In the 2007 US Supreme Court case Massachusetts v. EPA, the Court ruled 5-4 that the EPA had jurisdiction to regulate GHGs under the Clean Air Act (CAA) if they are found to be air pollutants. In December 2009, the EPA issued an endangerment finding that stressed the long-lasting negative impacts that greenhouse gas pollution has on human health and the environment, such as increases in food and water-borne pathogens, changes in air quality, and changes in extreme weather events.
For the CPP, the EPA used Section 111(d) of the CAA to establish CO2 emission performance rates for existing fossil fuel-fired steam-electric generating units and natural gas-fired combined cycle generating units. Section 111(d) of the CAA directs the EPA to determine the “best system of emission reduction” (BSER) for pollutants emitted by existing sources, taking into account cost, non-air quality health, environmental impacts, and energy requirements. States then set standards based on the BSER and submit their plans to the EPA for approval. This division of labor is consistent with the “cooperative federalism” model of the Clean Air Act.
The EPA created the CPP as part of President Barack Obama’s 2013 Climate Action Plan. In that document, President Obama directed the EPA to write a federal rule limiting carbon dioxide emissions from new and existing power plants. In order to achieve the desired carbon emissions targets, the EPA calculated that the US power sector needed to reduce its CO2 emissions by 32% from 2005 levels. To that end, the EPA identified three building blocks for BSER under the CPP. The first building block involves reducing the carbon intensity of existing power plants by improving the heat rate, or the amount of energy used to produce power. The second and third building blocks require generation shifting, or substituting electricity generation from coal-fired plants to lower-emitting existing natural gas plants or renewable energy sources. New natural gas plants would be covered separately under Section 111(b) of the CAA.
The final version of the CPP was announced on August 3, 2015, and published in the Federal Register on October 15 of the same year. However, 27 states, led by West Virginia, along with industry and labor groups challenged the EPA on the grounds that the CPP was a violation of the CAA and unconstitutional. In February 2016, the US Supreme Court prohibited the EPA from enforcing the CPP, pending a ruling by the US Court of Appeals for the District of Columbia Circuit on the plan’s legality. On March 28, 2017, President Donald Trump issued Executive Order 13783, which directed federal agencies to review actions that would put unnecessary burden on the domestic development of energy resources, spurring the EPA to reconsider the CPP. Accordingly, the D.C. Circuit Court agreed to suspend legal proceedings on the CPP.