On October 10, EPA Administrator Scott Pruitt took the first step in what is likely to be a protracted and contentious effort to repeal Obama’s landmark program to reduce carbon dioxide emissions from power plants, the Clean Power Plan.
EPA issued a proposed rule that would repeal the CPP outright; alongside it, the agency issued a request for comments and proposals regarding a possible replacement rule, which it may or may not issue, depending on whether it decides to replace the CPP.
The whole effort is deeply shady. It relies on a succession of legal arguments, procedural gambits, and factual claims that, in toto, look retrofitted to support a predetermined policy conclusion: minimizing or avoiding regulations on fossil fuel power plants, at all costs.
Courts will have opportunities to scrutinize Pruitt’s every move. And remember when that federal judge used Trump’s political rhetoric as evidence of his administration’s real intent on immigration? Courts are likely to notice Trump’s history of fealty to coal — that miners surrounded him when he repealed Obama’s Stream Protection Rule and very nearly surrounded Pruitt in a Rose Garden ceremony as he repealed the CPP.
These are not the acts of an administration serious about regulating carbon dioxide.
Remember, thanks to its previous finding that carbon emissions are a danger to public health, EPA is legally obligated to regulate them — not only to regulate them, but to implement, in the words of the Clean Air Act, the “best system of emission reduction” for them.
Given that Pruitt is unlikely to contest the endangerment finding (he would lose), he has to find some way to regulate carbon emissions from power plants while minimizing any disturbance to coal plants. That’s what his focus is now.
As I’ve talked to lawyers and advocates over the last week, the five shadiest aspects of Pruitt’s effort have come into focus.
1) Unnecessary delay of a necessary legal judgment
Perhaps the most maddening aspect of Pruitt’s bid is its purely unnecessary delay tactics, which involve trying to cancel a legal case on the CPP that will inevitably return.
At the core of the legal controversy over the CPP is the “fenceline” question. I wrote a long analysis of that question once, if you want to dig in, but here’s the capsule version.
The CPP requires states to reduce the average carbon emissions of their power fleets. Each state has a custom target; the rule leaves it up to states how to meet them. (That this extraordinary flexibility has become the right’s target is a rich irony.) Many of the steps states could take — implementing energy efficiency programs, building renewable energy — would take place “outside the fenceline” of existing power plants themselves.
Does EPA have legal authority to require actions outside the regulated power plants?
Good question. Conservatives used to want an answer to it. Since before the CPP was even released, conservative groups launched lawsuits on the basis of (among other things) the fenceline question.
The DC Circuit Court consolidated many of those complaints into a single case, which it took up in 2015. Conservative groups appealed to the Supreme Court to put a stay on implementation of the CPP until the case was resolved.
In February 2016, SCOTUS — in what now looks like a fatal blow — put a stay on the CPP.
The DC Circuit case went forward. There was a full day of oral testimony on September 27, 2016. Then Trump took office. His administration almost immediately asked the court to suspend the case, pending review of the CPP. In April, the court granted that request, putting the lawsuit on hold for 60 days.
Then, last week, the administration asked the court to extend that stay, pending the outcome of its new rulemaking.
Here’s what’s crazy about this.
The preamble to the rulemaking Pruitt issued is basically a rehash of the legal case he (and other fossil-state AGs) made against the CPP in the fenceline case — the one that was on the way to being decided. And sure enough, he plans to restrict the changes required by a replacement rule to inside the fenceline of power plants themselves.
EPA planning an "inside the fenceline" replacement of the Clean Power Plan. Translation: a replacement in name only. https://t.co/j9idiwJaZg— Brendon Slotterback (@bslotterback) August 1, 2017
Given that Pruitt has simply assumed an answer to the contested legal question, rather than waiting for the court to provide one, lawsuits from CPP advocates (environmental groups and non-fossil AGs) are inevitably going to press the fenceline issue all over again. That means a case based on that issue is almost certainly going to end up before ... the DC Circuit Court.
In other words, the court is going to have to decide this issue one way or another. All Pruitt is doing by pushing the court to drop it now — after so much testimony has been gathered and so many briefs filed — is maximizing the delay before that happens.
If Pruitt were a lawyer for coal companies, this kind of dilatory tactic would be savvy. But he is EPA administrator, facing a public health threat, under legal obligation from the Supreme Court to address it. So it’s shady.
(Side note: Even if courts accept Pruitt’s fenceline interpretation, there are inside-fenceline options to reduce coal-plant emissions — think co-firing with biomass, or attaching carbon sequestration — that are quite stringent. If Pruitt issues the weak tea everyone expects, asking nothing of coal plants but modest efficiency upgrades, he’ll have to justify to a court why he opted against them.)
The fenceline issue will be the core legal question, but Pruitt is taking other steps to soften the ground for the weak rule he is expected to issue. Many of them involve monkeying around with cost-benefit analysis to make carbon regulation look as bad as possible. That’s what our next four are about.
(For more on these cost-benefit shenanigans, see this excellent piece from Richard Revesz and Jack Lienke of the Institute for Policy Integrity and the original reporting from Politico’s Emily Holden on which it’s based.)
2) Confining the benefits of climate action to the US
Obama’s EPA calculated that the fully implemented CPP would produce up to $20 billion a year in avoided climate damages. Pruitt’s EPA says it’s a maximum of $3 billion a year.
Why the big difference?
Under Obama, the agency tallied the global climate benefits of the CPP. Under Pruitt, it is only counting the US portion of those climate benefits. The administration pitches this as part of its “America First” policy.
There is no way to exaggerate what a bad idea it is.
Casey Wichman of Resources For the Future has a great (if rather too charitable) consideration of the details, but at least four problems are obvious.
First, the idea that US climate risks can be neatly hived off from global climate risks is an accounting fiction. Climate change is going to serve as a “threat multiplier,” exacerbating hunger, migration, and conflict around the globe. (That’s why the military is virtually the only major US institution sufficiently attuned to climate risk.) Those humanitarian, economic, trade, and diplomatic disruptions will reach US shores. Specifying America’s “portion” of a global catastrophe is delusional.
Second, it amounts to sociopathy. Climate change will hit the global poor — those who did least to cause it — first and hardest. Necessarily, wealthy countries reducing carbon emissions will help them most. The Trump administration is saying it doesn’t care if US emissions hurt those people, or anyone besides Americans. As long as we narrowly benefit from burning fossil fuels, screw the rest of you.
Third, it’s a political disaster. It makes Trump’s worldview — venal, greedy, pugnacious, and myopic — into the official US stance on the world’s most difficult collective action problem. It codifies America’s pubescent disregard for norms or consequences. It says to other countries that they are fools to trust or collaborate with us.
Fourth, it would yield a “social cost of carbon” so low as to render climate change irrelevant in federal decision making.
It’s not clear whether this move would pass legal muster. Courts generally grant agencies wide latitude in rulemaking, but they have stepped in in the past when rulemaking is strikingly disconnected from fact or reasoning. A court could, in theory, find this account of benefits “arbitrary and capricious,” or at least find that about these cost-benefit shenanigans collectively.
3) A high discount rate
The administration’s rulemaking also indicates that Pruitt plans to use a discount rate of 7 percent to assess climate benefits.
I also wrote a long explanation of discount rates once (it featured otters!); I won’t subject you to another. Roughly speaking, discount rate measures how we value future costs and benefits — how much we discount them relative to present investments. So at a discount rate of 7 percent, a dollar of benefits a year from now is worth $0.93 relative to an investment dollar today. A 7 percent discount rate is often used in present-day financial transactions — the stock market, for instance.
Problem is, such a high discount rate makes far-future costs and benefits — the kind found in climate models — all but worthless. It is myopic, designed for individual use.
For numerous reasons (discussed in this expert panel), use of such a high rate is inappropriate for long-term, inter-generational cost-benefit calculations. Obama’s EPA modeled 2.5, 3, and 5 percent, generally settling on a central case of 3 percent (still arguably too high).
This might seem like an arcane accounting issue, but the choice of discount rate can make an enormous difference, yielding either urgency or indifference. Pruitt’s high discount rate is the administration’s way of saying to future generations the same thing it is saying to other countries: bugger off.
4) Only some health benefits count
Many of the benefits of the CPP are actually “co-benefits” — not the climate benefits of reducing carbon, the rule’s main goal, but the air-quality benefits that come from reducing other kinds of pollution in the process of reducing carbon.
One of the biggest sources of co-benefits is the reduction of smog from burning coal, particularly the reduction in “fine particulate matter” (PM2.5). There’s a perpetual dispute between EPA and its conservative critics over how PM2.5 benefits are calculated, but Pruitt has come up with something novel.
Pruitt’s proposes to keep the standard EPA method of calculating PM2.5 benefits — but to establish thresholds beneath which they don’t count. Specifically, Pruitt’s EPA won’t count any health benefits from reductions in PM2.5 beneath the threshold established by EPA’s National Ambient Air Quality Standards. A reduction of 13 to 12 micrograms per cubic meter of PM2.5 (the standard) improves public health. A reduction of 12 to 11, apparently, does not.
This is, to coin a phrase, arbitrary and capricious. It flies in the face of expert consensus on the health effects of PM2.5. It does, however, serve to substantially reduce the apparent benefits of the CPP. (RFF also has a good discussion of this issue.)
5) Efficiency savings vanish in a shell game
When utilities implement energy efficiency programs, it reduces energy demand and makes it easier to hit carbon targets. By a lot.
Obama’s EPA counted those efficiency savings as reductions in the rule’s costs. Pruitt’s EPA counts them as benefits, effectively moving them from one column to another.
The only reason to make this otherwise-pointless change is to make costs look larger — in this case, $20 billion larger.
The coming legal marathon
Pruitt set out to repeal the CPP with no replacement (yet). He will have to justify that move to a court by arguing that the CPP was clearly illegal. He’ll do that by arguing the fenceline issue, so the court will end up deciding that one way or another.
Meanwhile, unless he decides to make a quixotic run at the Endangerment Finding, Pruitt will have to come up with a replacement rule that satisfies the legal mandate it establishes.
In doing that, he will apply the cost-benefit distortions described above, striving to maximize the appearance of costs and minimize the appearance of benefits, seeking to develop the mildest possible regulation.
That new rulemaking will also have to pass muster with the courts. Like I said, courts typically give agencies a free hand in developing rules, but the cumulative weight of these manipulations is difficult to ignore.
The fenceline battle and the battles to follow will occupy courts for years, likely through the end of Trump’s first term. Eventually the Supreme Court will weigh in, and once again the fate of the world will reside in the fickle hands of Justice Anthony Kennedy (assuming Trump hasn’t stacked the court with more conservatives by then).
Pruitt’s victory is not assured in any of these cases. Between his crude manipulations and the administration publicly spiking the ball on coal’s behalf, he is practically daring courts to intervene.
Pruitt has gained a reputation for ruthless competence among terrified environmentalists, but the courts have not been kind to him. On the Clean Power Plan, as on many of the regulatory rollbacks Trump prematurely boasts about, he has simply started a long process. He’ll be long gone, running for Senate in Oklahoma, before the verdict is in on his success.
Correction: An earlier version of this piece stated that the SCOTUS decision to put a stay on CPP was in February 2017. In fact it was February 2016.