Via Forbes:

Last year, the Obama Administration proposed the Clean Power Plan (CPP), an Environmental Protection Agency (EPA) regulation that would reduce carbon emissions by 30 percent. A necessary result of these carbon reductions is increased electricity costs and reduced grid reliability as coal plants are shuttered. These concerns have been well documented. State legislatures, public utility commissions, departments of environmental quality, governors, and attorneys general from across the country have expressed anxiety about the policy implications flowing from EPA’s proposed CPP.

In a recent letter sent to every governor, Senate Majority Leader Mitch McConnell (R-Ky.) articulated his concerns about the CPP and EPA’s campaign to pressure states to hand over control of their power markets to the federal government. The conclusion Sen. McConnell reached – and one supported by conservative and free-market groups across the country – is that states should assess the CPP on their own and wait until the courts rule on the CPP before ceding irretrievable power to EPA.

The Clean Power Plan

The EPA set carbon reduction mandates for every state. EPA then told states there are four different tools each state can use to meet these mandates: improve the efficiency of coal plants, force fuel switching from coal to natural gas, bring more renewables online, and reduce consumer electricity consumption. EPA wants states to submit a legally binding State Implementation Plan (SIP) to the EPA detailing how the state will use these four tools to meet EPA’s prescribed carbon reduction target. States, however, can decide not to submit a plan and just let the federal government write a plan for the state, a so-called Federal Implementation Plan (FIP). One of the most pressing legal questions surrounding the CPP is which of the above tools EPA can unilaterally include in its FIP.

This is where things get interesting, and a bit confusing. There is a likelihood that EPA does not have the legal authority to unilaterally force states to switch electricity production from coal to natural gas, construct renewables, and reduce electricity consumption – we will refer to these carbon reduction policies as the three tools. Up until the proposed CPP, it was generally believed these three tools were only accessible by states, not the EPA. States, however, could effectively give EPA control of these tools through submission of a SIP. It is precisely because no one questions a state’s authority to use the three tools that EPA wants states to submit a SIP. Once EPA has access to these three tools because a state submitted a SIP, the state cannot then revoke the tools from EPA. The fox is in the henhouse.

Sen. McConnell explains it this way:

The EPA’s deadlines were very likely designed to force states to develop and submit implementation plans before the courts can decide on the legality of the CPP. Their hope is that states will commit to these plans before serious legal questions are resolved.

States that submit a SIP including these three tools are relinquishing substantial autonomy over their own power markets to the EPA. That’s because EPA has the final say over any SIP. If EPA doesn’t like a state’s SIP, the agency can throw it out or change it as they see fit.

What Happens If A State Does Not Submit A SIP?

We are in unchartered waters. There is no precedent for this regulation. If a state does not submit a SIP (a perfectly legal option) and EPA writes a Federal Implementation Plan (FIP), what will the federal plan look like? EPA will almost assuredly try to grab control of states’ tools and prescribe a FIP that includes fuel switching from coal to natural gas, the construction of renewables, and electricity reduction policies. Does EPA have the legal authority to wrest these policies away from states that do not want to relinquish them? Probably not, but no one knows for sure. Courts will need to assess the CPP and are already looking at this question.

Given all the ambiguity surrounding the CPP, many states are holding off from submitting a SIP until they know more about the rule’s legality and its impact on their state. This is the smart, wait-and-see argument Sen. Mitch McConnell is making.

Over in the House of Representatives, Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.) has introduced legislation that would make it easier for states to adopt the approach Sen. McConnell is advocating for. With more states pushing back against the EPA every week, EPA knows the American people are watching the agency and waiting to see what the final version of the Clean Power Plan will look like.

See the article here.