Power Plant Rule: EPA Defies Stay to Develop Legally Dubious Incentive Program

The EPA yesterday took another step to advance the Obama administration’s flagship domestic climate policy, the so-called Clean Power Plan (CPP).

As Politico reported:

The EPA is moving forward with a component of the Clean Power Plan, sending proposed details and language for the optional Clean Energy Incentive Program to the White House Office of Management and Budget today, according to an EPA statement set to be released today. The CEIP would provide credit for power generated by new wind and solar projects in 2020 and 2021, as well as double credit for energy efficiency measures in low-income communities over that same period.

“But,” Politico asks, “didn’t SCOTUS stay the Clean Power Plan?” Of course it did. On February 9, the Supreme Court told EPA to halt further proceedings on the rule. So how does EPA justify its continuing work on the CEIP? According to Politico:

EPA will argue that advancing this piece of the rule doesn't violate the stay. “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 those efforts, including the CEIP,” the statement says. “Sending this proposal to OMB for review is a routine step and it is consistent with the Supreme Court stay of the Clean Power Plan.”

Breathtaking. EPA’s explanation—sending language and details on the CEIP to OMB is a “routine step” and therefore “consistent with” the stay—is a non sequitur. Rules are proposed, developed, and implemented chiefly through a sequence of routine steps. When the Court puts a stay on a rule, it means rule development and implementation are to stop. The agency may not take another step. Period.  

EPA also says it is just “providing support” to states that “plan to move forward voluntarily.” But the agency was providing support in the form of CPP-related technical assistance and policy coordination before the Court stayed the rule. Such support was part of the implementation process. Why does it not qualify as implementation now?

Apparently, EPA is taking advantage of the vacancy created by Justice Scalia’s death to flout the stay. Congressional watchdogs should demand that EPA: (1) provide a list of CPP-implementing actions that it has terminated pursuant to the stay, and (2) explain the agency’s criteria for distinguishing which CPP-related actions are “consistent” with the stay and which are not.

EPA’s claim that finalizing the CEIP is lawful under the stay is all the more galling because the CEIP itself has no discernible statutory basis. The CEIP is an early action credit program. In such schemes, entities earn credits by reducing emissions—or, in this case, by investing in renewables—before the compliance period begins.

Credit for early action was an issue of recurring controversy during 1998-2005. The one thing virtually all stakeholders eventually agreed on is that current law—including the Clean Air Act (CAA)—does not authorize any federal agency to award regulatory credits for “voluntary” reductions of greenhouse gases.

Certainly, CAA Section 111, the putative authority for the Power Plan rule, does not contain any of the terminology associated with early action programs (“early,” “voluntary,” “credit,” “allowance,” “allocation,” “transfer,” “award,” “participant”). As Justice Scalia might have put it (UARG v. EPA, slip op. p. 23), the CEIP is another instance where EPA has decided to rewrite the law “to suit its own sense of how the statute should operate.”

So congressional watchdogs should also ask EPA to identify the CEIP’s statutory basis. For further discussion, see my previous post “Clean Energy Incentive Program: Why It Makes EPA’s Power Plan Rule Even More Unlawful.”