Biden’s climate playbook: Propose strong rules, then soften them

Posted: Sunday, March 31, 2024

The administration is wrapping “regulatory mice in Kevlar,” a policy analyst said, to withstand a conservative Supreme Court in a presidential election year.

EPA Administrator Michael Regan.

EPA Administrator Michael Regan speaks at the rollout of last year’s proposed clean cars rule. Last Wednesday’s final rule included longer timelines and more credits to help automakers comply. Nathan Howard/AP

As the Biden administration’s climate rules near the finish line, a pattern is emerging: The final regulations are weaker than the initial proposals.

Last month, EPA removed existing natural gas plants from upcoming limits on power plant pollution. Soon after, the Securities and Exchange Commission softened a rule on climate-related financial disclosures. And automakers will have more time than anticipated to adopt electric vehicles under EPA’s final rule last week to strictly limit carbon emissions from cars and SUVs.

Some see that trajectory — stronger proposals last year, weaker final rules this year — as a byproduct of President Joe Biden’s battle for reelection this November.

But it also comes amid a four-year skirmish between White House policy staff bent on taking aggressive action and agency lawyers — many of them Obama administration veterans — determined to make climate policy that can secure industry buy-in and withstand the inevitable court challenges.

“The Supreme Court is hovering over EPA like a hungry cat at a mouse hole,” said Jeremy Symons, an EPA climate policy adviser in the Obama administration who is now a consultant. “EPA knows that the most effective regulations are the ones that will hold up to scrutiny from a hyperactive Supreme Court majority that is actively searching for the weak link in every rule.”

EPA is trying to outfit its “regulatory mice in Kevlar” to withstand judicial scrutiny, even if it means slower progress toward Biden’s climate targets, he said.

The debate reflects the delicate balancing act facing Biden. Push too hard and the president runs the risk of seeing his rules struck down in court and alienating moderate Democrats this fall. But scale back too much and he could anger young progressive voters while leaving the country well adrift of its climate commitments under the Paris climate accord.

Either outcome could leave key sources of planet-warming pollution unregulated and help propel former President Donald Trump to the White House.

Biden’s leadership team at the White House and at EPA is mindful of the risks, said Stan Meiburg, a former EPA official who spent 39 years at the agency and served as its acting deputy administrator under former President Barack Obama.

“The folks there have all been to the movie,” he said. “I think everyone is pushing toward a common goal of being as forward-leaning as possible without going over the cliff.”

Asked about this conundrum at last week’s rollout for the long-awaited car rule, two senior administration officials insisted that the rule would deliver the same carbon emission reductions as last May’s proposal.

“This rule will be equally stringent, possibly more, given the flexibilities that we provided,” EPA Administrator Michael Regan told reporters gathered at the D.C. Armory. He argued that providing carmakers more lead time — with more lenient standards in model years 2027 through 2029 — would ensure “better parity” with federally funded charging equipment that won’t be fully deployed for years.

White House climate adviser Ali Zaidi claimed at the same event that “the president continues to accelerate the pace of taking on the climate crisis.”

“That’s the playbook he’s been executing from day one, whether you cover it that way or not, and he continues to execute it right now today,” he said in response to a question from E&E News.

Zaidi pointed to Biden’s decision in January to pause approval of export permits for liquefied natural gas and to the methane rule EPA finalized in December. The rule, which aims to cut the oil and gas industry’s methane emissions, is a rare example of a climate standard that strengthened between the proposal and final versions.

Energy Secretary Jennifer Granholm told an oil industry conference in Houston this week that the LNG pause would be over within a year.

Biden’s ‘balancing act’

Environmental regulations have a long history of being watered down or postponed altogether in advance of presidential elections. In 2011, Obama directed EPA to withdraw a draft ozone standard that would have otherwise been finalized during an election year.

But the spotlight on Biden is especially bright because he’s has staked more on climate than previous presidents — Obama included. Biden entered the White House promising to halve emissions from 2005 levels by 2030 and achieve 100 percent carbon-free power five years later.

Those pledges have been top of mind for White House staffers working on climate, according to outside observers in contact with those officials.

The clearest example came last year, when EPA proposed a rule regulating greenhouse gas emissions from existing coal plants and new natural gas facilities. The proposal was notably silent on existing gas facilities, which are set to overtake coal as the power sector’s largest source of carbon pollution this year.

The White House climate office, led by Zaidi, added existing gas plants to the draft in the final weeks of interagency review, according to the administrative record.

Some environmental groups said that proposed existing gas standard did not go far enough, as it covered only a small subset of plants — many of which could have avoided the pollution limits by simply operating less. Utilities argued the opposite, warning that including existing gas in the rule at all threatened grid reliability.

The eleventh-hour inclusion had foes in Congress as well, including some who are not usually critical of EPA policies. Democratic Sens. Sherrod Brown of Ohio and Jon Tester of Montana — who both face tough reelections — pointed to grid risks when they asked EPA to soften the rule.

Inside the administration, there were fears that the existing gas provision was vulnerable to court challenge because it relied on two fledgling industries — hydrogen and carbon capture and storage — to set the new emissions standards.

So last month, agency officials announced that it would remove existing gas plants from the marquee power sector rule.

“It’s definitely a balancing act for everyone involved,” said Michael O’Boyle, who tracks electricity policy at Energy Innovation: Policy and Technology, a climate and clean energy think tank that has advocated for stricter standards.

He called the regulations on coal facilities and new gas plants significant, saying they would act as a guardrail on utilities that have been slow to embrace the transition to cleaner sources of electricity.

But he acknowledged that reaching Biden’s 2035 carbon-free grid target would be more difficult without regulating existing gas plants. Gas currently accounts for more than 40 percent of U.S. power generation and around 48 percent of greenhouse gas emissions from power plants.

EPA’s pledge to consider a new rule looking solely at existing gas plants is key, O’Boyle said.

“It would have reduced some emissions, the existing gas rule, but there’s potential to redesign it to have a bigger impact,” he said.

Other rules have followed a similar pathway. In early 2023, the administration proposed stringent new fleetwide emission standards that encouraged automakers to adopt greater numbers of EVs. Last week’s final rule did that, but also extended a host of provisions to make it easier for carmakers to continue to produce plug-in hybrids and more efficient gas-powered cars.

Unlike EPA, the SEC is an independent agency, with its rules set and enforced by a five-member commission. The SEC regulations also will not have a direct impact on emissions; instead, they aim to inform investors of the climate risks facing publicly traded companies.

But, as with the EPA standards, the SEC final rule was less strict than the draft. The agency’s original proposal required companies to report so-called Scope 3 emissions associated with their supply chains and consumers. But the final rule, released earlier this month, was stripped of that standard and focused only on companies’ direct emissions.

“We understand that the SEC must be responsive to feedback in the comment file, but the absence of Scope 3 disclosures in SEC filings will leave investors with an incomplete picture of their risk exposure,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets. He noted that European Union and California emissions disclosure laws would require many of the same companies to do a more complete emission accounting anyway.

The politics of policy decisions

Environmentalists stress that Biden has done more to transform the U.S. economy and stem climate damage than any of his predecessors — especially his immediate predecessor and challenger, Trump.

EPA’s analysis shows the final power plant and vehicle rules would largely deliver the same climate benefits in the long term as last year’s drafts, said Manish Bapna, president and CEO of the Natural Resources Defense Council Action Fund. Those projections also show the Inflation Reduction Act — Biden’s signature 2022 climate spending law — would do a lot of the heavy lifting on decarbonizing transportation and power generation, even with no regulations in place.

“President Biden has been the best president for climate change, full stop,” Bapna told a recent press roundtable. “So let’s be clear that [the scaled-back rules result in] a very, very modest change in carbon pollution.”

NRDC’s modeling shows that EPA’s revised power plant and clean cars rules would still help the U.S. cut emissions to 42 percent below 2005 levels by 2030, when accounting for the Inflation Reduction Act and other policies, like recent EPA regulations on methane and coolants.

That’s a big potential down payment on the country’s pledge under the Paris Agreement to halve greenhouse gases by the end of the decade.

But some other climate advocates expressed frustration that EPA seemed to be taking its cues from industry. Public Citizen reported this month that 10 major car manufacturers have spent a combined $183 million since 2019 lobbying on the tailpipe emissions rules.

“Biden came out sort of guns blazing, if you will, making promises — many of which just require really strong leadership,” said Chelsea Hodgkins, Public Citizen’s senior EV advocate. “We’re at a time where all of these rules are trying to undo decades of systemic choices, so it’s going to be difficult. I think industry has pushed back a lot, and that’s really influenced the administration.”

Policy experts say the Biden administration is indeed centering politics in its policy decisions. They argue that’s how Biden can win in November and retain the ability to defend and build on his first-term rulemakings.

Paul Bledsoe, a former Clinton administration official who is now a professorial lecturer at American University’s Center for Environmental Policy, said this year’s election would be front and center in everything the administration does between now and Nov. 5.

“When the president is running for reelection, everything in the West Wing is seen through that lens,” said Bledsoe, who was an Interior Department official during former President Bill Clinton’s reelection campaign in 1996.

Bledsoe said the administration’s messaging around climate rules would be about protecting hard-hit consumers, not corporate profits. Trump has made political hay out of Biden’s support for EVs, which are more expensive than gas-fueled cars. Utilities have also linked climate rules to higher consumer prices, arguing that EPA’s limits on power plant pollution could raise electricity bills and disrupt energy supply. And lawmakers — including some Democrats — have expressed skittishness about both rules as proposed.

“So I think the administration has got to take it very seriously on political grounds,” he said.

Meiburg, the former EPA employee, said agencies are cognizant of how their rules can be weaponized during a campaign — and even tip the balance in a tight race. The sweet spot is often developing rules that push an industry forward, while not overreaching and outpacing public expectations of what is possible.

“You’re trying to move the rule in the same direction as the market is moving,” Meiburg said.

Armoring rules in moderation

In finalizing rules that omit some of the most aggressive policy elements, the administration appears to have opted for the road map plotted by EPA attorneys — including several, like agency air chief Joe Goffman, who worked on Obama-era rules that the Supreme Court later quashed.

Legal observers said a similar concern was behind the SEC’s move to pare down its climate disclosure rule. Whether removing Scope 3 emissions reporting will be enough to protect the rule from legal challenge remains to be seen. The 5th U.S. Circuit Court of Appeals dissolved its stay on the rule last week.

Not everyone agrees that armoring rules in moderation and compromise makes them more durable.

Leah Stokes, a professor who studies climate policy at the University of California, Santa Barbara, said the administration would have been in a better position to defend its power sector rule if EPA had included well-crafted standards for existing gas plants from the beginning. That would have avoided the problems that were created by the White House’s last-minute addition of existing gas pollution standards, which borrowed from EPA’s proposal for new gas facilities.

“There was a strategic decision made that it would be more important to finalize the existing coal and the new gas rules and that the existing gas could be left later,” said Stokes, who is a prominent voice in the climate movement. “And I just don’t think that was a good strategic decision because that’s where most of the pollution is from — the existing gas fleet.”

Jody Freeman, a Harvard Law School professor who served in the Obama White House, said the Biden administration’s climate ambitions are tempered somewhat by a hostile Supreme Court.

“And there are stakeholders like the auto sector, the power, the utilities that want the rules to succeed, and also their considerations have to be taken into account in order for the rules to survive politically and legally,” she said. “So there’s a tension here over how stringent these rules can be.”

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