Update on the Clean Power Plan: The Knowns and Unknowns

Posted on March 2, 2016 by Jody Freeman

This is a reposting – the earlier post incorrectly omitted Prof. Jody Freeman’s name as a co-author. Richard Lazarus is also a co-author.

State Reactions to the Stay 

Now that the Supreme Court has stayed the Clean Power Plan, States are in the process of deciding whether or not to proceed with implementation planning, and if so, at what pace to do so. The situation is still in flux. States like Pennsylvania, Virginia, Washington State, California, and most of the northeastern states that are part of the Regional Greenhouse Gas Initiative, have all said they will continue planning. Others, like Texas, Kentucky and West Virginia, have declared they will stop. EPA’s official count shows eighteen States as having halted efforts, with nine still deciding, and thirty still working: http://www.eenews.net/interactive/clean_power_plan#planning_status_chart. Even official statements from the States are somewhat misleading, however: some States that have announced a suspension of compliance planning, like New Jersey, are still sending officials to compliance meetings. 

Still, there is a risk that, on net, momentum will slow, at least until the legal challenge to the CPP is resolved. That process could take more than two years.

Maintaining Momentum Through “No Regrets” Policies

During that time, anything that can be done to maintain momentum on CPP implementation and related policies that will promote clean energy (regardless of whether the rule eventually is upheld) should be supported, with a priority given to helping States pursue “no regrets” policies that will serve their interests whatever the outcome of the litigation. There are a variety of things States and utilities can do now to address shorter term Clean Air Act obligations, such as regional haze, National Ambient Air Quality Standards, or cross-state air pollution, that also would set them up nicely for CPP compliance should the rule be upheld. 

Implications of Justice Scalia’s death

The D.C. Circuit will hear argument on the CPP in June 2016, and is expected to rule on the merits expeditiously, likely by fall of 2016. The panel is viewed as more favorable toward EPA than not, although certainly not a sure thing: Judge Rogers is seen as the most sympathetic to EPA, Judge Srinivasan is seen as at least open to the government’s arguments, while Judge Henderson is seen as hostile to the rule. 

If this panel were to uphold the rule, and the Supreme Court were to remain without a confirmed ninth Justice, it is possible that the Supreme Court could split 4-4, which would normally result in an order affirming the lower court decision. However, there is also a chance that if there were a 4-4 split in a case of this importance and one that would decide the issue once and for all, the Chief Justice would not be content to issue such an order and would instead hold the case over for re-hearing once a ninth Justice is confirmed. If that ninth Justice were appointed by a new Democratic president, the rule’s prospects of being upheld likely would increase; if appointed by a new Republican president, prospects could be the same as they would have been with Justice Scalia on the court. That would require Justice Kennedy, the likely swing vote, to be persuaded by the government to vote to uphold the rule.

There is another interesting wrinkle: the D.C. Circuit panel could change. Judge Srinivasan has been identified as a potential Supreme Court nominee. If he were nominated, he would likely withdraw from pending cases not yet argued in order to prepare for (theoretical) hearings.  But then, of course, a new judge would be lotteried in to fill his place, perhaps changing the balance of the panel. One might think this risk worth taking, since Judge Srinivasan in theory would wind up on the Supreme Court, where he might cast the deciding vote in this (and many other) cases. Yet even if Judge Srinivasan were confirmed, he would be recused from the CPP case because of his earlier participation on the D.C. Circuit panel that denied the stay, so the Court would remain at eight Justices for purposes of this case. Again, this would leave the prospect of a 4-4 tie affirming the decision below (and perhaps affirming a decision to strike down the rule). 

Next Steps and Timing of Litigation

Whatever the composition of the D.C. Circuit panel, however, and whatever it decides, the losing parties might seek en banc review in the D.C. Circuit.  The State and industry challengers would be almost certain to do so, because delay favors their side. This is because the Supreme Court took the unusual step of staying the rule not just until the D.C. Circuit rules on the merits, but for longer: until the Supreme Court either denies certiorari or grants review and decides the case. Delay means the Stay remains in force, which means the deadline for filing compliance plans keeps being pushed off, which means momentum slows, which favors those opposed to the CPP. En banc review is rarely granted, however, and the D.C. Circuit may be reluctant to further delay things by providing it when the Supreme Court has already associated itself with the case (by granting the Stay and making it all but certain review will be granted). 

What all of this means is that the earliest the Supreme Court could decide the case--given the time necessary for the cert petition, briefing, argument and deliberation--is likely to be June 2017, and the latest the Court is likely to decide the case is June 2018. That means the Stay could remain in place for more than two years. 

The fate of the CPP is clearly in the hands of the Supreme Court, which, with an open seat, is clearly in the hands of the President--and most likely the next president. 

Implications for a New Administration

If the Court ultimately upholds the rule, a new president could still withdraw it and replace it with something else, or choose to implement it as-is. A new president might even bargain with a new Congress over suspending the rule in exchange for a more comprehensive economy-wide approach to greenhouse gas regulation, whether a carbon tax or a cap-and-trade approach, or something else. And if the Court, newly constituted, strikes down the Clean Power Plan, a new president would have to decide on Plan B. 

EPA has thus far been mum about possible Plan Bs, but obvious options include a narrower interpretation of “best system” that would regulate power plants within the so-called "fence-line" only, relying exclusively on what the rule refers to as "building block 1.” EPA might be able to set a fairly stringent standard based on this building block alone, although doing so might, ironically, leave utilities far less flexibility to use alternative means of compliance than they would have using the agency’s current approach. EPA might also examine the Clean Air Act for other provisions capable of regulating existing power plant emissions, such as section 115, or even set a NAAQS for greenhouse gases--options that have been discussed before and rejected by the agency, but which could always be revisited. 



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