Coal, Energy Litigation, Energy Policy, EPA

EPA Back in Court Over Clean Power Plan, Is this Challenge of the Final Rule Premature As Well?

Glass globe resting on moss stone in a forestSince the U.S. Environmental Protection Agency (“EPA”) released its proposed Clean Power Plan (“Proposed CPP”) in June 2014, the agency has faced fierce opposition from states and companies seeking to prevent the implementation of the rule designed to drastically reduce CO2 emissions from existing power plants.  In June 2015, Murray Energy Corporation and other opponents lost their legal challenge to the Proposed CPP because the lawsuit was premature in the view of the D.C. Circuit Court of Appeals.  Wait for a final rule to be issued, the court mandated, especially in light of the fact that a final rule was expected shortly.  On August 3, 2015, the EPA presented the Final CPP and it was met swiftly with similar opposition to the legality of final rule, as well as to the firm deadlines set for States to submit compliance plans because the final rule has not been published in the Federal Register yet.  On August 13, 2015, the State of Kentucky was joined by Alabama, Arkansas, Florida, Indiana, Kansas, Louisiana, Michigan, Nebraska, Ohio, Oklahoma, South Dakota, West Virginia, Wisconsin and Wyoming in filing an emergency motion and petition for extraordinary writ of mandamus before the D.C. Circuit Court of Appeals seeking a stay of all deadlines set forth in the Final CPP, including the September 6, 2016 and September 6, 2018 deadlines set for submission of State Plans.  On the same day, Peabody Energy Corporation renewed its previous writ challenging the statutory authority of the EPA to regulate CO2 emissions from existing power plants, arguing that it is appropriate for the court to consider this substantive issue prior to publication of the Final CPP in the Federal Register, especially in light of the rapidly approaching firm deadlines set by the final rule.  The matters have been consolidated for consideration by the court.

The Final CPP contains several key changes from the Proposed CPP, including an increase in the required emissions reductions from the originally proposed target of 30% below 2005 levels – the Final CPP requires a reduction to 32% below 2005 levels by 2030.  According to the Petitioners, nine states that opposed the Proposed CPP received more stringent reduction requirements in the Final CPP as compared to only one state that had not opposed the proposed plan.  Under the Final CPP, States must submit a final compliance plan to the agency by a particular date – September 6, 2016 – or they must submit an initial plan with an extension request by September 6, 2016 and a final plan by September 6, 2018.  Unlike many agency rules, the Final CPP’s State Plan deadlines are not tied to the date the final rule is published in the Federal Register, which is the date that officially triggers the ability to challenge the agency rule in court according to the Clean Air Act.  The cause for concern – it could take several months for the “massive” final rule to be published in the Federal Register and by then States will have expended considerable resources towards drafting an initial or final compliance plan.  “The changes wrought by the Final Rule are unprecedented in their magnitude and resemble those arising from landmark legislation rather than from agency rules.”  The petitioners seek a stay of the Final CPP and its deadlines now to hedge against “unmeasurable risk that there will be significant delay in the Final Rule’s Federal Register publication” and to prevent irreparable harm.  But, the EPA urged the court to dismiss this attempt to challenge the Final CPP as premature, just as it did with the parties’ previous challenge to the Proposed CPP.

The EPA assesses the burden imposed by its deadlines as non-existent or minimal at best.  The agency argued that the Final CPP should be published in the Federal Register within “less than two months” and “the Rule is not legally effective until 60 days after it is published.”  In its August 31 brief, the EPA stated that it intended to submit the final rule to the Federal Register by September 4 and expects it would be published by the end of October.  In the EPA’s view, the petitioners would suffer no irreparable harm because the Final CPP “does not contain imminent deadlines.”  According to the agency, the pertinent date is 2022, the year the emissions limits will go into effect, and the initial submission that must be filed by the September 6, 2016 deadline to secure an “easily obtainable” two-year extension is “minimal.”

The court is being asked to determine whether this challenge is distinguishable from the previous challenge of the Proposed CPP – whether the step of finalizing the rule tips the balance and pushes the notion of judicial review pursuant to the All Writs Act over the line into the realm of proper.  But, even if full judicial review of the legality of the Final CPP must wait until after publication in the Federal Register, the State petitioners urge that U.S. Supreme Court precedent grants the limited authority “incidental to the court’s jurisdiction to review final agency action” to issue an injunction “to maintain the status quo…pending review of an agency’s action through the prescribed statutory channels.”  The EPA urges, however, that the final rule must actually have gone into effect for that incidental authority to kick in, which will not take place until 60 days after the Final CPP is published in the Federal Register.  Petitioner’s reply briefs were filed September 4.  A stay of the Final CPP’s State Plan deadlines would be a significant win for opponents of the Plan and would provide States with certainty regarding their obligations prior having to embark upon the exhaustive process of devising compliance plans.  Additional details regarding the components of the Final CPP are available here.

Brian Heslin

About Brian Heslin

Brian Heslin represents energy companies in regulatory proceedings at the state and federal level. In addition, he provides advice on busines and strategic planning, upstream natural gas supply and capacity negotiation, compliance and other related services.

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