Fate of Obama centerpiece rule might be in his successor’s hands

Source: Jean Chemnick, E&E reporter • Posted: Tuesday, June 17, 2014

Reining in U.S. power plants’ greenhouse gas emissions may be one of President Obama’s top priorities, but it’ll be his successor who’ll have to finish the job — or try to undo it.

The proposal for curbing carbon emissions from existing power plants that U.S. EPA rolled out on June 2 set in motion events that won’t be wrapped up by the time a new president is sworn in January 2017.

“The outcome of the 2016 presidential election will be extremely important to the future of these rules,” said Michael Gerrard, climate law director at Columbia Law School. “If the American people elect a Republican president who adheres to the current party position on climate regulation, it’s likely that EPA implementation of the rules will stop, and there will be an effort to repeal them.”

The timeline Obama set last year for EPA to complete its work on rules for both new and existing power plants was designed to get as much done as possible on his watch. The deadlines were tight. And both rules were to be final by June 2015 with state implementation plans for the existing plants submitted by June 30, 2016.

Another of the president’s goals was to see both rules upheld in court — limiting a new administration’s options for rolling back regulations at the heart of Obama’s Climate Action Plan.

But state officials are saying 13 months won’t be enough for them to finish plans after the rule is finalized, giving them firm emissions-reduction targets to work with. State implementation plans, or SIPs, for less complex Clean Air Act rules, they say, routinely take two or more years.

The EPA rule proposal all but surrenders the Obama EPA’s control over the SIP approvals, leaving the bulk of that work for the next administration. That’s because the proposal allows states to petition for extensions of one or two years beyond the 2016 deadline if they need the time to enact legislation or if they plan to satisfy the rule by participating in an interstate program. Many states are expected to take advantage of that opportunity.

Experts who track the rule differ on how Obama’s landmark rules might be rescinded by the next president. But they agree that an incomplete SIP approval process gives the next administration some leverage if the new occupant of the White House dislikes the regulations.

It will be much easier for a new administration to scrap the rules altogether if judicial review hasn’t ended by end of Obama’s term or if it has resulted in the rules being voided. If the courts uphold both rules, the administration will have less opportunity to modify them, most observers say.

“If they can get those court-tested from their point of view, whoever is left will really be bound to follow those rules in assessing the state plans,” said Thomas Lorenzen, a partner with Dorsey & Whitney and former assistant chief of the Justice Department’s environment division.

If the rule is finalized and passes court scrutiny, undoing it would require another rulemaking process complete with opportunity for public comment and likely court challenge by environmentalists and other EPA supporters. The process could take years.

“That’s not to say that you can’t change a rule that’s been put in place, but it is to say that you can’t just do it by the stroke of a pen,” echoed Robert Sussman, former EPA senior policy counsel.

Not carved in stone

To be sure, there have been instances when new administrations have rescinded and reconsidered EPA rulemakings done as the prior administration was heading for the door.

Consider the Obama administration’s first-term move to tighten EPA ozone standards that were finalized in 2008 under President George W. Bush at levels higher than what the agency’s science advisers considered safe. Obama pulled the plug on a new ozone proposal in 2011 in a move environmentalists panned as politically motivated.

The Obama administration did reverse a Bush-era decision to deny California a Clean Air Act waiver to implement tailpipe emissions regulations that are tougher than national standards — a decision that paved the way for national tailpipe emissions standards and ultimately for all other current and future greenhouse gas rules under the same statute.

But there are also instances when a new administration found it impossible to reverse regulations put in place under prior presidents that had already withstood judicial review.

The Supreme Court in 1983 reversed a decision by the Reagan administration’s Department of Transportation that threw out a Carter-era rule requiring vehicle air bags. The court found that DOT failed to make an adequate case for rescinding the rule.

But it’s not clear that litigation over the two power plant rules will have concluded before Obama leaves office, which might leave one or both vulnerable. EPA’s endangerment finding for carbon dioxide was completed in 2009, but court challenges continued until the Supreme Court issued a decision upholding it and other EPA rules — including the tailpipe emissions standard — in 2012.

Jeff Holmstead, who headed EPA’s Office of Air and Radiation under Bush, holds that EPA has overreached in constructing both its power plant proposals. The new sources rule requires new coal-fired power plants to use carbon capture and storage to limit a share of their emissions, while the existing facilities proposal requires emissions reductions “beyond the fence line” of a plant — provisions that industry attorneys say could doom both rules and send the agency back to the drawing board.

And because the Clean Air Act requires the rule for new sources to be in place before a rule can be finalized for existing ones, this month’s proposal would be put on hold if the new power plant rule was invalidated by the courts.

But even if the rules are upheld before Obama leaves office, Holmstead said, the only states that are likely to have submitted their SIPs before the end of his term are states that already have laws on the books that allow them to comply, such as the nine participants in the Northeast’s Regional Greenhouse Gas Initiative.

“In most other cases, the state legislature will need to pass new laws, which will then need to be implemented by state regulatory agencies,” Holmstead said, noting that that assumes legislatures wish to enact laws to allow their states to comply with EPA strictures.

That’s a big assumption, he said, because Kentucky and other coal states are enacting laws aimed at limiting their response to the EPA proposal.

Even after statehouses do their work, their regulatory agencies must then develop proposals based on these new state laws and allow for public comment and final plans — all of which takes time, Holmstead said.

So the new administration, he said, is likely to be in full swing before many SIPs for the new rule reach Washington, D.C., for EPA evaluations.

‘Opportunity to game the system’

Even without rescinding and replacing the existing power plant rule, the next president’s EPA would have substantial latitude to affect how the rule is implemented.

“Presidents have considerable ability to induce their agencies to move slowly,” Columbia’s Gerrard said.

EPA could take years to approve plans or approve ones that might not pass muster under the current administration. It could provide states with additional phase-in time. Any of these decisions might be challenged in court by environmental groups, but that would take additional time, too.

Expectations about what a new administration might do may inform some states’ plans, Sussman said.

“Some states may see this as an opportunity to game the system,” he said. “But I would hope that the great bulk of states at this point in time will have made their peace with the rule and figured out what they need to do to comply.”

Two weeks out from EPA’s proposal, states are still trying to assess how it will affect them and what comments they should submit to EPA during a 120-day period that begins when the rule is published. It is too early to know whether any might refuse to write an implementation plan that EPA would approve.

If states fail to get EPA approval, the agency would be forced to write its own plan to meet the state’s emissions target.

Federal implementation plans are uncommon, though, because states rarely refuse to cooperate.

When greenhouse gas permitting requirements for major emitters phased in in 2011, Texas was the only state to refuse to incorporate the new rules into its Clean Air Act implementation plan. So EPA took over permitting for those facilities — which included many of the nation’s largest refineries — until the Texas Legislature reversed course last year to pass legislation allowing the Texas Commission on Environmental Quality (TCEQ) to regulate heat-trapping emissions (Greenwire, Feb. 5).

TCEQ said at the time that it still opposed the regulation of greenhouse gases, but it would do so “so that permits can be issued in a timely manner and to continue the successes of the strong Texas economy.”

“They really like the advantage they have in being able to create their own plans,” said Melanie Condon, a policy associate for the National Conference of State Legislatures. “And maybe they won’t be on board with what the EPA is telling them to do, but they would much rather be able to cater it to their state rather than have the federal government come in and take it over for them.”

But the task of writing a federal plan would also fall to the new administration’s EPA, which may or may not give states that oppose the EPA rule comfort that they’ll get a more sympathetic ear later on.

Industry might finally seek this long-term assurance from Congress in the form of carbon legislation, said Holmstead. But he cautioned that a successful bill would have to represent a compromise between environmental and industry priorities.

“I think it is possible to pass meaningful legislation, and this is the only way to provide the business community with the degree of certainty they need to make major investment decisions,” he said.