American Bar Association Section of Environment, Energy, and Resources

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1 American Bar Association Section of Environment, Energy, and Resources EPA s Proposed Clean Power Plan: An Opportunity to Reduce Power Sector Carbon Emissions Kevin Poloncarz Ben Carrier Paul Hastings LLP San Francisco, California 22nd Fall Conference Miami, Florida October 8-11, 2014 ABSTRACT On June 2, 2014, EPA released its proposed Clean Power Plan. The Clean Power Plan aims to reduce carbon dioxide ( CO 2 ) emissions from existing fossil fuel-fired electric generating units ( EGUs ) by 30 percent (%) by 2030, compared to 2005 levels. The Clean Power Plan sets state-based emission goals for affected (i.e., regulated) EGUs and allows states to use a number of measures (including renewable energy and energy efficiency measures) to attain the goal. This paper discusses the regulatory context underpinning the Clean Power Plan, provides a summary of the Clean Power Plan itself, indicates why the Clean Power Plan is a positive step in the direction of reducing U.S. greenhouse gas ( GHG ) emissions, and concludes by discussing the likely legal issues that EPA will confront in defending the Clean Power Plan from anticipated court challenges. While some within the electric sector may view the Clean Power Plan as only the latest example of EPA overreach, more forward-thinking generators are likely to embrace the challenges imposed by the Clean Power Plan, along with those imposed by the broader regulatory suite of measures affecting the power sector, as an opportunity to reshape how electricity is both produced and consumed throughout the U.S. I. REGULATORY BACKGROUND The President s Climate Action Plan. On June 25, 2013, President Obama released the Climate Action Plan, which proposes a number of measures aimed at reduc[ing] U.S. [GHG] emissions in the range of 17 percent below 2005 levels by Chief among these measures is reducing GHG emissions from power plants. Accordingly, in a separate Presidential Memorandum, President Obama directed EPA to issue a New Source Performance Standard ( NSPS ) proposal for regulating the CO 2 emissions from new power plants by September 20, Further, the 1 Executive Office of the President, The President s Climate Action Plan, at 6 (June 2013), available at: 2 Barack Obama, Presidential Memorandum, Power Sector Carbon Pollution Standards (June 25, 2013), available at: On September 20, 2013, EPA proposed an NSPS for regulating the CO 2 from new fossil fuel-fired EGUs that produce at least 219,000 megawatthours of electricity ( MWh ) per year. EPA proposes separate standards for natural gas-fired stationary combustion turbines and coal-fired utility boilers and integrated gasification combined cycle units that are both in the 1,000 to 1,100 pounds of CO 2 per megawatt-hour ( lb CO 2 /MWh- 1

2 Presidential Memorandum directed EPA to propose CO 2 guidelines for existing power plants by June 1, 2014 and finalize such CO 2 guidelines for existing power plants by June 1, EPA s regulation of new power plant CO 2 emissions under section 111(b) triggers EPA s obligation to regulate existing power plants under section 111(d). Clean Air Act 111(d). EPA s proposal to regulate the CO 2 emissions from existing power plants is made pursuant to section 111(d) of the CAA. Section 111(d) only applies to existing sources (1) of any pollutant that is neither a criteria pollutant nor a hazardous air pollutant ( HAP ) and (2) to which an NSPS would apply, if the existing source were a new source. 3 In this case, EPA can regulate the CO 2 emissions of existing power plants because (1) CO 2 is a pollutant that is not a criteria pollutant nor a HAP and (2) existing power plants would need to comply with the CO 2 NSPS, if they were new sources (upon EPA finalizing an NSPS regulating the CO 2 emissions from new power plants). For such existing sources 4, EPA must prescribe regulations which establish a procedure similar to that provided by [CAA section 110] under which each State shall submit to [EPA] a plan which (A) establishes standards of performance for any existing source [subject to regulation under section 111(d) (i.e., satisfying the criteria described above)] and (B) provides for the implementation and enforcement of such standards of performance. 5 In turn, section 110 pertains to the States formulation of State Implementation Plans ( SIPs ) to attain or maintain the National Ambient Air Quality Standards ( NAAQS ). 6 Further, a standard of performance means a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction [i.e., BSER] which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) [EPA] determines has been adequately demonstrated. 7 The standard of performance is referred to in shorthand as the BSER standard. Section 111(d) Regulatory Framework. As required by section 111(d) of the Act, EPA has issued regulations that prescribe the procedure for the submission and approval of states plans for regulating existing sources. 8 The section 111(d) planning process begins with EPA s issuance of a guideline document for states to use in developing state plans. 9 Guideline documents provide information for the development of state plans, including: [a]n emission guideline 10 that reflects the application of the best system of emission reduction (considering the cost of such reduction) gross ) range, taking into account unit size (for gas-fired units) and compliance period alternatives (for coal-fired units) U.S.C. 7411(d)(1)(A). 4 To date, EPA and the states have regulated municipal solid waste landfills, sulfuric acid production facilities, kraft pulp mills, primary aluminum reduction plants, and phosphate fertilizer plants for a variety of pollutants under section 111(d), but not for their GHG emissions. See 40 CFR Part 60, Subparts Cb through Ce; 40 CFR Part U.S.C. 7411(d)(1). 6 Id Id. 7411(a)(1). This is sometimes simply referred to as the BSER standard. 8 See 40 CFR Part 60, Subpart B CFR 60.22(a). 10 The definition of emission guideline is substantially similar to the definition of standard of performance: Emission guideline means a guideline set forth in subpart C of this part, or in a final guideline document published under 60.22(a), which reflects the degree of emission reduction achievable through the application of the best system of emission reduction which (taking into account the cost of such reduction) [EPA] has determined has been adequately demonstrated for designated facilities. Id (e). 2

3 that has been adequately demonstrated for designated facilities 11, and the time within which compliance with emission standards of equivalent stringency can be achieved. 12 Effectively, the emission guideline establishes (1) the applicable standard of performance and (2) the deadline for compliance with the standard of performance. Each state plan, in turn, must include the following contents 13 : Emissions standards: Each plan must include emission standards 14, which shall either be based on an allowance system or prescribe allowable rates of emissions except when it is clearly impracticable. 15 Emission standards shall be no less stringent than the corresponding emission guideline. 16 Compliance Schedules: Each plan must include a compliance schedule, which is a legally enforceable schedule specifying a date or dates by which a source or category of sources must comply with specific emission standards contained in a plan. 17 Final compliance is required no later than the compliance times specified in the emission guideline. 18 Upon EPA review and approval of each state plan, the plan is incorporated into the federal regulations. If a State fails to submit a plan or EPA finds a State s plan inadequate (e.g., the State s proposed emission standards are less stringent than the federal emission guideline), EPA must prepare a federal plan applicable to the State. 19 Such federal plans must be as stringent as the emission guideline and require final compliance no later than the deadlines specified in the emission guideline. 20 II. EPA S PROPOSED CLEAN POWER PLAN On June 2, 2014, EPA released the Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units Proposed Rule ( Proposed Rule or Clean Power Plan ). 21 Under the Clean Power Plan, EPA projects a 30% reduction in CO 2 emissions from the electric generating sector by 2030, relative to 2005 levels, which would amount to more than a 500 million metric ton reduction in annual CO 2 emissions from the sector. 22 BSER for affected EGUs consists of strategies that may be implemented by the affected EGUs and/or states or other affected entities to achieve the required emissions reductions. These measures are grouped into four categories, which the EPA calls building blocks or blocks : 11 Designated facilities are existing facility to which section 111(d) applies. Id (b). 12 Id (b)(5). 13 See generally id Emission standard means a legally enforceable regulation setting forth an allowable rate of emissions into the atmosphere, establishing an allowance system, or prescribing equipment specifications for control of air pollution emissions. Id (f). 15 Id (b)(1). 16 Id (c). 17 Id (g). 18 Id (c). 19 Id (c). 20 Id (e)(1). 21 See 79 Fed. Reg (June 18, 2014) (Docket ID No. EPA HQ OAR ). 22 Id. at 34932, Table 10. 3

4 Block 1. Block 2. Block 3. Block 4. Reducing emissions through an average 6% heat rate (i.e., efficiency) improvement at affected coal-fired steam EGUs; Reducing emissions through shifting dispatch to affected EGUs with lower carbon emissions, with a target natural gas combined-cycle ( NGCC ) utilization rate of 70%; Reducing emissions at affected EGUs in the amount that results from substituting generation at those EGUs with expanded renewable energy ( RE ) capacity; and Reducing emissions from affected EGUs in the amount that results from the use of demand-side energy efficiency ( EE ) that reduces the amount of electricity needed. 23 The first two blocks represent changes that are achieved at individual affected EGUs or among the fleet of affected EGUs. The latter two blocks achieve affected EGU emission reductions from measures occurring beyond the fenceline of individual plants or the existing fossil fuel-fired fleet. EPA is proposing two alternative BSER formulations for fossil fuel-fired EGUs: The first identifies the combination of the four building blocks as the BSER All of these measures are components of a system of emission reduction for the affected EGUs because they either improve the carbon intensity of the affected EGUs in generating electricity or, because of the integrated nature of the electricity system and the fungibility of electricity, they displace or avoid the need for generation from those sources and thereby reduce the emissions from those sources For the alternative approach for the BSER, the EPA is identifying the system of emission reduction as including, in addition to building block 1, the reduction of affected fossil fuel-fired EGUs mass emissions achievable through reductions in generation of specified amounts from those EGUs. Under this approach, the measures in building blocks 2, 3, and 4 would not be components of the system of emission reduction, but instead would serve as bases for quantifying the reduction in emissions resulting from the reduction in generation at affected EGUs. 24 EPA is proposing to apply the BSER to the affected EGUs on a statewide basis. In the Proposed Rule, EPA terms the resulting emission limitation the state goal. The Proposed Rule indicates that each state must develop a plan to achieve an emission performance level that corresponds to the state goal. The state plans must establish standards of performance for affected EGUs and include policies that implement and enforce those standards. EPA is proposing that states can either impose legal responsibility on the affected EGUs for the entirety of the emission performance level or adopt a portfolio approach, which would impose requirements on other affected entities that would ultimately reduce CO 2 emissions from the affected EGUs. 25 Significantly, the Clean Power Plan refrains from prescribing how an individual state should meet its goal, instead allowing each state to design its program based on the combination of building blocks most relevant to their specific circumstances and policy preferences, or based on technologies or strategies that are not specific to the building blocks, such as market-based trading programs or construction of new NGCC units. 23 Id. at Id. at Id. at

5 The Clean Power Plan computes both interim and final state-specific emission performance goals based on application of the proposed BSER to each state s particular mix of fossil fuel-fired generating sources and potential to achieve reductions in emissions from such sources through expansion of RE capacity and demand-side EE. The interim and final goals are rate-based (i.e., expressed in lb CO 2 /MWh). States are also permitted to adopt an equivalent mass-based goal, which would allow for market-based trading programs such as a cap-and-trade system to be implemented to meet the goal. 26 III. WHY THE CLEAN POWER PLAN IS NEEDED EPA has recently promulgated important regulations that will unleash market forces to reduce SO 2, NO x, and PM 2.5 emissions from the power sector 27 and significantly reduce mercury and other air toxics emissions from coal-fired power plants. 28 EPA and the National Highway Traffic Safety Administration ( NHTSA ) have also jointly promulgated rules that will significantly decrease CO 2 emissions from new automobiles. 29 However, to date, there has been no national regulation that limits the CO 2 emissions from power plants. 30 As EPA states in the preamble to the Proposed Rule, the Clean Power Plan is an important step toward achieving the GHG emission reductions needed to address the serious threat of climate change. 31 EPA notes that CO 2 is the primary GHG pollutant and accounts for 82% of U.S. GHG emissions. 32 In turn, fossil fuel-fired EGUs are, by far, the largest emitters of GHGs, primarily in the form of CO 2, among stationary sources in the U.S. 33 The Clean Power Plan would reduce power sector CO 2 emissions by more than 500 million metric tons annually by The preamble to the Clean Power Plan highlights that the May 2014 U.S. Global Change Research Program s Third National Climate Assessment emphasizes that climate change is already happening now and it is happening in the United States. 34 The National Climate Assessment states that [t]he most recent decade was the nation s and the world s hottest on 26 Id. at See Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP Approvals, 76 Fed. Reg (Aug. 8, 2011) ( CSAPR ); see also EPA v. EME Homer City Generation, L.P., 134 S. Ct (2014) (upholding CSAPR). 28 See National Emission Standards for Hazardous Air Pollutants From Coal and Oil-Fired Electric Utility Steam Generating Units, 77 Fed. Reg (Feb. 16, 2012) ( MATS ); see also White Stallion Energy Ctr., LLC v. EPA, 748 F.3d 1222 (D.C. Cir. 2014) (upholding MATS). 29 See, e.g., Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg (May 7, 2010). 30 While EPA has applied preconstruction Prevention of Significant Deterioration ( PSD ) requirements to certain large sources of GHG emissions (including power plants), such PSD requirements do not establish a uniform limit on the CO 2 emissions from power plants, and they only apply to new or modified stationary sources that are otherwise subject to PSD requirements. See UARG v. EPA, 134 S. Ct (2014) (invalidating EPA s GHG Tailoring Rule, while holding that EPA could permissibly find that sources already required to obtain a PSD permit for pollutants of conventional pollutants must install the best available control technology ( BACT ) for GHGs) Fed. Reg , Id. 33 Id. 34 Id. at

6 record, and 2012 was the hottest year on record in the continental United States. 35 The Assessment continues by stating that [c]ertain types of extreme weather events with links to climate change have become more frequent and/or intense, including prolonged periods of heat, heavy downpours, and, in some regions, floods and droughts. 36 The Assessment states that the magnitude of temperature increases over the second half of this century, both in the U.S. and globally, will be primarily determined by the emissions produced now and over the next few decades, and there are substantial differences between higher, fossil-fuel intensive scenarios compared to scenarios in which emissions are reduced. 37 Indeed, [b]y the end of the century, U.S. warming is projected to correspond closely to the level of global emissions, with a projected increase in average temperatures of 5 F to 10 F for higher emissions scenarios that assume continued increases in emissions. 38 That is why [e]mission reductions today will benefit the public health and public welfare of current and future generations. 39 EPA anticipates significant emission reductions from the power sector as a result of the Clean Power Plan. 40 EPA estimates the monetized benefits stemming from these emission reductions using the Social Cost of Carbon ( SCC ) metric, which is an estimate of economic damages avoided by a reduction in CO 2 emissions. 41 Additionally, the Clean Power Plan is projected to result in substantial co-benefits through reductions of SO 2, PM 2.5 and NO x that will have direct public health benefits by lowering ambient levels of these pollutants and ozone. 42 The combined climate and health co-benefits of the Clean Power Plan would amount to $55 to $93 billion of net benefits (i.e., benefits after accounting for the compliance costs of the Proposed Rule) in Accordingly, the Clean Power Plan represents an important and overdue component of the U.S. s overall strategy for reducing GHG emissions. IV. LEGAL JUSTIFICATION FOR CLEAN POWER PLAN Even though the Clean Power Plan has not been finalized yet, it is virtually certain that it will be challenged in court. The challenge will center on the text of the Act, namely section 111(d) and the corresponding section 111(a) definition of standard of performance (i.e., BSER). Accordingly, as a threshold matter, it is worth noting the standard of review that a court will use 35 U.S. Global Change Research Program, Climate Change Impacts in the United States: The Third National Climate Assessment, Chapter 1: Overview and Report Findings, at 8 (May 2014), available at: 36 Id. at U.S. Global Change Research Program, Climate Change Impacts in the United States: The Third National Climate Assessment, Chapter 2: Our Changing Climate, at Id Fed. Reg , Id. at See Interagency Working Group on Social Cost of Carbon, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order (May 2013) Fed. Reg , Id. at 34938, Table 15. This range of net benefit values assumes a 3% discount rate for the SCC. Id., note d. 6

7 to determine whether, in formulating the Clean Power Plan, EPA s construction of the Act is lawful. Legal Framework in Event Clean Power Plan is Challenged. The U.S. Supreme Court s decision in Chevron v. Natural Resources Defense Council established the following two-prong test in determining whether an agency's construction of a statute which it administers is lawful: Step 1: If Congress has directly spoken to the precise question at issue, the agency must give effect to the unambiguously expressed intent of Congress. Step 2: If, however, the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible (i.e., reasonable) construction of the statute. 44 The Clean Power Plan will be assessed according to Chevron and its progeny. As indicated above, CAA section 111(d)(1) requires that each state s plan establish[] standards of performance for any existing source and section 111(a)(1) defines a standard of performance as a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction [i.e., BSER] which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) [EPA] determines has been adequately demonstrated. If finalized as proposed, the Clean Power Plan is likely to face challenges to EPA s authority to establish numerical goals for individual states in the first instance and to base each state s goal on the level of emission reductions that can be achieved by both displacing generation from highemitting coal-fired power plants towards lower- and zero-carbon generation options and reducing energy consumption. Anticipating the likely legal challenges to the Proposed Rule, the Preamble to the Clean Power Plan and supporting regulatory documents outline EPA s intended defense of the Clean Power Plan. EPA s Defense of the Clean Power Plan. EPA states that the basis for the emission standards the system of emission reduction may be any method that reduces the affected sources emissions, as long as that method is a system that meets the criteria for being the best that is adequately demonstrated. 45 EPA states that this interpretation is justified under Chevron Step 1 because the term system (which is not defined in the Act and, therefore, EPA reverts to the dictionary definition) is broad: [a] set of things working together as parts of a mechanism or interconnecting network. 46 EPA states that neither the remaining provisions of the definition of standard of performance nor the context in which the term standard of performance is found (i.e., section 111(d)) add constraints on the things that may constitute such a system. 47 EPA argues that it is clear from these CAA provisions that anything that reduces the emissions of affected sources may be considered a system of emission reduction for those sources and, therefore, EPA states that it must consider measures in building blocks 2, 3, and 4 as part of the 44 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, (1984) Fed. Reg , Id. (internal citation omitted). 47 Id. at

8 system. 48 Perhaps recognizing that the Act appears to be ambiguous with respect to this specific issue, EPA goes on to state that this interpretation is reasonable under Chevron Step A related question of whether EPA can define BSER to include Block 3 and 4 measures is the interpretation of CAA section 111(d) s requirement that states set performance standards for any affected source. 50 As EPA states, [s]tandards (such as EE and RE standards) are reasonably considered to be for affected sources if they would have an effect on affected sources by, for example, causing reductions in affected EGUs CO 2 emissions by decreasing the amount of generation needed from affected EGUs. 51 Alternatively, EPA argues that if the state s plan achieves the emission performance level through rate-based emission limits applicable to the affected sources, coupled with a crediting mechanism for RE and demand-side EE measures, 52 such measures are for the implementation and enforcement of such standards of performance within the meaning of section 111(d). 53 Additionally, EPA states that the application of BSER on a statewide basis to each state s affected EGUs is consistent with the CAA section 111(a)(1) definition of standard of performance, which refers to the application of the [BSER], for the purpose of determining the degree of emission limitation achievable, but does not otherwise constrain how the BSER is to be applied. 54 Accordingly, EPA states that it may apply the BSER to all of the affected EGUs in the state as a group ; and, each emission standard that the state adopts for each of its affected EGUs will meet the definition of a standard of performance under CAA section 111(a)(1) because the standard for each source will constitute a standard for emissions which reflects [that is, embodies, or represents] the degree [that is, the portion] of emission limitation achievable through the application of the [BSER] [that is, as noted above, the required emission performance level for all affected sources in a state]. 55 As EPA states, the degree or portion of the required emission performance level is, in effect, the portion of the state s obligation to limit its affected sources emissions that the state has assigned to each particular affected source. 56 Therefore, in EPA s view, [a]n emission standard meets this definition of the term standard of performance regardless of whether it is part of a plan that adopts the portfolio approach (in which case, the standard will reflect a relatively smaller part of the emission performance level) or one that imposes the plan s emission limitation obligations entirely on the affected EGUs (in which case, the standard will reflect a relatively larger part of the emission performance level). 57 Relevance of Recent U.S. Supreme Court Cases. It is unclear how a reviewing court (i.e., the D.C. Circuit and, likely, the U.S. Supreme Court) would treat the Clean Power Plan, if finalized as proposed. Prognosticators are quick to point to the U.S. Supreme Court s two most recent Clean Air Act cases as supporting whatever their preconceived view of the viability of the Clean Power Plan is. 48 Id. 49 Id U.S.C. 7411(d)(1) Fed. Reg , Id. at U.S.C. 7411(d)(1) Fed. Reg , Id. 56 Id. 57 Id. at ; see also EPA, Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units, at 99. 8

9 The Court in EME Homer City upheld EPA s CSAPR, holding that [t]his Court routinely accords dispositive effect to an agency's reasonable interpretation of ambiguous statutory language. The Good Neighbor Provision delegates authority to EPA at least as certainly as the CAA provisions involved in Chevron []. EPA's authority to reduce upwind pollution extends only to those amounts of pollution that contribute significantly to nonattainment in downwind States. 7410(a)(2)(D)(i). Because a downwind State's excess pollution is often caused by multiple upwind States, however, EPA must address how to allocate responsibility among multiple contributors. The Good Neighbor Provision does not dictate a method of apportionment. Nothing in the provision, for example, directs the proportional allocation method advanced by the D.C. Circuit, a method that works neither mathematically nor in practical application. Under Chevron, Congress silence effectively delegates authority to EPA to select from among reasonable options. 58 Supporters of the Clean Power Plan are sure to cite to EME Homer City for the proposition that the Court should defer to EPA on such difficult technical questions as regulating power sector CO 2 emissions under Chevron Step 2. On the other hand, in invalidating EPA s Tailoring Rule, the Court in UARG held that EPA was not required to regulate the GHG emissions of sources subject to PSD permitting, citing the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme, 59 and, further, that EPA could not alter the statutory thresholds for PSD applicability under Chevron Step 1, stating that [a]n agency has no power to tailor legislation to bureaucratic policy goals by rewriting unambiguous statutory terms. 60 Opponents of the Clean Power Plan will no doubt cite to UARG in claiming that EPA s interpretation of BSER in this instance fails to properly read section 111 in the context of the Act as a whole. It is worth noting that neither of these cases would be controlling authority in the event the Clean Power Plan is challenged in court; indeed, they both address wholly different sections of the Act. Accordingly, the framework established by Chevron would continue to govern how a reviewing court determines whether the Clean Power Plan is a permissible construction of CAA section 111. However, it is particularly worth highlighting here why opponents of the Clean Power Plan may be barking up the wrong tree in relying on UARG in their opposition to the Proposed Rule. At first glance, one might make much of the Court s statement that, [w]hen an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy,... we typically greet its announcement with a measure of skepticism. 61 While such an admonition to the EPA might suggest that a majority of the Court would view the far-reaching and ambitious interpretation of section 111(d) reflected by the Clean Power Plan with a similar dose of skepticism, the EPA ostensibly has greater authority to interpret what constitutes the best system of emission reduction from existing sources, than to multiply a statutory threshold by 1,000 in order to limit its applicability, as was the case with the Tailoring Rule. Thus, UARG may tell us little about how a majority of the Court would rule on the interpretive questions posed by the Clean Power Plan. Further, on the question of whether EPA has authority to regulate GHG emissions under section 111 in the first instance or must similarly adopt a narrow reading of any air pollutant in section 58 EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 1589 (2014) (quotation omitted). 59 UARG v. EPA, 134 S. Ct. 2427, 2441 (2014) (citing FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000)). 60 Id., 134 S. Ct. at Id., 134 S. Ct. at 2444 (internal citation omitted). 9

10 111(d)(1)(A), a footnote elsewhere in UARG affirms that the Court s decision in American Electric Power Company v. Connecticut, 131 S. Ct (2011) was premised upon EPA having authority to regulate GHG emissions under section 111 of the CAA. 62 Critics of the EPA s proposed approach would therefore be wrong to presume that the Court s decision in UARG means EPA s Proposed Rule will suffer a similar fate. Indeed, there are strong reasons to think that the Clean Power Plan is more legally durable, given that the building blocks are established independently of one another and are deemed to be severable by the EPA. Ultimately, the fate of the Clean Power Plan (if finalized as proposed) will depend on the reviewing court s view of whether section 111 vests EPA with the breadth of authority that EPA is claiming in the Proposed Rule. Further, because much of the real action could happen in judicial challenges to EPA s approval of individual state plans, which will be heard by the Circuit Courts of Appeal throughout the country and outside of D.C., it is possible that we could see several different interpretations of the scope of EPA s authority; no doubt the 9th Circuit might decide whether a state s allowance trading system may be used to satisfy section 111(d) differently than the 5th Circuit. Regardless, by the time such judicial challenges have been resolved, some states may be so far down the road in implementation of their respective plans through passage of legislation and adoption of regulations setting goals for achievement of dramatic improvements in renewable energy generation and energy efficiency that the outcome of the judicial challenges may occur as an after-thought. V. CONCLUSION The Clean Power Plan is only the latest of several EPA rulemakings affecting the sector, including, within the ambit of the CAA, the MATS, CSAPR and revisions to the NAAQS and, beyond the CAA, EPA s Section 316(b) effluent limitations guidelines and Coal Combustion Residuals rule. Together, these rules are already hastening significant reductions both in criteria pollutants and GHGs from the power sector, although their collective impact may pale in comparison to the reductions occurring as a result of secular changes in electricity markets and fossil fuel production, most notably the abundant supply of domestic natural gas that has accompanied the widespread use of hydraulic fracturing (or fracking ). Indeed, were it not for the changes that are already occurring as a result of these market forces, EPA would no doubt be much less willing to propose such a broad-reaching and expansive understanding of BSER as it does in the proposed Clean Power Plan. And while opposition to the Clean Power Plan and years of litigation are a foregone conclusion, there are many within the utility and power generation sectors who are likely to rise to the challenge and avail themselves of the opportunity afforded by the Clean Power Plan to reshape how electricity is generated and consumed in the U.S. today. As a consequence, by the time all the litigation has been resolved, some states may already be so far along the path towards their respective goals that turning back is no longer a practical or economic option. 62 Id., 134 S. Ct. at 2441, note 5. 10