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The American Coalition for Clean Coal Electricity (ACCCE)

STATE SOVEREIGNTY IS CRITICAL TO THE FUTURE OF COOPERATIVE FEDERALISM

Conference of Western Attorneys General Colorado Springs, Colorado

July 24, 2013

Paul M. Seby

RESPONSIBLE NATURAL RESOURCE RESPONSIBLE NATURAL RESOURCE DEVELOPMENT AND USE IS VITAL TO U.S. DEVELOPMENT AND USE IS VITAL TO U.S. SOCIAL & ECONOMIC WELFARESOCIAL & ECONOMIC WELFARE

Affordable electricity creates and protects America’s high standard of living.

Sustaining and improving American quality of life depends upon having more disposable income for food, education, health care, personal savings and other goods and services.

Fostering both economic development and environmental protection depend upon the future of “cooperative” federalism.

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Energy Costs as Percentage of Annual Household After-Tax Income

Source: www.americaspower.org

ENERGY COST IMPACTS ON ENERGY COST IMPACTS ON AMERICAN FAMILIES, 2001-2012AMERICAN FAMILIES, 2001-2012

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WHAT IS FEDERALISM? WHAT IS FEDERALISM?

Federalism is not an antiquated abstraction – rather it is a fundamental process for making critical legal and policy decisions.

Federalism is the process by which two or more governments share powers over the same subject matter or geographic area.

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COOPERATIVE FEDERALISM AND COOPERATIVE FEDERALISM AND NATURAL RESOURCE NATURAL RESOURCE DEVELOPMENT AND USEDEVELOPMENT AND USE Congress has repeatedly intended for a

meaningful federal-state partnership

Courts have enforced the partnership

“The Clean Air Act is an experiment in federalism, and the EPA may not run roughshod over the procedural prerogatives that the Act has reserved to the states . . . .” Bethlehem Steel Corp. v. Gorsuch (7th Cir.)

Politics challenge and erode the partnership.

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EPA IS INCREASINGLY USURPING EPA IS INCREASINGLY USURPING THE ROLE OF THE STATESTHE ROLE OF THE STATES

EPA has allowed its regulatory agenda to largely be defined by “Sue and Settle” Consent Decrees.

These Consent Decrees dictate how and when EPA must develop stringent new or modified regulations.

States responsible for implementing these regulations have little knowledge of or input in this process. 5

EPA’S SUE AND SETTLE STRATEGY EPA’S SUE AND SETTLE STRATEGY PRIMARILY IMPACTS WESTERN PRIMARILY IMPACTS WESTERN STATESSTATES A prime example of EPA’s practice of usurping the

role of the States involves the Regional Haze program.

National Parks Conservation Assoc. et al. v. EPA NPCA sued to compel EPA to take action on 45 State

Regional Haze Plans. “Settled” with a CD that grants EPA authority to

promulgate a FIP concurrent with vetoing a SIP. 18 States opposed the CD.

WildEarth Guardians & NPCA v. EPA Consent Decree Colorado, Montana, North Dakota, Utah & Wyoming.

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REGIONAL HAZEREGIONAL HAZE

Congress established a “national goal” in 1977 for the “prevention of any future, and the remedying of any existing, impairment of visibility” in 156 Class I areas.

CAA §169A carefully prescribes roles for both EPA and the states.

Congress clearly determined that states can best determine for themselves the proper balance between visibility improvement and the costs that the state and its citizens should bear in relation.

EPA’s RH Regulations are in effect until 2064.7

LEGAL CONTEXT FOR LEGAL CONTEXT FOR REGIONAL HAZE PLANSREGIONAL HAZE PLANSAmerican Corn Growers et al. v. EPA (2002)

D.C. Circuit invalidated significant portions of EPA’s original Regional Haze Rules because it found that EPA’s actions were “inconsistent with the Act’s provisions giving the states broad authority over [regional haze] determinations.”

D.C. Circuit recognized the CAA “calls for states to play the lead role in designing and implementing regional haze programs.”

Court also affirmed statutory visibility “goal” vs. a requirement. 8

EEPPAA IISS SSUUBBSSTTIITTUUTTIINNGG IITTSS JJUUDDGGMMEENNTT FFOORR SSTTAATTEE RREEGGIIOONNAALL HHAAZZEE DDEECCIISSIIOONN--MMAAKKIINNGG

EPA’s RH FIP campaign is based on nothing more than its substantive disagreement with the States’ discretionary judgments - EPA is actively vetoing SIPs.

Cost of EPA’s FIPs are routinely hundreds of millions of dollars greater than SIPs.

Impact on visibility, is in almost all cases, is not even humanly perceptible.

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REGIONAL HAZE CONT’D.REGIONAL HAZE CONT’D.

EPA’s BART Guidelines They are just that - Guidelines. For power plants in excess of 750 MW - the

Guidelines must be used. For plants less than 750 MW - the Guidelines are

not mandatory.

The Guidelines provide the States with recommendations, i.e. a State “may”, “should”, “can.” As Congress intended, the States are to take the

lead in designing and implementing their SIPs. The States have substantial authority and

discretion!10

WHY INDIVIDUAL STATE DECISION-WHY INDIVIDUAL STATE DECISION-MAKING MATTERS?MAKING MATTERS?

States cannot “clean up” identified visibility impairment caused by western federal land management activities (i.e. fire) or international sources.

States must be able to meaningfully use cost-benefit considerations to weigh the feasibility of reducing emissions (for non-health based regulations) towards a goal (vs. a requirement) by 2064.

States must be able to meaningfully use the “costs of compliance” factor to focus on cost effectiveness in terms of humanly-perceptible visibility improvement - not merely mandates for “emissions reduced”.

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STATE OF OKLAHOMA ET AL. V. STATE OF OKLAHOMA ET AL. V. EPA – EPA – JULY 19, 2013 (10JULY 19, 2013 (10THTH CIRCUIT) CIRCUIT)

OK developed and submitted a RH SIP – EPA vetoed and imposed a FIP.

EPA’s FIP forces installation of additional equipment that will cost $1.2 billion to $1.5 billion.

What does EPA’s FIP do for visibility improvement?

Nothing – the purported “visibility improvement” is not even humanly perceptible. 12

STATE OF OKLAHOMA ET AL. V. STATE OF OKLAHOMA ET AL. V. EPA CONT’D.EPA CONT’D.

A 2-1 decision by the 10th Circuit recognizes the CAA is based on “cooperative federalism” but effectively ignores it, and instead approves EPA’s second guessing of OK’s SIP.

The majority notes that this is “close case,” but then ignored OK’s authority to implement the RH program.

The majority opinion fails to address whether OK properly weighed the BART factors – which it did - and instead focuses on where there may have been a few isolated instances of differences in cost data between a utility and EPA to support finding EPA’s FIP was proper. 13

STATE OF OKLAHOMA ET AL. V. STATE OF OKLAHOMA ET AL. V. EPA CONT’D.EPA CONT’D.

The majority opinion applies the wrong legal standard of review, giving deference to EPA’s BART determinations.

The State’s BART and RP determinations should have been afforded deference. Unless it can be shown that the State acted

arbitrarily or capriciously, the State’s determinations must be respected by EPA.

The dissent got it right. EPA’s FIP was arbitrary and capricious and

usurped OK’s authority. “[It will] result in adverse changes to what

Oklahoma ratepayers will pay for electricity.” 14

PENDING REGIONAL HAZE PENDING REGIONAL HAZE FIP ACTIONS FIP ACTIONS North Dakota – 8th Circuit Court of Appeals

(Argued May 14, 2013) ND exercised its authority and discretion to

develop a refined visibility modeling program ND properly weighed BART factors and

determined appropriate technology

EPA rejected ND’s refined modeling program claiming it was “not reasonable.”

EPA is merely seeking to impose its different (and more costly) policy preferences.

This dispute is critical to the State’s regulatory authority. 15

PENDING REGIONAL HAZE PENDING REGIONAL HAZE FIP ACTIONS CONT’D.FIP ACTIONS CONT’D.

Wyoming – 10th Circuit Utah – 10th Circuit Arizona – 9th Circuit New Mexico – 10th Circuit

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STATES TAKING A STAND STATES TAKING A STAND AGAINST EPAAGAINST EPA

AL, AZ, GA, KS, NE, MI, ND, SC, TX, UT, & WY, submitted a FOIA request to EPA for public records related to EPA’s involvement in “sweetheart settlements” with environmental groups that lead to RH FIPs.

EPA denied the FOIA request saying it was ‘too broad’ and not in the public interest.

The 12 State AGs, led by Oklahoma, filed a federal suit against EPA for failure to comply with FOIA.

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econ

omy

environment

energy security

THE ONLY SUSTAINABLE ENERGY THE ONLY SUSTAINABLE ENERGY POLICYPOLICY

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