Cap-and-trade legislation making its way through Congress has become enormously complex, embodying a host of arcane political deals governing the distribution of the vast majority of emissions allowances being given away for free, with crucial details being left to EPA. This complexity threatens to hinder the effort to address climate disruption (see my article Capping Carbon). It would lead to long delays and weak implementation, just like other laws delegating a lot of controversial and litigable decisions to administrative agencies. Delays and weakness could prove disastrous in the climate disruption context, because greenhouse gas emissions have already warmed the planet and gases emitted while implementation flounders can create irreversible and potentially catastrophic ecological problems. Auctioning of 100% of the allowances would make the program run smoothly.
The Regional Greenhouse Gas Initiative—a cap-and-trade program that regulates utility emissions in the northeastern states— has relied on auctioning nearly 100% of the allowances. As a result, the long administrative delays typical of environmental programs have simply not arisen in this program. One Congressional bill, the Cap and Dividend Act of 2009, H.R. 1862, likewise relies on auctioning 100% of the allowances, but it has not gained political traction, at least not yet. But growing strife over political allocation decisions (see E&E Daily, subs. required) may make members of Congress realize that enactment of a simpler alternative based on auctions is better.
The cap-and-trade program for acid rain ran smoothly without auctioning only because Congress made all of the major design decisions itself, even including a table in the legislation allocating allowances to each phase one utility unit, thus leaving EPA with relatively few decisions to make in inevitably contentious rulemaking proceedings. Unfortunately, absent a decision to focus cap-and-trade on upstream providers of fossil fuels, duplicating this degree of specificity is not possible in a comprehensive cap-and-trade bill. The Waxman-Markey bill, for example, contemplates some 270 actions by agencies to implement the bill, some of which are essential to the cap-and-trade program’s operation. (See Michael Gerrard's database, accessible via his site, listing required agency actions under Waxman-Markey).
Full textA coalition of conservative and moderate Democrats has recommended deleting section 336 of the Waxman-Markey climate change bill because of "concern among industry about potential new liability for any emitter" under that provision (see the proposed amendments). Some polluters' objective, apparently, is to avoid liability for violating the law, and they recommend this deletion as a step toward accomplishing that goal.
But section 336 does not create any liability, new or old. Section 723 of the Waxman-Markey bill does that, quite appropriately, by establishing penalties for failure to meet targets or purchase sufficient allowances. And the liability in this other section does not apply to "any emitter," but only to emitters that violate the law by failing to reduce greenhouse gas emissions.
The whole notion that new obligations should create no new liability for violators, if accepted, would convert this bill from a mandatory cap and trade bill to another Bush Administration voluntary program. Industry concern about "potential new liability" should not be reason to amend a climate change bill at this point in the history of the world.
Section 336, however, has a much narrower effect. It attempts to preserve citizen standing in cases involving violations of climate change legal requirements by specifying that affected citizens may sue based on the potential contribution of a legal violation to global climate disruption. Without this provision, courts are more likely to make current law authorizing citizen enforcement of environmental law a dead letter in the climate change context.
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