The coal industry's allies have launched pre-emptive strikes in Congress and the courts as they seek to abort the Obama administration's proposed regulations to limit the amount of carbon dioxide that power plants may spew out.

It's no surprise that coal's political friends would fight hard against a rule that would effectively ban the building of new coal plants by requiring the industry to trap some of the fuel's CO2 for storage underground. Carbon capture and sequestration, or CCS, they say, is unproven and unaffordable.

What's unusual, however, is how early they are trying to derail what is still only a draft rule. They want Congress to repeal the proposal or judges to reject it now, and they're unwilling to wait until the proposal jumps through the remaining procedural hoops and is issued in final form.

At stake is one of the most significant attempts to control a greenhouse gas ever offered under the Clean Air Act. It is a pillar of President Obama's climate action plan, which attempts to deal with climate change without having to deal with Congress.

The proposed regulation, announced in September by the Environmental Protection Agency, was published in the Federal Register on Jan. 8, kicking off two months of public comments that the agency must consider in detail before making it final.

No sooner was it published than Nebraska asked a federal judge to nullify it. Then Sen. Mitch McConnell (R-Ky.), the minority leader, declared that Congress should block it without waiting for the final draft.

These early challenges could significantly complicate the agency's political and procedural tasks as it tries to complete the rules this year. And EPA may be put on the defensive and under pressure to weaken the rule, which it wants to get in place without further delay.

GOP'S Legal Strategy

One of the latest and most powerful objections to the rule raised in the past few months by Republican Congressional leaders has already caused substantial hand-wringing during the Obama administration's internal deliberations. The rule's opponents assert that the agency violated Energy Policy Act of 2005, or EPAct, when it based its claim that CCS is a viable technology largely on recent pilot projects that were financed partly with government subsidies.

"The Energy Policy Act of 2005 clearly prohibits EPA from considering certain federally funded projects when setting the standards," said Sen. David Vitter of Louisiana, the ranking Republican on the Senate Environment and Public Works Committee, who brought up the objection again at a hearing on Jan. 16. "And yet three such projects form the majority of EPA's discussion regarding new plants."

The agency says its finding that CCS is the most practical way available to reduce emissions from burning coal was more broadly based than that—and that it took into account CCS practices around the world and across several industries, as well as reviews of promising technologies and past experiences bringing novel pollution controls into common use. The proposal dwells at considerable length on precedents that the agency says support its approach.

"We're very comfortable with the standard that we proposed," Gina McCarthy, the EPA administrator, said at the combative hearing.

Perhaps so, but the ever-expanding regulatory docket reveals some last-minute consternation at other agencies reviewing the EPA proposal. Indeed, McCarthy said at the hearing that her agency had pulled together more information to bolster its case and sent it that morning to the White House office that manages internal consultations among agencies on complex rules like this.

"Our understanding of the reading of the EPAct is that we can't solely make a determination on the basis of EPAct-funded facilities," she said, adding that it didn't consider only the government-funded projects. "There's ... nothing in the law that precludes us from considering those in the context of a larger, more robust data set—which is what we are actually doing."

Lawyers for environmental groups have endorsed McCarthy's interpretation.

They say that while Congress didn't want the government to subsidize tests of an expensive new pollution control technology and then force an entire industry to adopt it, the law wasn't meant to rule out a new technology forever just because it received subsidies in its early development.

"That would be an absurd situation where the government is investing hundreds of millions of dollars in advanced technology and then we're not allowed to use that technology to improve the environment," said Dan Lashof of the Natural Resources Defense Council, testifying at the same hearing. "That would not make any sense."

Ultimately, the dispute over what Congress intended in 2005 may have to be settled in court. For one thing, the statutory passages in question occur more than once in the law, with slight variations each time.

D. Cameron Prell, a senior counsel on energy and environment at McGuireWoods LLP, said that the issue "may not be as big a legal issue" as Congressional Republicans think, but "it also may be a bigger deal" than most of the environmental groups admit.

Nebraska's Beef

Either way, the state of Nebraska, which gets more than two thirds of its electricity by burning cheap coal imported from next-door Wyoming, wasted no time asking a judge to rule on the dispute.

On Jan. 15, just a week after the EPA formally published its proposal, Nebraska asked a Federal district court there to find that EPA's approach indeed violated the 2005 law. It sought an order compelling the EPA to drop the notion of CCS as the cure for coal, and to withdraw its proposed rule without further ado.

Nebraska filed its challenge under the Administrative Procedure Act, which ordinarily rules out any such appeal until there is a "final agency action," according to an analysis by Margaret E. Peloso, a climate and energy lawyer at Vinson & Elkins LLP. "Typically this means that the agency has completed its rulemaking process and issued a final rule."

She noted that a similar lawsuit, against the first draft of the EPA regulation, was dismissed in December 2012 by the U.S. Court of Appeals for the District of Columbia Circuit "after the court concluded that the proposed rule did not constitute final agency action."

The Political Roadblocks

As the coal industry and its backers seek their day in court, they have powerful allies in Congress who are primed for a debate with significant political resonance.

At the hearing, Vitter fumed that the agency had been biding its time and would put its final decision off until after the mid-term elections, 10 months away.

"I believe these rules are still contrary to federal law," he said, "and I think the EPA's delay is designed to postpone controversial news during an election year and give the EPA more time to make excuses about why they're taking action beyond the scope of their legal authority."

McConnell, the longest serving Republican senator ever to represent coal-veined Kentucky, is already limbered up for a long bout.

On Jan. 16, he filed a resolution to repeal the proposed regulation under the Congressional Review Act, a law that allows Congress to overturn a rule within 60 days of its final effective date. This time, in a tactic just like Nevada's, he is arguing that Congress should act even before the rule is finalized. That has not been tried before.

McConnell, who has 41 co-sponsors, all Republican, turned to the non-partisan Governmental Accountability Office to see whether the law could be used by Congress in this case to overturn a regulation that's still in draft form. In a letter seeking an advisory opinion from the GAO, he noted that the section of the Clean Air Act being used by the EPA would apply the pollution controls to any new coal plant where construction began after the publication of the proposal.

In other words, no company can build a power plant without CCS while the EPA is tweaking the rule.

McConnell's claim is that the proposed rule therefore "immediately changes the legal landscape for anyone seeking to develop a fossil fuel powered plant." It's that immediate impact he wants to prevent.





This is at most a legislative long shot.

Obama surely would veto a bill of repeal if it somehow reached his desk. After all, this rule is the biggest prize in his second-term quest to outmaneuver the climate change nay-sayers in Congress. If only pre-emption were a presidential perk, he might even veto the McConnell resolution before Congress even voted on it.

But the reality is that Obama and his regulators have to move carefully in the crosshairs of Congress and the courts. Even the most hastily erected roadblocks cannot just be wished away.