HIGHLIGHTS:

  • On Aug. 3, 2015, President Obama unveiled the final Clean Power Plan (CPP) rule, which sets forth a historic, ambitious regulation for cutting greenhouse-gas pollution.
  • The CPP establishes the first-ever national standards to limit carbon pollution from power plants. These regulations are the cornerstone of President Obama’s environmental legacy.
  • In the coming months, the president and his cabinet are expected to engage in a series of events and multilateral meetings to reinforce the benefits and flexibility of the CPP and demonstrate U.S. leadership.

President Obama unveiled the final Clean Power Plan (CPP) rule on Aug. 3, 2015, which sets forth a historic and ambitious regulation for cutting greenhouse-gas pollution. The CPP establishes the first-ever national standards to limit carbon pollution from power plants. On the same day, the Environmental Protection Agency (EPA) issued the final Carbon Pollution Standards for new, modified and reconstructed power plants, and also proposed a federal plan and model rule to assist states in implementing the CPP.

The final rules will be effective 60 days after their publication in the Federal Register. States will be required to submit an emission reductions plan or request an extension by Sept. 6, 2016. Mandatory emission reductions must begin in 2022 and will be phased in through 2030. All states and affected electric generating units (EGUs) must achieve the final emission performance rates or equivalent state goals by 2030 and maintain that level thereafter.

These regulations are the cornerstone of President Obama’s environmental legacy. The CPP aims to limit carbon emission from both new and existing power plants that generate the largest slice of U.S. greenhouse-gas emissions. The final CPP sets a goal of cutting carbon pollution from power plants by 32 percent by the year 2030, compared with 2005 levels.

The final rule:

  • Requires states to develop and submit an emissions reduction plan to the EPA by Sept. 6, 2016, or submit an application for an extension of time. The EPA may grant an extension of time until no later than Sept. 6, 2018, to file a state plan.
    • If a state with affected EGUs does not submit a plan or receive an extension of time, then under the Clean Air Act (CAA), the EPA will establish a Federal Implementation Plan (FIP). (See the proposed federal implementation plan.)
  • Establishes a “glide path” or set of interim benchmarks. The first compliance period starts in 2022.
    • The EPA is creating an eight-year interim period over which states must achieve the full required CO2 reductions. The EPA credits three interim benchmarks (2022-2024, 2025-2027, 2028-2029) to help ensure state plans are on track to meet reduction goals.
  • Requires EGUs to achieve the final emission performance rates or equivalent state goals by 2030 and maintain that level thereafter. (See the individual state emission goal fact sheets.)
  • Provides states with a model plan and with "trade-ready" elements for swapping compliance credits.
  • Incentivizes early action to build renewable energy and implement user-side energy efficiency programs in low-income communities.
  • Aims to shift toward renewables rather than encourage an early surge to natural gas-fired electricity.
    • Under construction or expanded nuclear generation is eligible for credit as incremental zero-carbon capacity. However, retention of existing nuclear plants does not qualify those plants for zero-carbon credits.
  • Contains a grid reliability assurance mechanism that seeks to provide a reliability safety valve for individual sources where there is a conflict between the requirements of a state plan and the maintenance of electric system reliability.

(See the final CPP rule or the supporting material.)

Implementation of the CPP

The Obama administration has pledged not to hold off implementing this rule while Congress or the courts review it. Therefore, federal agencies are moving full-steam ahead to assist states in the development of their proposed state implementation plans.

The primary agencies working to coordinate efforts to help ensure continued reliable electivity generation and transmission during the implementation of the CPP are the EPA, Department of Energy (DoE) and the Federal Energy Regulatory Commission (FERC). These agencies are working together to:

  1. Monitor the progress of states as they develop single-state or multistate plans to meet the requirements of the CPP.
  2. Monitor the implementation of state plans or, where applicable, a federal plan, to detect any potential reliability effects.
  3. Ensure coordination, as appropriate, to address any issues concerning reliability that may arise.

(See the EPA/DoE/FERC coordination plan.)

In addition, each EPA regional office has established a CPP team that will work with states and utilities in their region to understand and implement the rule. (See the state emission reduction goals and an EPA point of contact.)

Challenges to the CPP

Needless to say, these regulations will have a dramatic impact on the way electricity is generated in the United States for decades to come. As a result, the announcement of the final rule also kick-starts a fierce set of legal and congressional challenges for the months and years to come. The CPP is also expected to be a hot topic on the presidential campaign trail and elections in 2016.

Over the next six months, it is expected that any number of congressional efforts to undermine the CPP will surface. The Senate majority leader has vowed to use every tool at his disposal – legislation, amendments and appropriations riders – to block or roll-back the rule. The Senate Environment and Public Works Committee has already begun drafting legislation to roll-back the rule. The bill is expected to be marked-up this week and ready for floor action this fall. Similarly, House leadership has called for action on the rule this fall.

Among the tools available to Congress is the Congressional Review Act (CRA). The CRA, passed during the Clinton administration, is one option that allows Congress to disapprove and vacate new regulations. The CRA operates essentially like any other legislative action. Majority votes in both chambers are required, in addition to presidential approval. However, once it has received a final regulation, Congress only has a limited time period in which to introduce a joint resolution of disapproval for that regulation.

Starting on the date on which the regulation is received, either chamber must introduce the joint resolution within 60 days of continuous session. If a CRA is proposed, debate is limited to 10 hours and may not be filibustered. In addition, points of order against the resolution are waived; it is not subject to amendment, or a motion to reconsider or postpone. If Congress adopts a joint resolution of disapproval, it must then submit to the president for consideration. If the president vetoes the joint resolution, the regulation will become effective unless Congress can override the veto within 30 session days after receiving the president’s veto.

In the legal arena, entities opposed to the final CPP will seek a stay of implementation until the courts ultimately resolve the pending legal challenges. Such motions for stay are difficult to obtain – this will be especially true for this rule. Thereafter, a number of legal challenges will follow in the U.S. Court of Appeals for the District of Columbia Circuit from utilities, associations, states and other stakeholders. Opponents of the rule will challenge the CPP under a number of different legal theories, including the scope of EPA’s authority under Section 111, EPA’s interpretations of Section 111(d), and constitutional challenges. The final rule will likely be tied up in the appeals process for the next several years.

CPP and the Road to Paris

In late November 2015, the United Nations Framework Convention on Climate Change will convene in Paris, France, in hopes of reaching a global agreement to reduce greenhouse-gas emissions. The United States Intended Nationally Determined Contribution (INDC) submission is a 26 percent to 28 percent reduction of CO2 from 2005 levels by 2025. The reductions in the U.S. INDC are based almost solely on the anticipated reductions of the CPP. There are many who believe that challenges to the CPP would greatly harm the United States' credibility leading up to the Paris conference. However, as mentioned above, a stay of the rule may be very difficult to obtain.

In the coming months, the president and his cabinet are expected to engage in a series of events and multilateral meetings to reinforce the benefits and flexibility of the CPP and demonstrate U.S. leadership in advance of the Paris meeting. During the week of July 27, 2015, the administration held a White House event to unveil a series of commitments to reduce CO2 by major corporations. This is expected to be the first in a series of similar events throughout the fall. For example, the president and Secretary of State John Kerry will convene a ministerial level meeting in Alaska later this month to highlight the impacts of carbon pollution in the Arctic. Similarly, the Pope’s visit to the U.S. in September is also expected to focus on the moral imperative to address the threat of climate change.