Saturday, January 22, 2022

When The Administrative State Slips Its Constitutional Bonds

,@ Manhattan Contrarian

For the past few weeks, everybody’s attention has been focused on the looming demise of President Biden’s legislative agenda. Both the massive social spending bill (going by the Orwellian name “Build Back Better”) and the anti-voter-integrity bill, have now conclusively failed, at least in their most recent forms. A major part of the Build Back Better monstrosity was the launching of the Green New Deal, with its attendant suppression of the use of carbon-based fuels.

So, at least for now, these things are dead in Congress. But what’s happening over in the Administrative State? That’s where, in Woodrow Wilson’s progressive vision, the “experts” from various fields of endeavor have gathered in the government, unconstrained by the Constitution’s separation of powers, to make the all-important rules for a smoothly running society. Today there are hundreds of thousands of these “experts” in the bureaucracy. To a person, they appear to believe that the most pressing issue of our era is saving the world from U.S. emissions of carbon dioxide. How do they know that? Obviously, they know it because they are the “experts.”

Under what legislative authority do these “experts” operate to impose their green agenda? Excellent question. Barack Obama had a big plan for “cap and trade” legislation to lower emissions by driving up the price of all fossil fuels. (“Under my plan of a cap and trade system, the price of electricity will necessarily skyrocket.”). The legislation failed in Congress. Biden’s Green New Deal also has so far failed in Congress. There has been no relevant amendment to the Clean Air Act further empowering the bureaucracy to regulate carbon emissions since such emissions first became a progressive obsession in the early 2000s.

Clearly then, the bureaucracy must be stymied in its goal to effect a fundamental transformation of the U.S. energy system by suppressing production and use of fossil fuels, while they await Congressional authorization to proceed. If you think that is true, you do not understand the extent to which the Administrative State has slipped its constitutional bonds.

For today, let me highlight just a few of the initiatives currently emanating from the Administrative State.

Biden Executive Order 13990. On January 20, 2021 — his first day in office — President Biden issued this Executive Order. From Section 1:

Our Nation has an abiding commitment to empower our workers and communities; promote and protect our public health and the environment; and conserve our national treasures and monuments, places that secure our national memory. . . . In carrying out this charge, the Federal Government must be guided by the best science and be protected by processes that ensure the integrity of Federal decision-making. It is, therefore, the policy of my Administration to listen to the science; to improve public health and protect our environment; . . . to reduce greenhouse gas emissions . . . .

You might note the lack of citation to any particular statute that might support the implementation of those lofty goals. “Reducing greenhouse gas emissions” means wiping out our existing, functioning energy system with no idea what might replace it or at what cost.

Social Cost of Carbon. Among many other things, EO 13990 established something called the “Interagency Working Group” to put a price on all CO2 emissions, which price would then be used in any cost/benefit analyses or considerations of permits to proceed with any project that might involve emissions of CO2 (in other words, all projects, since all human activities involve emissions of CO2). From the EO:

There is hereby established an Interagency Working Group on the Social Cost of Greenhouse Gases (the “Working Group”).  The Chair of the Council of Economic Advisers, Director of OMB, and Director of the Office of Science and Technology Policy  shall serve as Co-Chairs of the Working Group. . . . The Working Group shall also include the following other officers, or their designees:  the Secretary of the Treasury; the Secretary of the Interior; the Secretary of Agriculture; the Secretary of Commerce; the Secretary of Health and Human Services; the Secretary of Transportation; the Secretary of Energy; the Chair of the Council on Environmental Quality; the Administrator of the Environmental Protection Agency; the Assistant to the President and National Climate Advisor; and the Assistant to the President for Economic Policy and Director of the National Economic Council. . . . The Working Group shall, as appropriate and consistent with applicable law: . . .  publish an interim SCC [Social Cost of Carbon] . . . within 30 days of the date of this order, . . . [and] publish a final SCC . . . by no later than January 2022.

The IWG was promptly established (or more accurately, re-established after a previous Obama administration version) and, right on schedule, came out with its interim “SCC” on February 21, 2021. The newly announced SCC is $51/ton of CO2 emissions — a level sufficient to undermine many if not all significant projects relying in any way on use of fossil fuels. From the National Law Review, June 24, 2021:

With the resetting of the SCC to a significant value, it will begin to again influence federal decision-making, and courts and states will also begin considering it in evaluating environmental impacts. Industry actors will need to pay close attention to how the new administration applies SCC and quickly adapt their activities accordingly.

But wait a minute: This is a regulation explicitly designed and intended to effect a complete transformation of the U.S. energy economy. Did the Congress ever so much as authorize the creation of the IWG, or so much as suggest the creation of a “SCC” for such a purpose? Some seventeen states have brought litigation in the Western District of Louisiana (Louisiana v. Biden, No. 21-CV-01074, available at the government’s PACER website) seeking to enjoin the use of the SCC. From the States’ opposition to the government’s motion to dismiss:

[T]hese [SCC] Estimates are perhaps the most significant regulatory action in American history—yet Defendants cannot cite one statute authorizing them. Indeed, to avoid public and judicial accountability, the Administration has resorted to creating a new agency [the IWG] out of whole cloth, avoiding notice and comment procedures, and reviving a discredited methodology to justify unprecedented burdens on State sovereignty and individual liberty. This is the very definition of an APA violation and ultra vires action.

Remarkably, the “experts” in the government have calculated their social “cost” of carbon as being something entirely negative, with exactly zero accounting for the fact that carbon-based energy provides us with positive benefits like electricity and transportation that are low cost and that work. In other words, people who have no idea whatsoever what they are doing claim the mantle of “expertise” to completely refashion the U.S. economy without any hint of authorization from Congress.

Federal Reserve. Compared to other agencies whose Congressional mandate may be somewhat ambiguous, the Fed actually has two clearly specified goals: price stability, and full employment. One might quibble that those two goals may not be fully compatible at all times. But at least Congress has explicitly said that those are the goals, and has not named any others. Suppression of fossil fuels? There is no Congressional authorization for that.

But last week President Biden nominated one Sarah Bloom Raskin to be the Fed Vice Chair for Supervision — in other words, the person at the Fed in charge of overseeing the function of regulating the banking system. Who is Sarah Bloom Raskin? She is a former Deputy Secretary of the Treasury (Obama administration) and a former member of the Fed Board of Governors. She has also been outspoken in her view that the banking regulatory function needs to be co-opted in the service of the climate agenda and suppression of fossil fuels. For example, in June 2020 she contributed a Foreword to a Report for an organization called Ceres (the “Accelerator for Sustainable Capital Markets”). Excerpt:

If we want to create a sustainable climate, we need to transition to a net-zero carbon economy. This transition is not going to happen without guidance. Financial markets, themselves, are not going to be the first responders to keep us from the threats posed by a climate emergency. We are learning this the hard way. Thankfully, in many countries central banks and other financial regulators know that when it comes to curbing the effects that climate risk will have on the economy, particularly the heightened chance that such risks will bring about economic catastrophe, leadership must exist and concerted action must be taken.

Do the Republicans in the Senate have any chance of blocking this crazed lunatic from getting into a position to wreak havoc on the economy? I doubt it. I would also have no doubt that all the hundreds of minions working under Ms. Raskin will be fully and unanimously on board with the program of blocking bank lending to the fossil fuel industries. Hey, it’s to save the planet! With such important goals before us, what kind of impediment is the mere Constitution? And anyway, any dissenters will be fired.

And believe me, the above are just a couple of many, many such unauthorized and unconstitutional initiatives going on around the bureaucracy in the effort to “save the planet.” Expect future posts on some of the more significant and crazy among them.

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