Making Sense of Clean Power Plan Litigation

Making Sense Of Clean Power Plan Litigation

In November, Burnham Nationwide launched a new Solar Series on its Final Review blog designed to help builders navigate the complex photovoltaic installation processes. Below is the latest entry:

by ARLENE HAAS,  Burnham Nationwide | March 3, 2016

Last summer, the U.S. Environmental Protection Agency (EPA) released a new rule, the Clean Power Plan (CPP), designed to combat global warming by establishing carbon dioxide (CO2) emission rates for coal-burning power plants. The CPP is a big deal to those who care about global warming because power plants are responsible for almost 40% of CO2 emissions in the United States.

Yet, we keep hearing about the Clean Power Plan litigation and reading headlines like Supreme Court Deals Blow to Obama’s Efforts to Regulate Coal Emissions. You are probably wondering about the reasons for all these lawsuits, called by one journal “The Superbowl of Climate Litigation,” and what they mean for the future of the CPP. We at Burnham will answer these questions. 

What Kind of Law is the CPP Anyway?

To follow this litigation, it is necessary to understand what the CPP is, the process for creating it, and EPA’s role. The CPP is technically a regulation authorized by the Clean Air Act (CAA), a federal statute. EPA’s authority to create and enforce environmental rules derives from a number of federal statutes. For example, Congress passed the CAA in 1970 to address air pollution, and EPA, created the same year, was given authority to carry out its requirements. (Yes, this was during the Nixon Administration.) Congress’s major revisions to the CAA in 1990, known as the 1990 Amendments, expanded EPA’s authority to reduce air pollution emissions.

The way EPA implements a statute’s requirements is by creating regulations, rules that set forth the specific legal requirements of a particular environmental statute. EPA must go through a set process to create regulations which includes giving the public -- that means anyone -- the ability to submit comments on the regulations before they are finalized. Also, both the proposed and final set of rules must appear in the Federal Register, the federal government’s publicly available daily publication of Presidential documents and agency rules and notices. Believe it or not, after the EPA published the proposed CPP in the Federal Register, several million comments were submitted, and EPA had to consider all of them! Based on those comments, EPA made revisions before finalizing the CPP.

If you want to understand the story of the CPP lawsuits, you need to know that even if the final version of a regulation is available on an earlier date, it isn’t official until it is published in the Federal Register. For example, EPA released the final version of the CPP on August 3, 2015, but it was not published in the Federal Register until October 23, 2015. At this point, you are probably wondering why you should care about this procedural nuance. However, the importance of this detail will become clear shortly.

Why Do I Keep Hearing About CPP Lawsuits? (And Why is West Virginia Filing a Lawsuit in DC?)

Not everyone is a fan of the CPP.

States, industries, and trade associations that have a relationship to coal would like to stop any regulation of CO2. In fact, they are so anxious to put an end to the CPP that they have been filing lawsuits too early for challenging a regulation. Here is what I mean. Remember a rule must be proposed and open to public comments before it becomes final. Well, the CPP challengers started filing cases in August 2014, when the CPP was only a proposed rule. The court told the petitioners they couldn’t review their case because the court only has jurisdiction over the final version of a rule.

Some of the same groups eagerly filed a lawsuit again in August 2015, right after the final version of the CPP was released. However, recall a regulation is only official when it is published in the Federal Register. These petitions were also too early because the CPP had not yet appeared in the Federal Register. Adding to the fray were some cases filed in the wrong courts. The CAA specifies that any lawsuit that asks a court to review certain EPA actions, including the CPP type of performance standards, must be filed in a particular federal court, the U.S. Court of Appeals for the District of Columbia Circuit. So, the CPP’s opponents kept the EPA very busy, responding to legal challenges that they already knew could not proceed.

Once the final version of the CPP was published in the Federal Register on Oct 23, 2015, the battle truly began. An unprecedented number of cases opposing an environmental regulation were filed, many within hours of the CPP’s publication. Ultimately, more than 150 petitioners, including 27 states, coal companies, utilities and trade groups, filed lawsuits which were all combined into one case, West Virginia v. EPA. Others have since joined the suit to support EPA, including 18 states, the District of Columbia, several cities, and environmental groups.

Game change? The death of Justice Scalia last month clouds the CPP's future fate in the U.S. Supreme Court. 

Cases can take a while to be decided, of course. Therefore, the parties suing the EPA asked for a stay of the CPP, an order to suspend the regulation until the court reaches a final decision in the lawsuit. The petitioners argued that the CPP is causing them irreparable harmful while they wait for the case to be decided. The D.C. Circuit did not grant the stay, but it did agree to hear the case on an expedited schedule, meaning the court could decide the case this summer or fall.

Dissatisfied with the D.C. Circuit’s decision, the CPP opponents immediately petitioned the U.S. Supreme Court for a stay. The Supreme Court, in a very unusual move, granted the request to suspend the CPP on February 9, 2016. However, it is important to understand that the Supreme Court hasn’t permanently decided the future of the CPP. At the moment, the regulation is only on temporary hold until the legal challenges are reviewed. The D.C. Circuit will move forward with deciding the case on its merits, meaning that at this stage, the court is focused on reviewing the underlying issues in the lawsuit.

Whatever the D.C. Circuit decides, the case will undoubtedly wind up back with the high court. However, the Supreme Court granted the stay just before the death of conservative Justice Antonin Scalia, so things may be a little different when the case returns there after the D.C. Circuit decision.

As it is, the Supreme Court’s stay of the CPP leaves many unanswered questions. For example, it is unclear what states and stakeholders that have begun working on CPP compliance will choose to do now. Will they continue with their plans or bring everything to a halt? When might the fate of the CPP ultimately be decided and what are the possible outcomes?

How Exactly Does the Clean Power Plan Work?

To understand the CPP litigation, it is important to know that the rule falls under Section 111 of the Clean Air Act, the statute’s section that governs the emission of dangerous air pollutants from large stationary sources such as power plants, refineries, and other types of industry.

The CPP sets state-specific CO2 emission reduction goals based on each state’s own mix of power plants. However, it is up to each state to determine how it will meet these goals. EPA frequently delegates its authority to administer federal environmental programs to state and local governments with EPA oversight.

The CAA requires that CO2 emission rates set by EPA reflect the “best system of emission reduction” (BSER), meaning the adopted measures must be sufficiently demonstrated and take into account such factors as cost. EPA identified three “building blocks” as BSER for controlling power plant CO2 emissions: (1) improve efficiency at coal-burning power plants; (2) increase natural gas generation; and (3) increase renewable power generation. A state will decide the mix of these three building blocks it will use to meet its CO2 emission reduction goals.

How do the Lawsuits Challenge the CPP?

Opponents of the CPP are making a number of sophisticated legal arguments to stop the regulation. However, armed with a basic knowledge of the CPP, you will understand the issues being raised. One of the challenger’s main arguments is that the CAA only gives EPA the ability to regulate the coal-burning power plants themselves by requiring, for example, improved designs and operations for power plant emissions reduction.

However, EPA is going beyond measures that apply to power plants by giving states the option to substitute natural gas or renewable power generation for energy from fossil-fuel burning power plants. This has come to be known as the “beyond the fenceline” argument, the means of compliance are outside of the boundaries of the power plants being regulated. EPA and its supporters believe the CAA gives EPA authority to move the production of electricity to methods that use less fossil fuels.

“Does the Clean Air Act give EPA authority to move the production of electricity to methods that use less fossil fuels?”

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Opponents of the CPP also claim that a different section of the CAA, Section 112, prohibits EPA from regulating any air pollutant from an industrial category already regulated under Section 112, and EPA previously used Section 112 to regulate mercury emissions from power plants. Therefore, these earlier rules prevent EPA from regulating power plants under Section 111, the CAA section from which the CPP derives. According to EPA, the cited Section 112 language results from Congress accidentally adopting two different drafts of the CAA’s 1990 amendments. Congress did not intend to remove EPA’s authority to regulate hazardous pollutants under Section 111, and deference is granted to EPA’s interpretation if there is a conflict in language.

The CPP’s challengers also argue that the CPP violates the U.S. Constitution, specifically the 10th Amendment, by telling states how to use their resources. EPA has responded that their is no constitutional violation because states are given choices as to how they will comply with the CPP. Also, as noted earlier, EPA frequently delegates its authority to implement the environmental laws. Congress intended for states and local governments to play a role in carrying out the environmental statutes.

So, Now What are States Supposed to do?

Many states already began working on their CO2 emission reduction plans, due September 6, 2016, with the option of requesting an extension until September 6, 2018. Now, with the Supreme Court stay, these deadlines will have to be changed. EPA, environmental groups, and some attorneys recommend that states continue work on their plans despite the Supreme Court stay. First, they believe it is wise for states to move forward with planning because the CPP may still be implemented. Second, given the reality of climate change, there are many good reasons besides the CPP for states to work on reducing CO2 emissions.

Some states, particularly those opposing the CPP, have completely stopped work on CO2 emission reduction plans since the stay of the CPP. For example, Wisconsin Gov. Scott Walker issued an order prohibiting any further work on it. A number of states already announced that they will continue implementation of the CPP, and others are still evaluating how to respond to the Supreme Court’s stay.

How will this affect Future CO2 Reductions?

There is good reason to believe that even without the CPP there are important laws, policies, and market factors that will encourage reductions in CO2 emissions and increase the adoption of solar and other renewables. 

For example, with the declining cost of renewable energy and natural gas, the market share of energy derived from coal is shrinking. In addition, the recent extension of the Investment Tax Credit for solar and Production Tax Credit for wind will assure the growth of the country’s renewable energy capacity.

         Governors' Accord for a New Energy Future

Another important CAA regulation, the Mercury and Air Toxic Standards (MATS), affects the same coal-burning power plants regulated by the CPP. Rather than incurring the cost of complying with MATS, many power plants have been or are in the process of being shut down.

At the state level, there are legislative and regulatory changes underway to increase renewable energy and energy efficiency. Also, 17 governors last month signed an agreement, Governors’ Accord for a New Energy Future, to pursue clean energy goals.

When Will We Know?

The Supreme Court will only review the challenge to the CPP after the D.C. Circuit reaches a decision, possibly this summer or fall. Procedurally, once the D.C. Circuit has spoken, the losing side must petition the Supreme Court to take the case. Then, a Supreme Court decision will only happen after the parties submit briefs and participate in oral arguments, taking the case into at least 2017.

If only eight justices sit on the high court when the CPP comes before them, they may choose to re-schedule the case in the hope that a new justice will be appointed during the delay. So, in reality, no one can predict when we may see the conclusion of this critical environmental litigation.