EPA’s Clean Power Plan: Is it illegal overreach, or is EPA just doing its job?

One day ahead of the final Federal Register publication of the U.S. EPA’s Clean Power Plan for existing power plants, which will trigger the filing of numerous lawsuits against the plan, a House panel on Oct. 22 heard arguments both pro and con over the legality of the plan.

Elbert Lin, Solicitor General of West Virginia, a major coal-producing state, was one of the witnesses who appeared before the U.S. House Committee on Energy and Commerce’s Subcommittee on Energy and Power. The Solicitor General is in the office of state Attorney General Patrick Morrisey, who has been a leader in a group of about 15 states that have tried to fight the Clean Power Plan in court, and will fully be able to do so as of the Oct. 23 publication of the rule in the Federal Register. The version of the final rule issued on Aug. 3 by the EPA, which was the focus of the Oct. 22 testimony, was not final in terms of allowing the filing of lawsuits against it.

Said Lin in prepared testimony: “Under the leadership of General Morrisey, the State of the West Virginia has been over the past year at the forefront of the legal challenges to EPA’s Section 111(d) Rule, which regulates existing power plants. The Section 111(d) Rule—called the ‘Clean Power Plan’ by EPA—was unlawful when EPA first proposed it in 2014 and remains unlawful today. My testimony today will focus on the Power Plan and explain why the Rule does not survive legal scrutiny on several grounds.

“EPA claims Congress gave it authority to promulgate the Power Plan under Section 111(d) of the Clean Air Act (‘CAA’). EPA is wrong. The plain language of Section 111(d) does not authorize the Power Plan, and therefore the entire rule is illegal.

“Under the guise of imposing ‘standards of performance’ on existing coal-fired power plants under Section 111(d), the Power Plan is based primarily on what EPA believes each State can achieve by shifting its energy portfolio away from coal-fired power and fossil fuels generally. Two features of the Rule are relevant here.”

  • First, said Lin, EPA justifies the Power Plan as a regulation of coal-fired power plants, even though those plants are extensively regulated under Section 112 of the Clean Air Act. A Section 112 Exclusion prohibits EPA from regulating a source category under Section 111(d) where that category is “regulated under [Section 112].” Lin wrote: “Abandoning its position of the last 20 years, EPA now claims that “the phrase ‘regulated under section 112’ refers only to the regulation of [hazardous air pollutant] emissions.’ And because EPA has not (yet) decided to regulate carbon dioxide as a HAP under Section 112, the agency argues that it may impose carbon dioxide limitations under Section 111(d) on power plants, regardless of whether EPA has regulated those plants under Section 112.”
  • Second, the Clean Power Plan requires the states to fundamentally reorganize their energy grids, to reduce reliance on coal-fired power plants and fossil fuels more generally. EPA has mandated that the states design state [lans to achieve carbon dioxide emissions targets that EPA calculated based on three “building blocks”: altering coal-fired power plants to increase their efficiency; shifting reliance on coal-fired power to natural gas; and shifting reliance on coal-fired power to low or zero-carbon energy generation like wind and solar. EPA believes that Section 111(d) permits it to force states to design plans that will shift a state’s energy portfolio toward different, “cleaner” sources. “EPA’s claim that Section 111(d) permits the agency to reorganize the nation’s energy economy on a state-by-state basis must also be rejected because it violates the Tenth Amendment,” wrote Lin. Lin added: “The Power Plan runs roughshod over States’ constitutional rights regarding intrastate generation and use of electricity, and is thus illegal.”

Other legal experts argue the pros and cons

Testifying on the pro side of the Clean Power Plan was Richard Revesz, the Lawrence King Professor of Law and Dean Emeritus at New York University School of Law. At NYU Law School, he also serves as the Director of the Institute for Policy Integrity, a non-partisan think tank dedicated to improving the quality of government decisionmaking through advocacy and scholarship in the fields of administrative law, economics, and public policy.

Revesz wrote in his prepared testimony: “EPA’s flexible, cost-minimizing approach to setting performance standards for existing power plants is consistent with the Clean Air Act and the Constitution. It is not, as opponents argue, an unprecedented approach raising the prospect of economic calamity, but rather just another example of EPA doing its job to ensure that polluters account for the cost of their pollution in a manner that will result in substantial net economic benefits to the public.”

He made four main points in his testimony:

  • EPA has clear authority to implement the Clean Power Plan under Section 111(d) of the Clean Air Act;
  • EPA’s proposed approach to setting standards under Section 111(d) is authorized by the statute and based upon demonstrated approaches that power companies have already taken to reduce greenhouse gas emissions;
  • The Clean Power Plan does not give rise to any constitutional problems; and
  • The Clean Power Plan will result in substantial net benefits, including significant public health benefits, with reasonable costs and a great deal of flexibility

Testimony against the plan came from Allison Wood, a Partner at the law firm Hunton & Williams LLP.

“With regard to the final rule for existing power plants under section 111(d), that rule continues to suffer from numerous legal deficiencies, including the two issues that I raised before this Subcommittee in March,” Wood wrote. “The first issue is whether EPA even has authority under section 111(d) to issue the regulations for existing power plants in light of the fact that electric generating units (which are sometimes referred to as ‘EGUs’) are already regulated under section 112 of the Clean Air Act, which addresses hazardous air pollutants. The second issue is whether EPA’s final regulations for existing power plants can properly be considered to be a ‘system of emission reduction’ under the Clean Air Act, even assuming EPA has authority to issue a section 111(d) rule for electric generating units.”

Wood added: “The proposed federal plan and model trading rules seek to implement the regulations for existing power plants in states that do not submit acceptable state plans and also seek to provide trading rules that states can adopt to be part of a cap-and-trade program. Because the underlying regulations are unlawful, the proposed federal plan and model trading rules also cannot be lawfully promulgated.”

Head of the subcommittee firmly in the anti-plan camp

Rep. Ed Whitfield, a Republican from the coal-producing state of Kentucky who chairs the Subcommittee on Energy and Power, said in his opening statement for the Oct. 22 hearing: “Two weeks ago we reviewed the substance of EPA’s CO2 regulations for new and existing power plants, all 3,000 pages of them, with EPA Assistant Administrator Janet McCabe. Today we continue our scrutiny of these rules as the agency begins the process of imposing its requirements on the states.

“Today’s hearing will focus on the legality of this complicated and far-reaching scheme to commandeer each state’s electricity system and replace it with a cap-and-trade approach similar to the ones that Congress has repeatedly rejected.

“There is nothing in the Clean Air Act that even suggests such sweeping agency action is authorized. Indeed, these rules are unprecedented in the 45 year history of this statute. If Congress wanted to authorize a comprehensive transformation of the way America gets its electricity in order to address global warming, it would have said so. If Congress wanted to see a wholesale federal takeover of state authority on electricity policy, it would have said so. And if Congress wanted to largely write fossil fuels out of America’s energy future, it would have said so as well.

“In my view, the discrepancy between what EPA is trying to do and what the Clean Air Act actually allows is so wide that I am confident that these rules will not withstand judicial scrutiny. There are also serious Constitutional concerns with what many see as an Executive branch power grab at the expense of the legislative branch and the states.

“I might add that some of the same reasons EPA’s power plant rules are bad law are also the reasons they are bad policy, particularly in the way the agency treats the states. The 1970 Clean Air Act set out a working partnership between the federal government and states stating quite clearly that air pollution prevention and control are the primary responsibility of state and local governments. In contrast, unilateral EPA micromanagement of electricity generation is a recipe for higher bills, reduced reliability, and job losses that are well out of proportion to any environmental benefits.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.