- Industry: Energy & Utilities
The battle lines have been drawn, and the nation is divided—states actively fighting the Clean Power Plan and those actively supporting it. Only four regulated states are staying out of the legal skirmish at this point.
By Paul Augustine
On October 23, 2015, final Clean Power Plan (CPP) rules were published in the Federal Register. That event began a 60-day clock for challenges to be filed in the D.C. Circuit Court. CPP foes did not waste any time. A group of 24 states, led by West Virginia and Texas, immediately filed petitions to review and to stay the CPP, arguing that the CPP went beyond the U.S. Environmental Protection Agency’s (EPA) statutory authority and “otherwise is arbitrary, capricious, an abuse of discretion and not in accordance with the law.” Alabama, Arkansas, Arizona, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Missouri, Montana, Nebraska, New Jersey, North Carolina, Ohio, South Carolina, South Dakota, Utah, Wisconsin, and Wyoming joined West Virginia and Texas in their petition. The states of North Dakota, Oklahoma, and Mississippi then filed their own petitions. In addition, Murray Energy Corporation, the Utility Air Regulatory Group and the American Public Power Association, a coalition of 16 industry groups (including the U.S. Chamber of Commerce and the National Association of Manufacturers), the West Virginia Coal Association, and Entergy Corporation also filed legal challenges to the rule.
Meanwhile, New York, California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, the District of Columbia, along with the cities of New York, Boulder, Chicago, Philadelphia, and South Miami, and Broward County (Florida), filed a motion to intervene to support EPA in defense of the CPP. Nine environmental and public health organizations (including the American Lung Association, Conservation Law Foundation, Environmental Defense Fund, Natural Resources Defense Council, and Sierra Club) filed a similar request to intervene in support of EPA. A handful of power companies, including Calpine, Austin Energy, Pacific Gas & Electric, Seattle City Light, National Grid, and, later, NextEra Energy filed motions to intervene on behalf of EPA as well.
How the Battle Lines Are Drawn
A comparison of some basic state-level information reveals some unifying themes driving the division between the proponents and opponents of the Clean Power Plan.
Geographically, the West and Northeast are supporting EPA, and the South and Plains States are challenging EPA. Midwest states remain split. States that are more coal reliant have a greater burden in terms of emission reductions under CPP and are more likely to oppose EPA (though a few states with significant coal-fired electric generation, like Illinois, New Mexico, and Iowa, are supporting EPA). Generally, these states have also taken fewer measures to address greenhouse gas emissions—as indicated by a lack of climate policy or mandatory renewable portfolio standards. States supporting EPA have in common aggressive energy efficiency and clean energy mandates and programs, and they have seen the value of these policies. With a few exceptions (for example, New Jersey which has an aggressive RPS, low per capita emissions, and voted for President Obama in 2012), there seems to be consistency in the statistics and policies that unite each side.
Expected Timeframe and Process
There are measures under consideration in the U.S Senate and House of Representatives to suspend implementation of the CPP, but, even if these motions pass, President Obama will likely exercise his veto rights in support of EPA and the CPP. Thus, the decision on whether or not the CPP will proceed as planned will be left up to the courts.
The D.C. Circuit Court consolidated the various legal challenges to the CPP into one proceeding. A decision in the petition to stay the rule is on the critical path now. According to the court’s published schedule, EPA must respond to the motions for stay by December 3, 2015. Interveners’ responses to motions for stay will be due five days later. Replies in support of the motions for stay will then be due December 23, 2015. In their replies, the petitioners must provide an argument for how the CPP will result in immediate and irreparable harm to their states. They must also show a likelihood of success in court. In early 2016, a panel of three judges will decide whether or not to stay the rule. This decision is crucial.
If the court decides to stay the rule, it will derail the aggressive timeline that EPA laid out for implementing the CPP. Conversely, if the court decides in favor of EPA, states will have to quickly develop a compliance plan to meet EPA’s deadline. Furthermore, because many of the arguments on the merits of the review will be considered in the motion for stay, the decision could forebear the ultimate decision on the legality of the CPP itself.
The EPA will likely argue that with the long compliance horizon, there is plenty of time for states to adjust their compliance strategies and, thus, a state is not immediately harmed, and might not be harmed at all—in fact, an argument can be made that compliance will drive innovation, technology, and jobs.
The petitioners will likely try to demonstrate immediate harm in terms of reorganization of their electrical systems, decommissioning of coal generation, and investment in natural gas and renewable energy generation that would have to occur while the case is pending.
Following the decision in the motion for stay, the court will hear oral arguments on the merits of the rule. A decision in this review could take 1-2 years. Depending on that decision, then, the losing side could ask for a full court review and could appeal the decision, sending it to the U.S. Supreme Court. This means that we may not have certainty on the legality of the CPP until 2018, at which point we will have a new president and a new set of legislators.
Activity during the Battle
While politically expedient to “just say no” to compliance with the Clean Power Plan, most states now realize that such an approach is impractical. As we noted in a March 2015 CPP Newsletter article, “by not preparing for the rule’s implementation and not engaging in the development of a [State Implementation Plan], states, utilities, and other stakeholders will miss out on critical time to prepare for and to design programs that will most cost-effectively meet requirements under the CPP.” Moreover, failing to develop a state-specific compliance strategy will lead to imposition of a federal implementation plan, which would likely be costlier and less efficient. Prudence dictates that states develop strategies to implement the Clean Power Plan, regardless of where they might stand in the ongoing CPP legal battle. We will have to stay tuned for the critical decision in the motion for stay, and we should prepare for a long battle in the courts.
U.S. Census Bureau. “Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2014.” Available at: http://www.census.gov/popest/data/state/totals/2014/index.html
U.S. Energy information Administration. “State Electricity Profiles,” Data for 2013 released July 8, 2015. Available at: http://www.eia.gov/electricity/state/
U.S. Environmental Protection Agency. “Clean Power Plan Final Rule Technical Documents—Data File: Goal Computation Appendix 1-5.” Available at http://www2.epa.gov/cleanpowerplan/clean-power-plan-final-rule-technical-documents