The Clean Power Plan’s Legal Path

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Background

The Clean Power Plan (CPP) issued by the U.S. EPA in August 2015 represents a hallmark in regulatory and judicial actions.  However, on February 9, 2016, the U.S. Supreme Court stayed implementation of the CPP by a 5-4 vote pending judicial review at the lower court level.  This decision in no way reflects a decision on EPA’s rule itself.  Rather, the Supreme Court ruling—made before the death of Associate Justice Antonin Scalia—has simply delayed implementation of the EPA rule pending review at the U.S. Court of Appeals for the District of Columbia (DC Circuit).  The DC Circuit is scheduled to hear the case on June 2, 2016 with a decision to be rendered later in the year.  The DC Circuit is likely to be favorably disposed to EPA’s plan as our analysis below shows.  Their ultimate ruling is critical because if the Supreme Court is later deadlocked at 4-4 on an appeal of the DC Circuit’s ruling, then the DC Circuit decision will stand (although it could be reviewed again later once a full complement of nine justices is empaneled).

The CPP issued by EPA is based on Section 111 of the Clean Air Act (CAA) authorizing performance standards for both new and existing sources.  The plan seeks to reduce power plant emissions through state compliance plans (SCPs) to be implemented by 2022.  More detail on the CPP can be found here: https://www.epa.gov/cleanpowerplan.  However, despite flexible compliance mechanisms, 27 states and other manufacturing groups filed to appeal the CPP rule.

Prior legal challenges to block EPA from finalizing CPP rules had failed up until the Supreme Court stay in February.  Generally, CPP opponents claim EPA is overstepping its authority under Section 111(d) of CAA, and since EPA’s plan extends deeply into unchartered legal territory, the Supreme Court decided to stay further actions.  While EPA cannot compel the states to take additional action on the CPP right now, it can still advance understanding of emissions trading and benefits of greenhouse gas (GHG) regulation.  Almost 20 states are still moving forward with development of their SCPs.

Legal Issues

When the Clean Air Act was enacted and later amended in 1990, there were two different versions of Section 111(d) in the final statue from the House and Senate.  These differences were never reconciled in Conference Committee before being signed by the President.  Indeed, EPA chose to follow the Senate version of this section in the CPP because it prohibits the agency from writing a second rule controlling a pollutant that is already regulated.  Since GHGs are not regulated from power plants elsewhere in Section 112, the EPA would be free to regulate them under Section 111. In fact, EPA believes it is simply upholding current law following its 2009 Endangerment Finding that GHGs (including CO2) meet the necessary guidelines to be regulated under the existing Clean Air Act, and thus the CPP is not intended to foster conflict but merely adhere to existing law.

The CPP’s definition of the “best system of emission reduction” is also being challenged. EPA believes this system can be applied to entire power sector on a statewide basis.  In contrast, opponents believe the system is limited to individual emitting sources, since all emission sources within a state are not equally integrated into the power sector.  CPP proponents favor EPA’s expertise and flexibility in determining the scope of the rule.

Additionally, federalism is being advanced as an issue by some states that do not wish to implement a national policy that runs counter to state authority.  This same issue has arisen related to water and healthcare with the states as well.

Timing is also a challenge. While the DC Circuit plans to rule on this case later in 2016, because of the annual rotation of law clerks in the DC Circuit every August, appellate justices could lose research continuity and support soon after the hearing thereby impeding progress.  Separately, if the Supreme Court elects to hear an appeal of the DC Circuit decision in early 2017, a final decision is likely not until 2018 from the Supreme Court on the merits of the case.  Regardless, the final outcome could hinge on the 2016 elections, as the party that wins the White House will likely appoint the next justice to the Supreme Court (replacing Justice Scalia).

Precedent and Conclusion

History shows a judicial deference to EPA decisions.  The authors reviewed all judicial rulings at the DC Circuit since President Obama took office (2009-present) in cases where EPA was the Appellee and an Appellant was challenging an EPA policy (or ruling) previously upheld at a lower court.  Out of the 289 cases reviewed, EPA’s record at the DC Circuit was 239 wins, 30 losses, and 20 mixed results.  Only slightly more than 10 percent of the time did EPA lose outright on cases decided before the DC Circuit, evidence of deference to EPA at the Appellate Court level.  Recall the DC Circuit’s ruling might prove to be pivotal because lower court rulings stand when the Supreme Court has a tied vote (e.g. 4-4).

The international Paris Agreement in December 2015 adds broader interest and pressures for GHG regulations.  The Paris commitments may need additional policies in the U.S. beyond the CPP and tax incentives to succeed—an opportunity for tools under existing law to be used for the first time to reduce emissions.  For example, Section 115 of the Clean Air Act could support GHG action beyond the power sector in the U.S. by offering broad country reciprocity over any air pollutant anticipated to harm or threaten public health or welfare in a foreign country.  The U.S. already treats GHG emissions as pollutants and the United Nations Framework Convention on Climate Change offers the U.S. the reciprocity required to pursue Section 115.

The CPP is a part of an ongoing public debate in the U.S. regarding energy and environmental policy.  Pivotal to that public debate will be the judicial rulings on the CPP likely to arrive in early 2017 by the DC Circuit.  With the prospect of Congressional action on climate policy unlikely, all eyes are on the courts to decide if the first, nationwide policy limiting GHG emissions in the U.S. will take effect or not.

Addendum: On May 16, the DC Circuit announced that oral arguments will be delayed until September 27, 2016.  Furthermore, the case will be heard en banc by the full panel of DC Circuit judges, rather than the usual, smaller three-judge panel.  Experts believe that the en banc review at this step of the judicial review will expedite final resolution of the legal issues surrounding the Clean Power Plan.

CE3 Blog by Daniel H. Karney, Department of Economics and Michael J. Zimmer, Executive in Residence & Senior Fellow, Ohio University; Edited by Elissa E. Welch, Project Manager, CE3. May 2016.

 

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Creating A Waste Economy

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The Voinovich School of Leadership and Public Affairs at Ohio University is continuing their invaluable service to the region, this time in partnership with Rural Action. Funded by the Sugar Bush Foundation, the Athens Hocking Zero Waste Initiative (AOZWI) planning process reached a milestone in December with the release of an action plan. The plan “aims to provide a unified vision and path for a robust waste management system that will enable Athens and Hocking counties to work towards becoming a zero waste economy.”

This unified action plan demonstrates the need and economic incentive to reduce landfill waste and better manage resources across waste, recycling and reuse supply chains. To address the original plan set forth by community members in a series of meetings in 2012, AOZWI working groups will soon be established in an effort to make recommendations to modify to current practices, identify priorities and set goals. The working groups include:

  • • Education and Outreach
  • • Access to Recycling
  • • Collection of Hard-to-Recycle Materials
  • • Illegal Dumping and Burning Prevention and Enforcement

Though AOZWI is the poster-child of local waste reduction efforts, there seems to be an increased effort around the Ohio University campus and around our region that deserves notable attention. For example, in January, the Athens City Council decided the city’s efforts to recycle were falling short, and thus signed the city on to the action plan. Reducing waste is all about awareness. Ohio University has been part of this greater awareness for almost two years with the adoption of a sustainability plan in 2011 and a climate action plan set forth in 2012.

Recently, Ohio University entered into an energy performance contract with Constellation New Energy in an effort to improve campus conservation. The Athens News reports that through these efforts, Ohio University will save an estimated 50,145 tons of CO2 emissions and $3.2 million in energy costs annually for 15 years. Reducing wasted energy is a huge part of reaching certain sustainability and climate action benchmarks. By 2016, the University hopes to reduce individual consumption by 5% and to increase recycling rates to 80% by weight.

Robin Stewart, senior project manager for the AOZWI at the Voinovich School, says the biggest challenge to achieving similar goals throughout the Appalachian region is creating a viable model and acquiring greater capacity to handle a new waste-based economy. “We need to localize the supply chain,” said Stewart in an interview. “Creating initiative within communities is the best route to accomplish this in the business community, but education efforts such as the zero waste event guide and planning a zero waste graduation for Ohio University students are just as important.”

ReUse Industries, a local waste diversion non-profit organization, has been in operation for almost 20 years and has funneled 10 million pounds of materials back into the community for reuse. ReUse is bringing small communities together to develop a regional reuse economy. Working on a larger scale, the Ohio By-Product Synergy (BPS) Network works to bring buyers and suppliers of manufacturing and production industries together. “If one company produces a waste product, and it can be used by another company within the region, the BPS Network is there to create the economy, divert the waste product entering the environment and avoid further ground contamination,” said Stewart.

For ReUse and the BPS Network, buying, selling and promoting used goods is the clear option for making the familiar pattern of consumerism sustainable. Reused books, appliances, and furniture purchased from ReUse Industries saves money, supports the local economy, diverts waste, and lowers your cost of living or doing business. By saving so much during the purchase of used materials from ReUse or the BPS Network, we can reduce our reliance on primary material costs and logistics in our manufacturing businesses and increase our understanding for community collaboration.

The AOZWI project can serve as a guideline to how we need to begin organizing the way we manage waste in our businesses and communities. Currently, the state recycling goal is 25%, but we still have a ways to go. According to the U.S. EPA, packaging makes up approximately 30% of the United States waste stream and 34% of all waste can be composted. Imagine a world where individuals, communities and businesses strive to re-use packaging for the long haul, compost at a near 100% rate, and buy unpackaged or only previously used items. AOZWI is changing the way we think about waste and is raising that all-important awareness mentioned earlier.

To learn more about the specific goals of the AOZWI’s long-term action plan, click here.

Mathew Roberts

Handprints and the Green Supply Chain

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Over the past month, I have been challenged to re-imagine the “finished product.” The concept of “the handprint” was originally brought to my attention last fall at “A Workshop for Efficiency, Emissions, and Energy in Ohio” hosted by Ohio University Voinovich School’s CE3. Frank O’Brien-Bernini, chief sustainability officer of Owens Corning, gave a presentation on how his company is reducing emissions by improving efficiency efforts on the production line. His emphasis of this perspective focused directly on improving how the production line is formed, what efficient production depends on, and tracking all steps from cradle-to-cradle when possible. Their flagship product for example, fiber-glass insulation, is made with up to 50-65% recycled material.

O’Brien-Bernini explained that handprint analysis is a framework slowly entering the arena of business and manufacturing and it is conceptually connected to creating a green energy supply chain. The Sustainability and Health Initiative for NetPositive Enterprise (SHINE), an initiative of Harvard’s School of Public Health, is helping companies like Owens Corning develop ways to proactively measure positive impacts instead of calculating emissions footprints. While handprint studies are more focused on improving energy usage in-house and measuring positive environmental changes, a green energy supply chain management system emphasizes sourcing. Both concepts are intertwined insofar as the company must take on the responsibility to look at where raw materials are coming from, how they are processed, and how best they can be used to accomplish sustainable handprints.

Stakeholders are increasingly demanding sustainable practices from companies at all levels of production and urging leaders to take steps to adopt long-term solutions to waste. Gale Tedhams, director of sustainability at Owens Corning, has recognized this demand. “We run on a lifestyle-cycle accounting process, looking at the lifetime from supply extraction to disposal, to save energy and create new lines of energy efficient products,” says Tedhams.

The concepts of the handprint and green energy supply chains tell us something very important. If we can re-imagine the finished product as yet unfinished in its life at the moment of purchase, we imagine the next phases of the product when its “useful” life for us is over. We can make products that are responsibly-sourced from extraction of the product to reusability, but it takes great effort.

However, companies incorporating sustainability into their supply chains will last longer, according to Art Dodge, CEO of ECORE International, “not only because of the cost-effective nature of the process and ability to achieve environmental goals, but also through the commercialization of new and innovative products.”

In a recent talk given by Dr. Jason Jolley, assistant professor of rural economic development at the Voinovich School, about environment management systems and the green energy supply chain, I learned that businesses burdened with high dependence on fossil fuels or heavy initial-production resources are developing models and management practices to meet the demands of a changing regulatory landscape.

The great part about the adoption of these management systems is that it encourages a materials “race to the top” and/or a clear passion to maximize the utility of raw materials. Companies are tapping into resources such as the U.S. EPA’s Green Suppliers Network, and others have been certified as actors in sustainability; the ISO 14000 series is an environmental management system (EMS) certification, yet its adoption is slow. By adding a green supply chain management (GSCM) system to this certification, businesses can access suppliers’ environmental performance and track the cost of waste, making for a resilient business model of the future. These two systems are highly complementary: research by Jolley showed that EMS adopters that also utilize GSCM will be more successful in reaching environmental protection requirements.

Dr. Jolley’s case study asked companies around the country about this doubled-up adoption. With a 13 % response rate and most of those responsive in companies holding less than 250 employees, an optimistic insight was revealed: smaller companies are often the first to adopt environmentally sustainable practices.

For many of these local companies, the move makes both environmental and economic sense. Owens Corning, a business built on improving energy efficiency, is the prime international example of stepping up to the standard. We are seeing supply chains today, especially with companies that are employee-owned, that put high value on creating production and supply chain alliances. Future-proof supply chains, as they may be called, are beginning to be adopted, inspired by “handprinting,” green energy supply chains and sustainability measures as necessary components of business.

I have gained a new perspective by changing the way I think about materials sourcing and production. I understand the importance of developing a product for more than profit, with an eye to social and environmental responsibility. When we become aware of our global impact, improvements in the efficiency on our production lines expand and extend to create an optimistic mindset of net-positive gain rather than impact.

Mathew Roberts

Little by Little

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To some people, “environmentally-friendly” car manufacturing means electric cars or ethanol-fueled engines—“big ticket” items. Admittedly, I was one of those people, especially concerning cars. It’s easier to think about the “big” things when it comes to evolving technology—an entire car or an entirely different way to make gasoline. I’d always thought of driving a car as an “all or nothing” decision between convenience and environmental responsibility. I was very impressed, then, how Honda of North America has streamlined their manufacturing processes to take the little steps towards greater energy efficiency, those that are incorporated before they complete a finished product.

Honda changed its process of painting cars by thinking outside the box. Shubho Bhattacharya, senior staff engineer for Honda, featured in a video shown at CE3’s energy workshop in September 2013, created an algorithm for a system that completely changed Honda’s painting processes and has helped Honda to reduce its emissions targets. Bhattacharya’s work has created huge economic and environmental gains for the company.

In the same way that Bhattacharya was able to translate the abstract idea of changing the world into a tangible outcome, every day companies worldwide make small changes to their operations, creating positive impacts for the environment. Often their effect cannot be immediately seen, but their impact can be immediately felt. Oftentimes, impact is noticed in accolades and public recognition.

Honda has continued to gain industry, national and international recognition for their efforts to reduce some of the byproducts associated with their operations. In 2011, Honda achieved its goal of sending zero waste to landfills from its manufacturing operations in North America. In January 2014, the U.S. EPA recognized two of Honda’s Ohio plants with Energy Star Certifications for the eighth year in a row. Energy Star certified companies perform in the top 25 percent of all companies in their industries in energy efficiency.

Not only does Honda efficiently use its energy, it also generates industry-leading solutions to reduce CO2 emissions. The company began 2014 with a new wind turbine farm used in the company’s Russell’s Point Transmission Plant in Logan, Ohio. Honda is now the first major auto manufacturer with a plant that gains the majority of its electricity from on-site wind power. This is just another “small” step for Honda making an impact through its operations and on industry standards.

CE3 engages companies like Honda to build networks of peers to share the ways in which they have incorporated energy or environmental practices into their operations and remained profitable. During CE3’s “Workshop for Efficiency, Emissions and Energy Choices in Ohio” in September 2013, businesses from industries as diverse as paper production to home insulation showed how such small changes can have large impacts on the environment—little by little. Many organizations discussed the steps they believed would yield the best results for their company to while complying with U.S. EPA requirements and maintaining profitability. Here are a few takeaways from the workshop:

  • Include everyone’s input. Ask for and incorporate ideas from employees ranging from the CEO to those on the shop floor. Each and every position brings a different perspective and fresh insight to an issue. Communication, cooperation and coordination are key to cutting-edge innovation.
  • Think small steps with a big impact. Gradual changes can still lead to large benefits over time without excessive costs. Each small step represents movement toward the goal of improved energy efficiency for a better environment.
  • Use federal regulations to your advantage. Federal regulations can be an opportunity for the company to set new goals and engage in new projects. Instead of thinking of regulations as restrictions, use them as a chance to be innovative and grow the company’s sustainability message.
  • Share your successes. Forums like CE3’s energy workshops and webinars are a great opportunity to share your progress and exchange ideas with a diverse group of energy efficiency leaders—your peers. Watch for strategies from different industries that can be fine-tuned and applied to your own.

 

Following all those steps may not lead to emissions reductions as big as Honda’s right away, but each small step can make large impacts in bettering the environment. Corporations, groups of people, and individuals can make a collective effort to improve our natural environment. In the words of renowned anthropologist Margaret Meade: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.

By Seaira Christian-Daniels, CE3 Undergraduate Research Scholar