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Report: Clean Power Plan opponents 'misreading' stay, as EPA continues ancillary work

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Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

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Report: Clean Power Plan opponents 'misreading' stay, as EPA continues ancillary work

Amid calls to halt all work on the now-stayed Clean PowerPlan, the U.S. EPA is advancing a related early incentive program designed to development of renewable andenergy efficiency projects in the years prior to the carbon rule'simplementation.

But a new report from the New York University School of Law'sInstitute for Policy Integrity says those calling for a tolling of all theClean Power Plan's deadlines are confusing a stay with an injunction. One ofthe report's authors, Richard Revesz, NYU Lawrence King professor of law and deanemeritus, said the EPA is operating well within the bounds of the stay inadvancing the Clean Energy Incentive Program, an ancillary program proposed onthe same day the Clean Power Plan was released.

The EPA on April 26 sent the CEIP to the Office ofManagement and Budget for 90 days of review before publication in the FederalRegister. "There's no reason why EPA shouldn't move forward with" theCEIP, said Revesz, who is also director of the Institute for Policy Integrity.He said those calling for all work on the Clean Power Plan to halt are "misreading"the intentions of the Supreme Court.

"This was not an injunction. An injunction has to bevery clear as to what it prohibits, and this document does not do that," Reveszsaid. "EPA is very much permitted to continue working on these mattersand, in fact, that's what prior administrations of both parties did when ruleslike this have been stayed."

The Clean Power Plan established statewide carbon dioxideemission standards for existing fossil fuel-fired electric generating unitswith the goal of cutting CO2 emissions 32% as measured from a 2005 baseline by2030. States were to submit their initial state plans or request a two-yearextension in September, while compliance would not begin until 2022. But theSupreme Court's February effectively renderedthe rule unenforceable until litigation is resolved.

The U.S. Chamber of Commerce was among the partiescalling for the EPAto toll all Clean Power Plan-related deadlines. EPA Administrator Gina McCarthywas questioned about deadline changes before Congressearlier in April, and was also asked to justify the $50.5 millionbudgeted for the next fiscal year to roll out the Clean Power Plan.

Revesz said the Supreme Court simply barred the EPA fromenforcing the rule, or requiring any state to adhere to it. So in effect, thestay only applies at this point to the September deadline for initial stateplans, and states and the EPA are welcome to continue with voluntary participationin the rule.

McCarthy told Congress that the agency alone cannot toll therule's deadlines. Revesz agreed, and said precedent set under both Republicanand Democratic administrations puts the authority squarely on the courts todetermine any further changes to the carbon rule's deadlines.

The U.S. Court of Appeals for the District of ColumbiaCircuit is reviewing the matter on an expedited schedule, and the Clean PowerPlan will likely take another trip to the Supreme Court. Experts the high court could rule on thematter during the first half of 2017 at the earliest. Afterward, Reveszsaid the Supreme Court will likely assign the lifting of the stay and thesubsequent terms back to the D.C. Circuit.

The EPA would then be able to offer suggestions on how toproceed with the rule's deadlines. The agency could even request tolling — asit did upon the lifting of a stay that had been issued by the D.C. Circuit inDecember 2011 against the Cross-State Air Pollution Rule. During the CSAPRlitigation, the EPA also finalized a number of additional rules and issuesrelated to the regulation.

This precedent was also seen under President George W. Bush,when his EPA refused to "put its pencil down" in relation to a rulethat allowed power plants and other facilities to make upgrades to existingequipment without being subject to the new source review program up to acertain percentage of the replacement cost.

Regulatory certainty

In the case of the Clean Power Plan, Revesz said movingforward on the CEIP, as well as other ancillary rules and programs such as themodel trading rules and the federal implementation plan, is a good idea. TheInstitute for Policy Integrity report said that finalizing the latter two wouldhelp advise utilities' long-term resource plans and provide more regulatorypredictability to the energy industry.

And those states that have chosen not to work on the CleanPower Plan while the stay is in place would find compliance easier if the ruleis ultimately upheld. "Instead of coercing any states into compliance, EPA'scontinued work on rules related to the Clean Power Plan would provide usefulguidance to the states," the report said.

The report also argued that tolling may not even be neededin order for states to meet the Clean Power Plan's intended goals because ofrenewable energy tax credits recently renewed by Congress.

Advanced Energy Economy's Vice President of MarketDevelopment Matt Stanberry in a March interview worried that the EPA may haveto change the CEIP's eligibility dates because of the stay. The program wouldallow projects that commence construction after the submission of a final stateplan or the final deadline to submit such a plan, Sept. 6, 2018, to be eligibleto receive credits or allowances. For energy efficiency, the program addressesany initiatives that will start operation after those deadlines.

Stanberry said AEE will continue to encourage states to lookat the CEIP as a way to incentivize new renewable and energy efficiencyprojects.

The EPA in March said many states have asked the agency tocontinue providing "outreach" and supporting "tools,"including the CEIP. The agency declined to comment on any changes to thedeadlines specific to the CEIP, but said the agency "will move forwarddeveloping these actions in a way that is consistent with the stay."