The litigation over EPA’s Carbon Pollution Emission Guidelines for Existing Electric Generating Units (Carbon ESPS) continues to take surprising turns. As previously reported in the “Dinsmore Air Quality Letter,” the U.S. Supreme Court stayed implementation of the rules pending judicial review by an Order issued February 9, 2016. Then on May 16, 2016, the D.C. Circuit Court of Appeals entered an Order in West Virginia v. EPA directing that oral argument in the consolidated cases would be heard en banc. Normally, cases are heard by a three-judge panel and the losing party may then seek en banc review before petitioning the U.S. Supreme Court to hear the case. A three-judge panel had already been assigned, and oral argument was set to occur on June 2, 2016. The Order directing en banc review rescheduled the oral argument to September 27, 2016. As a result, a decision on the appeal is not expected until after the November presidential election. Whatever the decision, a petition to the Supreme Court to hear the case will undoubtedly occur.

In related developments, disagreements continue over the effect of the Supreme Court’s stay on deadlines in the rule and the permissible scope of EPA regulatory activities related to the Carbon ESPS. Statements by EPA officials indicate the agency intends to move forward with certain actions to provide support to states that are continuing to work on compliance plans despite the stay. Those activities include continued work on the Clean Energy Incentive Program (CEIP), which is intended to encourage energy efficiency projects as part of the agency’s early action incentive program. In June, EPA published a supplemental proposal addressing certain design elements of the program. Critics argue that the proceeding with rulemaking that is integrally tied to the stayed rule requires potentially affected parties to expend resources to protect their rights – actions that should not be required in light of the stay. The proposed model trading rule also remains pending despite pushes by some for action. Senator Inhofe, Chair of the Senate Committee on Environment and Public Works, disagrees with EPA’s position on the effect of the stay and in a June 9 letter to Acting Assistant Administrator McCabe, requested responses to questions related to EPA’s continued implementation activities.

With respect to the New Source Performance Standard, EPA denied five petitions for reconsideration. EPA deferred action on the petitions filed by the Biogenic CO2 Coalition and Wisconsin regarding treatment of biomass. Following EPA’s denial of reconsideration, the D.C. Circuit issued an Order on June 24 that suspended the existing briefing schedule in the litigation over the New Source Performance Standard, North Dakota v. EPA, No. 15-1381. A new schedule has now been set with final briefs due February 6, 2017.