June 30, 2022
June 2022 at Policy Integrity
- How Much Does the West Virginia v. EPA Ruling Limit Climate Policy?
- It’s About Time Agencies Improve Their Cost-Benefit Analyses
- Climate Risk Disclosures Coming to a Company Near You
- Measuring the Benefits of Regulating Power Plant Effluents
- Costs, Confusion, and Climate Change
- More From This Month
The Supreme Court’s recent decision in West Virginia v. EPA is a significant setback for environmental protection and public health safeguards, but the Environmental Protection Agency (EPA) retains the authority—and legal obligation—to regulate greenhouse gas emissions, including from power plants, Richard Revesz told AP News and CNN. EPA can still address climate change with regulations such as heat rate improvements, co-firing, and carbon capture, Jack Lienke told NBC. That said, the decision could still be a “canary in the coal mine” for how this court will interpret agencies’ regulatory authority, noted Dena Adler to the New Scientist. "It's inviting courts to apply particular scrutiny and skepticism" when reviewing regulations, Max Sarinsky said to Reuters. The decision invoked the “major questions” doctrine, which requires explicit congressional authorization before regulators can take consequential actions on issues of vast societal importance. In an amicus brief in the case, cited in Justice Kagan’s dissent, Revesz, Lienke, Sarinsky, and Rachel Rothschild explained that petitioners’ application of the doctrine in this case would expand it beyond either recognition or workability.
A luxury vacation might seem financially justifiable if examined only over the short term. A narrow time frame, however, would obscure later impacts such as fees for overdrafting your bank account, penalties for falling behind on your mortgage payments, and the otherwise brutal return to ordinary life. The choice of time frame has a critical impact on decisionmaking. So when a decision’s costs and benefits number in the billions of dollars—as is often the case when federal agencies issue rules—the time frame of analysis deserves explicit and considered attention. That’s what Lance Bowman argues in a recent report, Enhancing Consideration of Time Frames in Cost-Benefit Analysis. Strikingly, federal agencies regularly fail to justify their choice of analytical time frame when conducting a cost-benefit analysis of a proposed policy. The report thus analyzes the potential consequences—most importantly, an increased risk of insufficiently stringent regulation—and offers five recommendations to ensure that agencies properly consider their choice of analytical time frame.
The Securities and Exchange Commission (SEC) proposed a rule to enhance and standardize corporations’ climate-related risk disclosures. The rule would require publicly-traded companies to disclose important information about the extent to which climate change is already affecting their financial performance, their approach to climate-related risk management, their climate-relevant governance structures, and their greenhouse gas emissions. This information would offer investors a more complete picture of a company’s performance and allow those investors to align their investment portfolios with their risk preferences.
We responded with three sets of comments, submitted jointly with the Environmental Defense Fund and Professor Madison Condon of Boston University School of Law. The first set commends the Commission’s economic analysis and identifies additional scholarship and data to bolster it. The second finds that the Commission adequately justified using a prescriptive approach and incorporating certain third-party standards and offers avenues for the SEC to further support these choices. Finally, the third set of comments examines decades of regulatory precedent and concludes that the proposed rule is consistent with the Commission’s historical understanding of its disclosure authority.
EPA is considering regulations that would clean up the wastewater discharges from power plants, which were rolled back under the Trump administration. Our new report with two expert economists, David Keiser and Catherine Kling, recommends ways that EPA can improve upon its Obama-era assessment of the benefits from regulating these discharges. Building on an earlier report by co-authors Bethany Davis Noll and Rachel Rothschild, the report reviews the economic framework, literature, and analyses performed to support both the original Obama-era rule and Trump-era revisions. Keiser and Kling bring significant experience in valuing the benefits of water quality regulations, and the report should inform EPA’s future analyses of the considerable health and environmental benefits from reducing power plant water pollution.
The Yale Journal on Regulation recently published an issue focused on climate change featuring three articles by Policy Integrity staff.
An article by Richard Revesz and Max Sarinsky evaluates the various legal, economic, and institutional controversies surrounding the social cost of greenhouse gases and explains why this climate damage metric should play a critical role in guiding climate policymaking and decision-making across the federal government.
Justin Gundlach and Michael A. Livermore’s article compares the social cost of carbon (SCC) and marginal abatement cost (MAC) metrics used in climate policy, focusing on how a MAC-based threshold could sensibly be used in climate policy and explaining why it is not a substitute for the SCC.
An article by Peter Howard & Jason A. Schwartz argues for updating the discount rates agencies use to compare present and future costs and benefits in their decisions. The choice of discount rates greatly affects which regulations are cost-benefit justified, particularly for regulations with long-term benefits, as with climate regulation. The article details the compelling economic evidence and legal principles that support revising federal guidance on discounting.
We filed comments to:
- EPA on its proposal to reduce interstate transport of ozone pollution using the Clean Air Act's Good Neighbor Provision.
- DOE, together with partner groups, on its proposed rule to strengthen energy conservation standards for room air conditioners and pool heaters.
Max Sarinsky wrote a blog post explaining why the arguments of plaintiff-amici in the ongoing litigation over the social cost of greenhouse gases are flawed.