The Future of Clean Power Plan After Supreme Court Stay
March 15, 2016
On February 9, 2016, the United States Supreme Court issued a stay of the federal Clean Power Plan (“CPP” or “Plan”), preventing the Environmental Protection Agency (“EPA”) from enforcing the Plan until legal challenges are resolved by the federal courts. The CPP is currently before the D.C. Circuit Court of Appeals and likely would not be subject to Supreme Court review until late 2017 or 2018. Under the original CPP deadlines, states are required to make their first implementation plan filings by September 6, 2016. As a result, this stay could delay CPP implementation years beyond the Plan’s current deadlines.
In light of this original September 6, 2016, deadline, many states began developing their implementation plans before the Supreme Court stay. Since this stay was issued, 19 states indicated that they intend to continue developing their implementation plans during the stay; 19 states affirmed that they would suspend planning; and 9 states continue to assess their plan options.
In choosing to continue developing implementation plans, states are investing resources into compliance with a Plan that may ultimately rejected by the courts. If the CPP is overturned by the courts, states have the option to use this planning to develop new state laws that regulate greenhouse gas (“GHG”) emissions. California previously adopted a carbon cap-and-trade system, which is projected to allow California to exceed its CPP targets. 29 states already passed laws requiring mandatory purchases for renewable energy by utilities, which reduces reliance on coal-fired power plants with high levels of GHG emissions. To the extent the CPP is rejected, states that have continued planning for the CPP, particularly those with democratic leadership, could still adopt additional measures to reduce GHG emissions.
Whether the CPP will be upheld by the courts is uncertain. In issuing a stay of the CPP, five Supreme Court justices concluded that challengers to the CPP were likely to succeed on the merits of their claims against the Plan. With the loss of Justice Scalia since this stay was imposed, four current Supreme Court Justices support the stay and four current Supreme Court Justices oppose the stay. The future of the CPP will likely hinge on the next appointed Supreme Court Justice.
The most significant challenge to the CPP relates to EPA’s reliance on Section 111(d) of the Clean Air Act (“CAA”) as the statutory foundation for the Plan. Critics of the CPP argue that EPA may not regulate power plants under Section 111(d) where emissions standards for those power plants were already established under Section 112 of the CAA. In 1990, the House and Senate drafted two conflicting amendments to the CAA. The Senate’s amendment barred EPA from regulating pollutants under Section 111(d) that were already regulated under Section 112. By contrast, the House’s amendment prevents EPA from regulating any industrial sources pursuant to Section 111(d) when those sources are subject to emissions standards under Section 112. Under Section 112, EPA currently subjects power plants to emissions standards for hazardous air pollutants.
EPA is permitted to amend the CPP either to try to overcome the Supreme Court stay or if the CPP is ultimately rejected by the courts. Section 115 of the Clean Air Act authorizes EPA to establish emissions standards to protect other countries from United States emissions. In December 2015, 195 countries, including the United States, entered into a mandatory agreement to reduce their GHG emissions in an effort to slow down climate change. EPA could argue that as a result of this international agreement, Section 115 of the CAA provides legal authority for the CPP. If EPA were to revise the CPP relying on Section 115 of the CAA, the central legal challenge of the CPP (although new challenges would certainly be crafted) would no longer exist. In addition, if the CPP is revised, the Supreme Court stay and underlying court challenge would arguably be rendered moot and EPA would be permitted to enforce the CPP. Even if EPA continues to defend the CPP as currently drafted, if the CPP is ultimately rejected, EPA has an arguable legal basis for reforming the Plan in the future.
Finally, reductions in GHG emissions are likely to continue in the United States whether or not the CPP is successful. Adoption of mandatory renewable targets and energy efficiency goals by states have reduced reliance on coal-fired power plants. Lower natural gas prices arising from domestic shale production is causing additional switching from coal-fired to gas-fired power plants, which feature lower GHG emissions. Federal and state subsidies for renewable technologies decreased the cost of electricity produced by renewable generators while the cost of electricity from power plants increased as result of increasingly stringent emissions controls required for these power plants. Many coal-fired power plants already permanently shuttered as a result of these changing economics. With or without the CPP, it may be inevitable that GHG emissions will decrease and sources of electricity in the United States will be permanently changed. Success or failure of the CPP may only impact the timing of this transition.
Teresa Schmittberger is an Associate in the Firm’s Energy, Communications, and Utility Law and Environmental Law and Toxic Tort practice groups. Her emphasis within the Energy, Communications, and Utility Law Group is on issues related to electric, natural gas, and water utility services. She represents large industrial and commercial consumers of these services before state and federal administrative agencies, and also assists customers in purchasing electricity and natural gas from alternative suppliers. She can be reached at 717-237-5270 or firstname.lastname@example.org.