Emily Hammond on CPRBlog {Bio}

The Importance of the Murray Energy Case and Administrative Procedure

Last week, the D.C. Circuit heard oral argument on a highly unusual attempt to short-circuit EPA’s rulemaking process for greenhouse gas regulation of existing power plants.  Despite statutory and constitutional hurdles to premature litigation, the petitioners—the coal-fired industry and coal-producing states—argued that the importance of the proposed rule justifies court intervention.

The rule’s importance is precisely why it is critical that the agency complete the administrative process.

That industry groups will file lawsuits over EPA’s greenhouse gas initiatives is unremarkable.  After all, litigation is to be expected:  frequently, both the regulated community and public interest groups challenge major environmental rules.  Nor is it unusual that interested parties may attempt to hijack a regulatory policy before a rule is finalized.  Scholars have documented (for example, here, here, and here) the many contacts between agencies and regulated industries that occur at various stages of a rules’ development.  What is more, contacts—from any interested party—are perfectly legal provided the agency discloses anything it relies on in support of the rule.  Congressional pressure and Presidential direction may also be brought to bear on agencies during their decisionmaking processes.

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Power Plant Regulation and the Rhetoric of Reliability

The coal-fired power plant industry has always fought air-emissions standards enacted pursuant to the Clean Air Act (CAA).  But the industry has increasingly raised the specter of reliability problems, arguing that EPA’s recent “tsunami” of regulations will cause a “train wreck,” forcing companies to retire aging plants so rapidly that lost capacity will outpace the development of new sources.  The result, they maintain, will be such an unmanageable strain on the regional grids that they will have to impose brownouts and blackouts as a consequence.   

The overheated rhetoric of reliability threatens to overwhelm and run aground meaningful debate about environmental regulation, climate change, and the appropriate mix of fuels for generating electricity.  There is no doubt that reliability is a critical concern—but it is being misused to obscure the fact that many updates to our power supply are necessary, achievable, and taking place already as a result of both environmental regulation and market forces. 

The Rhetoric

Facing proposed new regulations under the CAA, the industry attempted to play the reliability trump card in several rulemaking proceedings, including EPA’s  “Cross-State” rule governing interstate transport of power plant pollutants, EPA’s “Utility MACT” rule limiting emissions of mercury and other hazardous air pollutants from power plants, and EPA’s greenhouse gas rules requiring power plants to install the “best available control technology” (BACT) in new power plants and modifications of existing power plants.  Coal interests have even used reliability concerns in their efforts to persuade Congress and the Bush and Obama Administrations to force EPA to terminate enforcement actions against power plants that unlawfully modified their facilities without undergoing “new source review” and installing BACT. 

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Keeping the Independent Agencies Independent

The proposed Independent Agency Regulatory Analysis Act, S. 3468, is a troubling idea. As Rena Steinzor explained here when the bill was introduced, it would authorize the President to bring independent agencies under the purview of OIRA.  This proposal is worrisome given the persistent flaws inherent in OIRA’s cost-benefit approach; extending the reach of a poorly functioning process is hard to justify.  But even more problematic is where S. 3468 treads:  the domain of independent agencies.  This development calls for thoughtful attention to the reasons for independence in the first place.

The fundamental difference between executive and independent agencies lies in the degree to which each is insulated from presidential control.  For example, executive agencies are typically headed by individuals who serve at the will of the President—but independent agencies are governed by multi-member commissions who are removable only for cause.  While executive heads are usually members of the President’s party and serve for indefinite terms, independent commissioners in most cases must come from both parties and have fixed terms that extend beyond a single administration. 

It is worth emphasizing that the choice whether to create an executive or independent agency lies with Congress.  By choosing an independent form, Congress puts in place a structure meant to insulate those agencies—at least somewhat—from political pressures.  How do independent agencies achieve this goal? There are many ways, but here I’ll mention those most salient to S. 3468.  First, by being shielded from the threat of removal, independent commissioners can make policies that might conflict with those of the White House but that are more consistent with those of Congress.  Second, independent agencies are meant to be experts in their regulatory field.  They typically have a narrower scope of responsibility than do executive agencies and can thereby focus their attention on developing specialized knowledge about their regulated industries.  Certainly, expertise does not provide a foolproof shield against politics—a point I and others have frequently made—but the possibility of providing at least some insulation is a goal well worth pursuing.

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