Details are leaking out about EPA’s impending* climate plan for existing power plants pursuant to section 111(d) of the Clean Air Act. In the past, EPA has interpreted Clean Air Act section 111(d) such that it applied only on a source-by-source basis. However, Bloomberg and Reuters recently reported that EPA’s climate plan would require “beyond the fence” or “mass emissions” approach—i.e., states would be required to regulate beyond a power plant’s smokestack. EPA’s plan thus represents a radical change from past practice.
Pursuant to section 111(d) of the Clean Air Act, EPA is authorized to promulgate “guidelines,” whose function is to aid states in the formulation of plans to achieve the “best” system of emission control system for a “designated” pollutant (greenhouse gases) from a “designated” source (power plants). States are then required to submit these plans to EPA for review. If EPA rejects a State plan, then the agency is empowered to impose a federal plan in its stead.
In this brief post, I address the following question: What sort of federal plan could EPA impose? Alas, the answer is frighteningly broad, and includes policies such as a carbon tax or even a cap-and-trade energy rationing scheme.
According to media reports, EPA is going to propose a plan that requires blanket cuts in greenhouse gas emissions across the entire power sector, somewhere around 25% to 35% (below a given baseline). States would then craft plans to achieve these cuts. EPA’s guidelines would offer States a menu of policy options to reduce greenhouse gases, from which States could choose. These policies reportedly could include:
- Green energy production quotas
- Demand-side response
- Curtailment of demand
- Carbon tax
- Regional cap-and-trade energy rationing schemes
Again, under the section 111(d) process set out by the Clean Air Act, States would have to craft a plan to meet EPA’s greenhouse gas targets, using the policy choices offered by the EPA (although a State could adopt alternative policies approved by the agency). If, however, the agency found a State’s plan inadequate, the agency would gain the authority to impose a federal plan. And the federal plan could choose from any of the options above. The upshot is that EPA would gain the authority to impose any number of terrible energy policies on unwilling States, including a carbon tax or a green energy production mandate.
It should go without saying that this would be a tremendous expansion of agency authority. Moreover, such a plan would raise serious federalism concerns, by infringing on jurisdiction that has traditionally been the exclusive preserve of State governments. All of the policies reported to be in EPA’s impending climate plan—i.e., green energy mandates, demand-side response, etc.—are measures that would otherwise have to be enacted by State Legislatures and implemented by State Public Utility Commissions before they could take effect.
*President Obama is expected to personally unveil the regulation in early June. It is part of his administration’s political pivot on climate change.