On June 2, President Obama will personally announce new Environmental Protection Agency regulations on existing power plants, which will be the policy centerpiece of his second term. Nobody knows how these rules will work or how ambitious they will be, and Bloomberg Businessweek reports today that “There’s disagreement even within the administration about what’s allowable under the Clean Air Act.”
The best way to think of the dilemma is keeping in mind the three things Obama wants his regulations to accomplish: He wants them to effectively reduce carbon pollution, he wants them not to cost consumers too much, and he wants to be sure they can survive legal challenge. The trouble is that he can only pick two of these. And the primary question weighing on administration regulators as they make their decision will be how to read the mind of Anthony Kennedy.
Start with a quick refresher on the basics. The Clean Air Act was passed in 1970. In 2007, the Supreme Court ordered the Environmental Protection Agency to regulate greenhouse gases under the Act. But since the most commonly used sections of the law would require extremely expensive changes, like getting rid of all coal plants, nobody had a serious plan to make this work. In 2012, the Natural Resources Defense Council came up with one: a regulatory scheme that would mandate that every state reduce its emissions.
Obama quickly began to look to implement versions of this plan. The NRDC plan is clever because it allows every state to find the most cost-effective way to meet its emissions targets — including, if they want, increasing renewable energy or encouraging consumers to use less electricity. It has all the market-based benefits of cap-and-trade, in other words. The risk is that — without delving into the legal weeds — it leans on defensible but untested applications of the Clean Air Act. If the Supreme Court decides to invalidate the plan, he’ll be left with nothing.
The alternatives would be either to write a weak regulation that barely reduces emissions, or to write an extremely strong regulation that imposes very high dislocation costs on states that rely heavily on coal-powered electricity. Both of those would use more established regulatory methods, and probably run less risk of being overturned. Effective, legally safe, and cheap — Obama has to pick two.
The legal risk can itself be boiled down to the risk that Anthony Kennedy, the Supreme Court’s swing justice, will overturn the regulations. A 2007 paper by Michael C. Blumm, a professor at Lewis & Clark law school, and Sherry L. Bosse summarized Kennedy’s history of rulings on environmental cases. Like everything else Kennedy-related, the answer is complicated, but the signs point more toward upholding than overturning. Kennedy, the paper concludes, “has shown an intolerance for elevating abstract philosophy over concrete justice.”
Since that paper came out seven years ago, Kennedy has made a number of new rulings. He had a prominent role in the Supreme Court case that authorized the EPA to regulate carbon dioxide, which might make him hesitant to slap down the agency for carrying out his ruling. He has continued to display a preference for regulations that meet his own sense of practicality.
“He likes balancing, he likes fact-based decision making,” Blumm tells me. Kennedy’s apparent preference for practicality over legal theory would seem to weigh on the side of Obama designing a plan that works best as policy. No doubt the administration’s lawyers have devoted countless hours to delving into the science of Kennedy-ology. The mysterious workings of the mind of Anthony Kennedy have perplexed a generation of legal scholars. In this case, the outcome may literally determine the fate of the world.