Obama’s Climate Plan Challenged by Industry at High Court

Photographer: Luke Sharrett/Bloomberg

The industries primarily affected by the requirements are power plants, chemical facilities, oil and gas projects and cement plants, according to the EPA. Close

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Photographer: Luke Sharrett/Bloomberg

The industries primarily affected by the requirements are power plants, chemical facilities, oil and gas projects and cement plants, according to the EPA.

The Obama administration today goes before the U.S. Supreme Court for the first time to defend climate-change policies that industry groups and Republican-led states say amount to a costly overreach of federal power.

Seven years after the court said the Environmental Protection Agency could regulate greenhouse-gas emissions, the justices are considering whether the agency misused that authority by imposing permit requirements on power plants and factories.

The court gave the EPA a preliminary victory in the case in October, refusing to consider arguments that would have barred the agency from addressing climate change at all. That left states and business groups fighting the permit rules, which they say may ultimately affect millions of facilities, including bakeries and apartment complexes.

“These requirements are threatening to impose huge burdens on America’s small businesses,” said Richard Faulk, a lawyer who filed a brief on behalf of 75 local business groups. “It’s a cloud that is hanging over them and their plans for expansion.”

The effect of the permitting program so far has been limited. Since 2011, 141 greenhouse-gas permits have been issued, about half for new facilities and half for the expansion of existing ones, according to the EPA.

The industries primarily affected by the requirements are power plants, chemical facilities, oil and gas projects and cement plants, according to the EPA. Companies that have applied for permits include Calpine Corp. (CPN), ExxonMobil Corp. (XOM) and Occidental Petroleum Corp. (OXY)

‘Ratcheting Down’

In its permits issued to date, the EPA has required “little or nothing” of companies, so the program hasn’t accomplished much, said Dallas Burtraw, a fellow at Resources for the Future in Washington, a nonpartisan group that conducts independent research on the environment and energy.

As time goes on, however, the EPA could begin a “steady ratcheting down of emissions intensity of new construction,” which could help cut the gases blamed for global warming, Burtraw said in an e-mail.

The agency concluded after President Barack Obama took office in 2009 that greenhouse gases pose a danger to public health and the planet. The EPA followed up by placing new emissions standards on cars and trucks.

The high court case centers on the next step the EPA took, when it used the vehicle-emission rule as a basis to also set permit standards for factories and other stationary sources. The EPA says those requirements were automatically triggered once the agency found that greenhouse gases were enough of a threat to warrant vehicle regulations.

‘Absurd Results’

Although the Clean Air Act generally requires a permit for sources that exceed either 100 tons or 250 tons per year of a particular pollutant, the EPA concluded that application of that threshold for greenhouse gases would lead to “absurd results.”

Greenhouse gases are emitted in far greater volumes than other pollutants, and the standard threshold would have meant that millions of commercial and residential sources were covered. To address the issue, the agency decided to relax the threshold for greenhouse gases, at least for the time being.

Opponents contend the EPA’s plan for phasing in stationary-source requirements proves that the agency’s approach is flawed.

“Eventually it’s going to have to cover everything,” said C. Boyden Gray, a Washington lawyer who filed a brief on behalf of six states opposed to the EPA’s policies. “I don’t think we need to gum it all up with all kinds of bureaucratic red tape.”

‘Distant Future’

Richard Lazarus, a Harvard Law School professor who specializes in environmental law, said the agency is accomplishing most of its goals under the permitting program by focusing on the 700 facilities that already have to get permits for other pollutants. Lazarus said he doubts the EPA would ever impose significant requirements on small facilities.

“Whatever EPA does, it will do it in the distant future, and it will not be very demanding,” he said.

Obama came into office looking to win congressional approval of legislation to control greenhouse gases. With those efforts having failed, the EPA rules now represent the primary front for the administration.

The agency’s biggest initiative, proposed rules capping emissions from power plants, isn’t at issue in the Supreme Court.

Biggest Threat

The Obama administration told the justices in court papers that the impact of greenhouse gas emissions “may prove to be more widespread, longer-lasting, and graver than the effects of any other pollutant regulated under the act.”

The U.S. Chamber of Commerce argued that the EPA is erecting “what may be the costliest and most intrusive regulatory program the nation has yet seen.” The permits are expensive to prepare and can be delayed, companies say.

Because the case won’t affect other parts of the EPA agenda, including the power-plant emission caps, the biggest impact may be political, Lazarus said.

Should the EPA lose, “people will read the Supreme Court as having rebuffed the Obama administration, and that’ll be a headline,” he said. “People will over-read the significance of what the court did.

‘‘The fact is Obama can still do exactly what he’s been doing under more powerful provisions.’’

The cases are Utility Air Regulatory Group v. EPA, 12-1146; American Chemistry Council v. EPA, 12-1248; Energy-Intensive Manufacturers v. EPA, 12-1254; Southeastern Legal Foundation v. EPA, 12-1268; Texas v. EPA, 12-1269; and Chamber of Commerce v. EPA, 12-1272.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Patrick Oster at

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