February 10, 2016

Supreme Court Delays Implementation of Clean Power Plan

In a 5-4 vote, the United States Supreme Court stayed the implementation of the Clean Power Plan (CPP) through the ultimate Supreme Court determination on the merits, assuming the inevitable writ of certiorari from the D.C. Circuit opinion is granted. The stay shifts the litigation’s timing incentives; now EPA and the other rule supporters are more likely to push for speedy resolution of the matter.

Granting the stay is an unusual move; many Clean Air Act programs that are challenged are not stayed. Allowing a rule to stand while legal challenges proceed can lead to a rule’s effective inevitability, however, as was the case with the recently reviewed Mercury Air Toxic Standards (MATS) Rule. The Supreme Court’s 2015 decision reversing the MATS rule in Michigan v. EPA had minimal impact on an industry that had already acted to comply before the question reached the high court.

Not so with the CPP. At a minimum, the Supreme Court stay delays states’ deadline of September 2016 to submit an implementation plan or request a two-year extension of that deadline to EPA. The stay also effectively provides opportunity for the next administration to act on the rule. If the rule stands, the next administration will be free to completely rewrite the implementation steps. Even a friendly administration will be tempted to punt compliance past the next election to defer pain in battleground states. The stay decision also comes on an awkward day, coinciding with the release of the President's 2017 budget which outlined substantial resources for the CPP implementation that presumably will not be needed next year. The decision appears to have stunned both sides, with supporters of the CPP on Capitol Hill chastising the Republican majority on the Court and promising to make this a campaign issue, and environmental advocates already pointing to other regulatory programs targeting coal such as the ozone standards and coal fly ash.

The stay of the Clean Power Plan raises many questions, including:

  • What does this mean for the CPP’s future? The standard for a stay is that there is substantial likelihood of success on the merits. The Court’s one-page order provided no analysis of the arguments for and against the stay, however. Is there room for one of the ordering justices to swing to the dissenting justices’ position upon full consideration of the merits?
  • How fast will the courts act? Most people expected a decision by the Circuit Court prior to the state submittal deadline in September; now the court is free to take its time. How will this timing be impacted by the upcoming presidential election?
  • How will the states react? A majority of states opposed the stay while most states that supported the regulation already have their own program, such as California and the northeastern states who participate in REGI. Is there latitude for them to continue moving forward in state planning, or will most states defer action until the case is ultimately decided?
  • How does this affect companies in the power sector, both utilities planning for CPP requirements and alternative energy producers hoping to benefit from the CPP? Does the reprieve, which in effect could be less than a year, actually change anything on the ground? What steps have companies taken that would need/be able to be walked back?

Now all eyes turn back to the D.C. Circuit and its analysis of the merits of this controversial rule.

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