Obama’s Clean Power Plan Heads to Court: What to Know

President Barack Obama’s plan to rein in carbon pollution from power plants has been a boon for at least one group: the legal profession.

Electric utilities, labor unions, business groups, and coal miners have joined a 27-state coalition in challenging the Environmental Protection Agency’s (EPA) Clean Power Plan, a regulation that aims to cut greenhouse gas emissions. Joining the agency in defense of the plan is an array of environmental groups, public health advocates, renewable-energy developers, large corporations, and 18 other states.

Sixteen lawyers are scheduled to address the U.S. Court of Appeals for the District of Columbia Circuit on Tuesday. Seventy appellate briefs, appendices, supplements, and, yes, corrections have been submitted to the panel. The opponent states’ core brief is 353 pages long; the government submission is 211 pages.

Tuesday’s hearing is the first to test the merits of the plan imposed 11 months ago. While the U.S. Supreme Court cast doubt on its legal viability when it put the program on hold in February, it did not resolve the issue—and may yet be asked to after the appeals court issues a ruling in coming months.

Here is what you need to know about the case:

How Did We Get Here?

The path to the EPA’s Clean Power Plan can be traced back to former President George W. Bush, who campaigned for the White House with a pledge to regulate carbon dioxide alongside traditional air pollutants from power plants. Bush reversed course after taking office, but environmentalists didn’t give up. In 2007, the Supreme Court ruled that carbon dioxide and other greenhouse gases can be regulated under the Clean Air Act if they endanger public health or the environment. Two years later, the EPA concluded greenhouse gases pose a threat, paving the way for the Clean Power Plan.

It all began with “an oilman from Texas,” noted Carl Pope, the former executive director of the Sierra Club, who is now a Bloomberg View contributor. “The war on coal you’ve heard so much about is really more or less Barack Obama carrying out one of George Bush’s unfulfilled campaign promises.”

What Does the Clean Power Plan Do?

The plan dictates specific carbon-cutting targets for most states based on the amount of greenhouse gases they released in the process of generating electricity in 2012. The EPA left Alaska, Hawaii, and Vermont (which has no coal plants) out of the plan. Instead of imposing specific limits on power plants, the EPA got creative. It gave each state a goal and gave them all broad latitude on how to achieve it. They aren’t limited to plugging smokestacks: A state could, for example, encourage homeowners to add insulation or get power companies to convert a coal plant to natural gas. It’s precisely that novel approach—regulating emissions by going beyond the power plants themselves—that the critics are challenging. If it ultimately loses, the EPA could go back to the drawing board and rewrite its rule to require emission cuts at individual power plants.

What Are the Stakes?

Carbon dioxide emissions are already declining in the U.S. as utilities replace coal with natural gas and as tax credits encourage the development of wind and solar power. But the Clean Power Plan ensures that the U.S. will keep making progress and confirms the nation’s intention to meet its obligations under the Paris climate agreement.

“It has really important signaling value to indicate that we are definitely going to do this,” said Benjamin Longstreth, a senior attorney at the Natural Resources Defense Council.

If courts strike down the plan, meeting U.S. climate goals gets harder—but not impossible. The U.S. is on track to achieve two-thirds of the Clean Power Plan’s headline carbon-cutting goal even if the rule doesn’t survive legal challenges, according to data from the U.S. Energy Information Administration.

The outcome of the case will also dictate how much authority the next president will have to keep limiting emissions—especially if he or she wants to tackle what’s coming from manufacturing facilities and refineries. EPA’s flexibility is on the line here, and a narrow reading of the agency’s authority could block states and utilities from using market-based programs for complying with an array of air quality rules.

“We have these great trends in the industry,” said Joanne Spalding, a managing attorney with the Sierra Club’s environmental law program. “But we’re not going to get there—we’re not going to get to the level of emissions reductions we need to achieve our climate goals and to meet our international commitments—without the Clean Power Plan and EPA’s continued authority to require reduced emissions from these sources.”

It’s exactly that authority that opponents are worried about. “The rule’s restructuring of nearly every state’s electric grid would exceed even the authority that Congress gave to the Federal Energy Regulatory Commission, the federal agency responsible for electricity regulation,” they wrote in a filing.

Who Are the Winners and Losers?

The biggest loser is coal; just ask the mining companies that raced to challenge the rule they say puts unfair pressure on states to retire power plants that use the fossil fuel.

“The rule will force the complete closure of power plants and mines,” said miner Peabody Energy Corp. in a filing with six other companies opposed to the plan.

But coal’s loss is wind, solar, and natural gas-fired power’s gain. States and utilities are encouraged to bring more renewables online to meet their carbon targets, while natural gas burns cleaner and can replace coal in some plants. The Clean Power Plan also is expected to boost pressure on states to keep aging nuclear plants online, because they provide carbon-free power essential to meet the rule’s targets.

The hardest-hit states under the plan are those that rely on coal-fired power and haven’t done much to pare emissions since 2012. Right now, roughly 40 percent of the compliance burden falls on just seven states. South Dakota, for example, is required to make the biggest cut, ordered to slash emissions 48 percent below 2012 levels. Montana (47 percent) and North Dakota (45 percent) aren’t far behind. Connecticut and Idaho have among the lowest emissions-cutting targets, at 7 percent and 10 percent, respectively.

“In states that mine coal, produce coal, manufacturer things, or rely upon it for their electricity, this rule will have vast economic and political implications,” said Michael Nasi, an environmental and energy attorney with Jackson Walker LLP in Austin. The rule rightly rewards states that have been cleaning up their act, he said.

Even so, many of the states complaining the loudest are on track to meet the targets. According to an analysis commissioned by the Environmental Defense Fund, as many as 21 of the states fighting the Clean Power Plan in court can hit their interim goals during the first three-year compliance period from 2022 to 2024. And as many as 18 of them can get all the way through 2030 by relying exclusively on existing generation, already planned investments, and implementation of existing state policies, EDF said in a legal filing summarizing the analysis.

Who’s On First?

Leading the lawsuit is West Virginia Attorney General Patrick Morrisey, whose deputy raced to the court to challenge the rule the same day the Clean Power Plan was published—earning the state top billing on the case that now bears its name. He beat out roughly a dozen other lawyers who were lined up at a Washington, D.C., courthouse to file papers the minute it opened on Oct. 23, 2015. Twenty-six other states have joined the legal challenge; Nevada has filed a friend-of-the-court brief opposing the CPP too.

Eighteen states plus a number of cities and renewable power trade groups have come to the EPA’s defense. The supporters include former EPA administrators, Democratic lawmakers, and the American Lung Association.

The dispute has divided the electric industry. While the American Public Power Association, the National Rural Electric Cooperative Association, and a slew of utilities are challenging the EPA, Houston-based power generator Calpine Corp., Pacific Gas and Electric Co., Southern California Edison Co., and Dominion Resources Inc. support the agency. Dominion, which has no-carbon nuclear plants in its portfolio, argues that the Clean Power Plan is not only “feasible,” it’s a better choice than the alternative.

Leading tech firms have also joined the fight. Amazon.com Inc., Apple Inc., Alphabet Inc.’s Google, and Microsoft Corp.—companies that have set aggressive in-house goals to use renewable energy to run data centers and manufacturing facilities—argue the rule is good for both business and the environment.

Former U.S. Secretary of State Madeleine Albright, former Secretary of Defense Leon Panetta, and former diplomat William J. Burns joined forces to warn that the problems created by a warming planet—from rising sea levels to severe weather events—pose “a critical and growing national security threat.”

©2016 Bloomberg News

Lead image: Obama walks to the lectern to speak about clean energy jobs at Hill Air Force Base in Utah in 2014. Credit: Mandel Ngan/AFP via Getty Images

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