EPA’s Proposed Clean Power Plan: The Historical Context and Future Implications of Section 111(d)

We recently attended the American Bar Association (ABA) Section of Environment, Energy, and Resources (SEER) 2014 Fall Conference in Miami, where the Environmental Protection Agency’s (EPA) proposed Clean Power Plan and the future of compliance was comprehensively discussed, analyzed, and debated from the beginning of the conference to the very end. The topic is of interest to us given our expertise in conducting historical environmental research into former industrial sites and manufactured gas plants, as well as our desire to improve and expand our research services in support of clients affected by emerging environmental litigation.

The conference began with a keynote address by EPA Administrator Gina McCarthy, in which she declared that: “We all have a right to a safe and healthy environment. Our people demand it. Our laws promise it. And our courts reaffirm it.” These statements and the rest of her address reaffirmed the progress of environmental law in America over the past forty years and the necessary role of environmental protection in the future.

Understanding the history of environmental law in America is critical to its interpretation and implementation today. One of the most notable environmental laws, the Clean Air Act (CAA) of 1970, has evolved over the years through various amendments in order to address large-scale environmental and public health risks from toxic air pollution, acid rain, ozone depletion, and now climate change. The most recent interpretation of the CAA to regulate greenhouse gases (GHGs) has sparked political controversy, spurred environmental litigation, and fostered innovative ideas for the future of compliance.

EPA’s Proposed Clean Power Plan

On June 2, 2014, the EPA proposed Carbon Pollution Standards for Existing Power Plants (known as the Clean Power Plan, or CPP), per its authority under Section 111(d) of the CAA. The CPP aims to cut carbon pollution from existing power plants by 30% from 2005 emissions levels by 2030. The CPP strives to maintain an affordable, reliable energy system, while cutting carbon dioxide to protect public and environmental health and address climate change.

Under the proposed rule, each state would be given a tailored emissions rate target, but the state would have the flexibility to determine how exactly to achieve that target. The Plan identifies four building blocks in which states can achieve emissions reductions, including, but not limited to:

  1. Make coal-fired power plants more efficient
  2. Use existing natural gas plants more effectively
  3. Increase zero- and low-emitting power sources such as renewables and nuclear
  4. Reduce electricity demand by using electricity more efficiently

Each state then has a variety of policy options to meet their unique emission reduction goals, such as renewable portfolio standards or efficiency standards, in addition to multi-state and regional initiatives, such as the Regional Greenhouse Gas Initiative (RGGI).

Stakeholder Responses

State and industry leaders fear that the CPP will raise electricity rates for consumers, and ultimately harm the U.S. economy. On the other hand, numerous climate, energy, and policy experts affirm the opposite, stating that the CPP will create jobs, protect and improve public health, and reduce electricity costs. Underlying these debates are various questions regarding the baseline from which emissions reductions are measured, the feasibility of proposed timelines, and the readiness of each state to comply with the rule based on their current energy generation mix.

For example, some groups assert that the EPA underestimates the role of renewable energy in setting targets. Environmental groups are dissatisfied with the less-than-anticipated emissions reductions, and many point out that little safeguards exist to avoid climate risks associated with a large-scale shift toward natural gas. A large portion of the controversy stems from the continuous expansion of the shale gas industry and the production methods it uses, namely fracking.

Legal Challenges

In 2007, the Supreme Court ruled in the case of the state of Massachusetts v. EPA that the EPA is legally required to regulate greenhouse gases (GHGs) under the Clean Air Act if it finds them to endanger public health and welfare. The EPA issued an endangerment finding in 2009 that six GHGs pose a threat to public health and welfare for current and future generations, including: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).

The EPA’s authority to regulate GHGs was later reaffirmed by the U.S. Appeals Court in 2012, when the court upheld EPA’s efforts to set limits on industrial and automotive emissions of GHGs. The debate continued in Utility Air Regulatory Group v. EPA, in which the Court upheld EPA’s authority to regulate the majority of stationary sources of GHG emissions.

When EPA first announced the proposed CPP, private coal producer Murray Energy Corp. immediately filed suit in conjunction with several states, challenging the EPA’s authority to mandate state-by-state emission standards for existing power plants. Thus far, the majority of these cases have been thrown out due to the fact that the rule is not yet finalized, but the potential for litigation remains. Meanwhile, the public comment period on the rule has been extended and remains ongoing until December 1, 2014.

The Future of Compliance

As legislative trends move toward industry disclosure and accountability in the oil and gas industry, the EPA has concurrently stressed the term “Next Generation Compliance” as a main goal of enforcement. During the ABA SEER Conference, Cynthia Giles, the assistant administrator at the EPA’s Enforcement and Compliance Assurance Office, defined the concepts of Next Gen Compliance as creating rules with compliance built in, increasing electronic reporting, developing advanced monitoring, increasing transparency, and encouraging innovative enforcement strategies.

The potential rules related to disclosure may mean that information that was once only obtainable through the Freedom of Information Act (FOIA) or Freedom of Information Law (FOIL) requests will become more readily available to us as researchers, and therefore, to our clients. And, such information might only be a keyboard click or two away from us in the future. For now, we’re following the proposed rules and legislation closely and figuring out how to tailor our research services to our clients’ evolving needs.

For additional information on EPA’s Clean Power Plan and interpretations from attorneys in the field, please consult the following sources:

EPA’s Proposed Clean Power Plan: An Opportunity to Reduce Power Sector Carbon Emissions” by Kevin Poloncarz and Ben Carrier of Paul Hastings LLP.

EPA’s Clean Power Plan: An Elephant or a Mouse?” by Chet Thompson and Jared B. Fish of Crowell & Moring LLP.

NRDC Summary of EPA’S Clean Power Plan: Carbon Pollution Standards for Existing Power Plants” by Natural Resources Defense Council.

Regulation of CO2 Emissions From Existing Power Plants Under §111(d) of the Clean Air Act: Program Design and Statutory Authority” by Robert R. Nordhaus of George Washington University Law School and Van Ness Feldman, LLP, and Ilan W. Gutherz of Van Ness Feldman.

Section 111(d) of the Clean Air Act: The Legal Foundation for Strong, Flexible & Cost-Effective Carbon Pollution Standards for Existing Power Plants” by Megan Ceronsky and Tomas Carbonell of the Environmental Defense Fund.