It Ain't Over 'til the Greens Win

Lawyers specializing in migration from both sides of the barricades have a wry capsule explanation of how the law works: It Ain’t Over 'til the Migrant wins. In this explanation “wins” means “stays.”

There are American laws galore that allow the government to deport people present in the United States illegally. Why don’t they work? Well, there are also laws that enable a competent lawyer to string out his client’s deportation indefinitely until he has a wife, children, a job, a home, and a lawyer here—which almost amounts to a squatter’s right to stay.

It seems downright unreasonable to send him back to where his home used to be—at least that’s the view of the immigration bar, NGOs specializing in migration and refugee policy, media that are overwhelmingly sympathetic to migrants of every kind, all Democrats and some Republicans in Washington, academic “experts” on immigration, and so eventually of the courts trying such cases.

As the late Judge Robert Bork pointed out in his short, brilliant book, Coercing Virtue: The Worldwide Rule of Judges (AEI, 2003), modern judges implement not the law as such but a blend of the law itself and of the opinion of the law held by legal members of the highly educated upper-middle class.

That’s why the opinions of judges matter and why legal verdicts in immigration cases increasingly follow the maxim of “It ain’t over 'til the migrant wins.” And, therefore, stays.

Case closed!

Is that maxim now being transferred to law determining court cases on the environment and climate change? That question is raised by the proliferation of court challenges to projects to extract and transport fuels, especially fossil fuels, when those projects have survived regulatory challenges from the federal bureaucracy, and even when their cancelations are likely to provoke disputes between the U.S. and other countries.

The most recent case of such judicial intervention took place in Alaska—usually a state hospitable to the oil and natural gas industry (as well it might be)—when a federal judge canceled Willow, a massive energy investment by Conoco-Phillips on Alaska’s North Slope.

Judge Sharon Gleason of the District of Alaska ruled that the environmental impact statement for Willow should have included a ”quantitative estimate of emissions resulting from oil consumption” (or explained why the estimate could not be produced) and provided better protection for wildlife including caribou.

These are interesting proposals, but they are not exactly legal judgments. They are decisions for the political and regulatory authorities which had considered then and taken a different view to Judge Gleason. Willow had been approved by the Bureau of Land Management, supported by the Biden administration, and backed enthusiastically Alaska’s Governor, Mike Dunleavy, who is responsible to the voters for Alaska’s economic development. He responded sharply to Gleason:

We are giving America over to our enemies piece by piece. The Willow project would power America with 160,000 b/d, provide thousands of family-supporting jobs, and greatly benefit the people of Alaska.

Judge Gleason has no accountability for the economic consequences of her arbitrary judgments. She was exercising irresponsible power—or as the saying goes, legislating from the bench. Alaska voters damaged by her intervention have no way of sanctioning her for it.

Judge Gleason has spoken.

Of course, we should acknowledge that such judicial interventions sometimes favor the corporation against the regulatory bureaucracy or the decisions of lower courts. A recent example of that took place in Louisiana where a court forced the Biden administration to resume selling oil and gas leases to energy company which it had halted “temporarily” while the Interior Department reviewed them.

Higher courts may reverse that judgment on appeal—but that comes with a cost too. As the formidable columnist Mark Steyn has pointed out in the different context of libel law, “the process is the punishment.”

All these infrastructure projects are hugely expensive and take years to complete. If their approval is a constantly changing shuttlecock batted back and forth between the courts, the regulatory bureaucracy, the political world, and the industry, that will raise their costs massively, sometimes cause their cancelation, and hike the price of the final product in energy bills to the electricity consumer—who now include owners of electric cars and other electrical products. They buy such such products in order to switch from dirty fuels to greener power sources at a considerable increase in cost. That cost increase will get larger if infrastructure projects become as risky as roulette. And if you make the cost of switching heavier, fewer people will do it.

All those consequences—and more—were exemplified by President Biden’s cancelation of the nine-billion dollar Keystone Pipeline from Canada to Texas. He did this by executive order immediately upon coming into office after it had survived more than a decade of regulatory and legal challenges from the usual suspects—environmentalists, protesters claiming to represent indigenous interests, progressive billionaires: the Democratic party’s post-industrial urban base.

Par for the course, you may think. But this particular decision was unusual in two respects. In the first placed, it reversed the more common practice by which the courts override the national executive in Washington. On Keystone, Biden overrode the courts—which is usually seen by Democrats as a constitutional mortal sin. "Climate change," however, is the excuse that sweeps all rational argument aside. Second, it provoked a serious foreign policy crisis with—of all energy-producing countries—Canada! Canadian prime minister Justin Trudeau is Biden’s ideological soulmate on energy, the environment, and much else, but he still had to take his constituents into account.

That international crisis shows no sign of abating—quite the contrary—because Michigan governor Gretchen Whitmer canceled a much more important and more established pipeline between the U.S. and Canada, apparently without really grasping the extraordinary damage she was inflicting on our friendly neighbor to the north. Here's one local report:

While the Keystone project was halted in early construction, Line 5 has transported Canadian oil since 1953. More than half of Ontario’s supply passes through it, according to [the pipeline company] Enbridge. It exits Michigan at the border city of Sarnia, Ontario, and connects with another line that provides two-thirds of crude used in Quebec for gasoline, home heating oil and other products.

I would once have thought that a war with Canada was in the realm of the impossible. But Governor Whitmer may be proving me wrong. She is threatening to confiscate Enbridge’s profits and do many other terrible things if the company continues to defy her. The federal regulator seems not to agree with the governor’s arguments that the pipeline is a hazard to the environment. Enbridge points out that all the alternatives to the pipeline would be more hazardous. The Canadians seem to be united around the defense of their own oil and gas industry since it keeps Ontario and Quebec warm in winter (and Michigan's airports operating). Local Michigan businesses are largely on Enbridge's side too. The Biden administration, which is currently digging down into a lot of holes, must be wondering how on earth it got into this hole and how to get out of it.

Game over, man.

The answer is that, as in Biden’s cancelation of the Keystone pipeline, there are far too many “authorities”—executive, regulatory, state, federal, legal—which believe that their virtuous Green ideologies give them a right to intervene arbitrarily in environmental and energy issues to reach the right outcome. Which one of them prevails is now an almost random matter. For companies contemplating multi-billion dollar projects, both negotiating with regulatory authorities and going to law in these circumstances are a little like shaking a kaleidoscope or consulting an astrological chart.

The main villain in all this is the authority that should and normally would determine fairly which of all the other authorities has the right and obligation to make which decisions on what and on what legal basis. That authority is the courts. Law should offer a reasonable certainty to companies and individuals contemplating major expenses from mortgages to investment in renewables. But it can only play this role well if it reduces to the minimum its own opinionatedness on green issues.

Unfortunately, the courts are no longer impartial umpires interpreting laws passed by Congress and state legislatures. They are moving in the direction of becoming more “green” rather than more judicial as the examples quoted above demonstrate. They have their fingers on the scales of Lady Justice. It threatens both America's prosperity and its democracy if it ain't over till the Greens win. But that's the trend.

Asking an Over-Burdened Capitalism to Save the World

My boss in my first job in journalism on the Daily Telegraph in London was a genius—a forgotten genius now, alas, because he was known in the trade as “the best editor the Daily Telegraph never had” and those kind of titles don’t pass down the generations. Colin Welch was both a clear-sighted anti-socialist with a sound grasp of economic theory and a wit perpetually fizzing with epigrams and ideas. In a debate in the magazine Encounter with Anthony Crosland, later Foreign Secretary but then Britain’s leading social democratic theoretician, Colin pointed out that the main intellectual flaw in moderate socialism was that it had far too much faith—indeed, unbounded faith—in capitalism.

Whereas more orthodox leftists wanted to nationalize companies and plan their operations to make them more efficient and profitable, modern-minded social democrats like Crosland accepted that free market disciplines were simply better than state ownership at making companies efficient, profitable, and thus taxable.

State-owned companies in Britain in the 1960s and 1970s had a distressing tendency to absorb more money in subsidies than they generated in profits and tax revenue. At one point it was estimated that the costs of subsidizing the UK’s coal, steel, and auto industries were equal to the total annual tax revenue from North Sea oil. That kind of thing discredited orthodox socialism and led to Margaret Thatcher’s program of mass privatization in the 1980s that was exported through the world.

With the collapse of the Soviet Union in late 1991, socialists of all kind had to invent a new definition of socialism, and they came up with one like Crosland's that amounted in theory as well as practice to regulated capitalism.

Nothing very dramatic there, you may think; capitalism has been regulated since the Victorians. But this kind of regulation went far beyond forbidding the emission of poisonous gases or punishing the man who watered the workers’ beer. Social democrats continued those regulations, of course; indeed, they generally made them heavier. But they also imposed novel regulations under two headings.

The first were regulations designed to control every aspect of how industries would be allowed to operate—what forms of energy they could use, the composition of their workforce, the kind of finance they could raise, etc., etc. The second regulations required companies to spend their own resources in achieving political objectives for which the government was reluctant to levy taxation. I covered this use of regulations by governments more fully in my earlier piece Towards the Socialist Corporation.

As Welch had foreseen twenty years before, however, when socialists did this, they were taking for granted that companies would be able to factor in the costs of these impositions more or less indefinitely without collapsing or going bankrupt. They had infinite faith in capitalism and a belief that it would always deliver the goods for them.

And now the bills are coming home to roost.

In his consistently original, usually correct, and sometimes scary Wall Street advice column, "True Blue Will Never Stain," Martin Hutchinson looks at how the first set of regulations has obstructed the development of three large economic development projects—exactly the kind of project that are necessary if we are to keep our economy moving forward and delivering growth (even at today’s anemic rate of productivity.)

He points out that the so-called Holy Roman Empire (i.e., broadly speaking, Germany before its unification in 1870) was about eighty years behind the Brits and the U.S. in developing its own industrial revolution because of two flaws: its feudal system of land tenure which was only one step up from serfdom, and its system of internal tariffs which obstructed trade and raised the prices of goods in all its subject principalities. There could be no creation of a large “single market” while these absurd economic institutions survived which they did until 1833, after which Germany began its successful catch-up.

Charlemagne. King of the Franks and Emperor of the Romans.

Why did they survive so long in the light of the fact that they were holding the statelets of the Holy Roman Empire back in a fast-developing world? Hutchinson argues that they were so stitched into the Empire’s legal system and so into the thinking of its people that reforming them seemed inconceivable. Hutchinson then delivers his blow; that in the U.S. today a similar duo is holding back the American economy. It is the combination of aggressive environmentalists and over-powerful lawyers who between them exploit the opportunities that the government’s over-regulation gives to them to halt economic development and to win large legal settlements.

Hutchinson gives three recent examples:

"A recent Supreme Court decision allowed the Atlantic Coast pipeline to run under the Appalachian Trail, a lawsuit that had held up the pipeline for years. However, this decision was essentially nullified when Dominion Energy, one of two companies that had been developing the $8 billion project, gave up and sold its remaining natural gas assets to Warren Buffett. Apparently, even with Supreme Court approval, the remaining environmental harassments and legal delays were sufficient to make the project uneconomic.
"In a second case, the $4 billion Dakota Access oil pipeline, which has been opened with oil passing through it quietly for three years, was suddenly blocked by a Washington district court, and prevented from further operation, because of some alleged defect in the pipeline’s paperwork before it was opened. By this decision of a lower court 1,500 miles from the pipeline, the operation of a $4 billion asset will be prevented for an indefinite period, at least 13 months.
"In the third case the Keystone XL pipeline, a major international project which was held up arbitrarily for the entire eight years of the Obama administration, and had slowly been working its way through the paperwork since 2017, was held up by the Supreme Court for yet another environmental review, thus dooming it if Joe Biden should win the November election. "

As Hutchinson concludes, not only are huge costs added to these projects by such delays but they are almost never completed on time, sometimes the delays become cancellations, and some projects are never started because the obstacles to them deter investment in the first place.

There are three villains in this account, however, not just Hutchinson's two. They are the close-minded, single-issue environmentalists; the aggressive lawyers—as George Gilder has written, “Entrepreneurial lawyers are the cancer of capitalism” -- and the government that makes and sustains the regulations that enable the first two to play their obstructive roles.

What makes the obstructive role of governments so hard to understand is that they are enabling the failure of their signal policies. Both political parties are loudly committed to large infrastructure spending to revive the U.S. economy. But unless they reform the regulations that allow the other two to flourish, they will be spending billions of taxpayers’ money mainly on legal fees, cost over-runs, and abandoned projects.

It seems so lunatic that it couldn’t possibly be true. Before you say that, however, consider this disturbing fact: governments around the world have steadfastly refused to publish the cost estimates of their promise to move towards carbon neutrality by 2050. Everybody knows that this policy (if it’s ever implemented) would be enormously expensive as well as reducing the standard of living of their populations. Still, it’s telling that governments are nervous about putting an actual figure on it -- as if the voters are so distracted by word inflation that they won't notice words such as horrendous or terrifying unless they're backed up by a statistic.

So we can understand the reluctance of governments when we learn that one government has done so with results that would alarm a drunken sailor into fiscal sobriety. As the Danish economist and head of the Copenhagen Consensus, Bjorn Lomborg, points out in a New York Post oped, adapted from his new book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet:

Only New Zealand has asked for an independent assessment of the cost of its climate policy. It will cost 16 percent of its GDP each and every year by 2050, making it more costly than the entire New Zealand public expenditures for education, health, environment, police, defense, social protection, etc. (My italics.)

Lomborg comments reasonably “We need smarter solutions.” For that, however, we would need smarter governments and smarter politicians. What we have are people who think you can pile ever-larger burdens on capitalism, progressively starve it of real investment and opportunities, and then ask it to save the world.