The Clean Power Plan: A Risky Investment

Last month at POWER-GEN International, the world’s largest conference and exhibition for the power sector, the controversial U.S. Clean Power Plan dominated the discussions. The plan to cut greenhouse gas emissions from U.S. power plants may be the most litigated rule in U.S. history. 

“More than 15 lawsuits were filed in just two days” after the plan was unveiled Aug. 3, said Alexandra Dunn, executive director and general counsel of the Environmental Council of the States, a nonprofit association representing state environmental agencies.

Dunn joined Jeff Holmstead, a leading climate change lawyer and former EPA assistant administrator in the Bush Administration, in a plenary-session discussion about the legal opposition and implementation challenges related to the most far-reaching energy-sector regulation in U.S. history.

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. The emission limits differ from state to state.

Although 27 states are challenging the rule, most of those states are evaluating their compliance options, Dunn said. “Most states are doing something productive,” she said. “They will be putting plans together.”

To illustrate the political nature of the debate over the Clean Power Plan, Dunn pointed to a map highlighting the states that are challenging the rule and those in favor of it. Dunn then showed attendees another map. The second map highlighted the state-by-state results of the last presidential election in the U.S.  Both maps were almost identical. The red (Republican) states generally opposed the plan while the blue (Democrat) states largely supported the plan.

“This is politics,” Dunn said. “It’s all politics.”

Holmstead pointed to another reality behind the support and opposition to America’s Clean Power Plan.

The 27 states challenging the plan in court are responsible for about 80 percent of the emission reductions required under the plan, he said. The states in favor of the plan are responsible for just 12 percent of the reduction targets mandated by the plan.

“That’s an indication of the burden the rule imposes on different states,” Holmstead said.

While Dunn was reluctant to say whether the plan would survive in court, Holmstead was unwavering in his belief the plan will ultimately be revoked by a new Republican administration or overturned by the U.S. Supreme Court. He gave a 70 percent to 80 percent chance to either scenario.

“If a Republican is elected, that administration will certainly revoke the Clean Power Plan,” he said. “I know how this works. There are some EPA rules that are very difficult or even impossible to change. But the Clean Power Plan is not one of them.”

If a Democrat is elected, the plan will certainly be appealed to the U.S. Supreme Court. “In all likelihood, the nine justices we currently have will be the justices hearing the case,” Holmstead said. “Right now, it’s absolutely certain there are four justices that would vote to overturn the Clean Power Plan.”

The plan “goes way beyond what Congress authorized EPA to do,” Holmstead said.

The case against the Clean Power Plan centers on the EPA’s authority to regulate greenhouse gas emissions from power plants under section 111(d) of the Clean Air Act (CAA). Opponents contend power plant emissions are already regulated under section 112 of the CAA. The CAA prohibits the EPA from regulating power plant emissions under more than one section of the law.

EPA has “never before said we’re going to take business away from these plants and give it to those plants, which is what they’re doing here,” Holmstead said.

Several states have asked a federal appeals court to stay the controversial plan until the courts decide whether the EPA has the authority to force states to limit CO2 from U.S. power plants.

“We don’t think there will be a successful request for a stay because you have to show imminent harm,” Dunn said after the plenary session. “No plants are going to shut down because of the initial submittals.”

Given the legal uncertainty, investments in compliance will vary from state to state, Dunn said. Any investments in compliance could be lost if the Supreme Court strikes down the law.  

“Some states are very confident about the law. There are some states that feel this is the right thing to do and they want to move in this direction, with or without the EPA,” she said. “But some states are highly skeptical and they will hold back full investment until they are sure this is legally sound.”

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