Energy Law

9 – Transportation

Fall 2014November 11, 2014

Alan Palmiter

Not for distribution- for study purposes only

Topic roadmap1. U.S. transportation

– History of transportation– Highway infrastructure

2. Powering transportation sector– Internal combustion engine– Electric cars– Natural gas vehicles– Hydrogen fuel cells– Biofuels

3. Regulation of fuels / auto industry– CAFE standards – Auto air pollution regulation– Restructuring auto industry

4. Future of transportation– American decentralization & recentralization– Improving motor vehicle network

http://www.eia.gov/totalenergy/

1. U.S. Transportation in Perspective

97.09(2011)

27.03(2011)

9

http://www.eia.gov/totalenergy/data/annual/pecss_diagram.cfm

1700 19501900 20001850

US transportation - timeline

Railway t

ravel - one m

illion passe

ngers NE to

CA (1872)

Duryea Brothers –

first auto plant (1

895)

John Calhoun – proposes unified ro

ad/canal sy

stem (1

816)

Henry Fo

rd – auto assembly l

ine (1908)

James Watt – ste

am engine (1781)

Hoover/Roosevelt –

highway constr

uction (1

930s)

Eisenhower –

NHS (1950s)

Robert Fulto

n – steamship Albany t

o NYC (1

807)

US auto sales <

50%

(2007)

Source: Wikipedia

US Interstate Highway System

(Click for video – 1.51 )

Highway Infrastructure

Overton Park v. Volpe (US 1971)

Justice Marshall:

The growing public concern about the quality of our natural environment has prompted Congress in recent years to enact legislation designed to curb the accelerating destruction of our country's natural beauty. We are concerned in this case with § 4(f) of the Department of Transportation Act of 1966:

Secretary of State shall not approve [highway construction] project over [specified public lands] ....unless (1) there is no feasible and prudent alternative to the use of such

land, and (2) such program includes all possible planning to minimize harm

to such park, recreational area, wildlife and waterfowl refuge, or historic site resulting from such use."

(Click for video – 1:33 )

Public transportation & technology

(Click for video – 3:35 )

2. Powering U.S. transportation

Model-T (internal combustion engine)

Alternatives to gasoline-powered ICE

Electric cars• Electric battery as fuel source• 1900: outsold every other type• Downfall: New roads / longer

distances / cheap oil• Recent popularity (since 1990s)

Compressed natural gas• Natural gas input for internal

combustion engine• Relatively safe and reliable• Lack of infrastructure

Hydrogen fuel cells• Hydrogen gas: separates into

protons and electrons – to generate power

• Only bi-product is water• Technology: expensive, derived

from natural gas, and safety perceptions

Biofuels• Produced from organic material• Common: ethanol /biodiesel• Debate: trade-off between

supply security / impact on food

Alternatives to gasoline-powered ICE

Click for video -1:49

Click for video -2:14

Who killed electric car?

Biofuels – interactive

Biofuels

According to the U.S. Department of Energy, the cost of producing small volumes of ethanol from cellulosic materials has dropped from about $9 per gallon in 2001 to about $2 per gallon today. This compares to the $2.80 cost of wholesale gasoline today.

Biofuels

Pros: Integrates well with

existing technology. Renewable resource. Greater security of

supply. Cleaner emissions.

Cons: Production may result in

net energy loss. Could impact food

supply. Discourages

conservation. Requires ‘flex-fuel’

equipment.

1. True or false? Henry Ford’s Model T was first powered by alcohol, not gasoline.

2. Which is true – a. The U.S. interstate is the

largest in the world.b. The U.S. interstate is 10x the

circumference of the earth.c. FDR conceived the modern

interstate system. d. The U.S. interstate systems

is the second largest public works project behind TVA.

3. Which is false -a. Lack of infrastructure hinders the

deployment of natural gas powered cars.

b. Only emission from hydrogen fueled cars is carbon monoxide.

c. Biofuels are produced from organic material.

d. Some biofuel production may result in a net loss of energy.

4. True or False? At the beginning of the 20th century, cars with electric motors were more popular than cars with internal combustion engines.

Pop QuizTransportation

Answers: 1-T / 2-a / 3-b / 4-T

Automotive air pollution regulation• Car + light truck emissions: EPA under the CAA• Massachusetts v. EPA (US 2007): under CAA

authority, EPA must regulate GHGs

Corporate Average Fuel Economy (CAFE)• Since 1975, vehicle fuel efficiency regulated• EISA of 2007 (and Obama agreements) raise

CAFE minimums• CAFE standards: 54.5 miles per by 2025

Biofuels mandates• Biofuels (i.e. ethanol) mandated• EPA of 2005: Renewable Fuel Standard (RFS) • By 2022, 36 billion gallons of blended ethanol

3. Regulation of fuels & the auto industry

1900 19901960 20201930

Transportation regulation - timeline

Federal Aid Road Act

(1916)

Clean Air Act

(1970)

Federal Aid Highway A

ct (1921)

Federal Aid Highway A

ct (1956)

Energy Policy Act

(2005)

Mass. v.

EPA (2

007)

EISA (2

007)

Citizens to Preserve

Overton Park

v. Volpe (1

971)

Massachusetts v. EPA (US 2007)

1973: CAA S 202(a)(1) requires EPA to set emission standards for "any air pollutant" from motor vehicles "which in [EPA’s] judgment causes, or contributes to, air pollution which may reasonably be anticipated to endanger public health or welfare.”

2003: EPA says lacks CAA authority to regulate GHGs for climate change purposes / and would decline to regulate, if did

Massachusetts v. EPA (US 2007)

2007 (Stevens): greenhouse gases fit well within the CAA’s capacious definition of air pollutant / remand to EPA on whether agency has discretion

2009: EPA concludes 6 GHGs in atmosphere may reasonably be anticipated both to endanger public health and to endanger public welfare / broad regulatory agenda

2012: DC Circuit dismisses challenges to EPA's endangerment finding and GHG regulations / accepts GHG such as CO2 endanger public health and likely responsible for global warming

http://www.epa.gov/climatechange/EPAactivities/regulatory-initiatives.html

CAFE Standards

(Click for video – 4:46)

1. True or false? CAFE standards were introduced in 1975.

2. Which is false – a. The NHTSA sets the CAFE

standardsb. The CAFE standards apply to

cars and light trucksc. The CAFE standards measure

auto makers’ sales-weighted fleet’s average fuel economy

d. An auto maker that fails to meet the CAFE standards must pay a penalty for only non-complying vehicles

3. Which is true --a. The CAFE standards for a Honda

Fit are the same as for a Ford F-150

b. Under new CAFE standards medium-duty and heavy-duty trucks are not covered

c. By 2016 auto makers are to meet a CAFE standard target of 28.5 mpg

d. The 2011 CAFE standards vary according to vehicle size

4. True or false? US vehicles by being bigger (though less fuel-efficient) are safer than vehicles in other 1st-world countries, which have smaller vehicles

Pop QuizTransportation – CAFE standards

Answers: 1-T / 2-d / 3-d / 4-F

Auto industry

US auto manufacturing industry:

• Throughout 1990s, lower R&D on efficient vehicles

• In Great Recession (2007), new vehicle sales plummet.

• Federal gov’t bailout (2008)

1. True or false? The Energy Independence and Security Act of 2007 requires corn-based ethanol production level off by 2015.

2. Beginning in the 1920s, the federal-state cooperation in highway construction gave the federal government a leading role in --a. Researchb. Oversight / siting of projectsc. Funding d. Construction

3. According to Overton Park Citizens v. Volpe, important considerations in siting highway projects are …a. Economic impact (jobs,

development, etc)b. Local input (town meetings,

referenda)c. Environmental considerations

(beauty, recreation, wildlife)d. Community disruption (slicing

cities in two)

4. True or false? In Mass. v. EPA, the Supreme Court held that although GHGs are “pollutants” the EPA can decide whether GHG regulation is required.

Pop QuizTransportation – regulation

Answers: 1-T / 2-abc / 3-c / 4-F

5. True or false? Germany recognized the future of biodiesel and increased tax exemptions for its production in 2009.

6. “Cash for Clunkers” produced which effects? a. Price of used cars increasedb. Price of used cars decreasedc. Domestic auto-maker market

share increasedd. Asian auto-maker market

share increased

7. The EPA is authorized under the Clean Air Act to do which of the following --a. Regulate fuel compositionb. Regulate fuel additivesc. Set emission standards for

vehiclesd. Regulate gas stations

8. True or false? High-speed rail took off after Congress passed the Passenger Rail Investment and Improvement Act of 2008 and the American Recovery and Reinvestment Act of 2009.

Pop QuizTransportation – regulation

Answers: 5-F / 6-ad / 7-abcd / 8-F

4.Future of transportation

(Click for video – 2:55)

‘Built To Last’ – US decentralization and recentralization

Improving the motor vehicle network

(Click for video – 1:35)

(Click for video – 1:33)

Energy federalism

Transportation Federal State

Highways Research / oversight / funding

Construction / maintenance

Gasoline EPA None

Alternative fuels Renewable Fuel Standards None

Autonomous cars None Tort law (products liability)/ insurance law

Class HypoWho is liable when an autonomous car crashes?

California’s legislature is considering a bill to shield self-driving car manufacturers, software providers and state roadway agencies from liability stemming from an “autonomous car” crash. Instead, the driver of a self-driving car will be liable for any damage or injuries caused by the crash -- just as if operating a traditional automobile.

Please provide talking points for your group’s view on this proposed legislation.

• Group 1: Google (self-driving car software provider)

• Group 2: CA Department of Transportation

• Group 3: National Association of Auto Insurance Companies

The end

Class HypoThe Obama Administration has recently concluded agreements with the major American automakers that would require such manufacturers to produce automobiles that exceed the Corporate Average Fuel Economy standards required by the Energy Independence and Security Act of 2007.

In a simulation of the talks that preceded the signing of these agreements, please produce talking points from each of the three groups below that discusses why, from your perspective, agreeing to more stringent CAFE standards is in your best interest and that of your constituents.

Group 1: American Automobile Association

Group 2: Obama Administration

Group 3: United Automobile Workers