09/26/2017 - Power Plant Regulation - Regulatory Tracker

Regulating Greenhouse Gases from Existing Power Plants—the Clean Power Plan and Affordable Clean Energy Rules

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Quick Take

The Supreme Court’s recent decision in West Virginia v. EPA limits how EPA regulates GHG emissions from the power sector, but EPA retains the authority to regulate emissions. EPA will now work to design a rule that reduces emissions without triggering the new major questions threshold established by the Court. Read our analysis of the decision and implications for EPA’s regulations here.

Why it Matters

Once EPA promulgates new source performance standards under Section 111(b) of the Clean Air Act (CAA), EPA must also issue emission guidelines under Section 111(d) for existing sources’ emissions that are not already addressed under the CAA. This tracker post focuses on the requirements for existing power plants. You can read more about GHG emissions reductions standards for new and modified power plants here.

The Clean Power Plan (CPP), finalized by the Obama administration, was projected to lower greenhouse gas (GHG) emissions from existing power plants 32% from 2005 levels by 2030. The rule allowed states flexibility to create their own plans to achieve the necessary reductions. The Trump administration’s replacement, the Affordable Clean Energy (ACE) rule, was projected to reduce carbon emissions by 0.7% by 2030 as it relied only on heat-rate improvement technologies and practices.

The day before President Biden’s inauguration, the D.C. Circuit held that EPA erroneously concluded that “the statutory text expressly foreclosed consideration of measures other than those that apply at and to the individual source.” Several states and industry petitioners filed a petition for writ of certiorari for the Supreme Court to hear the appeal of the D.C. Circuit decision. On Oct. 29, 2021, the Court agreed to hear the case on the questions surrounding the statutory interpretation of section 111 related to the “major questions” doctrine, to consider whether Congress authorized EPA to set a standard that accounts for measures that reduce emissions from the electric system—including generation shifting and cap-and-trade programs—and whether EPA’s standard limits measures states may include in their compliance plans.

Our executive director Carrie Jenks spoke with expert Kevin Poloncarz about the appeals to the Supreme Court of the D.C. Circuit decision to vacate the Trump administration’s ACE Rule in a recent episode of our podcast. And, our founding director Professor Jody Freeman and Professor Richard Lazarus discussed the Supreme Court case West Virginia v. EPA, including oral argument.

On June 30, 2022, the Supreme Court held that EPA lacked the authority to set an emissions cap for GHGs based on generation shifting. The opinion does not specify what EPA can do nor does it affirm the Trump administration’s interpretation that EPA can only consider measures that can be applied at an individual source under Section 111(d). However, the opinion confirms the approach of the majority to define the major questions doctrine in a way that is likely to apply to an increasing number of agency actions potentially beyond EPA.

Current Status

In holding that Congress did not authorize EPA to a regulatory scheme that capped CO2 emissions “at a level that will force a nationwide transition away from the use of coal to generate electricity” under Section 111(d), the Supreme Court stated on June 30, 2022 that “a decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.” Thus, the Court reversed the D.C. Circuit’s decision and remanded the case to the court for proceedings consistent with the opinion. Procedurally, the D.C. Circuit and parties will need to determine next steps, but practically, EPA will now need to undertake a rulemaking process consistent with the Court’s direction to repeal ACE and replace it with a new rulemaking. EPA has stated that it intends to propose a new rule by March 2023.  Read our full analysis of the decision and implications for EPA’s regulations here.

Timeline of Events

Obama administration
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Oct. 23, 2015 EPA publishes the Clean Power Plan (or the “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units”). The rule sets carbon pollution limits on existing power generators. Some states and industry groups immediately challenge the rule in the DC Circuit Court. West Virginia v. EPA, Case No. 15-1363 (D.C. Cir.).

Feb. 9, 2016 The Supreme Court issues a stay of the Clean Power Plan to keep it on hold through review at the DC Circuit and extend through review at the Supreme Court if it is appealed and accepted. Scholars note this might be the first time the Supreme Court ever stayed a rule before any court ruled on the merits.

Sep. 27, 2016 The DC Circuit hears oral arguments on the Clean Power Plan.

Trump Administration
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March 28, 2017 President Trump signs the Executive Order on Promoting Energy Independence and Economic Growth, directing EPA to review and “if appropriate . . . publish for notice and comment proposed rules suspending, revising, or rescinding” the Clean Power Plan. EPA asks the DC Circuit to halt deliberations while they review the rule.

April 28, 2017 At the request of the Trump Administration, the DC Circuit suspends the litigation for 60 days and orders EPA to file 30-day status reports on the agency’s review of the rule. The court also asks the parties to file briefs to address whether the rule should be returned to EPA in lieu of continued suspension of the litigation.

May 15, 2017 EPA files a brief arguing the case should remain suspended to preserve the Supreme Court’s stay. Environmental groups seek a remand to EPA to lift the stay and require the agency to go through a rulemaking process to repeal the Clean Power Plan. The states and environmental groups supporting the CPP also ask the DC Circuit to rule on the merits of the case, arguing the same issues will reappear in any new rule issued under this section of the Clean Air Act.

Aug. 8, 2017 The Court determines the case should remain suspended for another 60 days. Judges Millett and Tatel concur in the order but add that “[a]s this court has held the case in abeyance, the Supreme Court’s stay now operates to postpone the application of the Clean Power Plan indefinitely while the agency reconsiders and perhaps repeals the Rule… Combined with this court’s abeyance, the stay has the effect of relieving EPA of its obligation to comply with that statutory duty for the indefinite future.”

Oct. 10, 2017 EPA releases a proposal to repeal the Clean Power Plan, saying the rule “exceeds the Agency’s statutory authority.” EPA does not release a replacement rule, but states that it will issue an Advanced Notice of Proposed Rulemaking to solicit comments on carbon control measures that could be implemented at individual power plants. EPA takes comments on the proposed repeal until April 26, 2018. The agency announces public hearings on the rollback in West Virginia on November 28–29, 2017.

Dec. 18, 2017 The agency issues an Advance Notice of Proposed Rulemaking to solicit comments on carbon dioxide emissions control measures that could be implemented at individual power plants.

Dec. 28, 2017 The agency publishes an Advance Notice of Proposed Rulemaking to solicit comments on carbon dioxide emissions control measures that could be implemented at individual power plants. EPA takes comments on the Advance Notice of Proposed Rulemaking until February 26, 2018.

June 27, 2018 The DC Circuit grants another stay in the Clean Power Plan litigation before the court, but two judges express concern about the continued delay and state that they will not vote to grant another stay in the future.

Aug. 21, 2018 EPA announces the proposed replacement rule, the Affordable Clean Energy (ACE) Rule. The ACE rule has several components: a determination of the best system of emission reduction for greenhouse gas emissions from coal-fired power plants limited to modifications that can be made “within the fenceline” of each plant, a list of “candidate technologies” states can use when developing their plans, a proposed change to the New Source Review program: a new applicability test based on hourly emissions for determining whether a physical or operational change made to a power plant may be a “major modification” triggering NSR, and new implementing regulations for emission guidelines under Clean Air Act section 111(d). The proposed rule is published in the Federal Register. The public comment period is open for 30 days until Oct. 1, 2018.

June 19, 2019 EPA releases the final ACE Rule along with the final repeal of the Clean Power Plan. These final rules become effective 60 days after publication in the Federal Register.

July 8, 2019 The final rule is published in the Federal Register and becomes effective on Sept. 6, 2019.

July 8, 2019 Two public health organizations, American Lung Association and American Public Health Association, file a petition challenging the ACE Rule in the DC Circuit.

Aug. 13, 2019 Twenty-two states and seven cities file a petition challenging the ACE Rule in the DC Circuit.

Aug. 14, 2019 Ten environmental organizations file a petition challenging the ACE Rule in the DC Circuit.

Sep. 5, 2019 Three industry groups file petitions in the DC Circuit challenging EPA’s authority to regulate carbon dioxide emissions in the ACE Rule. Cases 19-1175, 19-1176, and 19-1179 all consolidated in American Lung Association v. EPA, Docket No. 19-01140 (D.C. Cir.). Oral argument in the case has been scheduled for Oct. 8, 2020.

Sep. 17, 2019 The DC Circuit dismisses the Clean Power Plan case as moot, meaning there is no longer an active case because the Clean Power Plan has officially been repealed. West Virginia v. EPA, Case No. 15-1363 (D.C. Cir.).

Oct. 7, 2019 A coalition of 30 states and cities, led by New York, seeks to intervene in the industry challenges against ACE to defend EPA’s authority to regulate carbon dioxide emissions from fossil-fueled power plants.

Sep. 20, 2019 Environmental organizations request that litigation of the ACE Rule be paused until the agency completes its proposed changes to the New Source Review program, as previewed in the proposed ACE Rule. The states make a similar request on Sep. 25, 2019. American Lung Association v. EPA, Docket No. 19-01140 (D.C. Cir.).

Nov. 22, 2019 The DC Circuit decides that the ACE Rule litigation will not be paused (held in abeyance) until the New Source Review changes are finalized, as requested by environmental groups and states. The court also decides that the case will not be expedited, as requested by EPA. The case will proceed normally. American Lung Association v. EPA, Docket No. 19-01140 (D.C. Cir.).

Oct. 8, 2020 The DC Circuit holds oral arguments in the case challenging the repeal of the Clean Power Plan and the ACE Rule which last over nine hours. DOJ attorneys defend EPA’s narrower approach to regulating greenhouse gas emissions from coal-fired power plants. States and environmental groups question the legality and adequacy of the ACE rule and argued for a broader regulatory approach. Listen to the audio recording of arguments here. American Lung Association v. EPA, Docket No. 19-01140 (D.C. Cir.).

Jan. 19, 2021 The D.C. Circuit strikes down the ACE rule, remanding it to the agency, saying ““[t]he EPA rewrites rather than reads the plain statutory text.”

Biden Administration
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Feb. 12, 2021 EPA issues a memorandum to its regional administrators explaining its view that the Jan. 19th D.C. Circuit opinion did not reinstate the Clean Power Plan or any of its now-passed deadlines. Thus, states are not expected to develop and submit plans as would have been required under the Clean Power Plan.

Feb. 22, 2021 The D.C. Circuit agrees to stay its mandate vacating the Clean Power Plan Repeal Rule until EPA responds to its remand with a new rulemaking to avoid confusion about what rule is in place, making clear that the Clean Power Plan was not revived by the decision. EPA is required to file its first status report in 90 days.

April 29, 2021 A group of states led by West Virginia petition the Supreme Court asking that it address the question of whether § 111(d) of the Clean Air Act allows for the type of generation shifting envisioned in the Clean Power Plan, arguing the decision vacating the ACE rule improperly attributed wider authority to the agency than Congress intended. West Virginia, et al., Petitioners vs. Environmental Protection Agency, et al., Docket No. 20-1530 (U.S. May 4, 2021).

April 30, 2021 North American Coal Corp. files a petition arguing that section 111 does not authorize EPA to impose standards based on “an industry-wide system of ‘generation shifting’—a cap-and trade-style regime.” The North American Coal Corporation v. Environmental Protection Agency, et al., Docket No. 20-1531 (U.S. May 4, 2021)

May 28, 2021 The National Mining Association submits a brief in support of the states’ petition to the Supreme Court arguing that Congress did not authorize EPA to regulate the power sector under § 111(d) of the Clean Air Act in the manner it did so in the Clean Power Plan.

June 2021 Basin Electric Power Cooperative submits a brief in support of the states’ petition to the Supreme Court. Kentucky and America’s Power submit briefs in support of the states’ petition to the Supreme Court. North Dakota and Westmoreland Mining Holding file petitions concerning the scope of EPA’s authority under Section 111. North Dakota v. Environmental Protection Agency, et al., Docket No. 20-1780  (U.S. June 23, 2021); Westmoreland Mining Holdings LLC, v. Environmental Protection Agency, et al., Docket No. 20-1778 (U.S. June 23, 2021)

Aug. 5, 2021 The Biden administration, states, NGOs, and power companies filed briefs opposing the petitions for a writ of certiorari.  

Aug. 23, 2021 The petitioners file reply briefs. (Docket No. 20-1530, 20-1531, 20-1780, 20-1778).

Oct. 29, 2021 The Court grants the petitions for writ of certiorari on the section 111 statutory interpretation questions presented by the Petitioners related to the major questions doctrine, whether Congress authorized EPA to set a standard that accounts for measures that reduce emissions from the electric system, including generation shifting and cap-and-trade programs, and whether EPA’s standard limits measures states may include in their compliance plans.

Dec. 13, 2021 Petitioners (West Virginia, North Dakota, Westmoreland Minings Holdings LLC, Basin Electric Power Cooperative, North American Coal Corporation, and America’s Power) submit briefs.

Jan. 18, 2022 Respondents (Federal respondents, Power Company respondents, State of New York and Other State and Municipal respondents, NGO and Trade Association respondents) file briefs.

Feb. 17, 2022 Petitioners (West Virginia, North Dakota, Westmoreland Mine Holdings LLC, Basin Electric Power Cooperative, and North American Coal Corporation) file reply briefs.

Feb. 28, 2022 The Court holds oral argument. Listen to the oral argument and download the transcript on the Supreme Court’s website.

June 30, 2022 In reviewing the CPP, the Supreme Court holds in a 6-3 decision that EPA lacks the authority under Section 111(d) of the CAA to set a cap on GHG emissions from power plants based on generation shifting. The majority reaches this holding in West Virginia v. EPA by applying the major questions doctrine, which it states requires Congress to provide EPA with clear authorization before forcing a nationwide transition away from coal-fired electric generation. This decision creates practical challenges and legal hurdles for the Biden administration in drafting rules to regulate power plant emissions, but it does not strip EPA’s authority to do so, nor does it preclude EPA from considering measures applied outside the fenceline. The challenge will be to develop rules that are grounded in traditional application of their authority and ensure the regulatory record demonstrates that the rule does not cross the Court’s emerging economic and political significance threshold. Read our analysis of the decision here.