Conservatives have spent the past month rejoicing over the U.S. Supreme Court’s ruling that the Environmental Protection Agency failed to appropriately account for industry costs when deciding to propose rules limiting mercury emissions from power plants. And rightly so.
After years of sounding the alarm about the massive economic costs the EPA is imposing, seemingly without concern, conservatives find themselves vindicated. For the first time in a long time, it seems there perhaps is a limit to what previously seemed like completely unchecked power. After all, the concept that costs should be appropriately accounted, and that you cannot simply claim any and all benefits, however tangential, to justify a regulation, is the most basic part of regulatory analysis. It shouldn’t take the Supreme Court to affirm this idea.
The question remains, now that the Supreme Court has ruled that the agency must do better, what will happen in future legal challenges over pending regulations, particularly the Clean Power Plan? And how should conservatives who oppose the rules react?
It’s tempting to draw too much hope from the ruling. It’s simply not yet clear what will happen or whether the rule will be vacated during the reevaluation of costs and benefits. Even if it were, a victory in the mercury case doesn’t guarantee a victory later. If anything, conservatives who want to halt the Clean Power Plan will at best get a brief reprieve while the agency figures out a “smarter” way to structure and justify the rule. The Supreme Court’s ruling doesn’t weaken, and may strengthen, liberals’ resolve to regulate any and all emissions. Moreover, the Clean Air Act’s language compels the agency to regulate dangerous pollutants, and the Supreme Court has found that carbon emissions qualify.
Conservatives should see this as a window of opportunity. The left is dead set on doing something about carbon emissions. The rules of the game are such that, if we stay on the current course, we will get some form of onerous regulation to achieve those emissions reductions. Therefore, the right should be proactive during this period of uncertainty and put forward a permanent, market-based solution, using that as a justification to remove the authority from the EPA.
We at R Street long have advocated for a revenue-neutral carbon tax at the federal level that includes preemption of EPA’s regulatory authority to regulate carbon. In absence of federal action, state-level carbon taxes as a means to comply with the CPP are the next best option. As we all know, and even the American Legislative Exchange Council has affirmed, pricing an externality is a far preferable method of control to regulation. At the federal level, the tax could be used to reduce, or even potentially eliminate, the corporate income tax. At the state level, it could be used to reduce taxes that discourage business development and economic growth.
Rather than using the recent ruling to rest on our laurels, conservatives should view this as a golden opportunity. The nation’s highest court has affirmed that the cost of regulation needs to be considered, and that the benefits may not be as high as the EPA claims. But it doesn’t end the agency’s prerogative to act. Congress must present smarter solutions, and once and for all take ownership over the climate change issue. Otherwise we’re merely waiting and hoping the issue will go away. That seems a too much of a longshot on which to gamble the future of America’s energy economy.