EPA’s Clean Power Plan backstop: carrot or stick?

By Emily Holden | 01/08/2015 08:10 AM EST

For months, U.S. EPA has been encouraging states disinclined to cooperate with new power plant regulations to develop their own plans for reducing greenhouse gas emissions or else deal with a federal version that might not be as tailored to their preferences.

Yesterday, acting air chief Janet McCabe said that alternative will become public by midsummer. EPA plans to propose a federal plan that would kick in if states don’t comply with the rule for existing power plants. The agency will release the proposal along with the final rule for both new and existing power plants, which McCabe announced will come later than expected (see related story).

Observers say the model could serve as a viable option for reaching targets or as punishment to disobliging states. And depending on how it looks, states may feel pressure to write their own plans rather than await federal intervention.

"It raises the question: Is this just a backstop, or is this something that’s going to be more onerous and a worse alternative for states?" said Joe Kruger, a Clean Air Act expert and consultant who has worked at the White House Council on Environmental Quality and for EPA.

Kruger said EPA doesn’t want the federal plan to penalize states for inaction, by requiring them to get all their cuts from one place, for example.

But Bill Becker, executive director of the National Association of Clean Air Agencies, said seeing the proposal on paper should at least pressure states to write their own plans.

"It seems almost certain that the EPA’s federal implementation plan is going to be more restrictive and less flexible than a typical state plan," Becker said.

State-written plans, on the other hand, might look more like what EPA intends — reaching "beyond the fence," or outside the direct operations of coal-fired power plants, to build more renewable energy and cut back on power use.

"EPA is going to have a very hard time coming up with a federal plan that does what it wants states to do," said Jeff Holmstead, a former EPA air chief who represents clients at Bracewell & Giuliani.

Weighing state vs. federal implementation

Critics of the rule have been asking since June how a federal alternative might work. Many thought EPA would stick with options that are clearly federally enforceable, like requiring states to increase the efficiency of coal plants or shut them down. But it would be impossible to reach EPA’s desired cuts with those changes alone. The agency is aiming to cut power-sector carbon dioxide emissions 30 percent between 2005 and 2030.

Supporters of the rule think EPA will write a federal plan that’s as workable as possible, rather than trying to push states to write their own proposals.

David Doniger, climate and clean air director at the Natural Resources Defense Council, said EPA will reach beyond those power plant-centric measures in writing the federal plan.

If EPA wanted to threaten states with the federal alternative, the agency would have included it in the proposed rule in June, said Ken Colburn, a senior associate with the Regulatory Assistance Project.

In any case, proposing a federal implementation plan could also be a strategic move on EPA’s part.

In an email from June 2013 that was released by Senate Republicans last month, an official with the Natural Resources Defense Council advised EPA air attorney Joe Goffman that proposing a federal plan after state plans are due in June 2016 would leave its implementation in the hands of the next administration.

Holmstead said he thinks EPA is also aiming to keep challenges to the federal implementation plan within the D.C. Circuit Court of Appeals, which may be more sympathetic to EPA than other jurisdictions.

If EPA provided federal plans to each state down the line, those plans might be challenged in different courts around the country.

Reporter Scott Detrow contributed.