Vermont Law Top 10 Environmental Watch List 2015

EPA Clean Power Plan: Homerun, Base Hit, or Strikeout?

Summary:
The world is watching as the Environmental Protection Agency's Clean Power Plan, proposed in June 2014, faces fierce opposition from the coal industry and coal-dependent states.

Image courtesy Public Domain PicturesIn June, under orders from President Obama, the Environmental Protection Agency proposed an ambitious plan to slash carbon pollution from existing power plants by an estimated 30 percent by 2030. These plants, most of which are coal-fired, account for 40 percent of the nation’s CO2 emissions. The plan fulfills a pledge the president made in 2012 at the United Nations climate change meeting in Copenhagen: that the U.S. would cut its emissions by 17 percent by 2020. Coupled with the U.S.-China joint announcement in November to decrease emissions from both countries, the plan provides the U.S. with greater credibility with the global community in anticipation of the 2015 UN meeting in Paris, where the parties hope to hammer out a new agreement to reduce global emissions of greenhouse gases.

The EPA’s “Clean Power Plan” is based on § 111(d) of the Clean Air Act (CAA), a little-used provision that raises questions about the scope of the EPA’s authority to require changes in the way electricity is produced and consumed across the country. Under § 111(d), the EPA and states share responsibility for regulating existing sources of pollution. The statute requires that the EPA determine the “best system of emission reduction” (BSER) to protect public health and welfare. The EPA then must use BSER to calculate the level of emission reductions required for each state. States may choose from a variety of options to achieve their emission goals.

Under the EPA’s proposal, BSER consists of four “building blocks”: (1) technology improvements to make coal plants more efficient, (2) increased use of high-efficiency, natural gas combined cycle plants, (3) increased use of renewables and other low/zero-emitting facilities, and (4) demand-side energy efficiency. The blocks were created as severable pieces so that if one or more is struck down the others may survive.

There is little controversy over the first block, which would reduce emissions by about 6 percent. But there is fierce opposition to the remaining blocks from the coal industry and coal-dependent states. Opponents argue that the EPA has exceeded its statutory authority by going “outside the fenceline” to require changes in the way states manage their electricity programs.

This issue may well turn on what Congress meant by its use of the word “system” in §111(d). The EPA says it means the entire integrated system of electricity generation and distribution. Opponents argue that it must be limited to the system of pollution controls at individual facilities—“inside the fence.” Under the EPA’s interpretation, states get maximum flexibility in designing strategies that are cost-effective, tailored to their individual circumstances, and phased in over 15 years. Under the opponents’ interpretation, the EPA would be forced to require prohibitively expensive retrofit of experimental carbon capture and sequestration systems in order to achieve emission reductions.
Even before these substantive issues can be addressed, however, the EPA’s plan faces a more immediate legal challenge. Lawsuits have been filed by several coal-reliant states and by Murray Energy in an attempt to derail the Clean Power Plan. The suits, which are pending in the D.C. Circuit, seek to exploit a legislative glitch in the way that § 111(d) was amended in 1990. In short, Congress passed conflicting versions of the 1990 amendments to §111(d). The amendment passed by the House prevents the EPA from regulating under§ 111(d) any industrial source that is regulated under § 112 (b), which would include coal-fired plants since they emit mercury. The Senate amendment only prevents the EPA from regulating the § 112 (b) hazardous pollutants under § 111(d), rather than limiting the agency’s authority to regulate industrial sources.

The EPA argues that the Senate version must hold because adopting the House version would read § 111(d) out of the statute. The EPA is counting on the fact that the Supreme Court has deferred to EPA interpretation of ambiguous language in the Clean Air Act a number of times, most recently in the cross-state air pollution case last term.

It is likely that the D.C. Circuit will rule that the challenges to the rulemaking are premature until the rule becomes final in June 2015. Ultimately, the Supreme Court may once again be called upon to decide how far the EPA can go in using the Clean Air Act to address the very real and worsening consequences of climate disruption.