Governors' Wind Energy Coalition

States have had several weeks to mull over U.S. EPA’s Clean Power Plan (CPP), which, once finalized, would set standards for greenhouse gas emissions from existing power plants. While most are keeping mute as they analyze the rule and prepare to submit comments, a few early movers have already taken action, either to challenge the rule or comply with it — and, in some cases, both.

Creating plans to meet EPA’s guidelines — plans that, due to flexibility mechanisms built into the CPP, will span each state’s energy sector and could even cross state lines — will inevitably be a long and costly process. For that reason, many states “are looking at and preparing for the proposed rule as if it were final today,” said Eric Massey, director of the Air Quality Division for the Arizona Department of Environmental Quality (ADEQ).

Initial actions have largely centered on the planning process. This week, Arkansas utility executives and state regulators met with environmental groups to begin coordinating a plan to meet the expected guidelines and to discuss expected costs and benefits. In Michigan, the state DEQ tapped one of its top officials to head up the state’s response to the proposed rule.

Comments on the proposed rule are due to EPA in mid-October.

The most vocal reactions, however, have come from state governments and their attorneys general who oppose the CPP and seem to be spoiling for a chance to challenge it in court.

Nine governors from some of the nation’s largest fossil-fuel-producing regions sent a letter to President Obama last week lambasting the rule’s potential effects on their industries.

“In an unprecedented move, your GHG emissions plan would largely dictate to the States the type of electricity generation they could build and operate,” they wrote. “In addition, you seek to essentially ban coal from the U.S. energy mix. Your pursuit of this objective will heavily impact those of our states that rely primarily on coal for electricity generation — such a decision should not be made by unaccountable bureaucrats.”

Some states’ top lawyers gear up for a fight

While legal challenges won’t be possible until the rule is finalized next year, attorneys general in at least three states — Texas, Oklahoma and Alabama — have confirmed that they are preparing to meet it in court.

“Because the Obama administration has gone around Congress to impose these punitive regulations, it has been left to state Attorneys General to challenge them in court,” Alabama Attorney General Luther Strange (R) said in a statement. He and other attorneys general, he said, “were successful in overturning one such ruling in 2012 regarding cross-state air pollution and the Obama administration can expect another legal challenge to its latest intrusive and overreaching carbon emission regulation.”

The upcoming election season may play into the timing of the attorneys general’s stated aims. All three are currently running for public office — Strange and Oklahoma’s Scott Pruitt (R) for the posts of attorney general, and Texas Attorney General Greg Abbott as the Republican nominee for governor.

Pruitt in particular has earned a reputation for suing EPA on everything from cross-border air pollution to mercury air toxics protection. He is campaigning on a promise to “continue his fight against federal overreach.”

In Oklahoma, that’s put the tenor of the attorney general’s office at odds with the state Department of Environmental Quality, whose director told the publication OKEnergy that “I’m not sure compliance for us will be difficult.”

“I don’t think any of these rules really caught utilities off guard. I think they’re all looking pretty far forward,” he said.

Neither the Oklahoma DEQ nor the state attorney general could be reached for comment.

Arizona elects for a two-pronged approach

But in some states, even departments of environmental quality are considering legal action against EPA. That’s the case in Arizona, where earlier this month Arizona DEQ Director Henry Darwin told the state Legislature that his agency would consider a possible legal challenge as among its suite of options in meeting the plan.

“States and industry have not been very successful as of late challenging the EPA on greenhouse gases,” Darwin told the Legislature. “That doesn’t mean we won’t be.”

Arizona is in a particularly tricky position to comply with EPA. A law passed by the Legislature in 2010 — House Bill 2442 — precludes ADEQ from adhering to EPA rules that limit greenhouse gases unless the Legislature first grants it prior authorization.

Crafted in an era where carbon markets and cap and trade, rather than regulation from EPA, were at the forefront of most climate debates, this law could still complicate Arizona’s ability to meet standards for existing power plants under a finalized plan next summer, ADEQ’s Massey said.

“We’ve definitely identified [H.B. 2442] as an issue,” he said. If the state doesn’t draft its own strategy to meet finalized EPA standards, he said, then responsibility for creating the plan will fall to EPA, an outcome few in Arizona’s Legislature are eager to see.

While H.B. 2442 prevents ADEQ from submitting a plan, it doesn’t preclude the agency from working on a plan in the interim between now and EPA’s 2016 deadline.

So for the moment, Massey said, Arizona is taking a two-pronged approach: working out a plan to comply with EPA rules while exploring options to challenge the rule in court.