Environmental Regulation, Energy, and Market Entry

As my contribution to a symposium, I was asked to identify and to discuss conflicts between environmental regulation and pursuit of the goals of national energy policy. I identify three contexts in which I see clear conflicts between environmental regulation and energy policy - gasoline production, importation of liquefied natural gas, and transmission of electricity. In each case, I conclude that the conflict is attributable to state and local regulations. In the case of the gasoline market, I conclude that the market is beginning to perform poorly because of a combination of state land use regulations that make it impossible to construct new refineries and state gasoline-type mandates that are in the process of transforming the highly competitive and efficient national gasoline market into scores of much smaller inefficient markets that are increasingly susceptible to both unilateral and collusive exercises of market power. In the case of the natural gas market, I conclude that state and local government attempts to assert the power to veto federally approved liquefied natural gas terminals place us in jeopardy of experiencing a devastating shortage of natural gas in the next few years. In the case of electricity transmission, I conclude that our rapidly growing shortage of transmission capacity is already costing us many billions of dollars per year and increasing dramatically our vulnerability to widespread blackouts and price spikes, and that the shortage is attributable primarily to state and local land use regulation. In each case, the conflict can be eliminated only by reducing the power of state and local regulators and/or by transferring some regulatory power from state and local institutions to federal institutions

Which Institution Should Determine Whether an Agency’s Explanation of a Tax Decision is Adequate?: A Response to Steve Johnson

This Essay responds to Professor Steve Johnson’s Article for the 2014 Duke Law Journal Administrative Law Symposium, Reasoned Explanation and IRS Adjudication. I first describe the ways in which courts have added burdensome procedures that are not required by the APA for the notice and comment process. Next, I explain why the Office of Information and Regulatory Affairs (OIRA) is better than courts at reviewing the adequacy of agency reasons for issuing a rule. Finally, I explain how courts can eliminate judicial review for the adequacy of the reasons IRS gives for issuing a rule by applying the traditional broad interpretations of the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act

Democratizing the Administrative State

Scholars have long questioned the political and constitutional legitimacy of the administrative state. By 1980, a majority of Supreme Court Justices seemed poised to hold that large portions of the administrative state are unconstitutional. In 1984, the Court retreated from that abyss and took a major step toward legitimating and democratizing the administrative state. It instructed lower courts to defer to any reasonable agency interpretation of an ambiguous agency-administered statute, basing this doctrine of deference on the superior political accountability of agencies. Henceforth, politically unaccountable judges were prohibited from substituting their policy preferences for those of politically accountable agencies. The Court recognized that agencies are politically accountable to the people because they are subject to the control of the elected President. The Court\u27s 1984 effort to democratize the administrative state has fallen far short of its potential because of temporal problems with the manner in which the Supreme Court defines and implements both the deference doctrine it announced in 1984, and the other two doctrines that require courts to defer to agency interpretations of agency-administered texts. The most important of those deference doctrines is explicitly premised on the Court\u27s understandable belief that policy decisions should be made by the politically accountable President rather than by politically unaccountable judges. Yet, the Court\u27s present method of implementing the deference doctrines has two unfortunate effects. First, in a high proportion of cases, there is a lag of four to eight years between the time that a President takes office and the time when a court is willing to acquiesce in implementation of the policies preferred by the President. In other words, each President is required to implement the policies preferred by his predecessor for at least one term and perhaps even for two terms. Second, in some important situations, regulatees are required to incur large costs in enforcement actions to comply with interpretations of agency rules that have already been rejected by the incumbent President by the time courts impose the costs on the regulatees, and that were disavowed by the agency at the time the regulatees engaged in the conduct that is the basis for the enforcement actions. This Article explains why these results are unacceptable, and proposes four changes in the Court\u27s present methods of implementing the deference doctrines that will eliminate these effects and that will create a more democratic and constitutionally legitimate administrative state in which Presidents actually have the power to make changes in policy within the statutory boundaries set by Congress

A Primer on Demand Response and a Critique of FERC Order 745

This essay is a contribution to the Second Annual Demand Response Conference sponsored by George Washington University and the law firm of Husch Blackwell. Demand response is a term that is used in debates about potential ways of reforming regulation of electricity to provide consumers with the proper incentives to conserve electricity. In this essay, Professor Pierce attempts to describe the basic economic and legal principles that are implicated in the debate in terms that make the debate more accessible to participants, policy makers, and the general public

A Primer on Demand Response and a Critique of FERC Order 745

This essay is a contribution to the Second Annual Demand Response Conference sponsored by George Washington University and the law firm of Husch Blackwell. Demand response is a term that is used in debates about potential ways of reforming regulation of electricity to provide consumers with the proper incentives to conserve electricity. In this essay, Professor Pierce attempts to describe the basic economic and legal principles that are implicated in the debate in terms that make the debate more accessible to participants, policy makers, and the general public

Two Problems in Administrative Law: Political Polarity on the District of Columbia Circuit and Judicial Deterrence of Agency Rulemaking

In a refreshingly candid article, Chief Judge Wald of the D.C. Circuit noted in 1986: The flow of membership in the D.C. Circuit . . . is more like what one would expect in Congress with elections every few years, or in the Executive, shifting its key policymakers with each administration. 1 Eleven of the twelve D.C. Circuit judges were appointed by President Reagan or President Carter within the last nine years. Most served previously in policymaking positions in either the legislative or executive branches of government. Based on their record of decisionmaking with respect to judicial review of agency actions, the new members of the D.C. Circuit seem to be experiencing a difficult, and as yet incomplete, transition from their prior active role in the partisan political process. Two problems have emerged in the D.C. Circuit\u27s review of agency decisions. First, the democratic and republican judges on the D.C. Circuit see agency policy decisions through dramatically different prisms. Deeply ingrained differences in political perspective become particularly apparent when the D.C. Circuit reviews agency policy decisions with significant ideological implications: the fate of a major agency policy decision reviewed by the D.C. Circuit will vary with the composition of the panel that reviews the agency action. 2 Second, policymaking through agency rulemaking has declined significantly at some agencies during the past decade. 3 While other factors have contributed to this trend, 4 the approach taken by appellate courts when they review agency rules dominates the list ..

The Past, Present, and Future of Energy Regulation

This essay is a contribution to a symposium at University of Utah. It begins with a summary of the history of energy regulation from 1960 until 2011. It then makes three arguments. First, the essay argues that the US should abandon pursuit of the goal of energy independence and pursue exclusively the goal of global warming mitigation. Second, it argues that the US should replace its present reliance on expensive and ineffective subsidies and mandates to mitigate global warming with a single mechanism to attain that goal – a large carbon tax. Third, the essay recognizes that, while a carbon tax offers the best prospect of mitigating global warming, that task is so difficult that it might not be attainable through any means