A stunning U.S. Supreme Court decision to halt implementation of the Obama administration's signature regulation for cutting greenhouse gas emissions has left state agencies scrambling.
The 5-4 ruling freezes U.S. EPA's Clean Power Plan while the rule is under review at the U.S. Court of Appeals for the District of Columbia Circuit. The high court's ruling late yesterday throws open the door to a prolonged legal battle that could delay early decisions by states around how to meet federal emissions targets.
The ruling is also a major setback for President Obama, who during his second term has made the EPA rule limiting carbon emissions from power plants the centerpiece of a broader policy to combat climate change. Obama touted his executive authority to regulate carbon dioxide at home and pressed for similar commitments from China and India ahead of a global climate agreement in Paris last December.
In a White House statement and during a press call with administration officials, the president's top advisers defended the EPA rule, which aims to cut carbon emissions from power plants 32 percent below 2005 levels by 2030, saying it has a "strong legal and technical foundation."
The administration also sought to rapidly shore up efforts to keep states engaged in the early stages of implementation.
"We remain confident that we will prevail on the merits," said the White House statement. "Even while the litigation proceeds, EPA has indicated it will work with states that choose to continue plan development and will prepare the tools those states will need."
A panel of judges on the D.C. Circuit are the next step in what has become the most aggressively litigated environmental regulation in U.S. history. More than two dozen states, the U.S. Chamber of Commerce, coal companies and some electric utilities have said EPA overreached in its use of the Clean Air Act to force states and utilities to shift away from old coal-fired power generation and use lower-carbon or carbon-free sources of electricity, including wind, solar, natural gas and energy efficiency.
Eighteen states, environmental groups and a range of power industry interests have filed supporting briefs, saying the rule should be kept in place. A stay, they argue, would "only deepen uncertainty" and "cause harm to the power companies and others who are investing in clean generation technology."
With hotly contested presidential primaries underway and Republicans campaigning on platforms hostile to federal climate action, the speed and timing of litigation have become an issue.
If the lower court upholds the regulation, then it's expected to land on the doorstep of the Supreme Court again. All the while, the court's stay of the rule will remain in place, likely making 2017 the earliest time the rule could take effect, well after Obama leaves office.
'Can't stay climate change'
On hearing of the Supreme Court stay, opponents of the power-sector carbon rule rejoiced, while EPA press secretary Melissa Harrison said in a statement that the agency is disappointed that the rule has been stayed, but "you can't stay climate change and you can't stay climate action."
"Millions of people are demanding we confront the risks posed by climate change. And we will do just that," she said. "We believe strongly in this rule and we will continue working with our partners to address carbon pollution."
Republicans on Capitol Hill lauded the decision. Sen. Jim Inhofe, the Oklahoma Republican who chairs the Senate Environment and Public Works Committee, said in a statement that it is a "major blow to President Obama's legacy on climate change" and a "sign the court recognizes that the Obama administration has overreached its authority."
"These challenges highlight the enforceability problems, encroachment on state authority, skyrocketing electricity prices, and job losses during an already anemic economy that these regulations will cause," Inhofe said.
Senate Majority Leader Mitch McConnell (R) touted it as proof that states should have followed his advice last year to "just say no." McConnell, whose state of Kentucky is a big coal producer and consumer, called on governors to put off submitting to EPA their plans for cutting emissions until a federal court ruled. "Today's Supreme Court order to halt those regulations -- regulations that attack the middle class and won't even have a meaningful impact on global carbon emissions -- is just the latest sign they may not be [legal]," he said.
The decision to stay the EPA rule is a highly unusual step for the Supreme Court. Lawyers interviewed by E&E, both supporting and opposing the rule, said they couldn't recall the justices ever halting a rule before a lower court weighed in on whether it was legal.
Scrambling state plans
The decision threw yearslong state planning processes into limbo, as agencies considered whether they would still need to adhere to a Sept. 6 deadline to submit an initial carbon-cutting draft and request a two year-extension.
Montana Gov. Steve Bullock (D) immediately announced that the first meeting of the state's Interim Clean Power Plan Advisory Council, scheduled for later this month, will be canceled.
Montana faces some of the steepest carbon reduction requirements in the nation under the Clean Power Plan. Bullock was disappointed by the rule's targets for his state, but his office had been working on a compliance strategy.
"I have been clear that I think these rules were unfair to Montana. Given the court's ruling today, I am putting the work of the Clean Power Plan Council on hold," Bullock said in a statement. "What we cannot put on hold, however, is the need to address climate change and embrace Montana's energy future, and I am committed to ensuring we do so on our own terms."
Electric Reliability Coordinating Council Director Scott Segal said he doubts states that are suing but planning for the rule will continue in that direction. "I'm sure every state in the union is obviously rethinking that, because the rule's been stayed," Segal said.
But other states opposed to the rule, while shocked and pleased by the decision, said they might have an obligation to keep working.
The Arizona Department of Environmental Quality had a Clean Power Plan meeting scheduled for this morning, and Air Quality Division Director Eric Massey said the "decision is late-breaking and requires our careful and thoughtful analysis to ensure that Arizona pursues the most prudent path."
The Virginia Department of Environmental Quality, whose governor supports the rule, has a similar meeting planned for Friday. Air Division Director Michael Dowd said he would need to "read the order, chat with our lawyers, commissioner and team."
Arkansas Department of Environmental Quality Director Becky Keogh and Arkansas Public Service Commission Chairman Ted Thomas in a joint statement said they were pleased with the decision but would "strive to balance our obligation to be wise stewards of taxpayer money with our obligation to be fully prepared should the Supreme Court ultimately uphold the plan."
Oklahoma, whose governor issued an executive order forbidding compliance with the rule, fell somewhere in between. "Oklahoma continues to engage with the Southwest Power Pool and stakeholders on the impacts of the Clean Power Plan," Michael Teague, Oklahoma's secretary of energy and environment, said in a statement. "Since the Supreme Court has stayed implementation, Oklahoma no longer faces a September compliance date and can focus on assisting the attorney general on overturning this rule."
A senior White House official, however, said "there are powerful drivers outside of the scope of the Clean Power Plan that are going to continue to mean a shift to cleaner energy sources in the power sector [and] additional investment in clean energy."
National Association of Clean Air Agencies Executive Director Bill Becker said he expects much of the work states are doing to prepare for carbon regulations to continue. "Reducing greenhouse gases is a smart public policy because it's meant to do things more efficiently -- this is the moral of what states and localities have learned over the past couple of years," Becker said.
Becker acknowledged that the Supreme Court's move could also complicate things for the parties most affected by the ruling -- power companies.
"At some point, there is a distinct possibility that utilities will rue the day that the Supreme Court has stayed this rule, because if states continue to adopt their own individual programs, it will create a multi-headed hydra of greenhouse gas programs around the country," Becker said.
"The one thing utilities have advocated for is efficiencies," he added. "The irony [is that] this decision could be slamming utilities who are welcoming a very reasonable and efficient way of reducing greenhouse gases."
Alexandra Dunn, executive director of the Environmental Council of the States, which represents state environmental commissioners, agreed that the regulation has already built up a head of steam in state capitols. State environmental and utility regulators have been collaborating, far more than usual.
"Even without the Clean Power Plan, the need for the energy and environmental sectors of our economies to interact was extremely overdue," Dunn said. "I predict that the conversations happening may continue, but perhaps not around the exact structure of the Clean Power Plan."
South Carolina has been in carbon-cutting talks for more than two years, said Hamilton Davis, energy program director for the South Carolina Coastal Conservation League and a participant in the state's planning process. "I don't anticipate that the Supreme Court hitting the pause button is going to derail the work that we've been doing," Davis said.
State officials noted that initial plans due in September under the EPA rule aren't a heavy lift. "There's still a pretty big window of time" before final plans are due in 2018, one official noted.
Inside the court's decision
The justices' leanings in the decision broke down on familiar lines. Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito joined in the decision. Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan would not have granted the stay.
In weighing stay requests, the justices must consider certain criteria, including whether the court would likely agree to review the merits of the case, whether the petitioners would face irreparable harm without a stay, and whether the court would likely overturn a lower court's decision on the merits of the case.
In the Clean Power Plan litigation, however, there is no lower court decision on the merits. While the D.C. Circuit considered the arguments for and against a stay, it has not yet been fully briefed on the broader merits of the case or issued a decision on the rule's legality. The Supreme Court's decision to stay the rule before any lower court has reviewed it is considered highly unusual.
"The court has kind of inserted itself in a way that it hasn't done before and in a way that doesn't bode well for EPA," Dorsey & Whitney attorney James Rubin said. "It hasn't really stayed a rulemaking challenge. That usually goes to the D.C. Circuit and works its way up."
The administration hammered that point in a brief to the court last week, warning against the "danger of premature intervention." States and industry challenging the rule countered that the unprecedented reach of the Clean Power Plan necessitated extraordinary legal action (EnergyWire, Feb. 5).
Bracewell LLP attorney Jeff Holmstead, who is representing industry clients against the rule, said the court's decision shows the justices' confidence that the challengers ultimately are likely to succeed in the litigation.
Rubin said it's likely the justices were also swayed in part by a fourth factor in the court's criteria for stay applications: the level of harm to each side -- or "balance of equities" -- and the public interest.
"What probably was on some of the judges' minds was the MATS case," Rubin said, referring to an EPA mercury rule that was partially invalidated by the high court, but not before many power plants began complying. "That's an equities issue. They looked at the rule and said, 'Well, we could stay it and keep the status quo, or we could let it pass and by the time we get to it, a lot of things could have happened.'"
Rubin added that the decision may have broader impacts, emboldening other challengers to pursue stays for various federal regulations.
"There's no reason for people not to try it, because if they lose in the D.C. Circuit, they can just go to the Supreme Court," he said, adding that Roberts, who handles applications from D.C. Circuit cases, may find himself busier than usual.
But Holmstead said a rush of stay requests is unlikely because the Clean Power Plan is uniquely far-reaching. "The circumstances here really were extraordinary, and all of us who were involved were able to show the court that it was highly unusual," he said. "So maybe the Supreme Court's decision wasn't such a big surprise."
Supporters of the regulation, meanwhile, are taking comfort in the preliminary nature of the Supreme Court's decision.
"It's possible that the court is saying, 'Well, let's just hold this in place until the lower court gets a closer look, and we get a look,'" Natural Resources Defense Council attorney David Doniger said. "This is a preliminary decision."
Senior administration officials reiterated that sentiment on a press call last night, repeatedly calling the decision a "temporary procedural determination."
Reporters Edward Klump, Rod Kuckro and Joel Kirkland contributed.