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This court case will decide if Obama’s signature climate policy goes down in flames

The legal thriller of the summer.
(Shutterstock)

If you’re at all interested in climate policy, you really ought to be following the huge court case over the Clean Power Plan in the DC Circuit Court. Oral arguments begin Tuesday morning.

The central plank of President Obama’s climate agenda is facing a serious legal challenge, and this case will decide whether the plan survives — with potentially large repercussions around the globe. The Supreme Court is likely to weigh in later on, and we may not get a final resolution for a year or two. But for those just dialing in, here’s a short primer:

1) The Clean Power Plan is the centerpiece of Obama’s climate agenda

Last year, the Environmental Protection Agency finalized a far-reaching rule that would, for the first time ever, regulate carbon dioxide emissions from America’s existing coal- and gas-fired power plants — one of the biggest sources of climate pollution around.

The so-called Clean Power Plan sets specific emissions targets for each state and gives them plenty of flexibility in deciding on how to meet the goals. (See here for more detail.) If all goes as intended, the plan would reduce power plant emissions roughly 30 percent below 2005 levels by 2030.

The Clean Power Plan is the glitzy centerpiece of Obama’s climate agenda, most of which has been carried out through the EPA, circumventing Congress. If this rule gets scrapped, the US probably won’t meet its goal of cutting overall greenhouse gas emissions 26 to 28 percent below 2005 levels by 2025:

(Tax Policy Center)

And if the US doesn’t hit its emissions goals, then the global climate deal forged at Paris last year will start to look a lot shakier. Even the meager strides the world has made so far on global warming could be endangered.

2) The legal challenge to the CPP hinges on three key arguments

That brings us to the legal challenge. Various oil and coal companies, along with 27 states led by West Virginia, have sued to overturn the Clean Power Plan. Many of these states could meet the plan’s targets fairly easily, but they tend to be ideologically opposed to any expansion of EPA powers. In response, the Supreme Court halted implementation of the Clean Power Plan until the case was resolved.

Opponents of the Clean Power Plan make three key arguments, which the DC Circuit Court now has to sift through:

— The argument over a drafting error: The EPA claims authority for the Clean Power Plan under Section 111(d) of the Clean Air Act, which deals with pollution from existing power plants. But there’s a catch. Back when the Clean Air Act amendments were enacted in 1990, the House and Senate actually passed two slightly different wordings concerning 111(d) that, due to an oversight, never got reconciled before being signed into law.

The House’s version basically says the EPA can’t regulate a pollutant from power plants under 111(d) if it already regulates other pollutants from those power plants. Opponents say this wording makes the Clean Power Plan invalid, since the EPA has long regulated mercury emissions from power plants under Section 112. So under the House wording, the EPA can’t create a new rule for CO2 emissions.

In its defense, the EPA points out that the Senate version of the amendments clearly allows for overlapping regulations, and hence, the Clean Power Plan is valid. So the court has to decide how much deference to give the EPA in its interpretation of an ambiguous law passed by Congress. In the past, courts have often been deferential to federal agencies in these situations, but they’ve occasionally been more skeptical when the law has vast economic implications, as this one does. (Coral Davenport at the New York Times has more on this drafting error.)

— The “outside the fenceline” argument: As part of the Clean Power Plan, the EPA set emissions targets that it deemed reasonable for each state. It set these targets by assuming that states could 1) improve the efficiency of their existing coal plants, 2) ramp up the use of existing gas plants to displace coal, and 3) build more renewables, in line with existing trends. States don’t have to do these things under the plan — this was just a benchmark set by the EPA to determine reasonable goals.

Opponents of the rule argue that this is different from how the EPA usually does things. Usually, when the EPA sets standards for power plants, it only looks at actions that could be undertaken at the individual plants themselves (i.e., “within the fenceline”). But in the Clean Power Plan, the EPA set standards for coal plants by assuming states could take actions outside the fenceline — like building more renewables and shutting down coal.

This was a genuinely novel move, and legal scholars have a range of opinions on how defensible this is, so we’ll see how the courts rule.

— The 10th Amendment argument: Finally, opponents argue that the Clean Power Plan violates the 10th Amendment by “forcing” states to grant permits, review siting decisions, and so on. The 10th Amendment forbids the EPA from using states as “implements of [federal] regulation.” Some legal observers think this is a much weaker argument than the above two.

So that’s what the DC Circuit Court has to consider, with oral arguments starting Tuesday at 9:30 am. You can see a more detailed summary of the various legal arguments here. If you want a comprehensive defense of the EPA’s rule, check out Tomás Carbonell’s concise post at ACSblog here.

3) Odds look favorable for the Clean Power Plan — but nothing’s certain yet

The Bergen Generating Station of the Public Service Electric and Gas Company in Ridgefield, New Jersey.
(Joseph Sohm / Shutterstock.com)

Right now, the betting line looks decent for the Clean Power Plan. The case is being heard by 10 members of the DC Circuit Court. Six were nominated by Democratic presidents; four were nominated by Republicans.* But because this is such a consequential case, and the EPA is in relatively uncharted legal territory, there are no guarantees here. A ruling is expected in either late 2016 or early 2017.

Whatever the outcome, the next stop for this case is the Supreme Court, which has been split 4-4 between conservatives and liberals ever since Justice Antonin Scalia’s death this year. If there’s a 4-4 SCOTUS split on this case, then whatever the DC Circuit Court rules will stand.

4) The ultimate fate of the Clean Power Plan also depends on the next president

The presidential election also matters a great deal here. Donald Trump has promised to repeal the Clean Power Plan through executive actions — and while that won’t be easy, he can probably scrap the rule with persistent effort. So if he becomes president, these court cases may be moot; the plan will be dead.

Hillary Clinton, by contrast, has promised to extend and expand Obama’s EPA regulations around CO2 emissions. Her climate plan very much depends on the Clean Power Plan surviving so that she can continue to nudge US emissions downward, sector by sector, all in the hopes of slowly grinding international talks forward. Not terribly inspiring, but that’s what’s on the table right now.

If Clinton is president and the plan gets upheld, then states will have to start reconfiguring their electricity sectors. Under the original rule, they were expected to submit plans to the EPA by 2018 at the latest, start cutting emissions by 2022 at the latest, and then keep cutting through 2030. That timetable might now get pushed a bit. Again, states have plenty of leeway on how to reduce emissions: they can switch from coal to natural gas, expand renewables or nuclear, boost energy efficiency, enact carbon pricing... And if states refuse to submit a plan, the EPA will impose its own federal plan, which could involve some sort of cap-and-trade program.

If Clinton is president and the plan gets struck down? Then things get interesting. Her EPA could try to rewrite a different rule for power plants to comply with the courts. (The EPA will still have the authority to regulate CO2 no matter what the outcome here.) Or, less plausibly, she could try to work with Congress to enact climate legislation. But one way or another, it’s unlikely the carbon fight will just go away.

Further reading:

* Correction: The DC Circuit Court case is being heard by 10 judges, not nine as I originally wrote. Cornelia Pillard, an Obama appointee, joined the panel hearing the case last week after having previously recused herself.

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