Climate change regulation and EPA disincentives.

• Author: Latin, Howard A.
• Position: III. Eight Laws of Administrative Behavior and Climate Change B. Agencies Avoid Making Regulatory Decisions That Would Create Severe Social or Economic Dislocation through IV. Conclusion, with footnotes, p. 45-73

2. Agencies Avoid Making Regulatory Decisions That Would Create Severe Social or Economic Dislocation

   EPA has a history of attempting to avoid the imposition of strict regulations that would lead to substantial economic and employment losses in especially vulnerable regions. (135) EPA has also attempted to avoid implementing regulatory programs that would create a competitive advantage for some states or areas at the expense of others. (136) For twenty years after the 1970 adoption of the CAA, EPA refused to regulate Midwest air pollution discharges that were carried eastward by prevailing winds and eventually came down as acid rain harming ecosystems of eastern states and Canadian provinces. (137) EPA did not want to resolve the controversy caused by interstate air pollution affecting more than a dozen states, and the Agency did not want to impose stricter pollution-control standards on rust belt states that arguably could not afford to implement them. (138) Instead, EPA waited two decades for Congress to make the crucial decisions. (139) The acid rain conflict was not resolved through EPA administrative actions, but only in the thousand-page Clean Air Act Amendments of 1990. (140) EPA's attitude was: Let Congress Do It!

   EPA faces the same dilemma in attempting to achieve progress on climate change mitigation while trying to avoid substantial economic and social dislocation. Replacing fossil-fuel combustion technologies with clean GHG-free or very-low-GHG alternative technologies and processes undoubtedly will be expensive and will lead to widespread business losses and job losses in the fossil fuel energy industries. (141) From a national perspective, these losses will probably be more than counterbalanced by innovative energy technologies and emerging jobs that benefit the people in different locations. (142) The employment losses would likely be offset by new clean energy jobs and improved public health and welfare. (143) However, national benefits cannot always overcome regional losses in states dependent on fossil fuel energy production.

   EPA does not want to be the fall guy blamed for business and employment losses in the fossil fuel states that will inevitably occur. Although the total costs of present and future climate change damages will be vastly higher than effective mitigation costs, (144) EPA does not want to take controversial actions that will cause substantial business and labor dislocations. EPA's attitude is still: Let Congress Do It! And yet, in recent years Congress has been almost completely paralyzed by constant contention and partisan fervor. (145)

   This second law of administrative behavior may help explain why EPA has been so determined to follow the CAA by regulating existing GHG pollution sources in a less stringent, more decentralized manner than its regulation of more efficient new GHG sources. When large fossil fuel-burning power plants and other major GHG-discharging facilities exist in a particular area, that normally means a significant proportion of local employment and consumer sales will be derived from the economic effects of large-scale GHG polluters and their employees. (146) EPA would rather find ways to cushion the blow than to be perceived as killing the local economy. If Congress is forced to make the hard choices, as it ultimately had to do in the context of acid rain regulation, EPA officials will not be attacked (to the same extent) as callous job killers.

   Many of the ideological criticisms articulated by prominent conservative politicians are focused on the allegedly severe economic harm that would result from stronger climate change mitigation programs. For example, House Speaker John Boehner described proposed climate-based cap-and-trade systems as "job killing regulation" and a "full-blown fleecing of the middle class." (147) Governor Chris Christie withdrew New Jersey from the Regional Greenhouse Gas Initiative, a partnership of eastern states operating a cap-and-trade program to reduce GHG emissions from their power plants, on the grounds that "[the regional program] does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernible or measurable impact upon our environment." (148) And Senator Marco Rubio claimed he "do[es] not believe that the laws that [the Obama Administration] propose[s] we pass will do anything about [climate change], except it will destroy our economy." (149)

   Notwithstanding the highly dubious nature of these assertions, the EPA has bent over backwards to try to refute them. The Agency has published or cited numerous scientific and economic studies concluding that the aggregate costs of effective climate change mitigation would be far less than the expected costs of increasing climate change damages. (150) The EPA's leaders have organized many meetings and workshops to discuss the impacts of the EPA emissions-reduction programs with business representatives and state or local officials. (151) The EPA staff has sponsored a number of public hearings supporting each specific climate change regulation by providing information about the benefits and feasibility of the Agency's programs and to solicit relevant comments from the participants. (152) Indeed, after her appointment as Administrator, McCarthy assembled a new staff characterized by their "political chops," featuring "a seasoned team of political operatives, Capitol Hill veterans and policy experts to lead the effort from within her office." (153)

   Unfortunately, these EPA public relations efforts to persuade people that climate change mitigation efforts are both desirable and affordable have not been able to overcome the intense hostility of many conservative politicians, businesses, employees in fossil fuel industries, and communities dependent on fossil fuel production for a major part of their revenues and living standards. I believe EPA has recognized that the relentless opposition to their programs from affected fossil fuel businesses and manufacturing firms has been more successful than the Agency's appeals for broader public support.

   Regrettably, but not surprisingly, this recognition has led EPA to try to minimize the economic and social dislocation impacts of its programs by weakening the GHG emissions-reduction goals that were initially regarded as central to climate change policies. In other words, EPA has sacrificed its commitment to strong mitigation actions in order to reduce the Agency's apparent blame for the economic and social dislocation likely to result in various regions dependent on fossil fuel energy production.

   With regard to the EPA standards for new fossil fuel-burning power plants, the Agency's documentation states that "the proposed EGU New Source GHG Standards will result in negligible CO, emission changes, energy impacts, benefits or costs for new units constructed by 2020. Likewise, the Agency does not anticipate any notable impacts on the price of electricity or energy supplies." (154) In another passage, EPA noted that "the proposed EGU New Source GHG Standards are not expected to change GHG emissions for newly constructed EGUs, and are anticipated to yield no monetized benefits and impose negligible costs, economic impacts, or energy impacts on the electricity sector or society." (155) EPA acknowledged that the proposed NSPS "will result in negligible C[O.sub.2] emission changes, quantified benefits, and costs by 2022." (156)

   These EPA statements were quoted in Part I as partial proof of the inadequacy of the Agency's efforts to curtail urgent climate change hazards. (157) Yet, it should be easier for readers to understand these passages now in light of the EPA's desire to avoid imposing economic dislocation costs in states dependent on fossil fuels. EPA also wants to minimize the constant criticisms asserting that current mitigation programs--as feeble as they now are--will significantly damage the U.S. economy and create competitive disadvantages with many nations that refuse to implement any substantial mitigation initiatives. EPA's choices to protect itself from criticism and to reduce serious dislocation arising from their proposed mitigation programs have induced the Agency to weaken their GHG emissions-reduction efforts to the point where they will hardly have any beneficial impacts at all.

   With regard to the regulation of existing fossil fuel-fired power plants, the proposed rule calls for a 30% reduction in GHG pollution from fossil fuel-fired power plants by 2030. (158) According to EPA, these energy facilities emit about 32% of the annual GHGs discharged by U.S. sources into the atmosphere, (159) which makes these power plants the largest dischargers of GHGs in America. (160) This EPA emissions-reduction target for existing power plants may seem more ambitious than it is in reality. The proposed 30% GHG reduction by 2030 will apply only to the 32% share of GHG discharges from existing EGUs. If we multiply the 30% emissions-reduction target by the 32% of GHGs discharged from the fossil fuel power plants, the aggregate result is that EPA's proposed standard will only cut annual GHG emissions by a little less than 10% (30% X 32% = 9.6%). Under EPA's proposed rule, the remaining 90% of GHG emissions will be allowed to reach the atmosphere, where they will combine with the high concentration of GHGs already in the air. This limited, if not miniscule, 2030 emissions-reduction target is far from an impressive regulatory achievement, and the huge volume of unregulated GHG emissions in the years before 2030 will be even worse.

   In light of EPA's negligible GHG emissions-reduction plan for existing power plants, it appears that the Agency is not attempting to impose significantly more stringent pollution-control regulations to reduce climate change endangerment at least partly because EPA does not want to be blamed for the resulting economic and social dislocation losses in politically influential fossil...