Why States Should Boycott the Federal Clean Power Plan

Via The Wall Street Journal:

Better for states not to comply with the EPA’s plans than to go along and absolve the feds of accountability for the mess.

Senate Majority Leader Mitch McConnell (R., Ky.) set off a firestorm recently when he advised states not to comply with the Environmental Protection Agency’s Clean Power Plan. Yet that advice isn’t as radical as his detractors make it sound. As a state public utilities commissioner who deals with the effects of federal regulations on a regular basis, I also recommend that states not comply.

Proposed last summer and with a final rule due in June, the Clean Power Plan aims to reduce overall U.S. carbon-dioxide emissions by 30% from 2005 levels by 2030. Each state must cut its emissions by a different amount, ranging from an 11% reduction in North Dakota to 72% in Washington, using a baseline established by the EPA.

From the EPA’s perspective, states have two options for achieving these reductions. The agency’s preferred option is for states to comply and create their own State Implementation Plans, or SIPs, which would allow the feds to share the blame for the ensuing electricity-rate increases and destabilized energy grid.

The other option, which Sen. McConnell and I support, is refusal to comply, at which point the EPA would impose a Federal Implementation Plan that risks even greater harm. The EPA designed this threat to force state lawmakers into compliance. But while letting the feds call the shots may seem risky, it will force them to own the individual implementation plans and the overall regulation. This also places the feds in a legally tenuous position that is fraught with political repercussions.

States choosing to comply with the regulation have until next summer to submit their SIPs. They can achieve emissions reductions through four “building blocks”—reducing coal use, increasing natural-gas use, using more renewable and nuclear energy, and enhancing energy-efficiency standards.

No matter which building blocks the states use, electricity rates are expected to soar. According to a recent study by NERA Economic Consulting, electricity costs will increase by as much as $366 billion between 2017 and 2031, with 43 states seeing double-digit rate increases each year. Coal-dependent states like Utah, Wyoming and Montana will see their rates increase the most—an estimated 20%, 18% and 16%, respectively, each year. Less coal-dependent states will likely see their rates increase by around 10%.

Moreover, in a 2014 report the North American Electric Reliability Corp. warned of threats to the stability of the U.S. energy grid as the regulation moves toward full implementation in 2030. “Constructing the resource additions, as well as the expected transmission enhancements,” NERC said, “may represent a significant reliability challenge given the constrained time period for implementation.”

Any state that doesn’t comply will be assigned a federal plan. But the problem for the EPA is that the federal government lacks the legal authority under either the Constitution or the Clean Air Act to enforce most of the regulation’s “building blocks” without states’ acquiescence. This severely limits the EPA’s ability to tailor a federal plan to a state’s unique needs.

Any federal plan will likely rely heavily on building block No. 1—reducing coal usage—which will require draconian cuts to the number of coal-reliant power plants in noncompliant states. The likely result will be even greater electricity-rate increases than if states were to draft their own plans.

Proponents of the Clean Power Plan therefore argue that any state lawmakers who oppose the regulation—not the EPA that created it—will be responsible for higher energy costs. As such, they argue, states opposed to the EPA’s demands should comply with the regulation to prevent even greater harm.

This argument should be dismissed out of hand. While the short-term effects may be painful, the long-term consequences of submitting to this federal power grab are far worse.

For one, compliant states will enter into a “Mother may I?” relationship with the federal government. Not only will the initial SIP require the EPA’s blessing, so will any future modifications. This gives the EPA de facto veto power over any proposed state energy regulations, thus centralizing all energy decisions in Washington.

Compliance also would absolve the federal government of accountability once the disasters of this regulation begin to unfold. The regulation is designed so states will share blame with the EPA when electricity rates skyrocket. If federal regulators want to raise Americans’ electricity bills by thousands of dollars each year, they can do that. State lawmakers would be wise to let them walk that road alone.

The more states that refuse to give in to the EPA’s demands, the more likely it is that the agency will be forced to hold back the most burdensome elements of its Clean Power Plan. This could mean anything from nonenforcement to amending provisions of the regulation to mitigate their impact.

All of this assumes the regulation will ultimately go into effect, which is far from certain. Thirteen states are challenging the plan in federal court as unconstitutional and in violation of the Clean Air Act. Such liberal legal scholars as Harvard Law School’s Laurence Tribe have supported this position.

With the first SIPs not due until June 2016, state lawmakers still have plenty of time to weigh their options. As they do, they should understand the long-term implications of their final decision. Giving in to Washington’s demands might seem like the easy option now, but it will ultimately do far more harm in the long run.

Mr. Hill is a director of the Tennessee Regulatory Authority.

See the article here.