Regulation, "Republican Moments," and Energy-Policy Reform

Article excerpt

During the last half decade or so, energy policy reform has made its way to the top of the American policymaking agenda, driven by a groundswell of concern over environmental issues (primarily climate change), energy security issues, and the desire for a more efficient and reliable energy delivery system. This groundswell has produced some recent policy changes, but they have not been enough to satisfy proponents of reform, who remain frustrated with the unwillingness of Congress to pass legislation aimed at fundamentally changing the way Americans produce and consume energy. This Article examines the reasons why fundamental energy policy reform has been so difficult.

Part I explores the historical context to the current reform debate, beginning with the energy policy reforms enacted in the 1970s. Part II examines more closely the current logic of reform, including the reasons why Congress is considering such fundamental energy policy change now, and the menu of policy instruments under consideration. Part III examines the political logic that governs legislative action and the contextual and issue -based reasons why the energy policy reforms under consideration are particularly difficult for Congress to enact compared with major regulatory reforms of the past. I argue here that Congress is capable of enacting regulatory reforms over the objections of well-organized interests (so-called "republican moments"), but Congress is particularly illequipped (or disinclined) to do so when, as here: (i) the issues are technically and politically complex, making the benefits of reform (or costs of inaction) seem unclear and remote to many voters, and (ii) the costs of reform fall upon current voters while many of the benefits accrue to others. Part IV offers some brief concluding thoughts about the kinds of developments that might change the current political dynamic so as to make reform more likely.

I. WHERE WE'VE BEEN: REFORM AND THE PATH TO (MORE) REFORM

A. Regulatory Activity, 1970-2000

It has been approximately three decades since Congress, the President, and regulators last sought to fundamentally change the way Americans produce and consume energy. In the 1970s policymakers were motivated by environmental and energy security concerns. Environmentalism was at its peak as a motivating force for legislation in the 1970s, producing the Clean Air Act of 1970, 1 the Clean Water Act of 1972,2 and major hazardous waste legislation.3 These new regulatory regimes imposed new pollution control costs on fossil fuels, requiring automobiles and industry alike to comply with new emissions standards. Meanwhile, the formation of the Organization of Petroleum Exporting Countries (OPEC)4 and the resultant oil shocks of the 1970s heightened energy security concerns, as did the widespread perception that the United States was running out of natural gas.5 The result was a portfolio of legislation and regulatory initiatives that represented, collectively, an attempt to reduce the United States' dependence on oil and steer the economy toward cleaner and more efficient energy alternatives.

This legislative trend began in 1975 when Congress created national fuel economy standards for automobiles known as "CAFE standards."6 That same year Congress established the Strategic Petroleum Reserve, the culmination of an effort on the part of the Nixon and Ford administrations to build up a reserve supply of oil to be used during future supply interruptions.7 The Reserve stores oil in various places throughotit the United States and retains the capacity to provide about a month's worth of oil consumption.8 Beginning in 1977, the Carter Administration made energy policy a priority, creating the new Department of Energy9 and securing the passage of a legislative package that addressed supply and shortage concerns in several ways. First, the Natural Gas Policy Act of 1978 (NGPA)10 deregulated the price of natural gas at the wellhead, ultimately stimulating both the discovery of new domestic sources of gas and greater efficiency in natural gas markets. …