A fortuitous 5-4 judgment by the Supreme Court puts on hold the centerpiece of President Barack Obama’s greenhouse-gas-reduction program until the court has a chance to review the rule. This doesn’t preclude the plan eventually taking effect, but it does stop the clock on implementation and buy time to address climate change more meaningfully, at lower cost and without expanding government.
For the Supreme Court to issue a stay before the lawsuit is heard by a federal appellate circuit is extremely unusual, if nonetheless fortunate. The decision suggests the court finds there would be significant and irreparable harm if the rule went into effect while the legal challenges play out. This likely reflects their decision in Michigan v. EPA last term, in which the Supremes found the Environmental Protection Agency had been unreasonable in its decision to limit mercury from power plants. By the time the court issued its decision, the compliance window had closed and power plants had already paid the costs of compliance. In this decision, it appears that the court is unwilling to let the EPA operate unchecked once again.
And with good reason. Under the Clean Power Plan, the EPA charges states with reducing greenhouse-gas emissions from existing power plants to 32 percent below 2005 levels by 2030. This would remake the power system entirely and present a material challenge to a low-cost, reliable electric supply.
The immediate backlash was unsurprising. Some states find their targets to be excessively ambitious and costly, burdening low-income consumers with high electricity rates. Utilities and coal interests fear it’s a death knell for the country’s most abundant and historically reliable fuel source. Small government interests caution that it’s an excessive power grab, moving far beyond the bounds of the EPA’s authority. The result is a massive lawsuit calling for the rule to be struck down, which has been joined by 29 states and state agencies, utilities, mining companies and allies of all of the above.
Though the ruling undoubtedly marks a victory, there’s no guarantee that we’re out from under the threat of EPA regulation. Challenges to the CPP will now move through the courts, where the rule may survive or be struck down in whole or in part. No matter the resolution, we must be ready.
If the rule is upheld, the clock starts on compliance. States will have to design their own plans to reduce emissions or will face the prospect of the EPA stepping in to impose its own reduction scheme. R Street has identified the opportunity for states to comply with the CPP and lower existing tax burdens through a direct price on carbon. That opportunity will stand.
If the rule is overturned, the agency will try again. The court’s 2005 decision in Massachusetts v. EPA found the agency is required by law to regulate emissions that endanger public health or welfare. Standing precedent dictates the EPA is bound under the Clean Air Act to curb greenhouse-gas emissions. The CPP was just the agency’s first attempt to comply with that ruling. There are still a number of other authorities the agency could exercise, and none is as flexible or as deferential to state authority. Subsequent regulatory attempts may well be far more restrictive.
No matter how the courts ultimately decide, this stay buys us time. Let’s use that time wisely. Congress must intercede to restrict the EPA’s authority and mitigate the future threat of damaging regulations. This is not to say we should ignore the material threat of climate change, but we should rethink the tools used to achieve that end. A direct price on carbon emissions would be far more effective than clumsy regulations. Better yet, dedicating that revenue stream to reduce or eliminate growth-slowing taxes would ensure that limiting emissions won’t due excess harm to the economy or expand the size of government.
The EPA is a helpful political boogeyman, but it’s time for serious consideration of our alternatives. Agency regulation is not the only or the best way to reduce emissions. Let’s build a cleaner environment and a smaller, more effective government.