Tag: "EPA"

Dallas Imposes Plastic Bag Tax

After over two dozen cities around the nation have banned plastic bags, Dallas officially joined this year at 5 cents per bag. This new imposed fee encourages the use of reusable bags. However, the Dallas plastic bag ban will end up having a negative effect on the city.

Contrary to the myth propagated by environmental lobbyists, plastic bags are not a significant source of waste. Indeed, the national 2009 Keep America Beautiful study does not even include plastic bags in its top 10 sources of litter. A recent study found that plastic grocery bags make up less than 0.6 percent of the overall waste stream.

Negative effects of a plastic bag tax:

  • Stores affected by bag bans reported an increase in missing shopping carts and hand baskets.
  • Stores inside the Los Angeles ban area reduced their employment by more than 10 percent. Stores outside the ban area increased their employment by 2.4 percent. This occurred despite the fact that the overall unemployment rate in Los Angeles County fell dramatically.
  • The cost to taxpayers also will rise as lawsuits are filed challenging these bans.

Reusable bag dangers:

  • On the economic front, China is the leading manufacturer of reusable bags, while plastic bags are made in the U.S. with the industry employing thousands of workers.
  • When the bags are used to carry meats, poultry or fish, blood and other fluids can soak into them. If not cleaned regularly and stored properly, bacteria — including E. coli — can take up residence and mold can form.

Free plastic bags benefits:

  • Plastic bags reused to line bathroom trash bins, collect dog waste and used cat litter, to securely seal soiled diapers and more.
  • A number of major retailers have set up recycling boxes at the entrance of their stores to encourage recycling, and plastic bag recovery has increased by 31 percent since 2005 and according to EPA data, this growth is more than nine times the 3.4 percent increase in recovery of all municipal solid waste from 2005 to 2009.

Consumers like choice, and most choose plastic bags for their convenience, flexibility and strength. Evidence indicates that cities with bag bans lose, where people cannot choose.

Keep Oil Prices Down by Passing Keystone XL

The Tampa Bay Times conducted a fact check on some statements made by Senator John Thune of South Dakota on Sunday. The fact check covered two main points:

―President Barack Obama’s own administration has done five environmental impact assessments of the Keystone XL pipeline

According to the fact check, the U.S. State Department actually had one report on the pipeline that included several drafts and a major revised version that considered a more environmentally sound route change in the pipeline.

―All of which have said it would have a minimum impact on the environment

While the State Department study found that the pipeline would have minimal impact on the environment, the Environmental Protection Agency worries of a greater impact from the pipeline’s greenhouse gas emissions than the study found.

The new Republican leadership in the Senate plans to have a friendly, open amendment process with Democrats with a goal of passing the pipeline bill. The bill is expected to have enough votes to be filibuster proof, and if not enough to override a presidential veto, enough to force the president to wield his veto pen and take a position on this controversial issue. The claim that gas prices are too low for the new addition to Keystone to have a positive economic impact does not consider that the pipeline will take time to build (and time to get approved) and by then, prices could be up even to record high prices.

Suspicious Excessive Administrative Leave at the EPA

The U.S. Government Accountability Office (GAO) report Federal Paid Administrative Leave: Additional Guidance Needed to Improve OPM Data, issues last October, provided data on administrative leave at the EPA and 23 other federal agencies. Out of 69 EPA employees using paid administrative leave for fiscal years 2011 through 2013:

  • 50 employees used between one and three month of administrative leave,
  • Two employees used more than a year of administrative leave,
  • Total days of administrative leave was 4,711, and
  • The estimated amount of taxpayer dollars spent on administrative leave totaled $17,550,100.

Apparently, at least 8 of the 69 EPA employees that used administrative leave during that time did so because they were involved in “cases of alleged serious misconduct,” according to a memorandum sent from EPA’s acting assistant administrator to the EPA’s inspector general.

The EPA’s Office of Inspector General issued an Early Warning Report about the GAO report which made no recommendations and requested no action from the EPA.

Over the past three years, administrative leave at the EPA has cost taxpayers over $17 million, much of which went to fund employees involved in “cases of alleged serious misconduct.” These findings come at a critical time for the EPA, which is aggressively pushing increased regulations on controversial topics like emissions standards.

Ozone Regulation Could Cost Trillions

In a flashback to 2011, Obama is once again staring down the barrel of a controversial regulation to limit smog-creating ozone pollution. The EPA’s proposed regulation ― which would lower the threshold of ground-level ozone pollution considered healthy to breathe ― is already being decried by opponents as “the most expensive regulation ever.”

Obama nixed a similar version of the rule in 2011, claiming that he was acting to “underscore the importance of reducing regulatory burdens and regulatory uncertainty.” Yet with his recent actions on immigration, education and health care, many are left wondering whether Obama will keep his commitment to “reducing regulatory burdens” in the face of the EPA’s new proposal.

The proposal itself would lower the existing acceptable ozone standard from 75 parts per billion (ppb) to somewhere between 65 and 70 ppb ― though the EPA’s science advisers would rather see limits closer to 60 ppb. According to the EPA and environmentalist groups, lowering the amount of acceptable ozone would increase public health, reduce illness and premature deaths, and lead to $21.2-$42.1 billion in benefits, contrasted with $16.6 billion in costs.

Opponents of the regulation warn that lowering the limit would stifle economic growth, drastically reduce jobs, and wipe out trillions of dollars in economic output. A July study by the National Association of Manufacturers estimated that a strict version of the rule ― setting the limit to around 60 ppb ― would eliminate $3.4 trillion in economic output and cut 2.9 million jobs by 2040.

The EPA must make a final decision on the rule by October 1st of next year. While many argue that it’s too early to truly estimate the costs of the proposed regulation, the initial forecasts put millions of jobs, billions of dollars in investment, and trillions of dollars of economic output at risk.

“By any measure, the revised ozone rule will represent one of the costliest rules ever issued by EPA,” Louisiana Senator David Vitter told Politico. The EPA’s proposal could be “one of the most devastating regulations in a series of over-reaching regulatory actions taken by this administration.”


The KEEP Energy Act

If it were not for the $300 billion boost to the U.S. economy and the more than two million jobs added each year from the oil and gas industry, we could have been in a second Great Depression. To add to this economic boom, the 114th Congress can quickly pass new legislation, such as the KEEP Energy Act according to Mark P. Mills in today’s Forbes.

KEEP is an acronym for Keystone, EPA, Exports and Production.

  • Keystone XL pipeline approval would be a very important symbolic victory for the United States and its allies. The pipeline would also add thousands of more jobs.
  • The Environmental Protection Agency needs to be reined in. The EPA’ rules and regulations threaten the economy and is gearing up for new rules for the fracking boom.
  • The oil and gas export ban over the past several decades, has not made sense for one of our most basic values of free global access to trade. There is even more reason to end this obsolete ban with our allies in Europe and elsewhere in great need for these energy supplies.
  • Energy production could increase much more if the federal government opened more lands to drilling and if there was more investments made in technologies such as horizontal drilling and hydraulic fracturing.

2014 Election and the Future of Energy Legislation

Election Day is officially behind us. The votes are in, the campaign ads are over, and the traffic in front of the grocery store, local high schools and other polling places should go back to normal. The Republicans kept the House and took the Senate. Now the big question is: what does it all mean?

The Republicans taking the Senate could signal big changes in U.S. energy policy. This past session, Republicans and Democrats battled over the expansion of domestic energy production, GMOs and EPA regulations.

With majorities in both the House and the Senate, Republicans now have an opportunity to make some big changes in the environment and energy conversations. Yet as pointed out over at the NCPA Health Blog, running straight for the controversial topics will only lead to partisan bickering, not effective change. Rather than targeting the extreme topics, Republicans would do well to target their legislation at topics with broad, bipartisan support.

Over the course of the 113th Congress, 76 bills made it past the House, but have yet to make it past the Senate. For those that don’t make it through this session, the topics that already a) have enough clout to make it through the House and b) have enough bipartisan support to get through both houses without a huge expenditure of political capital.

Energy Bills Passed by the House

Looking back at these bills, there are a few topics that stand out in both of these terms. Among them are:

Cutting Burdensome Regulations. Two bills, H.R. 2279, or the “Reducing Excessive Deadline Obligations Act of 2013” and H.R. 935, the “Reducing Regulatory Burdens Act of 2014,” both focused on cutting unnecessary regulations instituted under the banner of environmental protection. Curbing the growth of government regulations is rarely a bad idea, especially if you can do it in a bipartisan way. H.R. 935 passed with 62 percent of the vote, 8.6 percent of which came from the Democrats. While not a wide margin, it’s definitely a topic to consider as Republicans move forward into the next session.

Promoting Efficiency. No one likes inefficiency — not even Congress. H.R. 2126, the “Energy Efficiency Improvement Act of 2014,” passed the House with a whopping 87 percent of the vote. Energy efficiency, as well as procedural efficiency, could be a good focus for energy enthusiasts as we head into next session.

Increasing Domestic Energy Production. Increasing domestic energy production has the power to create jobs, boost the economy and protect national security. While definitely a more polarizing topic — the average number of Democratic supporters ranges from 7-20 for many of the bills that made it through the House, it could be a good strategy for a nation looking for an answer to Putin’s misbehavior. H.R. 6, the “Domestic Prosperity and Global Freedom Act,” actually passed with 62 percent of the vote. Exporting our natural gas reserves could be a huge help to the parts of Europe dependent on Russia, and the jobs and money it would bring in here at home aren’t a bad tradeoff.

As this next session gets under way, Republicans should keep in mind the lessons learned from Obamacare: Focusing all of your political capital on a partisan agenda right at the beginning can be disastrous. Focusing on smaller, bipartisan measures can have just as big an impact and hopefully with less of a mess.

EPA’s Climate Change Adaption Plan

The Environmental Protection Agency has released their plans to reduce human greenhouse gas emissions and prepare for the effects of climate change. The EPA Sustainability Plan and Climate Change Adaptation Plan coincides with President Obama’s 2009 Executive Order on Environmental, Energy and Economic Performance, which set aggressive energy, climate and environmental targets for agencies, and detail how.

In the Climate Change Adaptation Plan, the EPA identifies priority actions the agency will take to incorporate considerations of climate change into its programs, policies, rules and operations to ensure they are effective under future climatic conditions. This includes:

  • Incorporating climate adaptation criteria in the Brownfields grants process to ensure cleanup actions taken by communities are effective as the climate changes.
  • Integrating considerations of climate change into the Clean Water State Revolving Funds process and continue working with states to ensure investments in water infrastructure are resilient to changes in climate.

For example, a stormwater calculator and climate adaptation tool empowers community planners to estimate the amount of stormwater runoff.

Up to this point, the aggressive regulations of the EPA have:

  • Reduced the federal government’s greenhouse gas emissions by more than 17 percent since 2008.
  • Exceeded the 24 percent energy intensity reduction from its 2003 baseline.
  • Reduced 2013 energy intensity by 25.6 percent from 2003.
  • Reduced fleet petroleum use by 38.9 percent compared to the 2005 baseline.

Federal regulations, in general, and specifically by the EPA may have good intentions, but inevitability do much more harm than good. Many examples of how these types of regulations do great harm are already well published. We can only assume that further action by the federal/state/local governments will only do more damage.

EPA NY Bridge Loan Rejection Leads to Setback

The Environmental Protection Agency rejected most of a $511 million loan that had been requested by Governor Andrew Cuomo to finance the construction of the new Tappan Zee Bridge. The original purpose of the loan was for “enhancing the environment.” However, it became clear that the entire amount of the loan would be used for construction of the bridge. The EPA’s rejection of the loan is a major setback for the governor.

The rejection was a reminder of how difficult big infrastructure projects — and the challenges of financing them — are for governors.

So far, the state has obtained $1.6 billion in federal transportation loans, the state asked for an additional $511 million from the EPA through the Clean Water Act.

President Obama used the bridge last May as a backdrop when he urged Republicans in Congress to support his $302 billion, four-year transportation-infrastructure program.

The Troubling Murkiness of Sustainability

What does the phrase “sustainable development” mean to you? Your answer is particularly important, because our government is asking us to make many sacrifices to our personal freedoms in its name. We need to know if it is all worthwhile. Consider the following:

Where did this phrase originate? The United Nations World Commission on Environment and Development (also known as the Brundtland commission) first coined the phrase in a report published back in 1987, and it has since taken on a life of its own ever since.

The Environment Protection Agency (EPA) uses this definition: “Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.”

What is required for promoting sustainability? Setting aside the notion of “productive harmony” between humans and nature (whatever that means), finding the best way to fulfill the resource demands of both our present and future generations certainly sounds appealing.

Yet, based on the hue and cry for greater regulation over energy production and natural resource use in our economy, it appears that the voluntary interaction between people engaged in production and exchange in the private marketplace is an unsustainable system that has been found wanting.

Is there a better alternative than voluntary exchange? It is assumed by many that abandoning the marketplace and embracing a democratically designed regulatory process for allocating our nation’s resources will create a superior balance to this intergenerational tug-of-war over alternative resource uses.

However, in two earlier articles appearing in this blog, I give many reasons why we cannot presume that a centralized and involuntary approach toward managing our nation’s resources — even through a democratic process — will necessarily create a more sustainable outcome to the private marketplace.

Why? The same misalignment of incentives and imbalance of influence over resource use decisions that critics claim corrupt the market process are also quite prevalent in any democratic process that directs public resource use. But there are still other issues with relying on public policy to effectively deliver sustainable development.

What are the costs and benefits of sustainable development practices? Whenever the voluntary interactions between people are curtailed, they bear the lost benefits that could have been enjoyed by both parties had they been free to continue their activity. These costs are real and can only be revealed by those who willingly abandon this activity. Like the homeowner who relinquishes her house title to a buyer willing to pay the right price, the true value that is lost from this forgone activity is revealed only when a person receives sufficient payment to voluntarily stop the activity.

Even when market activities do not impose any burdens on third parties (like pollution), restricting human freedoms in the name of sustainability is usually justified by the claim that benefits need be preserved for future generations to enjoy. Yet, these benefits can only be accurately measured by those who voluntarily pay to preserve them for others to consume. Like the ratio of income that parents save for their children’s college education, the value of these future benefits is revealed only when each person voluntarily pays a price sufficient to acquire them for someone else.

This all implies that if our federal agencies claim to know the true costs that are borne by everyone who is forced to abandon their beneficial activities, or to know the true value of benefits that are funded by many people today but reserved for future generations to enjoy, then our democratic government suffers from a hubris that Friedrich von Hayek termed “the fatal conceit.”

Hayek understood that only the voluntary, decentralized interactions of millions of individuals in the marketplace can create the spontaneous and orderly outcomes that incorporate the greatest amount of cost and benefit information that could possibly be considered in order to create the best possible outcomes for the greatest number of people in society.

One of the reasons we value freedom so highly is that we instinctively know that nobody else can manage our own lives to produce as much joy as we can obtain by freely making our own decisions. Indeed, the concept of sustainable development has been applied with great rhetorical fervor to just about everything we find valuable in society — except the joy from exercising our personal liberty.

Which brings us back to our initial query: Is sustainable development — at least as it is being promised and delivered by our federal bureaucracy — worth the price that we are being asked to pay? How would you know?

The Challenge of Becoming a Green Nation (Part 2)

In my previous blog post, I critically examined our nation’s predisposition to view public policy, if formulated by a democratic process, as being sufficient for promoting the public interest in managing our nation’s energy economy. Abandoning decentralized, voluntary market transactions and embracing centralized, regulated energy resource allocations does not ensure a superior pathway for satisfying our nation’s long-run energy needs. Specifically, I noted that:

  • Competition over scarce energy resources exists, whether they are allocated in the private or public sectors.
  • Self-interest guides citizen choices in both the private and public sectors.
  • Power and influence were unequally distributed in both the public and private sectors.

These realities imply that there is plenty of room for inefficient development of energy resources to arise from poor public policy design. Further, we also need to understand the many challenges of implementing regulatory policy over our nation’s energy resources.

Observation #4: Critical knowledge for efficient and sustainable energy resource allocation is scarce and it tends to be concentrated in the same markets that the federal agencies are tasked with regulating.

This means that government agencies need to hire industry experts from the very markets that they try to regulate. Also, regulators from these agencies tend to be heavily recruited by special interest groups operating in the markets that are being regulated. With such cross-pollination of talent, there exist many opportunities for unequal influence to occur in the design and implementation of public policy which may not necessarily reflect the public interest.

An illustrative case is the recent announcement that the second highest EPA administrator resigned from his federal appointment to head a non-profit group that seeks to influence the EPA’s federal energy policy design and implementation. Whether we agree or disagree with this organization’s goals and objectives, it still illustrates how public policy is not insulated from the same concentration of influences that supposedly contaminate private sector resource decisions.

Observation #5: All of the costs surrounding any resource allocation decision must be fully paid, whether in the private or public sector. In the public sector, however, the benefits of public policy often do not accrue to those who bear these costs.

Most people understand how oil spills or auto exhaust emissions can impose negative spill-over costs on third parties. This often drives the call for greater regulatory intervention. Yet, few people recognize that similar cost externalities are often created when the government control over resource allocation decisions replaces the private, voluntary transactions in the marketplace.

For example, it is well-documented that food prices have risen ever since federal policy forced oil refineries to add ethanol (mostly made from corn) into our nation’s gasoline supply, in part to reduce fossil fuel consumption rates. When U.S. agricultural markets shifted 14% of its corn production away from food products, this moved the United Nations to ask the U.S. to lower its ethanol requirements to ease the impact of rising food prices on developing nations.

Observation #6: All the potential impacts from a resource allocation decision cannot be anticipated, even by the experts in a regulated market. The private sector has much more flexibility to adapt to these unforeseen impacts than the public sector and to send accurate signals of relative value in competing proposals for developing a resource.

By definition, private sector decisions are always voluntary and public sector decisions are always compulsory. Pursuing public policy to allocate energy resources replaces the potential of markets to find innovative solutions and forces the government to pick winners and losers in competing energy policy proposals. It also creates distorted price signals about competing plans for developing our nation’s energy resources.

Consider what transpires when the government imposes eminent domain upon a private landowner to facilitate a given energy policy. While the land owner is constitutionally assured a fair market price for the lost benefits for using the appropriated resource, we must remember that this same owner always had the opportunity to sell the resource at its market price, but preferred to not sell it. This means a voluntary sale would require a much higher price.

This reality implies that if the government were to acquire the needed resources to facilitate a given public policy through a voluntary market process, it would be far more expensive than simply imposing eminent domain. This makes it much more likely that the public policy in question would have been found inefficient, had it been forced to compensate the owners of all the needed resources for the full value of their lost benefits.

Andrew Morris (J.D., Ph.D.) is a law and economics specialist who serves as Senior Fellow at the Property & Environment Research Center. In a recent study he notes that,

Eminent domain laws are inadequate for coping with this growth in infrastructure, for protecting landowners’ rights in the face of expanding utility easements, and for giving utilities inappropriate price signals.

The bottom line is this: for all the concern that developing energy resources in the private sector would fail to reflect the public interest, there is no guarantee that public policy — even when designed and implemented in a democracy — would better reflect the public interest. We must dispassionately and carefully examine both public and private sector approaches to make an informed decision.