Oil: The Never-Ending Crisis
By Joan Indiana Rigdon

In 1979 Americans found themselves in their second oil crisis in six years. During the first one, brought on by the Arab oil embargo, gas stations had run dry and petroleum-dependent power companies had been forced to impose brownouts on their customers. This time, Islamic revolutionaries in Iran were disrupting their country’s oil production, which accounted for one-fourth of the world’s oil supply. By year’s end, those revolutionaries would seize the United States Embassy and overthrow the Iranian government.

Waiting times at gas stations expanded into loud, honking hours. By 1980 the average price of gas at American pumps had spiked to $1.24 a gallon, nearly double what it had cost two years earlier. That fed into inflation, which already was running in the double digits.

As the crisis was brewing during the summer of 1979, a wildly unpopular President Jimmy Carter canceled his vacation and instead retreated to Camp David with a phalanx of advisors. He emerged 10 days later with a major national address—titled “Crisis of Confidence”—one that many historians have written off as his “malaise” speech. In it he noted the nation’s lack of confidence in its future, given recent turmoil that included the Kennedy and King assassinations as well as the Vietnam War, Watergate, and years of increased inflation and rising unemployment. Americans had lost faith, Carter lectured, and were instead trying to find meaning in “self- indulgence and consumption.” “The symptoms,” he added, included America’s “dependence on foreign oil.”

President Carter declared the nation would change course. America would slash its dependence on foreign oil by one-half over the following decade. It would achieve that goal by capping foreign oil imports at 1977 levels, conserving energy, and exploiting domestic resources, especially coal. If domestic refineries and pipelines were needed, the environment would be protected, but they would be built. Meanwhile, America would levy a windfall profit tax on oil companies and plow the proceeds into public transportation and alternative energy research. America would also sell $5 billion in bonds to fund alternative energy research. Just a month earlier, in fact, President Carter had had solar panels installed on the White House roof.

“The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now,” he vowed in his speech.

Here We Go Again
Nearly 30 years later, it all sounds too familiar. With war in the Middle East, rising inflation, unemployment claims at a five-year high as of September 2008, and a painful summer spike in gas prices, not to mention dry gas pumps in Atlanta, policymakers and legislators are once again looking for ways to keep gas prices in check while reducing our dependence on foreign oil.

Once again, lawmakers are looking at windfall profit tax on oil companies such as Exxon Mobil, whose profits clocked in at $114 million per day in 2006. Once again, there is talk of plowing billions into alternative energy sources, ranging from wind and solar to ethanol that is derived from grass instead of corn.

And once again, Congress is looking to increase domestic oil production—only this time it has acted. On October 1, Congress allowed the nation’s 27-year moratorium against offshore drilling to lapse. Congress had enacted the ban in 1981 as an annual rider on the Department of the Interior appropriations bill; it was scheduled to expire October 1 of every year, but it had been renewed every year until this fall.

Though the ban had been hotly contested throughout the summer, its actual expiration was barely noticed, partly because it happened October 1, when Americans were focused instead on attempts to rescue the nation’s crumbling banking system.

Now that the bill has expired, the federal government can begin proceedings to sell leases off the East and West coasts, as well as parts of Florida that had been covered by the ban. But lawyers don’t expect any drilling to begin anytime soon.

“First you have to put together a lease sale. That in itself takes six to nine months,” says Dana Contratto, a Crowell & Moring LLP partner who leads the firm’s energy group. “That has to be part of a five-year [Minerals Management Service] plan. Historically, it always is. And you don’t have a plan put together.”

The Minerals Management Service (MMS)’s current five-year plan expires in 2012. It is unlikely to be rewritten, but even if Senator John McCain, the Republican presidential nominee, is elected and starts the process, “the earliest there could be a lease sale is probably 2010 or 2011. So there will be no short-term change to the areas off our coasts. That gives us time to organize politically and to put some protections in place,” says David Bookbinder, chief climate counsel for the Sierra Club, the nation’s leader in grassroots environmental litigation.

When the moratoria expired early in October, Senator Barack Obama, the Democratic presidential nominee, was leading in the polls. Democrats were also expected to gain seats in Congress. That leads Bookbinder to believe that the moratoria could be reinstated. “The next Congress will put it right back,” he says. Or, he adds, “the next administration will put it right back.”

In late summer, Senator Obama, who had previously opposed offshore drilling, had said he would accept it as part of an overall energy plan. Contratto takes that to mean that an Obama administration would not simply reinstate the ban. “I don’t think he’d support a drilling ban, because I don’t think he’s disingenuous. I think he’s an honorable person and usually means what he says. So unless there’s some significant change in the fact pattern, I don’t think he would support a drilling ban,” he says.

“On the other hand, he might support a state veto, or state permissions, so that if, say, Virginia, wants to allow [drilling] off its coast, that’s fine … I wouldn’t be surprised to see him say, ‘Well, okay, states deserve a larger say in this,” Contratto says. Currently, the Coastal Zone Management Act of 1972 gives states only some say into activities off their coasts.

Why Now?
The major difference between the crisis of the 1970s and now is that Americans today feel more of an urgency to wean ourselves from foreign oil. After the average price of a gallon of regular gas crested at $4 this summer, many began to worry for the first time about the prospect of $5 gas. “Nothing motivates people more than expenses,” Bookbinder says.

Daniel Adamson, a Davis Wright Tremaine LLP partner and formerly director of the Office of Energy Projects for the Federal Energy Regulatory Commission (FERC), agrees. “I’ve worked on energy issues for more than 20 years. What I’m used to is energy being a second-tier or third-tier issue in the public dialogue. Now, you see it as being one of the top issues, first and foremost because of the high energy prices,” says Adamson, who also is cochair of Davis Wright Tremaine’s climate change practice group.

Contratto concurs. “What’s new is the extraordinary oil, gasoline, and natural gas prices,” he says, as gas prices were peaking. “That’s where the fundamental drive for change is coming from. There’s a growing consensus in the country that we need to do something about our production of oil and gas.”

National security is another major motivator. Although Americans were alarmed by the seizure of the U.S. Embassy and the ensuing 444-day hostage crisis 30 years ago, the oil shocks were primarily viewed as an economic problem, says Jackie Glassman, a Hogan & Hartson LLP partner who specializes in transportation law. Now, in the wake of 9/11 and the ensuing war, she says, Americans think of oil prices “more immediately as a national security concern.”

But the biggest change of all is that there are environmental concerns, too, strengthened by last year’s U.S. Supreme Court surprise ruling against the federal government in Massachusetts v. Environmental Protection Agency (EPA).

In that ruling, with Justice Anthony Kennedy casting the decisive vote in a 5–4 majority, the Court found that the EPA does in fact have the authority to regulate greenhouse gas emissions. What makes the ruling historic is that the Court acknowledged that greenhouse gases, once deemed the realm of pseudoscience, are a real threat, and that the duty of the EPA is to “slow or reduce” global warming. Greenhouse gases are carbon dioxide, nitrous oxide, and other vapors that trap the sun’s heat in the earth’s atmosphere, causing the earth’s temperature to rise, with potentially dire consequences for climate change. Every week, it seems, the popular press reports on another part of the polar ice cap crumbling away.

A Squandered Opportunity
Thirty years ago, “Nobody was talking about global warming. People were talking about some of these issues and environmentalism, and certainly the EPA had been started, but the environment wasn’t as much of a grassroots issue as it’s become today,” Glassman says. “Now all the businesses are going green as well,” she adds.

Looking back, Bookbinder says, the oil shocks of the 1970s had the potential to inspire Americans to drastically reduce their use of oil. And for a few years, they did. In 1977 we were importing 8.6 million barrels of oil a day, or about half of our consumption. By 1985 our imports plunged by half, to 4.3 million barrels a day, which by then amounted to just 27 percent of consumption, according to the Energy Information Administration (EIA), a division of the U.S. Department of Energy.

But since then, America’s consumption of foreign oil has steadily climbed past the 1977 levels that President Carter once vowed would be our limit. In 2007 our net imports totaled more than 12 million barrels a day, or 58 percent of our consumption, according to the EIA.

“We’ve gone backward. We had that first warning sign, and we simply continued to believe that we would always have cheap sources of energy. We squandered that opportunity,” Bookbinder says.

Democracy and Drilling
In a democracy, states should be able to choose whether drilling takes place off their shores, Contratto says. He can understand why states that have never experienced offshore drilling would be reticent. “There’s already a status quo. There are already people who love their beaches and properly so. And they may not want that risk. And if they don’t want that risk, then in a democracy, you can’t foist it upon them,” he says. “But maybe there’s another state that would like the jobs and thinks it can be done in an environmentally safe way.”

But offshore drilling is not a state issue. The federal ban relates to federal waters, which the federal government can decide how to use. If the ban is lifted, states would not have control over federal drilling off their shores “but they would continue to have a strong and important say in the matter,” through the federal Coastal Zone Management Act, Contratto says.

An Obama administration could change all that by proceeding with offshore drilling in general, but granting states permission to veto activity near their waters, Contratto says. While a state such as Virginia might allow drilling, that would allow other states, with heavily touristed beaches, to keep drilling away from their waters. Protecting the environment is “particularly important for a state like Florida,” with its large tourism industry, “or shockingly, even New Jersey. New Jersey has the Jersey Shore, which is not something you’d think of, but obviously if something bad happened to the Jersey Shore, that would be problematic for that economy,” Contratto says.

Indeed, much of the opposition to offshore drilling is rooted in the 1969 Santa Barbara, California, oil spill which spread black goo over once-pristine beaches that have long been popular with tourists and movie industry moguls down the road in Hollywood.

In that disaster, a drilling platform off the shore of the Santa Barbara suburb of Summerland, California, suffered what the industry calls a “blowout,” where oil and gas gush out of a well uncontrollably. Early efforts to cap the blowout increased pressure from below, causing oil to burst through a substandard pipe casing—and to spurt forth from five newly formed ruptures in the surrounding sea floor. By the time all the ruptures were sealed 11 days later, 100,000 barrels of crude oil had spilled, according to U.S. Coast Guard estimates. Wind and waves then spread the slick to cover 800 square miles of ocean. It was one of the first environmental disasters to be broadcast into American living rooms, complete with images of dead dolphins and blackened beaches.

Drill, Baby, Drill
Clearly, based on the “Drill, Baby, Drill” mantra that rolled across the floor of the Republican National Convention—and more recently off the tongue of Alaska Governor Sarah Palin, the Republican vice presidential nominee—there is significant Republican support for proceeding with offshore drilling. That, and support from parts of the Democratic party, inspired Senator Obama to change his position on drilling, saying he would accept it as part of a larger overhaul of the nation’s energy policy.

But even if the next president and Congress do proceed with offshore drilling, they are unlikely to let stand a “blanket removal of restrictions,” says Thomas Jensen, a partner at Sonnenschein Nath & Rosenthal LLP and chair of the firm’s Committee on Environmental Sustainability. He is also a former majority counsel to the U.S. Senate Committee on Energy and Natural Resources.

“In the next Congress, there will be a very vigorous debate over how to proceed. The ban is gone, but that doesn’t answer the question of how we will proceed, where and how much,” Jensen says. “This is very much a live issue, and I’m confident that some of the coastal states and the environmental community including fishing interests, as well as ocean-front real estate interests, will be very aggressive in pursuing their agendas, and in setting standards that may be quite at odds with what [drilling proponents] think they have won. The battle now becomes to set the terms for any activities.”

Jensen thinks it possible that eventually Congress will find a way to open up the eastern Gulf of Mexico and the Atlantic Ocean, where political opposition to drilling is not as strong as it is on the West Coast.

“The major debate, and nobody has quite said this, is about opening some areas that are covered by the ban, but are easy areas for the industry to exploit because all of the industry’s offshore capital is already there, in the Gulf, with the minor exception of a few in California. It would be an easy thing, businesswise and operationally, to expand the footprint in the Gulf. It would be harder, slower, and longer to take that business of operating offshore anywhere else in the country, except Alaska,” Jensen says.

But it is feasible that Congress might allow drilling off the Atlantic, he adds. “One of the most interesting political questions is whether there is enough receptivity off the eastern coast of the United States, especially if the drilling were limited to areas way over the horizon, say 15, 20, 30 miles, where no one vacationing on the Outer Banks would see the flares, the lights. The continental shelf is so broad here on the East Coast. There’s a lot of water out there, way over the horizon where offshore activity could occur and be essentially invisible.”

Of course, “that doesn’t eliminate the environmental risks” of drilling, Jensen adds. But given current political pressures, he sees the Atlantic as one of the most likely areas for future drilling.

Once the new administration and Congress finish reviewing the nation’s offshore drilling policy, the restricted areas on the West Coast, and especially California, will remain off-limits, given the Santa Barbara spill, Jensen figures. “It’s very hard for me to imagine that the industry will succeed in getting approval for drilling off of California, given California’s experience and politics,” Jensen says. Besides, California’s Republican Governor Arnold Schwarzenegger has made clear that he opposes drilling off of his state’s shoreline, putting him in direct conflict with his party’s presidential nominee, Senator McCain.

“The elected leadership [in California] is all against offshore drilling and has essentially taken the same position that many of the Democrats have, which is that it’s not in the interest of the state, it’s not good energy policy, it’s not good resource policy, and it’s not good oceans policy,” Jensen says.

Environmental Misconceptions?
Mary Anne Sullivan, a Hogan & Hartson LLP partner who served as general counsel for the Department of Energy from 1998 to 2001, sees offshore drilling as a necessary interim step the country must take while it works on strategies to improve fuel efficiency and reduce demand.

She adds that drilling is potentially more environmentally friendly than the current system of tankering oil across oceans from those areas that do currently allow drilling—primarily the Gulf of Mexico and parts of Alaska.

“There’s a strong push in the environmental community to preclude drilling, which I find a bit ironic,” she says. “These moratoria started with the spill in Santa Barbara in 1969. Since then, drilling has vastly improved, while oil spills from tankers transported from other places have continued unabated.”

Scott Segal, a Bracewell & Giuliani LLP partner whose specialties include energy law, says offshore drilling is not the environmental blight that many think. “A lot of folks that are upset about offshore drilling have very antiquated assumptions about what offshore drilling is,” Segal insists. “The assumption is made that you would have to have multiple upon multiple permanent drilling platforms. Now, with mobile offshore drilling units, you can move them around. You don’t have the same fear of the clouded seascape.”

Increased Production?
Sullivan believes the expiration of the ban will have an effect on the market. “Oil markets are tight. They do respond to small changes in supply and demand. If you increase the supply, you might impact the markets. Frankly, even the prospect of an increase in supply” could impact the market, she says. “If we were to supply an additional 5 or 10 percent of our own oil needs, that would be huge.”

Indeed, oil futures slid to an eight-month low in early October. But most economists pegged the slide to worries about the country’s banking system and an intensifying freeze in global credit markets, as opposed to the expiration of the ban.

Adamson of Davis Wright Tremaine doesn’t believe the end of the ban will change oil prices anytime soon. Even if leasing started today, “you won’t see any oil come out of the ground for seven or eight years, maybe even longer. And when it comes out, it would be a small part of overall supplies. It might have some effect on price, but what’s going to have more effect than anything else is overall consumption patterns in the U.S., China, and India,” especially as the latter two move toward a Western lifestyle that includes cars, Adamson says.

“That’s one reason why prices are high today. That’s what’s changed over the last 10 or 20 years. You have explosive economic growth in countries where we hadn’t seen that before, and explosive increases in their consumption of fossil fuel,” he adds.

This past May, the EIA estimated how and whether the resumption of offshore drilling activity would affect gas prices and our dependency on foreign oil.

For the lower 48 states, the answer was, probably not. Here is the scenario: The United States resumes leasing for offshore drilling in the Pacific, Atlantic, and eastern Gulf of Mexico in 2012, when the current congressional moratoria are scheduled to expire. Barring no major delays from leasing disputes, environmental litigation, or weather disasters, it takes five years to develop the leases to the point where they could produce oil.

By 2017, drilling in those areas would increase America’s oil production from the lower 48 states to 2.4 million barrels of oil a day, or 7 percent more than we would produce otherwise, the EIA estimates. But that 7 percent bump would not result in lower prices at the pump, “because oil prices are determined on the international market, [and] any impact on average wellhead prices is expected to be insignificant,” the EIA concludes.

Arctic National Wildlife Refuge
Also in May, the EIA produced another report, “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” on the impact of resuming drilling in that area, which includes 19 million acres in the northeast corner of Alaska, about 1,300 miles south of the North Pole. Also known as ANWR, it is home to the polar bear, which the U.S. Department of the Interior declared last May to be an endangered species based on the fact that its habitat, the polar ice cap, is disappearing more quickly than scientists had projected.

The oil industry had expected the protected status of the polar bear to make oil and gas exploration difficult, but one month after the polar bear made the endangered species list, the Bush administration gave several oil companies the green light to explore for oil and gas in the polar bear habitat in Alaska (areas not covered by the current moratoria) as long as they only harmed or killed “small numbers” of bears.

Governor Palin is suing the Bush administration on behalf of the state of Alaska to overturn the bear’s protected status.

Segal says the polar bear’s “charismatic, mega-fauna fuzzy critter” attributes will help environmentalists who oppose drilling in ANWR. “In the very first major dispute of the Endangered Species Act of 1973, the protected species in question was the snail darter. I looked at a photograph of it. It’s not cute. It’s a little hyperactive minnow, and it opened up the act to some ridicule. Here was this important hydroelectric project [the Tennessee Valley Authority’s Tellico Dam] being held up by this snail darter,” Segal says. (In its 1978 decision in Tennessee Valley Authority v. Hill, the Supreme Court ruled in favor of protecting the snail darter, at the cost of stopping construction of the Tellico Dam, which was almost complete.)

By contrast, when it comes to the selection of “which species applications to pursue with vigor,” environmentalists are now choosing more carefully, Segal says, as evidenced by their pick of the polar bear.

A lot is at stake. The Arctic National Wildlife Refuge includes a coastal plain which geologists believe has a 95 percent probability of producing 5.7 billion barrels of oil over time, and 5 percent odds of producing 16 billion barrels. For perspective, our net imports last year (imports minus exports) were 4.43 billion barrels, according to the EIA.

If drilling proponents can defeat environmental opposition and the United States resumes drilling in ANWR, that would lower gas prices—but not by much, the report found. According to the EIA’s calculations, if leasing were to resume in 2012 and production begins six years later, ANWR’s oil production would peak at 780,000 barrels per day in 2027.

By 2030, ANWR would produce somewhere between .4 percent and 1.2 percent of world oil consumption, the EIA projects. “Consequently, ANWR oil production is not projected to have a large impact on world oil prices,” according to the report.

The refuge’s oil production would reduce oil prices by 75 cents a barrel by 2025, the report estimates. However, the Organization of the Petroleum Exporting Countries (OPEC) “could neutralize any potential price impact of ANWR oil production by reducing its oil exports by an equal amount,” the report adds.

Drilling in ANWR would reduce our dependency on foreign oil, but again, not by much. Without ANWR’s oil, the United States is expected to import just under half its oil during the years 2022 to 2026. With ANWR, imports would drop just below 48 percent.

At least that’s the mathematical analysis. Politically, “I don’t see any evidence that a political consensus has emerged that it would be okay to even talk about touching ANWR,” Jensen says. “ANWR is off the table.”

At least, that is what Jensen told us before Governor Palin emerged as Senator McCain’s running mate. While Senator McCain opposes drilling in ANWR, Governor Palin is a strong advocate. In the vice presidential debate, while speaking of her differences with Senator McCain, she vowed, “I will keep pushing him on ANWR.”

Jensen doesn’t anticipate a widespread support in Congress for opening ANWR to drilling. “Even though some in the industry put a high priority on gaining access to ANWR, to me it feels at this point more like a bargaining chip. Even though they’re demanding it, they would be willing to walk away if they got something else they wanted,” such as permission to lease and explore in the eastern Gulf and off the Atlantic, Jensen says.

Fossil Fuels
While lobbyists have been sparring loudly and publicly over the political issue of offshore drilling, energy and environmental lawyers and policymakers have been tackling our oil consumption problem from a different direction. They are supporting legislation to regulate greenhouse gas emissions, which would make oil—and coal—more expensive to use, and thus reduce demand for fossil fuels in general.

For the past year policymakers have been considering the merits of a carbon tax versus a cap-and-trade system that would set limits on how much carbon companies could emit into the atmosphere, and allow companies who don’t use their limits to sell their excess pollution rights to others. The limits would be lowered over time. Environmental economists believe an outright carbon tax would be more effective at reducing pollution, but politicians and environmentalists believe a cap-and-trade system is more politically viable.

To the environmentalists, making fossil fuels less attractive seems like the most efficient solution to both the current energy crisis and mounting concerns over global warming. “I think a willing president could come in and say we’ve got a couple of different problems that could be solved by the very same action. We can help out with people’s fuel costs by making cars more fuel efficient,” says Lisa Heinzerling, a professor of environmental law at the Georgetown University Law Center. “We can tackle climate change [by making cars more fuel efficient]. We’ve got a whole bunch of problems we can solve with the same solution. That seems completely sensible, completely legal to me.”

In December 2007 environmentalists won a major victory when Congress passed the U.S. Energy Independence and Security Act, which, among other things, requires automakers to make major improvements in fuel efficiency between the years 2010 and 2015.

Under the new Corporate Average Fuel Economy (CAFE), automakers must increase the fuel economies of their fleets to 35 miles per gallon by the year 2020. Along the way, they must meet separate interim standards, one for their passenger car fleets, and one for their light truck fleets. Under the interim standards, passenger car fleets are to achieve an average of 35.7 miles per gallon by 2015, up from the current 27.5 miles per gallon; light trucks must average 23.5 miles per gallon in 2010 and 28.6 miles per gallon by 2015.

The National Highway Traffic Safety Administration (NHTSA) estimated that between the years 2011 and 2015, the new standards will save 55 billion gallons of fuel—which is about the same amount of fuel the United States consumed in the first quarter of this year, according to statistics from the EIA.

NHTSA also estimates that the interim standards would reduce carbon dioxide emissions by 521 million metric tons between 2011 and 2015. That’s roughly equal to our country’s average monthly carbon emissions in 2006, according to preliminary data from the EIA.

From an environmentalist’s perspective, the new standard “is not bad. It’s not terrific. But it’s not bad. For Congress, it was a bold step,” says the Sierra Club’s Bookbinder.

A Waiver Denied
But the new standards also contained a major setback for environmentalists: NHTSA rejected the idea that states have a right to set their own greenhouse gas standards, because doing so is tantamount to regulating fuel efficiency, which only the federal government can do.

That has major implications for California. In 2002 the state passed AB1493, also known as the Pavely Bill, requiring a 30 percent reduction in motor vehicle emissions by 2016.

To implement the law, California needs the approval of the Environmental Protection Agency. The Clean Air Act allows California to adopt air pollution regulations that exceed federal ones if it can convince the EPA that it needs its own standards to meet “compelling and extraordinary conditions.” California gets special treatment under the Clean Air Act because it began regulating automobile pollution before March 1966. (It began to regulate pollution in 1947 and established its Motor Vehicle Pollution Control Board in 1960.)

The Clean Air Act also allows other states to adopt California’s stricter standards, when the EPA grants California a waiver to adopt those standards. Eleven states have adopted the Pavely standards, while several more had set plans to do so.

But those plans are on indefinite hold. For years, the EPA refused to rule on the Pavely waiver request, saying it did not have the authority to regulate greenhouse gas emissions. The EPA’s silence on the waiver persisted even after the Supreme Court handed the EPA the authority to regulate greenhouse gas emissions with its April 2007 ruling in Massachusetts v. EPA.

In December 2007, hours before President Bush signed the new CAFE standards into law, the EPA announced it would deny the waiver. By way of explanation, EPA Administrator Stephen L. Johnson told the media that the Bush administration was “moving forward with a clear national solution—not a confusing patchwork of state rules. . .”

Although the EPA previously had granted 50 waivers to California, it viewed the Pavely standards as fundamentally different. California’s previous air pollution regulations had addressed local and regional air quality; this was the first time the state had set out to regulate greenhouse gas emissions in an attempt to contribute to the fight against global warming.

In the view of the EPA, California doesn’t have the authority to regulate greenhouse gases because that problem affects everyone, not just California, says Georgetown’s Heinzerling. “Their reason was that the statute says, in order to get a waiver, California has to have extraordinary and compelling conditions. California had said to the EPA that its snow pack was melting, that it was low on water supplies, that it was having coastal problems . . . and the EPA said, ‘No, you know what? Everybody is going to have those kinds of problems, so you don’t have extraordinary and compelling conditions.’

“They really made it out that California had to show that its situation was unique,” Heinzerling says, adding that wasn’t the case before. “L.A. didn’t always have to win the award for worst air pollution in the country” for California to receive its previous decades’ worth of waivers, she says.

Bookbinder finds the EPA’s denial lacks reasoning. Through the Clean Air Act, “Congress told every state in the country they could adopt California standards. Congress wouldn’t have allowed other states to adopt California standards if California could only adopt them for things that happen in California,” he says.

Last January California and 15 other states, including Maryland, sued the EPA in the U.S. Court of Appeals for the Ninth Circuit, seeking to overturn the EPA’s decision to deny the waiver. The Ninth Circuit dismissed the case with a short order explaining that the EPA’s letter to California informing the state of the waiver denial wasn’t actually a “final action” subject to judicial review. The case has moved to the D.C. Circuit Court of Appeals, where no action is expected this year.

Bookbinder expects the District of Columbia Circuit Court to “vacate the idiocy that the EPA came up with and send it back” to the agency for review. He expects the waiver to be granted by the next by president. Both Senators McCain and Obama have said they are in favor of granting the waiver, he says.

Bookbinder doubts the D.C. Circuit Court will uphold the denial, because “[the EPA’s] own people are saying ‘We’re going to lose if we go to court on this.’” That sentiment surfaced in an internal document that Congress reviewed as part of its investigation into the waiver denial. The document, “California GHG Waiver: Arguments Against Granting,” was part of a briefing prepared by the lead staff lawyer for the EPA’s general counsel. On page 31, it states, “After review of the docket and precedent, we don’t believe there are any good arguments against granting the waiver. All of the arguments … are likely to lose in court if we are sued.”

Another document that surfaced, a PowerPoint presentation prepared by the EPA staff for administrator Johnson, shows that EPA staff concluded that California did in fact have “extraordinary and compelling” conditions that required separate standards.

Automotive Industry Lawsuits
In the meantime, the automotive industry has filed four similar lawsuits in four states, seeking to overturn the Pavely standards. The suits allege that states’ attempts to regulate tailpipe emissions are essentially a back-door effort by states to usurp the federal government’s authority to set fuel-efficiency standards. The automotive industry also alleges the Pavely standards will harm the automotive industry and its consumers, and worse, interfere with U.S. foreign policy.

By filing the suits in four jurisdictions, the plaintiffs are hoping to create a split among the courts and send the issue to the Supreme Court. The suits were filed in U.S. District courts in California, New Mexico, Rhode Island, and Vermont.

Bookbinder of the Sierra Club says regulating tailpipe emissions is related to fuel economy, and that Congress always has accepted that, as evidenced by the fact that the Clean Air Act directs the NHTSA to take California’s emission standards into account when NHTSA sets CAFE standards. “Congress is acknowledging that California tailpipe emission standards have an effect on how much fuel is going to burn. Congress is saying that’s okay,” Bookbinder says.

So far, the automotive industry’s arguments aren’t gaining much traction. Environmentalists won the first round in September 2007, in Green Mountain Chrysler v. Crombie. In a 240-page decision, William K. Sessions III, chief judge of U.S. District Court for the District of Vermont, ruled that his state’s adoption of California standards does not preempt federal fuel-efficiency standards partly because the Clean Air Act gives California special status. “Congress has essentially designated California as a proving ground for innovation in emission control regulations,” Sessions wrote.

Three months later, in December 2007, the U.S. District Court for the Eastern District of California ruled against the automotive industry in a similar suit, Central Valley Chrysler v. Goldstone. In his decision, U.S. District Court Judge Anthony W. Ishii found California’s proposed greenhouse gas emissions standards do not conflict with federal fuel-efficiency standards or, as the plaintiffs had alleged, with U.S. foreign policy.

Since then, a similar case in Rhode Island was dismissed on the grounds that its issues already had been decided in the Vermont and California courts. A fourth case, Zangara Dodge, Inc. v. Curry, is pending in New Mexico.

Unsexy Building Codes
Much of the public debate about energy and greenhouse gas emissions is centered on automobiles, a focus which Bookbinder believes is misplaced.

“Transportation will solve itself,” he says, explaining that higher fuel-efficiency standards, combined with new biofuels that are not derived from food, as well as new technologies including plug-in hybrids, ultimately will drive down demand for oil and greenhouse gas emissions.

Instead, he says, policymakers could have a much bigger impact on the country’s foreign oil dependence and greenhouse gas emissions by adopting energy-saving commercial building codes. California’s per capita consumption of electricity is among the lowest in the nation, Bookbinder says, because the state enacted strict commercial building codes that regulate lighting, heating, cooling, and power transmission, following the oil shocks of the 1970s.

Better commercial building codes would easily trump any savings from residential use of alternative energy, Bookbinder adds. Getting even just one state to upgrade its building codes “is worth more than every Tom, Dick, and Harry running out to put a windmill on their roof,” he says.

But he doubts building codes will become a nationwide priority, because building codes “are the least sexy thing in the world.”

If upgrading commercial building codes ever does become a nationwide priority, the next president could help set the tone by reconsidering the use of solar panels on the White House. The panels President Carter had installed lasted just seven years before President Reagan had them removed.

Freelance writer Joan Indiana Rigdon last wrote about Universal Health Care in the July/August 2008 issue.