October 26, 2015

EPA Publishes Clean Power Plan in Federal Register — Sets Off Flurry of Activity

The Clean Power Plan final rule, proposed Federal Plan and carbon pollution standards for new, modified and reconstructed (existing) power plants were published in the Federal Register on October 23, 2015 — weeks after its August 3, 2015, pre-publication release. The regulations themselves, unchanged since President Obama’s August announcement, “weighed in” at just over six hundred pages in the Federal Register. The publication of the rule is the official trigger for legal challenges and Congressional review of one of the largest and most far-reaching regulatory programs under the Clean Air Act.

Changes From the Proposed Plan and the EPA’s Federal Plan

The final CPP varies somewhat from the original June 2, 2014, proposal. Notably, EPA designed its “Best System of Emission Reduction” (BSER) carbon-reduction requirements without reliance on the “building block” of demand-side reductions, as originally envisioned in the proposed rule. (However, demand-side reductions are still available as an option to gain compliance.) Also, the final proposal includes source-specific CO2 emission performance rates and gives states a choice between either mass-based or rate-based statewide reduction requirements. Finally, compliance dates have been extended and a “glide path” toward the final CO2 reduction goals has been established. EPA characterizes these changes as providing more flexibility for states and shoring up the rule’s legal foundation.

EPA has also proposed a Federal Plan, which would be finalized for any state that failed to submit an approvable plan. The Federal Plan proposal includes rate-based and mass-based federal plans for each state with affected electrical generating units, as well as rate-based and mass-based model trading rules. The model trading rules are available for use by any state; the assumption is that the proposed rate- and mass-based plans that would be applicable to noncompliant states would be presumptively approvable and therefore useful for states as a model as well.

Off to the Court House

Lawsuits were filed essentially concurrently with the Clean Power Plan’s publication in the Federal Register. This is the latest round of litigation; several states and industry groups earlier challenged the regulations before they were published. The D.C. Circuit rejected these challenges as untimely. Now that the regulations have been published, the timeliness question is resolved, and more states have joined the lawsuit. West Virginia was active in earlier litigation and again Friday launched a multistate lawsuit, including a request for stay of the rule as litigation plays out. The states joining West Virginia's lawsuit are Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Missouri, Montana, Nebraska, New Jersey, Ohio, South Carolina, South Dakota, Texas, Utah, Wisconsin, Wyoming, the Arizona Corporation Commission and the North Carolina Department of Environmental Quality. Oklahoma filed its own separate request to review the regulation, and the National Mining Association filed its own request to stay the CPP on behalf of the industry.

Congress Reacts

On Friday, Energy and Power Subcommittee Chairman Ed Whitfield (KY-01) announced he was introducing two resolutions under the Congressional Review Act (CRA) to disapprove the final rules for new and existing power plants. On the Senate side, U.S. Senate Majority Leader Mitch McConnell announced that he and Senator Joe Manchin (D-WV) will file a resolution of disapproval for the new unit regulation while Senator Shelley Moore Capito (R-WV) and Senator Heidi Heitkamp (D-ND) will file a resolution for the existing power plant regulation. The resolutions only require a simple majority in both the House and the Senate, and cannot be filibustered, although it is expected that President Obama will veto them both. The votes, however, will show how much opposition can be found in Congress as they continue to negotiate appropriation riders for the 2016 fiscal year.

What’s Next?

As Congress and the courts push forward on challenges to the regulations, the states will need to decide how to respond to the regulations. The states have until September 6, 2016. to either 1) submit a final state plan demonstrating how they will meet the targets, 2) submit an initial submittal and request a two-year extension for their final plan, or 3) submit nothing and become subject to a federal plan. States must walk the line of preparing for a new regulatory reality and responding to legal decisions. At least some states that are party to the lawsuit are concurrently moving forward with a state plan.

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