ERCC's Segal & Holmstead: Why the Supreme Court Put New Climate Rules on Hold

February 10, 2016
USA Today
By: Scott Segal & Jeff Holmstead

February 10, 2016 

Yesterday when the Supreme Court issued an order to stay the Obama administration’s “Clean Power Plan,” it did something it has never done before: put a federal regulation on hold until the courts can decide whether it is legal. To the average American, the Clean Power Plan would mean higher energy costs and a less reliable electricity system, but the high Court’s order will protect them from further economic harm while the courts decide.
 
The Clean Power Plan is a rule issued by Environmental Protection Agency (EPA), which claimed authority under an obscure, 45-year-old provision in the Clean Air Act.  Twenty-seven states and more than 100 other parties immediately challenged it in court, arguing that EPA had gone well beyond its statutory authority. While it's hard to know exactly why the Court stayed the rule, it is clear that a majority of justices believe that the legal case in favor of the rule is flimsy and that states, power producers, manufacturers and the coal industry would be harmed if the rule remained in effect during the litigation.
 
Doubtlessly weighing on the minds of the Court was a 2015 Supreme Court case dealing with another Clean Air Act rule. In that case, known as Michigan v. EPA, the Court found the rule to be illegal, but the decision came after power plants had already been forced to spend tens of billions of dollars to comply with the rule and was too late to save dozens of coal-fired power plants that shut down because they couldn’t afford the cost. Then, after the Court ruled against EPA, a lower court allowed the rule to remain in effect — in part because so much compliance investment had already been made. Maybe this a case of "fool me once shame on you, fool me twice shame on me."
 
In the Clean Power Plan, EPA, in effect, ordered that approximately 30% of the remaining coal-fired power plants be shut down and that new wind and solar facilities be built to replace them. This was a remarkable assertion of regulatory authority — to take billions of dollars of business from some plants and award it to others favored by EPA.
 
While the legal case for the rule is weak, the policy case is no stronger. The agency also argued that, even though the rule would significantly increase the cost of electricity in many states, consumers wouldn’t be harmed because they would simply use less of it.  This response was especially disappointing given that increases in electricity costs fall disproportionately on the elderly living on fixed incomes and those living at or near the poverty line.
 
The Court may also have understood that the rule would not reduce global warming impacts at all. Indeed, if rising energy costs force manufacturing overseas to countries with more affordable power and weaker environmental standards, it is entirely possible that the Clean Power Plan could make the damage the environment instead of protect it.
 
There is no doubt that balancing reliable base-load energy with smart renewable power is a laudable goal.  So is improving energy efficiency.  There are many policies that can encourage these outcomes, from sensible market incentives to grants for enhanced research and development. But unilateral action by one branch of government never was appropriate to a cause this important. Now would be a good time for consumers, businesses, environmentalists, and governments to use the pause afforded by the Court to work together on a more sensible path forward.

Scott Segal is the director of the Electric Reliability Coordinating Council, a coalition of utilities. Jeff Holmstead is a former EPA air administrator and represents the American Coalition for Clean Coal Electricity in the case. Both are partners at Bracewell which represents energy interests.