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Climate Change Hero

Climate Change Blog

  • 10
  • February
  • 2016

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Supreme Court Stays Clean Power Plan, What’s EPA’s Next Move?

In an unprecedented order issued last night, the Supreme Court stayed the implementation of the Obama Administration’s greenhouse gas emission standards for existing power plants, commonly referred to as the Clean Power Plan (“CPP”).  Earlier this year, the D.C. Circuit denied a similar request to stay the implementation of the CPP while legal challenges to the rule proceed, a sign that the D.C. Circuit merits panel is inclined to uphold the CPP.  In a 5-4 vote, the Supreme Court overruled the D.C. Circuit, directly granting a stay of the rule’s implementation.  The Supreme Court’s stay will remain in place until either (1) the court denies certiorari in an appeal of the yet-to-be issued D.C. Circuit merits decision or (2) the Supreme Court issues a merits decision of its own on the rule. 

How did the stay request get to the Supreme Court?

Upon the D.C. Circuit’s denial of their request for a stay, a group of 29 states filed an application with Chief Justice John Roberts seeking a stay directly from the Supreme Court pursuant to section 705 of the Administrative Procedure Act.  A second application for a stay was filed by a number of utilities and affiliated groups. 

What is the impact of the stay?

Under the CPP, states were required to submit either their initial state plans or requests for extensions by September 2016.  With the stay in place, states will no longer be required to make their initial submissions this year.  Even with the expedited litigation schedule that will have the D.C. Circuit hear oral arguments on June 2, it is highly unlikely that the stay will be lifted before sometime in mid-2017, meaning that even if it withstands legal challenge, it is unlikely that the Obama Administration will have any opportunity to oversee its implementation.

Furthermore, under the Supreme Court’s precedent in Winter v. NRDC, a party seeking a stay must demonstrate that it has a likelihood of success on the merits, will suffer irreparable harm without a stay, and that the balance of equity tips in its favor.  In denying the petitioner’s request for a stay, the D.C. Circuit concluded with no written analysis that these factors were not satisfied.  In contrast, the direct issuance of a stay by the Supreme Court indicates that five of the justices believe that the legal challengers to the CPP have a reasonable prospect of success on the merits. 

Under the Supreme Court’s precedent in Hollingsworth v. Perry, the grant of a stay means that the five justices voting in favor of the stay concluded (1) there is a reasonable probability that certiorari will ultimately be granted in the CPP litigation, (2) there is a reasonable prospect that a majority of the Court would vote to reverse a D.C. Circuit decision upholding the CPP, and (3) there is a likelihood that irreparable harm would result from the denial of the stay.

Does this mean power plant GHG emissions are no longer regulated under the Clean Air Act?

No.  The stay only applies to the EPA’s regulations for carbon emissions from existing power plants.  EPA’s carbon emission standards for new power plants—though the subject of their own legal challenge—remain in force.  Therefore new power plants must achieve greenhouse gas emission rates that are equivalent to those achieved by natural gas combined cycle or supercritical pulverized coal plants.

In addition, EPA retains authority to require prevention of significant deterioration (‘PSD”) permitting for GHG emissions from sources that are subject to major source permitting for conventional air pollutants (the so-called “anyway sources”).  While EPA is still has not promulgated a rule to substantiate its GHG emission threshold for permitting as required by the Utility Air Regulatory Group decision, it continues to require PSD permits for anyway sources with GHG emissions greater than 75,000 tons per year.

What’s next for EPA?

The litigation over the Clean Power Plan will continue.  While the D.C. Circuit panel has indicated that it may uphold the CPP, the Supreme Court has now sent a strong signal that there are at least some aspects of the rule that it finds to be legally objectionable.  This raises the likelihood that some or all of the CPP will be remanded to EPA for further rulemaking proceedings, but any such remand is unlikely to occur before mid-2017.

In the meantime, EPA will need to determine whether to proceed with finalizing its proposed Model Trading Rules.  The Model Trading Rules were slated to be finalized in June 2016 to provide guidance to the states on how they could implement rate-based or mass-based versions of the Clean Power Plan.  With the CPP itself hanging in the balance, it is not clear that EPA will devote the resources to finalizing an implementation rule for a rule that may never be implemented in its current form.

However, it is also important to note that coal-fired generation continues to be subject to a host of increasingly burdensome air regulations that, while not driven by greenhouse gas regulation, raise the continued possibility of additional unit retirements.  For example, many coal-fired units retired or were slated for retirement in response to EPA’s mercury air toxics standards (“MATS”).  While these standards were ultimately remanded by the Supreme Court, EPA has proposed a new analysis to correct the deficiencies cited by the court and proceed with the implementation of MATS.  Updates to EPA’s cross-state air pollution rule, implementation of the new ozone NAAQS, and implementation of regional haze plans all have the potential to create new air pollution control requirements that will continue to threaten the viability of existing coal plants.  

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Author

Margaret E. Peloso

Margaret E. Peloso Partner