Politics & Policy

Betting Blind on ACES

The House is all-in on Waxman-Markey, a bill it never had a chance to read.

L ast Friday, the House of Representatives narrowly passed a massive climate-change bill that few, if any, members of Congress had actually read. The legislation would impose the first-ever limits on emissions of carbon dioxide and impose a raft of other regulatory measures, while simultaneously ensuring that key constituencies are protected from climate policy’s pinch. The bill is one step closer to becoming law, and yet most of our elected representatives could not tell you much of what it contains.

The centerpiece of the American Clean Energy and Security Act, also known as the “Waxman-Markey” bill after its two primary sponsors (Reps. Henry Waxman of California and Edward Markey of Massachusetts), is a “cap-and-trade” regime governing greenhouse-gas emissions. It imposes a cap on industrial emissions of carbon dioxide that declines over time: 17 percent below 2005 levels in 2020, over 80 percent below 2005 levels in 2050. Emitting firms must acquire emission credits, in any of a number of ways — by receiving them from the government, by buying them from other emitters, or by supporting projects that can “offset” their emissions (such as eco-friendly changes in agricultural practices).

 

Originally credits were to be auctioned off, but the bill’s sponsors opted instead to dole them out like corporate welfare to keep a lid on the legislation’s costs to business. Many major emitters are guaranteed free emission allowances for years to come. This enables the sponsors to claim that Waxman-Markey will be less expensive, but it also reduces the likelihood that it will generate meaningful reductions in emissions. Indeed, depending on how the offset provisions were implemented, it’s possible the bill would not reduce domestic carbon emissions for 20 years.

The trading of emission credits is what distinguishes this regulatory regime from traditional command-and-control regulation. In theory, cap-and-trade should be a more affordable way to reduce emissions, as less efficient emitters can purchase credits from those capable of reducing emissions at less cost. Yet even cap-and-trade is not free. Insofar as firms have to purchase their emission credits, the regime will operate like a carbon tax, albeit one hidden from consumers and prone to special-interest manipulation. Even with trading, the EPA estimates the bill will cost approximately $1,100 per household in increased energy costs by 2050.

Cap-and-trade is just one of the components of this gargantuan bill. Among other things, Waxman-Markey would impose a federal renewable-portfolio standard, requiring 15 percent of electricity from each utility to come from renewable energy sources, and an additional 5 percent to come from conservation and efficiency improvements. Insofar as such alternative energy sources are not cost-competitive, these provisions will further increase costs for consumers. The bill also provides for increased federal efficiency standards for buildings and appliances, and threatens to preempt local building and housing codes. As the Washington Post (but few other papers) reported, the legislation requires local building codes to meet ever-tightening energy-efficiency standards for new construction, and authorizes the Energy Department to develop a draft national code of its own. And, as one would expect, the bill contains many more provisions catering to various interest groups, such as a requirement that bill-funded projects comply with Davis-Bacon prevailing-wage rules.

The Waxman-Markey bill was already a 1,000-page behemoth when it emerged from the House Energy and Commerce Committee last month, but there was more to come. Several other committee chairmen wanted the chance to add provisions of their own, threatening lengthy turf battles that could tie up the bill for months. Intense negotiations ensued. Then, late Monday night, House Democratic leaders substituted a 1,200-page bill with new measures written to help the bill squeak through. Provisions were added to guarantee emission credits to rural electric cooperatives and placate agricultural interests — but the wheeling and dealing was not yet done.

As the floor debate approached, House leaders were still worried that they might not have the votes. Behind the scenes, negotiations continued apace, primarily with Rust Belt and farm-state representatives concerned that a greenhouse-gas emissions cap would harm their constituencies. Then, at 3 a.m. on Friday, with the floor debate just hours away, House leaders added yet more amendments — 300 pages’ worth — accommodating yet more interests that could be persuaded to support the bill.

A key provision of the final compromise transfers authority over “offsets” from the Environmental Protection Agency to the Department of Agriculture. Farm-state interests demanded this change in the hope that USDA will adopt a more flexible approach to offset compliance and turn a blind eye to the indirect environmental consequences of some offset projects. Another provision could force the imposition of tariffs on foreign products from nations that do not impose sufficiently stringent climate controls of their own. Yet another could overturn an EPA ruling adverse to ethanol and biofuel interests.

When Waxman-Markey finally hit the floor, there was no actual bill. Not one single copy of the full legislation that would, hours later, be subject to a final vote was available to members of the House. The text made available to some members of Congress still had “placeholders” — blank provisions to be filled in by subsequent language — including one for the regulation of climate derivatives. The last-minute amendments, too, had yet to be incorporated. Even the House Clerk’s office lacked a complete copy of the legislation, and was forced to place a copy of the 1,200-page draft side by side with the 300-page amendments.

Even if members had had the opportunity to read the draft bill and the last-minute amendments, they would still have been in the dark about much of the bill. The last-minute amendments consist largely of line-by-line revisions and insertions that are simply incomprehensible on their own. Here’s a sample (from page 5):

Page 32, line 6, strike “When,” and insert “Except as otherwise provided in paragraph (2), when”.

Page 43, line 10, after “supplier” insert “, or a central procurement State that, pursuant to subsection (g), has assumed responsibility for compliance with the requirements of subsection (b),”.

Page 43, line 21, before the comma insert “and paragraph (4)”.

Page 44, line 5 strike “(4)” and insert “(5) and with paragraph (4) where applicable”. . . . 

And so on. This is the sort of stuff that would take even experienced legislative staff more than a few hours to comprehend. There’s simply no way most members of Congress have any idea what these last-minute revisions did.

Climate-change policy is incredibly important. Even those who support federal action on climate change (as I do) should be distressed about the process and product that emerged from the House last week. The “debate” over the bill was a farce — a mockery of representative government — and the bill itself is riddled with sweetheart deals for special interests and regulatory measures that will impose costs for minimal benefit.

In the end, the Waxman-Markey bill garnered 219 votes, significantly fewer than the Democrats’ total 256-vote majority caucus (and the bill picked up eight Republicans). One hopes that at least some of the 44 Democrats who voted against the bill were uncomfortable endorsing legislation they did not have time to read, let alone digest. Senate Democrats will not have this excuse. When it’s their turn to take up climate legislation, they’ll have to focus on what the bill actually says. If the Senate is to endorse climate cap-and-trade, we can hope that the glare of sunlight will prevent it from approving an equally monstrous bill.

NRO Contributing Editor Jonathan H. Adler is Professor of Law and Director of the Center for Business Law & Regulation at the Case Western Reserve University School of Law.

Jonathan H. Adler — Mr. Adler is an NRO contributing editor and the inaugural Johan Verheij Memorial Professor of Law at Case Western Reserve University School of Law. His latest book is Marijuana Federalism: Uncle Sam and Mary Jane.

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