Navigant Research Blog

EPA Heads to Court with CPP

Paige Leuschner — August 28, 2015

The Clean Power Plan (CPP) has been a hot topic in recent months. It is about to get even hotter as 15 states band together in opposition to take the final ruling to court (details of the CPP can be found in the following links: link 1 and link 2).

Early Resistance

The CPP has met resistance since day 1, with federal court challenges filed well before the final rule was released by the Environmental Protection Agency (EPA) on August 3, 2015. Portions of the CPP were even shed in anticipation of a legal fight. The draft CPP rule included four Building Blocks (BBs):

  • BB1: Heat rate reductions
  • BB2: Switching from coal to gas
  • BB3: Renewables
  • BB4: Focused on energy efficiency (EE)

The EPA removed BB4 in order to strengthen the CPP’s legal position since EE is a demand-reducing resource, not a supply resource covered by the Clean Air Act (CAA, the CPP’s core federal law). Dropping BB4 removed a key legal concern cited by many who commented on the proposed CPP rule. However, a large block of states still oppose the CPP and plan to file in federal court to block implementation of the rule. Arguments against the rule range from its potential to substantially alter the power industry and the economic drivers of that business to unemployment and the threat of weakened power reliability.

CAA Battle

The CPP is not the only EPA rule being challenged in the courts. Florida is leading a group of 17 states over EPA startup, shutdown, and malfunction (SSM) rules. These states argue that the CAA gives the federal government the authority to set standards involving harmful pollutants, but it is up to the states to determine how they want to implement those standards.

The CAA is often upheld by the Supreme Court despite vigorously fought cases against the EPA. In the case of Coalition for Responsible Regulation v. EPA (2012), various state and industry group petitioners challenged all four EPA greenhouse gas (GHG) actions, alleging that they are based on improper constructions of the CAA. The Court upheld the GHG actions, supporting the EPA’s interpretation of the CAA in those cases. The Court also upheld provisions of the CAA in the Chamber of Commerce v. EPA (2011) case that permit the EPA to allow California to set its own automobile emissions standards. In this case, the U.S. Chamber of Commerce and National Automobile Dealers Association could not prove that these standards would cause any economic harm.

Primed for an Ongoing Battle

If the CAA’s previous Court success is any indication of the future, states need to prepare now for how they will meet the EPA’s CPP requirements. While numerous states fight the CPP (most recent state count was more than 15), many more are already preparing plans to reduce carbon emissions. In fact, a study conducted by the Union of Concerned Scientists shows that the 31 states that have already made commitments to the CPP will be more than halfway toward meeting their 2022 benchmarks, and 21 of these states will actually surpass it. Georgia, North Carolina, and South Carolina, all of which are suing the EPA, are also on track to exceed their 2022 benchmarks. The ongoing battle between states’ rights and the implementation of federal EPA rules will be on full display once the final CPP is published in the Federal Register (on or about November 3, 2015) and the opposing states file their federal court cases. The outcome of those joint cases will have a great impact on the future of the U.S. power industry.

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