Wyoming, West Virginia and 25 other states, industry groups and others presented arguments before the D.C. Circuit Court of Appeals on Tuesday in opposition to the Clean Power Plan.

The states argued the proposed rule goes far beyond the Environmental Protection Agency’s (EPA) authority. Wyoming would be particularly impacted as the rule requires the state to reduce its carbon dioxide emissions by 44%.

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“Federal regulatory agencies continue to push the boundaries of their legal authority. This results in unreasonable and onerous burdens on industry, businesses, individuals and states,” said Wyoming Governor Matt Mead.

Earlier this year, the D.C. Circuit denied a petition from states to halt implementation of the rule while litigation was pending. The petition was then submitted to the U.S. Supreme Court which ultimately granted the stay and stopped implementation of the rule.

The petition argued the EPA did not have the proper authority, the Clean Power Plan would take authority away from states to regulate in-state power generation and transmission and the final rule was substantially different from its draft version, a violation of the Administrative Procedure Act.

The U.S. Department of Energy’s EIA said in June that if the CPP passes, natural gas growth will double.

Court Case Update from Power Magazine

Oral arguments on the merits of the Environmental Protection Agency’s (EPA’s) Clean Power Plan were concluded before an en banc panel (10 judges, rather than the anticipated three) at the D.C. Circuit Court of Appeals on September 27.

West Virginia v. Environmental Protection Agency (No. 15-1363) is arguably the most important environmental case in nearly a decade. For the U.S. power sector, the stakes are particularly high. The sector has grappled with uncertainty about the rule’s future since the Supreme Court issued a stay of the rule on February 9.

Dissecting the Arguments. Legal analyses of oral arguments on the merits of the EPA’s Clean Power Plan are pouring in.

Georgetown Law invited key litigators in the case to participate in a discussion about the oral arguments on September 28. Participants included West Virginia Solicitor General Elbert Lin, who represented plaintiffs, Thomas Lorenzen, a partner at Crowell & Moring LLP, who represented the National Rural Electric Cooperative Association, New York Assistant Attorney General Morgan Costello, and Sean Donahue of the law firm Donahue & Goldberg LLP in Washington, who was counsel for environmental advocacy group Environmental Defense Fund.

Lin said that the biggest thing that came out of the day was the question of whether there has to be “clear congressional authorization.” That’s a theme that came up not only in the opening segment, but throughout the day,” he said. “I think that’s good, because it addresses key questions, which are ‘What does this rule do?’ and ‘Is it the kind of rule that the EPA has the power to issue?”‘

One question that Judge Griffith asked was about whether the rule “matters in real-world numbers,” Lin said. Ultimately, questions veered toward whether the rule is “transformative in a legal sense.”

Lin suggested that Congress wouldn’t have delegated such “transformative and large” power “implicitly through ambiguity” in provisions of the Clean Air Act’s Section 111(d). “It is a fundamentally and qualitatively different use of the Section 111(d) power, and I think the court got that,” he said.

Court Update from Utility Dive

The Clean Power Plan was under fire at the D.C. Circuit Court this week, where a 10-judge panel questioned lawyers during oral arguments for seven hours.

West Virginia Solicitor General Elbert Lin told the court in his opening statement that the CPP would dramatically transform the power sector of his state and the nation as a whole, Utility Dive reported.

“By deploying a “little used” provision of the Clean Air Act — Section 111(d) — Lin argued that the EPA is effectively compelling coal plant owners to either make investments in renewable energy or shut down prematurely. The CPP, he noted, sets target emission rates for fossil fuel generators, not allowing them to operate if they emit above those thresholds,” the report said.

By requiring coal plant owners to purchase emissions credits to offset their carbon pollution, coal plant owners would be required to subsidize their competitors or shut down, the petitioners argued.

That sort of “generation shifting,” is outside of the EPA’s authority, petitioners said in yesterday’s hearing. While the Clean Air Act allows EPA to mandate performance improvements at individual power plants, they argue it does not allow the agency to mandate plant owners invest in different generation resources — wind and solar in this case — to offset pollution rates.

“Generation shifting is business as usual for the power sector,” Kevin Poloncarz, a lawyer representing power company intervenors, told the judges.

Though the EPA has not used Section 111(d) in exactly this manner before, agency lawyers said they are well within the Clean Air Act’s limits.

The law compels the agency to devise the “best system of emission reductions” (BSER) for any given pollutant, EPA lawyers noted, and that’s what the agency did after the Supreme Court ruled in 2007 (Massachusetts v. EPA) that the EPA must regulate carbon dioxide under the act.

Judge Patricia Millet, an Obama appointee, said during the hearing: On one side, Mass v. EPA shows that the Supreme Court was aware of Congressional inaction and wanted the EPA to regulate carbon, she said.

But at the same time, she said, the impacts of the case could be so immense — and the EPA’s regulatory scheme so novel — that a “clear statement” might be necessary from Congress to authorize the agency to take this interpretation of the Clean Air Act.

Agency lawyers called for the judges to accept EPA’s interpretation of the text, emphasizing that it was ordered by the Supreme Court to find a way to regulate carbon under the act. But petitioners stuck to their guns, saying the text is in fact not ambiguous and the EPA created the ambiguity to get around the letter of the law.

Petitioners argued the CPP “unconstitutionally commandeers” the power of state governments to regulate their power systems and runs roughshod over the separation of federal powers.

Under the Federal Power Act, states are in charge of ensuring reliable electric power within their borders. By mandating wholesale changes to the power grid, petitioners argued the EPA is infringing on that right and the powers of states.

Quick takes

EPA supporters were generally upbeat following the hearing, with a number telling reporters they were confident ahead of what most expect will be an eventual hearing before the Supreme Court.

“The Clean Power Plan had a very good day. But we aren’t taking that to the bank just yet,” David Doniger, director of the NRDC’s climate and air program, said in a statement after the hearing. “What is certain, though, is we need to take swift and decisive action to combat climate change. This plan is our best available tool, and the court should uphold it.”

But the petitioners were confident as well. Despite power sector comments in support of generation shifting, West Virginia Attorney General Patrick Morrisey told Utility Dive he was especially encouraged by that round of questioning.

Though many other EPA rules involve emissions trading schemes, Morrisey said this one steps into new territory.

“I think what you’re looking at is that this is actually forcing the owners and the operators to cross-subsidize and if they can’t meet the specific standards, they are going to potentially have to go 300 miles to build a windmill,” he said. “That’s never envisioned by this section of the Clean Air Act and I think you also heard today that as people were focusing on whether the EPA could regulate, what was very clear to me was that they cannot regulate through [Section] 111 (d).”

The EPA, of course, contests those points, saying it is well within its authority under the Clean Air Act to set those standards. What judges think of the issue could weigh heavily on their decision, which is expected by year’s end.

 


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