WASHINGTON, Sept. 27, 2016 – The Clean Power Plan finally got its day in court Tuesday, and you needed a scorecard to tell who the players were.

Ten judges at the D.C. Circuit Court of Appeals heard arguments from more than a dozen lawyers, who were variously representing 46 states both for and against the plan, as well as hundreds of industry associations and individual companies, current and former members of Congress, and environmental groups – not to mention cities, counties, mayors, public health advocates and labor unions.

The appeals court declined to stop implementation of the rule in January, but the Supreme Court showed no such reluctance in February, issuing a stay just four days before the death of Justice Antonin Scalia.

The current four-four split on the high court is significant, because whichever side loses in the D.C. Circuit is expected to appeal that ruling, and a 4-4 verdict would leave the D.C. Circuit decision in place.

But first, the court will have to issue a decision, which could come this winter. And predicting which way the D.C. Circuit will go is a dicey proposition, at best.

Even before the arguments, parties to the litigation were making their case to the media. Jim Matheson, CEO of the National Rural Electric Cooperative Association, said in a statement that the CPP rule “hits not-for-profit, consumer-owned electricity providers and their members especially hard. Instead of crafting sensible regulations to address power plant carbon emissions, EPA issued a rule that would significantly restructure the power sector, far exceeding its legal authority and burdening electric co-ops with a disproportionate share of the costs.”

“The rule would force many co-ops to prematurely shutter coal-fired power plants on which they’re still repaying loans,” Matheson said. “Members of those co-ops would be charged twice for their electricity – once to continue paying down the loans on assets that are no longer generating revenue, and again for the cost of purchasing replacement power from somewhere else.”

West Virginia Attorney General Elbert Lin, representing the 28 states that are seeking to block the plan, argued that the Clean Air Act does not give EPA the authority to impose such a sweeping regulatory mandate on the energy industry and the states that have to implement the CPP.

No individual coal plant can meet the emission standards under the plan, Lin and attorney Peter Keisler, representing the utilities, argued. (That assertion was disputed by attorneys for the other side, who said coal-fired plants could use carbon dioxide capture and sequestration and co-fire with natural gas to meet the rule’s standards.)

The plan will force some plants to be shut down or replaced, and require companies to invest in wind and solar energy in order to meet the new standards, Lin and Keisler said.

Some of the judges pushed back, however, questioning whether the expected decrease in the amount of electricity derived from coal would really be “transformative.” “You’re talking about a 5 percent difference,” from 32 percent of the nation’s electricity derived from coal to 27 percent, Circuit Judge Thomas Griffith said. “That doesn’t seem to me to be transformative.”

Lin disagreed, saying coal’s share of the energy pie would fall by 10 percentage points, but Circuit Judge David Tatel said “the only thing that seems transformative is that they’re regulating CO for the first time.”

And Griffith added that the Clean Air Act’s requirement that emission guidelines reflect “the best system of emission reduction” seemed to be “awfully broad language.”

“You might quarrel with Congress giving so much power to EPA, but they’ve done it,” he said.

Lin, however, said he did not think Congress gave EPA the authority to issue a rule that sets emission rates.

“This is the kind of power that not even the Federal Energy Regulatory Commission has,” he said.

Keisler insisted that the CPP would force companies to “subsidize” the wind and solar industries. The only way for companies with coal-fired generation to meet the emissions targets would be through the purchase or construction of renewable energy sources.

But Circuit Judge Nina Pillard questioned whether operators of coal-fired power plants have long benefited from subsidies by not having to pay for the “externalities” of health problems caused by emissions from those plants.

The Justice Department’s Eric Hostetler told the court that the CPP simply adopts procedures that have been used for decades by the energy industry to distribute electricity, which he called “an extremely fungible product.” Hostetler disagreed with Circuit Judge Brett Kavanaugh’s assertions that the case has “huge national and political significance” and “huge national repercussions.” He conceded the case is important, but said the economic compliance costs are no higher than those of other regulations affecting the power sector.

Kavanaugh also insisted that Congress should have provided a “clear statement” on a policy issue of such significance. Hostetler insisted the Clean Air Act gives EPA the authority to impose what he called “incremental” changes, and said, “Fundamentally, the rule is about substituting cleaner technologies for dirtier technologies.” 

Addressing the issue of whether CPP forces power companies to alter the way they provide electricity (also known as “generation shifting”), Kevin Poloncarz, representing power companies that support EPA, said “generation-shifting is business as usual for the power sector.”

“The petitioners want to have it both ways,” he said, talking about the states and power companies seeking to overturn the rule. “They want to use generation shifting but not use it to set the (emissions) bar.”

Other issues raised at the argument included whether EPA provided the public adequate notice of the rule’s content, whether EPA exceeded its constitutional authority by forcing states to implement federal policies, and whether the goals of the plan are actually achievable.


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