Weakest link in EPA's climate rule?

A key concession touted by vulnerable Democrats in the administration's new carbon pollution standards may provide the greatest legal threat to the controversial new rules, the cornerstone of President Obama's climate change agenda.

The administration is giving states broad flexibility on how they meet Environmental Protection Agency targets for existing power plants to reduce their carbon emissions 30 percent from 2005 levels by 2030.

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Under the rules, states may take actions to reduce pollution that aren’t directly related to power plant emissions. A state could avoid retiring a power plant by investing in cleaner technology, push energy efficiency programs that will cut demand, or invest in wind and solar, according to the EPA.

That latitude marks an unprecedented move by the agency, which typically specifies methods of reducing emissions solely for power plants.

"We gave every state the opportunity to say where they wanted investments to happen,” said EPA chief Gina McCarthy said in an interview with PBS after unveiling the proposal. “Some of them will invest in their coal units, they will get them more efficient and they will stay for a long time."

Red-state Democrats have generally been critical of the overall climate rule, but see the flexibility option as a benefit for energy industries, allowing each state to choose a method that reflects its priorities.

Sen. Mary Landrieu (D-La.), who faces a tough reelection battle this year, called the flexibility approach a "wise" decision by the EPA.

Legal observers, though, aren’t sure the EPA’s maneuver will pass muster in the courts.

Under the Clean Air Act, the EPA has the power to mandate states apply "the best system of emissions reductions," to existing power plants.

Critics say the EPA is now using a definition of “best system” that is too broad. Traditionally, the agency used “best system” to refer to specific technologies or practices to reduce pollution from plants.

Now the EPA is defining “best system” to include other flexible options states can use, including cleaner, renewable energy sources to meet the agency’s reduction targets.

A top agency official said the EPA is not bending the Clean Air Act, it is simply changing the pollutant it applies to it, and looking beyond carbon technology for ways to reduce power sector emissions.

The EPA official acknowledged that it was a completely new approach, but said the agency considered the legal implications surrounding it before proposing the rule. The official said EPA wouldn’t have issued the rule if they didn’t think it would be upheld.

But many legal experts, and even Obama's top climate adviser, John Podesta, expect challenges, putting the future of the rules in the hands of the courts once it's finalized.

A legal challenge will likely contest the flexibility or "beyond the fence" options afforded to states when determining how best to become more energy efficient.

In the case of Kentucky, prime coal country where the climate plan is under full assault, EPA estimates the state will become 17 percent more energy efficient by 2030 through reductions in carbon emissions.

Kentucky can do that by investing cleaner technology in its coal plants, which would curb carbon emissions, or they can become more efficient by joining a cap-and-trade program, or establishing energy efficiency programs for consumers.

The problem, electric utilities say, is that even if Kentucky were to invest in cleaner coal plant technology, like EPA chief McCarthy said they could, it wouldn't be enough to meet the 18 percent efficiency rate.  

At best Kentucky would become 6 percent more efficient when adding new technology to a plant, forcing the state to adopt other energy policies.

"Every time the Clean Air Act has been used, it has never been to justify compliance obligations beyond the fence line of the specific source being regulated," said Scott Segal, director of the Electric Reliability Coordinating Council.

"There is definitely a legal risk to creating such a broad interpretation," Segal added. "Especially since there is no precedent on this. The question is whether the EPA can base a standard on mandating demand-side controls."

In effect, courts will likely be asked if the EPA can require carbon dioxide emission reductions that are separate from power plants.

That part of the rule which power generating companies are expected to challenge, though, is one vulnerable Democrats, like Landrieu, from pro-energy states have celebrated.

Fellow Democratic Sen. Mark Begich, (Alaska) said his top priority for the rules would be the flexibility they would afford his home state.

Conservative groups are working hard to tar Begich in his energy-producing state by attempting to tie him to a number of Obama's climate policies.

The administration has tried to assuage pro-fossil fuel Democrats like Landrieu and Begich that the flexible rules will be a benefit and place the burden of reducing pollution on all states.

That concession could help the regulations weather the political storm, but at the cost of inviting an equally tough legal fight.

Robert Glicksman, professor of environmental law at George Washington University, though, said that if history is any indication, the EPA is likely to prevail.

"The EPA has at least a reasonable chance of prevailing," Glicksman said. "In recent cases the Supreme Court has noted the deference they are obliged to afford the EPA when a provision isn't clear."

But he cautioned, it could all depend on the courts.