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Industry Carbon Lawsuits Suffer "Wardrobe Malfunction"

David Doniger

Posted November 5, 2010 in Curbing Pollution, Solving Global Warming

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Yesterday I wrote about Texas’s flimsy legal challenge to EPA’s initial steps to curb carbon pollution.  Today let’s look at the lawsuits brought against EPA by Texas’s industry partners. 

The National Association of Manufacturers (NAM) is leading a who’s who of American trade associations that, like Texas, are asking the court of appeals in Washington to “stay” all of EPA’s actions to tackle global warming.

NAM's lawsuits were supposed to dress up the polluters' lobbying attack on the Clean Air Act.  But now they look more like a wardrobe malfunction.

NAM’s lobbyists are spreading scary warnings that construction of big new industrial projects will be blocked all across the country starting in January.  But as I explained, Texas is the only state not ready to issue those permits.  All 49 other states are ready to do the job, either on their own or in coordination with EPA.  So, there will be no “construction bans” and America’s industries will be able to get the clean air permits they need – except possibly in Texas, and then only if that state’s leaders are really into self-inflicted wounds. 

NAM also claims that EPA’s modest requirements will cause huge costs to the economy.  For proof, NAM offers a couple of industry-funded consultant reports that, on close inspection, are classic examples of economic malpractice. 

We asked two noted economists to examine the industry consultants’ claims.  Here’s what they found.  

Dr. Dallas Burtraw, an economist with Resources for the Future, found that NAM’s consultants “offer inappropriate comparisons between fundamentally different policies and reach conclusions that cannot be sustained based on the cited evidence. As a result, the exhibits provide no meaningful information on the costs or economic impacts of the policies that NAM seeks to stay.”

Dr. Nathaniel Keohane, an economist with the Environmental Defense Fund, found that NAM consultants’ reports “are based on demonstrably biased economic studies and contain rudimentary errors and faults of reasoning. The errors and degree of bias are so great as to call into serious question the expertise” of NAM’s consultants.  Their work, Keohane writes, “says absolutely nothing about the effects of EPA’s regulatory action” and provides “absolutely zero evidence for any increase in the cost of capital resulting from EPA’s actions, or for any corresponding reduction in investment.”  

As Dr. Burtraw explains: 

Because the emission limitation reflecting [Best Available Control Technology] will be determined in the future for each covered source on a case-by-case basis, taking costs into account, it is impossible to demonstrate now that the costs of those requirements will be excessive for the sources or burdensome – or even noticeable – for the overall economy.

Burtraw also caught NAM’s experts comparing apples to oranges.  The BACT requirements will apply to only about 1,600 of the largest new and expanded industrial pollution sources each year.  But NAM’s consultants based their cost claims on a much bigger program – the economy wide cap-and-trade proposals considered, but not enacted, by Congress – which would have covered more than 10,000 sources.  And NAM’s consultants bloated their comparison with “a highly exaggerated picture of the impacts of the cap and trade proposals” based on a host of bogus assumptions. 

As I said yesterday, you can say anything you want in a two-page lobbying letter to Congress.  But when you go to court, you have to prove your case.  NAM’s “proof” falls as flat as west Texas. 

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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