  But the speech is making the most news for an unexpected reference to the Keystone XL pipeline, which is designed to transport oil sands bitumen from Hardisty, Alberta to Steele City, Nebraska.

The surprising reference to Keystone XL came in the middle of the President’s speech when he said:

I do want to be clear:  Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest.  And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution (Remarks by the President on Climate Change).

Under Executive Order 13337 the President approves a cross-border pipeline when it is in the “national interest.” So President Obama’s words seemed to prescribe a new standard for the pipeline:  even if the pipeline would provide benefits in terms of oil prices or energy security, it would only be approved if it would not “significantly exacerbate” greenhouse gas emissions.

This new standard places significant pressure on the U.S. State Department, which is responsible for assessing the environmental impact of the project under the National Environmental Policy Act, 42 USC 4321 et seq.  In March 2013, the State Department issued a draft environmental impact statement for the pipeline, which addressed the concern that approving the pipeline would cause increased development of the Canadian oil sands, which would, in turn, lead to more greenhouse gas emissions.  The State Department rejected this analysis, concluding that the pipeline would cause “no substantive change in global GHG emissions.”  (See State Department, Draft Supplemental Environmental Impact Statement 4.15-107).  This is because rejecting the pipeline would merely “force more crude oil to be transported via other modes of transportation, such as rail.”  (See State Department, Draft Supplemental Environmental Impact Statement 1.4-1).  Thus, in the State Department’s view, the oil sands would be developed with or without the pipeline.

Pipeline opponents have attacked this conclusion, arguing that other transportation options would be more expensive, so stopping the pipeline would slow oil sands production.  For example, the National Resources Defense Council along with other environmental groups formally asked the State Department to submit a new draft environmental impact statement because of subsequent analysis that, they claimed, showed “there are high cost and technical and logistical barriers to rail transport.”  (See Natural Resource Defense Council et al., Request for Supplemental Environmental Impact Statement for the TransCanada Keystone XL Pipeline Based on Significant New Information (June 24, 2013)). The U.S. Environmental Protection Agency itself laid the groundwork for this critique, telling the State Department that it “recommend[s] that the Final EIS provide a more careful review of the … rail transport options,” and suggesting that “recognizing the potential for much higher per barrel rail shipment costs” could affect “the level and pace of oil sands crude production.”  (See U.S. EPA Keystone XL Project Comment Letter (Apr. 22, 2013)).

Ultimately, President Obama’s words suggest that the Keystone XL pipeline will only be approved if the State Department largely stands by its analysis that the pipeline will not significantly increase global emissions.  This raises the stakes for the State Department’s final environmental impact statement, which does not have a firm due date, but will be released after the State Department reviews the hundreds of thousands of comments that were submitted on its draft impact statement.  (See Update, New Keystone XL Pipeline Application).

Cross-posted at ABlawg, the University of Calgary’s Law Blog: http://bit.ly/18h6pdG