Yesterday's decision by a federal appeals court to uphold U.S. EPA's greenhouse gas program affirmed that Congress is the only line of defense between industry and carbon dioxide rules it finds onerous.

But it was also clear that the political climate would need to change considerably before any changes could be made to the Clean Air Act.

The U.S. Court of Appeals for the District of Columbia Circuit yesterday announced it denied or dismissed challenges to four key components of the administration's greenhouse gas regulatory program, including the endangerment finding, which provides the basis for the regulations, and the tailoring rule, which limits the regulations to large emitters (Greenwire, June 26.).

The Supreme Court and now the appeals court have decided that EPA does have the authority to regulate heat-trapping emissions under the Clean Air Act.

As industry's hopes that the courts would throw out the rules dimmed, pro-fossil fuels members of Congress called for legislation to pare back EPA's authorities.

"I just feel very strongly that EPA or any other bureaucratic agency shouldn't have the authorities or regulations that have not been legislated," said Sen. Joe Manchin (D-W.Va.).

Manchin added that Congress should weigh in with new legislation.

"I just think that these things should be legislated. I feel very strongly about that," he said. "We're going to see where we go and what we have to do now."

Sen. James Inhofe (R-Okla.), who last week offered a resolution to kill EPA's power plants rule for mercury, which was defeated, called the court decision a "wake-up call" for voters. He predicted that it would help get lawmakers elected who would vote to strip EPA of its authorities.

Sen. John Barrasso (R-Wyo.) said he would "continue to work on legislation as I have been doing to try to limit the action of the EPA."

Industry representatives said they hoped the decisions would spur congressional action.

"This should give Congress incentive to redouble its efforts at oversight and even legislation that focuses on EPA's carbon authority," said Scott Segal, director of the Electric Reliability Coordinating Council, a coalition of power companies.

Southern Co., the Atlanta-based utility, said in a statement that it "continues to believe that the Clean Air Act is ill-suited to handle issues like greenhouse gases and that Congress should be the policy maker in this area."

Prospects in Congress

The House has passed numerous pieces of legislation in the past 18 months that would pare back EPA regulations, including for greenhouse gases. But the bills have stalled in the Senate, where 60 votes are typically needed to pass controversial legislation.

Even if Republicans were to take control of the Senate after this year's election, the new majority might find it challenging to shepherd a controversial anti-EPA bill through the upper chamber.

But Paul Bledsoe, a senior adviser at the Bipartisan Policy Center, saw another possibility. The court's decision could eventually push regulated industries to ask Congress for an alternative means of regulating carbon dioxide.

"The near certainty at this point that regulation of greenhouse gases will occur should spur industry interest in less-costly legislative approaches," he said, adding, "The key question is whether their GOP allies will show interest in doing that."

Bledsoe acknowledged that the current political climate is not ripe for a climate bill of any kind. But he noted that Republican acceptance of a market-based climate bill has "waxed and waned" in the past decade, and it might do so again.

And if industry wants a law to pre-empt EPA greenhouse gas rules, Bledsoe said, it would find that yesterday's court decision has strengthened the Democratic negotiating hand considerably.

An industry lawyer said that EPA's greenhouse gas rules do not weigh heavily enough on industry right now for it to risk supporting a major reworking of the Clean Air Act that might lead to more regulation. He said that could change if EPA lowers its regulatory threshold for carbon dioxide from 100,000 and 75,000 tons, respectively, for new and expanded sources.

Doug Holtz-Eakin, a former energy adviser to then-GOP nominee John McCain during the 2008 presidential campaign, agreed that the legal challenge to EPA's rules appeared to be settled. And the outcome, he said, would be that greenhouse gases will be regulated under the Clean Air Act, a solution that proponents and opponents of action on climate change have both said is not ideal.

"That's a very bad place for us to be as a nation," Holtz-Eakin said.

It is now in the hands of Congress, that's for sure," he said. But he said a grand bargain to curb emissions and pre-empt EPA "doesn't look likely" anytime soon.

But Sen. John Kerry (D-Mass.), a leader of the Senate effort to pass a climate change bill in the last Congress, said he expects the issue to come to the fore again.

"I'm convinced everybody's going to come back to the table," he said, pointing to extreme weather events he said would convince the public that climate change is real and must be addressed.

"I think this election will determine a lot," he said. "The speed with which people decide to come back to the table will obviously be significantly affected by this election."