The Uncertain Future of the Clean Power Plan under the Trump Administration

Since the Obama Administration announced its implementation in August of 2015, the Clean Power Plan (“CPP”) has managed to survive despite the many challenges brought against it. The Environmental Protection Agency (the “EPA”) rule was the centerpiece of the Obama Administration’s climate change plan and seeks to reduce carbon pollution from power plants by 32% from baseline 2005 levels by 2030 by setting reduction goals for each state. However, the CPP has encountered many legal roadblocks, and, with the election of Donald Trump and a Republican Congress, its future appears to be in doubt.

On February 9, 2016, the United States Supreme Court ordered the Obama Administration to stay any efforts to implement the CPP until the completion of all legal challenges to the same in a 5-4 ruling. While the Court stay of the CPP is not final, it placed the Obama Administration’s environmental agenda in peril. However, the death of Justice Scalia in February appeared to put the CPP in a much more stable position. The sitting panel of the United States Court of Appeals for the District of Columbia Circuit, which will decide the challenge, is composed of a majority of judges appointed by Democratic Presidents that would likely uphold the regulations. A majority of the Supreme Court would then be needed to overturn the Supreme Court’s decision. Prior to the election, that seemed unlikely, as the Court was deadlocked at 4-4. Oral arguments in case against the CPP were heard in the D.C. District Court on September 27, 2016, but no final ruling has been issued.

With the recent election of Mr. Trump to the presidency, however, the CPP will likely be rendered completely ineffective. Mr. Trump has stated that he believes that climate change is a hoax, and, in a May 2016 speech to the North Dakota Petroleum Council, he said that he would “rescind” the CPP in his first 100 days in office. Further, he has appointed Myron Ebell, the Director of Global Warming and International Policy at the Competitive Enterprise Institute, as the head of his EPA transition efforts. Mr. Ebell is a well-known skeptic of climate change and is a vocal opponent of the CPP.

In order to limit or block the CPP, the Trump Administration has several options:

• As a far-reaching option, the Trump Administration, working with the Republican-controlled Congress, could author and pass a bill amending the Clean Air Act that would reduce or eliminate the power of the EPA to regulate carbon emissions. This would effectively kill the CPP. Such a bill would be subject to a Democratic filibuster in the Senate; however, Senate Republicans have the constitutional option of removing or substantially limiting the filibuster. In the alternative, the Republican Congress may attempt to attach a rule reducing the regulation of carbon emissions to a more popular bill as a compromise with the Democrats to avoid a battle over the filibuster.

• If the D.C. District Court does not issue its decision before Mr. Trump’s inauguration, the Trump Administration’s newly-appointed Attorney General could move for a “voluntary remand” as discussed in SKF USA, Inc. v. United States, 254 F.3d 1022 (Fed Cir. 2001), whereby the agency, in this case the EPA, can ask that the court remand the action to the agency to conduct additional proceedings in the underlying case. The Trump Administration then could modify the CPP at the agency level to weaken or remove its more stringent regulatory requirements.

• If the D.C. District Court does uphold the CPP prior to January 20, 2017, the Trump Administration could require the EPA to re-write the CPP. The EPA would then need to follow the full necessary rulemaking procedures, including notice, drafts of the rule, and public comment on the same, which would typically take at least 12 to 15 months.

• The Trump Administration, through the EPA, could also decline to strictly enforce the CPP regulations and instead give states leeway to create very weak implementation plans.

If the Trump Administration is successful in weakening or overturning the CPP, various states, such as Colorado and California, will likely move ahead with their state-specific plans, while other states, such as Texas and West Virginia, may abandon their plans entirely. Moreover, economic factors such as the low price of natural gas and the continuing growth and efficiency of solar and wind energy will likely continue the decline in the use of coal-fed power plants. Regardless, the elimination of the CPP will slow the de-carbonization of the energy sector, and the Trump Administration’s actions on the CPP will likely be indicative of the coming political battles over energy production during the next four years.

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Upon the Death of Justice Scalia, the Clean Power Plan Gains New Life

The Obama Administration, through the Environmental Protection Agency (“EPA”), announced the implementation of the Clean Power Plan (“CPP”) in August of 2015. The CPP has the stated purpose of “establishing guidelines for states to follow in developing plans to reduce greenhouse gas emissions from fossil fuel-fired electric generating units,” or, in layman’s terms, to cut carbon emissions from power plants. At that time, fifteen coal-reliant states filed for an emergency stay of the CPP with the U.S. Court of Appeals for the District of Columbia Circuit. The court dismissed the petition on September 9, 2015, stating that it was untimely because the final regulation had not yet been properly published. On January 21, 2016, the D. C. Circuit Court denied the requested stay on its merits. On January 26, 2016, officials of twenty-nine states appealed to the U.S. Supreme Court, requesting a stay pending the resolution of litigation regarding the regulation. The appellants argued that the CPP provided the EPA with too much power, which would result in the EPA pushing for the use of wind and solar at the expense of older energy-generating plants that burn coal or oil.

In a 5-4 ruling on February 9, 2016, the Supreme Court ordered the Obama Administration to stay any efforts to implement the CPP until the completion of all legal challenges to the same. This stay will remain in place while courts consider more than 30 lawsuits pertinent to the CPP. While the Supreme Court stay of the CPP is not final, it placed the Obama administration’s environmental agenda in peril. Following the ruling, the White House expressed its disappointment as follows:

We disagree with the Supreme Court's decision to stay the Clean Power Plan while litigation proceeds. The Clean Power Plan is based on a strong legal and technical foundation, gives states the time and flexibility they need to develop tailored, cost-effective plans to reduce their emissions, and will deliver better air quality, improved public health, clean energy investment and jobs across the country, and major progress in our efforts to confront the risks posed by climate change.

Even if the rule is eventually upheld, the stay will adversely affect compliance timelines set forth for states and utilities. The CPP requires states to submit implementation plans as early as this year (with possible extensions to 2018) in order to reduce greenhouse gas emissions from existing power plants by 2022. This would result in carbon emissions reductions of 32 percent from 2005 levels by 2030.

The EPA enacted the CPP under a section of the Clean Air Act that has been rarely used since it was passed in 1970. Justice Antonin Scalia, writing for the majority, noted that “[w]hen an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism.” The stay indicated that the conservative majority of the Court foresaw a reasonably high likelihood that the challengers to the CPP would probably win their case, and that the denial of the stay would result in irreparable voluntarily harm.

However, the recent death of Justice Scalia puts the CPP in a much more stable position than it would have been otherwise. The sitting panel of the D.C. District Court, which will decide the challenge, is composed of a majority of judges appointed by Democratic Presidents that would likely uphold the regulations. A majority of the Supreme Court would then be needed to overturn the D.C. Circuit Court’s decision. This seems unlikely, as the Court as it stands now is deadlocked at 4-4. If the Obama Administration is able to fill the vacancy on the Court or if a Democratic successor to President Obama is elected, the Court would likely uphold the CPP by a 5-4 vote. On March 3, 2016, Chief Justice John Roberts refused a similar request by 20 states to stay an EPA regulation limiting mercury and other toxins from power plants as it undergoes a lower court challenge, a move that some pundits claim evidences a shift of power on the Court.

In any regard, the EPA plans on pushing forward with the implementation of the CPP. At a recent conference in Houston, EPA Administrator Gina McCarthy expressed confidence that the CPP would survive these on-going legal challenges, and she pledged that the EPA would, in the meantime, continue to help states that wanted to continue to implement the CPP by choice. In her words, “[t]he stay doesn’t preclude the EPA from continuing to make progress on climate change. Are we going to respect the decision of the Supreme Court? You bet we are. But that doesn’t mean we won’t continue to support any state that voluntarily wants to move forward.”

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Early State Challenges to the Clean Power Plan Fall Short of Stay

On August 3, 2015, the Obama Administration through the Environmental Protection Agency (“EPA”) announced the implementation of the Clean Power Plan (“CPP”) which has the stated purpose of “establishing guidelines for states to follow in developing plans to reduce greenhouse gas emissions from fossil fuel-fired electric generating units,” or, in layman’s terms, to cut carbon emissions from power plants. The Final Rule addresses both new and existing power plants. Through the CPP, the EPA has set forth (1) carbon dioxide performance rates for fossil fuel-fired electric utility steam generating units and stationary combustion turbines; (2) state-specific carbon dioxide goals based on past carbon dioxide performance rates; and (3) guidelines for the development and implementation of state or multi-state plans that establish standards and other measures to implement these performance rates. http://www2.epa.gov/cleanpowerplan

The ultimate goal of the CPP is to reduce carbon pollution from power plants by 32% from baseline 2005 levels by 2030, and sets reduction goals for each state. In determining these reduction goals, the EPA considered each state’s current carbon dioxide emissions and fossil fuel generations. Individual state plans are due in June 2017 and multi-state plans are due in June 2018. States must begin complying with their plans by 2022, with reductions phased through a “glide path” to 2030. For western state targets see 8/5/15 post http://goo.gl/2desV2

In issuing the rule, the Obama Administration cited environmental and health effects of carbon dioxide, a primary greenhouse gas. According to the EPA, electric power facilities accounted for almost a third of greenhouse gas emissions in the U.S. in 2013. Options for meeting the rule presented by the EPA include increased reliance on alternative energy sources, transitioning from coal to natural gas, and increased energy efficiency.

However, many energy providers that currently rely on coal-fired power plants have already requested a delay in the implementation timeline set forth in the rule. They cite concerns such as increases in electricity rates, decreases in system reliability, and the loss of jobs due to the potential closure of non-compliant plants.

Fifteen coal-reliant states, led by West Virginia and including Alabama, Arkansas, Florida, Indiana, Kansas, Kentucky, Louisiana, Michigan, Nebraska, Ohio, Oklahoma, South Dakota, Wisconsin, and Wyoming filed a petition for an emergency stay of the CPP with the U.S. Court of Appeals for the District of Columbia Circuit on August 13, 2015. They argued that amendments to the Clean Air Act in 1990 prevent the EPA from regulating a carbon emissions source, such as existing power plants, under Section 111(d), as these emissions are already regulated under Section 112. The states also argued the EPA is requiring more stringent standards for existing coal-fired power plants than new power plants, thereby undermining the viability of continuing use of the existing facilities. The Court dismissed their petition on September 9, 2015, in a one sentence order stating only that the petition did not satisfy “the stringent standards that apply to petitions for extraordinary writs that seek to stay agency action.” There will be more challenges. Stay tuned.

The CPP is codified at 40 CFR Part 60 [EPA-HQ-OAR-2013-0602; FRL-XXXX-XX-OAR] and is available online at http://www2.epa.gov/sites/production/files/2015-08/documents/cpp-final-rule.pdf, and the Petition for an Emergency Stay is available at http://www.eenews.net/assets/2015/08/14/document_ew_04.pdf.

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