EPA seeks to regulate coal-fired power plants out of business

October 10, 2014 | By PAUL BEARD

As most Americans know, the Environmental Protection Agency (EPA) has a strong penchant for regulation of businesses and industries.  Consider its unlawful attempt to impose both state and federal regulations on existing coal-fired power plants—a strategy surely aimed at putting these lawful business out of business.

The controversy began in 2011, when EPA approved a so-called “settlement agreement” with a handful of pro-regulation States and environmental groups.  The settlement agreement requires EPA to propose and finalize a rule requiring all States to regulate existing coal-fired power plants under Section 111(d) of the Clean Air Act.  The agreement is really just another product of the EPA’s sue-and-settle strategy to avoid public scrutiny of its regulatory agenda.  The U.S. Chamber of Commerce aptly describes EPA’s strategy this way:

Sue and settle occurs when an agency intentionally relinquishes its statutory discretion by accepting lawsuits from outside groups that effectively dictate the priorities and duties of the agency through legally binding, court-approved settlements negotiated behind closed doors—with no participation by other affected parties or the public. As a result of the sue and settle process, the agency intentionally transforms itself from an independent actor that has discretion to perform its duties in a manner best serving the public interest into an actor subservient to the binding terms of settlement agreements, which includes using congressionally appropriated funds to achieve the demands of specific outside groups. This process also allows agencies to avoid the normal protections built into the rulemaking process—review by the Office of Management and Budget and the public, and compliance with executive orders—at the critical moment when the agency’s new obligation is created.

In February 2012, EPA finalized federal rules to directly regulate existing coal-fired power plants.  These rules were adopted under a different section (Section 112) of the Clean Air Act.  To avoid duplicative and burdensome regulations, the Act prohibits EPA from requiring States to regulate existing coal-fired power plants under Section 111(d) (as per the settlement, for example) if EPA itself already regulates such plants under Section 112.  Nevertheless, on June 2, 2014, EPA defiantly declared in a memorandum its view that it still has the authority to subject existing coal-fired power plants to both state and federal regulation.  So, in compliance with its alleged obligations under the settlement agreement, on June 18, EPA proposed a Section 111(d) rule requiring States to regulate existing coal-fired power plants.

On August 1, twelve States led by West Virginia filed a petition for review of EPA’s actions in the D.C. Circuit Court of Appeals.  The case is an important one, because it tests the reach of EPA’s regulatory power—and, more specifically, whether the Clean Air Act truly protects businesses and industries against this kind of double regulation.  Pacific Legal Foundation will be filing an amicus brief supporting the States’ lawsuit.