Blog Post

Can Anyone Challenge EPA's Coal Ban?

Nov 13, 2013 | Nathan Richardson

Dan Farber argued recently that coal interests would likely find it hard to challenge EPA's new source performance standards (NSPS), even though the standards would effectively ban construction of new coal plants without expensive and unproven carbon capture and storage technology. The reason: standing. Since few if any coal plants are being built (because of low prices for competing natural gas, and higher coal plant costs due to environmental regulation), then there's no injury in the legal sense. As Farber put it:

Without any clear prospect for new coal plants, EPA’s rules won’t be causing a concrete injury to industry.  No doubt the rules aren’t helpful, and industry would rather have them off the books.  But that’s not enough to create standing.

I think this is right, with a couple of caveats. First, there are in fact three coal plants that have received permits but not yet begun construction (see page 163 of the proposed NSPS - hat tip to my colleague Art Fraas for pointing this out). EPA specifically excludes one (Wolverine's plant in Rogers City, Michigan) from the proposed NSPS, requesting comment on how to treat it. The others two would be included. In the final rule, EPA may grandfather all these plants in, or plans might be scrapped anyway. But they're some evidence that EPA's claim that no coal will be built is untrue. Even if the plants are ill-advised business decisions, they are on the drawing board, permitted, and largely ready to build. If the NSPS blocks their construction, the firms behind them will likely have standing to challenge the rule.

Second, it's possible that other operators will seek approval to build new coal plants in the future. If so, they'd have standing even if nobody does today. I mentioned this in a tweet responding to Farber's post:

Farber critiqued this in a follow-up post this week, arguing that courts would take a dim view of permit applications made simply for litigation purposes, and that such an application would probably be insufficient to create standing. He's right, and I shouldn't have implied that strategic behavior would be enough to get into court.

But permit applications don't have to be strategic. Someone might actually want to build a coal plant. EPA's modeling concludes, and most analysts think, that this won't happen. But it can't be ruled out. Economic conditions might change, or operators might make a bet on coal contrary to the prevailing view of market trends (note that this is not necessarily irrational). If so, they'd likely have standing. Standing isn't restricted to those that behave as predicted by models or analysts (nor has Farber or anyone else suggested it is).

In other words, Farber is probably right about there being a standing barrier to challenging the NSPS. But I think it's pretty fragile. If someone, anyone, decides they legitimately want to build a coal plant, and can show that intent, they can get standing. If nobody at all wants to build one over the life of the NSPS, then standing doesn't matter anyway since coal doesn't matter anyway.

One last thought - most analysts agree that it's future existing source performance standards, not the NSPS, that will be the real source of both economic costs and environmental benefits from Clean Air Act climate regulation. But ESPS require NSPS to be in place for similar sources. Could an existing source therefore claim to be injured by the NSPS, and get standing? I think not, since any NSPS for a group of sources can be the legal basis for ESPS. Technical flaws in the NSPS are irrelevant, since EPA could just issue a minimally-stringent NSPS and use that as a basis for the same ESPS the existing source claimed to be injured by. But it's worth thinking about.