U.S. Supreme Court Unexpectedly Stays Clean Power Plan

11 February 2016 Manufacturing Industry Advisor Blog

In a virtually unprecedented move, the Supreme Court yesterday issued an order staying the Clean Power Plan, the cornerstone of President Obama’s environmental agenda and the most significant step the country has ever taken to address climate change.

The U.S. Environmental Protection Agency (“EPA”) finalized the Clean Power Plan in August of last year. The Plan would effectively restructure the nation’s entire electricity sector by forcing states to shift from carbon-intensive sources of electricity generation to low- and no-carbon resources (i.e., solar, wind, and natural gas). Compliance costs would be (by some estimates) in the tens of billions of dollars, as dozens of existing coal plants would have to shut down. Power companies would have to invest in new energy infrastructure, including wind and solar facilities, and manufacturers and other industry members might be forced to implement costly energy efficiency measures. For this reason, environmentalists and renewable energy developers have praised the rule.

However, a coalition of industry groups (including manufacturers) and conservative states argues that the Plan is illegal, claiming that Section 111(d) of the Clean Air Act—an obscure, rarely invoked provision that EPA has cited as the sole legal authority for the Plan—actually forbids EPA from issuing the rule at all. They also argue that the Plan would require power companies to reduce carbon dioxide emissions “outside-the-fenceline” of power plants, which is entirely inconsistent with the way EPA has previously established emission standards under Section 111.

The challengers have filed numerous lawsuits in federal court, trying to halt implementation of the Plan while the judiciary considers their claims. Until now, they have been unsuccessful. But in a 5-4 vote along party lines, the Supreme Court agreed to stay the Plan. The order (a copy of which is available here) is only a page long and does not contain any legal reasoning—it simply says that the rule is on hold while the litigation runs its course.

The Supreme Court’s decision is highly unusual. Federal courts will only stay agency rulemakings if the persons seeking the stay can show, among other things, that they are likely to prevail on the merits of their claims and that they will be irreparably harmed, absent the stay. The stay order suggests that a majority of the justices believe the Clean Power Plan is illegal.

At this point, the case will go back down to the D.C. Circuit, which will address the merits of the challengers’ claims, likely issuing a decision by Fall 2016. At that point, the case could go back to the Supreme Court, where a decision would not be expected for at least several months.

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