Do Energy Laws Need Expiration Dates? [Gaille Energy Blog Issue 24]
- Posted by scottgaille
- On May 1, 2016
- 0 Comments
“The Deepwater Horizon oil spill in 2010 was exacerbated by safety mechanisms that didn’t fit the crisis. When the well started spewing mud and gas, the crew redirected it into a safety device called the ‘mud-gas separator.’ But the device ‘was quickly overwhelmed, enveloping much of the rig in explosive gas. Without this device, the crew would have directed the flow over the side of the rig, and the worst of the accident might have been prevented.’ Survivors in a life raft almost died because it was tied to the burning rig by a lifeline, and safety protocols had banned the crew from carrying knives.”
– Philip Howard, The Rule of Nobody: Saving America from Dead Laws and Broken Government
This is the second post about topics debated at the 2016 Energy Forward Conference. My energy policy panel included Ron Minsk (Former Special Assistant to President Obama for Energy and Environment) and Richard Meyer (responsible for Energy Analysis and Standards at the American Gas Association). Mr. Meyer observed that regulators are struggling to keep up with energy technology, which results in a mismatch between rules and the industry they govern. Any given law is essentially a snapshot of conditions existing at its origin. Several years will pass between the date on which a bill is filed and its eventual implementation by regulators. The faster the energy industry changes, the harder it will be to regulate.
The discussion brought to mind Philip Howard’s Rule of Nobody, which argues that our “Constitution has a significant flaw, not visible until the last half century,” namely “it is almost impossible to amend or repeal old laws. Our founders were concerned about preventing too many laws but never debated how to undo laws that didn’t work out. The same checks that deter making new laws also prevent changing old laws.” Howard laments a growing mountain of old laws, such as the “seventy-nine renewable energy programs” and the “forty-seven approvals from nineteen different governmental entities” needed for a major infrastructure project. He proposed the following Constitutional amendment as a fix:
“Amendment XXVIII: No statute or regulation requiring expenditure or public or private resources (other than to oversee legal compliance or enforcement), shall be in force for longer than fifteen years.”
In other words, all laws would have expiration dates. Howard’s proposal has a long pedigree, dating back more than 2,000 years to the Roman Republic. There, the power to collect certain taxes or activate the military was limited to the duration of an elected office. Texans are familiar with this approach, too, as all state agencies are automatically terminated after twelve years – unless a law is passed to renew them. Since the enactment of the Texas Sunset Law in 1977, 83 agencies have been abolished, including the Texas Tuberculosis Nurse Examiners (which at the time of its demise only regulated four nurses).
I asked my fellow panelists what they thought about Howard’s sunset proposal, sparking a lively debate with the audience. The sunset opponents’ principal criticism was that it undermined regulatory predictability. More specifically, they thought the prospect of expiring regulations created “unquantifiable risk” – whereas perpetuity can be quantified and thereby priced into investment decisions. But what exactly is the risk to an energy company if a regulation expires? I’m not sure there is any. It’s much more likely to be a benefit (in the form of decreased compliance costs).
What the sunset opponents really were saying is that expiration would create risks for the unregulated competition. President Obama’s energy regulations generally seek to make fossil fuels more expensive, based on their respective carbon emissions. If Obama’s laws and regulations were subject to expiration dates, investors in renewable energy would lose a key advantage: the “constitutional presumption against change [which] gives special interests almost invincible powers to keep things the way they are” (The Rule of Nobody). Maybe Howard’s proposal is exactly what America needs. As James Madison once said, “the infirmities most besetting Popular Governments . . . are found to be defective laws which do mischief before they can be mended, and laws passed under transient impulses, of which time & reflection call for a change.”
About the Gaille Energy Blog. The Gaille Energy Blog discusses issues in the field of energy law, with weekly posts at http://www.gaillelaw.com. Scott Gaille is a Lecturer in Law at the University of Chicago Law School, an Adjunct Professor in Management at Rice University’s Graduate School of Business, and the author of two books on energy law (Shale Energy Development and International Energy Development).