By: Richard Revesz, Director, Institute for Policy Integrity
The legal showdown over the Obama administration’s signature climate change initiative is heating up, as the last of the briefs for the lawsuit challenging the Environmental Protection Agency’s Clean Power Plan were submitted Friday. Now the U.S. Court of Appeals for the D.C. Circuit will begin to assess the legality of these carbon dioxide emissions restrictions for the power sector.
The coal companies and states challenging the plan have crafted a legal argument that essentially focuses on one core assertion: that the rule is “unprecedented.” But history suggests otherwise. Every major element of the Clean Power Plan that opponents say is unprecedented has in fact been used by the EPA before, under administrations of both parties.
Courts tend to defer to federal agencies on regulations that involve longstanding statutory interpretations. And an analysis of prior EPA rules and relevant court decisions – some dating back to the Reagan administration – reveals that the structure of this rule is consistent with decades of Clean Air Act practice. The Clean Power Plan is novel and historic in that it finally regulates carbon emissions from the nation’s highest-polluting sector. But nothing about the legal structure of the rule is unprecedented.
Collective cuts. In an effort to minimize costs and achieve greater emissions reductions, the EPA designed this plan to limit the cumulative emissions of a state’s power plants rather than the emissions of every individual plant. If a state chooses to keep coal plants running and cut emissions elsewhere based on cost or other concerns, it is free to do so.
Those challenging the rule find fault with this design. Their broadest claim is that, before this rule, EPA emissions limits have consistently been achievable purely through improved performance of individual facilities in a regulated category. This is untrue.
Several past EPA rules issued under the Clean Air Act featured emissions limits that sources could achieve collectively, through emissions trading or averaging. In some of these rules, the use of trading or averaging enabled the EPA to set more stringent limits than it otherwise would have.
Precedents for the EPA’s use of trading and averaging include the George W. Bush administration’s Clean Air Mercury Rule; the Obama administration’s Cross-State Air Pollution Rule (which was upheld by the Supreme Court); the Clinton administration’s emissions guidelines for municipal waste combustors; and the Reagan administration’s rules limiting the lead content of gasoline and nitrogen oxides emissions from motor vehicles. Some of these rules were issued under the very same Clean Air Act provision used for the Clean Power Plan.
Shifting power sources. The Clean Power Plan assumes that some states will shift from high-polluting to low- or non-polluting electricity generators in order to meet their emissions targets. Opponents of the rule assert that the assumption of “generation shifting” is wholly inconsistent with past administrative practice. This, too, is incorrect.
In two previous power sector regulations – the Clean Air Mercury Rule and the Cross-State Air Pollution Rule – the EPA explicitly considered the potential for generation shifting when setting emissions limits.
And many other regulations – like the National Ambient Air Quality Standards, which are the centerpiece of the Clean Air Act – have been expected to result in generation shifting, even if their emissions limits were not explicitly based on that expectation.
Owners, operators and off-site actions. Finally, challengers take issue with the idea that some power plant owners and operators will be asked to engage in efforts outside of a plant’s walls. They suggest that the EPA has never before based emissions limits on actions that regulated sources’ owners and operators can only take “beyond the source itself.” But from the Clean Air Act’s earliest days, EPA rules have recognized owners’ and operators’ ability to reduce pollution by undertaking or investing in off-site activities.
For example, the first set of emissions limits for power plants that the EPA ever set, in 1971, was based on an assumption that owners and operators could arrange for pre-combustion cleaning of coal to reduce its sulfur content – an action typically performed off-site by third parties. The Clean Air Mercury rule’s trading program also required off-site actions. To buy or sell emissions allowances from or to other sources, owners and operators would have to take actions and make investments outside of their own facilities, which would serve to reduce pollution from the source category as a whole.
The flexible design of the Clean Power Plan draws on several decades’ worth of past EPA regulations from administrations of both parties. The plan is enormously significant – it marks a new chapter of American action to address climate change. But its design is steeped in precedent.