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
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
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