The Legal Case for the Clean Power Plan — in a Nutshell

(This post originally appeared on the American Constitution Society’s blog. EDF Attorney Ben Levitan co-authored it.)

In February, the Supreme Court stayed implementation of the Clean Power Plan, which provides the EPA with its best chance to cut future greenhouse gas emissions. On Tuesday, Sept. 27, the Court will hear oral arguments in the case of West Virginia, et. al. v. EPA. This case will determine whether it is within the EPA’s power to regulate air quality by setting strict standards for carbon emission. ACS invited experts to explore the issues that will be presented before the Court.

Oral argument on the Clean Power Plan — the nation’s first limits on emissions of harmful climate pollution from fossil fuel power plants — will take place in the U.S. Court of Appeals for the District of Columbia Circuit on September 27, 2016. As the court reviews the most significant step our country has taken to address the threat of climate change, the need for action to reduce climate-disrupting pollution has never been more urgent: Louisiana recently became the fifth state in the span of 12 months to suffer from a “1,000-year flood.” August 2016 marked the 16th consecutive month that set a global monthly high-temperature recorded. The Clean Power Plan, which will reduce carbon pollution from power plants to 32 percent below 2005 levels by 2030 and generate $54 billion per year in climate and health benefits, is essential to reduce these risks.

During oral argument, the court will hear powerful legal arguments for upholding the Clean Power Plan. The rule is supported by a broad and diverse coalition that includes eighteen states and sixty municipalities across the country; power companies that own and operate more than ten percent of the nation’s generating capacity; leading businesses like Apple, Google, Mars and IKEA; public health and environmental organizations; consumer and ratepayer advocates; faith organizations; and many others. Numerous legal experts — including drafters of the Clean Air Act, former EPA Administrators who served under Presidents Nixon, Reagan and Bush and former state energy and environmental officials — have also affirmed the strong legal basis for the Clean Power Plan. These supporters understand that the Clean Power Plan is both a crucial step to address climate change and fully consistent with the law.

The court will also hear from Clean Power Plan opponents, including the coal industry, coal-dependent power companies and their allies. Many of these opponents have a long record of opposing any type of limit on climate pollution and now they are directing their vast resources against the Clean Power Plan. Below, we explain why we are confident the Clean Power Plan will ultimately prevail against this barrage of legal attacks.

EPA has clear authority to regulate climate pollution from existing power plants.

As even opponents of the Clean Power Plan have conceded, EPA’s authority to regulate climate pollution from existing power plants is clear.

The Clean Power Plan is rooted in multiple Supreme Court decisions upholding EPA’s authority to regulate climate pollution under the Clean Air Act. See Massachusetts v. EPA, 549 U.S. 497 (2007); American Electric Power v. Connecticut, 564 U.S. 410 (2011) (“AEP”);Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014). In AEP, many parties that currently oppose the Clean Power Plan argued — and the court expressly held — that section 111(d) of the Clean Air Act “speaks directly” to limits on climate pollution from existing power plants. This is precisely the section under which EPA issued the Clean Power Plan.

Now that Clean Power Plan opponents face the prospect of finally addressing their emissions, however, they sing a very different tune — implausibly disputing EPA’s clear authority to issue the rule. Peddling one dubious reading of a phrase in an amendment to the statute, they claim that EPA cannot regulate climate pollution from power plants under section 111(d) at all because the agency separately regulates completely different pollutants from power plants under section 112 of the Act – including mercury, arsenic, acid gases and other hazardous air pollution. This “pick your poison” theory is akin to exempting a restaurant from food handling requirements because it is already subject to the fire code. It defies not just common sense, but the purpose and structure of the Clean Air Act.

When Congress first enacted section 111(d) in 1970, it made unmistakably clear that this section plays a crucial “gap-filling” role — providing EPA with authority to protect the public from dangerous pollutants, such as greenhouse gases, that are not subject to national ambient air quality standards (sections 108-110) or hazardous air pollutant standards (section 112). Opponents argue that when Congress amended section 111(d) in 1990 as part of an overhaul of section 112, it implicitly abandoned this basic framework. Yet in the 1990 amendments, Congress expressly provided that no standard under section 112 shall be “interpreted, construed or applied to diminish or replace . . . [an] applicable requirement established pursuant to section [1]11.” 42 U.S.C. § 7412(d)(7). This language clearly undermines opponents’ theory that section 112 standards for power plants preclude EPA from regulating climate pollution from those sources under section 111(d).

Moreover, the opponents’ theory completely ignores a parallel amendment to section 111(d) that was passed by the Senate and signed into law in 1990.  Under the duly-enacted Senate language, even opponents acknowledge that EPA has authority to issue the Clean Power Plan. Opponents offer no reasonable justification for tossing aside this statutory text.

Lastly, there is no evidence in the extensive legislative history of the Clean Air Act Amendments that either chamber intended to gut the protections of section 111(d) in 1990 by exempting from that provision any source that is regulated for different pollutants under section 112. Congress would not have effectuated such a dramatic change in total silence, especially as part of legislation intended to revitalize and strengthen the Clean Air Act.

In prior litigation, current Clean Power Plan opponents acknowledged EPA’s authority to regulate existing power plants under section 111(d). Under administrations of both parties,EPA has consistently interpreted section 111(d) in a way that allows regulation of pollutants like carbon dioxide. The opponents’ cynical, opportunistic interpretation is just their latest move in a legalistic shell game to avoid pollution limits that mitigate climate change in any form.

EPA’s approach to establishing the emission reduction targets in the Clean Power Plan is consistent with the statute and reflects proven, highly cost-effective measures that the power sector has been using for decades.

Under section 111(d), EPA is required to issue emission guidelines that reflect the “best system of emission reduction” (“best system”) that has been “adequately demonstrated,” taking into account costs, energy requirements and other required factors. States must then set standards of performance for individual sources that meet or exceed the level of reductions specified in the emission guidelines.

To determine the best system for reducing climate pollution from power plants, EPA carefully examined the systems that power companies have actually been using to reduce climate pollution and other pollutants. It took into account that power plants are all part of an interconnected, centrally operated grid in which generation is constantly shifted among plants to balance supply and demand. And it considered that carbon dioxide is a global pollutant that has similar impacts regardless of where it is emitted. After weighing costs, feasibility, electric system reliability and other factors, EPA determined that the best system consists of the following proven, cost-effective measures: (1) improving the efficiency of coal-fired power plants; (2) shifting some generation from higher-emitting fossil fuel-fired power plants to lower-emitting natural gas plants; and (3) shifting some generation from fossil fuel-fired power plants to zero-emitting renewable generation.

As a recent analysis by the NYU Institute for Policy Integrity demonstrates, this systemclosely adheres to all of the criteria in section 111. First, it is clearly adequately demonstrated: as the major power companies supporting the Clean Power Plan argued in their brief, this system is “business-as-usual within the power sector” and is the same approach power companies themselves have successfully deployed to reduce climate pollution:

Electricity providers have been shifting generation among affected units and to zero-emitting sources as a means of achieving emission reductions for decades, as these strategies achieve greater reductions at lower cost than by relying on control technology alone…generation shifting is itself “business-as-usual” within the power sector and the ordinary means by which supply and demand are instantaneously matched throughout the interconnected electricity grid…EPA wascorrect in declining to establish the best system based on other facility-based control measures which, while technically feasible, are significantly more expensive than shifting generation to lower- and zero-emitting sources.

Power Company Intervenors Brief, at 2–3.

Not only is this system adequately demonstrated, it also best satisfies the cost and energy criteria of section 111.  Generation shifting allows for pollution reductions to be achieved economically, which is part of the reason that EPA expects the Clean Power Plan to result in lower household electric bills while fully preserving electric reliability. Even power companies that oppose the Clean Power Plan asked EPA to allow them to comply with the standards through generation shifting and through related techniques like averaging and trading of emissions among plants – a strong indication that generation shifting is the most cost-effective and feasible means for power plants to reduce climate pollution.

In accordance with another section 111 requirement, the standards are also eminently achievable. Largely thanks to generation shifting, carbon pollution from the power sector hasdecreased by more than 20 percent since 2005, meaning that we’re already about two-thirds of the way toward meeting the Clean Power Plan requirements for 2030. In fact, most states that are litigating against the Clean Power Plan are on track to meet its requirements.

EPA’s approach also carefully respects other statutory constraints under section 111. Among other things, the best system includes only measures that power plants themselves can implement; is limited to measures that reduce emissions from existing power plants themselves; and is expressed in the form of emission standards that can be applied to any individual power plant.

Contrary to opponents’ arguments, nothing in section 111 prohibits EPA from identifying generation shifting as part of the best system.  As Clean Air Act experts have pointed out, Congress used the broad term “best system of emission reduction” in section 111 to ensure that EPA would have the ability to set standards that are appropriate for the unique characteristics of each source category and pollutant.  If Congress wanted EPA to instead be constrained to control technologies that can be installed at individual sources, it could have and would have said so – just as it has done under other Clean Air Act provisions. See 42 U.S.C. § 169A (requiring sources to “procure, install and operate … the best available retrofit technology … for controlling emissions”).

EPA’s approach is consistent with a long history of Clean Air Act precedents across administrations of both parties.

Opponents of the Clean Power Plan nonetheless claim that EPA’s approach to the best system is unprecedented.  Yet as legal experts have pointed out, generation shifting is actually familiar territory under the Clean Air Act — and has formed the basis of multiple Clean Air Act standards.

For example, the Cross-State Air Pollution Rule — which was upheld by the Supreme Court in 2014 as a “permissible, workable and equitable” interpretation of the Clean Air Act — established state-wide limits on smog and soot-forming pollution from power plants that were explicitly premised on the potential to shift generation from dirtier power plants to cleaner ones. EPA v. EME Homer City Generation, 134 S. Ct. 1584 (2014).  EPA’s earlier program to address interstate pollution similarly established state-wide emission budgets for power plants that were based on the assumption that sources would engage in regional trading of emission credits — and similarly was upheld against numerous legal challenges. And as early as 1982, EPA set standards for lead in gasoline that some refiners could meet only by obtaining lead credits from other, cleaner refineries — an approach that the D.C. Circuit explicitly upheld. See Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 534–35 (D.C. Cir. 1983).

Far from being unprecedented, EPA’s approach to establishing the emission reduction targets in the Clean Power Plan is a natural extension of successful, cost-effective approaches that have been used to set other Clean Air Act standards for years, under both Republican and Democratic administrations.

The Clean Power Plan respects the prerogatives of the states and reflects the best traditions of cooperative federalism.

The Clean Power Plan is also consistent with the time-tested “cooperative federalism” framework that is at the heart of section 111(d) and many other Clean Air Act programs.

Consistent with this framework, the Clean Power Plan establishes minimum emissions performance requirements — and gives states tremendous flexibility in deciding how to implement those requirements in ways that best meet local needs and priorities. Among other things, states have the flexibility to decide between “mass-based” targets (which limit total pollution per year from power plants) and “rate-based” targets (which limit the amount of pollution per unit of electricity generated); to adjust the pace of pollution reductions prior to 2030, within broad parameters; and to establish flexible, market-based programs that allow power companies to meet their emission standards through whatever measures are most cost-effective. States can also opt out of implementing the Clean Power Plan altogether, without any sanctions or penalties, in which case EPA will directly regulate emissions from power plants instead.

Opponents of the Clean Power Plan wrongly claim that the rule dictates energy policy choices to the states.  As the states across the country that are supporting the Clean Power Plan have affirmed, a state’s only obligation if the state chooses to implement the Clean Power Plan is to regulate climate pollution from power plants, the same way that states regulate pollution under many other Clean Air Act programs. Indeed, EPA has proposed optional “model” trading rules for the states that demonstrate the Clean Power Plan can be implemented through traditional regulatory frameworks that are virtually identical to the emissions trading programs that dozens of states have implemented under other Clean Air Act provisions.

As with these other programs, it will ultimately be up to power companies to decide how to meet these emission limitations at least cost.  The Clean Power Plan’s approach allows states to offer power companies wide latitude in doing so and does not limit power companies to using generation-shifting measures for compliance.  Power companies can reduce their emissions through on-site activities (such as natural gas co-firing or carbon capture), demand-side energy efficiency investments that reduce energy bills for families and many other measures.

States opposing the Clean Power Plan also make the baseless allegation that EPA is “commandeering” them to take certain actions. For instance, they note that a power plant’s strategy for complying with the rule will occasionally require review by the state public utility commission (“PUC”). These states ignore the fact that any emission standard affecting the power sector — regardless of how it is set or which pollutants it regulates — will affect which power plants are built and operated, thus triggering PUC review. PUC review is likewise carried out when utilities seek recovery for compliance cleanup costs or permission to build new generation in response to other long-standing air pollution control programs for smog, soot, mercury and other air pollutants. That’s why Congress directed and empowered EPA to consider “energy requirements” when determining the best system of emission reduction. That the Clean Power Plan could have a differential impact on electric generation options that emit different levels of pollution is not an aberration and certainly not a violation of the Constitution—it’s business as usual and exactly what Congress contemplated when it drafted the Clean Air Act.

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The Clean Power Plan addresses one of the gravest public health and environmental threats we face today by building on the Clean Air Act’s successful history of reducing air pollution through flexible, cost-effective approaches. The rule rests on an extensive and solid factual record and adopts an approach mirroring that of regulations issued under administrations of both political parties. We are confident the Clean Power Plan will survive legal challenge and endure as a crucial element of our nation’s response to climate change.