Douglas Kysar on CPRBlog {Bio}

American Electric Power v. Connecticut: The Good News

Cross-posted from ACSblog.

In one of the most, er, hotly anticipated cases of its term, the Supreme Court yesterday heard arguments in the climate change nuisance suit of Connecticut v. American Electric Power. From the beginning of this litigation, pundits have questioned the plaintiffs’ decision to seek injunctive relief gradually abating the defendants’ greenhouse gas emissions. To critics, this form of relief – as opposed to, say, monetary damages – seems to highlight the complex and value-laden aspects of climate change as a policy problem, making judges more likely to dismiss the suit as lying beyond the ken of the judicial branch.

Tuesday's argument confirmed the pundits’ view, as even reliably liberal justices like Ruth Bader Ginsburg greeted the plaintiffs’ claims with palpable skepticism. Justice Ginsburg’s money quote, which is being cited around the blogosphere, came when she told the plaintiffs that their prayer for relief “sounds like the kind of thing EPA does.” Justice Kagan quickly piled on: “It sounds like the paradigmatic thing that administrative agencies do rather than courts.” Justice Breyer, ever the policy wonk, wondered aloud whether “the courts [can] set a tax” because, in his words, from “what I get from reading, these [carbon taxes] might be the best way to deal with the problem.”  (Answer: Courts set implicit harm taxes every day in the form of monetary tort awards. Bonus Answer: The Clean Air Act might well be a great way to deal with the problem, as the benefits of emissions permits have been oversold and the likelihood of a carbon tax passing Congress is nil).  For her part, Justice Sotomayor was nowhere to be found since she had recused herself from the case, even though she would have been within ethical guidelines to stay involved.

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As the VSL Turns...: In Value of a Statistical Life Debate at EPA, Moral Decisions Hide Behind Technical Jargon

A report yesterday from Inside EPA offered a fascinating overview of the agency’s struggle to update the way it assigns dollar values to the suffering and premature death that its regulations prevent. Seriously, as far as economic esoterica goes, this stuff is riveting. What’s more, your life may depend on it.

Currently, EPA values each statistical human life saved by its rules at $7.9 million. This number is derived from so-called “wage-risk premium” studies that examine large data sets on employment and occupational risk. The idea is that, if you control for education, job sector, geographic region, and other relevant factors, then you should be able to come up with a number representing the portion of an employee’s wage that compensates for higher on-the-job health or safety risks. Depending on how a worker values health and safety compared to other goods, he – and he is an important distinction here since the value-of-life studies tend to only look at male-dominated blue collar jobs – might be willing to take a higher wage in exchange for accepting higher levels of occupational risk. In theory, then, the studies can pull out the amount at which workers themselves value risk exposure, which can then be converted into a uniform “value of a statistical life” (VSL) for policy analysis. By using the VSL number to value the health and safety benefits of regulations, EPA can avoid the messy task of government deciding on its own how much protection is worth investing in.

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SCOTUS Grants Cert in AEP v. Connecticut; Why the Threat of Tort Liability Should Remain as Part of the Balance of Powers

The Supreme Court this morning granted certiorari in the case of American Electric Power Co. v. Connecticut, a common law nuisance suit seeking an order compelling large electric utility companies to reduce their contributions to global climate change. At issue will be a variety of doctrines – such as standing and political question – that nominally originate from constitutional limitations on the role of the judicial branch, but that judges have, over the years, expanded well beyond the text and structure of the Constitution. 

AEP is the first climate change nuisance suit to reach the Supreme Court, but it is only one of several that have been initially dismissed by district court judges who seem all too eager to avoid these controversial and boundary-straining suits. 

The problems with these dismissals are two-fold. First, to the extent that judges are worried about stretching tort law to reach the mother of all collective action problems – global climate change – their concerns are grossly overstated. Numerous avenues exist within the substantive law of tort itself to avoid finding defendants liable for their contributions to climate change (see my recent paper outlining these avenues here). Second, to the extent that judges erect preliminary barriers that deprive courts of the opportunity to engage with climate change tort claims on the merits, they abdicate a traditional role that lies at the very heart of our system of limited government. Tort law is a residual locus for the airing of grievances when no other government actor is responsive to societal need. Unlike legislators and executive branch officials, judges have to give an answer when a claim of wrongful harm is brought to their attention. Using slippery and seemingly unprincipled doctrines like standing and political question to avoid that responsibility works to short-circuit a fundamental node in our system of divided and overlapping governmental power.

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Bad Times for Good Government

This post looks at two recent books by CPR Member Scholars in the context of the BP disaster and other recent regulatory failures:

The People’s Agents and the Battle to Protect the American Public, by Rena Steinzor and Sidney Shapiro

Facing Catastrophe: Environmental Action for a Post-Katrina World, by Robert R. M. Verchick

Does the BP oil spill signify the need for an entirely new conception of the administrative state, one reformulated to meet the global, complex, uncertain, and potentially catastrophic nature of twenty-first century threats to social and ecological well-being?  Or does it simply suggest the need to redouble our commitment to environmental, health, and safety laws that are already on the books and that would have prevented the disaster if they had been vigorously enforced?

Two valuable new books shed light on these questions.  Both were written before the spill, but both will inevitably be read with that disaster in mind.  The first, Robert Verchick’s Facing Catastrophe: Environmental Action for a Post-Katrina World, is uncommonly moving for a tract on environmental law.  It emerges out of Verchick’s experience relocating to New Orleans not long before Hurricane Katrina struck in 2005.  One might think that the author, having no prior connection to the city, would have been tempted after the storm to move on to drier pastures.  Yet the devastation wrought by Katrina had precisely the opposite effect on him.  He immediately sprung into action in support of his newly adopted home, providing congressional testimony on issues relating to Katrina and its aftermath, serving as a volunteer and board member for local initiatives as part of the rebuilding effort, and researching and writing Facing Catastrophe.  The result is a beautifully written and deeply insightful book on the challenge of managing disaster and achieving sustainability amidst a changing world.

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The State of the Cost-Benefit State: What We Can Expect from Sunstein, 'Nudge,' and OMB on Regulatory Impact Analysis

This week the White House Office of Management and Budget (OMB) released its annual report to Congress on the costs and benefits of federal regulatory programs. For the policy wonks among us, the most intriguing part was a section on recommendations for reform of the OMB regulatory review process. Here we find hints of what might result from President Obama’s long-awaited overhaul of the executive order on regulatory impact analysis. Cass Sunstein – an eminent legal scholar and now head of the Office of Information and Regulatory Affairs (OIRA) within OMB – has written prolifically and powerfully on this subject and observers expect that the new executive order will bear his unmistakable imprint, shaking up what has been a long-calcified debate on the role of cost-benefit analysis in federal policymaking. If OMB’s annual report is any indication, they won’t be disappointed.

From Nudges to Shoves

OMB’s first major recommendation for reform is that agencies use more cognitive psychology, behavioral economics, and other social sciences in the crafting of regulations. This recommendation comes straight from the pages of Nudge, Sunstein’s popular book co-written with Dick Thaler. Nudge argues that conservatives and liberals should be able to agree on a wide variety of soft regulatory interventions – ones designed to alter the “choice architecture” for individuals in a way that improves well-being without directly forcing behavioral changes. My favorite example from Nudge involves the use of a painted fly image inside the urinals of men’s bathrooms, which apparently dramatically improves aim and thereby reduces cleaning costs. A more pertinent example is the use of an “opt-out” as opposed to an “opt-in” default standard for retirement savings programs, which can substantially enhance participation rates. The idea is that, for a variety of reasons, we underestimate our long-term savings needs. Altering the choice architecture in this way helps to overcome those cognitive limitations while still permitting individuals to opt-out if they desire.

These are fine policies as far as they go, but the question is . . . how far do they go? OMB writes that “[b]ehaviorally informed approaches can be applied in many domains, including financial regulation, public health, environmental protection, energy use, motor vehicle safety, and consumer protection.” But the effectiveness of nudges depends very much on context and goal.

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Lomborg Plays Economist-as-Philosopher-King on Climate Change

Prominent environmental commentator Bjorn Lomborg is at it again, this time convening a blue ribbon panel of five economists to assess the relative merits of different possible methods for addressing climate change.  As reported by Reuters Friday morning, Lomborg's panel concluded that "'climate engineering' projects, such as spraying seawater into the sky to dim sunlight, would be a more effective brake on global warming than increasing taxes on energy."  In a blog entry, The Wall Street Journal added that the economists viewed "any sort of carbon tax" as the least desirable climate policy reviewed and that a "cap-and-trade proposal . . . didn't even make the list." 

It's difficult to evaluate these claims in light of the sparse information actually released thus far about the report.  According to Lomborg's website, the economists relied on background papers concerning each of the proposed climate policies that were prepared by "acknowledged authorities."  Despite being supposedly authoritative, these papers were then "balanced" by a critical "perspective paper" in order to "ensure complete information on each category of solutions."  The names of the authors of these various papers allegedly appear "overleaf" on the final report issued by Lomborg's panel, but that page of the report is conveniently missing from the online version of the report.

A number of acknowledged authorities - who have not remained anonymous - also have looked at climate engineering and reached less bullish conclusions.  Just this week one of the world's most eminent scientific organizations, Britain's Royal Society, cautiously endorsed research into climate engineering possibilities, but stressed that such mass-scale alteration of the earth's atmosphere, oceans, and land systems could have catastrophic side effects.  Because such unintended consequences could be massive - and because scientists as yet have no reliable way to estimate their likelihood - the Royal Society stressed that climate engineering should only be thought of as a kind of last-ditch insurance policy.  In other words, climate engineering is at best a relatively minor complement to - not a substitute for - policies designed to reduce greenhouse gas emissions, which remain "[t]he safest and most predictable method of moderating climate change."

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