©2010 Foley & Lardner LLP EPRC 5 EPI’s 5 th Annual Energy Policy Research Conference Will The Clean Power Plan Make It Through The Courts? September 11, 2015

©2010 Foley & Lardner LLP The Clean Power Plan Is Finally Here  Forget what you knew  this is a new rule  It’s easier to say what’s the same than what’s different: –Still called the Clean Power Plan –Based on Clean Air Act section 111(d) –Regulates CO2 from existing power plants –Uses building blocks –Gives states flexibility

©2010 Foley & Lardner LLP Important Dates  Initial SIPs due Sept. 6, 2016 –But extension to 2018 available  Start date moved back to 2022 –BUT there is a mini-SIP due for pre-2022 period  When will it hit the Federal Register? –EPA saying mid- to late Oct. –Triggering date for lawsuits  Race to courthouse  Stay decision by early 2016

©2010 Foley & Lardner LLP The Limits!  One nationwide emission rate for each category: –Fossil fuel EUSGUs: 1,305 lbs of CO2 per MWh by 2030 –Stationary CTs: 771 lb CO2/MWh by 2030  State-specific rate and mass-based goals –Weighted aggregate of rates for the state’s EGU’s

©2010 Foley & Lardner LLP Best System Of Emission Reduction  Still based on same “BSER” interpretation  EPA set the BSER for each region  Then picked the highest rate (i.e., least stringent) for each compliance year –EPA says provides “headroom”  Remember the EPA is now trying to set one nationwide uniform rate rather than state- specific rates

©2010 Foley & Lardner LLP New Building Block 1  Efficiency projects “inside the fence-line” –4.2% cut in Eastern –2.1% cut in Western –2.3% cut in Texas  Why differences?

©2010 Foley & Lardner LLP New Building Block 2 (FKA BB3)  EPA used a seven step formula  In general: –Used past RE capacity installed over last 5 yrs –Figured out the average annual increase and the maximum annual increase for each type of RE –Applied annual average increase in 2022 and 2023 –Applied max annual increase from  All new RE capacity is assumed to offset coal/gas generation

©2010 Foley & Lardner LLP New Building Block 3 (FKA BB2)  Assumed all of the existing NGCC in each region would increase utilization rate  75% utilization rate (based on summer capacity rating)  Ramp up between 2022 and 2027  Increased NGCC generation offsets REMAINING coal/gas after RE capacity is added

©2010 Foley & Lardner LLP So Is It Legal? Our Poll.

©2010 Foley & Lardner LLP Some Of The Results… Question 1: Do you believe the Clean Power Plan, as currently written, is legal? ResponseCount Total-Yes59 Total-No58 Total-Don't Know13 Private Attorneys-Yes20 Private Attorneys-No45 Private Attorneys-DN8 Professors-Yes30 Professors-No4 Professors-DN4 Utility-Yes1 Utility-No5 Nonprofit-Yes6 Nonprofit-No1 Government/Other-Yes2 Government/Other-No3 Government/Other-DN1

©2010 Foley & Lardner LLP Some More Results… Question 2: If you think the Clean Power Plan is legal, please go to question (4). If you think the Clean Power Plan is illegal, please identify which of the following parts you believe are illegal (you may select more than one): Count Percent of Respondents Total Responses56 (a) The entire Clean Power Plan is illegal because it’s unconstitutional (b) The entire Clean Power Plan is illegal because the EPA doesn’t have the authority to regulate power plant CO2 emissions under section 111(d) (c) Building block one (6% reduction at coal plants) is illegal (d) Building block two (running combined cycle natural gas plants instead of coal plants) is illegal (e) Building block three (increased renewables and new nuclear) is illegal (f) Building block four (increased energy efficiency) is illegal4275.0

©2010 Foley & Lardner LLP How EPA Helped Itself  Harvard Law Professor Freeman loves the EPA’s changes!  EPA eliminated BB4 –Shouldn’t be required to reduce consumption  Delayed start date to 2022  More flexible SIP submittal deadlines  Helped itself on constitutional questions by focusing more on source compliance

©2010 Foley & Lardner LLP EPA’s Whiffs and Zingers  Keeping CCS in new plant rule  EPA admits MATS rule was in place when it issued CPP (page 178)  Drastic flip-flop on 111(d) v 112 issue  Betting entire rule on one totally new argument (pages )  Essentially admits “outside the fence-line” isn’t ok  Doesn’t make BB1 severable

©2010 Foley & Lardner LLP Will The CPP Make It Through The Courts Unscathed?  Makeup of the D.C. Circuit panel is critical  Same panel strongly favors industry on merits  BUT en banc favors EPA on merits  Supreme Court is a wild card –New Chevron standard? –UARG language? –BB2 and BB3 most vulnerable  My guess

©2010 Foley & Lardner LLP Program Speakers Brian H. Potts Partner Foley & Lardner LLP