LIVE UPDATES: The Clean Power Plan at the D.C. Circuit

Oral arguments on the merits of the Environmental Protection Agency’s (EPA’s) Clean Power Plan were concluded before an en banc panel (10 judges, rather than the anticipated three) at the D.C. Circuit Court of Appeals on September 27.

West Virginia v. Environmental Protection Agency (No. 15-1363) is arguably the most important environmental case in nearly a decade. For the U.S. power sector, the stakes are particularly high. The sector has grappled with uncertainty about the rule’s future since the Supreme Court issued a stay of the rule on February 9.

POWER‘s editors will be updating this page over the coming week. Follow @POWERmagazine on Twitter for the latest news.

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Dissecting the Arguments. Legal analyses of oral arguments on the merits of the EPA’s Clean Power Plan are pouring in.

Georgetown Law invited key litigators in the case to participate in a discussion about the oral arguments on September 28. Participants included West Virginia Solicitor General Elbert Lin, who represented plaintiffs, Thomas Lorenzen, a partner at Crowell & Moring LLP, who represented the National Rural Electric Cooperative Association, New York Assistant Attorney General Morgan Costello, and Sean Donahue of the law firm Donahue & Goldberg LLP in Washington, who was counsel for environmental advocacy group Environmental Defense Fund.

Lin said that the biggest thing that came out of the day was the question of whether there has to be “clear congressional authorization.” He said: “That’s a theme that came up not only in the opening segment, but throughout the day. I think that’s good, because it addresses key questions, which are ‘What does this rule do?’ and ‘Is it the kind of rule that the EPA has the power to issue?”‘

One question that Judge Griffith asked was about whether the rule “matters in real-world numbers,” Lin said. Ultimately, questions veered toward whether the rule is “transformative in a legal sense.”

Lin suggested that Congress wouldn’t have delegated such “transformative and large” power “implicitly through ambiguity” in provisions of the Clean Air Act’s Section 111(d). “It is a fundamentally and qualitatively different use of the Section 111(d) power, and I think the court got that,” he said.

For Lorenzen, the length of the argument and the clear preparation of the judges was notable. “This was an argument that was scheduled to go three hours and 18 minutes. It went six hours and 42 minutes—more than double the time the court had scheduled,” he said.

Lorenzen also said that “clear statement”—whether Congress has expressed support for the EPA’s extremely consequential course of new regulation—is a “very big issue. I don’t know how the court is going to resolve it, but it is going to have to grapple with it.”

He also noted that judges would have to consider that Congress has failed to act on actions to tamp down carbon emissions, including cap-and-trade measures. “The Clean Air Act was last amended in 1990, 26 years ago—at a time when climate change was really not an issue we were grappling with,” he said. “What do we take from that?”

Costello noted that the clear statement doctrine had been raised repeatedly during the U.S. Supreme Court’s 2011 consideration of American Electric Power Co. v. Connecticut, and that the high court had ultimately ruled—unanimously—that the Clean Air Act delegated the responsibility of regulating carbon dioxide emissions to the EPA under Section 111(d). “So there’s got to be some other aspect of this case that requires a clear statement that takes it out of that,” she said.

Donahue, too, agreed that questions came up repeatedly at the hearing about whether Congress needed to enact specific legislation to cut carbon emissions or if the Clean Air Act authorized it. But, he said: “The other side has not suggested a practical alternative.”

In a press call on September 27 directly after the hearing, Donahue had said that the very first question from the court pointed out that the rule does not have the “kind of extreme consequences that the petitioners’ cases is based upon.”

The court seemed to dig under the litigators’ “rhetoric,” he said. “I thought the four [Justice Department] lawyers who defended EPA did an exceptionally fine job and I thought that the interveners supporting EPA—the power companies, a very broad coalition of companies—are basically pointing out that this rule is based on what is already widespread practice in the industry, and it’s feasible.

“It’s consistent with what power companies … are doing every single day. It was extremely effective, and the court was really listening to them.”

Be Prepared. In an e-mail to POWER, Megan Berge, a partner at law firm Baker Botts DC Environmental, said that power generators would be wise to continue planning ahead. “The arguments yesterday have not moved the dial,” she said. “While the arguments are interesting and give you a sense of the issues the court it considering, it does not give you any insight into how they will decide the case.”

Berge added that she would not advise generators to look to the argument to guide their decision-making process. “While the Clean Power Plan is stayed and, indeed, may never be implemented, the complexity of the rule makes it important for companies to consider what would work best for them if the regulations were to be implemented. If that happens, states are going to have a ton of work to do in preparing their state plan submissions and power generators should be prepared to engage with them in that process from day one.”

Berge also noted, as have a number of diverse parties involved in the case, that the court seemed well prepared at the hearing, engaging fully with all parties to the litigation. “With 10 judges sitting en banc, there was a wide array of questions posed to the parties; the attorneys had to be nimble in responding to what, at times, became a barrage of questions,” she said.

“While the judges seemed to be examining the issues presented from a variety of angles, it was clear that they are all taking the case seriously and that they are aware of some of the larger social and political nuances related to the case.”

Oral Argument Audio Recordings. The D.C. Circuit released oral argument recordings for State of West Virginia v. EPA late in the evening on September 27.

Part I includes arguments from Solicitor General of West Virginia Elbert Lin, attorney Peter D. Keisler, Justice Department lawyers Eric Hostetler and Amanda Shafer Berman, Michael J. Myers from the New York State attorney general’s office, and Sean Donahue, who is counsel for environmental group Environmental Defense Fund.

Part II includes arguments from Myers, Berman, the Justice Department’s Norman L. Rave, Brian Lynk, David B. Rivkin (who represents the state of Oklahoma), Thomas Lorenzen, a partner at Crowell & Moring, as well as acclaimed Harvard professor of constitutional law, Laurence Tribe.

Coal Industry Group Is “Hopeful.” In a statement on the EPA’s oral arguments, the American Coalition for Clean Coal Electricity said coal has been pivotal in meeting the nation’s energy needs. “We are hopeful the court heeds the concerns of the majority of states and state agencies that are challenging this overreaching, federalist agenda and stop it in its tracks before more jobs and families are put at risk,” said Laura Sheehan, ACCCE senior vice president of communications.

From the Noon Break. Reports and tweets that are emerging from observers during a lunch break at the day-long hearing say that the judges’ questions were skeptical of both sides but appeared to be divided along the party lines of the presidents who appointed them.

According to The Hill’s Timothy Cama, “The judges focused their questions largely on a handful of questions related to how the regulation fits under the Clean Air Act: whether the rule is so ‘transformative’ that it cannot be allowed, whether Congress needs to have given the EPA a ‘clear statement’ for it to enforce its rule, and how the court should apply different legislative amendments that the House and Senate passed in 1990.” Cama noted that “a majority of the judges who engaged with the lawyers seemed at least somewhat supportive of the EPA’s position.”

The Wall Street Journal‘s Amy Harder noted that EPA Administrator Gina McCarthy was at this morning’s oral arguments as was Brian Deese, an Obama senior advisor. ClimateWire reporter Emily Holden noted that one section of arguments on “generation shifting” took twice the time it was allotted.

The Argument Schedule. Today’s legal arguments are scheduled to take 218 minutes—but will likely last much longer. While petitioners raised more than 33 arguments challenging the validity of the Clean Power Plan, the court will tackle only a handful today.

Industry sources say the court will hear arguments on whether the Clean Power Plan violates Section 111(d) of the Clean Air Act because two of three building blocks require “generation shifting”—so-called “beyond-the-fence” measures that are achieved by substituting coal plants with lower-emitting natural gas plants or renewables.

“Instead of making changes at their source, or facility, [owners or operators] have to go outside of that and find ways to reduce carbon via cap and trade and other methodologies to reduce carbon emissions even if they can’t achieve it at their site,” explained John King, a partner with Louisiana-based law firm Breazeale, Sachse & Wilson.

The court will also hear arguments on whether the EPA is prohibited from regulating carbon dioxide emissions under Section 111(d) of the Clean Air Act because it is duplicative of regulation under Section 112. Arguments will also touch on the EPA’s authority to interfere in state regulatory programs and whether it circumvented the rulemaking process set forth in the Clean Air Act.

Opponents are also expected to argue that the rule’s goals aren’t achievable and could threaten grid reliability.

A Deeply Contested Rule. Eighteen states (plus the District of Columbia) are supporting the Clean Power Plan in the merits litigation: California, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Maine,Maryland, Massachusetts, Minnesota, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Virginia, Vermont, and Washington. A number of power companies are also participating as intervenors, including Calpine, Pacific Gas & Electric, NextEra, and Southern California Edison Co.

Meanwhile, 27 are suing the EPA: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia, Wisconsin, and Wyoming.

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AWEA: Clean-Energy Train Has Left the Station. The CPP builds on existing trends that have allowed the market to adopt “affordable” renewable energy, the American Wind Energy Association (AWEA) said in a statement. “We fully expect the D.C. Circuit to agree that EPA correctly took these facts into account in considering well-established pollution control measures, such as renewable energy, when establishing carbon reduction standards for power plants under the plan,” said Tom Kiernan, AWEA’s CEO.

AWEA also noted that wind power’s costs have dropped by two-thirds over the last six years. Citing data from the Energy Information Administration, the industry group said that wind energy can supply the majority of the “the lowest-cost Clean Power Plan compliance mix.” It added that at the current 5% of the U.S. power mix, wind already “ reduces over five percent of power sector emissions, and 20 percent wind will reduce power sector carbon by 20 percent.”

Texas Coalition Optimistic Court Will Find CPP Exceeds EPA’s Statutory Authority. Balanced Energy for Texas, a statewide coalition of energy consumers and producers, said in a statement that it was optimistic the D.C. Circuit will follow the rule of the law and find that the CPP exceeds the EPA’s statutory authority. “No matter how one feels about the goals of the CPP, there is no legal basis whatsoever for the EPA to mandate compliance with a standard that is derived from market assumptions outside of the agency’s expertise and jurisdiction to enforce,” it said.

“The EPA-cited illusion of state ‘flexibility’ does not cure the legal defects hard-wired into the standard it is threatening to impose on power generators and the states. This is coercive federalism, not cooperative federalism. And it does a disservice to legitimate environmental laws to suggest that the CPP is either legal or appropriate.”

Solar Industry Group Issues Statement on Clean Power Plan Hearing. Solar Energy Industries Association’s (SEIA’s) interim president Tom Kimbis said in a statement that the Clean Power Plan fights climate change, which is a “grave environmental and national security threat,” and that it “should be upheld on its merits.”

“Forward-looking leaders in the private sector and in state government agencies are already moving forward with initiatives and policies to advance a clean energy economy. And with clean energy costs continuing to come down, hitting the plan’s goals is both achievable and affordable,” he said.

Don’t miss these recent POWER stories about the Clean Power Plan:

How the Power Industry Is Making Sense of an Environmental Quandary

Learning from the Clean Air Act’s Tragic Flaw

Supporting Coal Power Plant Workers Through Plant Closures

Despite Stay, EPA Proposes Details of Clean Power Plan Voluntary Incentive Program

Support Wanes for Coal Industry Lobbying Groups

Even with Trump, America’s Coal Age Ends in 2016

Federal Court Stays EPA’s Regional Haze Rule

U.S., Canada, Mexico Commit to 50% Carbon-Free Power by 2025