The Obama administration plans to announce new greenhouse-gas rules for power plants next Monday, and lawyers on both sides are already suiting up for battle.
While the U.S. Supreme Court has upheld the Environmental Protection Agency’s power to regulate carbon dioxide as a dangerous pollutant, and the Clean Air Act itself refers to effects on “weather” and “climate” in the definition of “air pollutant,” utilities and other industries that will suffer financial harm under the new regs are plotting strategy with their lawyers on how to block, delay or at least modify the new rules.
“The bigger battle -- over whether greenhouse gases can even be regulated under the Clean Air Act -- is over,” said Thomas Lorenzen, a partner with Dorsey & Whitney in Washington who until last year was a top lawyer at the Justice Department handling environmental cases. “But how you go about implementing it, that is a battle yet to be fought.”
The Supreme Court’s 2007 decision in Massachusetts vs. EPA established a very broad definition of the authority Congress handed the EPA (Lorenzen, ironically, was on the losing side of that case since as a lawyer then working for the Bush administration he had to argue against the EPA's authority to regulate greenhouse gases). It was a 5-4 decision with all of the conservative justices but Anthony Kennedy dissenting, but it is good law and unlikely to be overturned.
That doesn’t mean lawyers can’t find other ways to blunt the administration’s new regulations, though.
The regulations to be announced June 3 will target existing power plants, according to Obama administration officials quoted in the Wall Street Journal and elsewhere. That could put a heavy burden on utilities like AEP, which gets 60% of its electricity from coal, and ratepayers who will ultimately bear the cost of pollution controls and alternative sources of electricity.
Following the enforcement structure for much of the rest of the Clean Air Act, the EPA will set guidelines on greenhouse gas emissions and let the states use a variety of tools to reach them, including cap-and-trade regimes that allow big emitters to swap credits with zero- or low-emission producers like wind and solar.
All those arrangements will be grist for litigation, however, depending upon how the administration structures them.
Lorenzen told me there will be three main strategies in the legal war over the new regs:
- Attack the greenhouse gas rules for new power plants. The Obama administration announced standards for new stationary sources in September 2013 and the final rules are expected to go into effect by the end of this year. Once in place somebody will sue, perhaps challenging the idea there is an economically or technically feasible way to capture CO2 from power plant emissions. “We don’t know how that suit will come out,” Lorenzen told me. “But if a court strikes it down, then there’s a question about whether the EPA has the authority to finalize existing-source standards” that it plans to announce next week.
- Attack the implementation standards. The Clean Air Act say states are in charge of “implementing and enforcing standards of performance” of existing power plants, and the EPA can only step in if they fail to do so. “Can the EPA set a 25% reduction?” Lorenzen asks. “Or will the states set the numbers?”
- Inside the fence or outside? The EPA can specify the best way to reduce greenhouse gas emissions, but utilities want to know whether that applies to their plants alone – “inside the fence,” in industry jargon – or to all the measures a utility can take to reduce emissions. In the best of all worlds, the reduction targets would be calculated according to the capabilities of the equipment inside the fence, but the utilities would be able to use measures outside the fence, like encouraging conservation and efficiency, to achieve them.
Section 111(d) of the Clean Air Act also gives the EPA authority to customize the rules for existing power plants, such as grandfathering older plants under the theory they will come to the end of their useful lives in too short a period to amortize the cost of expensive pollution controls. Each interpretation, however, could be grist for a lawsuit.
“There is certainly going to be litigation over this,” Lorenzen said. “And the litigation is going to be on multiple different legal fronts.”
Libertarian types will never give up on rolling back the sweeping authority Congress has granted agencies like the EPA to make what are in effect federal laws that have huge effects on the pocketbooks of ordinary voters, without requiring the vote of a single legislator. And Justice Antonin Scalia issued a strong dissent on this point in this session’s EPA vs. Homer City Generation, in which the majority upheld the EPA’s interstate emissions-control program. (A dissent marred, it must be noted, by his mis-cite of his own prior opinion.)
But the majority has ruled consistently in favor of giving EPA wide latitude in crafting rules to control pollution and that’s not likely to change unless a new Congress decides to try and rewrite the Clean Air Act, a move that would certainly be vetoed by President Obama.
"The Clean Air Act is not an ideal tool for controlling greenhouse gases," Lorenzen concluded. "That’s why Congress explored a legislative solution in 2010. But that legislation died, and the Supreme Court has said definitively that the Clean Air Act, as written, covers greenhouse gases. The coming lawsuits over these regulations will determine how far that authority goes.”
