Administration Says They will cut Carbon with EPA if Legislation Fails

WASHINGTON (Reuters) - The Obama administration has warned it could use the Environmental Protection Agency to help cut carbon emissions if Congress drags its heels, but legal and logistical problems could thwart that strategy.

A Senate climate bill unveiled last week faces slim odds of being passed and signed into law soon, with the U.S. economy shedding jobs and coal-dependent states fearing it would raise prices for electricity and steel and hurt manufacturing.

The delay in the United States, which has emitted more greenhouse gas pollution than any other country, is being closely watched by rich and developing countries seeking a lead on how to tackle global warming.

Some 190 nations due to meet in Copenhagen in December to thrash out a successor pact to the Kyoto Protocol want to see that the United States is serious about fighting climate change before committing to share the burden of slowing global warming.

The administration has always said it prefers legislation over action by the EPA. But to prod business to support efforts in Congress, and to show the world Washington is taking action on climate change, the administration has also pressed the EPA to take early steps on regulating greenhouse gases.

The same day the senators unveiled the bill, the EPA proposed a rule, that would narrow the scope of the Clean Air Act, to force new factories and power plants to cut greenhouse gas emissions.

In addition, Carol Browner, the administration's climate and energy coordinator, and a former administrator of the EPA, said last week that if Congress does not pass the bill the agency could work with U.S. states that have already formed cap-and-trade markets to expand them.

Environmental groups, like the Sierra Club, and legal experts, such as those at New York University's Institute for Policy Integrity, have said the EPA could get around Congress and create a national cap-and-trade market on the emissions.

EPA VULNERABLE TO LITIGATION

"I would question the ability of the EPA to follow through with that," said Divya Reddy, a Washington-based analyst at the Eurasia Group. Nearly any action the EPA takes would be "extremely vulnerable" to litigation and congressional intervention, she said.

Many of the troubles with EPA acting by itself on climate have to do with the sheer size of the potential U.S. carbon market.

If the EPA were to impose a national cap on carbon pollution, it would create credits worth hundreds of billions of dollars for the right to emit greenhouse gases, said Jeff Holmstead, a former EPA assistant administrator.

That's about 10 times the size of previous emissions programs on acid rain that the agency has helped run.

Another likely problem is that the EPA would have trouble dictating how the states should distribute the permits and spend profits from their sale.

"LOTS OF WORK FOR LAWYERS"


Analysts say legislation by Congress would be more acceptable politically because it would represent a compromise between various political interests rather than a ruling imposed from above by one agency.

And if an EPA program works poorly, opponents would point the finger at the administration, not the entire Congress.

"Bottom line is EPA may have a lot of authority but you can bet the opponents of action are going to sue on every single thing EPA does," said Frank O'Donnell, the president of activist group Clean Air Watch.

Holmstead said any attempt to regulate carbon under the Clean Air Act, the law that empowers the EPA to protect air quality, would "create lots of work for lawyers."

One congressional aide, who asked not to be identified, was more blunt about any attempt to change the Act: "EPA would be attempting to rewrite legislation. They don't do that. Congress does."

Lawmakers too could continue to try to chip away at EPA rules. Senator Lisa Murkowski, who is the senior Republican on the Senate Energy and Natural Resources Committee, already has sought a one-year delay on the proposed EPA smokestack rule. She says it would hurt the economy.

The Senate squashed the attempt last month, but Murkowski may try again. "She is continuing to look for opportunities," Robert Dillon, a spokesman for the senator, said on Wednesday.

(Additional reporting by Richard Cowan; Editing by Xavier


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