NMA Highlights 10 Things to Know about the Clean Power Plan

WASHINGTON, D.C.– On Sept. 27, the D.C. Circuit Court of Appeals will hear arguments on the administration’s so-called Clean Power Plan (CPP). The proceedings will be followed closely by stakeholders across the country. The National Mining Association (NMA) challenged the rule and has summarized ten things to know in advance of the arguments.

  1. What is the rule about?

The CPP is a policy that limits carbon dioxide emissions produced from power plants. If implemented, the rule would transform the mix of electricity generation in nearly every state in the nation.

  1. What has happened to date?

The rule was first proposed by the Environmental Protection Agency in June 2014, formally unveiled by President Obama on Aug. 3, 2015, and officially published in final form on Oct. 23, 2016.

Due to concerns about immediate negative economic consequences and wide-ranging legal defects including the rule’s constitutionality, regulatory overreach, and the about face on 45 years of established interpretation of the Clean Air Act, it was immediately challenged in court (West Virginia v. Environmental Protection Agency) by a broad coalition of concerned parties.  Due to the extraordinary nature of the case, and the threat of immediate economic harm posed by the rule, the Supreme Court issued a stay on Feb. 9, 2016, suspending any obligation by the states to implement the rule before litigation is completed. The Supreme Court has never before issued a stay of a government regulation before an underlying court hears the merits of the case. Additional recognition of the significance of the case came from the D.C. Circuit, which made the extraordinary decision to go directly to en banc review of the case on Sept. 27.

  1. Who is challenging the rule in court?

In addition to the National Mining Association, 150 parties are challenging the rule in court.

They include 27 states (with an additional amicus brief from Nevada opposing the rule); the coal industry; the utility industry, public power and co-ops; labor groups; industry associations including the U.S. Chamber of Commerce and National Association of Manufacturers and others.

  1. What will be covered in court?

The issues to be covered, in order by argument segment, as designated by the court, are:

  • Segment 1: All issues related to EPA’s statutory authority, including inside/outside fence line and state authority issues, except those related to Clean Air Act Section 112.
  • Segment 2: Issues related to whether Section 112 of the Clean Air Act bars regulation under Section 111(d).
  • Segment 3: Constitutional issues.
  • Segment 4: Issues related to whether the CPP was properly noticed.
  • Segment 5: Records-based issues not submitted on briefs.
  1. What are the key legal issues that have been raised?

A key issue concern’s EPA’s authority under section 111(d) of the Clean Air Act. (Segment 1)

As articulated in NMA’s stay motion and subsequent court filings, EPA’s authority is limited to regulating “sources” themselves – in this instance, fossil fuel burning power plants – by adopting standards of performance to reduce emissions that can be implemented by individual plants. In promulgating the rule, EPA jettisoned 45 years of consistent interpretation of its authority and abruptly determined that it could use the states to impose reduction requirements premised overwhelmingly on reducing or even eliminating operations at fossil plants and making fossil generation owners subsidize the development of renewable generation. In fact, says NMA’s brief, “the rule’s reduction requirements can be met only by shutting down hundreds of coal-fired plants, limiting the use of others, and requiring the construction and operation of other types of facilities preferred by EPA—a directive EPA euphemistically calls ‘generation shifting.’”  [This is frequently referred to as the “beyond the fenceline” argument because the means of compliance are outside of the boundaries of the power plants being regulated.]

Other legal arguments:

  • EPA cannot regulate sources under 111(d) that are already regulated under section 112 [111 vs 112 argument] (Segment 2)
  • The rule is unlawful because it prevents states from exercising the authority granted to them under section 111 to establish standards of performance and take into account the remaining useful life of an existing source when applying a standard to that source [remaining useful life argument] (Segment 3)
  • The rule violates the U.S. Constitution by compelling the states to implement federal policies [commandeering argument] (Segment 4))
  1. Have the courts examined similar issues in the past? (key precedent cases)

Those challenging the rule will point to recent Supreme Court cases that question EPA’s authority.

As the Supreme Court recently said, courts should “greet … with a measure of skepticism” claims by EPA to have “discover[ed] in a long-extant statute an unheralded power to regulate a significant portion of the American economy” and make “decisions of vast economic and political significance,” Util. Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2444 (2014) (“UARG”) (internal quotation marks omitted), especially in areas outside an agency’s “expertise,” King v. Burwell, 135 S. Ct. 2480, 2489 (2015). That skepticism is doubly warranted here where EPA’s rule intrudes on an “area of traditional state responsibility,” Bond v. United States, 134 S. Ct. 2077, 2089 (2014)—namely, the states’ “traditional authority over the need for additional generating capacity, the type of generating facilities to be licensed, land use, ratemaking, and the like,” Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 212 (1983) (“PG&E”).

Those defending the EPA rule will likely refer to a less recent Supreme Court decision, Massachusetts v. EPA, 549 U.S. 497 (2007), which determined EPA had the authority to regulate carbon dioxide and other greenhouse gas emissions as pollutants under the Clean Air Act.  Massachusetts, however, did not say how EPA may regulate and so provides no authority for the CPP.

  1. What will it mean for Americans if the rule is upheld?

There will be immediate and irreparable economic harm, and indeed there already has been harm. While climate change benefits will be virtually unmeasurable, the EPA’s own estimates forecast that even before the CPP takes effect it will force the retirement of 56 coal-fired power plants from 2016–2018—plants that used 55.3 million tons of coal in 2014—limiting the ability to rely on coal for the diversification that allows price increases in any one fuel to be offset by another.

If implemented, the widespread ripple effects of the closures will be felt by nearly all Americans. The typical annual household electricity bills in 2020 will be more than a third higher than they were in 2012, (an estimated $680 per family). Currently Americans save an estimated $93 billion in electricity costs annually through the diverse power grid that is anchored by coal. Under the CPP, however, more than 40 states will face double-digit increases in the cost of wholesale electricity, with the CPP increasing wholesale electricity prices by $214 billion, and an additional $64 billion for the construction of replacement generating capacity.

To view state-by-state impacts of the CPP, visit: http://www.countoncoal.org/costly-power-plan/

  1. What are the climate implications if the rule is upheld?

Climate change benefits will be virtually unmeasurable—with global temperatures reduced by 0.018°C by the year 2100, atmospheric concentrations of CO2 reduced by less than one percent and sea level rise reduced by 0.3 millimeters (less than three sheets of paper) by 2050.

  1. What will it mean if the rule is struck down?

If the rule is struck down in its entirety, EPA cannot go back to the drawing board to develop another overreaching rule but must regulate within the bounds Congress mandated, as it has consistently done for the 45 years leading up to the CPP. States will retain the authority they now have to make energy choices that best fit their circumstances, infrastructure and available mix of energy generation.

  1. What happens after the 27th?

A decision expected from the DC Circuit in late 2016 or early 2017, with an immediate appeal to the Supreme Court by the losing party nearly inevitable.

The Supreme Court would likely hear the case in 2017 and issue a decision in 2018.