The Environmental Protection Agency (EPA) is moving forward with its Clean Power Plan (CPP) despite pending litigation from more than 20 states to halt its enforcement. CPP establishes statewide carbon dioxide (CO2) emissions standards for existing fossil fuel-fired electric generating units with the goal of cutting CO2 emissions by 32% by 2030, as measured from a 2005 baseline. EPA bases its authority to promulgate such a rule using Section 111(d) of the Clean Air Act. More than 20 states filed an official petition for review (i.e., taking another look at this rule) with the U.S. Court of Appeals for the District of Columbia on October 23, 2015, with West Virginia as the lead petitioner—West Virginia et al. vs. EPA et al. (No. 15-1363). Many of the same states simultaneously filed a separate request to stay the rule (i.e., halting its implementation pending results of review).

Key Details

West Virginia Attorney General, Patrick Morrisey, whose state is among many reliant on coal-based electricity, was unequivocal in his perspective calling CPP one of the “most onerous and illegal regulations coming out of Washington, D.C. that we’ve seen in a long time.” Morrisey went on to say that the EPA plan is “flatly illegal” and would have a “devastating impact” on West Virginia’s economy. Texas Attorney General, Ken Paxton, supports the lawsuit led by West Virginia and is quoted as saying the EPA was imposing “unrealistic” goals on the U.S. power grid and that the rule was a “major threat” to consumers.

The lawsuit is one of an expected wave of future legal challenges against the rule now that the rule was published in the Federal Register on October 23, 2015. Previous attempts to force a review, stay, or complete overturn of the rule were rejected by the D.C. appeals court for being ahead of the curve since the rule had not yet been published in the government’s daily record. As of this writing, other anti-CPP litigation-pursuing parties include coal producer Murray Energy Corporation, the U.S. Chamber of Commerce, and the National Association of Manufacturers.

In addition to the lead petitioner, West Virginia, the other states filing the new challenge include: Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Missouri, Montana, Nebraska, New Jersey, Ohio, South Carolina, South Dakota, Texas, Utah, Wisconsin, and Wyoming.

Implications

ScottMadden insight and research indicates that legal challenges and state responses to the EPA’s proposed CPP will extend through the next several years making it nearly impossible to determine if and how the program will be implemented.

States are challenging the CPP on several legal fronts:

• The CPP is unconstitutional because it violates the Fifth Amendment/Takings Clause by upending “settled investment expectations,” likely eliminating coal use in a dozen states
• The EPA decision that the “best system of emission reduction” should include the entire electric grid is unprecedented in the 40-year history of the Clean Air Act
• The EPA cannot use multiple sections of the Clean Air Act to regulate. Since the new Mercury and Air Toxic Standards are regulated via Section 112, the EPA cannot base the CPP on Section 111

The EPA justifies the CPP in several ways:

• The CPP is constitutional because it does not explicitly require the retirement of coal units or the adoption of a specific energy mix, undermining the takings argument
• In the history of jurisprudence and regulatory affairs, unprecedented has never by default meant illegal
• Changes in proposed regulations for new power units could arise, bolstering the chances of the existing rule surviving. For example, EPA is proposing a new rule under section 111(b) of the Clean Air Act that would require partial carbon capture for new coal units

CPP litigation is not likely to end until the U.S. Supreme Court is asked to weigh in, which may not occur until well after the conclusion of the Obama Administration. Time will tell whether the next administration supports the plan or not.

More information

EPA: Clean Power Plan

SNL: West Virginia Governor Supports Suing EPA and Creating CPP Compliance Plan

This report is part of ScottMadden’s Fossil Minute series. To view all featured Fossil Minutes, please click here.