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Threat Of Regulations Looms As Democrats Haggle Over Budget Bill

October 20, 2021

As the White House and Hill Democrats strive to reach a deal that preserves the bulk of the president’s legislative climate agenda, the possibility of stringent EPA and other regulations is looming large if the ambition of the pending legislative package is reduced.

In an effort to salvage his climate-heavy economic policy agenda, President Joe Biden is reportedly floating a pared back budget “reconciliation” package of between $1.75 trillion to $1.9 trillion. Amid those talks, there is increasing expectations that consistent opposition by Sen. Joe Manchin (D-WV) to a proposed clean electricity performance program (CEPP) will mean Democrats will have to scrap it from the broader deal.

While lawmakers are still haggling over which climate-related programs might replace the CEPP, an analysis from the Rhodium Group is highlighting potential other federal energy sector policies such a tougher EPA regulations:

Analysis Sees Little ‘Room For Error’ To Achieve Biden’s 2030 GHG Goal

New analysis from the research firm Rhodium Group is concluding that the U.S. can still achieve the Biden administration’s target of halving economy-wide greenhouse gases by 2030, though it would require aggressive actions by Congress, federal agencies and states that would remedy any shortfall in future policies.

Even though tougher rules would be needed to make up for the GHG cuts expected from a CEPP, reducing the scope of Capitol Hill incentives for low-carbon power could make it more politically challenging to write such rules.

“Without these incentives, it’s reasonable to expect that federal regulators and state officials will be less enthusiastic about pursuing all of the regulations we include in our joint action scenario at the levels of ambition necessary to put the 2030 target within reach,” the report says.

The Rhodium report examines a “joint action scenario” assuming a suite of federal and state policies representing a “step change in U.S. action” on climate. But the group notes these measures rely on authorities “well known with actors who have prior experience in design and implementation.”

The paper’s assumptions are notable both for what is included and what is left out. For example, the report does not assume enactment of the CEPP, a methane fee on oil and gas facilities or a federal carbon price. “In an effort to avoid over reliance on a highly uncertain outcome, we take a conservative approach to congressional action in our joint action scenario.”

At the same, EPA’s chief air regulator is considering a suite of rules that could be deployed to reduce power sector GHGs and conventional emissions, with some advisers calling for quick action amid uncertainty about the pending climate legislation.

As CEPP Stalls, EPA Eyes ‘Rich Toolbox’ To Limit Power Sector Emissions

As Democrats in Congress hit an impasse over legislation to curb power sector greenhouse gases, EPA acting air chief Joe Goffman is exploring his “rich toolbox” of measures to regulate both conventional and GHG emissions from the sector amid a review by EPA of its strategy and calls for swift regulation from some agency advisors.

Speaking to a virtual meeting of the Clean Air Act Advisory Committee (CAAAC) Oct. 18, EPA’s Goffman said his office is reviewing its “full toolbox” to address the public health problems posed by power plants, taking into account multiple pollutants, at the direction of agency Administrator Michael Regan.

EPA is looking for ways to align the most effective regulatory tools to deal with the most pressing problems, Goffman said. At the Office of Air and Radiation, “we do have a rather rich toolbox,” Goffman said, citing air law authorities such as section 111 that includes performance standards for existing and new power plants, long-range air pollution provisions, and direct means to regulate GHGs.

Goffman’s statements come as the agency is deciding on its strategy to replace Obama- and Trump-era power sector rules that resulted in objections by federal courts. But his comments also resonate as the administration is gearing up for United Nations climate negotiations in Glasgow, Scotland, next month.

For months, congressional Democrats have said adopting bold climate measures is crucial to empowering U.S. negotiators to seek tougher GHG commitments from other big emitters like China and India at the U.N. climate talks.

As such, lawmakers are scrambling to either shore up the climate elements in the bill -- or come to grips with reduced legislative ambition on emissions -- less than two weeks before President Biden and his top deputies will head to Glasgow, Scotland, for this year’s closely watched international climate summit:

Democrats Brace For GHG Effect Of Cutting CEPP From Budget Plan

As Democrats appear poised to cut the Clean Energy Performance Standard (CEPP), a key feature of the Biden administration’s climate agenda, from their emerging budget deal, they are facing the prospect of falling well short of their greenhouse gas reduction targets, particularly for the power sector, according to several recent analyses.

White House international climate envoy John Kerry underscored the stakes of the Hill debate last week, arguing that if the Democratic-controlled Congress did not act on the issue, it “would be like President Trump pulling out of the Paris Agreement, again.”

Yet Biden himself downplayed the level of concern Oct. 15, in response to a reporter’s query that paraphrased Kerry’s remarks but focused on a scenario of not enacting the reconciliation bill before Glasgow.

“I think it'd be good to have an agreement on the climate piece, but we're going to get the climate piece. And I think Senator Kerry has a little hyperbole there,” the president said.

Democratic leaders have linked passage of a roughly $1.2 trillion bipartisan infrastructure bill, approved by the Senate in August, with the broader reconciliation package that would fund most of Biden’s climate policy priorities.

To approve the reconciliation package without Republican votes, Democrats need to maintain near unanimous support for both bills. Yet moderates’ concerns about the CEPP’s effect on fossil-fuel industries, as well as the overall cost of the package, are leading Democrats to mull a scaled-back package that likely omits the CEPP.

For its part, the Biden EPA has already begun to lay the groundwork for tougher climate regulations with the focus on assisting disadvantaged communities as part the administration’s broader equity push:

EPA Formalizes Plans To Address Climate Risks Across Policy Platforms

EPA is formalizing plans to incorporate and address potential adverse climate change effects, especially on vulnerable communities, into all aspects of its work, including rulemakings, enforcement and other program and policy measures, in keeping with the Biden administration’s push for government-wide adaptation in the face of potential risks.

For instance, EPA’s Oct. 7 climate adaptation plan, required by Biden’s climate executive order issued in January, as well as the agency’s Oct. 1 draft strategic plan for fiscal years 2023-26, detail a series of steps the agency plans to take to better address climate change.

“EPA will integrate information about the impacts of climate change into rulemaking processes consistent with its authorities,” the adaptation plan says, adding that it will consider a variety of “entry points,” including rules’ development, related policy and guidance, outreach to stakeholders, especially overburdened and underserved communities, post-rule permitting; and monitoring and enforcement and compliance assurance activities.

To do this, the agency says it will develop guidance documents and train rule writers to understand the implications of climate change impacts and incorporate these considerations into rulemakings.

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