Air Pollution Control Equipment Services, Coal, Policy & Regulations

Holmstead: CPP is Very Clever, but Ultimately Illegal

Issue 2 and Volume 120.

By Tim Miser, Associate Editor

While admitting the final version of the Clean Power Plan (CPP) is better than the proposed version, Jeff Holmstead, an environmental attorney with Bracewell & Giuliani, said the CPP is very clever, but ultimately illegal.

Holmstead’s comments were made in a mega-session at POWER-GEN International 2015. Holmstead said short of a stay, the CPP will carry the force of law during litigation, but will likely be struck down by the Supreme Court in late 2017 or early 2018. Under the law, he said, a single Supreme Court justice-John Roberts-could stay the rule unilaterally, though there is no precedent for such an action, and it will likely not happen.

The Clean Power Plan calls for sweeping new requirements to cut carbon dioxide (CO2) emissions 32 percent below 2005 levels by 2030. States have until 2018 to submit their compliance plans.

On Jan. 21, the D.C. Circuit Court of Appeals did indeed deny petition to stay the rule, preserving the landmark legislation’s authority to regulate carbon emissions from power plants, even as the rule prepares to defend against subsequent litigation designed to erode its legality.

Stating that petitioners “have not satisfied the stringent standards that apply to petitions for extraordinary writs that seek to stay agency action,” the Court declined to uphold action brought by West Virginia and Peabody Energy Corporation, which would have rendered the law powerless as it defended its constitutionality in future legal cases.

The final rule, Holmstead said, took a much more national approach and was designed to incentivize states to implement a mass-based cap and trade program, instead of a rate-based program. Still, he said, states are all watching one another to see what the others will do.

Jeff Holmstead

The session, attended by more than 100 power professionals, also included panelists Ben Machol with the EPA, Steve Corneli with NRG Energy, and John Lawhorn with the Midwest Independent System Operator (MISO.)

Machol said the CPP was designed to mitigate climate change and the associated warming trend of the last many years. He then highlighted key differences between the proposed version and the final version of the CPP.

NRG Energy’s Corneli said there is no longer a question about climate change. The science is in, he said, and as a large carbon emitter, NRG is in the process of working toward a solution. Corneli advocated for a strategy that would “pick the low-hanging fruit first”. States can approach owners of coal plants and ask them to commit to voluntarily retire high-emission coal plants, he said.

Many states are already very close to CPP compliance, he continued, and emissions reductions will essentially come from coal plants, not combined-cycle gas-fired plants.

Lawhorn, whose work has modelled the impact of the CPP, said the interconnected nature of the grid creates an environment in which conditions that affect one system operator may also affect neighboring system operators.

MISO is talking with its neighbors about collective efforts to analyze the CPP, he said, adding the impacts of the CPP “will be national in scope, reaching beyond the border of any single system operator.” Addressing the question of whether the CPP delivered what it was expected to deliver, Lawhorn said there was no way to know, since state implementation plans are not yet finalized. The default backstop for the CPP is the federal implementation plan, he noted, adding that states “need the flexibility to implement the CPP on the most economical basis possible.”