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Obama's Last Shot

Page 2 of 3

Still, these new EPA regulations are a heavy lift. For one thing, the agency expects a flood of legal challenges from fossil-fuel-friendly states over what kind of technology standards can be applied under the Clean Air Act to existing (as opposed to new) power plants. For another, if there's anything Big Coal hates more than solar panels, it's government regulation. In order to get power-plant regulations in place before he leaves office, Obama had to get an aggressive timetable, with the proposed rules due by June: That means the rules will be rolled out just before the midterm elections, the moment of maximum peril for Democrats.

The proposal won't be made public until June, but Big Coal is blasting it as yet another attempt by liberal elites to shut down the industry. The playbook is simple and familiar: The EPA is trying to put the coal industry out of business; electricity rates will soar, forcing more American manufacturing to move to China; there will be more blackouts, causing economic chaos. It's the same argument they made against regulations to cut smog 40 years ago, the same argument they made against regulations to cut acid-rain pollution 25 years ago, and the same argument they made against regulations to cut mercury pollution 10 years ago.

Big Coal is indeed in a death spiral, but what's killing them isn't the EPA – it's cheap wind, cheap solar and cheap natural gas. Of course, that hasn't stopped coal-friendly politicians from throwing themselves on the tracks. Last fall, the attorney generals from 17 states wrote a letter to McCarthy, suggesting that the EPA was overstepping its authority in setting these rules. The House has already passed a bill to strip the EPA of authority to make these rules. And you can be sure that groups backed by the Koch brothers will get in on the action, too. Koch-related groups like Americans for Prosperity, American Future Fund and the American Energy Alliance, headed by former Koch Industries lobbyist Tom Pyle, spent some $400 million to influence the 2012 election, bombarding swing states like Ohio and Virginia with TV ads calling on voters to "stand with coal" and to "vote no on Obama's failing energy policy." These groups have already spent $30 million targeting vulnerable Democrats in 2014 midterms and will spend millions more in the coming months.

But the old rhetoric is losing its power. In Kansas, Koch-backed groups recently funded an attack on the state's renewable-energy laws, which require 10 percent of the state's power to come from renewable energy, and 20 percent by 2020, claiming that renewable energy was expensive and would destroy local economies. In reality, Kansas added the second-most wind generation in the country in 2012, with 13,000 direct and indirect jobs, and $7 billion in economic activity for the state. Although a Koch-backed bill to kill the renewable-energy laws passed in the Kansas state Senate, it was defeated by the House. "This is nothing more than folks who want to exercise political power," said Rep. Russell Jennings, a Republican and an advocate of clean energy, after the bill's defeat.

In fact, it's Republicans, as much as Democrats, who feel the pressure from Koch money. "There used to be a whole range of Republicans who were willing to talk frankly about renewable energy and climate change, but that changed with Citizens United in 2010," says Sen. Whitehouse, referring to the Supreme Court decision that unleashed a flood of corporate cash into American politics. "I've had Republicans who come up to me and say, 'You think you have problems with the Koch brothers. You don't know what problems are.'"

McCarthy, who is no shrinking violet, has spent much of the last year traveling around the country, talking with governors, utility execs, public-utility commissioners and concerned citizens about the upcoming EPA proposals. "We've had over 300 meetings around the country," McCarthy says. "We've had a great deal of support to take action. What states are looking for is flexibility to make these rules work – and that's our goal, too. This is about how to address a public-health issue, while continuing to create jobs and grow our economy." For Obama, success or failure of the EPA proposal will likely come down to whether utility execs and state leaders believe that the benefits of leaping to a clean-energy economy outweigh the political risks. "I expect a lot of people will run around with their hair on fire, claiming the rules are too tough, but will admit behind the scenes that they can work with them," says Heather Zichal, who was Obama's deputy assistant on energy and climate until last year. If too many states revolt, the lawsuits will multiply and the courts could drag out the rule-making process until after Obama leaves office, which means it could get killed by the next administration. If that happens, any hope of meaningful carbon reductions in the foreseeable future vanishes, and the next administration might as well encourage residents of Miami, Norfolk and even Washington, D.C., to start building boats.

The trouble with EPA rule-making is that it isn't sexy. It's bureaucratic, complex and slow. In terms of actually making a difference on climate, the power-plant rules are by far the most important action Obama will take in the second term. But the decision that everyone will most be paying attention to, and which will inspire all kinds of entertaining idiocy on Fox News, is the decision on whether Obama approves the Keystone XL pipeline.

"Five years ago, it would have gone through without comment," says Zichal. But a few things happened that prevented that: Republicans tried to bully it through, which grabbed the attention of activists in Nebraska and elsewhere, who made the pipeline a litmus test of the president's commitment to ending our dependence on fossil fuels. The protests paid off, at least initially. The president rejected the pipeline in 2012 based on local environmental concerns; TransCanada, the Canadian company that hopes to build the pipeline, then rerouted it and reapplied for a permit from the State Department, which is still pending (a final recommendation is due to be sent to the president at the end of May). In a speech last year, the president vowed to approve Keystone "only if this project does not significantly exacerbate the problem of carbon pollution" – a standard that would, by any common-sense measure, kill the dirty-oil pipeline right there.

For the White House, the fight over the pipeline has become a kind of albatross, one that is getting in the way of more constructive progress. Sources close to the president say he is eager to get it off his plate. "I'm confident that the president is aware of every nuance of this debate," says Zichal. Activists meet him everywhere he goes with handwritten signs urging him to kill the pipeline, and he gets letters from Democratic senators in tough re-election fights, including Mary Landrieu of Louisiana and Mark Pryor of Arkansas, arguing that if he delays approval of the pipeline any longer, it could cost them the election.

What senators like Landrieu and Pryor fear, of course, is the Koch brothers' attack machines. Koch Industries is indeed one of the largest landowners in northern Alberta, holding leases to more than a million acres in the tar-sands region, and they stand to profit hugely if the pipeline is approved. But as with the power-plant rules, the impact that rejecting Keystone will actually have with the electorate is far from clear. Tiernan Sittenfeld, an analyst with the League of Conservation Voters, points out that in the 2012 election, Keystone supporters spent $11 million to target anti-Keystone candidates in 18 races – and none of them lost. In the 2014 election, it doesn't hurt that billionaire Tom Steyer has pledged that his political-action committee, NextGen Climate Action, will spend $100 million targeting climate deniers and Keystone supporters. "President Obama is obviously very committed to this issue," Steyer told me in an e-mail. "My goal is to support him in this in any way I can."

Exactly how the president has weighed the decision on Keystone is a closely guarded secret in the White House, known only to a few senior advisors like Valerie Jarrett and Dan Pfeiffer. But it's no surprise that I was told recently by members of the administration that the pipeline would, in fact, be rejected. "If the president is really serious about his legacy on climate change, he can't have that and approve Keystone," an Obama insider told me. "The only question now is the timing of the announcement."   

Inside the beltway, there was speculation that the President could announce a decision on the pipeline early this summer. But late in the afternoon on Good Friday – the darkest depths of the news cycle – the State Department released a statement that a decision on the pipeline would be once again delayed: "Agencies need additional time based on the uncertainty created by the ongoing litigation in the Nebraska Supreme Court which could ultimately affect the pipeline route." The White House denies the move was in any way political. "I know there's a great urge and has always been to make this about politics," White House press secretary Jay Carney said later. "The issue here has to do with a court decision in Nebraska and its impact on the ability for the State [Department] process to continue for agencies to be able to comment." 

Republican Senator Lisa Murkowski of Alaska, a pipeline supporter, called the delay "a stunning act of political cowardice." But Jane Kleeb, founder of Bold Nebraska and one of the leaders of the anti-pipeline movement, described the move to me as "a pretty brilliant move" that will give red state Democrats like Mary Landrieu and Mark Begich an easy and highly theatrical way to distance themselves from the president in the mid-terms, as well a rallying point for oil and gas money to support them. "Obama just used oil and gas to get red state dems elected," Kleeb wrote. "No way will gas and oil push against Landrieu and Begich."

"Sometimes the art of politics is the art of delay," says Kalee Kreider, a D.C. consultant who works on climate issues.

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