This newsletter addresses EPA’s proposed Clean Power Plan regulatory and compliance developments.
Welcome to West Monroe Partners’ Clean Power Plan Regulatory Tracker – where we track and preview federal and state regulatory policies and developments as they affect the power sector. The newsletter addresses continual coverage of EPA’s Clean Power Plan regulatory and compliance developments.

On January 1, 2016, the U.S. Court of Appeals for the District of Columbia Circuit denied a petition by Clean Power Plan opponents, led by fossil fuel industry interests and several states to stay implementation of EPA’s Clean Power Plan. Weeks later on February 9, the US Supreme Court took the unprecedented step in a 5-4 decision to put a hold on President Barack Obama's signature environmental initiative to lower carbon emissions for power plants by 32 percent by 2030.

The Supreme Court voted along party lines, with five Republican members supporting the stay, and all four Democrats voting to allow the rules to go into effect. The Court offered no arguments or justification for its vote. Nor was the Court required to do so.

The Supreme Court’s decision to stay was unexpected in part, because the lower federal courts refused to do so, and further, the Supreme Court is required to find two things under the rules governing the grant of stay applications – which the Court found. The Court determined first, that the states and industry challenges to CPP were likely to prevail in their challenge, and second, that opponents would suffer irreparable harm if CPP is implemented. These findings of course are pending the federal courts’ resolution of the legality of the Clean Power Plan. At issue is whether the courts are able to find that Congress vested with EPA the power to regulate greenhouse gas emission under Section 111(d) of the Clean Air Act. CPP opponents believe there are statutory reasons to think EPA does not have such authority and one can argue the Supreme Court agrees by granting the stay. Even if lower courts find in favor of CPP, the Supreme Court’s stay remains in effect until all appeals are exhausted. In effect, CPP implementation is in abeyance until an appeal finds its way to the Supreme Court.   

Many pundits argue the Supreme Court’s action is the death of CPP and EPA’s alleged overreach into regulating carbon under the Clean Air Act. Others express the view that appeals are yet to be exhausted and believe EPA has said authority. An alternative view, not so widely heard, is that regardless of the legal outcome, clean energy technologies and their continued reduction in cost and increasing market share, coupled with low natural gas prices, has pivoted the business climate and economic trend toward lower carbon fuels. This trend is independent of CPP, and expected to continue. Coal plants continue to face economic pressure to close and new power generation is increasingly natural gas-fired or renewable.  Energy efficiency and demand response – key strategic elements of CPP continue to drive energy and demand growth close to zero. It is clear that if the trends continue, the U.S. is on a course to reduce carbon emissions from power generation significantly with or without CPP.

Regards,
Paul A. DeCotis
(646) 998-9147
pdecotis@westmonroepartners.com

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