Ideology vs. Interest Group Politics in U.S. Energy Policy

Ideolog y vs. Interest Group Politics in U.S. Energ y Polic y David E. Adelman David B. Spence Recommended Citation David E. Adelman & David B. Spence, Ideology vs. Interest Group Politics in U.S. Energy Policy, 95 N.C. L. Rev. 339 (2017). Available at: http://scholarship.law.unc.edu/nclr/vol95/iss2/3 - CAROLINA Follow this and additional works at: http://scholarship.law.unc.edu/nclr Part of the Law Commons DAVID E. ADELMAN** & DAVID B. SPENCE*** The political economy of energy policy in the United States is dominated by a combination of ideological partisanship and interest group lobbying. Both are reflected in the widespread belief that, under the Obama administration, the Environmental Protection Agency (“EPA”) was engaged in a misguided “war on coal,” despite the coal industry’s status as the leading industrial source of air pollution and compelling evidence that the benefits of EPA’s regulations vastly exceed their costs. This conflict is persistent and unresolved, notwithstanding repeated involvement of the Supreme Court over the last few years. The politics of this conflict are compounded by tensions between electricity managers and environmental regulators. Much of this tension is driven by competing perspectives: EPA’s focus has been on the national costs and benefits of its rules, whereas grid managers operate regionally. This Article resolves the apparent conflicts by downscaling the regulatory analyses of three highprofile (and highly litigated) EPA rules addressing emissions of conventional pollutants, air toxics, and greenhouse gases associated with climate change from coal-fired power plants. This Article utilizes complementary EPA databases and draws on several model estimates to examine the regional impacts— both costs and benefits—of regulations targeting coal-fired power plants. Overall, this Article finds that the distribution of both the compliance costs and environmental benefits of the rules are roughly commensurate with each region’s reliance on coal-fired * © 2017 David E. Adelman & David B. Spence. ** Harry Reasoner Regents Chair in Law, University of Texas at Austin School of Law. *** Professor of Law, University of Texas at Austin School of Law; Herbert D. Kelleher Professor of Business Law, University of Texas at Austin McCombs School of Business. The authors would like to thank the colloquium participants at the University of Florida Levin College of Law in Gainesville, Florida, on October 29, 2015, and at the PUC Clean Energy Collaborative in Washington, D.C., on November 6, 2015, for their helpful comments on earlier drafts of this Article; and Kelly Cavnar-Johnson for her research assistance in the preparation of this Article. NORTH CAROLINA LAW REVIEW [Vol. 95 power plants, particularly older facilities. That is, the benefits of reducing emissions under these rules are predominantly local. As a consequence, regulatory benefits exceed costs not only at the national level but at the regional level as well, and typically by large margins. Further, with a few important caveats, we find that while the EPA rules will hasten power plant closures, most will occur in electricity markets that have sufficient excess capacity to mitigate potential threats to electricity supplies and reliability. Nevertheless, opposition to the rules persists, which we explain as the product of a combination of both interest group and ideological/partisan opposition. Interestingly, ideological/ partisan opposition appears to hold greater sway based on varying levels of political opposition regionally and may— incrementally—be shifting in EPA’s favor. INTRODUCTION 341 Energy policy in the United States is shaped by ideological conflicts between the political parties and powerful interests with large assets at stake. While the increasing polarization of American politics is well recognized,1 conflicts over regulation of the energy sector are especially sharp, inciting repeated interventions by the Supreme Court in recent years.2 EPA’s regulation of electric utilities has become a focal point of this partisan divide and an ideological litmus test for congressional campaigns.3 It is also emblematic of the broader trends in congressional politics, characterized by a shift from norms of cooperation among centrists of both parties in the 1970s and 1980s to the dominance of bitter partisanship today.4 In the 1970s, for example, a Republican president created EPA,5 and a Democratic president oversaw the deregulation of natural gas prices;6 in the 1980s NORTH CAROLINA LAW REVIEW [Vol. 95 and early 1990s, a bipartisan Congress addressed the problem of acid rain and the global threat of ozone losses in the stratosphere,7 and a Republican president ran for election as the “environmental president.”8 Today, however, the parties are each more ideologically homogenous than at any time in the postwar era,9 yet are further divided on issues that concern the regulation of the energy industry, most no (...truncated)