Clean Power Plan Formally Published – Full Steam Ahead for Challengers!

The U.S. EPA formally published the final version of the Obama Administration’s Clean Power Plan on Friday, October 23, an action which starts a 60 day period within which to challenge the rule. On the same day, 26 challenges were filed, asking the Court of Appeals for the District of Columbia Circuit to invalidate the rule. Several of those petitions asked the Court to stay the rule while the challenges are heard. The plaintiffs include more than two dozen states and a number of energy-generating entities that rely on fossil fuels.

Ever since the draft rules were proposed in June of 2014, those unhappy with the Administration’s Clean Power Plan have made it no secret they planned to challenge the rule, and some filed challenges even before the rules were final (they were dismissed as premature). The Administration seeks to reduce Greenhouse Gas (GHG) emissions from existing sources by 32 percent below 2005 levels by 2030. The rule, issued under Clean Air Act Section 111(d) directs states to create State Implementation Plans (SIPs) to administer statewide or regional programs to reduce those emissions from power producing plants. If a state does not create a SIP, the federal government will impose a Federal Implementation Plan (FIP).

The key arguments against these rules focus on whether EPA has the authority to regulate GHG emissions under the Clean Air Act, whether EPA is improperly attempting to regulate activity “outside the fence line,” and whether the changes between the draft and final rule were significant enough to warrant re-circulation to give regulated entities more notice of the new rules. While it is settled that carbon dioxide and GHG emissions are “air pollutants” that can be regulated under the Clean Air Act, the challenge to the final rules will focus on whether section 111(d) is the proper vehicle.

Those that claim the Clean Power Plan attempts to regulate outside the fence line will challenge EPA’s designation of the regional transmission grid as the “system” in the rule (instead of an individual generating source) and Clean Power Plan’s notion of GHG using “building blocks,” including the use of renewables and the substitution of natural gas for coal, to reduce overall GHG emissions. In a move designed to increase its legal defensibility, EPA dropped from the final rule an energy efficiency building block.

The final rule pushed back several key compliance dates:

• States must submit State Implementation Plans (SIPs) or request extension – September 6, 2016.
• States may request an extension for the SIP up to September 6, 2018.
• First compliance date with the SIPs – 2022

This new timing may affect how the DC Circuit will look at the requests for staying the Clean Power Plan while the rule is litigated. The 2018 date is three years off, which should be enough time for the courts to reach a final decision. However, a final determination, presumably by the U.S. Supreme Court, could take longer. Those asking for a stay will remind the D.C. Circuit that, as reported in this blog in June of this year, the U.S. Supreme Court invalidated a mercury emissions rule years after it was finalized. In the interim, most of the industry had complied with it.

The challenges have been filed, and perhaps more will follow and be consolidated. The first issue will be whether the DC Circuit will stay the rule while EPA’s authority and the process by which the rule was adopted are being litigated. In short, the question of whether this piece of President Obama’s legacy will survive legal challenge is now on the table.