Climate regulation and the limits of cost-benefit analysis

California Law Review

Volumn 99, Issue 6, 2011, Pages 1557-1599

  Masur, Jonathan S ^a   Posner, Eric A ^a  

^a UNIVERSITY OF CHICAGO   (United States)

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[No Author keywords available]

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EID: 81455136544     PISSN: 00081221     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (141)

1. see, e.g., wILLIAM NORDHAUS, A QUESTION OF BALANCE: WEIGHING THE OPTIONS ON GLOBAL WARMING POLICIES (2008);
2. NICHOLAS STERN, THE ECONOMICS OF CLIMATE CHANGE: THE STERN REVIEW (2007);
3. RICHARD B. STEWART & JONATHAN B. WIENER, RECONSTRUCTING CLIMATE POLICY: BEYOND KYOTO (2003);
4. Cass R. Sunstein, The World vs. the United States and China? The Complex Climate Change Incentives of the Leading Greenhouse Gas Emitters, 55 UCLA L. REV. 1675(2008);
5. Michael P. Vandenbergh, Climate Change: The China Problem, 81 S. CAL. L. REV. 905(2008). We agree with this consensus.
6. See ERIC A. POSNER & DAVID WEISBACH, CLIMATE CHANGE JUSTICE (2010);
7. Daniel Abebe & Jonathan S. Masur, International Agreements, Internal Heterogeneity, and Climate Change: The "Two Chinas" Problem, 50 VA. J. INT'LL. 325(2010).
8. See Conference of the Parties, United Nations Framework Convention on Climate Change, Copenhagen, Den., Dec. 7-19, 2009, Report of the Conference of the Parties, Fifteenth Session, Copenhagen Accord, U. N. Doc. FCCC/CP/2009/11/Add.l (Mar. 30, 2010).
9. See Perry Bacon, Jr., Lack of Votes for Senate Democrats' Energy Bill May Mean the End, WASH. POST, July 23, 2010, http://www.washingtonpost.com/wp-dyn/ content/article/2010/07/22/AR2010072203614.html ("Conceding that they can't find enough votes for the legislation, Senate Democrats on Thursday abandoned efforts to put together a comprehensive energy bill that would seek to curb greenhouse gas emissions-").
10. The EPA has taken the more limited step of requiring that major carbon dioxide emitters obtain permits. See Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31, 514 (June 3, 2010)
11. (to be codified at 40 C. F. R. pts. 51, 52, 70, 71). We discuss this regulation below. See infra note 83 and accompanying text
12. Massachusetts v. EPA, 549 U. S. 497, 532(2007) ("Because greenhouse gases fit well within the Clean Air Act's capacious definition of 'air pollutant,' we hold that EPA has the statutory authority to regulate the emission of such gases from new motor vehicles.").
13. Ctr. for Biological Diversity v. Nat'l Highway Traffic Safety Admin., 538 F.3d 1172, 1198-203 (9th Cir. 2008).
14. See Notice of Intent to Prepare an Environmental Impact Statement for New Corporate Average Fuel Economy Standards, 76 Fed. Reg. 26, 996 (May 10, 2011)
15. (to be codified at 49 C. F. R. pts. 531 & 533).
16. See, e.g., FRANK ACKERMAN & LISA HEINZERUNG, PRICELESS: ON KNOWING THE PRICE OF EVERYTHING AND THE VALUE OF NOTHING 1 9-11(2004);
17. Amy Sinden et al., Cost-Benefit Analysis: New Foundations on Shifting Sand, REG. & GOVERNANCE 48, 50(2009).
18. The Clinton order renewed an earlier order issued by President Reagan, which may explain the association between cost-benefit analysis and conservative, antiregulatory sentiment See MATTHEW ADLER & ERIC A. POSNER, NEW FOUNDATIONS OF COST-BENEFIT ANALYSIS 1-5(2006).
19. See, e.g., RICHARD L. REVESZ & MICHAEL A. LIVERMORE, RETAKING RATIONALITY: HOW COST-BENEFIT ANALYSIS CAN BETTER PROTECT THE ENVIRONMENT AND OUR HEALTH 18-19(2008);
20. CASS R. SUNSTEIN, RISK AND REASON: SAFETY, LAW, AND THE ENVIRONMENT 291-93(2002).
21. Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation Standards, 73 Fed. Reg. 58, 772, 58, 814 (Oct. 7, 2008)
22. (to be codified at 10 C. F. R. pt. 430).
23. Average Fuel Economy Standards Passenger Cars and Light Trucks Model Year 2011, 74 Fed. Reg. 14, 196, 14, 346, 14, 351 (Mar. 30, 2009)
24. (to be codified at 49 C. F. R. pts. 523, 531, 533, 534, 536 & 537) [hereinafter 2011 CAFE Standards].
25. Regulating Greenhouse Gas Emissions Under the Clean Air Act, 73 Fed. Reg. 44, 354, 44, 416 (proposed July 30, 2008)
26. (to be codified at 40 C. F. R. ch. 1).
27. See INTERAGENCY WORKING GROUP ON SOCIAL COST OF CARBON, TECHNICAL SUPPORT DOCUMENT: SOCIAL COST OF CARBON FOR REGULATORY IMPACT ANALYSIS UNDER EXECUTIVE ORDER 12866, at 40-41(2010) [hereinafter IWG REPORT], available at http://www.epa.gov/oms/climate/regulations/scc-tsd.pdf.
28. U. S. ENVTL. PROT. AGENCY, OFFICE OF ATMOSPHERIC PROGRAMS, EPA ANALYSIS OF THE AMERICAN POWER ACT IN THE 111TH CONGRESS (June 30, 2010), available at http://www.epa.gov/cliniatechange/economics/pdfs/EP A-APA-Analysis-6-14-10.pdf.
29. See, e.g., Michael P. Vandenbergh & Marie A. Cohen, Climate Change Governance: Boundaries and Leakage, 18 N. Y. U. ENVTL. L. J. 221(2010) (describing mechanisms to create incentives for major developing nations to reduce emissions); Vandenbergh, supra note 1 (analyzing the difficulty of bringing both China and the United States on board with an international agreement on climate change);
30. Jonathan B. Wiener, Think Globally, Act Globally: The Limits of Local Climate Policies, 155 U. PA. L. REV. 1961(2007) (describing the international nature of climate change and the need for an international solution);
31. Cass R. Sunstein, Of Montreal and Kyoto: A Tale of Two Protocols, 13 HARV. ENVTL. L. REV. 1(2007) (discussing the need for, and difficulties with, an international climate accord).
32. See, e.g., Gilbert E. Metcalf & David Weisbach, The; Design of a Carbon Tax, 33 HARV. ENVTL. L. REV. 499(2009) (describing how a legislatively enacted federal carbon tax might be structured);
33. Lisa Schultz Bressman, The Future of Agency Independence, 263 VAND. L. REV. 1599, 665-72(2010) (discussing the ramifications of climate change legislation on agency structure and authority);
34. David A. Super, From the Greenhouse to the Poorhouse: Carbon-Emissions Control and the Rules of Legislative Joinder, 158 U. PA. L. REV. 1093(2010) (analyzing the leading legislative options for regulating carbon emissions);
35. Robert L. Glicksman, Balancing Mandate and Discretion in the Institutional Design of Federal Climate Change Policy, 102 NW. U. L. REV. COLLOQUY 196(2008), http://www.law.northwestern.edu/lawreview/colloquy/2008/5 (analyzing the question of how much authority Congress should delegate to the EPA to regulate climate change);
36. Hari M. Osofsky, Climate Change Legislation in Context, 102 NW. U. L. REV. COLLOQUY 245(2008), http://www.law.northwestem.edu/lawreview/colloquy/2008/ 9 (analyzing the different pressures on legislative action).
37. See, e.g., Jason Scott Johnston, Climate Change Confusion and the Supreme Court: The Misguided Regulation of Greenhouse Gas Emissions Under the Clean Air Act, 84 NOTRE DAME L. REV. 1(2008) (arguing that the EPA should not have been permitted to regulate climate change under the Clean Air Act);
38. Abigail R. Moncrieff, Reincarnating the "Major Questions" Exception to Chevron Deference as a Doctrine of Noninterference (Or Why Massachusetts v. EPA Got It Wrong), 60 ADMIN. L. REV. 593(2008) (arguing that the Supreme Court should have refused to interfere with the EPA's decision not to consider regulating carbon dioxide);
39. J. B. Ruhl & James Salzman, Climate Change, Dead Zones, and Massive Problems in the Administrative State: A Guide For Whittling Away, 98 CALIF. L. REV. 59(2010) (noting the legal problems involved with agency regulation of massive issues such as climate change).
40. See, e.g., Hari M. Osofsky, Is Climate Change "International"? Litigation's Diagonal Regulatory Role, 49 VA. J. INT'L L. 585(2009) (discussing regulation at local, state, federal, and international levels);
41. Katherine A. Trisolini, All Hands On Deck: Local Governments and the Potential for Bidirectional Climate Change Regulation, 62 STAN. L. REV. 669(2010) (exploring the role of local governments in regulating greenhouse gas production).
42. See, e.g., Randall S. Abate, Public Nuisance Suits for the Climate Justice Movement: The Right Thing and the Right Time, 85 WASH. L. REV. 197(2010) (discussing the increased use of private law as a means of forcing reductions in carbon emissions);
43. Kirsten H. Engel, Harmonizing Regulatory and Litigation Approaches to Climate Change Mitigation: Incorporating Tradable Emissions Offsets into Common Law Remedies, 155 U. PA. L. REV. 1563(2007) (same);
44. see also American Elec. Power Co. v. Connecticut, 131 S. Ct. 813(2010) (granting certiorari in a lawsuit against carbon emitters brought under state nuisance law).
45. See Ctr. for Biological Diversity v. Nat'l Highway Traffic Safety Admin., 538 F.3d 1172, 1198-203 (9th Cir. 2008).
46. See 2011 CAFE Standards, supra note 14, at 14, 346;
47. Richard S. J. Tol, The Social Cost of Carbon: Trends, Outliers, and Catastrophes, 2 ECONOMICS-THE OPEN-ACCESS, OPEN-ASSESSMENT E-JOURNAL, 1-2(2008), available at http://www.economics-ejoumal.org/economics/joumalarticles/2008-25/ version-l.
48. accord MARK A. DELUCCHI, UCD-ITS-RR-96-3(9) Rev. 1, SUMMARY OF THE NON-MONETARY EXTERNALITIES OF MOTOR VEHICLE USE 49-51 (rev. Oct. 2004), available at http://www.its.ucdavis.edu/publications/2004/UCD-rTS-RR-96-03(09)- revl.pdf.
49. Energy Conservation Program: Energy Conservation Standards and Test Procedures for General Service Fluorescent Lamps and Incandescent Reflector Lamps, 74 Fed. Reg. 34, 080 (July 14, 2009)
50. (to be codified at 10 C. F. R. pt. 430).
51. Energy Conservation Program: Energy Conservation Standards and Test Procedures for General Service Fluorescent Lamps and Incandescent Reflector Lamps, 74 Fed. Reg. at 34, 163.
52. See id. at 34, 172. We have our doubts about the normative soundness of this conclusion. See Jonathan S. Masur & Eric A. Posner, Against Feasibility Analysis, 77 U. CM. L. REV. 657(2010).
53. See Energy Conservation Program: Energy Conservation Standards for Small Electric Motors, 75 Fed. Reg. 10, 874, 10, 909 (Mar. 9, 2010)
54. (to be codified at 10 C. F. R. pt. 431).
55. Energy Conservation Program: Energy Conservation Standards for Small Electric Motors, 75 Fed. Reg. at 10, 931.
56. 2 at $5.70 comes to $13.11 million. However, the overall figure must be higher because 1) the regulation reports values in 2009 dollars while the IWG report lists carbon dioxide prices in 2007 dollars; and 2) the social costs of carbon are greater than $5.70 in every year subsequent to 2015.
57. Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters, 75 Fed. Reg. 20, 112 (Apr. 16, 2010)
58. (to be codified at 10 C. F. R. pt. 430);
59. Energy Conservation Standards for Certain Consumer Products and for Certain Commercial and Industrial Equipment, 75 Fed. Reg. 1122 (Jan. 8, 2010)
60. (to be codified at 10 C. F. R. pt 431);
61. Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines, 74 Fed. Reg. 44, 914 (Aug. 31, 2009)
62. (to be codified at 10 C. F. R. pt. 431);
63. Energy Conservation Standards and Test Procedures for Commercial Heating, Air-Conditioning, and Water-Heating Equipment, 74 Fed. Reg. 36, 312 (July 22, 2009)
64. (to be codified at 10 C. F. R. pt. 431);
65. Energy Conservation Standards for Certain Consumer Products and for Certain Commercial and Industrial Equipment, 74 Fed. Reg 16, 040 (Apr. 8, 2009)
66. (to be codified at 10 C. F. R. pt. 430);
67. Energy Conservation Standards for Commercial Ice-Cream Freezers; Self-Contained Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers Without Doors, 74 Fed. Reg. 1, 092 (Jan. 9, 2009)
68. (to be codified at 10 C. F. R. pt 431);
69. Energy Conservation Program for Commercial and Industrial Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation Standards, 73 Fed. Reg. 58, 772 (Oct. 7, 2008)
70. (to be codified at 10 C. F. R. pt 431).
71. Notice of Funding Availability for the Department of Transportation's National Infrastructure Investments Under the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act for 2010, 75 Fed. Reg. 30, 460-02 (June 1, 2010);
72. Notice of Funding Availability for Supplemental Discretionary Grants for Capital Investments in Surface Transportation Infrastructure Under the American Recovery and Reinvestment Act, 74 Fed. Reg. 28, 755 (June 17, 2009).
73. Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program, 75 Fed. Reg. 14, 670 (Mar. 26, 2010)
74. (to be codified at 40 C. F. R. pt. 80).
75. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. 25, 324 (May 7, 2010)
76. (to be codified at 40 C. F. R. pts. 85, 86, 600;
77. C. F. R. pts. 531, 533, 536, 537, 538).
78. Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium-and Heavy-Duty Engines and Vehicles, 75 Fed. Reg. 74, 152 (proposed Nov. 30, 2010)
79. (to be codified at 40 C. F. R. pts. 85, 86, 1036, 1037, 1065, 1066, 1068;
80. C. F. R. pts. 523, 534, 535).
81. 2), which is the principal greenhouse gas emitted by motor vehicles.");
82. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. at 25, 324 ("This joint Final Rule is consistent with the National Fuel Efficiency Policy announced by President Obama on May 19, 2009, responding to the country's critical need to address global climate change and to reduce oil consumption. ").
83. 549 U. S. 497(2007).
84. News Release, EPA, EPA: Greenhouse Gases Threaten Public Health and the Environment (Dec. 7, 2009), available at http://yosemite.epa.gov/opa/admpress. nsf/08dl la451131bca585257685005bf252.
85. See 5 U. S. C. § 553(2006) (describing the rulemaking process that the EPA must undertake before regulating).
86. See Sindya N. Bhanoo, The E. P. A. Announces a New Rule on Polluters, N. Y. TIMES, May 14, 2010, at A13.
87. Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31, 514 (June 3, 2010)
88. (to be codified at 40 C. F. R. pts. 51, 52, 70, 71). We describe this regulation as more limited both because it regulates only a small subset of carbon emitters and because the impact of requiring that even a large emitter install the "best available" technology will likely be "relatively small."
89. The D. C. Circuit rejected a motion to stay this regulation, Coal, for Responsible Regulation, Inc. v. E. P. A., No. 09-1322 et al, 2010 WL 15509187 (D. C. Cir. Dec. 10, 2010), and the regulation took effect on January 2, 2011.
90. Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. at 31, 598-601.
91. William Nordhaus, an economist at Yale University, developed DICE. See WILLIAM Nordhaus, A QUESTION OF BALANCE: WEIGHING THE OPTIONS ON GLOBAL WARMING POLICIES (2008);
92. WILLIAM D. NORDHAUS & JOSEPH BOYER, WARMING THE WORLD: ECONOMIC MODELS OF GLOBAL WARMING 4-5(2000).
93. Chris Hope, of the Cambridge University Judge Business School, developed PAGE. See Chris Hope, Optimal Carbon Emissions and the Social Cost of Carbon Over Time Under Uncertainty, 8 THE INTEGRATED ASSESSMENT J. 107, 107(2008);
94. Chris Hope, The Marginal Impact of C02 from PAGE2002: An Integrated Assessment Model Incorporating the IPCC's Five Reasons for Concern, 6 THE INTEGRATED ASSESSMENT J. 19, 20(2006).
95. Richard Tol, a professor at the Economic and Social Research Institute in Dublin, developed FUND. See Richard S. J. Tol, Estimates of the Damage Costs of Climate Change. Part I: Benchmark Estimates, 21 ENVTL. AND RES. ECON. 47, 50(2002);
96. Richard S. J. Tol, Estimates of the Damage Costs of Climate Change. Part II: Dynamic Estimates, 21 ENVTL. AND RES. ECON. 135, 137(2002).
97. Id at 30-33; see also Martin L. Weitzman, On Modeling and Interpreting the Economics of Catastrophic Climate Change, 91 REV. ECON. & STAT. 1(2009);
98. Martin L. Weitzman, A Review of the Stem Review on the Economics of Climate Change, 45 J. ECON. LIT. 703(2007). There are a number of possible climate change-related "tipping points": points at which some drastic climatic event occurs with potentially extreme economic or sociological consequences. These include, for instance, the collapse of the Greenland Ice Sheet or the West Antarctic Ice Sheet, each of which would raise sea levels substantially. Climate scientists estimate the likelihood of one of these events occurring at approximately 50 percent, assuming 2.5-degree Celsius global wanning. IWG REPORT, supra note 17, at 33. These "tipping points" would not necessarily generate economic catastrophes (as they are defined by the climate models), but it is worth noting that the probability of such an event occurring is nearly an order of magnitude higher than the probability of an economic catastrophe under the DICE or PAGE models. PAGE puts the likelihood of a catastrophe at nearly zero, while DICE estimates it at 4 percent, again assuming 2.5-degree warming.
99. Alejandro E. Camacho, Transforming the Means and Ends of Natural Resources Management, 89 N. C. L. Rev. 1405, 1412(2011) ("[U]ncertainty is amplified by the fact that the effects of global climate change on ecosystems will be influenced by two other factors for which there remains limited information: the extent of mitigation strategies to be employed to abate further climatic change and the collateral effects on biota from adaptation strategies-") (citation omitted);
100. Michael D. Mastrandrea, Calculating the Benefits of Climate Policy: Examining the Assumptions of Integrated Assessment Models 30-37 (Pew Ctr. on Global Climate Change, Working Paper, 2009), available at http://www. pewcliniate.org/docUploads/mastrandrea-calculating-benefits-cliniate-poUcy-12- 22-09.pdf.
101. See INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, WORKING GROUP II, CLIMATE CHANGE 2007: IMPACTS, ADAPTATION, AND VULNERABILITY 380-81(2007) (contribution of the working group to the Fourth Assessment Report of the IPCC).
102. See Daniel A. Farber, Modeling Climate Change and Its Impacts: Law, Policy, and Science, 86 TEX. L. REV. 1655(2008);
103. see also Daniel A. Farber, Rethinking the Role of Cost-Benefit Analysis, 76 U. CM. L. REV. 1355, 1386-97(2009) (arguing that cost-benefit analysis cannot handle climate change because of scientific uncertainty).
104. For a general and somewhat more optimistic discussion of climate modeling, see generally Farber, Modeling Climate Change and Its Impacts, supra note 111 (arguing that climate models are more advanced than economic models in establishing lower-end estimates of the impacts of global temperature change, and should have more influence on the policy-making process).
105. Energy Conservation Program: Energy Conservation Standards and Test Procedures for General Service Fluorescent Lamps and Incandescent Reflector Lamps, 74 Fed. Reg. 34, 080, 34, 164 tbl. VII.27 (July 14, 2009)
106. (to be codified at 10 C. F. R. pt. 430).
107. On the other hand, the relationship could be less than linear, meaning that the Appendix actually overstates benefits of reducing emissions. However, given the widespread belief among climate modelers that damages scale more than linearly with increases in global temperature, this seems unlikely. See INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, WORKING GROUP II, CLIMATE CHANGE 2001: IMPACTS, ADAPTATION, AND VULNERABILITY 78(2001) (contribution of the working group to the Third Assessment Report of the IPCC) (presenting evidence that environmental systems have "strongly nonlinear, complex, and discontinuous responses" to ecological pressure);
108. 2 cause nonlinear ecological changes);
109. 2);
110. Darwin C. Hall & Richard J. Behl, Integrating Economic Analysis and the Science of Climate Instability, 57 ECOLOGICAL ECON. 442, 443-44(2006), available at http://upi-yptk.ac.id/Ekonomi/Hall-Integrating.pdf (arguing that the environment has a nonlinear response to changing inputs);
111. Timothy M. Lenton et al., Tipping Elements in the Earth's Climate System, 105 PROC. NAT. ACAD. SCI. 1787(2008), available at http://www.pnas. Org/content/105/6/1786.full.pdf (describing several potential nonlinear climate change effects);
112. Robert J. Nicholls et al., Global Estimates of the Impact of a Collapse of the West Antarctic Ice Sheet: An Application of FUND, 91 CLIMATIC CHANGE 171, 172-73(2008), available at http://www.springerlink.com/content/ cv0810423u037236/fulltext.pdf (demonstrating the nonlinearity of damages created by environmental changes);
113. Megan Ceronsky et al., Checking the Price Tag on Catastrophe: The Social Costs of Carbon Under Non-Linear Climate Response 18 (Econ. & Soc. Res. Inst, Working Paper No. 392, 2011), available at http://www.esri.ie/UserFiles/ publications/WP392/WP392.pdf (demonstrating the need to account for nonlinear climate responses in projections of marginal damages in costs assessment models).
114. 2 emission reduction, see Robert N. Stavins, A Meaningful US. Cap-and-Trade System to Address Climate Change, 32 HARV. ENVTL. L. Rev. 293, 324-27(2008) (advocating linking U. S. climate change regulations with foreign and international regulatory scheme to achieve an optimal reduction in carbon emissions); Vandenbergh & Cohen, supra note 21 (discussing the difficulty of using unilateral measures to incentivize Chinese reductions in carbon emissions);
115. Jonathan B. Wiener, Climate Change Policy and Policy Change in China, 55 UCLA L. REV. 1805(2008) (discussing the need for the United States and China to work together to develop coordinated climate change regulations).
116. See, e.g., Mustafa H. Babiker, Climate Change Policy, Market Structure, and Carbon Leakage, 65 J. INT'L ECON. 421, 439-40(2005) (discussing the effects of international leakage on bilateral trade).
117. This is likely true with respect to some countries, but not with respect to others. The United States ranks eighty-second among the 134 nations (for which there are data) in the carbon intensity of its energy production. That is to say, eighty-one countries produce less carbon per unit of energy than the United States; fifty-two produce more. Carbon Intensity of Energy Use in 2007, WORLD RESOURCES INSTITUTE CLIMATE ANALYSIS INDICATORS TOOL, http://cait.wri.org/ cait.php? page=carberg&mode=view (registration required). Notably, China, Australia, Ireland, Israel, Italy, and Denmark have less carbon-efficient economies than the United States; Japan, India, Canada, and the European Union countries, as a whole, are more efficient.
118. See generally Paul-Erik Veel, Carbon Tariffs and the WTO: An Evaluation of Feasible Policies, 12 J. INT'L ECON L. 749, 755-60(2009) (discussing the failure of specific European carbon tariff proposals to completely eliminate leakage).
119. Joshua Elliott, et al., A Quantitative Examination of Trade and Carbon Taxes (manuscript at 22-30) (on file with authors).
120. Leakage would now occur not only to China and India, but also to the European Union, Japan, Canada, and Australia. See FRANK CONVERY ET AL., M. I. T. JOINT PROG. ON THE SCI. & POL'Y OF GLOBAL CHANGE, NO. 162, THE EUROPEAN CARBON MARKET IN ACTION: LESSONS FROM THE FIRST TRADING PERIOD 16-17, available at http://mit.dspace.org/bitstrearaliandle/1721.1/44619/MITJPSPGC-Rptl62.pdf.
121. Mustafa H. Babiker & Thomas F. Rutherford, The Economic Effects of Border Measures in Subglobal Climate Agreements, 26 ENERGY J. 99, 106-08(2005) (estimating leakage from 7-39 percent depending on whether the United States is included in the Kyoto coalition countries and on what type of protective measures, such as tariffs or exemptions, Kyoto coalition countries take to reduce leakage);
122. TON MANDERS & PAUL VEENENDAAL, NETH. BUREAU FOR ECON. POLICY ANALYSIS, NO. 171, BORDER TAX ADJUSTMENTS AND THE EU-ETS: A QUANTITATIVE ASSESSMENT 23 tbl.4.4(2008) (estimating a 3.3 percent leakage rate for reductions made by the European Union).
123. Energy Conservation Program: Energy Conservation Standards for Small Electric Motors, 75 Fed. Reg. 10, 874 (Mar. 9, 2010)
124. (to be codified at 10 C. F. R. pt. 431).
125. See, e.g., National Primary Drinking Water Regulations, 66 Fed. Reg. 6976, 6981 (Jan. 22, 2001)
126. (to be codified at 40 C. F. R. pts. 9, 141, 142).
127. 42 U. S. C. § 7521 (a) (1) (2006). The term, "air pollutant," means "any air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive... substance or matter which is emitted into or otherwise enters the ambient air."
128. Recently affirmed by the Supreme Court in Morrison v. National Australia Bank, 130 S. Ct. 2869(2010).
129. For a recent explanation for the presumption of extraterritoriality in litigation involving environmental laws, see generally Jonathan Remy Nash, The Curious Legal Landscape of the Extraterritoriality of US. Environmental Laws, 50 VA. J. INT'L L. 997(2010) (detailing recent courts' reluctance to embrace extraterritoriality of domestic environmental regulations).
130. 42 U. S. C. § 7415 (c) ("This section shall apply only to a foreign country which the Administrator determines has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section. ").
131. See generally SIMON CANEY, JUSTICE BEYOND BORDERS: A GLOBAL POLITICAL THEORY 3-16(2005) (describing competing approaches to international relations including the cosmopolitan, realist, statist, and nationalist approaches).
132. See W. Kip Viscusi & Joseph E. Aldy, The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World, 27 J. RISK & UNCERTAINTY 5, 26, 27-28 tbl.4, 29-30(2003) (showing a range of valuations for a statistical life from $0.8 million in South Korea to $19.9 million in the United Kingdom, in 2000 U. S. dollars).
133. Cf Eric A. Posner & Cass R. Sunstein, Dollars and Death, 72 U. CHI. L. REV. 537(2005) (discussing how the law should assign dollar values to human lives).
134. Wojciech Kopczuk, Joel Slemrod, and Shlomo Yitzhaki, The Limitations of Decentralized World Redistribution: An Optimal Taxation Approach, 49 EUROPEAN ECON. REV. 1051, 1075(2005).
135. See Cass R. Sunstein, Of Montreal and Kyoto: A Tale of Two Protocols, 31 HARV. ENVT'L. L. REV. 1(2007).
136. See Rachel Brewster, Stepping Stone or Stumbling Block: Incrementalism and National Climate Change Legislation, 28 YALE L. & POL'Y REV. 245, 246-47(2010) (arguing that incremental domestic action may retard the development of an international agreement on climate change).
137. Elena Kagan, Presidential Administration, 114 HARV. L. REV. 2245, 2358-68(2001).
138. Similar to the treatment of foreigners is the treatment of benefits to people living in the distant future. The treatment of such people is a normative question (typically discussed under the rubric of intergenerational equity), not a technocratic question, and thus not one that can be answered with cost-benefit analysis. See Eric A. Posner, Agencies Should Ignore Distant-Future Generations, 74 U. CHI. L. REV. 139, 143(2007).
139. Ctr. for Biological Diversity v. Nat'l Highway Traffic Safety Admin., 538 F.3d 1172, 1227 (9th Cir. 2008).
140. See 5 U. S. C. § 706(2) (A) (2006) (ordering courts to set aside agency action that is "arbitrary [or] capricious").
141. See Exec. Order No. 13, 563, 76 Fed Reg. 3821 (Jan. 18, 2011).