In the News

An agency is typically lumped into one of two categories: executive (subject to presidential control) and independent (not subject to presidential control). Kirti Datla and Richard L. Revesz discuss how the “independent agency” label does little more than create a false dichotomy. There are not just two types of agencies. Different permutations of design choices result in many different kinds of agencies. And so, in reality, agencies fall along a continuum ranging from most insulated to least insulated from presidential control.

The Wall Street Journal editorial board is continuing to pretend that the EPA is acting against the law by regulating coal pollution, despite repeated Supreme Court rulings that conclude otherwise. On April 29, the Supreme Court ruled in a 6-2 decision to re-instate the EPA’s Cross-State Air Pollution Rule, which regulates air pollution that crosses state lines and “significantly” prevents neighboring states from achieving national air quality standards. The rule, which is part of the Clean Air Act by way of the “Good Neighbor Provision,” was delayed in 2011 for further review after being challenged by a major coal-fired operator — to the delight of the Wall Street Journal, which lauded the decision to delay for showing “how out of bounds the cross-state regulation is.” The board decided that the Supreme Court “should overturn [the Cross-State pollution rule] for violating the federalist intentions of Congress,” adding it would “to show this increasingly rogue agency that it can’t rewrite the law as it pleases.” Now that the rule has been reinstated (counter to the wishes of the Journal) in EPA v. EME Homer City Generation, the paper is scrambling to find wrongdoing. The board published an editorial titled “The EPA Unchained” recycling its own faulty arguments that concluded with the fear that “the Obama EPA will feel even less bound by legal restraints, if that’s possible.” Its claims, however, are extremely misguided. … The WSJ summarily dismisses the court’s defense of the EPA’s use of cost-benefit analysis when considering the best regulatory action, calling it “ironi©” because “the EPA typically dismisses cost-benefit analysis unless a statute explicitly calls for it.” However, according to an amicus brief from NYU’s Institute for Policy Integrity, the EPA has been using cost-benefit analyses to guide inter-state air pollution regulations for decades. The “Good Neighbor Provision,” for instance, does not explicitly call for cost-benefit analysis. The Court deferred to the EPA as the most appropriate body to determine whether or not to use cost-benefit analysis to regulate pollutants that are clearly covered by the Clean Air Act.

Opponents of the Environmental Protection Agency’s proposed carbon dioxide standards for newly built power plants are looking to federal statutes beyond just the Clean Air Act to base legal cases. Challenges are likely to focus on whether the agency violated the Energy Policy Act of 2005 when it proposed a standard for new coal-fired power plants that would necessitate the use of carbon capture systems. Industries that oppose the performance standards already have raised the objection, and a House committee launched an investigation into whether the proposed rule violates the law. “My guess is that the industry is going to throw every possible legal argument into the mix on this,” Michael Livermore, an associate professor of law at the University of Virginia School of Law and a senior advisor to the Institute for Policy Integrity, told Bloomberg BNA. “It’s kind of a no holds barred, every argument, don’t pull any punch kind of approach.”

EPA scored a victory when the Supreme Court reinstated its cross-state emissions rule for power plants, but changing market and compliance conditions may force the agency to rethink how the rule is implemented. … The EPA’s Clean Air Interstate Rule, a predecessor to the cross-state rule that the D.C. Circuit also struck down, has remained in effect. Now the EPA needs to address how it will transition between the two programs, state air pollution regulators and attorneys said. “Having this issue in legal limbo for so long, EPA should move as quickly as they can to implement,” Richard Revesz, director of the Institute for Policy Integrity, told Bloomberg BNA April 29

Economists and scientists may have seriously underestimated the “social cost” of carbon emissions to future generations, according to a warning in the journal Nature. Social cost is a calculation in U.S. dollars of the future damage that might be done by the emission of one metric ton of carbon dioxide as greenhouse gas levels soar and climates change, sea levels rise and temperature records are broken in future decades. How much would society save if it didn’t emit that ton of carbon dioxide? One recent federal estimate is $37. Such a measure helps civil servants, businessmen and ministers to calculate the impact of steps that might be taken. On the other hand, says Richard Revesz of New York University School of Law and a research team consisting of U.S. and Swedish colleagues, assumptions of cost per ton – and these range from $12 to $64 according to various calculations – are based on models that need to be improved and extended. Our descendants will pay a higher price for greenhouse gas build-up as real costs are updated over time.

As the United States struggles with a high unemployment rate in the wake of the Great Recession, it is worth examining carefully the relationship between jobs and regulation, as well as possible policy responses to it. A recent panel discussion held at the Wharton School at the University of Pennsylvania sought to do just that. The panel, organized around the recent publication of the book “Does Regulation Kill Jobs?,” showed how difficult it is to find any evidence to support claims that regulations systematically kill jobs. Political rhetoric notwithstanding, the book’s introductory chapter states that “the existing empirical research suggests that regulation does relatively little to reduce or increase overall jobs in the United States.” Richard L. Revesz, Lawrence King Professor of Law and Dean Emeritus at New York University Law School, recognized the challenges currently associated with estimating the employment effects of regulation. But he noted that economists and policy analysts have successfully overcome similar methodological challenges in estimating risks and the costs and benefits of regulation more generally. With a concerted effort at additional research and analysis, he argued, agencies could do a better job of developing reliable estimates of job impacts, which would be better than allowing these effects to continue to be exaggerated in political discourse.

Rooftop solar electricity generation may seem like something that everyone can agree on. It helps homeowners save money on their electricity bills. It can help support the rest of the electrical grid during times of high usage or outages. It can help utilities meet their renewable energy mandates. And, if it replaces dirty fossil fuel power, it will reduce harmful air pollution, including carbon pollution that threatens to warm our climate and destroy our planet. However, utilities are concerned that increased development of rooftop solar generation will threaten their ability to maintain vital infrastructure, equitable rates for all ratepayers, and their own financial viability.

Future generations will have to pay more for today’s carbon emissions than what governments across the world currently understand. The climate models used by policymakers around the world to estimate the economic and social costs of CO2 emissions have to be improved according to Thomas Sterner, professor of Environmental Economics at the School of Business, Economics and Law, University of Gothenburg, and six other scientists in the prestigious journal Nature.

The U.S. government makes lots of regulatory decisions that have important implications for the climate. Any benefit-cost analysis of these decisions ought to include their climate impact. If a particular decision will lead to more greenhouse gas emissions — building the Keystone XL pipeline, for example — that figure ought to go on the cost side of the ledger. If the decision will lead to fewer greenhouse gas emissions — such as carbon pollution standards for power plants — that figure adds to the benefits side. Such benefit-cost analyses require a dollar figure for the social cost of carbon pollution. The best we currently have is around $40 for each ton of carbon dioxide emitted, calculated by averaging results from three of the most prominent and well-established climate-economic models. Uncertainties around the $40 value notwithstanding, putting in $0 is not an option. That, sadly, is what some with clear stakes in the outcome are arguing, however weak the ground they stand on. In fact, $40 is very likely on the low end of the true cost of CO2, as a recent commentary in Nature points out.

The country should shift from “command and control” mechanisms like the renewable fuel standard to a cap-and-trade system to reduce greenhouse gas emissions from the transportation sector, New York University’s policy think tank said yesterday. In a report, the Institute for Policy Integrity said that a cap-and-trade system would represent the lowest-possible cost for emissions reductions and guarantee continued reductions. EPA could put such a system in place for the transportation sector without Congress’ help, the NYU analysis found. “EPA must look to new regulatory tools to drive further cuts in transportation emissions,” NYU legal experts Jack Lienke and Jason Schwartz wrote in the analysis.