Via Power Mag:

According to Peter S. Glaser, partner with Troutman Sanders LLP, who practices in the energy and environmental law fields, saying “no” is an option that states have in response to the Environmental Protection Agency’s (EPA’s) Clean Power Plan proposal.

Speaking during a panel discussion at George Mason University’s Law and Economics Center on Feb. 4, Glaser suggested that just saying no was not only an option, but perhaps even the best course of action for many states.

The EPA proposed the Clean Power Plan on June 2, 2014, under President Obama’s Climate Action Plan. Power plants are the largest source of carbon pollution in the U.S., accounting for roughly one-third of all domestic greenhouse gas emissions. The EPA estimates that the proposed rule will help cut carbon pollution from the power sector by 30% from 2005 levels.

The EPA is using its authority under Section 111(d) of the Clean Air Act to promulgate the regulations. Section 111(d) is a state-based program for existing sources. As such, the EPA establishes guidelines and the states then design programs that fit within those guidelines. Once submitted, the EPA gets to review the state plans and make a judgment as to whether or not the criteria set forth was met under the plan. If not, the EPA would then have authority under the statute to impose a federal plan.

According to Glaser, a large number of states, perhaps even a majority, think the rule is a really bad idea and contrary to the best interests of their state’s citizens. For the most part, the states are concentrated in the middle of the country, and in the south and southeast. Most of them rely on coal-fired electricity more than other states do.

“These states think that the EPA regulations are going to require states to submit plans that will have dramatic increases in terms of raising the price of electricity to consumers and impairing the reliability of the electric grid just because the regulations are so aggressive. So they are really reluctant to buy into this program where they have to be the ones to submit plans and therefore they become the public face of the regulations and they become the ones that the citizens get mad at,” Glaser said.

The fact that the regulations face a high-likelihood of being overturned in court is another sticking point. Preparing a plan is extremely costly, time-consuming, and controversial, effectively forcing each state to re-engineer its electric grid in order to meet targets. If a state goes through the process of developing a plan, the entire effort could be wasted if the courts overturn the rule. Additionally, during the time it takes for litigation to play out, investment decisions could be made in order to comply with the regulations, which are difficult, or even impossible, to change.

The question Glaser asked was: What if states were to just say no to the whole program? To answer, he said there were really two alternatives.

One would be to simply not submit a plan. The other would be to submit a plan assuming the extent of the EPA’s authority would be what’s called an “inside the fence line” plan. In the second option, the state would only look at ways to reduce CO2 emissions from existing plants, such as by improving efficiency.

“What we believe EPA’s remedy would be, and its sole remedy would be—and I don’t think this is all that controversial—would be for EPA to do a federal plan,” Glaser said.

Glaser said that he doesn’t think the EPA really wants to do a federal plan. The reason: the EPA doesn’t want to be responsible for the consequences if, as a lot of people predict, the regulation ends up resulting in higher electric prices and degraded reliability.

Would a federal plan be any worse than what a state would put together? Probably not. The reason is that if states build a plan in accordance with the emission reduction requirements set forth by the EPA, there really isn’t any flexibility. In the end, the coal fleet has to take a significant hit. Glaser said that a person could actually make the argument that that’s the whole point of the regulation.

So, Glaser suggested that the best option for some states may be to say no, “at least until these things move through the courts and we find out whether this program is legal in the first place,” which he said “could take a period of years, because it probably will go all the way up to the Supreme Court.”

—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)

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