Waxman-Markey’s Chevron Redux?

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Chevron LogoThere’s been a lot out there in the ether about how Waxman-Markey (and climate change legislation in general) has been a windfall for lobbyists, fighting both to keep the government’s hands off of utilities and others’ CO2 emissions on the status quo side and scrambling for the subsidies and other dollars on the green tech side.

The Washington Post (WaPo) opened just such a story this week with an anecdote about Rep Gene Green’s (D-TX) amendment changing the word “sources” to the words “emission points.” WaPo notes “that tiny bit of editing might one day give petroleum refiners valuable rights to emit carbon dioxide when it otherwise might not have been allowed. Refiners could get the extra allowances in return for cutting carbon emissions by 50 percent at a single point of a vast refinery complex instead of slashing emissions by 50 percent for the entire facility.”*

Anyone working with executive agencies, or with any admin law or environmental experience is familiar with the concept of “Chevron deference,” referring to the famous Chevron v NRDC decision that essentially found that where Congress has delegated responsibility to an executive agency, unless the agency is arbitrary and capricious in the way it propagates rules or applies them in adjudications, court’s should defer to the agency’s interpretation — after all, they’re the experts.

Less well-known is the controversy that surrounded the Chevron case and led to the decision. Basically, the question was whether the Clean Air Act (CAA) required special action when a new or modified “source” of pollution was brought into service. EPA held that entire plants really constituted the “source” that CAA contemplates and that the addition of a single new stack would not require compliance as long as the whole facility’s emissions — in aggregate — did not increase.

NRDC’s challenge was unsuccessful and we are left with “Chevron deference.” We seem not to have been left with a lesson for legislators working on the mark-up of Waxman-Markey.

With EPA waiting in the wings again on CO2, I am beginning to think I want to see the Obama administration to pull the trigger and take executive action on a command and control carbon regime. Industry, the GOP and some others will tell you that this means HUGE cost increases for consumers.

True enough, but do you really think we’re going to wind up with a bargain under the proposed cap-and-trade (or should I say, perhaps, cap-and-cash).

Day by day, Waxman-Markey is looking less like the kind of effective climate change legislation we all might have reasonably expected under a fillibuster-proof Dem legislature and with Obama’s super-high approvals. Instead, we’re seeing flaccid GOP action that is actually moving the ball in the midst of the all-too-common Dem circular firing squad (this time pitting Brown Dogs against the Bicoastals).

As of today, we are looking at a bill that will actually encourage emitters to inflate their emissions to get a bigger allowance and a bigger windfall to pass through to ratepayers in cleverly-greened garb. Any surprise that refiners decided they wanted in on the party once they saw the 85% allowance model that is being put into place?

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