How Obama & EPA Could Use Clean Air Act to Enact Cap-and-Trade Without Congress


photo: Josh via flickr.

According to new analysis from the Institute for Policy Integrity at New York University School of Law, when the EPA issues its final declaration on global warming being an endangerment to human health, the Obama administration could press forward with a cap-and-trade program without having to go through Congress:Greenpeace executive director Philip Radford says in The Nation,

With this authority, the administration can do what has been widely dismissed as politically infeasible, but what scientists and others warn is environmentally and economically essential: reducing US global warming pollution from 25 percent to 40 percent below 1990 levels by 2020.

It'd Have to Be a Regulatory Fee
This authority would be enabled, according the IPI analysis because (in the most basic terms, the original analysis goes into a much greater level of detail that I can here...), though only Congress could levy a tax on carbon, the EPA could set a cap on carbon and then auction off emissions credits, classifying them as regulatory fees:
Courts have sometimes struggled to differentiate illegal regulatory taxes from permissible regulatory fees. Under the U.S. Constitution, only Congress has the power to levy taxes, which are generally defined to include payments imposed on many citizens to raise money for a public purpose. In contrast, agencies may have statutory or inherent authority to create regulatory fees, which include payments made voluntarily by some individuals for a service provided by the agency, in order to defray the expenses of that service. An auction of emissions permits would not fit neatly into either category, but some might argue it resembles a tax: it will likely affect a large number of citizens, it could be considered involuntary, and the funds generated will exceed EPA's administrative expenses.

However, an auction of emissions credits is not a tax because the purpose of the auction is not to raise revenue. Neither is it truly a regulatory fee, intended only to cover EPA's expenses. Rather, the auction is simply regulation: the fee "serve[s] regulatory purposes directly by...deliberately discouraging particular conduct by making it more expensive." Whether explicitly or implicitly authorized by Congress, an emissions auction poses no constitutional problems. [TH note: this is all footnoted in the original; these have been removed in this excerpt.]


Acting Unilaterally Potentially Problematic...
Ultimately, report authors Inimai Chettiar and Jason Schwartz say ,
In order to maximize the net benefits of greenhouse gas regulations, EPA should whenever possible adopt market based incentives. Those market based programs must be carefully tailored to adhere to the language of the Clean Air Act, while giving businesses maximum flexibility to achieve compliance at the lowest possible costs. However, where the Act clearly requires command and control regulations, EPA must fulfill its obligation to carry out the wishes of Congress by adopting those regulations.

The IPI analysis points out that such an action by the EPA would have to be very carefully handled—there are many potential stumbling blocks which could actually increase the cost of reducing emissions—and really only used if Congress fails to act.

...But May be Required
Radford rightly says that a unilateral action by the Obama administration to slash carbon emissions would sure be playing political hardball,

But for better or worse hardball is what it's going to take to solve the climate crisis, create a green economy and meet the president's healthcare goals. At the end of the day, President Obama can't afford to let Congress set the schedule--or unilaterally decide the fate of the planet.

Read the full IPI report: The Road Ahead: EPA's Options and Obligations for Regulating Greenhouse Gases and Philip Radford in The Nation
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Tags: Barack Obama | Carbon Emissions | Congress | EPA | Global Climate Change | United States