Obama’s Climate Push Sets Up Battle Reminiscent of Obamacare

(Bloomberg) — President Barack Obama unveiled a landmark

set of regulations to combat climate change in a plan that

requires states to cut emissions from power plants, setting up a

red-state, blue-state battle reminiscent of Obamacare.

“No challenge poses a greater threat to our future and

future generations than a changing climate,” Obama said at a

White House ceremony Monday. “We’re the first generation to

feel the effects of climate change, and the last generation that

can do something about it.”

The new rules issued by the Environmental Protection Agency

to set emission standards for each state drew fire from

opponents even before they were announced. States such as

Wyoming and Oklahoma have sued to try to block the rule, and as

details of the final regulation emerged on Monday the U.S.

Chamber of Commerce and other business groups said they would

try to block it in the courts, too.

Just as states challenged requirements under the Affordable

Care Act, Senate Majority Leader Mitch McConnell urged them to

reject the power-plant regulations. Many are likely to be joined

by coal producers and coal-reliant utilities in challenging the

new rules.

“We will pursue all available options, including

litigation if necessary, to block EPA’s regulatory power grab,”

Tom Donohue, the president of the Chamber, which also led the

opposition to Obamacare, said in a statement.

Suit Dismissed

Resistance to the proposed rules resembles the prolonged

legal fight against Obama’s Affordable Care Act. In June, a

federal court dismissed a lawsuit by the nation’s largest coal

companies and 14 coal-producing states — most led by Republican

governors — seeking to block the EPA’s 2014 proposal to reduce

greenhouse-gas emissions from power plants.

That June 9 ruling from the U.S. Court of Appeals for the

District of Columbia Circuit said it was premature for a court

to act on a rule that had been introduced only in draft form.

Other court challenges are expected.

McConnell, a Republican from the coal state of Kentucky,

took the unusual step in March of advising governors to block

implementation of the rules in their states.

On the Senate floor Monday, McConnell said the EPA’s plan

“represents a triumph of blind ideology over sound policy and

honest compassion.”

No Delays

The administration will proceed even if it means court

challenges, White House press secretary Josh Earnest told

reporters Monday, saying he’s “not aware of any specific plan”

to delay them while court cases play out.

Because of the way the Clean Air Act is written, the rule

requires each state to come up with a plan to reduce emissions

from power plants.

“Over the next few years each state will have the chance

to put together their plans to cut carbon pollution,” Obama

said. “And we’ll reward the states that take action sooner

rather than later.”

Obama’s EPA plan requires states and utilities to use less

coal and more wind power, solar or natural gas. The plan is

designed to bring about cuts in carbon emissions from power

plants of 32 percent by 2030.

Anticipating the resistance from states, the agency

unveiled a series of enticements in its final rule Monday that

will make it easier for states that submit plans to cut

emissions, and make it cheaper for utilities in those states.

The agency will give a bonus for renewable projects started

after a state plan is submitted, and clears the way for carbon

trading, which many companies say is the cheapest way to comply.

“Relatively Painless”

“It makes it easier for the rank-and-file officials to say

that this is doable,” said Vicki Arroyo, the head of the

Georgetown Climate Center. “It will be relatively painless.”

Power generation, specifically burning coal to make

electricity, is the biggest source of carbon pollution in the

U.S. Until now there was no cap on those emissions.

The EPA plan is the centerpiece of Obama’s climate plan,

which aims to get the country on track to cut its greenhouse gas

emissions 26 percent to 28 percent by 2025 and ink a global

accord to get other nations to address global warming, too.

The regulations are to take effect after publication in the

Federal Register, but they may be stalled if opponents ask for

stay while challenging in court.

State Targets

The general EPA plan actually uses a complicated formula to

set individual targets for states. Each state must then submit

plans to the agency by 2018 on how it will achieve the EPA-mandated goal, which begin to bite in 2022 and phase in through

2030.

It’s that step that may prove problematic, just as many

states refused to set up the insurance exchanges under

Obamacare.

Obama referenced the parallel between the two plans at the

White House Monday, saying that critics charging the EPA plan

will harm minority communities by raising their electric bills

are misguided, and if they are serious about helping those

communities they should extend health care.

“You could also expand Medicaid in your states,” Obama

said in a message to the Republican governors.

The legal argument against the EPA plan, which is likely to

find its way to the Supreme Court, centers on whether EPA can

rely on emissions reductions from using less coal or natural gas

and more renewables as a “best system of emissions

reductions.” In previous rules, those systems were seen as

equipment that could be installed on smokestacks.

Court Chances

Legal experts say the administration made a number of

changes that will shore up its chances of surviving in court.

“It’s much more legally defensible,” said Jody Freeman, a

professor of law at Harvard University who supports the EPA’s

rule. “What EPA did in the final rule is really bolstering its

case for why it has this authority.”

For states refusing to submit plans, it would be up to the

EPA to come up with a plan to force power producers to reduce

emissions.

Still, utilities such as Entergy Corp., PPL Corp. and

FirstEnergy Corp. have been among the utilities opposing a wave

of bills in state capitols that would let legislatures block

plans to curb emissions. Those companies say they want the

flexibility at the state level to figure out the best and

cheapest way to reduce carbon emissions.

And the EPA will include an off-the-shelf carbon trading

program, something that would make it much easier for states to

come up with plans to comply, analysts say.

Lower Risk

“We expect modest carbon prices to become a reality as

states gradually come around to the efficiency of pricing carbon

in power prices as a way to reduce the risk over time,” Julien Dumoulin-Smith, an analyst at UBS AG, said in a research note.

And, even in cases where state leaders refuse to play ball,

the EPA has come out with a federal implementation plan that

will apply to power producers there. Those plans might be more

difficult and costly to implement, just as the online market for

health insurance under Obamacare had massive glitches at first.

Just as with the health-care law, the success of this rule

may be determined by Obama’s successor. Democrat Hillary Clinton

supports the plan, but the Republican field trashed it.

“The rule runs over state governments, will throw

countless people out of work, and increases everyone’s energy

prices,” Jeb Bush said in a statement Sunday. “Climate change

will not be solved by grabbing power from states or slowly

hollowing out our economy.”

To contact the reporter on this story:

Mark Drajem in Washington at

mdrajem@bloomberg.net

To contact the editors responsible for this story:

Jon Morgan at

jmorgan97@bloomberg.net

Steve Geimann

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