Category: Regulation and Risks

Balancing Environmental and Economic Concerns

While climate change is a consideration for most Americans, some metro areas are adopting unnecessary draconian growth restrictions. The best example may be the state of California. California Assembly Bill 32 mandates that by 2020 the state reduce its greenhouse gas emissions to 1990 levels. Research indicates that the state has just about reached that goal. But instead of celebrating that goal, California lawmakers want to go much farther. Assembly member Quirk has introduced a bill to plan for carbon reductions of 80% by 2050. A 2012 report by Greenblatt and Long found that commercially available technology would be sufficient to enable California to reduce greenhouse gases by 60% by 2050. However, meeting the 80% threshold will require technological advances.

Over the last twenty years, the Los Angeles region has actually lost jobs. Between 2001 and 2011 alone, L.A. County lost 7.1 percent of its jobs. Since 1990 the region has lost 150,000 manufacturing jobs. While all metro areas have lost manufacturing jobs, Los Angeles has lost the second highest number in the country; and those jobs made up a larger percentage of the economy than first place New York. And while poor leadership and national factors have contributed to these losses, the biggest factor may be environmental regulations. Many of Los Angeles’ industrial jobs have moved to other states such as Texas with looser environmental laws. Obtaining an 80% reduction in greenhouse gases would require the city to control emissions from ships and trucks at the Ports of L.A. and Long Beach. Yet the ports are the largest and second largest container ports in the country and supply a significant percentage of metro area jobs. The ports are the biggest supplier of manufacturing jobs.

While an 80% reduction in greenhouse gases may be desirable, it will also eliminate some of the few manufacturing jobs in the region. Los Angeles needs to be increasing not decreasing the number of blue-collar jobs. And manufacturing jobs are high-paying quality jobs. In a region with major economic problems, a little balance could go a long way.

May 19, 2014 | 1 comment | by

Is the EPA Playing Politics?

According to reports, the Environmental Protection Agency (EPA) may have held back on the publication of a new energy regulation in order to protect Democrats in the 2014 midterm elections.

In June 2013, President Obama asked the EPA to issue rules regulating carbon dioxide emissions from power plants, and the EPA proposed such standards on September 20, 2013.

But this is where the agency started to deviate from normal procedure.

Typically, rulemaking goes like this: The EPA proposes a new rule (usually, it announces this on its website for the public to see) and then — generally within five days — it submits the rule to the Federal Register for publication. Once published in the Federal Register, the public has a limited number of days to comment on the proposal. Notably, the Clean Air Act requires the EPA to finalize emissions rules for new power plants within one year of publication in the Federal Register.

But the September emissions rule was not sent to the Federal Register within five days. It was not even sent there a month later. Instead, a full 66 days after the rule was proposed, the EPA finally sent the proposal to the Federal Register for publication, on November 25, 2013.

What does this have to do with the 2014 midterms?

Because the publication date determines when the rule is finalized, pushing the publication date to January 2014 meant that the controversial rule would not become final until January 2015.

But had the EPA followed protocol and submitted the rule for publication in September within the usual 1-5 day window, it would likely have been published just prior to the November 2014 midterm elections. Senator James Inhofe (R – OK) said just this in a letter to EPA Administrator Gina McCarthy:

The costs of the President’s [greenhouse gas] regulations are going to be enormous with far-reaching and irreparable impacts on our electricity generation capacity, affordability and reliability. With this in mind, it makes sense that the American public would react negatively to the finalization of this first round of [greenhouse gas] regulations…This makes the timing of your proposal very important. If the rule was finalized by September 20, 2014, the American people would have about six weeks to consider the negative impact of the rule on the economy prior to going to the polls. In addition to this, my colleagues and I would have been able to force a vote on a resolution of disapproval against the final rule…This possibility of electioneering is deeply troubling.

Had the EPA submitted the rule in a timely fashion, lawmakers could have been forced to take a stand on it prior to the November elections.

The EPA has blamed the delay on consistency needs and “formatting” (it is not entirely clear what would make this rule so unique that it would require two months of formatting…), as well as the government shutdown. But the shutdown did not start until October 1, seven working days after the rule was proposed. As Sen. Inhofe said:

If the EPA had followed…protocol, the [New Source Performance Standards] rule would have been submitted to the Federal Register’s office two full working days before the shutdown.

Perhaps most damning of all, Administrator McCarthy, testifying before the Senate Environment and Public Works Committee, said, “I will assure you that as soon as that proposal was released, we had submitted it to the Federal Register office.” She went on: “The delay was solely the backup in the Federal Register office.”

The Office of the Federal Register disagrees. Federal Register Director Charles Barth said that his office did not receive the EPA’s proposal until November 25. Moreover, once the agency did receive it and scheduled it for publication on December 30, the EPA requested that publication date be pushed forward even farther, to January 8, 2014!

Politico reports that the EPA says it pushed for the delay because it did not want to release the rule during the holidays. So the government wanted to wait and release controversial news when the public was actually paying attention? That would be a first.

May 05, 2014 | 1 comment | by

The Under-Reported Costs of the Endangered Species Act

When I read articles from the apologists for the Endangered Species Act (ESA), I often read silly statements like,

The U.S. federal and state governments spent just more than $1.7 billion to conserve endangered and threatened species under the Endangered Species Act (ESA) in fiscal year (FY) 2012… (W)ith a pretty high success rate of preventing species from going extinct, the ESA works out a decent bang for your buck.

Well, I beg to differ — $1.7 billion is just a small part of the total economic costs of implementing the ESA. Let me count the ways:

1)    The economic costs of implementing the ESA include its total impact on economic efficiency. This includes all of the lost economic opportunity that arises from the restrictions that are imposed by the ESA. When a federal agency declares private property as a “critical habitat” for an endangered species on private land, that agency can force the land owner to discontinue her economic use of that land. This impacts not only the landowner, but all of the businesses that directly engage in trade with that landowner. How bad can this cost be? One economic study in 1994* looked at the ESA recovery plan for the spotted owl species in the northwest. It estimated that this plan decreased economic welfare in the region by $33 billion (and that was in 1990 dollars). That was just one recovery plan… for one endangered species… for specific period of time.

2)    The economic costs of implementing the ESA include its total impact on social equity. What is almost never considered by such apologists is the unequal distribution of who ultimately bears the cost. The cost of any regulation is not just the taxes raised for implementing the Act. These taxes are spread across the federal government tax base, and (conceptually) everyone bears some federal tax exposure. However, the economic costs that arise from regulations are borne only by the landowner and those that directly relied on the land owner for trade. This creates a disproportionate share of the total economic costs to be borne by the land owners and the people who do business with them, rather than by the nation’s taxpayers. That same spotted owl study estimated that the regional producers of intermediate wood products bore the brunt of that $33 billion economic loss, which was a very small segment of the regional population. Ouch…

3)    The economic costs of implementing the ESA include its total impact on individual rights. Yet another aspect of the cost of implementing the ESA is that when private property owners are told that their land is “critical habitat” and can no longer be used for its historical economic activity, this amounts to a “taking”  that is supposedly protected under the Fifth Amendment to the U.S. Constitution. However, the land owner must undertake very expensive legal action to sue the federal government for her rightful “just compensation” for this taking. Research by the Congressional Research Service has shown that the odds of winning such suits are relatively low. Their 2013 study identified 18 such ESA cases filed against the federal government, with only one being successful at the time of printing and two still outstanding. That means there is between a 83% to 94% chance of losing a very expensive law suit to defend your Constitutional rights. A track record like that will be sure to send a message to those who believe the U.S. Constitution will protect their individual rights.

Apr 07, 2014 | Leave a Comment | by

Favoring Wind Power Endangers Birds and Bats

The Obama Administration has used subsidies and regulation to promote wind power. Yet the deaths of thousands of birds and bats from wind turbines, and the misappropriation of funds shows the danger of endless government subsidies and rules that are enforced only when they benefit certain industries.

Wind turbines kill approximately 600,000 birds a year. The American Bird Conservancy thinks that the Golden Eagle will wind up on the endangered species list because so many are being killed by turbines. Wind turbines also kill an estimated 900,000 bats each year. According to National Geographic bat-friendly turbine designs exist, but the wind-power industry has been slow to install the new turbines.

More disturbingly, the administration seems to be selectively enforcing laws. The Bald and Golden Eagle Protection Act and Endangered Species Act prescribe strict penalties for killing eagles and condors respectively. But the administration has given an exemption from prosecution to a California wind company if the company is responsible for the death of the California Condor, one of the rarest birds in the world. The administration wants to grant a similar exception to birds on the 1,500-mile Texas to North Dakota migratory corridor. And the administration seems to be ignoring bat deaths altogether.

Other businesses that inadvertently harm protected animals face hefty consequences. Shooting or electrocuting the Bald Eagle can lead to a $250,000 fine and two years in jail. Harming the bird can also lead to legal fees incurred in federal prosecution. Further, the wind industry is allowed to build wind farms on protected lands despite the danger to native animals.

No power source is perfect. Coal and oil power produce emissions. Nuclear power plants require a site to store used fuel rods. Solar power panels use large amounts of land, displacing native animals. But the wind power subsidies and selective enforcement of laws shows the government is deliberately distorting the market to favor a certain industry. Eliminating subsides and uneven enforcement of rules would allow energy companies to produce high-quality low-cost energy. Further it would improve not worsen the lives of birds and bats.

Apr 07, 2014 | 2 comments | by

EPA Raises a Stink over Sulfer Restrictions for the Oil Industry

The Wall Street Journal (WSJ) reports that the Environmental Protection Agency (EPA) has recently issued rules to cut the sulfur content of gasoline by 67% and to significantly reduce tailpipe emissions in cars and pickups, starting with the 2017 models. These new rules are known as “Tier 3 standards.” They are designed to reduce the smog created from tailpipe emissions and the subsequent incidence of various lung diseases.

Not surprisingly, both the WSJ and the New York Times (NYT) reports that federal adoption of these stricter Tier 3 standards found broad based support among many environmental and health groups. The Natural Resources Defense Council said the Tier 3 standards could save America $19 billion a year in health-related costs by 2030. The American Lung Association said that Tier 3 standards will reduce pollution equivalent to taking 33 million cars off the road.

Mar 10, 2014 | 2 comments | by

Sue and Settle: The Performance Enhancement Drug (PED) of Public Regulators

When Bruce Yandle wrote his classic article in Reason Magazine entitled, “Bootleggers and Baptists: The Education of a Regulatory Economist,” he artfully explained how profit seeking law breakers sidled up with religious do-gooders to accomplish a common social objective: keeping liquor sales illegal. More and more examples of such unexpected bedfellows are appearing in Washington each year. To understand why, just think like a federal bureaucrat.

Mar 05, 2014 | 6 comments | by

EPA Proposal Promotes Fossil Fuel Use over Renewable Wood Use for Heating Homes

The latest example of big brother schemes brewing in Washington this year is the proposal of the Environmental Protection Agency (EPA) to significantly restrict solid particulate emissions from wood burning stoves. The Census Bureau estimated that 2.4 million U.S. homes use wood as a primary source for heating their homes. The EPA is proposing that manufacturers be required to reduce solid particulate matter emissions by any wood burning stove from the current level of 7.5 grams per hour to 4.5 grams per hour by 2015, and further reductions to 1.3 grams per hour by 2019 (see Table 3).

Mar 03, 2014 | 7 comments | by

Imperial Presidency rules through regulations

“It’s a new year and you know what that means — new regulations. The Obama administration has wasted no time in writing them.”

I couldn’t have said it better myself.  Now, to be fair, every Presidential administration issues rules and regulations, that’s how laws are implemented.  However, some Presidents issue more regulations than others and seem to use regulations to legislate directly, skipping the legislative process, by stretching the rules and regulations issued beyond either the letter or intent of the law upon which they are supposed to be founded.  In this President Obama has few Presidential peers. 

As proof, an annual analysis by my friends at the Competitive Enterprise Institute, finds that the Obama administration issued an average of 56 new regulations for every law passed, a record high ratio. 

Keeping up his record pace, without any new laws having passed, on just three days in January 2014, the Obama administration posted 141 new regulations. 

This move to rule through regulations is in keeping with Obama’s stated commitment to “not wait for Congress to act,” if Congress refuses to enact the President’s policies, Constitution be damned.

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Of course successive sessions of Congress are largely to blame for the rise of the Presidential ability to rule by fiat.  Since the beginning of the Progressive era in the late 19th and early 20th Century,  the country has seen rise of the administrative state accompanied by the growing list of alphabet agencies (each approved by Congress) needed to manage it.  Congress has largely abdicated it’s constitutionally assigned role of legislating, and delegated it to executive branch agencies.   The problem is, Constitutionally, Congress alone is empowered to pass laws and there is no provision in the Constitution for it to delegate that power to others.  Still, successive Presidential administrations have encouraged Congress’s trend of delegating authority (and why not, it gives the President more power) and, alarmingly, the Courts have acquiesced in the trend — in the meantime seizing power for themselves. 

David Schoenbrod has written a number of insightful books on Congresses irresponsible delegation of authority and the tragic consequences it has had for this country including: Power without Responsibility: How Congress Abuses the People through Delegation. 

I’d like to propose a remedy, though it would require an act of Congress, a President who would sign off and future Congresses to actually exercise the power — each and every step, probably wishful thinking.

Congress should enact a law that requires every rule or regulation proposed to define, enable, carry out and enforce a law or portion thereof, to come before itself for an up or down vote on the regulation – thus, establishing its authority and responsibility for the it.  No longer could Congress pass a vague feel good laws, allow executive agencies to fill in the details and then complain that the agencies overstepped their authority when adopting or imposing the regulations.  If hoping Congress would approve every regulation is too much (though I think it is actually in the spirit of the Constitution), perhaps they could vote on every rule or regulation that had over a $25 million impact on the economy.  Having passed a law, if a regulation stemming from the law could not get a majority vote from Congress, one can assume it did not conform to Congress’s will in passing the law — which would also leave much less for the Court’s to interpret.  This would not solve all the problems the country faces but it would be a step toward greater accountability for the Legislature.

One can dream.

Jan 08, 2014 | 15 comments | by

Critical Metals in critically short supply

The Washington Post’s Brad Plummer penned a blog worth reading concerning the fragility of the materials undergirding modern society.  Writing about a paper from the national academy of sciences, Plummer notes:

“A huge chunk of modern-day technology, from hybrid cars to iPhones to flat-screen TVs to radiation screens, use dozens of different metals and alloys. A computer chip typically involves more than 60 different elements that are specifically selected to optimize performance, like europium or dysprosium.

And that’s long raised a concern: What would happen if we run short of any of these valuable metals? . . . A fascinating recent paper in The Proceedings of the National Academies of Science looks at 62 different metals that are widely used in modern-day industry. For a dozen metals, potential substitutes are either inadequate or flat-out unavailable. And there are no “excellent” substitutes for any of the 62 metals. A shortage of any of them could do some damage.”

This is a topic near and dear to my heart as the NCPA has been writing about the potentially dangerous shortage of certain critical metals, “rare earths” for a number of years now.  Potential shortages of these metals are due to a number of factors, only one of which is natural scarcity.  Too often, the single biggest threat to the availability of these metals is political control.  Another factor is artificial politically ginned up demand for these metals in non-essential but politically favored technologies.  Plummer’s blog discusses some of these issues.

The NCPA has examined the threats to national defense posed by potential shortages of rare earths.  We have also examined how green energy mandates make the country more dependent on China for rare earths in the short to mid-term.  And we have looked at the prospects for sources of rare earths outside of China and for domestic production.

Dec 19, 2013 | 9 comments | by

On Climate Change: President Obama goes one way, the world goes another

Flying under the media radar largely due to the ongoing Syrian crisis, President Obama has in the past two weeks signed on to three multinational climate agreements.  Grist, the popular online environmental newsite and blog, reports that two agreements would further limit powerful greenhouse gasses under the 1987 Montreal Protocol for the phase out of CFC’s and other greenhouse gasses that also affect the Ozone layer.  A third, Pacific regional agreement would set concrete goals and offer $24 million to help poor coastal communities vulnerable to sea level rise.

Meanwhile, elsewhere around the world, other countries are backing off their climate commitments.  Europe seems disposed to dumping or modifying their airline tax.  The Australian people elected a Conservative government, in part, based on its promise to dump its carbon tax among other costly, ineffective measures targeting climate change.  Europe is slashing its green energy subsidies. Finally, the Kyoto climate change treaty’s time has passed with no back up plan to replace it.

And the world goes on its merry way continuing to confound the climate sages and their models.  Despite predictions of the total loss of ice in the arctic by 2013, the arctic ice cap grew by 60 percent over the summer of 2013.  And rather than increasing in frequency or power, the Atlantic Hurricane season is experiencing one of its quietest years.  None of the climate models predicted either of these trends.

What to think?  If you’d like to learn more about what’s going on see our new, updated version of The Global Warming Primer.  It is an easy to read booklet that highlights the what is known and unknown about earth’s climate and lets the reader decide what to think.  I believe anyone who reads it will find it worthwhile.  In addition, we have a short video that condenses the primer to a few key points.  Fun educational viewing for the entire family.

 

Sep 12, 2013 | 8 comments | by
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