It’s déjà vu all over again — Yogi Berra
Anyone following the Justice Delayed series knows I have been waiting for the other shoe to drop in the continuing saga of challenges to the Clean Power Plan (CPP). Well—it dropped.
On Oct. 13, plaintiffs challenging the U.S. Environmental Protection Agency’s authority to issue New Source Performance Standards (NSPS) offered oral arguments to the U.S. Court of Appeals for the District of Columbia Circuit in the case of North Dakota, et. al. v USEPA, et. al. Don’t be fooled by the name; the challengers in this instance are basically the same crew of states, industry and organizations challenging the EPA’s authority to regulate CO2 emissions from existing power plants in the Clean Power Plan case West Virginia v EPA.
Technically the latest challenge is not a direct shot at the CPP. Finalized last August by EPA, the new source standards limit carbon emissions from four types of electric generating units (EGUs): new and modified fossil steam EGUs; reconstructed EGUs; and, new combined-cycle combustion turbines.
The two rules, however, are inextricably linked in the Clean Air Act (CAA/Act). According to the Act, EPA can neither require existing generating units under section 111(d) to meet stricter requirements than new units nor can they regulate existing sources before new or modified plants under section 111(b).
Stated simply, EPA is prohibited by the Act from regulating existing plants before new/modified ones. Practically speaking, even if the limits under 111(d) are found constitutional, a successful challenge of the NSPS would prevent EPA from ever enforcing the CPP.
The guts of the petitioners’ argument is that the foundation of EPA’s regulations is unproven carbon capture and sequestration (CCS) technology. The CAA requires EPA to base required limitations on the best system of emission reduction (BSER).
BSER, according to the challengers, reasonably implies commercial viability. The Agency, however, seems to have identified only one instance where CCS technology has been demonstrated as feasible--both technologically and economically.
The system identified by EPA as proof of its viability claim is Canada’s Boundary Dam project. The lead member of the consortium, Saskpower, advertises the Boundary Dam project as: a rebuilt coal-fired generating unit, retrofitted with CCS technology. Started in the fall of 2014, the Estevan, Saskatchewan plant came on line as the World’s First Post-Combustion Coal-Fired CCS Project integrated with a power station.
State petitioners and industry opponents, led by Murray Energy Corporation, claim that the one identified demonstration of capture technology is far from commercial. They characterize the project as: being less than one-quarter the size of a full-scale power plant; suffering from massive cost overruns; and failing to demonstrate sequestration in deep saline formations.
Equally, the plaintiffs pointed to the substantial funding the project receives from the Canadian government. The implication being the project is too speculative for the private sector to fund and is merely a governmental proof of concept.
North Dakota makes the additional claim that the demonstration project is even less applicable to its particular circumstance. Power plants in N.D. burn over 99 percent of lignite coal, which has higher carbon concentrations and requires even more energy intensive control technologies. Therefore, results of the Canadian project would not be applicable.
The matters of cost and proven technology have played important roles in other federal court decisions. Keep these matters in mind, as they will be recurring factors in future legal challenges.
As recently as March 2015, SCOTUS declared implementation cost an essential factor to be considered by EPA when drafting regulations. In that case the Court stated:
Agency action is unlawful if it does not rest “‘on a consideration of the relevant factors…..’” and, EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants.
In addition to plaintiffs’ arguments that the Boundary Dam Project does not demonstrate the commercial feasibility of CCS technology, they claim EPA failed to show that carbon emissions from the regulated plants sufficiently endanger public health and welfare so as to require strident regulation.
Even if the courts intuitively believed such emissions harmful, EPA needs to monetize the negative consequences. Determination of reasonable cost is a function of the ratio of the costs of compliance to the cost of the harms done. Without putting a dollar amount on the hazard to human health and welfare, the ratio cannot be established.
It is important to understand that the key difference between sections 111(b) and (d) involves readily available compliance options. The emission targets of the CPP are state based and can be met through system wide efficiencies.
Under the NSPS rules, they cannot. The only way to meet the new source limitation levels is through carbon capture and sequestration at the facility level.
There is a certain dark irony running through the current case. No new coal-fired power plants are currently being built—not because of environmental regulation but the low price of natural gas.
Although EPA will undoubtedly raise this defense in their oral arguments before the three judge panel on Dec. 14, I am skeptical the claim will be accepted by the court. NSPS regulations impact modified or reconstructed fossil/coal steam EGUs; it cannot be stated with certainty that coal-fired power plants will be non-competitive in the future—either because of technological breakthroughs or rising natural gas prices.
Experience limits my willingness to predict the outcome of legal cases as complicated as the West Virginia CPP case and the North Dakota CAA proceeding. I will say that of the two, the 111 (b) case should prove the more problematic for the courts.
Justice Will Continue To Be Delayed
There is little reason to believe this case won’t also find its way to SCOTUS. Once again an evenly divided eight justice panel will come into play. It is possible that a President Clinton would be successful in having a new nominee approved by the time the case makes it all the way to SCOTUS. It is even possible that Judge Garland’s nomination will be approved by the Senate before President Obama leaves office; the theory being that Clinton would appoint a more rabid liberal than Judge Garland.
Given that Senator McCain has announced that Republican senators will oppose all of President Clinton’s appointments, the country will continue to be hobbled by Congressional gridlock. The only way any Clinton nominee to SCOTUS is going to have a relatively clear path to approval is if the 60 Democratic senators needed to force cloture of a filibuster are elected in November.
Legal challenges by the states and fossil fuel industries will continue. No matter the final outcome of the law suits, implementation of environmental regulations will be slowed. Is justice delayed, justice denied? You be the judge.
Joel B. Stronberg
Joel Stronberg, Esq., of The JBS Group is a veteran clean energy policy analyst with over 30 years’ experience, based in Washington, DC.