Fate of Clean Power Plan could rest with Supreme Court

A panel of legal experts told a Bipartisan Policy Center forum Oct. 4 in Washington, D.C., that whatever happens with the D.C. Circuit they expect the legal dispute over the Environmental Protection Agency (EPA) Clean Power Plan will ultimately be decided by the U.S. Supreme Court.

The legal experts, split evenly between supporters and opponents of the EPA carbon dioxide (CO2) control rule, also expect the question of whether the CPP requires shifting sources of generation to accomplish climate goals will weigh heavily in the D.C. Circuit’s decision.

The full U.S. Court of Appeals for the District of Columbia Circuit heard about seven hours of legal arguments Sept. 27.

Legal experts rehashed the arguments in a Bipartisan Policy Center forum moderated by Wall Street Journal reporter Amy Harder. Harder kicked off the discussion by noting that the case was heard by six appeals court judges appointed by Democrats s and four appointed by Republican presidential administrations.

The legal experts on the panel included: Christophe Courchesne, Chief, Environmental Protection Division, Massachusetts Attorney General’s Office; David Doniger, Director, Climate & Clean Air Program, Natural Resources Defense Council; Jeffrey Holmstead, Partner, Bracewell & & Giuliani; Allison D. Wood, Partner, Hunton & Williams.

The legal panel split evenly on whether the D.C. Circuit will issue its legal decision prior to the presidential inauguration on Jan. 20, 2017.

Harder said the oral arguments made before the D.C. Circuit on Sept. 27 seemed to break down into a few major categories. They include: Did EPA go beyond its jurisdiction and dictate “generation shifting”; 2) Does EPA really have authority to regulate CO2 under Section 111 D of the Clean Air Act; Does the CPP infringe upon states’ rights to regulate power generation; and, was there too much change between original and final versions of the CPP put forth by EPA.

Holmstead said that if the D.C. Circuit wanted to ‘punt’ the issue, it could rule that the final version was radically changed from the first version in June 2014 and a new round of notice-and-public comment is needed.

“Whatever happens at the D.C. Circuit … it will not be the final word,” Wood said. She fully expects that the losing side before the D.C. Circuit will successfully seek high court review.

Both Holmstead and Wood represent energy clients that would like to see the CPP overturned.

Doniger of NRDC cautioned that the makeup of Supreme Court in 2017 will be different than what it was in February of this year when it stayed implementation of the Clean Power Plan. As a result, it is not a “given” that the justices will agree to hear the case – although they probably will, he added.

The legal panel assembled by BPC agreed that the question of how much “deference” that the courts should show EPA in interpreting the key areas of the Clean Air Act will play a huge role in the decision.

Doniger, who supports the CPP, said he found it difficult to see opponents getting six votes out of the 10-judge panel to overturn the rule. The NRDC attorney did note that the judges asked very tough questions on both sides.

There was no one among the lawyers and the judges “to be that voice of climate denial,” Doniger said.

Courchesne, of Massachusetts, said the appeals court judges seemed to understand the “real world of energy.” Massachusetts supports the CPP and Courchesne hopes the D.C. Circuit will view the rule as a natural extension of what many states are already doing to reduce reliance on carbon-based generation.

Is EPA forcing coal burners to ‘subsidize’ other generation?

The judges seemed to be struggling with the scope of the EPA rulemaking and whether it is “transformational,” Holmstead said.

EPA has never before ordered plant owner to “subsidize another plant that has nothing to do with your plant.” EPA seems to be saying: “We have the authority to remake the grid,” Holmstead said.

It’s going a lot farther than merely requiring coal plants to install SO2 scrubbers on coal plants, Holmstead said.

“One can play the subsidy argument in both directions,” Doniger said. EPA has the authority to regulate carbon and when this happens it will inevitably make some sources of generation more attractive than others, added the NRDC official.

The Clean Power Plan is different from other rules “in that the generation shifting is baked into the rule itself,” Wood said. She noted that the SO2 trading program was initiated by Congress in the Clean Air Act amendments of 1990.

Congress has taken no equivalent action to establish a CO2 trading system and it will be virtually impossible for many states to comply with the CPP without some form of interstate trading.

Wood noted that Montana doesn’t have any gas plants so increasing efficiency of natural gas won’t really help them. Montana must either shut its plants down to meet it or work with other states.

Wood added that states like California, which might have CO2 emission allowances to trade, don’t typically want to engage in such trading that might benefit carbon-emitters.

Doniger countered that states like Montana and the Dakotas have a growing wind power sector. The NRDC attorney also said that Justice Department lawyers tried to assure the D.C. Circuit that EPA would provide states with administrative hearings to address various workability problems that might emerge.

But Holmstead said it is important to note that the 20-some states against the CPP account for vast majority of CO2 emission reductions required in the rule. The 18-states that are explicitly supporting it account for a small slice of reductions being required, Holmstead said.  

“I think the judges understand this [case] is a big deal,” Holmstead said.

The hearing by the full court was the first time judges fielded arguments on the merits of the rule.

The Bipartisan Policy Center is a non-profit organization that combines the best ideas from both parties to promote health, security, and opportunity for all Americans.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.