During President Obama's State of the Union address on
January 28th, he made his intentions clear that he would
use his authority to continue to push forward new standards and
regulations that would curb the amount carbon pollution US power
plants are allowed to dump into the air. Further still, Obama
stated that the United States must "act with more
urgency" citing continuing climate changes which have seen
droughts and floods affect North American cities in recent
years. Canadians must watch these developments for potential
implications for business.
In furtherance of these positions, Obama has directed the EPA to
issue a draft of a regulation that would set new national standards
for carbon pollution by June 1st of this year. It
appears the brunt of these changes will target coal-fired power
plants, likely forcing hundreds of plant closures throughout the
country, and, as such, coal-heavy states have lobbied the EPA
extensively with respect to the stringency of the standards to be
set in the impending regulation.
Early impressions seem to
indicate that the regulation will delegate the responsibility of
creating and carrying out plans to meet these standards to each
state independently, a move which could bring forward a myriad of
approaches ranging from closing coal-fired plants and investing in
other renewable sources of energy, to instituting "cap and
trade" programs which would cap carbon pollution and create a
market for buying and selling pollution permits.
The exact options available will be largely dictated by how the
new rule is eventually written, the language of which will almost
certainly be challenged if the EPA attempts to be too aggressive in
its attempts to cut emissions. Various organizations and
associations have made known their intention to fight any rules
that would target the coal industry and the EPA's legal
authority to set national standards on climate change has been a
battleground ever since a 2007 US Supreme Court
decision first found that the Clean Air Act
gives the EPA the authority to regulate tailpipe emissions of
greenhouse gases as pollutants.
In December 2013, hearings began
in the US Supreme Court on key cases challenging the EPA's
authority to deal with air pollution and climate change,
specifically including whether the EPA can set limits on air
pollution that originates in one state, but directly affects the
air quality of another, as well as a challenge to be heard in early
2014 regarding the EPA's plans to limit greenhouse gas
emissions from power plants.
As the due date for the EPA's new regulation draws near, it
will be interesting to continue to monitor the US Supreme
Court's findings with respect to the scope of the EPA's
authority as well as any developments in the standards being
targeted or how these standards are intended to be implemented. If
the EPA does delegate the implementation of these standards to each
state, it will be particularly interesting from a Canadian
perspective to see the how many various approaches are taken to
reduce carbon emissions and which approaches are most
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