How to Deal with Hornets: The Administrative Procedure Act and the Social Cost of Carbon

• Author: Jay G. Stirling
• Position: J.D. Candidate, University of Iowa College of Law, 2015; B.A., Brigham Young University, 2006
• Pages: 853-880

853

How to Deal with Hornets:

The Administrative Procedure Act and the

Social Cost of Carbon

Jay G. Stirling



ABSTRACT: This Note explores the extent to which the 2013 revision to the

social cost of carbon (“SCC”)—a figure used in the cost-benefit analysis of

federal rules involving carbon dioxide emissions—conforms to the

Administrative Procedure Act’s (“APA”) notice and comment process. This

Note analyzes two precedents the 2013 SCC revision process set: (1) an agency

will not re-notice a proposed rule when it substitutes an old SCC with a revised

SCC in the final rule; and (2) the interagency working group that calculates

the SCC will not submit revised SCCs for independent notice and comment.

This Note argues that these precedents, although likely permitted under

present judicial interpretations of the APA, contribute to an uncertain

regulatory environment for industries subject to carbon emissions regulation.

This Note recommends that the Office of Information and Regulatory Affairs,

a member of the interagency working group as well as the hub of executive

oversight of the rulemaking process, should communicate more clearly and

transparently about the SCC revision process, using the Federal Reserve

System’s “forward guidance” communications strategy as a model.

 J.D. Candidate, University of Iowa College of Law, 2015; B.A., Brigham Young University,

2006. Thank you to my wife and fellow law student, Talia, for h er love, support, and perspective; to

the staff of the U.S. House of Representatives Committee on Oversight & Government Reform for

an introduction to the congressional oversight process; and to the Volumes 99 and 100 staff for

bringing out my best work.

854 IOWA LAW REVIEW [Vol. 100:853

I. INTRODUCTION ............................................................................. 855

II. BACKGROUND: A TALE OF TWO NUMBERS .................................... 858

A. THE SCC ................................................................................ 859

1. Legislative, Judicial, and Executive Roles in

Rulemaking .................................................................... 859

2. Origin of the SCC .......................................................... 861

3. The Revised SCC and Subsequent Congressional

Action ............................................................................. 864

B. THE FEDERAL FUNDS RATE ...................................................... 868

1. The Federal Reserve System ......................................... 868

2. Fed Communication: From “Never Explain” to “Forward

Guidance” ...................................................................... 869

3. Views on the Effectiveness of Forward Guidance ....... 870

III. ANALYSIS: THE APA’S ROLE IN THE SCC REVISION PROCESS ....... 871

A. THE RE-NOTICE CONTEXT ....................................................... 871

B. THE INDEPENDENT NOTICE CONTEXT ...................................... 873

IV. RECOMMENDATION: A COMMON PROBLEM, A COMMON

SOLUTION ..................................................................................... 874

A. LOW CONDITIONALITY ............................................................ 875

B. HIGH CREDIBILITY .................................................................. 875

C. HIGH TRANSPARENCY ............................................................. 877

D. HIGH FORECAST ACCURACY ..................................................... 877

V. CONCLUSION ................................................................................ 879

VI. APPENDIX: TABLE .......................................................................... 880