Teaching an old law new tricks

President Obama is expected to announce his much anticipated rule for power plants on Monday, requiring for the first time that older and dirtier plants reduce their carbon dioxide emissions, which account for a sizable share of the nation’s carbon pollution.

This new rule has rightly been called the "cornerstone" of the president's climate action plan. If successful, it has the potential to transform the nation's power sector by driving new investments in efficiency and renewable energy, and by increasing the use of cleaner natural gas in place of coal.

But don't expect big changes anytime soon. Legal challenges could tie up this effort for years.

This is the sad reality of climate policy in the United States circa 2014. With Congress paralyzed on the issue, the country's climate and energy policy is being made in arcane legal battles over the meaning of single phrases in statutes written long ago, leaving government and industry to duke it out in court.

The Environmental Protection Agency's authority to regulate the nation's approximately 550 existing power plants comes from a little-known section of the Clean Air Act known as 111(d). This section requires states to adopt performance standards for existing sources of pollution. The E.P.A. sets benchmarks that the states must meet and can improve upon.

Some critics argue that the E.P.A. lacks the authority to regulate power plant pollution under this provision, but that argument is weak.

The record clearly shows that Congress intended to ensure that harmful pollutants from existing power plants could not entirely escape regulation. These emissions qualify for regulation under 111(d) because they are not covered elsewhere in the law and account for nearly 40 percent of the nation's total emissions of carbon dioxide, the principal driver of global warming.

The more serious legal battle will be over how stringent the performance standards can be. Some opponents from states and the utility industry insist that the standards must be based solely on what individual facilities can achieve on-site with existing technologies.

In practice, this would mean very modest emissions reductions because there are relatively few cost-effective ways to cut carbon pollution directly at older power plants.

The E.P.A. has signaled that it favors a broader approach. States would have to look beyond individual facilities, and consider what additional emissions reductions could be achieved through systemwide improvements, including through energy efficiency or renewable energy.

This would reduce the demand for fossil fuels and cut carbon emissions. Performance standards set using this method would vary in stringency across states with different energy profiles but they could be significantly more demanding generally because of each state's ability to find relatively cheap emission reductions across the entire electricity system.

Ultimately, states could adopt whatever measures they preferred, including cap-and-trade programs that place a limit on carbon pollution and create markets for buying and selling pollution permits. Trading schemes or energy efficiency measures might be far less expensive to adopt than retrofitting old coal plants.

It is always risky legally to adapt old laws to new problems. The Clean Air Act was passed in 1970 primarily to address conventional pollutants like smog and soot and was subsequently amended, but before climate change was a prominent issue. Although the act is flexible and allows regulators substantial discretion, even the E.P.A. would concede that it is not perfectly designed to address greenhouse gases like carbon dioxide. Yet the agency must do something. The Supreme Court held in 2007 that greenhouse gases are "air pollutants" under the law.

If opponents prevail here, power plants will continue largely with business as usual. If the E.P.A. adopts the broader approach and the courts approve, states and utilities will be asked to make significant collective investments in energy efficiency and clean energy.

The broader approach has a solid legal foundation. Because section 111 of the act defines performance standards in terms of the "best system of emission reduction," the E.P.A. can argue that this language authorizes it to think about systemic improvements. Well-established legal principles also give agencies latitude to interpret ambiguous laws, as long as their interpretations are reasonable.

The E.P.A. does have some wind at its back. It has recently won an impressive series of challenges to its regulatory authority. The Supreme Court reiterated last month that agencies must have some leeway to implement the laws Congress entrusted to them. This bodes well for the president's plan.

Still, every case is unique. No court has ever determined what a performance standard means in this context. And the E.P.A. has never before adopted such an expansive reading of 111(d). It is entirely possible that some judges would balk at an ambitious approach.

This is how policy is made when Congress abdicates its role. If you want to know what happens next, don't watch the democratically elected branches. Watch the courts.

By Jody Freeman

Source: The New York Times