Green Groups Press EPA for Climate Rule Industry Loathes

Photographer: Andrew Harrer/Bloomberg

U.S. President Barack Obama has vowed to make combating global warming a top priority in the next four years, after environmentalists dubbed his first-term record as mixed because he failed to deliver on a campaign promise to secure cap-and-trade legislation. Close

U.S. President Barack Obama has vowed to make combating global warming a top priority... Read More

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Photographer: Andrew Harrer/Bloomberg

U.S. President Barack Obama has vowed to make combating global warming a top priority in the next four years, after environmentalists dubbed his first-term record as mixed because he failed to deliver on a campaign promise to secure cap-and-trade legislation.

Environmental groups are stepping up pressure on President Barack Obama to issue the first greenhouse-gas limits for power plants as the utility industry seeks to weaken the standards before a deadline next month.

The Sierra Club and its allies say a top priority for Obama in meeting his second-term pledge to deal with climate change is for his Environmental Protection Agency to issue restrictions on carbon dioxide coming from power plants. They warned against bowing to industry criticism and scaling back or putting off the rule, which spurred a record 2.67 million public comments, most in support of it.

“We’re very concerned about the potential for delay,” David Doniger, climate director at Natural Resources Defense Council, told congressional staff members this week at a Capitol Hill forum. The EPA has an April 13 court deadline to issue the standard, and if late, “groups like ours will take steps to have it enforced.”

Utilities such as Southern Co. (SO) and American Electric Power Co. (AEP) and coal producers such as Peabody Energy Corp. (BTU) have weighed in against the EPA proposal, arguing that the agency shouldn’t issue a standard that can only be met by power plants fueled with natural gas. That plan wouldn’t affect existing plants, and coal producers and utilities are bracing for the EPA to tackle that source next.

Obama Pledge

Obama has vowed to make combating global warming a top priority in the next four years, after environmentalists dubbed his first-term record as mixed because he failed to deliver on a campaign promise to secure cap-and-trade legislation. If structured correctly, new rules for operating plants could let the U.S. meet Obama’s goal of cutting greenhouse gas emissions 17 percent by 2020 at a cost of $4 billion in that year, according to Doniger.

The EPA released a draft of the rule last year that would mandate an emissions cap of 1,000 pounds of carbon dioxide per megawatt hour for new power plants. That’s in line with state- of-the-art natural gas plants, and would impose a ban on new coal-fired plants that lack carbon-capture equipment, a technology that power producers say isn’t commercially available.

The final rule to reduce emissions of the gases that scientists link to global warming is due next month, and the EPA is still reviewing comments from the public, said Alisha Johnson, a spokeswoman. She didn’t say if EPA would meet that deadline or not. It hasn’t been submitted to the White House for a required review, a process that can take 90 days or more.

Industry Complaints

And it’s facing vigorous complaints from industry.

EPA “is unilaterally changing American energy policy to force coal out of the nation’s resource mix and to make the nation dependent on natural gas as the dominant fuel for electric generation,” Peabody said in a filing with the EPA in June. “Congress, however, did not give EPA authority over energy policy. EPA has, without a basis in law, taken this authority for itself.”

Southern Chief Executive Officer Tom Fanning said utilities and the agency are seeking a “constructive solution.”

“We’ll reach a successful conclusion as we have with virtually every regulation being put out by EPA,” Fanning said March 18 in Washington. “I just want to make sure at the end of the day that if we are really setting energy policy, that energy policy is set out of Congress.”

Sierra Club

The Sierra Club, National Wildlife Federation and other environmental groups delivered more than 2 million written comments supporting the proposal to EPA Assistant Administrator Gina McCarthy in June, which the organizations say was the most ever submitted for a Clean Air Act regulation. Those groups are now pressing McCarthy, Obama’s nominee to head the EPA, to keep that proposal in its same basic form.

“Strong carbon pollution standards for power plants are inevitable,” John Coequyt, director of climate change at the Sierra Club, said in an e-mail. “The law and public opinion are on the side of these safeguards.”

Four Democratic senators led by West Virginia’s Joe Manchin wrote Obama on March 14 and urged him to toss out the EPA’s plan for new plants. West Virginia one of the nation’s biggest coal producing states.

“That’s a sign that Democrats, too, are concerned,” Luke Popovich, a spokesman for the National Mining Association, said. “The path forward could be a lot more responsible.”

Court Challenge

Previous EPA rules for pollutants such as sulfur dioxide set separate standards for coal and gas plants, which emit about half the carbon dioxide as coal when burned to create electricity. Setting one overarching rule would be subject to a court challenge, and might be tossed out, industry lawyers say.

“As a legal matter, it was swinging for the fences, but it’s a high risk, high reward kind of thing,” William Bumpers, a lawyer at Baker Botts LLP in Washington, said in an interview. “If it gets struck down, it sends you back to the drawing board.”

And if rules for new plants are struck down, that means any standards for existing plants may be further delayed, said Jeff Holmstead, a former EPA official under President George W. Bush and a lawyer at Bracewell & Giuliani LLP in Washington. “If EPA rolls the dice on new sources and loses,” it slows everything else down, he said.

The EPA said this proposal will have no impact on producers or consumers because no coal plants are likely to be built in the next two decades unless the facilities have carbon-capture systems. Still, the battle now is a prelude for the more serious effort to cut carbon emissions from existing plants.

That plan as well may fail a legal challenge, according to Holmstead, a frequent sparring partner with Doniger. That creates a conundrum for the EPA, he said.

“The president has created this expectation that he is going to pull the trigger, and send his people out to tackle greenhouse gases,” Holmstead said in an interview. “But I don’t think EPA has the ability to do that under the Clean Air Act.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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