Through regulatory programs, international agreements and other actions to reduce greenhouse gas (GHG) emissions, President Obama and his Administration are constructing a legacy of measures to address climate change. It may be up to a new Congress, and, more likely, the federal courts to determine how lasting that legacy may be.
On November 12, 2014, President Obama and Chinese President Xi Jinping jointly announced an agreement on reducing GHG emissions from their respective countries by 2030. The agreement, negotiated quietly through high level contacts, represents the first-ever international commitment by China. The United States commitment increases the stringency of the target set in 2009, agreeing to reduce its GHG emissions by 28 percent from 2005 levels by 2025. The President also announced the United States will contribute $3 billion to the United Nations’ Green Climate Fund over four years to help poor countries deal with the effects of climate change. The U.S. pledge would take the fund, which was established in 2010, a long way toward its initial investment goal of $10-$15 billion.
These announcements were intended to spur other nations, particularly in the developing world, to make their own cuts in GHG emissions as part of a new global agreement to be reached next year in Paris. Indeed, they clearly had an impact. At the recently concluded U.N. Climate meeting in Lima, countries reached an agreement on a framework that could include broader participation by all nations in efforts to reduce GHG emissions globally. But they also engendered expected opposition from critics of the Administration’s policies, many who will be in power when the newly elected Republican majorities in the House and Senate begin their terms in 2015. The U.S. financial commitment was even targeted by legislative riders in the waning days of this year’s legislative session. Moreover, while the agreement with China is not legally binding nor subject to Congressional approval, it undoubtedly builds upon the recently-proposed CPP as well as potential measures to reduce methane leaks in oil and gas production. These regulatory programs, already highly controversial, will certainly be attacked in the new Congress and in the courts, leaving open to question whether the United States will be able to live up to its international commitments.
EPA has proposed two major regulatory pieces to reduce GHGs from the power sector under the New Source Performance Standards (NSPS) program of the Clean Air Act. The first proposal, which would place limits on GHG emissions from new fossil-fuel power plants, is due in final form in January 2015. This “new unit rule” has raised significant concerns by proposing that new coal-fired plants be capable of partial carbon capture and sequestration (CCS) while new gas plants achieve the highest standards of a combined cycle natural gas plant. The new unit rule will certainly be challenged in court upon publication, which is significant because it provides a condition precedent for regulation of GHG emissions from existing power plants. Hence, were the new unit rule to be invalidated by a court, it could potentially impact EPA’s even more controversial rule, the CPP.
EPA published the proposed CPP in June 2014, setting out NSPS for GHG emissions from existing fossil-fuel power plants. The CPP’s goal is a 30 percent reduction in GHG emissions from the power sector by 2030 based on 2005 emission levels. In its proposal, EPA considered emission reduction strategies that went far beyond efficiency improvements at existing plants, focusing on a broad range of actions across the energy sector — increased dispatch of natural gas, renewable and nuclear energy, and broader energy efficiency programs — that would reduce energy demand in order to reduce GHG emissions. Based on these actions, EPA established strict carbon emission rate-based state targets to be achieved by 2030 with interim targets set in the 2020-2029 period. After extensive outreach to stakeholders, EPA provided an extended period for public comment, which ended on December 1, 2014. EPA now must consider over a million comments, many of which are very critical of the fundamental scope and authority underlying the proposal. Even EPA’s staunchest allies have pressed for modifications to allow states more time and leeway to meet their 2030 targets.
The CPP has already come under attack both in Congress and in the courts, and the new Republican majorities are likely to consider ways of thwarting both the NSPS proposals in the new term. The final CPP is expected in June 2015 and will be immediately challenged in court. An administration veto and split Senate may be all that protects this rule in Congress now while a potential judicial resolution may not occur for several years. Since the interim target dates may begin soon thereafter, states will need to consider soon, if not now, their compliance strategies.
In addition to the NSPS rules, EPA will be considering a number of other regulatory programs, including Implementing its pre-construction permit program for GHG emissions from major industrial sources following the Supreme Court’s partial reversal of its Tailoring Rule earlier this year; determining how to handle carbon dioxide emissions from biomass fuel in current and potentially future GHG rulemakings; and proposing a potentially broad set of regulatory and voluntary initiatives to reduce releases of the potent GHG methane from the oil and gas industry. EPA will also be determining new volumetric requirements for its Renewable Fuels Standard (RFS) program, having recently put off its 2014 RFS volumetric determination until early 2015. These programs have all drawn Congressional scrutiny and have been or will be subjects of judicial review, so their future is just as unclear.
All the above elements are important components to the President’s Climate Change Action Plan and thus are bricks in the edifice the Administration is constructing as a lasting legacy of actions to address climate change. But they face an uncertain future with a new Congress hostile to allegedly unilateral exercises of executive authority with potentially significant impacts on power pricing, reliability and economic development. The President and his Administration will no doubt be quite busy in the next two years, trying to finalize this construction while fending off multiple and continued political and legal challenges. Ultimately, like many other Administration programs, the final word may lie with the federal courts well after the President’s term ends in 2016.
James Rubin and Jeff Lane both serve as Counsel to Dentons