The Power and the Money

Shocking Supreme Court stay on the Clean Power Plan

 I have no idea why I did not finish and publish the previous post. I am a bit annoyed at myself for failing to finish the post because today, in a partisan vote, the Supreme Court delayed implementation of the Clean Power Plan. (On the other hand, if you were a student in the seminar I taught at Hoover that summer, then you already know all about this!)

We do not know why the Republican justices decided to delay implementation. It could be worried about one of the first two arguments that I mentioned in the previous post. Or it could be that bit of bad drafting that I averred to but did not discuss. 

In 1990, Congress passed two contradictory versions of an amendment to Section 111(d) of the Clean Air Act. The House version said that the EPA could not regulate power plant emissions under this section if it had already regulated another pollutant from these plants. The Senate version allowed the EPA to issue rules on new pollutants even from plants that were already regulated. For those of you interested in the exact language:

• House version: rulemaking will proceed for “any air pollutant … not … emitted from a source category which is regulated under Section 112.” E.g., no future regulation of new pollutants from sources that are already regulated.
• Senate version: rulemaking will proceed for “any air pollutant . . . not included on a list published under . . . 112(b).” E.g., only certain specific pollutants are excluded from future regulation.

Congress, however, screwed up. Instead of choosing one version or the other, the conference committee somehow managed to insert both into the final bill. The “Section 112 exclusion,” therefore, is a contradictory mess. If you want to kill the Clean Power Plan, then you want to argue that the House language applies.

The requests for a stay can be found here. Most of them seem to hinge upon some version of the “beyond the fence” argument and the confused language of the Section 112 exclusion. 

Shades of King v. Burwell! For those of you unfamiliar with Supreme Court cases, King v. Burwell was an attempt to kill Obamacare that hinged upon a single badly-drafted line. 

The D.C. circuit rejected the applications for a stay of the plan, but now the Supreme Court has stepped in. We will have to see, but I feel pessimistic about the Clean Power Plan’s chances. Although the legal arguments presented in these last two posts are not particularly powerful, they are also far from specious.

Larry Tribe, on the other hand, has presented a specious case against the Plan based on the Fifth and Tenth Amendment. If you want to see an avowed liberal tie himself in weird knots in order to justify a conservative outcome because he is being paid to do so, go click the link. 

Unpublished post from August 14, 2015: Challenges to the Clean Power Plan

 I’m in Palo Alto, enjoying the lack of humidity and thinking about the Clean Power Plan. What else would you think about in California?

What might kill the plan in the courts? Well, I have been talking with some libertarian-leaning lawyers, and here is what they tell me. In order from least plausible to most:

1. The “wrong target” argument:  The Clean Power Plan (CPP) does not regulate power plant operators directly. Rather, it enjoins state governments to limit their overall CO2 emissions from all power plants. That is new; the regulations should be targeting the emitters directly. A challenge on these grounds seems unlikely to succeed; at worst it would force the federal government to write the state plans, which even now it will do if a state refuses to come up with a plan.
2. The “beyond the fence” argument: This is very similar to the above argument.  By imposing state-level limits, the CPP is acting “beyond the fenceline” of the power plants that it is regulating. After all, some power plants might not be affected at all, should a state decide to join one of the existing cap-and-trade systems. This argument is a little stronger, but does not seem to have much basis in either the Clean Air Act or in constitutional law.  
3. The fact that the law, like the Affordable Care Act, is terribly written and contains its own contradictions. 

Let me briefly unpack that last one. 

President Ted Cruz and the Clean Power Plan

 Actually, when I first presented this analysis out in Palo Alto, it was President Marco Rubio. And I still have a not-entirely-rational soft spot for my man from Miami. But right now the senator from Texas is looking slightly more likely. 

Not that it matters. First, Marco Rubio is a Republican, and one of the many sad things about the current Republican party is that they are all identical on the subject of carbon emissions. As in, they don’t care. Bush, Cruz, Kasich, Rubio, Trump no difference. 

Second, American regulatory law is set up to make it essentially impossible for an incoming president to repeal regulation short of changing the underlying  legislation. Agencies issue regulations because Congress realized that laws could not be written to cover every contingency as if they were simple algorithms. The big legislation governing the process is the Administrative Procedures Act of 1946, which deliberately slows down the rulemaking process to allow for comment periods ... which is when lobbyists work their magic. Sadly, the magic does not involve hanging out in hotel lobbies with expensive cigars. Rather, it involves “expert” testimony designed to influence the final rule. 

Presidents can order agencies to create rules or repeal them, but the latter is almost impossible given the administrative process. On the other hand, they have widespread authority to grant exemptions and slow walk implementation. So ...

President Rubio Cruz could:

1. Slow walk approval of state plans, or allow plans based on dubious assumptions to be approved;
2. Grant extensions to states with high concentrations of coal plants (KY and WV);
3. Allow Congress to overturn the existing plan via the Congressional Review Act of 1996. If the GOP gets a 60-seat majority of the Senate in ‘16, this trumps all else.

In other words, absent a filibuster-proof majority (or a GOP abolition of the institution) the options are limited. But they will be even more limited if the Obama adminstration manages to complete before January 2017 the rule governing what will happen should a state reject the Clean Power Plan. Right now, the plan is to default those states to a cap-and-trade system, the kind of thing that President McCain would have initiated. 

That would worsen the Rubio Cruz dilemma.

Consider the marginal firm under a cap-and-trade system where permits are allocated rather than auctioned. Before a cap-and-trade system, that firm was making $X per ton of CO2. Under cap-and-trade, the cost of carbon abatement = the price of a permit, call it $Y.

The firm will either spend $Y, reduce emissions and earn $Y from selling its permit … or it will just use its permit. It still makes $X.

That is for the marginal firm. Some firms will lose, because for those firms the cost per ton of abatement will be greater than $Y. They will need to pay the additional costs or buy more permits. But for a lot of firms, the cost of abatement will be less than $Y. And those firms will be better off under cap-and-trade than they were before: they will pay the cost of abatement and free up permits for sale. One the system is in place, they will mobilize to keep it in place. And that will wreck the politics of global warming denialism.

I suspect that a President Cruz might barrel ahead regardless. The good news is that Cruz will hurt his own re-election chances. Rubio or Trump is more likely to acquiesce to the political reality. 

The rub is that much depends on the ability of the Obama administration to get the rules out before January (more realistically, November) and that is by no means certain. 

In short:

1. A GOP president will likely do nothing if a cap-and-trade system comes in, unless he or she does not care about being re-elected in 2020.
2. If there is no cap-and-trade system, he or she will be able to do a lot of damage around the margins, but not destroy the reforms.
3. Unless we get 60 GOP senators, in which case all bets are off.

Is this helpful? I will change my blogging voice to suit; clarity is important.

A depressing Thursday thought about global warming

 The Clean Power Plan proposed by the President is a very important step forward for climate change. According to the Energy Information Administration, the American power sector will emit almost half a gigaton less carbon into the atmosphere by 2024 than otherwise would have been the case. That is almost a quarter of all power-sector emissions!

Globally, the picture looks like this through 2021:

To be fair, the graph misses a full third of the reduction, which will happen in 2022-24. I guess that makes it better?

The problem is that electricity generation produces only 40% of the carbon dioxide emitted in the United States. 24% × 40% = 9.6%, which does not look as impressive. (And only 7.2% by 2021.) Add to that the fact that the United States is not the only country on the planet and things look even less impressive.

A start is better than nothing. But it is only a start.