President Barack Obama’s signature climate change rule is expected to land this summer, imposing the nation’s first-ever greenhouse gas limits on the electric utility industry— and Republicans and industry are already scrambling to kill it any way they can.
A handful of governors have already pledged to ignore the rule, heeding the call of Senate Majority Leader Mitch McConnell for a state-by-state campaign of defiance. And House Republicans have inserted a controversial rider into the Environmental Protection Agency’s annual spending bill, due for a floor vote as soon as this week, which would cut off federal funding to implement the rule.
But it’s really the courts where EPA’s adversaries expect to notch their big win. Obama’s opponents think the agency is vastly overreaching by using the 1990 Clean Air Act as the legal basis for curbing carbon dioxide emissions, and plan to sue to block it. Ultimately, this is a debate that could go to the Supreme Court.
For a look at the strategy and expectations of Obama’s opponents, POLITICO senior policy reporter Darren Samuelsohn interviewed Jeff Holmstead, an energy industry attorney at Bracewell & Giuliani who ran EPA’s air office during President George W. Bush’s first term.
Holmstead explained some of the reasons that industry expects the so-called Clean Power Plan to be overturned – and why it will be fighting so hard to win a court stay even before then. He also described what a future Republican president might do instead on climate change, and why even business could get behind a new climate law that replaces the administration’s hodgepodge regulatory approach to fight global warming.
Darren Samuelsohn: You’ve been at EPA as it wraps up big rules. What’s happening at the agency right now as it finishes the Clean Power Plan?
Jeff Holmstead: They're probably still doing response to comments. This has been a very rushed process. I think there's just a lot of production work that's going on. The senior people, I would imagine, are still engaged in the interagency process. This is a presidential initiative but that doesn't mean that DOE and OMB don't have questions and comments. So, my guess is there's a lot of production going on at the staff level. There's also a lot of negotiations about language that are going on at more senior levels between EPA and other agencies.
DS: Do you think Obama himself is involved, given this is so central to his environmental legacy?
JH: I doubt he will be involved in the substance very much, but certainly we expect that he'll be involved in the announcement. He's made it such a big part of his agenda.
JH: In my lifetime, we've never seen anything like this, where an EPA rules has gotten such a significant kind of public relations campaign that involves the president, that involves really everybody in his administration. It's really quite remarkable, and whether you think it's a good thing or a bad thing, you have to kind of admire them for the campaign that they've put together.
DS: Is this the biggest rule EPA has ever done?
JH: It depends how you count it. It may not be the most expensive. I mean, compared to the ozone rule, it may not be as expensive as that. It may not be as expensive as the MATS [mercury and air toxics] rule. But in terms of the ambition of the agency, to really fundamentally change the way that electricity is produced and used throughout the United States, it's really quite extraordinary.
DS: Opponents are trying to kill the EPA rules in many different ways, from lawsuits to budget riders. Which approach do you think will be most successful?
JH: I find it very hard to believe that the courts will ultimately uphold the rule, unless it changes a lot. We've only seen the proposal, but I think if you …had to choose one way to oppose the rule, you would say you'd do it in court, because it really is hard to see how the courts would uphold this.
DS: What did you take away from the Supreme Court’s Obamacare ruling last month in King v. Burwell as a signal of where the justices would go if they ultimately get to decide the legality of the Clean Power Plan?
JH: I don't think the court is going to give EPA deference in interpreting the scopes of its own powers. One thing we've learned from Burwell, that's probably something that the court will do on its own.
DS: Industry will certainly be trying to get the federal appeals court to immediately block implementation of the Clean Power Plan while the merits of the case are decided. How important is a winning a stay at that early stage?
JH: My impression is that there are a lot of people in the administration who understand that this is legally a stretch and may be struck down eventually. But the hope is--and I know this to be the case--that they really hope that once states start down this path, once they start on their plans, that even if the rule is struck down, they'll continue down that path. I don't know how realistic that hope is, but I think that's one of the things that's motivating this whole thing. And that's one of the reasons why I think you have so many states and so many industry groups that are going to put a lot of effort into the stay. That's going to be a huge battle.
DS: What signals do you take away from the Supreme Court’s other recent decision, in Michigan v. EPA, which kicked the agency’s mercury regulation back down to the federal appeals court and told the agency it should have considered costs earlier in the rule writing process?
JH: I don't think it will affect in any way what EPA is doing….I do think it could have an impact on the way the court deals with [the Clean Power Plan], and in particular on the stay issue. I think it just seems really unfair to a lot of people that finally we understand that this rule is not legally--not validly promulgated, and yet you have…100 plants that have shut down, thousands of workers have lost their jobs, and companies have spent billions of dollars. I think that makes it easier for states and industry to go in and say, ‘Look, you have to stay the Clean Power Plan until the litigation is over, until we really see if this is really legally valid or not.’ I also think…you just have to say that it doesn't bode well for the EPA in the Supreme Court. Two years ago people were saying, ‘Well, EPA wins all these cases. The Supreme Court is going to defer to them.’ And now, we have two cases where that's not the case.
DS: Do you see Congress weighing in in the meantime?
JH: I've spent the last 25 years working on Clean Air Act issues and I can say with some confidence that the act doesn't work very well, if the goal is to get a level of environmental protection at the lowest possible cost. We're paying a lot more than we need to for the reductions that we're getting because there's so much underbrush here. People are starting to talk about another round of Clean Air Act reauthorization.
The one thing that I think could finally push Congress to reform the Clean Air Act is the ozone [standards], because depending on where they set it, you're going to have many, many parts of the country that are going to have a standard that they're not able to meet. If you're in a rural area and wherever you are in the West, you don't have sources in your area that you can regulate to meet the standard, and yet because of the way that the Clean Air Act works, you have a legal obligation to do something that you can't do.
DS: Given the state of U.S. climate politics, do you think this is an issue a future Republican administration would even tackle?
JH: I'm going to give you what I think the real answer is. …I think ultimately that's why the Clean Power Plan is so important, because I think we will get legislation eventually. If the Clean Power Plan is upheld, then the environmental community will have much more leverage in those debates, because the courts will have said, ‘Well, here is this aggressive mechanism that EPA can use not only to regulate power plants but regulate anybody else.’ And I think in some ways that may be the most important part of the Clean Power Plan.
On the other hand if, as I would expect, the Clean Power Plan is overturned in court, the environmentalists will no longer see the Clean Air Act as the way that they can get what they want and they will feel like they need to actually go to Congress and work on something.
And the other thing I would say is this: I mean, I don't pretend to know how it will ultimately play out, but today it is so hard for anyone to build anything new. And when you look at the way climate change is now being addressed under NEPA and the Endangered Species Act and maybe the Clean Water Act and the Clean Air Act, I think there would be a lot of folks in the business community who would like to have a rational program that just replaced all of these other things that really were never designed to deal with the issue, but…the transactions costs of doing anything are so high that if there was a way to kind of wipe those away, to have something that was more sensible, that was more understandable--so, I think that there could eventually be some kind of legislation.
DS: There’s an argument that a Republican president could better handle this debate—akin to a ‘Nixon to China’ moment on energy and the environment.
JH: I don't know that you need a Republican to do it, but you do need a White House that is willing to get involved… not only in negotiating with the Democrats, but actually pushing back on their own constituency.
DS: What happens to the Clean Power Plan if a Republican wins the White House in 2016?
JH: Any Republican candidate that I can imagine would very quickly just rescind the Clean Power Plan. Even if you look at the statements from folks who are most sympathetic, every one of them agrees that this is an incredible overreach by an agency.
DS: Do you think a Republican president would revoke EPA’s endangerment finding on greenhouse gases that is essentially the backbone of everything it’s doing on climate change?
JH: As a practical matter, I think that would be very hard to do. You can always exercise your discretion under a law to change something, but I don't think a Republican administration would do that. I think part of the problem is there's this scientific record that would be very hard to get around, and I don't think that's really necessary. …EPA could still do things to regulate CO2 emissions that would not be enormously disruptive or expensive and, oh, by the way, would be consistent with the law and what the Clean Air Act says. My guess is the Republican administration would probably pursue that instead of trying to revoke the endangerment finding.
DS: Post-Obama, will the climate debate have moved far enough in the direction of action that a Republican couldn’t ignore it once in office?
JH: Maybe that is true. I'm not sure the big debates are around the science, the big debates are around well, what is it that we should do... It's really a technology issue, and I think the only effective way to deal with climate change is to make sure we're investing in technologies that will give people what we get today from fossil fuels at a cost that's cost competitive.
If I were in charge of climate change policy in the government, I would
certainly want to invest more in those kinds of technology
breakthroughs. And we're seeing some encouraging things, but I
think… if this is only about making people's energy more expensive, making it
harder for people to have the things that they have today with fossil fuels, I
think it's very hard to overcome human nature. But if there are
technologies that can actually give us those same things without those CO2
issues and at a comparable cost, I think that's the only way we actually end up
dealing with climate change.