The D.C. Circuit Court of Appeals will hear oral argument next Tuesday, September 27 on the Environmental Protection Agency’s so-called Clean Power Plan. The centerpiece of President Obama’s climate policy agenda, the Plan establishes first-ever carbon dioxide (CO2) emission standards for “existing” (already built) coal and natural gas power plants. The Plan will increase consumer energy prices and impede job and GDP growth yet have no discernible effect on global temperatures or sea levels. However, that’s not why the Court should strike it down.
The Court should overturn the Plan because it is an unlawful power grab. The Plan will compel States to establish new, or more aggressive, cap-and-trade programs and renewable electricity mandates—policies Congress has debated for 20 years and repeatedly declined to enact. Moreover, no federal statute authorizes the EPA or any other agency to play national electricity czar revising the policies and directing the actions of State legislatures and public utility commissions, yet that is exactly what the EPA has done with the Plan.
The Plan is unlawful on several counts. For starters, section 111(d) of the Clean Air Act (CAA), the very provision on which the Plan is allegedly based, prohibits the EPA from setting emission standards for existing power plants. The provision specifically excludes from the EPA’s authority “sources”—industrial facilities such as power plants— that are regulated under a different section of the act (section 112). Power plants have been regulated under section 112 since 2011.
Section 111(d) authorizes the EPA to establish “performance standards” based on the “best system of emission reduction” for existing stationary “sources.” To regulate beyond its authority, the EPA played fast and loose with those key statutory terms.
It all began when President Obama told the agency to achieve big reductions in power-sector CO2 emissions. Performance standards are to reflect the best system of emission reduction that is “adequately demonstrated,” meaning feasible and affordable. However, there are no commercial technologies for capturing or filtering CO2 emissions from existing power plants. The only viable option for lowering the emission rates of existing power plants is to run them more efficiently. However, that would reduce power-sector emissions by only a few percentage points—nowhere near enough to satisfy Mr. Obama.
So the EPA reimagined “source”—a term defined as “any building, structure, facility, or installation” that emits air pollutants—to encompass source “owners” and “operators” including their economic activities anywhere in the nation’s electricity marketplace.
The EPA also reimagined the word “system” to refer not just to the way power plants control emissions, but also any “set of things working together” that affects emissions. Since an electric grid is such a “system,” the agency reasoned, the “best system” of emission reduction must include market-restructuring policies such as cap-and-trade.
That interpretation is clever, and if Congress wanted to decarbonize the electric grid, it might legislate a program like the Clean Power Plan. However, congressional majorities oppose the Plan, and the CAA does not allow the EPA to do what it is doing.
The illegality of the Plan is evident in its paradoxical and even absurd results. To get the big emission reductions Obama wants, the Plan sets CO2 performance standards for existing, decades-old, power plants that are infeasible and unaffordable even for new state-of-the-art power plants.
The Plan then gives existing source owners the “choice” to comply by paying for new renewable generation, reducing the output of their coal or gas power plants, or simply shutting them down. So the Plan’s so-called performance standards are actually non-performance mandates. Producing less power or closing the plant does not improve its environmental performance. “Produce less or none at all” and “subsidize your competitor’s product” are not valid Clean Air Act performance standards.
The EPA’s Power Plan will seriously undermine the rule of law, federalism, and the separation of powers. What the Supreme Court said in a previous case dealing with CO2 emissions from stationary sources applies in spades to the present controversy: “EPA’s interpretation is . . . unreasonable because it would bring about an enormous and transformative expansion of EPA’s regulatory authority without clear congressional authorization.”
Marlo Lewis is a senior fellow at the Competitive Enterprise Institute