Whether President Obama’s Climate Action Plan is a repackaging of existing efforts, entirely new programs, or something in between, the president has the political advantage because Congress’ possible responses are limited. The rollout of climate-related programs, especially regulations, may take some time, but environmental and energy stakeholders should take notice and consider opportunities to influence the development of federal regulations and policies.

In late June, President Obama emphasized three overarching goals: (1) reduce domestic carbon dioxide emissions by 17 percent between 2005 and 2020; (2) prepare the United States for the impacts of climate change; and (3) lead international efforts to combat climate change.¹ While few specifics were offered, the president’s plan directs the U.S. Environmental Protection Agency (USEPA) to work quickly to complete carbon emission standards for new and existing power plants. Underscoring the president’s announcement, the Agency last week sent the White House a draft of a proposed rule related to new or future power plants.

This Reed Smith client alert summarizes the president’s ongoing plan to regulate carbon emissions from new or future power plants, and the new plan to regulate carbon emissions from existing power plants. It then discusses possible Congressional reactions – and their limitations – to any rules related to climate change.

In upcoming client alerts, Reed Smith attorneys will address the possible impact of the Climate Action Plan on a range of stakeholders and issues, including the effect of federal efforts and regulation on California’s carbon market, the possible jumpstart of developments related to carbon capture and storage, and the likely increase in opportunities in renewable energy projects.

Carbon Emissions for New Power Plants

As part of the Climate Action Plan, President Obama signed a Presidential Memorandum directing USEPA to issue a new proposal for carbon emissions standards for new or future power plants under the Clean Air Act section 111’s New Source Performance Standards (NSPS) program by September 20, 2013. This is on top of carbon standards for new power plants under NSPS that USEPA proposed in April 2012. The Memorandum provides that USEPA now issue a "new proposal," and this new proposal may split coal and natural gas facilities into separate categories with distinct standards. So far, the draft of the new proposed rule sent by USEPA to the White House last week is confidential.

Plan to Regulate Carbon Emissions from Existing Power Plants

The president’s Memorandum also directs USEPA to propose carbon emission "standards, regulations, or guidelines" for emissions from existing, modified, and reconstructed power plants by June 1, 2014, and to finalize the standards by June 2015. Neither the Memorandum nor the president’s remarks included any details about how USEPA may try to reduce these emissions. Adding to the process is that states have the primary responsibility for implementing emission reductions from existing facilities under the State Implementation Plan, but USEPA is responsible first for issuing direction to the states. In addition, the Memorandum establishes a date of June 30, 2016 for states to submit implementation plans to USEPA for applying the standards, regulation, or guidelines to existing power plants in their states.

The President’s Climate Action Plan in Today’s Political Environment

Not surprisingly, the climate change policies proposed by President Obama will face stiff opposition in Congress, especially from members elected from coal-producing states. But with the House of Representatives and Senate controlled by opposing political parties, the chance for any political influence would likely not occur until(?) after the 2014 elections.

The Congressional Review Act

Those in Congress seeking to fight climate change regulations have only two tools available to them. First, opponents of USEPA regulations could pursue a challenge under the Congressional Review Act and try to overturn the proposed regulation. After a rule is promulgated, Congress then would have to have a sufficient majority in each chamber to overturn the rules, something that would be unlikely if the Senate continues to be held by the Democrats. Even if Congress would succeed under the CRA, the president can veto the resolution.

The Power of the Purse

Reducing USEPA’s funding would be a faster but more limited way to overturn the regulations. Congress could pass language in the Fiscal Year 2014 spending bill for USEPA (formally known as the "Interior and Environment" spending bill), forbidding it to spend any money to draft or implement any of the president’s proposed climate change rules. A spending bill containing such language would not have to wait until a rule is in fact promulgated, so it could be proposed as part of the upcoming Fiscal Year 2014 appropriations process. However, it would still need sufficient support to pass both houses of Congress. It would also need to be signed into law by the president. While this is not likely, it remains possible, especially if the president is supportive of the majority of the broader spending measures contained within the bill. A downside to spending language is that, unlike a joint resolution of disapproval, it only lasts during the fiscal year in question and must constantly be enacted into law for each subsequent fiscal year in order to stay in effect. So Congress would have to go through the same process again and again.

The Power of the Ballot

The most effective way for Republicans to pursue either of the above alternatives is with increased clout in Congress. With control of the House of Representatives expected to stay in the hands of Republicans, a lot will depend on whether Republicans gain any leverage in the Senate in next year’s elections. Some of the most competitive Senate races will be in states known as "coal country," such as Kentucky and West Virginia, meaning that the president’s proposed climate change rules will become part of the debate in those races. If Republicans gain seats, or outright control of the Senate, they may be emboldened to use this power to attack some or all of the climate change regulations proposed by the president.

Conclusion

In short, the president has kick-started efforts to address climate change with a range of proposals likely to influence industry and stakeholders throughout the economy. Politically, at this point, Congress has limited ability to slow down these efforts. Industry and stakeholders should take notice and understand these developments, engage regulators or elected officials, and consider possible risks and opportunities. 

¹ To achieve these goals, President Obama’s Climate Change Action Plan includes more than 30 new actions, such as efforts to reduce methane emissions from oil and gas development and the expanded use of renewables.

Client Alert 2013-196