CLIMATE:

GOP launches offensive on Obama admin's regulatory 'carbon tax'

Republican lawmakers and pro-fossil-fuels advocates have long held that the Obama administration is planning to promulgate a carbon tax without Congress' consent, and they have found their smoking gun in the administration's revised estimate for the social cost of carbon (SCC).

The SCC will be used in the cost-benefit analyses for agency rulemakings. And Republican opponents of those rulemakings say that businesses will pass the cost of compliance to their customers, making it a de facto levy on carbon emissions.

All this has GOP lawmakers in a frenzy pushing legislative fixes and demanding government oversight.

At issue is an estimate, which was released in May as part of the cost-benefit analysis for an Energy Department microwave efficiency rule, that is more than 50 percent higher than the administration estimated in 2010. The new SCC estimates that each ton of man-made CO2 released today costs society $35 per ton of CO2 -- up from $21 -- in economic damage related to health, property and crop loss, and other climate-related risks.

"Without Congressional action, the EPA will continue to promulgate regulations using this carbon tax, and the costs of these regulations will be passed onto American businesses and American consumers," Rep. John Culberson (R-Texas), one of the most vocal critics of the administration's new estimate, said in a statement.

Culberson joined Rep. Duncan Hunter (R-Calif.) and Sen. David Vitter (R-La.) yesterday in calling on the nonpartisan Government Accountability Office to investigate the administration's process in revising the SCC.

The trio wrote that it was "imperative" that the American people understand how representatives of agencies including U.S. EPA and the Department of Energy arrived at the new estimates.

"As openness and transparency in rulemaking are not only legally required but also a stated goal of the administration, we direct our inquiry to the process and methods used by the Interagency Working group crafting and developing the SCC," they said. They requested that GAO delve into the working group's basis for raising the SCC, including any experts who were consulted.

The White House has not provided much information about the working group, including which officials participated in it.

The administration argues that the three models that were used in assessing the SCC are the product of extensive peer review and are publicly available. It also notes that the SCC is not a rule -- though it may be used in cost-benefit analyses for rules in the future and those rules would be open to public comment, including about the assumptions made in the analyses.

But Republicans say the process that led to the SCC was still too obscure, considering how frequently the administration might use the estimate to justify new regulations.

Yesterday, during debate on H.R. 1582, a bill that would give DOE final say over major energy-related U.S. EPA rules, an amendment was approved to bar EPA from using the SCC in cost-benefit analyses for energy-related rulemakings. Though Culberson and Hunter originally introduced language on this issue, the adopted amendment was from Rep. Tim Murphy (R-Pa.).

An aide to Vitter said yesterday that he was considering offering a similar amendment to an Senate energy efficiency bill sponsored by Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio) that is set for a fall vote.

Culberson also succeeded in adding his amendment to the House Interior and Environment Appropriations bill for fiscal 2014 during the first half of its committee markup Wednesday.

"My amendment will provide businesses and stakeholders a chance to weigh in on this formula before the EPA uses it as a cost basis for any new rules," he said in a statement.

The committee plans to complete work on the bill after the August recess, but its chances of clearing the Senate with its policy provisions intact are very slim. A Senate version of the spending bill does not include a similar ban on the use of the SCC.

Opposition brews off the Hill

Advocacy groups are also wary of the way the SCC might be used, and some have made that concern a part of their summer offensive against the president's Climate Action Plan.

Benjamin Cole of the American Energy Alliance said his group began "flooding the airwaves" last month in several states with ads targeting members it sees as possible supporters of a carbon tax (Greenwire, July 16). The group will follow with other media efforts and outreach to lawmakers and staff throughout the August recess.

"We're carpet bombing with our messaging on this very issue and educating the American people about what we believe to be the threat of the president's climate change policies and specifically how that will be implemented by the EPA through a backdoor tax on carbon," he said.

Some of the group's efforts were in support of an amendment by Rep. Steve Scalise (R-La.) opposing a carbon tax, which is supposed to be brought to the House floor during debate today on H.R. 367, congressional Republicans' signature regulatory reform proposal. But Cole said the amendment by Culberson and Hunter on the SCC would have prevented the Obama administration from using regulation to levy a carbon tax.

"That's the vehicle that the administration appears ready to use to drive a carbon tax down the American people's throat," he said. "It is the regulatory end-run around the Congress' constitutional authority to raise revenues."

Paul Cicio, president of the Industrial Energy Consumers of America, said the SCC is of concern to his organization, which represents energy-intensive, trade-exposed industries like cement and steel.

"It's not a one-for-one carbon tax cost, but it is a cost, because as EPA does a cost-benefit calculation for new regulation, they will consider the cost versus the benefit," he said. "That's going to help drive the justification for a regulation, and the regulation is real. It stops being theoretical and becomes a cost."

But Myron Ebell of the Competitive Enterprise Institute said that efforts to oppose the SCC are unlikely to resonate as much outside the Beltway as those to fend off a carbon tax.

"It's just much harder to explain why through a long series of government actions this could be just as bad as a carbon tax," he said.

While House members of either party who vote against the Scalise amendment are likely to pay the price when they go home to their districts for the August recess, the same fate might not await those who fail to oppose EPA's use of the SCC, he said.

"It's an issue; I just don't think it's one we're going to be able to promote as much," he said.

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