Will There Be a Future for the Clean Power Plan?

April 19, 2017

The Obama administration’s attempt to regulate carbon emissions from new and modified power plants has been subject to challenge since its inception. Now, with a new administration in office, an open case before the D.C. Circuit, and a new Supreme Court justice, the future of the Clean Power Plan is especially uncertain.

 

Clean Power Plan Background and Potential Effects

On August 3, 2015, the EPA and President Obama announced the Clean Power Plan—the “first-ever national standards to address carbon pollution from power plants.”[1] That same day, the EPA issued final carbon emission standards for new, modified, and reconstructed power plants.[2] The Clean Power Plan regulates carbon emissions via Clean Air Act § 111, whereby the EPA sets a goal as to emissions of a particular pollutant and states choose how they will meet that goal.[3] Under the Clean Power Plan, the EPA has set interim and final goals for carbon dioxide emission rates for two types of “fossil-fuel-fired electric generating units: fossil fuel-fired electric steam generating units (generally, coal- and oil-fired power plants)” and “natural gas-fired combined cycle generating units.”[4] States then must implement plans to bring the power plants in that state into compliance with the carbon dioxide emission rate.[5] The interim goal period is from 2022-2029, and the final goal is to be achieved by 2030.[6] The Clean Power Plan predicts that by 2030, when the final goal is met, carbon emissions from power plants will be 32 percent below 2005 levels.[7] The EPA also predicts that utilizing cleaner energy sources will result in 90 percent less sulfur dioxide compared to 2005 levels, and 72 percent less nitrogen oxide levels, by 2030.[8] The difference, however, between the Clean Power Plan and previous emissions “goals” is that other emissions standards required implementation of a particular technology, whereas no such technology is available in this case; instead each state must develop its own plan to meet the emissions reduction “target” assigned to it.[9] To meet these targets, states will likely have to shut down coal-fired power plants and replace them with renewable energy sources.[10]

 

According to the Electrical Reliability Council of Texas (“ERCOT”), if the Clean Power Plan remains in place, it could mean big changes for the Texas energy sector. Based on ERCOT’s analysis, compliance with the Clean Power Plan would result in an estimated retirement of 4,000 MW of coal generation capacity.[11] That amount of retirement, particularly if combined with the Regional Haze Federal Implementation Plan for Texas, ERCOT says could result in grid-reliability problems.[12] For reference, a megawatt powers approximately 500 average Texas residences during periods of normal demand, and the ERCOT grid currently has a capacity of nearly 78,000 megawatts.[13] Additionally, the Clean Power Plan, according to ERCOT’s analysis, will result in an increase in energy costs up to 16 percent by 2030, without taking into account other additional costs such as transmission upgrades and increased natural gas prices due to greater demand, which would likely raise the price further.[14]

 

Future of the Clean Power Plan

 

The fate of President Obama’s Clean Power Plan is uncertain at this time, and it remains to be seen whether ERCOT’s predictions will come to pass. A White House spokesperson said that President Trump plans to issue an executive order “instructing the EPA to begin re-doing the Clean Power Plan and overturn[ing] a federal moratorium on new coal leases on federal lands.”[15] The Supreme Court, however, beat Trump to putting the breaks on the new regulations. In February 2016, the Supreme Court granted a stay preventing implementation of the Clean Power Plan until the legal challenges to it have been resolved.[16] The Supreme Court stay, a 5-4 decision, seems to suggest that a majority of the Court questioned the EPA’s ability to bring the Clean Power Plan under Clean Air Act § 111. [17]

 

Nevertheless, the D.C. Circuit is prepared to hear the case regardless of the Trump administration’s intentions as to the Clean Power Plan. Recently, the U.S. Court of Appeals for the District of Columbia assigned judges to hear arguments on April 17th, 2017, challenging EPA’s carbon dioxide new source performance standards.[18] Judges Srinivasan, Pillard, and Henderson will hear the case—two of which are Obama appointees.[19] This is probably wise, as it may be a lengthy process for Trump to undo the Clean Power Plan regulations, since an administration must typically undergo the administrative rulemaking process, which implemented the regulation.[20] Courts review challenged agency rulemaking to determine whether it is “arbitrary and capricious,” meaning that the agency must provide a rational basis for undoing the original Clean Power Plan rulemaking.[21] Thus, in rolling back the regulations, Trump would have to provide credible legal, factual, or policy decisions for doing so.[22] This process can be quite lengthy, especially when challenged, and could take as long as two years.[23]

 

Another consideration in evaluating the future of the Clean Power Plan, may be Neil Gorsuch’s appointment to the Supreme Court. If the Court is currently split 4-4, based on the outcome of the February-2016 stay, Gorsuch could tip the vote in favor of the oil and coal industries.[24] If the Clean Power Plan comes before the Supreme Court, given the likelihood of a 5-4 outcome, its survival may hang on Chevron deference to EPA’s interpretation of the Clean Air Act’s section 111.[25] Judge Gorsuch is somewhat famous for his distaste of Chevron deference, which he and Justice Thomas believe requires judges to give up their independent judgment in interpreting the law.[26] If the Clean Power Plan’s survival depends on whether the Court decides to defer to the EPA, Neil Gorsuch could be the final blow to the regulation regardless of whether Trump is successful in the administrative rulemaking process to roll back the regulation. Only time will tell whether the Trump administration will be able to undo the current regulations before the Clean Power Plan makes it before the Supreme Court.


 

[1]FACT SHEET: Overview of the Clean Power Plan, U.S. Envtl. Prot. Agency, https://www.epa.gov/cleanpowerplan/fact-sheet-overview-clean-power-plan (last visited Mar. 24, 2017).

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Coral Davenport, Appeals Court Hears Challenge to Obama’s Climate Change Rules, N.Y. Times (Sept. 27, 2016) https://www.nytimes.com/2016/09/28/us/politics/appeals-court-hears-challenge-to-obamas-climate-change-rules.html?_r=0.

[10] Id.

[11]ERCOT Analysis of the Impacts of the Clean Power Plan: Final Rule Update, Elec. Reliability Council of Tex., at 1 (Oct. 16, 2015) http://www.ercot.com/content/news/presentations/2015/ERCOT_Analysis_of_the_Impacts_of_the_Clean_Power_Plan-Final_.pdf.

[12] Id.

[13] Jordan Blum, Clean Power Plan May Force Coal Power Plant Retirements in Texas, ERCOT Says, Houston Chronicle: Fuel Fix (Oct. 16, 2015), http://fuelfix.com/blog/2015/10/16/clean-power-plan-may-force-coal-power-plant-retirements-in-texas-ercot-says/.

[14] Id.

[15] Ari Natter, Executive Order on Clean Power Plan Next Week, Per White House, Bloomberg BNA: Energy and Climate Report (Mar. 1, 2017), http://0-news.bna.com.tallons.law.utexas.edu/clln/display/story_list.adp?mode=ep&frag_id=106481924&item=topic5&prod=clln.

[16] W. Virginia v. E.P.A, 136 S. Ct. 1000 (2016).

[17] Jonathan H. Adler, Supreme Court Puts the Brakes on the EPA’s Clean Power Plan, Wash. Post: Volokh Conspiracy (Feb. 9, 2016), https://www.washingtonpost.com/news/volokh-conspiracy/wp/2016/02/09/supreme-court-puts-the-brakes-on-the-epas-clean-power-plan/?utm_term=.13cc745c010c.

[18] Andrew Childers, Power Plant Climate Case Gets Judges, but Will It Be Argued, Bloomberg BNA: Energy and Climate Report (Mar. 20, 2017), http://0-news.bna.com.tallons.law.utexas.edu/clln/display/story_list.adp?mode=ep&frag_id=107543529&item=topic5&prod=clln.

[19] Id.

[20] Jennifer A. Dlouhy, Trumps Words Could Jeopardize His Environmental Rollbacks, Too, Bloomberg BNA: Energy and Climate Report (Mar. 22, 2017) http://0-news.bna.com.tallons.law.utexas.edu/clln/display/story_list.adp?mode=ep&frag_id=107774577&item=topic5&prod=clln.

[21] Id.

[22] Id.

[23] Coral Davenport, Trump to Undo Vehicle Rules that Curb Global Warming, N.Y. Times (Mar. 3, 2017), https://www.nytimes.com/2017/03/03/us/politics/trump-vehicle-emissions-regulation.html.

[24] Ken Silverstein, How Gorsuch Could Mean Change for U.S. Energy Sector (Feb. 1, 2017, 8:12 AM), https://www.forbes.com/sites/kensilverstein/2017/02/01/even-trump-is-making-the-oval-office-spin-is-energy-policy-next-with-the-gorsuch-pick/#48bceec23b83.

[25] See Philip Hamburger, Gorsuch’s Collision Course with the Administrative State, N.Y. Times (Mar. 20, 2017), https://www.nytimes.com/2017/03/20/opinion/gorsuchs-collision-course-with-the-administrative-state.html.

[26] Id.

Bridget O’Hickey is a second year law student at The University of Texas School of Law. She graduated summa cum laude from Colorado State University in 2012 with a B.S. in Health and Exercise Science. She hopes to practice in Dallas after graduation.