DOE's Legal Authority Regarding Transferable Credits:

CEI Responds to EPICI---Again

**June 19, 2003**

**Marlo Lewis, Jr.**

**Senior Fellow**

**Competitive Enterprise Institute**

**1001 Connecticut Ave. NW, Suite 1250**

**Washington, DC 20036**

**202-331-1010; <mlewis@cei.org>**

# I. Background & Overview

On September 20, 2002, the Electric Power Industry Climate Initiative
(EPICI) submitted a supplemental comment to the Department of Energy
(DOE) disputing the Natural Resources Defense Council's (NRDC) argument,
presented in NRDC's June 5, 2002 comment, that DOE has no authority,
under section 1605(b) of the 1992 Energy Policy Act, to provide
transferable credits or baseline protection for "early voluntary"
greenhouse gas reductions. On November 18, 2002, the Competitive
Enterprise Institute (CEI) submitted a supplemental comment rebutting
EPICI's criticism of NRDC's legal opinions. On March 3, 2003, Eric
Holdsworth submitted a supplemental comment on behalf of EPICI
responding to CEI's rebuttal.

The present paper examines EPICI's March 3 response. It finds that EPICI
does not engage the substance of any of the arguments CEI presented in
its November 18 comment. EPICI once again:

-   Fails to identify any legal authority to award baseline protection
    and transferable credits applicable to a future carbon cap-and-trade
    program;

-   Implausibly and erroneously suggests that even though Congress
    rejected a version of section 1605 that directed DOE to establish a
    crediting system, it nonetheless gave DOE authority to implement
    such a system;

-   Misconstrues the purport of Senator Joe Lieberman's (D-Conn.) floor
    statement following final passage of the Energy Policy Act;

-   Confuses the discretion DOE has in implementing a reporting system
    with authority to implement a baseline protection/crediting system;

-   Confuses the absence of statutory prohibition against penalty
    protection and early credits with a grant of legislative authority
    to initiate such policies; and

-   Tacitly concedes that DOE does not really have authority to protect
    companies' emission baselines or award early credits.

If implemented, the administration's transferable credit plan will
create the institutional framework and lobbying incentives for energy
rationing. A more inappropriate project for a Department of Energy is
hard to imagine.

Advances in climate science counsel against alarmism, and even alarmists
acknowledge that the Kyoto Protocol would be all economic pain for no
environmental gain. If the United States embraces Kyoto-style energy
rationing, it will not be because science and the public interest
carried the day. More likely, it will be because transferable credits
corrupted the politics of energy policy, and because industry groups who
could have pulled the administration back from the brink chose instead
to profit from its confusion.

# II. Commentary

EPICI's March 3, 2003 supplemental comment consists of seven paragraphs.
Each paragraph is reproduced below in Arial font. Portions on which I
comment are repeated in bold italics. CEI's comments are in Times New
Roman font.

> **Paragraph 1.** After the Electric Power Industry Climate Initiative
> (EPICI) submitted on September 25 \[sic\], 2002 supplemental legal
> authority comments to the Department of Energy (DOE) docket
> established on May 6, 2002 (see 67 *Fed. Reg*. 30370), another
> commenter, Marlo Lewis, submitted a lengthy paper that examines the
> EPICI comments. That paper apparently does not take issue with our
> contention that these two concepts, baseline protection and
> transferable credits, are separate and distinct, but concludes that
> they "ultimately have no application except as part of a regulatory
> (emissions cap-and-trade) program" and that "to set up a
> pre-regulatory crediting program via 'guidelines,' pursuant to no
> statutory authority, would not only be improper," it "would also be
> illegal."
>
> **That paper apparently does not take issue with our contention that
> these two concepts, baseline protection and transferable credits, are
> separate and distinct**,

**CEI Comment:** EPICI's September 20, 2002 comment asserted, rather
than explained, the importance of keeping the two "concepts," baseline
protection and transferable credits, "separate and distinct." That
comment also highlighted NRDC's agreement with EPICI that baseline
protection and transferable credits are "distinct issues," just as
EPICI's March 3, 2003 comment notes that CEI "does not take issue" with
EPICI on this point. Evidently, this recondite definitional matter is a
big deal to EPICI. It is not to CEI.

In most discussions of these issues---for example, the President's
February 14, 2002 policy initiative; the Chafee-Lieberman-Lazio
legislation of the 106^th^ Congress; and publications of advocacy groups
like Environmental Defense, Pew Center on Global Climate Change, and
World Resources Institute---baseline protection is the end to which
transferable credits are a means. That is, the central rationale for
credits is to protect early reducers from having to do double
duty---reduce emissions from already lowered baselines---under a future
climate policy.

CEI opposes the administration's plan to award transferable credits for
baseline protection. If implemented, it will fundamentally and
unavoidably corrupt the politics of energy policy, for two reasons.

First, transferable credits will mobilize lobbying for energy rationing.
Transferable credits attain full market value *only* under a Kyoto-style
carbon cap. That is because, although many companies would love to sell
carbon credits---especially if they can "earn" credits by reducing (or
avoiding) emissions they would reduce (or avoid) anyway, in the normal
course of business---few companies would want to buy credits unless
constrained to do so by the necessity to meet a cap.[^1] Since credits
trading at \$4 to \$7 per ton today could be worth \$50 to \$100 per ton
under a cap, every credit holder will have an incentive to lobby to make
"voluntary" reductions mandatory.

Second, although touted as "voluntary" and "win-win" (good for business,
good for the environment), transferable credits would create a coercive
zero-sum game in which one company's gain is another's loss.
Transferable credits provide baseline protection and have economic value
only if they can be used to offset a company's obligations under a
future cap. A cap is an emissions "budget"---a legal limit on the
quantity of emissions a specific sector or nation may lawfully release.
If the cap is not to be exceeded, then the quantity of emission
allowances available to companies in the mandatory period must be
reduced by the number of credits awarded for "early" reductions in
"voluntary" period. In other words, for every company that earns a
credit for "early" reductions, there must be another that loses a credit
under the cap.

Thus, transferable credits are, at bottom, a wealth transfer scheme. It
is the essence of such programs to reallocate compliance period
allowances from companies that do not take "early action" to those who
do. Non-participants are penalized, forced in the mandatory period to
either pay higher credit prices than would otherwise prevail or make
deeper reductions than the cap would otherwise require. Once companies
understand this dynamic, many will "volunteer" for "early action" just
to avoid getting fleeced by rival firms later on. The predictable result
is a surge in the number of companies holding Kyoto coupons that mature
only under a cap.

Neither EPICI nor any other commenter has explained the accounting
procedures whereby DOE might provide baseline protection without issuing
credits for "early" reductions. However, whether or not such a system is
feasible, any baseline protection program would build a clientele for
mandatory reductions, because, under a cap, firms enjoying such
protection would gain a competitive advantage vis-à-vis other firms.

> **Paragraph 2.** We disagree with the premise that these concepts
> "have no application" unless they are part of a regulatory cap and
> trade program and assume that the Administration also agrees fully
> with us, particularly in light of the President's directives of
> February 2002 regarding both concepts. Those directives surely did not
> reference a cap and trade program, and we presume that none is
> contemplated.
>
> ***We disagree with the premise that these concepts "have no
> application" unless they are part of a regulatory cap and trade
> program***

**CEI Comment:** My precise words (see Paragraph 1, above) were that
baseline protection and transferable credits "*ultimately* have no
application except as part of a regulatory (emissions cap-and-trade)
program" (emphasis added). There really should be no dispute on this
point. EPICI and others would not be asking for baseline protection and
transferable credits if Kyoto did not exist and there were no political
constituency for energy rationing. It is pointless to deny the obvious
inherent linkage between a pre-regulatory transferable credits program
and the regulatory scheme to which such credits would apply.

> **We ... assume that the Administration also agrees fully with us,
> particularly in light of the President's directives of February 2002
> regarding both concepts. Those directives surely did not reference a
> cap and trade program, and we presume that none is contemplated.**

**CEI Comment:** The President implicitly referenced cap-and-trade when
he directed DOE to ensure that companies registering emission reductions
"are not penalized under a ***future climate policy***" (emphasis
added).

The fact that the President does not want cap-and-trade is small
comfort, because on climate policy, the administration is a house
divided:

-   The President opposes the Kyoto Protocol. Yet his State Department
    refuses to renounce America's participation as a signatory, despite
    acknowledging (when it renounced Bill Clinton's signature on the
    Treaty of Rome establishing an International Criminal Court) that
    non-ratifying signatories remain treaty parties and, thus, are bound
    by customary international law not to act against the treaty's
    purposes.

-   The President opposes climate alarmism. Yet his Environmental
    Protection Agency (EPA) published the alarmist *Climate Action
    Report 2002* (CAR). Moreover, his EPA and Office of Science and
    Technology Policy refuse to disavow the CAR even though it violates
    Federal Data Quality Act standards of objectivity and utility, and
    even though disavowal would demolish a key premise of the carbon
    dioxide lawsuit of the state attorneys general.[^2]

-   The President wants to replace the Kyoto Protocol's absolute tonnage
    targets, which are anti-growth, with emission intensity targets,
    which can accommodate growth. Yet his February 2002 initiative
    proposes to award transferable credits for "real" (i.e., tonnage)
    reductions---ratifying, rather than replacing, the Kyoto framework.

-   Finally, although the President has always opposed Kyoto, his
    administration initially advocated Kyoto-like controls on carbon
    dioxide emissions from power plants. Free-market and conservative
    groups had to mount a full-court press to talk the administration
    out of that mistake.

In short, the administration's record on climate policy is one of
confusion, inconsistency, and bureaucratic moonlighting. DOE's advocacy
of a crediting scheme comes straight out of the Environmental
Defense-Pew-Lieberman playbook. If implemented, that scheme will create
the institutional framework and lobbying incentives for energy
rationing. A more inappropriate project for a Department of Energy is
hard to imagine. EPICI ought to demand that DOE take a sobriety test.
Instead, it plays the part of enabler.

> **Paragraph 3.** We disagree with the paper's contention that
> guidelines could not give recognition to these concepts and that DOE
> is legally incapable, in revising the Energy Policy Act (EPAct)
> section 1605(b) guidelines and improving the existing
> database/registry, to provide such recognition of these two concepts.

**\[G\]uidelines could ... give recognition to these concepts ...
provide such recognition of these two concepts.**

**CEI Comment:** The issue is not whether DOE's revised 1605(b)
guidelines could "give recognition" to "concepts." Rather, the issue is
whether DOE has legal authority---in the President's words of February
14, 2002---"to *ensure* that businesses and individuals that register
reductions *are not penalized* under a future climate policy, and to
*give transferable credits* to companies that can show real emissions
reductions" (emphases added). The issue is whether 1605(b) authorizes
DOE to hand out regulatory offsets applicable to a "future climate
policy" like Kyoto. As CEI's November 18, 2002 paper noted, 1605(b)
contains no hint or trace of such authority.

> **Paragraph 4.** First, as to the question whether "guidelines" could
> give "recognition" to these two distinct concepts, we simply note that
> section 1605(b) provides that the Secretary "shall ... issue
> guidelines for the voluntary collection and reporting of information
> on sources of greenhouse gases" and that the EIA "shall develop forms
> for voluntary reporting under the guidelines" and "establish a data
> base comprised" of the voluntarily reported information. While the
> section is silent on public access and disclosure of the collected or
> reported information, DOE and the Energy Information Administration
> (EIA) have interpreted these provisions to provide for public
> disclosure of the information, subject to EPAct subsection 1605(b)(3)
> on confidentiality. Indeed, EIA publishes the information annually
> (see EIA report Voluntary Reporting of Greenhouse Gases 2000 (Feb.
> 2002)). To our knowledge, there is nothing in EPAct subsections
> 1605(a) or (b), the current guidelines or any other relevant law
> applicable to DOE and EIA that would preclude EIA from including
> "recognition" of these concepts as part of that annual publication.
>
> ***While the section is silent on public access and disclosure of the
> collected or reported information, DOE and the Energy Information
> Administration (EIA) have interpreted these provisions to provide for
> public disclosure of the information, subject to EPAct subsection
> 1605(b)(3) on confidentiality.***

**CEI Comment:** EPICI's point here is that silence is not prohibition.
Just as EIA was not precluded by the EPAct's silence from publishing the
emissions reduction information reported to it, so, EPICI suggests, EIA
is not precluded by the EPAct's silence from instituting a
baseline-protection/crediting system. That is a complete non sequitur,
because authority to publish information is *clearly implied* in
subsections 1605(b)(3) and (4), whereas authority to protect baselines
or award credits is not implied in any provisions of 1605.

Let's look at the text. Subsection (3) states: "CONFIDENTIALITY.---Trade
secret and commercial or financial information that is privileged or
confidential shall be protected as provided in section 552 (b)(4) of
title 5, United States Code." This caveat would have no point unless
Congress anticipated and desired EIA to publish information. Subsection
(4) states: "ESTABLISHMENT OF DATA BASE.---Not later than 18 months
after the date of the enactment of this Act, the Secretary through the
Administrator of the Energy Information Administration shall establish a
data base comprised of information voluntarily reported under this
subsection. *Such information may be used by the reporting entity to
demonstrate achieved reductions of greenhouse gases*" (emphasis added)."
How in the world could companies use the information they report to
"demonstrate achieved reductions" unless the database is public
information?

EPICI is grasping at straws. Unlike the authority to publish
information, the authority to protect baselines or award credits is not
implicit in any component of 1605(b). Silence is not prohibition, but
neither is it authority to do whatever Congress has not prohibited.
Courts do not presume that Congress has delegated power to an agency
simply because the statute does not expressly withhold such power
(*American Petroleum Institute v. EPA*, 52 F.3d 1113, 1120, D.C. Cir.
1995). Moreover, as the Supreme Court has emphasized, "Few principles of
statutory construction are more compelling than the proposition that
Congress does not intend *sub silentio* \[by its silence\] to enact
statutory language that it has earlier discarded in favor of other
language" (*INS v Cardoza-Fonseca*, 480 U.S. 421, 442-43, 1987). As CEI
noted in its November 18, 2002 comment, when Congress adopted the EPAct,
it considered and rejected provisions to establish an emissions
reduction crediting system.

> ***First, as to the question whether "guidelines" could give
> "recognition" to these two distinct concepts ... there is nothing in
> EPAct subsections 1605(a) or (b), the current guidelines or any other
> relevant law applicable to DOE and EIA that would preclude EIA from
> including "recognition" of these concepts as part of that annual
> publication.***

**CEI Comment:** Again, the question at issue is not whether EIA's
guidelines can give "recognition" to "concepts," but whether EIA, via
guidelines, can "***ensure*** that businesses and individuals that
register reductions ***are not penalized*** under a future climate
policy, and to ***give transferable credits*** to companies that can
show real emissions reductions." Although EPICI struggles to maintain
the fiction that EIA has such authority, its real position is more
modest. EPICI's continual refrain about "concepts" and "recognition"
boils down to this: Nothing in the law precludes EIA from revising its
"annual publication" in ways that a future Congress ***may*** find
useful ***if*** it decides ***both*** to enact a cap-and-trade program
***and*** to give credit under the cap for past reductions. This
admission against interest is exactly where EPICI ended up in its
September 20, 2002 comment. In that document, EPICI stated:

By their very nature, they \["recognition or certification" of reported
reductions\] are non-binding. What they offer is an opportunity for
reporting entities to demonstrate their past actions and persuade the
government if and when some future policy is debated in one or both of
these two branches of government. \[Page 16\]

In the final analysis, EPICI agrees with NRDC and CEI that DOE has no
authority to protect baselines or award credits. All DOE has authority
to do is "recognize" or "certify" reported reductions so reporting
entities have an "opportunity" to "persuade" policymakers to provide
baseline protection and transferable credits "if and when" a future
cap-and-trade program is "debated." Why EPICI bothers to challenge NRDC
and CEI after effectively throwing in the towel is unclear. Perhaps
EPICI believes that, once EIA starts to "certify" reported reductions,
industry will clamor for legislation authorizing baseline protection and
transferable credits.

> **Paragraph 5.** Second, as to the question of legal authority for DOE
> to revise current guidelines to provide such recognition, we refer to
> our letter and enclosure of September 25 \[sic\], 2002, which discuss
> this issue of legal authority at length and conclude that there is
> ample authority to recognize and apply these two concepts. Our
> conclusions are based on the legislative history of section 1605,
> particularly the work of the House-Senate Conference Committee;
> subsection 1605(b)(4), which states that the information voluntarily
> reported "may be used by the reporting entity to demonstrate achieved
> reductions" of greenhouse gases; and the general authority contained
> in the DOE Organization Act. Referenced also was the Framework
> Convention on Climate Change (FCCC), which the U.S. signed and
> ratified in 1992 prior to the enactment of the EPAct. Clearly, the FCC
> and section 1605 are in accord in encouraging voluntary actions to
> reduce and report reductions, avoidance and sequestration.

Our conclusions are based on the legislative history of section 1605,
particularly the work of the House-Senate Conference Committee;

CEI Comment: As noted above and in CEI's November 18, 2002 comment, when
Congress enacted section 1605, it considered and rejected provisions
directing EIA to implement a baseline-protection/crediting system. EPICI
again fails to acknowledge the obvious implication of this critical fact
of legislative history---EIA has no authority to institute a
baseline-protection/crediting program.

subsection 1605(b)(4), which states that the information voluntarily
reported "may be used by the reporting entity to demonstrate achieved
reductions" of greenhouse gases;

CEI Comment: EPICI continues to confuse accounting with crediting.
Obviously, DOE could not award credits unless it operated a database and
reporting system enabling companies to "demonstrate achieved
reductions." However, authority to operate a database/reporting system
in no way entails or implies authority to award credits. To borrow
EPICI's terminology, it is important to keep these two
"concepts"---emissions reduction accounting and emissions reduction
crediting---"separate and distinct."

and the general authority contained in the DOE Organization Act.
Referenced also was the Framework Convention on Climate Change (FCCC),
which the U.S. signed and ratified in 1992 prior to the enactment of the
EPAct.

**CEI Comment:** Here, as in its September 20, 2002 comment, EPICI
invokes the DOE Organization Act without analysis or explanation. EPICI
does not cite any provisions to show where and how the DOE Organization
Act authorizes baseline protection or transferable credits. As for the
FCCC, it is not self-executing, and here, as in its September 20
comment, EPICI does not cite any statute enacted pursuant to the FCCC
that authorizes DOE to provide penalty protection or credits.

> **Paragraph 6.** Contrary to the views expressed in the Lewis paper,
> EPICI did not rely on remarks made on final passage of EPAct by
> Democratic Sen. Lieberman for these legal authority conclusions. EPICI
> did take note of those remarks because they were relevant to the
> changes made in the Conference Committee to the House and Senate
> versions of section 1605 that afforded greater "discretion" in the
> implementation of the new subsection (b) of section 1605. As we noted
> in footnote 5 of our enclosure to our September 25 \[sic\], 2002,
> supplemental comment, a Republican conferee who was a signatory of the
> Conference Committee's reported bill, Rep. Carlos Moorhead, made
> similar remarks on final House passage of the bill when he said the
> conference report survived "with less detail and more discretion for
> the Administration." 138 ***Cong. Rec.*** H11438 (daily ed. Oct. 5,
> 1992). Both remarks are supportive of the EPICI view that the final
> bill that was enacted clearly was revised from the pre-conference
> versions by 1) shifting from a call for rulemaking to guidelines and
> 2) discarding 11 specific provisions, including provisions on
> crediting and double counting, in favor of far more general language.
> In our view, the Lieberman/Moorhead descriptions of the final version
> of the law that it was "streamlined" and entailed "less detail and
> more discretion" are accurate and quite appropriate. They are sound
> and valuable legislative history in support of the EPICI conclusion
> that the revised section 1605 provides "more discretion in the
> program's administration."
>
> ***EPICI did not rely on remarks made on final passage of EPAct by
> Democratic Sen. Lieberman for these legal authority conclusions. EPICI
> did take note of those remarks because ... the changes ... afforded
> greater "discretion" in the implementation ... As we noted in footnote
> 5 of our enclosure to our September 25 \[sic\], 2002, supplemental
> comment, a Republican conferee who was a signatory of the Conference
> Committee's reported bill, Rep. Carlos Moorhead, made similar remarks
> on final House passage of the bill when he said the conference report
> survived "with less detail and more discretion for the
> Administration."***

**CEI Comment:** EPICI's September 20, 2002 comment reproduces most of
Sen. Lieberman's floor statement and discusses its alleged implications
on five consecutive pages. It quotes one sentence by Rep. Moorhead, in a
footnote. Nonetheless, let's grant that EPICI merely 'took note' of
Lieberman's remarks. The real issue is whether those remarks (and
Moorhead's) mean what EPICI suggests they mean.

Both remarks are supportive of the EPICI view that the final bill that
was enacted clearly was revised from the pre-conference versions by 1)
shifting from a call for rulemaking to guidelines and 2) discarding 11
specific provisions, including provisions on crediting and double
counting, in favor of far more general language. In our view, the
Lieberman/Moorhead descriptions of the final version of the law that it
was "streamlined" and entailed "less detail and more discretion" are
accurate and quite appropriate.

**CEI Comment:** In its September 20, 2002 comment, EPICI suggested that
"more discretion" included the discretion to transform the 1605(b)
reporting program into a baseline-protection/crediting system. That
reading of the statute has no support in the plain text of 1605(b), its
logical implications, or its legislative history. In fact, it is not
supported by Senator Lieberman's floor statement, which described
1605(b) as establishing a "data base" and "simple accounting mechanism."

As noted in CEI's November 18, 2002 comment, if we compare the House
version with the final version, we find that the "streamlining" occurs
in what was section 1605(b) of the House version, which lists 11 types
of reductions ***eligible to receive credits***. In 1605(b)(1)(B) as
enacted, those are summarized ("streamlined") as types of reductions
***eligible to be reported***. However, the House version of 1605(a),
which provides "opportunities for entities to receive official
certification of net greenhouse gas emission reductions relative to the
baseline for purposes of receiving credit against any future Federal
requirements that may apply to greenhouse gas emissions," is not
summarized or "streamlined" in 1605(b) as enacted. The conferees simply
deleted that language.

They are sound and valuable legislative history in support of the EPICI
conclusion that the revised section 1605 provides "more discretion in
the program's administration."

**CEI Comment:** As CEI explained in its November 18, 2002 comment,
precisely because conferees intended the 1605(b) program to capture data
rather than protect baselines, they gave EIA more discretion in
implementation. It is only when voluntary reductions generate credits
that potentially confer competitive advantage on some firms at the
expense of others that it becomes necessary to have rigorous and
consistent accounting standards and practices. Thus, it was entirely
appropriate for the House version of 1605, which provided for a
crediting system, to prescribe "by rule" 11 specific features of the
proposed GHG registry. In contrast, administrative "discretion" in the
development of flexible "guidelines" was appropriate to encourage
reporting under various voluntary programs that do not award credits.

> **Paragraph 7.** We also note rather extensive comments in the Lewis
> paper about bills introduced, but never enacted, during the 105^th^
> and 106^th^ Congresses by Sen. Lieberman and others regarding "early
> credit" proposals. The paper asks why the Senator championed such
> legislation in those Congresses, if the authority already existed for
> these two concepts in EPAct. Not knowing the intent of the Senator, we
> would not presume to reply to this rhetorical question. However, we
> understand that those bills (S. 2617 and S. 547) were decidedly
> regulatory in nature, which is exactly the opposite result achieved by
> the Conference Committee in adopting a revised section 1605. In fact,
> S. 2617 was an amendment to the Clean Air Act and depended on the
> issuance by the President of numerous regulations. S. 547, while not
> an amendment to that Act, also required the promulgation of
> regulations. Moreover, EPAct was enacted in the 102d Congress.
> References to introduced bills in later Congresses can have no bearing
> on the meaning and legislative history of a prior enactment.

The \[Lewis\] paper asks why the Senator championed such legislation in
those Congresses, if the authority already existed for these two
concepts in EPAct. Not knowing the intent of the Senator, we would not
presume to reply to this rhetorical question.

CEI Comment: As CEI's November 18, 2002 comment pointed out, even though
President Clinton and Vice President Gore supported credit for early
reductions, they never attempted to implement a crediting program via
administrative action, nor did Sen. Lieberman ever call upon the
Clinton-Gore Administration to use 1605(b) authority to provide baseline
protection or transferable credits. Sen. Lieberman was an architect of
the 1605(b) program, and Senators are not in the habit of introducing
legislation to authorize the president to do things that they believe he
already has authority to do. Therefore, I do presume that Lieberman
twice introduced early credit legislation because it was as obvious to
him as it was to Environmental Defense, the Pew Center on Global Climate
Change, and the International Climate Change Partnership that 1605
provides no authority to protect baselines or award credits.

However, we understand that those bills (S. 2617 and S. 547) were
decidedly regulatory in nature, which is exactly the opposite result
achieved by the Conference Committee in adopting a revised section 1605.
In fact, S. 2617 was an amendment to the Clean Air Act and depended on
the issuance by the President of numerous regulations. S. 547, while not
an amendment to that Act, also required the promulgation of regulations.

CEI Comment: As noted above, it would be inappropriate for DOE (or any
agency) to award regulatory offsets applicable against a future carbon
cap-and-trade program on the basis of flexible "guidelines." The fact
that 1605 as enacted is not a regulatory provision is prima facie
evidence that it does not authorize baseline protection or transferable
credits.

Moreover, EPAct was enacted in the 102d Congress. References to
introduced bills in later Congresses can have no bearing on the meaning
and legislative history of a prior enactment.

CEI Comment: EPICI here criticizes as a technical legal point what I
offered as a matter of common sense. Sen. Lieberman introduced early
credit legislation in the 105^th^ and 106^th^ Congresses. The bill
gained only 12 co-sponsors in its second go-round. Rep. Rick Lazio's
(R-N.Y.) House companion bill attracted just 15 co-sponsors. Neither
bill ever came to a vote in committee, much less on the House or Senate
floor. To claim that 1605(b) authorizes DOE to award transferable
credits is to tantamount to asserting that Congress implicitly enacted
the substance of the Lieberman-Lazio legislation in 1992---a thesis no
informed commenter would defend.

III\. Conclusion

The administration's crediting plan comes straight out of the
Environmental Defense-Pew-Clinton-Gore-Lieberman playbook. If
implemented, that plan will create the institutional framework and
lobbying incentives for energy rationing. A more inappropriate project
for a Department of Energy is hard to imagine. EPICI ought to demand
that DOE take a sobriety test. Instead, it plays the part of enabler.

Advances in climate science counsel against alarmism, and even alarmists
acknowledge that Kyoto would be all economic pain for no environmental
gain. If the United States embraces Kyoto-style energy rationing, it
will not be because science and the public interest carried the day.
More likely, it will be because transferable credits corrupted the
politics of energy policy, and because industry groups who could have
pulled the administration back from the brink chose instead to profit
from its confusion.

[^1]: Consider these remarks by Dupont's Robert Routliffe, as reported
    in the March 17, 2003 edition of *Greenwire*: "As for carbon trading
    outside of Kyoto or another regulatory scheme, one industry analyst
    predicted that participation will be spotty and prices will likely
    remain low. 'That is going to be a characteristic of any voluntary
    market. It\'s hard to get folks to volunteer to spend money,' said
    Robert Routliffe, manager of GHG emissions trading at DuPont."

[^2]: In their June 4, 2003 lawsuit, the attorneys general of Maine,
    Massachusetts, and Connecticut argue that EPA, as lead agency in
    producing the CAR, has already made a scientific determination that
    carbon dioxide emissions endanger public health and welfare---the
    trigger for regulatory action under section 108 of the Clean Air
    Act. The CAR, however, is based on two non-representative climate
    models---the "hottest" (Canadian Climate Center) and "wettest" (UK
    Hadley Center) out of some 26 models administration officials might
    have used. Moreover, as Virginia State Climatologist Patrick
    Michaels discovered and National Atmosphere and Ocean Administration
    scientist Thomas Karl confirmed, those models could not replicate
    past U.S. temperature trends better than could a table of random
    numbers. At once biased and useless, the CAR flunks Federal Data
    Quality Act (FDQA) standards of objectivity and utility. Disavowing
    the CAR as incompatible with FDQA would demolish a key premise of
    the AGs' lawsuit. Yet the administration seems determined to
    preserve its alarmist report, going so far as to deny that the CAR
    is "information" subject to review under the FDQA.