Topic: Energy and Environment

Recusal Rules Impact Environmental (and Other) Litigation

Two weeks ago I blogged about the dismissal of the Katrina-related global warming case because half the judges on the Fifth Circuit were recused for having financial interests in the energy companies and utilities (which the plaintiffs chose specifically to gain recusals but mis-timed their strategy).  Well, now it seems that many judges on the Gulf Coast are recusing themselves from the nascent (and future) oil spill suits, again because they own shares of BP, Transocean, and the other companies involved.  Indeed, over half the federal district judges in the affected states – Texas, Louisiana, Mississippi, Alabama, and Florida – will not be participating in these cases, leading to calls to appoint judges from elsewhere in the country to handle them.

That’s ridiculous!  Owning a few hundred or thousand dollars worth of shares of stock is not enough to change the way a judge will behave, particularly when the public knows which judge owns which stock.  If we cannot agree that such purported “conflicts” don’t really show an appearance of impropriety – if we really doubt the integrity of our judiciary to such an extent – then we might as well throw out the ethics rules, throw up our hands, and declare the country ungovernable.  (I’m reminded of the Carrie Underwood song, “Jesus Take the Wheel.”)

Moreover, the financial conflict rules are murky.  As this AP story discusses, ”a judge does not have to step aside if the investments are part of a mutual fund over which they have no management control. Mere ties to companies or entities in the same industry, no matter how extensive, also don’t require disqualification.”  So here we’re valuing form over substance.

Look, maybe this is just a pet peeve of mine – it’s not an ideological issue one way or the other – but I think you just have to apply the “reasonable skeptic” standard.  Every judge is human and has his various biases.  It’s one thing to recuse if counsel for one of the parties is the judge’s spouse or child, or if half the judge’s wealth is invested in one of the parties.  But dinky little “abundance of caution” recusals cost the justice system more in administrative hassle, sunk attorney fees, and other wastes of time and money than they benefit it in increased integrity.

As for the oil spill litigation, the U.S. Judicial Panel on Multidistrict Litigation – which looks at complex cases on similar issues brought in disparate venues – meets July 29 in Boise, Idaho (of all places), to hear arguments on consolidation.  In light of the aforementioned recusals, the Louisiana cases may well be sent to Alabama, Mississippi, or South Florida – or a federal courthouse near you!

Driverless Cars — You Heard It Here First

Not five months after Randal O’Toole discussed the idea of safe, efficient, driverless cars in his book Gridlock: Why We’re Stuck in Traffic and What to Do about It and in this full-page Wall Street Journal essay – but 71 years after Norman Bel Geddes first imagined the idea at the New York World’s Fair of 1939 – the Washington Post (in an article picked up from the New Scientist) and Scripps-Howard columnist Dale McFeatters (in the New York Post and elsewhere) are writing about the benefits of such advanced technology. As the Post puts it,

Yet according to Jonas Ekmark, a researcher at Volvo headquarters near Gothenburg, Sweden, this is just the start. He says we are entering an era in which vehicles will also gather real-time information about the weather and highway hazards, using this to improve fuel efficiency and make life less stressful for the driver and safer for all road users. “Our long-term goal is the collision-free traffic system,” says Ekmark.

Or as O’Toole had put it in the Wall Street Journal,

Driverless vehicles offer huge advantages over current autos. Because computer reaction times are faster, driverless cars can safely operate more closely together, potentially tripling highway throughput. This will virtually eliminate congestion and reduce the need for new road construction….

Driverless cars and trucks will be safer. They will also be greener, first by significantly reducing congestion, and eventually because vehicles will be lighter in weight due to reduced collision risks.

Stay tuned to the Cato Institute for more ahead-of-the-curve ideas.

Global Warming Plaintiffs Hoisted on Their Own Petard

We have reached a denouement of sorts in the “blame XYZ companies for causing global warming which caused Hurricane Katrina which damaged my property” lawsuit that I’ve previously discussed and in which Cato filed an amicus brief.  When last I blogged about this, the Fifth Circuit had apparently lost its en banc quorum – a late judicial recusal left only 8 of 16 judges available to hear the appeal – and was figuring out what to do. 

Well, on Thursday the court issued an order determining that it lacked a quorum, but that the panel opinion – the one that allowed the tendentious causation claims to proceed – remained vacated.  The money quote: “In sum, a court without a quorum cannot conduct judicial business… .  Because neither this en banc court, nor the panel, can conduct further judicial business in this appeal, the Clerk is directed to dismiss the appeal.”  This means that the district court opinion dismissing the suit stands, though plaintiffs are free to seek Supreme Court review.  Not surprisingly, the three judges on the panel dissented from this order (which means that the order was decided by a 5-3 vote).

The upshot of all this is that the plaintiffs ended up botching their strategy of suing companies whose shares are owned by Fifth Circuit judges.  This clever legerdemain successfully removed seven judges, but that left a quorum of nine.  Of course, had the late-recusing eighth, Jennifer Elrod – who would’ve been expected to rule against the plaintiffs – recused when the first seven did, the court could not have vacated the panel opinion in the first place.  We’ll never know what happened after the court’s prior decision to grant rehearing that caused Judge Elrod to recuse, but at least we’re left with the second-best result: no strong decision from an important federal appellate court, but the reinstatment of the correct decision below.

‘Do Something, Superpresident!’

Amid the din of James Carville’s screeching, you may have missed a couple of reasonable voices taking issue with the “do something, Superpresident!” approach that’s dominating the discussion of the Gulf Spill. (They both mention Cato work, which is a bonus).

In the Daily Beast, Tunku Varadarajan writes that this isn’t

“Obama’s oil spill,” if by saying so we mean to ascribe culpability to the president. He didn’t run the rigs, or oversee the plans, or grant the licenses to drill, or write the rules that govern the granting of those licenses. He was just president when the bloody thing happened.

(Varadarajan links to this piece by Peter Van Doren and Jerry Taylor on what the spill says about “the profound intellectual poverty animating our public conversation about energy policy.”)

Over on the New York Times’ website, Glenn Greenwald cites my book, The Cult of the Presidency, to worry about a political culture dominated by

the mythology that presidents are paternal, virtually omnipotent figures who will protect us from harm and, in the broadest sense, ensure that justice is done.  Americans, in turn, crave protection from a messianic commander-in-chief, and are willing to vest him with great latitude and power in exchange for that protection.

This mystical conception of the presidency–and the power-concentrating dynamic it leads to–is the major theme of my book, especially Chapter 7, “Omnipotence and Impotence”:

In the BBC production of Robert Graves’ “I Claudius,” Emperor Augustus tells his wife Livia that the Senate had voted to make him a god in the Syrian city of Palmyra, and the people there had put a statue of him in the temple, to which they’d bring offerings in the hopes that the emperor would grant rain or cure their ailments. “Tell me Livia,” Augustus says, “If I’m a god, even in Palmyra, how do I cure gout?”

Augustus’s frustration is all-too-familiar to the modern president. He can no more “manage” the economy or provide seamless protection from all manner of hazards than Augustus could bring rain or cure gout.

Neither Varadarajan nor Greenwald is particularly ready to feel sorry for a president who’s done everything he can to stoke irrational public expectations for presidential salvation in virtually every public policy area.  Nor am I.  It couldn’t happen to a nicer guy, as they say.

But it’s not entirely clear what Carville, Palin et al actually want done.  A government takeover of the spill site?  That’s a stupid idea.  Better regulation (retroactively?)?  There’s plenty of blame to go around, but color me unsurprised that incompetence and regulatory capture characterize the Minerals Management Service, and that a president who sits atop an 2-million-employee executive branch, pretending to run it, didn’t  ”fix” those problems beforehand.

President Bush Surveys the Scene in His Superplane

If the story LA Gov. Bobby Jindal is telling is true (I don’t know enough to say), then he has a legitimate beef with the federal government for standing in the way of state mitigation efforts. But most of the complaints dominating the airwaves are far vaguer: centering on the atavistic notion that just by Obama traveling to the site, the magical force of Presidential Concern might cause the slick to recede.   Yesterday, Drudge linked to Obama’s schedule thusly:

Things Obama Is Doing Instead of Going to Gulf: Duke Photo, Lunch with Bill, Vacation...

Schadenfreude is fun, but it’s worth worrying about the consequences of this view of the presidency.  When the public views the president as the man responsible for curing everything that ails us–from bad weather, to private-sector negligence–presidents are going to seek powers to match those superheroic responsibilities.  With Great Responsibility Comes Great Power (to torture one superhero slogan).

That was what happened in Katrina’s aftermath, as I explain here–and don’t be surprised if it’s the upshot of the public and the pols’ current cries for presidential rescue.

In yesterday’s Post, E.J. Dionne complained that we’ve “handed vast responsibilities over to a private sector that will never see protecting the public interest as its primary task.”  But as far as incentives go, the spill is all downside for BP, which is hemorrhaging market value along with oil.  In contrast, the federal government and the president may well emerge from the spill with less popularity, but more power. That’s the logical consequence of the public’s boundless conception of presidential responsibility.

If only we could “Top Kill” the Cult.

FTA Chief: Paint Is Cheaper Than Trains

In March, Cato published my review of every rail transit system in America (as of 2008), showing that in nearly every case buses would have been more cost-effective at moving people. This same view was expressed last week by a surprising source: Peter Rogoff, the Obama administration’s appointee in charge of the Federal Transit Administration (FTA).

Appropriately, Rogoff spoke before the Federal Reserve Bank of Boston, whose transit system, he pointed out, is in a “grim” state. Nationwide, he noted, America’s transit industry suffers from $78 billion worth of deferred maintenance – most of which is due to rail transit lines that cities cannot afford to keep in shape. Rogoff was disturbed that cities were asking for federal grants to build more rail lines when they can’t keep the existing trains in a state of good repair.

Rogoff says he has been telling transit managers, “if you can’t afford to operate the system you have, why does it make sense for us to partner in your expansion?” Cities that build “shiny new rails now … need to be mindful of the costs they are teeing up for future generations.”

“Let’s start with honesty,” he said: “Paint is cheap, rails systems are extremely expensive.” He suggested that, instead of expensive trains, many cities can attract just as many riders onto transit by painting buses on specific routes in distinctive colors (as Boulder, CO has done).

Part of the problem, Rogoff knows, is that Congress has given cities incentives to build high-cost transit projects. To address this issue, the last transportation bill, in 2005, included a section requiring the Federal Transit Administration to evaluate the incentives created by federal funding.

Unfortunately, the FTA dropped the ball: the resulting report said nothing about existing incentives and addressed only the question of whether new incentives could be created to encourage agencies to bring their properties up to a state of good repair. While that is a laudable goal, it is an input, not an output.

According to historic data published by the American Public Transportation Association, the productivity of public transit – outputs per unit of input – has declined dramatically since the federal government began funding transit in 1964. From 1964 through 2008, the inflation-adjusted cost of operating transit increased by more than 360 percent, while transit ridership grew by a mere 24 percent and fares by 62 percent.

Ultimately, transit should be privatized, but in the meantime Congress or the administration can adopt a race-to-the-top program similar to the one the administration is using to improve education. Rogoff should direct his agency to rewrite its incentive report before Congress takes up transportation again in 2011.

Indur Goklany’s Double Play in the New York Times

Indur Goklany’s great book, The Improving State of the World: Why We’re Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet, has been cited this week by both John Tierney and Andrew Revkin in the New York Times.

But neither of them really says much about it. Don’t bother with the articles, just go buy the book. It’s a compelling, comprehensive case – with more than 100 charts and tables – for the case made in the title, which deserves to be bullet-pointed. It shows that the state of the world is improving because

  • We’re Living Longer,
  • Healthier,
  • More Comfortable Lives
  • on a Cleaner Planet

Check out the evidence.

The Good Side of Bad News in Europe

What does the Greco-Euro currency/debt crisis mean for the U.S. economy?

Nearly everyone except the uniquely wise economist John Cochrane assumes very bad “contagion” effects –on U.S. banks, exports and particularly U.S. manufacturing.

This echoes identical anxieties while the world went through a far more dramatic Asian currency crisis after  July 1997,  and a Russian debt crisis the following May.

The most widely ignored effect of that crisis, however, was to depress foreign demand for oil, and thus slash oil prices to U.S. buyers from $25 a barrel in early 1997 to $11 by the end of 1998.

Oil is a major input into the manufacturing process (e.g., chemicals and plastics), and a major cost of distribution (trucks, trains and airplanes).  It is also a major determinant of the cost of all energy sources used in making other goods such as aluminum and paper.   When marginal costs go down, it becomes profitable to expand production.

At the height of the Asian/Russian crises, the table below shows that U.S. manufacturing output  rose by more than 10 percent. It’s an ill wind that doesn’t blow somebody some good.

Looking at the same phenomenon from the other side, every recession but one (1960) was preceded by a big increase in the price of oil. For oil importers like the U.S., cheaper oil is definitely better.

During the last big foreign currency/debt crisis, the real growth of U.S. Gross Domestic Purchases (the home-grown portion of GDP) jumped by 4.7% in 1997 and 5.5% in 1998.  Yet the Fed cut interest rates three times in October and November of 1998 because of what was happening in other countries.

The table  show what happened to the price of oil and to U.S. manufacturing from June 1997 to December 1998. The middle column is the price of a barrel of West Texas crude, and the column to the right is the U.S. industrial production index for the manufacturing sector.

1997-06    19.17    87.80
1997-07    19.63    88.12
1997-08    19.93    89.69
1997-09    19.79    90.45
1997-10    21.26    90.98
1997-11    20.17    92.05
1997-12    18.32    92.52
1998-01    16.71    93.36
1998-02    16.06    93.31
1998-03    15.02    93.13
1998-04    15.44    93.68
1998-05    14.86    94.25
1998-06    13.66    93.53
1998-07    14.08    92.96
1998-08    13.36    95.40
1998-09    14.95    95.11
1998-10    14.39    95.96
1998-11    12.85    96.08
1998-12    11.28    96.63

In recent weeks, as the debt and currency problems in Euroland hit the front page, the price of crude oil fell by about 20 percent.

Once again, as in 1997-98, everyone may be watching the wrong ball in the wrong court.