Clean Power Plan: Heading for a Rather Untidy Legal Fight
By: Martin E. Rock, P.E., J.D., LEED-AP
OMNI Professional Environmental
Before the ink was dry on the Administration’s final “Clean Power Plan” (CPP), over 20 states, several energy and mining companies, a number of trade associations, and other groups were lining up to sue the US. Environmental Protection Agency (EPA) on its final Rule, signed by the Administrator on August 3, 2015. (Such lawsuits, referred to as “judicial review” in the Administrative Procedures Act (APA), can be filed within 60 days following publication of the final rule in the Federal Register.) Indeed, several of these same litigants had already taken the unusual step of filing judicial challenges to this Rule at the proposal stage. Despite these aggressive legal challenges and complaints about job losses and further adverse impacts on US economic growth, the final CPP actually requires tighter reductions in CO2 emissions averaging a 32% reduction nationwide in the final Rule compared to a 30% nationwide average reduction at the proposal stage.
On the other hand, the final Rule does allow two additional years for compliance with the new greenhouse gas (GHG) mandates. US. Senate majority leader, Mitch McConnell famously urged all state government officials by letter to “just say no” to the new CPP and to refuse to cooperate with the EPA on the implementation of these rules. Since the CPP is designed to address existing power plants, the EPA is limited to employing so-called “cooperative federalism” approaches, so even this part of the Rule implementation process is subject to certain judicial interpretations.
The so-called “Clean Power Plan” actually is not a single rule at all. It consists of three separate regulatory actions – two final rules and one proposed rule:
– Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units final rule;
– Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units final rule; and
– Federal Plan Requirements for Greenhouse Gas Emissions from Electric Utility Generating Units Constructed on or Before January 8, 2014; Model Trading Rules; Amendments to Framework Regulations proposed rule.
The existing source carbon rule, which many refer to as the entire CPP, establishes final emission guidelines for states to follow in developing plans to reduce greenhouse gas (GHG) emissions from existing fossil fuel-fired electric power plants. The final rule sets (1) carbon dioxide (CO2) emission performance rates for the principal types of fossil fuel driven electrical generators, (2) State specific CO2 goals reflecting those emission performance rates, and (3) guidelines for state plans to implement the CO2 emission performance rates, which may be accomplished by meeting the State goals. The proposed rule would (if finalized) apply if States declined or failed to implement the carbon rule to EPA’s satisfaction and is commonly referred to as a proposed “FIP” (federal implementation plan). The new generators (NSPS) rule applies to future or “modified” existing generators. (Please Note: The EPA itself claims no costs and no benefits for this NSPS Rule, but clearly, this NSPS rule must be in place in order for EPA to claim authority to regulate existing sources.)
In toto, the final rules alone encompass more than 2,000 typescript pages, without even counting any of the simultaneously issued factsheets, technical or impact documents.
Changes from Proposal
EPA’s failure to take into account key comments of affected stakeholders was a major issue in the engines rule vacatur in the recent Delaware DNREC v. EPA case. In the final CPP Rule, EPA mentions such comments with “stakeholders providing more than 4.3 million comments on the proposed rule.” However, the courts will need to scrutinize whether EPA did enough to address these comments given the fact that many of the comments opposed the Rule entirely and others stressed the mammoth costs and economic dislocations of the CPP, yet the final rule actually increases the stringency of required GHG reductions – arguably adding even more to the costs of the Rule. (For example: Recent research studies show that losing one’s employment under such circumstances, in a majority of cases, results in the displaced employee being afflicted by one of more serious diseases, health effects, or mental illnesses due to the resulting economic, lifestyle and emotional trauma.) In any case, EPA summarized the changes as follows:
The principal changes are the exclusion from the BSER of emission reductions achievable through demand side EE and through nuclear generation; a revised approach to determination of emission reductions achievable through increased RE generation;. . . and a revised interim goal period of 2022 to 2029 (instead of the proposed interim period of 2020 to 2029).
One obvious change from the proposed CPP Rule is the elimination of one of the original four “building blocks” from the Rule strategy as follows: “the EPA has not included demand-side EE (energy efficiency) as part of the final BSER (“best system of emissions reduction… adequately demonstrated”) determination.” This removes one of the three key building block challenges that were discussed by critics of the Proposed Rule that was clearly outside of EPA’s CAA authority. Whether this change was done for legal or technical reasons is certainly open to debate, but such a change is unlikely to save the CPP from other weighty legal challenges.
An issue that has gotten considerable attention is the final CPP Rule’s treatment of nuclear power generation capacity as a GHG reduction strategy. EPA decided to address this issue via “exclusion of the proposed nuclear generation components”, which actually is more favorable toward nuclear power generation than the former CPP Rule proposal.
The CPP also seeks to prevent a further shift from coal to natural gas in electricity generation. This is a bit mystifying, since over the past few years, power plants have been shifting from coal to natural gas due to market conditions alone – not due to EPA regulations. And switching to natural gas fuel has resulted in substantial reductions in carbon emissions. This has led some to point to the impressive voluntary GHG reductions in the U.S. and to recite the old adage: “If it ain’t broke, don’t fix it.” The CPP also lacks any commitment from the largest GHG emitting countries, such as China and India, to reduce their rapid increases in GHG emissions. Such profligate increases in non-US emissions will simply overwhelm any hard won and costly reductions in the United States.
With the elimination of the demand side energy efficiency building block and an increase in the required GHG emissions reductions, the large gap left by these changes is apparently now to be met by more RE (renewable energy) sources, with RE sources shown as growing from less than 5% of current power generation to over 28% by 2030 – implausible given current economic realities regarding RE sources.
Coming Court Battles
Even some EPA supporters are concerned about impacts of recent US. Supreme Court (SCOTUS) decisions and decisions from the Court of Appeals for the District of Columbia Circuit (DC Circuit): EPA may itself face a more difficult “climate” in terms of stare decisis (legal precedents), as the Agency historically averages two decisive losses out of every three cases it chooses to litigate. Given some of the CPP “building blocks” are not part of Clean Air Act (CAA) authorization, the CPP may face the same fate as several other recent EPA air rules – defeat in the courts. Also, EPA’s state by state allocations of required GHG reductions are prone to attack (EPA plans to impose these targets based on the carbon intensity of a given state’s power generation), since, by definition, at least half of the states must reduce carbon emissions by more than the national average GHG reductions target.
EPA’s MATS (mercury & air toxics) Rule was recently struck down by SCOTUS because EPA failed to “appropriately” consider costs in its initial decision to regulate (Michigan v. EPA); EPA’s Tailoring Rule – another GHG Rule – was also struck down by SCOTUS during a previous term of court because EPA exceeded its CAA authorization and arbitrarily changed numerical thresholds the Congress itself had specified (UARG v. EPA); EPA’s Transport Rule (CSAPR) was recently (July 29, 2015) remanded to the Agency for major revisions because of EPA’s faulty, out-of-date emissions database and resulting faulty state threshold allocations for nearly a dozen states; EPA’s engines rules were also vacated by the DC Circuit because the EPA acted “cavalierly” and failed to consider the adverse effects of its rules on electrical reliability (Delaware v. EPA). Even the King v. Burwell, (Obamacare) case may have a bearing on CPP litigation, as that case suggested a narrowing of so-called “Chevron deference”, which allows federal agencies to use their discretion where Congress is less than crystal clear in its statutory language – an issue that was also raised in the Michigan and Delaware cases and that has been the subject of increasing scholarly analysis.
Mainly because of this 5 fold increase in RE, independent studies by NERA Economic Consulting predicted that energy system costs would rise a cumulative $366 billion through 2031, yielding double-digit electricity price hikes in 43 states. This independently derived price tag along with widespread electricity rate increases seems eerily reminiscent of candidate Obama’s 2008 interview with the San Francisco Chronicle, when he said: “Under my plan. . .electricity rates would necessarily skyrocket.”
Presidential Speeches and Pushback
The President plans to tout the CPP Rule as a major accomplishment at the global climate summit in December. This has led opponents to describe the final CPP as more of a publicity stunt than a serious attempt to control GHG emissions within CAA authority – some go even further and chalk up the CPP to just plain lawless arrogance – bypassing Congress. Mr. Obama “wants to be viewed as the world leader on climate change,” Ed Whitfield, US House Energy & Power Committee Chair said. “The reality is he doesn’t care what we think.” (Mr. Whitfield’s letters to EPA challenging the Agency’s authority to issue the CPP Rule have gone unanswered by the Administration.)
Another reality is the long journey from issuing a new, ambitious rule on paper to actually reducing nationwide GHG emissions by 32%, increasing RE (renewable energy) by a factor of five, and doing both of the above while maintaining the integrity and reliability of the US electrical grid. After a lengthy and costly legal battle challenging the very limits of the fundamental authority of the EPA, it will be up to the courts to determine whether the CPP ever actually gets implemented or just gets scrapped. Given the long time frame for implementation of the CPP, plus the inevitable delays resulting from protracted litigation, it is also quite possible the CPP will simply be withdrawn by a new Administration before it ever gets to actual implementation – some of the current Presidential candidates have already pledged to do just that.
Mr. Rock is a registered professional engineer with three engineering degrees, including an M.S. in environmental engineering. He is also a licensed attorney and EUCI instructor. Earlier in his career, he served as vice president and general counsel with Palmetto Engineering Corp. in Columbia, S.C. and as staff attorney with the South Carolina Department of Health and Environmental Control.
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