Abby L. Harvey
GHG Monitor
10/23/2015
The floodgates have opened. The Environmental Protection Agency’s carbon emissions standards for new and existing coal-fired power plants appeared in the Federal Register on Friday, opening the door for legal challenges to the rules. The final rules, developed under Sections 111(b) and 111(d) of the Clean Air Act, were announced on Aug. 3, and several state attorneys general have been champing at the bit to sue.
First in the queue appears to be West Virginia, as state Attorney General Patrick Morrisey headed a coalition of 24 states that Friday morning filed a petition for review with the United States Court of Appeals for the District of Columbia, along with a request for a stay of the 111(d) rule. The coalition consists of West Virginia, Texas, Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Missouri, Montana, Nebraska, New Jersey, Ohio, South Carolina, South Dakota, Utah, Wisconsin, Wyoming, the Arizona Corporations Commission, and the North Carolina Department of Environmental Quality.
“Petitioners will show that the final rule is in excess of the agency’s statutory authority, goes beyond the bounds set by the United States Constitution, and otherwise is arbitrary, capricious, an abuse of discretion and not in accordance with law. Accordingly, Petitioners ask the Court to hold unlawful and set aside the rule, and to order other such relief as may be appropriate,” the petition for review says.
Under the Clean Air Act, the rules could not be challenged until they were published in the Federal Register, though that did not stop several entities from trying. Numerous premature challenges against the existing source rule, 111(d), which requires states to develop action plans to meet federally set emissions reduction goals, have been dismissed since it was proposed in June 2014. The new source rule, 111(b), which sets an emissions cap for any new-build coal-fired power plant that would likely require the use of carbon capture and storage technology to meet, faced no such premature suits.
Opponents argue that the 111(d) existing source rule would cost billions of dollars to implement and would serve as a means for the administration to strong-arm states into shifting to renewable energy. At the core of the arguments against 111(d) is a belief that the EPA is acting outside its authority in promulgating the rule in the first place.
While the rules were finalized in early August, EPA had to submit the rules to the Federal Register and edit for grammar and other small changes. No substantive changes were made to the rules between finalizing and publishing, Janet McCabe, acting assistant administrator for the EPA’s Office of Air and Radiation, told reporters this week.
Old Arguments to Rise Again
A new rush of lawsuits is underway following today’s publication. The main arguments against the rule have questioned the EPA’s authority to draft the rule at all. According to opponents, Section 111(d) of the Clean Air Act says the agency cannot regulate under that section a source category that has already been regulated under Section 112. Coal-fired power plants are already regulated under Section 112.
The EPA has rejected this argument on two fronts. The first is that the 112 exclusion is laid out in a provision of the 1990 Clean Air Act amendments. However, there were two versions of that specific provision, one from the Senate and one from the House. Both the Senate and House amendments went to committee, were not resolved, and were reported from committee and signed by the president. Both appear in the Statutes at Large. However, only one version, which would disallow the regulation under Section 111 of a source category regulated under section 112, was published in the U.S. Code.
“Opponents of the Clean Power Plan argue that because the House amendment appears in the U.S. Code it should be the controlling version,” Richard Revesz, director of the Institute for Policy Integrity at the New York University School of Law, explained this week at a hearing of the House Committee on Energy and Commerce. “However, it is well established that when the Statues at Large and the U.S. Code conflict the text in the Statute at Large controls. The decision to include only the House amendment in the U.S. Code was made by a staff member in the Office of Law Revision Counsel, but this staff member cannot supplant the U.S. Congress.”
The EPA’s second counter to the 112 argument is that the exclusion refers to pollutants regulated under Section 112, not sources, suggesting that as long as carbon is not regulated under Section 112, the agency can regulate it under 111.
This is a last-ditch effort to create legal footing where there is none, according to Elbert Lin, solicitor general of West Virginia. “EPA’s backup to its previous backup position does not get EPA out from under the 112 exclusion,” Lin said at the hearing, “Despite its claim, the statute is quite clear, it refers to source categories regulated under Section 112, not air pollutants listed under Section 112.”
West Virginia has been a leader in the charge against the regulation thus far, having sought legal action against the rule in both its proposed and final pre-published forms. Federal courts dismissed both suits on procedural grounds. “Given what we thought, what we read as the clear illegality of the rule, we thought that these were efforts worth making to save massive amounts of taxpayer dollars both at the federal level and at the state level to stop EPA from even moving forward what is in our belief an unlawful rule no matter what form it takes,” Lin said. He further stressed that “the courts have not ruled on the merits of our arguments. The courts have only ruled on the procedural grounds.”
Other states that signed on to one or more of these premature suits include Wyoming, South Dakota, Kansas, Nebraska, Oklahoma, Louisiana, Indiana, Ohio, Kentucky, Wisconsin, Michigan, Florida, South Carolina, Alaska, and Alabama.
Requests for Stay Likely to Call Upon MATS
While many lawsuits are likely to challenge the merits of the rule, it is also probable that some entities will call for a stay of the rule, halting its implementation pending judicial review. Those calling for such a stay received some support in the form of a Supreme Court ruling earlier this year. In the case, the high court found that the EPA should have considered the cost of implementing its Mercury and Air Toxics Standards (MATS) before moving forward with them.
On the surface, this outcome does little for opponents of the Clean Power Plan as the EPA has conducted a cost analysis of the carbon rule. However, by the time MATS made it to the Supreme Court, utilities had invested billions of dollars to come into compliance with the rule. Opponents of the Clean Power Plan assert that the same will happen in this case. It will likely take one to three years for the regulation to clear the courts. While the EPA has pushed back the deadlines in the final rule to 2018 for states requesting an extension, which will give states more time to come into compliance, investments and decisions will need to be made immediately to plan for the requirements of the rule, Raymond Gifford, a partner at Wilkinson Barker Knauer, said at the hearing.
“In recent weeks we have seen what are called integrated resource plans, which are plans that utilities file with the state utility commission, that have been presented that incorporate the assumptions of the rule and that’s what a prudent utility has to do given their planning horizons,” Gifford said. “If this rule were overturned by the Supreme Court in 2018, 2019, you could have a situation where a good chunk of the nation’s coal fleet is already scheduled to be retired under state planning process.”
New Source Rule Provides New Target
The rule for new-build coal-fired power plants, the New Source Performance Standards (NSPS), has been largely ignored by the legal world thus far. While it has caused its fair share of controversy, no legal challenges have been brought against it prior to publication in the Federal Register. However, a new narrative taking shape suggests the NSPS could prove a significant weakness for the Clean Power Plan.
Under the Clean Air Act, an emissions source type cannot be regulated under Section 111(d) if it is not also regulated under Section 111(b). Essentially, a rule regarding new sources must be in place for there to be a rule regarding existing sources. “This means that if the final regulations for new power plants are overturned by a court, the legal foundation for EPA’s regulating existing power plants would disappear,” Allison Wood, a partner at Hunton & Williams, said during the hearing.
While no legal cases have been made against the EPA’s authority to develop an 111(b) rule, arguments against the form the rule has taken have been common. The rule as proposed required that individual new-build coal units would have to cap emissions at between 1,000 and 1,100 pounds of CO2/MWh using partial carbon capture. The final rule eased this requirement to 1,400 pounds of CO2/MWh but kept the partial CCS requirement.
The CCS mandate has been contested, with opponents asserting the technology is not viable. “CCS has not been adequately demonstrated in the final rule,” Wood said. “EPA improperly relies on projects that received funding under the Energy Policy Act of 2005 to find that CCS is adequately demonstrated which violates that act. The only project that EPA cites that did not receive such funding is a small Canadian unit that does not provide adequate support for EPA’s determination.”
The noted Canadian project is SaskPower’s Boundary Dam Unit 3, which has been operating for more than a year. The project captures around 90 percent of its emissions, a far greater rate than the EPA regulations require.
