U.S. CHAMBER OF COMMERCE

Two Wrongs Make a Blackout

By Heath Knakmuhs

Unless you live under a rock, you likely know by now that the Obama Administration’s carbon emissions rule – which could be referred to as the Costly Power Plan – proposes to redesign the country’s electric power sector.  You – the electricity consumer – are expected to foot the bill.  The unprecedented argument by the Environmental Protection Agency (EPA) that it has the authority under the Clean Air Act to reconfigure how electricity is generated, transmitted, and used across the country has naturally given rise to what will likely be the most litigated Clean Air Act rule in history.  In fact, twenty-seven of the forty-seven states that stand to lose authority over their electricity markets pursuant to the EPA’s rule have filed suit with the Court of Appeals for the D.C. Circuit to push back against this federal power grab. 

But not only have nearly sixty percent of the regulated states filed suit to upend the EPA’s plan, they have also asked the Court to put the EPA’s Costly Power Plan on hold until the legal challenges to the rule are decided.  The Chamber is leading a group of fifteen other associations and affected entities that are seeking a “stay” of the EPA’s unprecedented carbon emissions rulemaking.  Even though the EPA has established a 2022 initial compliance date for its carbon rule, a stay is strongly justified here.

The complete judicial review of complex rulemakings – this one spanning over 3,000 pages, all from under 300 words in the Clean Air Act – can take multiple years.  State laws require that utilities plan their resources 10-20 years in advance, therefore necessitating actions now to move toward 2022 compliance mandates.  Therefore, as was recently demonstrated with another EPA rulemaking, much of the damaging changes forced on our electricity system could already be done before judicial review is complete.  Thus, a judicial stay of the rule is not only prudent, but essential to maintain grid reliability and protect consumers in the wake of another, subsequently deemed improper, EPA rule.

In December 2011, the EPA finalized its Mercury and Air Toxics Standards for electric power plants (MATS Rule).  This rulemaking mandated hundreds of power plants to either install costly environmental controls or completely shut down by April 16, 2015, with the potential for an extension until April 2016 to carry out compliance activities.  The MATS rule was also challenged in court by many of the same states, associations, and companies that are now crying foul over the Administration’s second big attempt this year to bankrupt coal-fired power plants.  But there was no stay of that rule while litigation was ongoing.

On June 29, 2015, however, the Supreme Court held EPA’s MATS Rule was unlawful, noting that it would be “inappropriate” for EPA “to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.” 

The problem is that this ruling came too late for the majority of the power plants impacted by the rule.

As the above map illustrates, the Supreme Court’s invalidation of the MATS Rule came too late for the 163 generating units across the country that had already closed for good, with each depicted here citing EPA regulations as a cause for their closure.  While some states escaped unscathed from this EPA offensive, others such as Ohio lost over thirty electric generation units that could have otherwise been saved if the MATS Rule had been subject to a stay during its judicial review.  In total, over 50 GW of affordable, reliable power plants have been shuttered by an illegally crafted MATS Rule.

The states seeking a stay of the EPA’s Costly Power Plan shouldered 123 of these closures.  They know, better than others, that another round of shutdowns driven by legally-questionable EPA carbon regulations could deal a significant blow to their economies. 

In advance of the judicial rebuke of the MATS Rule, EPA Administrator Gina McCarthy brazenly brushed off the potential for a loss by noting that the forthcoming verdict really didn’t matter because the Agency had already achieved what it set out to do – close plants.  That is exactly what the EPA hopes will occur again with its carbon emissions rules—and without a stay, they might get their wish.  We can only hope that the Court will this time prevent the EPA from pulling another fast one on our constitutional system of checks and balances … and the American people. 

 

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