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Biden Faces Regulatory Challenges to Cut Power Plant Emissions (Corrected)

Nov. 13, 2020, 4:01 PMUpdated: Nov. 16, 2020, 11:35 PM

A Biden administration will face pressure to use existing regulatory authority to tackle power plant carbon pollution given a closely divided Congress, while navigating a U.S. Supreme Court that has only grown more conservative, attorneys and environmentalists say.

But President-elect Joe Biden still has the ability to direct federal agencies to take a host of climate actions, curbing planet-warming emissions from power plants as well as cars and trucks, and phasing down the use of hydrofluorocarbons used in refrigeration and cooling.

“They are going to not try to scale the building from one side—but from all sides simultaneously,” said Miles Keogh, executive director of the National Association of Clean Air Agencies, representing more than 150 state and local air pollution control agencies.

Among the Biden administration’s early challenges at the Environmental Protection Agency: how to quickly halt the Trump administration’s 2019 carbon pollution limits, which replaced Obama’s ambitious Clean Power Plan with more modest requirements limited to plant sites.

Biden has only hinted on his approach to EPA regulations, vowing to “move ambitiously to generate clean, American-made electricity to achieve a carbon pollution-free power sector by 2035" to meet “the threat of climate change,” according to his transition website.

Clean Air Act attorneys say the bigger challenge will be deciding whether to follow EPA’s strategy under President Barack Obama—which relied on Section 111 of the Clean Air Act to expand its regulatory reach beyond plants and into the power grid—or opt for another strategy.

Those options include using an international section to address emissions, Section 115 of the Clean Air Act, or Sections 108-110, which EPA has used to set National Ambient Air Quality Standards for other air pollutants.

Skeptical Supreme Court

The debate centers around Section 111 of the Act, which Obama’s EPA said authorizes a best “system” approach to cut pollutants endangering public health and welfare.

More than two dozen states challenged the Clean Power Plan as a sweeping intrusion into the domestic energy sector. The Supreme Court stayed the Obama-era rule three years ago without comment.

The U.S. Court of Appeals for the District of Columbia Circuit was also weighing whether the EPA had overstepped it authority as Obama left office in January 2017. But it froze the case when Trump became president and signaled he would reverse course.

Joanne Spalding, the Sierra Club’s deputy legal director and chief climate counsel, said it’s unclear how the Supreme Court would view EPA’s approach since the court offered no explanation for its stay. But having the agency now turn to other sections of the Clean Air Act comes with its own drawbacks.

“I can imagine the Supreme Court being skeptical if the agency is going to shift gears like that,” she said. “It doesn’t mean they can’t do it—they just would need a very, very good explanation of why.”

The Sierra Club is part of the coalition opposing the Trump-era Affordable Clean Energy rule. The group has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

Changing Horses?

Other Clean Air Act attorneys also are skeptical Biden that will scrap Obama’s plan for a completely new approach, as it would mean starting from scratch on power plant regulation after a decade of regulatory work.

Robert Meyers, a partner with Crowell & Moring LLP, argues that abandoning Section 111 now would amount to changing horses midstream.

“Section 111—that’s the horse you’ve got right now, and to try to get onto another part of CAA is actually wishful thinking,” Meyers said.

Those advocating starting from scratch “should look at the fact that it has taken us 12 years from then to where we are now with Clean Power Plan litigation,” he said. “You’d start all over again if you tried to use those other authorities and you’d be well beyond the Biden administration before you sorted it all out” in the courts.

Mack McGuffey, a Clean Air Act attorney with Troutman Pepper Hamilton Sanders LLP, agreed. He said the EPA is essentially stuck with Section 111, as it gave the EPA and states flexibility to find ways to cushion power plants and ratepayers from excessive costs.

That section “is the only one that passes the laugh test,” McGuffey said. He said Congress has long ducked the issue, and a consensus on climate legislation has been elusive.

More Conservative Court

Obama’s plan claimed broad authority under Section 111 to extend its emissions limits beyond power plant sites to the broader power grid. The Trump administration scrapped it in favor of its own Affordable Clean Energy rule (RIN:2060:AT67), now before the U.S. Court of Appeals for the District of Columbia Circuit.

But other Clean Air Act sections could get another look, attorneys say—especially as the Supreme Court already put Obama’s approach in doubt in 2016.

In deciding whether to pursue a new approach or largely stick with Obama’s plan, the EPA today faces an even more conservative 6-3 majority on the court after Amy Coney Barrett’s October confirmation.

“I think the approach from the Obama Clean Power Plan clearly is more vulnerable because of the way it interpreted the Clean Air Act, and this Supreme Court wouldn’t be too likely to sustain that,” said Dan Lashof, director of the World Resources Institute, United States.

Other Authorities Eyed

The two other alternatives most often discussed to address carbon pollution from the power sector—using EPA’s authority to address international pollution, or setting a National Ambient Air Quality Standard for carbon dioxide as it does for other air pollutants—each have their own hurdles.

The international section has long been dormant and requires lengthy consultations with other governments, while a NAAQS approach would have the agency set a national standard for carbon dioxides at or below current atmospheric levels—412 parts per million—and direct states to reach attainment. But that would put the entire nation out of attainment.

Keogh, the National Association of Clean Air Agencies head, said using those authorities, particularly the NAAQS approach, might in the end be less risky than sticking with an Obama strategy already drawing skepticism from the courts.

“I don’t think [Section] 111 is the lead horse in this thing,” he said, adding that setting an ambient air quality standard may offer simplicity that might better survive judicial challenge.

Either way, Biden will have to move quickly to make his mark on a host of climate regulations and policies, including power plant rules, to ensure the courts can render decisions while he is still in office—and in case a Republican president opposed to climate action succeeds him, Keogh said.

“There is a really strong sense [Biden administration officials] have two years to do everything,” he said.

(Corrects paraphrased comment from Mack McGuffey in 18th paragraph of Nov. 13 article. )

To contact the reporter on this story: Dean Scott in Washington at dscott@bloombergindustry.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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