POWER PLAYS

Last week, the U.S. Supreme Court issued a stay of the EPA's new carbon emissions regulation targeting coal-fired power generating plants. There are more than 30 lawsuits challenging the rule, filed on behalf of some 25 states and others. The stay of the enforcement of the rule allows the lawsuits to work their way through the lower courts before the matter, in all probability, winds up back before the Supreme Court.

Such a stay in the Supreme Court is rare. Some pundits in the press have opined that it means the Supreme Court likely will reverse EPA'a carbon emissions rule on the merits. In a broader sense, some have asserted that the stay is a significant blow to the President's environmental agenda.

Perhaps these comments arise from the typical requirements for a court stay, such as a showing of likelihood of success on the merits and denial of a stay would result in the threat of irreparable harm.
However, the grant of a stay is not a ruling on the merits of a case, and there is no assurance that the Supreme Court ultimately will reverse the rule.

In theory, there are two primary grounds that could justify any reversal of the regulation: (1) a finding that EPA exceeded its statutory authority under the Clean Air Act and/or (2) a finding that EPA did not find and consider the costs, including economic impacts, and benefits of the carbon emissions rule. For example, does causing the shift away from coal-fired power plants result in substantial economic impacts on the coal mining industries, utilities, jobs and ratepayers?

In addition to such "traditional" arguments against a rule, there may be more subtle issues at play here. They may arise from the concept of federalism established in the U.S. Constitution.

First, while Congress may have delegated to EPA regulation of air pollution, they may have not delegated authority to enact major national policy decisions such as policy on climate change, what fuels can be used for power generation, and impacts on the coal industry. Policy issues of substantial economic and political significance would be expected to be determined by Congress, not by an administrative agency.

Second, there is the federal-states relationship inherent in the 10th Amendment to the Constitution. Powers not delegated to the United States by the Constitution, or prohibited to the States by it, are reserved to the states, or the people. There has been a long recognition of states' role in regulation of electric utilities, generation and transmission assets and reliability of service. While a federal agency seeks to phase out coal-fired power plants, the result is to shift to states the burden to assure that lights will still be lit when those plants are retired. In a way, the carbon emissions rule is directed to the states as much as to the power plant owners, as it is the states that will have to reorganize their energy economies and regulatory oversight. In that sense, states seem to be called upon to implement a federal administrative agency policy decision.