An agreement by the Environmental Protection Agency that it will drop a policy under which it had sought to prevent two of its attorneys from speaking out against cap-and-trade legislation is being hailed as a victory for free speech and the rights of whistleblowers.

The dispute began as the result of an effort by two EPA attorneys, Laurie Williams and Allan Zabel, to argue that cap-and-trade is not only inadequate as a solution to climate change but potentially counterproductive.

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The EPA ordered Williams and Zabel last fall to take down a YouTube video in which they made their case and to receive prior approval for any future written publications. They appealed to the Obama administration for support, and the staff of the White House Ethics Counsel worked out new guidelines which guarantee the right of free speech for government agency employees.

William and Zabel had begun arguing against cap-and-trade as early as 2008, when they sent an open letter to members of Congress stating that “attempting to address climate change through a cap-and-trade approach alone … is an inefficient and ineffective strategy to address the most pressing problem of our time.”

The husband-and-wife couple suggested that the only workable alternative was “escalating carbon fees on all fossil fuels at the point of importation or extraction,” along with “a ban on new coal-fired power plants without effective carbon sequestration.”

Last October, after the House of Representatives had passed a climate change bill — the counterpart to which has since stalled in the Senate — Williams and Zabel posted a video on YouTube titled “The Huge Mistake,” which described the problems they saw in the legislation.

On October 31, they followed this up with an op-ed for the Washington Post charging that both bills were fatally flawed by their reliance on a combination of cap-and-trade and carbon offsets, which meant they “would undermine even their weak emissions-reduction targets and would lock in climate degradation.”

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At that point, the EPA took action against the two employees, whom it saw as violating conflict of interest rules by exploiting their official positions for personal advantage. Even though they had received advance clearance to post the video and had made it clear they were expressing only their own opinions, they were ordered to take it down or face “disciplinary action.” They were also told to edit out all references to their experience as EPA attorneys and obtain prior approval of any “outside writing activity” in the future.

The apparent censorship raised a firestorm in environmental circles. One environmental law blog suggested that Williams and Zabel must be “wondering if their message is cutting through the smoke of whether they are being ‘silenced’ by the EPA and showing how the Obama Administration is no different from any other administration in muzzling differing opinions about policy issues.”

Rather than filing a lawsuit, however, the two appealed to the Obama administration for support, and the staff of White House Ethics Counsel Norm Eisen began discussions with EPA officials. This led to the Office of Government Ethics issuing a guideline for all government agencies stating that employees have a First Amendment right to speak freely, as long as they make it clear they are expressing their own views and not those of the government.

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The Government Accountability Project, which had represented the two attorneys, sent a letter (pdf) of thanks this week to President Obama, saying that the new interpretation “will make a real difference for employees throughout government. … For decades, manipulation of ethics rules has been a highly effective tactic to silence or punish whistleblowers.”

“Equally significantly,” the letter continues, “the Special Counsel also convinced the EPA to implement the anti-gag statute, which requires agencies explicitly to qualify free speech restrictions by disclosing that they do not apply to the Whistleblower Protection Act or communications with Congress. EPA has refused to implement this basic transparency law for 22 years.”

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William and Zabel have now celebrated their new-found freedom by issuing a paper (pdf) titled “Disclosure of Unfixable Flaws of Greenhouse Gas Offsets in Proposed U.S. Climate Legislation” that calls for a Congressional investigation of the financial hazards of carbon offsets.

As summarized by SourceWatch, the paper argues that “the complexity and subjectivity of carbon offsets renders them impossible to certify, regulate or enforce,” meaning that they are likely to become “a new ‘creative financial instrument’ which carries the same deceptive potential to bankrupt markets as did the creative instruments peddled on Wall Street.”

This video was posted to YouTube by Laurie Williams and Allan Zabel on November 13, 2009.