States, Groups Put Clean Power Plan to Legal Test

The Obama administration’s two rules to curb greenhouse gas emissions from power plants have already attracted 21 suits in opposition — ensuring that federal appeals court judges, and possibly the Supreme Court, will determine whether the landmark limits stay or go.

Opponents have also filed six motions for a stay of the rules, known as the Clean Power Plan, in the U.S. Court of Appeals for the District of Columbia.

Those motions seek to keep the rule on hold until the suits are heard. They also preview the major arguments that will be made to the judges and to the public in the coming months over the landmark rules, which would set the first-ever limits on greenhouse gas emissions from power plants.

Appeals court judges will first determine whether to grant a stay early next year, in response to the motions filed by 26 states, utilities and unions, trade groups, and the coal industry.

Environmental groups and a set of 15 states and two cities have sided with the EPA before the court and contend the challengers won’t meet the legal requirements for a stay.

EPA officials, including Administrator Gina McCarthy, have asserted that the rules are on solid legal footing and will be upheld in court.

Here is a rundown of the cases filed to date, and the key arguments.

States

Three suits and stay motions have been filed by the states: one each by North Dakota and Oklahoma, and one by 24 states led by West Virginia.

All of the pending cases, including those by outside groups, have been consolidated under the case West Virginia, et al v. EPA, making it the lead suit.

West Virginia Attorney General Patrick Morrisey has been a vocal legal opponent of the rule, which he says will decimate the state’s coal economy. In the stay motion, the states call the rules “an unprecedented, unlawful attempt by an environmental regulator to reorganize the nation’s energy grid.”

More specifically, the states make two arguments to underpin their contention that the EPA overstepped its authority under the Clean Air Act.

First, the states say the section of the law used by the EPA to impose the rule, Sec. 111(d), does not allow the imposition of mandates that go beyond ordering pollution cuts at individual plants.

The EPA’s rules, in fact, don’t specify targets for each plant. Rather, they set carbon emissions rates for states from all electricity sources. Collectively, the rules would cut national emissions 32 percent below levels seen in 2005, with some states facing tougher reductions than the national level and some less.

The EPA emphasizes that states are free to come up with their own plans to reach their targets, including the purchase of credits by operators from others in states that exceed their cuts.

Such a trading scheme would allow coal plants that might otherwise be shuttered to keep running, the EPA says. But states say the bottom line is that they will have to restructure their entire power sector to comply.

The plan “imposes measures that favor renewable generation,” they argue, without a clear mandate from Congress.

Second, the states say the EPA is skirting language in the law that they argue prohibits a power plant from being regulated under two different sections.

The EPA in late 2011 finalized rules limiting mercury and air toxics, the so-called MATs rule, from power plants, under section 112 of the law.

States say the law prohibits imposition of the new rule on the same plant after the EPA already imposed the other. The EPA has responded that the new carbon rules do not regulate the same pollutants as the MATs rule, and therefore are legal

For its part, North Dakota argues that the law leaves to states the setting of emissions limits, and that only the state can impose a statewide carbon target, not the EPA.

It also argues that the state was not given an opportunity to comment on the final rule, which was changed by the EPA compared to a proposal. The final rule give states more time to begin compliance — two additional years — and removes language that based the limits on expected energy efficiency programs.

Oklahoma argues that its state powers are being usurped by the EPA, violating the constitution’s concept of “cooperative federalism,” and that the agency is violating the law by seeking emissions reductions that can’t be met by the power plants themselves.

By effectively mandating the generation of lower- and zero-carbon energy elsewhere, Oklahoma says the EPA is regulating “beyond the fenceline” of the specific pollution source.

In the motion, Oklahoma Attorney General Scott Pruitt called the rule “a gun to the head” that unlawfully coerces the state into compliance by threatening the imposition of a federal plan if the state does not submit its own by set deadlines.

Coal Industry

The motion for a stay on behalf of coal companies was filed jointly by the National Mining Association, the American Coalition for Clean Coal Electricity and Ohio-based Murray Energy Corp.

The industry is already facing a tough domestic market because of relatively flat electricity demand, low prices for natural gas and renewable generation and the MATs rule. Those factors have led power companies to abandon coal in proposals for new plants.

The groups in their motion say coal is “directly in the crosshairs” of the Clean Power Plan, and that even though the rule doesn’t require emissions cuts until 2022, power companies will close coal plants in anticipation starting next year.

Similarly to states, they also challenge the EPA’s interpretation of the Clean Air Act to impose the plan under section 111(d). “EPA would thus transform itself from its Congressionally-created role as an air quality regulator to the nation’s electricity czar,” they argue.

Their motion also calls for the court to issue a stay, before the market and states make what it calls “irreversible” decisions that will lead to less mining and the closure of as many as 56coal-fired generating units by 2018, according to the EPA’s own projections.

“From the time EPA first proposed the rule and condemned the coal industry to a greatly diminished future, coal company share prices have plummeted, coal companies have declared bankruptcy, and access to capital has collapsed. All of this will worsen in the coming months,” the groups said.

Business Groups

The U.S. Chamber of Commerce and 15 other business groups, including the National Association of Manufacturers, are parties in a suit that levels two objections to the rules.

First, they challenge the use of the 111(d) section that was also brought by the other challengers, and the fenceline regulation argument.

They will also stress that the EPA’s interpretation sets an illegal precedent by assuming power to regulate sources that only Congress has the authority to grant.

“We do think, and are confident, that there is a precedential concern that not only applies to the energy sector, but will apply or could apply to other sectors in the future,” one attorney for the group told reporters last week.

Utilities

A motion outlining utility objections was filed by the Utility Air Regulation Group and the American Public Power Association, with individual utilities, cooperatives, power generators, and the United Mine Workers and International Brotherhood of Boilermakers unions.

They also make the 111(d) authority objections and argue, as do some of the other suits, that the EPA imposed tougher standards for carbon reductions on existing plants than it did for new plants.

“The rule’s restructuring of the electric sector is not only wholly untethered from the [Clean Air Act] but is an assertion of authority over energy policy that is greater than what Congress has given to any federal agency, including the Federal Energy Regulatory Commission,” they argue.