CHAPTER 11 UNDOING THE CLEAN POWER PLAN: WHAT AWAITS PRESIDENT OBAMA'S SIGNATURE ENVIRONMENTAL REGULATION?

• Jurisdiction: United States

Advanced Public Land Law - The Continuing Challenge of Managing for Multiple Use
(Jan 2017)
CHAPTER 11
UNDOING THE CLEAN POWER PLAN: WHAT AWAITS PRESIDENT OBAMA'S SIGNATURE ENVIRONMENTAL REGULATION?
Thomas A. Lorenzen
Partner, Crowell & Moring LLP
Washington, DC

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THOMAS A. LORENZEN is a partner in Crowell & Moring's Washington, D.C. office and is a member of the Environment & Natural Resources and Government Affairs groups. Tom works with clients seeking to successfully navigate the federal environmental rulemaking process. With a decade of Justice Department experience managing the legal defense of all EPA rules, Tom has a unique ability to help clients shape environmental policy, provide vital input on proposed federal environmental regulations through written comment and direct interaction with regulators, and mount effective judicial challenges to EPA actions that adversely affect his clients' interests. Tom also helps clients ensure compliance with existing environmental regulations. In addition, he is a noted appellate lawyer who has briefed, argued, or supervised hundreds of petitions for review of EPA regulations and other final EPA actions. While he was at the Department of Justice, Tom oversaw many of the seminal environmental cases of the last decade. These include Massachusetts v. EPA, in which the Supreme Court affirmed EPA's authority to regulate greenhouse gases under the Clean Air Act, and Entergy v. Riverkeeper, in which the Court held that EPA has discretion under the Clean Water Act to consider or decline to consider costs in determining how to regulate cooling water intake structures. In the D.C. Circuit and the other federal courts of appeals, he oversaw the government's defense in Coalition for Responsible Regulation v. EPA, in which the court upheld EPA's first suite of greenhouse gas regulations (largely upheld by the Supreme Court in Utility Air Regulatory Group v. EPA); EME Homer City Generation, L.P. v. EPA and North Carolina v. EPA, in which the court reviewed EPA's various attempts to address interstate transport of air pollutants; numerous cases challenging EPA regulations governing emissions of hazardous air pollutants; and National Cotton Council v. EPA, in which the Sixth Circuit reviewed EPA's Clean Water Act regulations governing the application of pesticides over waters of the United States. Tom is a frequent lecturer and commentator in print, on the internet, and on television regarding federal environmental law, climate change regulation, administrative law, federal policymaking, and effective appellate brief-writing and argument. He received his J.D. from Harvard Law School in 1985.

Candidates for the presidency often campaign on broad promises to revisit and roll back or reverse the prior administration's regulatory decisions. Candidate George W. Bush vowed to revisit and roll back the Clinton administration's new source review rules under the Clean Air Act; candidate Barack Obama promised to revisit and tighten the Bush administration's 2008 national ambient air quality standards for ozone; and candidate Donald Trump vowed to revisit and roll back a host of Obama administration regulations, including the Obama administration's signature environmental regulation--the Clean Power Plan,¹ which seeks to cut emissions of carbon dioxide from the power generation sector by 32 percent from 2005 levels by 2030.²

Both Presidents Bush and Obama found these promises more difficult to keep than expected. As a rule, absent a court decision invalidating a rule, regulations are not easily undone by new administrations. The Administrative Procedure Act and the governing case law typically require that existing regulations be undone through new rulemakings that, given notice-and-comment requirements and the inevitability of litigation, can themselves take years. Politics and intervening events can interfere and change an administration's intended course, leading them to retain and defend regulations they initially disdained. And then there are the statutes and the courts: the statutes may compel an agency to regulate even where the administration may wish not to do so, and the courts stand ready to enforce those statutory requirements. Yet, by and large, the law favors allowing a new administration to shift course, and the courts will often permit new administrations the opportunity to put pending litigation over existing regulations on hold while the rulemaking agency reconsiders.

This article briefly summarizes the basis for and elements of the Obama administration's Clean Power Plan, recaps the extraordinary course the litigation over the rule has taken and may yet take, and outlines the tools the Trump administration might employ as it revisits many of the Obama administration's environmental and other regulations.

What is the Clean Power Plan?

In 2007, the United States Supreme Court held for the first time that greenhouse gases are "pollutants" that EPA must regulate under the federal Clean Air Act³ if EPA finds that emissions of those gases cause or contribute to endangerment of public health or welfare.⁴ The decision was a close one; only five justices joined the majority opinion, but the Supreme Court has since reaffirmed EPA's authority to regulate greenhouse gases in two significant decisions--one

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involving nuisance suits against greenhouse gas emitters, and the other involving EPA's first efforts to limit anthropogenic greenhouse gas emissions.⁵

The Clean Power Plan, together with the accompanying new source performance standards for fossil fuel-fired power plants,⁶ tackled the largest domestic source of carbon dioxide emissions--power generation, which (according to EPA) accounted for 30 percent of domestic greenhouse gas emissions in 2014.⁷ Both rules were promulgated pursuant to section 111 of the Clean Air Act,⁸ which authorizes EPA to identify categories of sources of pollutants not regulated pursuant to the national ambient air quality or air toxics provisions of the statute, and then to issue standards governing the operation of such sources. More specifically, section 111 authorizes EPA to issue regulations requiring that sources in the identified category apply the "best system of emission reduction" for reducing emissions of the pollutant in question.⁹

The statute sets up two different regimes for implementing this requirement--one applicable to new (and modified) sources,¹⁰ the other applicable to existing sources.¹¹ The provision applicable to new sources is more stringent than that applicable to existing sources, authorizing EPA to both make the determination of what system constitutes the "best system of emission reduction" and then to develop the performance standards (typically expressed in terms of a permissible rate of emission of a pollutant) based on the use of that best system.¹² For new fossil fuel-fired power plants, EPA determined that there were two separate "best systems of emission reduction"--partial carbon-capture-and-sequestration for new coal-fired units, and

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natural gas combined cycle systems for gas-fired units. Based on these, EPA derived two separate performance standards--1400 lbs CO₂/MWh for coal-fired units, and 1000 - 1030 lbs CO₂/MWh for gas-fired units.¹³

The provision applicable to existing sources--the specific source of authority for the Clean Power Plan--is notably different. Unlike section 111(b), section 111(d) divides regulatory authority between the federal and state governments. As with new sources, EPA still has the authority and responsibility to determine the "best system of emission reduction which ... has been adequately demonstrated." But it is the individual States, not EPA, that are to establish the performance standards applicable to existing sources within their own borders based on the EPA-identified system of emission reduction.¹⁴ Further, in applying those performance standards to individual sources within its borders, each State is expressly permitted "to take into consideration, among other factors, the remaining useful life of the existing source to which such standards applies."¹⁵ This provision effectively gives States the authority to exempt from regulation (or to regulate more leniently) those existing sources that, due to short remaining useful lives or other factors, cannot economically or feasibly implement the existing source performance standards that have been set. Perhaps anticipating that some States might not regulate existing sources sufficiently to comply with the Act, EPA retains backstop authority to prescribe and enforce a federal plan for any State "in cases where the State fails to submit a satisfactory plan ...."¹⁶ If EPA does so, it must "take into consideration, among other factors, the remaining useful lives" of the regulated existing sources.¹⁷ Again, Congress' expectation was that some existing sources might not be able to comply with the standards and that this should be taken into account in determining whether and to what extent each is regulated, even under a federally-imposed plan.

In the Clean Power Plan, EPA broadly defined the "best system of emission reduction" for existing fossil fuel-fired power plants, based on three "building blocks": making heat-rate improvements at individual coal-fired power plants (Building Block 1); shifting generation from existing coal-fired units to existing natural gas-fired units, which emit at approximately half the rate of coal units (Building Block 2); and shifting generation from fossil fuel-fired units to renewable sources of electricity such as wind and solar (Building Block 3).¹⁸ This marked the first highly unusual aspect of the new rule, as EPA had never previously used section 111 to require "generation-shifting" or any "system of emission reduction" that was not based on improvements that could be made at the individual source.¹⁹

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Based on its determination...