University of Houston Law Center Faculty Blog : University of Houston Law Center Faculty Blog

I have spent the better part of four years studying proposed US climate change legislation, state and local climate actions, the roll-out of the Kyoto Protocol and the implementation of the European Union’s Emissions Trading Scheme. I have written about the large scale issues that must be considered in federal legislation, and looked in depth at some of the issues surrounding offsets and trading, and have recently published op-eds and blogged on the way the Waxman-Markey bill deals with offsets. I have just finished co-teaching a graduate level course in carbon trading that explored many of the issues surrounding how a cap and trade system for greenhouse gases could work. I know that any attempt to control greenhouse gases through a market is complicated and difficult, but I also believe that this is the only way forward.

Like many, I care deeply about the problems of climate change, and believe that unchecked, it will drastically alter the world we live in, and not for the better. From that perspective, I see problems with the Waxman-Markey comprehensive climate change bill recently passed out of the House Energy and Commerce Committee. In particular, many decisions made to garner more conservative democratic votes have weakened some ways of fighting climate change, and the political prognosis is that more changes may have to be made for ultimate passage. Despite this, I am still optimistic about our chances to really tackle climate change, and I want to briefly address some of the concerns of the environmental groups about the Waxman Markey Bill.

Probably the biggest disappointment for environmentalists is the pace and target of reduction. The original Waxman-Markey discussion draft called for a 20% reduction (from 2005 levels)  in greenhouse gases from capped sources by 2020, and the new bill only calls for a 17% reduction (though it still estimates that by using other policies besides cap and trade, the overall reduction might still approach 20%).   The IPCC and most scientists estimate that we need larger reductions earlier to reach a stabilization temperature that would avoid some catastrophic changes to the environment.   The IPCC calls for a 40% reduction by 2020 from the developed countries. The failure to meet the IPCC recommendation has caused some environmental organizations to withdraw support for the Waxman-Markey Bill.

I agree that the divergence of the bill’s target from what is needed early on is disappointing. However, I do not think it is disastrous or cause to withdraw support from the bill. Importantly, the overall target of a reduction by 83% by 2050 is in line with recommended reductions. While delaying earlier reductions will indeed change the need for longer term reductions, it doesn’t mean that we cannot go in later and require greater reductions as needed. The world is already experiencing the effects of climate change, and they get clearer and clearer by the year. Once the United States has committed to a system of reduction, a cap and trade and other direct controls, altering the ultimate cap will be less difficult than starting from scratch, particularly as the effects become more and more obvious and pronounced. This occurred with respect to the Montreal Protocol for ozone, and was anticipated for NOx reductions when it looked as if CAIR would be implemented. While greenhouse gases have more direct interaction with economic growth than ozone depleting substances, once the system is in place, a more stringent reduction is only a matter of degree. 

By the time that we are approaching significant reductions (around 2030) we will already have needed significant technological innovations to move from a carbon economy or to otherwise sequester greenhouse gases, and so, additional incremental reductions should not be impossible. On the other hand, if we do not pass a cap and trade bill when we have the political opportunity to do so, there is no guarantee that we ever will or that its terms will be better. Additionally, real international reductions from the major developing countries, such as China, are going to depend on the developed countries, particularly the United States, making significant reductions itself. Going to Copenhagen without a serious attempt to reduce greenhouse gases, which the Waxman-Markey bill is, will significantly impede international negotiations and necessary reductions and targets form the developing world.

The other major criticism has to do with the giving away allowances for a set time to various industries, such as electric power generation and petroleum refining. The Waxman-Markey discussion draft did not address this issue at all, and it should be noted that many prior bills also assumed that some of the allowances would be given away. This bill actually only gives 59% for several years to industry. Economists would argue that this doesn’t affect actual reductions, and for the most part, they are correct. It doesn’t matter who owns the allowances, their number will still be limited and emissions will still be subject to the same cap. This simply “buys off” some of the entrenched interests that would oppose CO2 reductions.

The real effect is not so simple of course. Judging from what happened in Europe, unsophisticated businesses that receive allowances for free may hold on to them even when it would make economic sense to trade them and invest in emissions reductions, delaying the development of new technology that will be necessary for reductions. Moreover, by requiring utilities to use their allowances to avoid rate increases, instead of allowing such increases but rebating money for any use to families, this discourages reduction of the use of coal fired power. Still, the overall cap remains the same, and this will hopefully by support with little cost in climate change effects.

Other provisions of the bill that worry environmentalists have to do with offsets, which people are rightly suspicious of. This bill, more than any other, provides mechanisms for ensuring that offsets are genuine and not illusory. Unfortunately, it isn’t necessarily enough, nor does it mandate how much review of general environmental effects of offsets should be done. Still, the mechanisms do allow the EPA to roll out the offsets program with strict verification, and environmental protection. The major question is will it have the expertise and political will to do so. I believe that with proper advice, it will.

So all in all, I am favorably disposed to the Waxman-Markey bill. I credit Henry Waxman for his patience and ability to reach out to hear every point of view on this bill. Like his retention of some of John Dingell’s staff when he became Committee chair, this demonstrates that he is really interested in educating and convincing Congress of the need and wisdom to control climate change, and not just interested in “winning.” We environmentalists need to take a page from his playbook. We need to do the best we can, and not sacrifice the environment solely based on particular provisions. This bill has significant and stringent limits, and sets up a system that can go further in the future.

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Many environmental organizations were stunned recently when the D.C. Circuit vacated the EPA’s implementation of the Clean Air Interstate Rule (“CAIR”) in North Carolina v. EPA. According to the Court, the CAIR failed to follow Clean Air Act (“CAA”) statutory mandates.

This rule, which for the first time seemed to put teeth into the CAA’s requirement that states not contribute to other states’ unhealthful levels of pollutants, was judged inconsistent with specific requirements of that section of the statute, 42 U.S.C. Sec. 7410(a)(2)(D)(i)(1).

Since the CAIR seemed poised to produce actual reductions in harmful pollutants, which could save 17,000 lives annually, the dismay is understandable. After all, prior EPA enforcement of section 7410(a)(2)(D)(i)(1) was woefully inadequate, leaving many states in situations where it was almost technically impossible for them to meet the CAA’s requirements within their state. And this was the only Bush EPA action that had received broad support from environmental and public health organizations. Nevertheless, as the D.C. Circuit reminds us, “all the policy reasons in the world cannot justify reading a substantive portion out of a statute.”

The DC Circuit correctly noted that under Sec. 7410(a)(2)(D)(i)(1), the EPA could only approve states’ State Implementation Plans, or SIPs, if the plans insured that pollutant sources within that state did not cause significant pollution loads in other states. This reflects one of the prime reasons for a federal air pollution control law in the first place – the abatement and control of interstate pollution. Unfortunately, for a variety of reasons, both technical and political, this requirement lay dormant for most of the history of the Act. The evolving understanding of this problem finally led individual states to petition the EPA to make findings of “out of state contributions” as early as 1997, leading to the first real attempt of the EPA to address this important issue.

Over the evolving attempts to do so under both the Clinton and Bush administrations, the DC Circuit has been consistent in its requirement that the EPA hew to specific statutory language in the Act, while also exhibiting a high degree of deference to specific agency scientific and technical findings of contribution. Thus, in Michigan v. EPA and in Appalachian Power Company v. EPA, the DC Circuit broadly upheld the EPA’s findings that specific sources were causing downwind non-compliance, and even upheld a somewhat novel use of cost reduction analysis to allow the EPA to make this determination on a wider and broader scale.

These prior decisions and current vogue of pollutant trading systems led many to believe that the DC Circuit would approve a broad trading system as a solution to the interstate problem. A broad trading system, like CAIR, however, fails to meet the requirements of the section at issue because it doesn’t pinpoint which sources cause downwind state non-compliance, nor does it require those sources to make the reductions necessary to return downwind state compliance. Though CAIR clearly would make improvements in overall air quality in the Eastern United States, thus meeting several of the overall goals of the CAA, it fails to do so in the way that takes account of all values at issue in the CAA. As North Carolina correctly noted, the CAA not only requires overall air quality to be improved, but mandates improvements in specific areas that are being harmed by out of state sources. It is not enough to improve the air quality in the Washington D.C. metro area, if Charlotte, North Carolina is still being inundated with pollutants from upwind states. Moreover, the competitive economic advantages and disadvantages of states struggling to meet their CAA requirements while protecting the health of their citizens (in other words, the federalism and sovereignty issues) are mostly ignored by a rule like CAIR.

Not having a shortcut like CAIR makes for a harder administration of this CAA provision to be sure, since it requires the EPA to focus on and reduce sources on an individual basis. But the DC Circuit in Michigan and Appalachian Power has shown a great degree of deference as to how this can be accomplished, and what evidence can be used to make this finding. While this means that some reductions will surely take longer without CAIR, it needn’t delay real health improvements if the agency acts quickly to make requested findings on upwind sources and is willing to impose a Federal Implementation Plan (or “FIP”) on non-compliant states.

While environmentalists were understandably thankful that CAIR seemed to represent some significant pollution reductions, the method of avoiding legislative specificities in this case are simply part and parcel of the Bush Administration’s attempts to accomplish its policy goals without following the legalities of the CAA. Just because the result would have been “better” in this case than in the Administration’s Mercury rule or New Source Review Routine Maintenance and Repair Rule, doesn’t make its use less dangerous. This case reminds us again that the statutory mandates of our environmental laws are important, and that an individual administration cannot simply change or alter them on its whim. The complexities of pollution reduction and accompanying issues of health and economic development require that policy choices be made in the appropriate arena, the legislature. If our policy provisions in the current CAA are unworkable, let us explore changing them there.

This case should also remind us, as we focus on the big issue of climate change, that we still have work to do on more traditional pollution control. Perhaps this will lead to a truly integrated and thoughtful debate on these intertwined issues in the next administration.

(Note: this opinion editorial first appeared in JURIST. -VF)

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The academy, politicians, and environmental law nerds have been abuzz the last few days about the possibility of President Bush putting forward a climate change policy showing significant movement from his prior positions. I guess we can all harbor hope. If one was expecting any major policy pronouncement, however, one would have been sorely disappointed with yesterday’s Rose Garden ceremony.   

Rather than pressing ahead with important initiatives to control greenhouse gases, President Bush instead announced his support for policies that had previously been rejected by the U.S. Congress and countries across the globe. 

The limited CO2 caps announced yesterday would apply only to one sector of the economy – electricity generation – and would leaving the rest of the U.S. economy free to continue releasing untold quantities of greenhouse gases into the atmosphere. The target reductions outlined by President Bush fall well below what is necessary to meet the U.S. share of worldwide cutbacks that even the most conservative scientists deem necessary to avoid catastrophic climate change in the long term. 

In other parts of the world, this “new” U.S. policy that doesn’t come close to meeting the U.S. need for reductions and only ensures that developing countries, such as India and China, will resist   binding reductions in CO2 emissions.   And while President Bush emphasized the role that new technologies can play in reducing emissions, he fails to promote the strong economic incentives that could spur the development and acceptance of these low-carbon technologies.

The program outlined in the Rose Garden would have represented a welcome “start” if it were announced in 2001; today, however, it constitutes a step backward. Over the last 18 months, academics, scientists and business interests have cooperated with Congress in a meaningful and focused debate aimed at controlling climate change. Many of these discussions centered on the critical need to hold developing countries accountable for their emissions, and on the equally critical need to mitigate the economic impact that CO2 controls might have on U.S. businesses and the people they employ.  

The good news is that these efforts have generated real progress, and each of the three candidates to become the next U.S. president has indicated his or her support for a comprehensive bill that would be in line with international expectations.

In one way, however, President Bush does not disappoint. His hubris in assuming that the world will listen to him "no matter what," and his belief that he is always right, were very evident in his pronouncement. However, just as in other issues in this administration, he is in for a rude surprise. For years, President Bush has declined to be a part of any collaborative process on addressing climate change.  When it became clear in the last year that businesses (even Republican-leaning businesses) needed "certainty" and were prepared to accept a cap-and-trade bill, this president still wouldn’t play. Because of that, the bill we ultimately get may be harder on particular industries than would have otherwise occurred. It is a sure bet that if President Bush had indicated the possibility of signing a mandatory cap-and-trade bill two years ago, the allocations would almost assuredly have been given way (as they were with SO2) instead of auctioned, the position favored by environmentalists and a position to which most bills are now moving.

Either the President has so isolated himself from public and business opinion on this issue that he doesn’t realize this proposal will go nowhere, or he is intentionally trying to “gum up the works” by slowing down the march towards a thoughtful bill. Whatever the motivation, the only conclusion to draw from his statements in the Rose Garden is that it is time for him to step aside. If he wishes to be remembered for his support of a thoughtful and fair bill on climate change, he can simply sign one of the existing proposals currently before the Congress. His choices were to lead, follow, or get out of the way – and he clearly failed to make the proper choice.     

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