Clean Power Plan Stay: States Take Matters into Their Own Hands

On April 26, the Environmental Protection Agency (EPA) moved forward with a voluntary measure to incentivize states to take early action on its stalled Clean Power Plan (CPP). The Clean Power Plan is the first U.S. regulation ever to address carbon dioxide emissions from existing power plants, and could lead to significant changes in our power sector. Power plants are the nation’s largest source of carbon pollution at 31 percent of the total; reducing their emissions is critical if we are to keep global warming below 3.6 degrees Fahrenheit (2 °C).

Although the regulation has been the most litigated ever, states were nevertheless proceeding with their compliance plans until, in an unprecedented move on February 9, 2016, the Supreme Court halted the regulation with a stay. The Clean Power Plan is now temporarily frozen until litigation is complete, but EPA is signaling that states which wish to get a head-start on compliance can still do so. Indeed, to encourage them the agency is moving ahead on voluntary, early incentives.

Many States Are Moving Forward on the Clean Power Plan

A number of states are continuing to move ahead on compliance with the Clean Power Plan, despite the stay. Of the 47 states which the Clean Power Plan applies to, 19 have decided to continue preparing compliance plans, which would have been due on September 6, 2016, had the stay not been issued. Now that the states no longer face the September deadline, they have more time to decide how they will comply with the plan, although some may still submit plans to EPA on the original deadline. EPA has also said that it will work with states that decide to continue preparing compliance plans. John Quigley, secretary of the Pennsylvania Department of Environmental Protection, said in a statement that "[Pennsylvania], at least currently, sees a path to submitting [a state plan] on September 6 . . . What the Clean Power Plan is calling for is really good business."

In addition, many utilities have already begun transitioning from coal-fired power generation to natural gas and renewable energy power generation, due to market forces, other regulations, and anticipation of the Clean Power Plan. Duke Energy has expressed interest in working with North Carolina on an implementation plan, but the state has ceased progress on complying with the regulation. Likewise, MidAmerican Energy, a Berkshire Hathaway Energy-owned utility that supplies power to Iowa, Illinois, South Dakota and Nebraska, is moving briskly toward its 100 percent renewable energy target, despite the fact that Iowa is still assessing whether it will stop preparing to comply with the Clean Power Plan, and South Dakota and Nebraska have both stopped compliance planning (Illinois is continuing to draw up plans).

Some States Have Put Their Pencils Down – For Now

Despite the potential advantages of continuing to prepare CPP compliance plans, 20 states have stopped such activities. Almost all of these states are also suing the EPA over the regulation, arguing that the agency made procedural and record-based errors in constructing it, and that the plan itself is illegal and unconstitutional. Texas Attorney General Ken Paxton commented, "We're not moving forward with anything until this case is resolved." Many of the states that have discontinued compliance efforts rely heavily on fossil fuel power generation and associated industries, and say that the regulations present an economic burden. Although most of these states are part of a joint lawsuit against the rule, most of them were still working to comply with the Clean Power Plan before the stay was issued.

Internally, some state legislatures are also trying to stop their state environmental departments from preparing plans. One such bill was just shot down in Colorado's House on April 27 by a narrow margin. That bill would have removed $112,000 in funding from the state Department of Public Health and Environment until the Supreme Court's stay was lifted (that amount was the agency's estimated cost of preparing for the Clean Power Plan). In Virginia, the state legislature refused Governor Terry McAuliffe's request for more funding to prepare a compliance plan. Both Colorado and Virginia are striving to continue preparing compliance plans.  

Some States Have Just Not Made Up Their Minds

An additional eight states are still assessing whether or not they will continue to prepare plans to comply with the Clean Power Plan. The states in this limbo—Arizona, New Mexico, Iowa, Missouri, Tennessee, Ohio, Florida, and South Carolina—are considering their options; some have cancelled stakeholder meetings, while others are meeting with interested parties to weigh what course of action may be best. A little over half of these assessing states are suing the EPA over the Clean Power Plan.

The Clean Energy Incentive Program

As states hesitate over whether to prepare for the Clean Power Plan or not, EPA is proceeding with voluntary incentives, confident that its rule will make it through all the legal hoops. On April 26, EPA sent its voluntary Clean Energy Incentive Program (CEIP) to the White House Office of Management and Budget (OMB) for a review. OMB review is the final step for CEIP before it becomes available to the public. In a statement on April 27, EPA said, "Many states and tribes have indicated that they plan to move forward voluntarily to work to cut carbon pollution from power plants, and have asked the agency to continue providing support and developing tools that may support these efforts, including the [CEIP]."

CEIP, which was proposed in August 2015 when EPA finalized the Clean Power Plan, incentivizes early state action on solar and wind energy, energy efficiency, and energy efficiency projects in low-income communities, by providing early-bird states with extra credit toward their overall emissions targets. CEIP projects have to be in place and generating or saving electricity sometime between 2020 and 2022, before compliance requirements begin in 2022. The program is completely voluntary.

The Hill reports that the Office of Management and Budget will likely review CEIP over the next 60 days, after which, if approved, EPA will likely allow further public comment on the program. In comments on April 27, EPA Administrator Gina McCarthy said, "We are going to be fully prepared, and we are going to have all of the implementation ready to go when we win in the courts and we move forward."

Authors: Laura Small, Anthony Rocco