Via RTO Insider:

BALTIMORE — Former Environmental Protection Agency official Jeff Holmstead says he hasn’t made predictions on how the courts will rule on previous environmental rules affecting the electric industry.

But Holmstead, former EPA assistant administrator for air and radiation, says he’s very confident that the agency’s new carbon emission rule, the Clean Power Plan, will not live long enough to be implemented.

“I have not been out there predicting any of the other rules would be struck down,” said Holmstead,  now a lobbyist for utilities and the coal industry, during a panel discussion that opened the Organization of PJM States Inc. annual meeting last week.

“I had my concerns about [the Mercury and Air Toxics Standards]; I had concerns about [the Cross-State Air Pollution Rule]; but I was pretty confident they would be upheld in court. … But this rule is completely different from anything that EPA’s ever done before. … If this gets to the Supreme Court, there are right now almost certainly five justices that would vote to overturn it.”

Although the court has said EPA can regulate CO₂ emissions, Holmstead said, the agency must do so by setting an emission rate based on the best technology available. “It cannot require an existing source to go out and pay another entity to do something else that has nothing to do with the particular plant,” he said.

“The only program I think that would clearly withstand judicial scrutiny would be an inside-the-fence line, efficiency-based approach. The reason EPA didn’t do that is because it doesn’t get you very much,” he said. “The reason they’ve taken this big, legally vulnerable step is because that’s the only way they thought they could get meaningful reductions.”

Holmstead — who served in both Bush administrations and now lobbies for Arch Coal, Southern Co. and Duke Energy as head of the environmental strategies group at Bracewell & Giuliani — is hardly a neutral observer. He is loathed by environmentalists, with Greenpeacelabeling him “King Coal’s Mercury Pollution Lobbyist.”

But none of the other members of the panel — which included PJM’s Mike Kormos and officials from Exelon, American Electric Power, the American Wind Energy Association and the Southern Environmental Law Center — challenged Holmstead’s legal analysis, although some questioned his prediction that a Supreme Court ruling could come by the end of 2017.

(At a conference in Washington Tuesday, EPA Associate Assistant Administrator Joseph Goffman said the rule’s building blocks – which include increased dispatch of natural gas plants and renewables – “reflect what states and utilities told us was the ‘Best System of Emission Reduction.’”)

Holmstead pointed to four dates that will determine the rule’s fate:

In the first quarter of 2016, he said, a decision is likely by the D.C. Circuit Court of Appeals on requests for a stay (highly unlikely, he acknowledges).

The next milepost will be the 2016 presidential election. “The [EPA] administrator and the administration have been telling people around the world that once this regulation is finalized it will be very hard for anyone to change it. It becomes a part of the law and what’s done is done,” he said.

“There are some rules that are very difficult for a new administration to change, for legal reasons or practical reasons. But this is not one of those regulations. So I can say with some confidence that if there is a Republican administration … the rule will fairly quickly be revoked.”

Holmstead sees a D.C. Circuit court ruling on the merits of the rule by the end of 2016 because the Obama administration has said it wants to defend it before the president leaves office.

Because of the expedited schedule, a Supreme Court ruling could come by the end of 2017, he said, though others say 2019 is a more realistic timeline.

And if the rule is thrown out?

“At that point we’re probably all back on Capitol Hill talking about legislation,” he said. “And the good thing about legislation of course is that it really does provide you much more certainty.

“The fact that EPA will ultimately likely regulate [carbon] regardless of how this rule comes out doesn’t tell you very much about your future investment decisions. Because you just don’t know if EPA can do anything that’s at all aggressive.”

See the article here.