The U.S. Supreme Court’s order on February 9, 2016 staying EPA’s implementation of the Clean Power Plan (CPP) will create at least a year of uncertainty about the shape of the future electric power regulatory framework, with implications for states, utilities and other electric power providers, and for the many other stakeholders potentially affected by the CPP. The CPP is the regulatory program issued by EPA on October 23, 2015, that requires states to develop plans to reduce carbon (CO2) emissions by meeting either state-specific mass caps (tons/year) or state-specific emission rate intensity limits (lb/netMWh). The CPP seeks to establish a whole new style of regulation using authority under section 111(d) of the Clean Air Act.
Supreme Court Halts CPP Implementation
Twenty-nine (29) states and a number of utilities, labor unions and trade associations challenged the legality of the CPP. These appellants sought a stay of the rule from the D.C. Circuit in November 2015. The petition for a stay was denied on January 21, 2016. The appellants then appealed to the U.S. Supreme Court — a move that most pundits thought was futile as it is extremely rare for the Supreme Court to grant such a stay. In order to grant a stay, the Court needed to find that if the D.C. Circuit were to uphold the CPP, (1) there is a reasonable probability that four Supreme Court Justices would vote for review of the D.C. Circuit opinion; (2) there is a fair prospect that a majority of the Supreme Court would vote to reverse the D.C. Circuit’s opinion upholding the CPP; and (3) that there is a likelihood that immediate, irreparable harm would result from the denial of a stay. By granting the stay, it appears that five of the nine Supreme Court justices (Roberts, Scalia, Alito, Kennedy and Thomas) indicated that they believe there is a fair prospect that they would vote to overturn the D.C. Circuit were the D.C. Circuit to uphold the CPP. The Court’s action prevents EPA from further implementation of the CPP until the petitioners’ appeal is decided. The underlying challenge to the CPP is proceeding on an expedited schedule with oral argument set for June 2 and 3, 2016.
In addition, another factor in the Court’s stay decision was likely the pending deadlines for states to take compliance actions. The deadline for states to submit initial plans demonstrating how they would comply with the CPP was September 6, 2016. While virtually all states were likely to request an extension for plan submittal until September 2018, states still needed to show progress on their plans by this September, and many states, including several of the 29 appellant states, were beginning the planning process.
Next Steps: Back to the D.C. Circuit
The Court’s stay is certainly not the end of this case. The briefing and oral arguments on the merits of the case lie ahead (opening briefs in the DC Circuit appeal are due April 15). The D.C. Circuit is likely to issue its opinion this summer (or fall) and, regardless of its decision, there are likely to be appeals to the full D.C. Circuit followed by appeals to the Supreme Court. It is highly likely that review will not be completed by the time the next President takes office on January 20. The fate of the CPP appears to now lie with the Supreme Court acting no sooner than sometime in 2017, and with the next elected President.
A Year of Uncertainty Ahead for CPP Stakeholders
In the interim, there will be at least a year of uncertainty for the many stakeholders — in particular the state agencies tasked with developing CPP compliance plans. Utilities and other entities in the U.S. electric power system, environmental groups and other strong proponents of the CPP, ratepayers that would ultimately pay for the CPP, and the international community that is closely monitoring the recent U.S. CO2 reduction commitments as part of the Paris Climate Accord, will also be affected by the court’s decision to stay the implementation of the CPP. While the stay theoretically halts implementation of the rule, it is possible many of the pro-CPP states will continue development of their plans albeit on a more relaxed schedule. It is unclear what specific direction EPA will give as to how the stay will affect deadlines were the Agency to prevail. The September 2016 deadline is gone as the stay will still be in effect long after that deadline passes. However, it is not clear that all deadlines would simply shift by the duration of the stay were EPA to prevail in all respects at each level of the courts.
We will be closely monitoring developments and will keep our readers informed, as the CPP advances into an uncertain future.