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2. The American Coalition for Clean Coal Electricity (ACCCE) STATE SOVEREIGNTY IS CRITICAL TO THE FUTURE OF COOPERATIVE FEDERALISM Conference of Western Attorneys General Colorado Springs, Colorado July 24, 2013 Paul M. Seby

3. RESPONSIBLE NATURAL RESOURCE DEVELOPMENT AND USE IS VITAL TO U.S. SOCIAL & ECONOMIC WELFARE  Affordable electricity creates and protects America’s high standard of living.  Sustaining and improving American quality of life depends upon having more disposable income for food, education, health care, personal savings and other goods and services.  Fostering both economic development and environmental protection depend upon the future of “cooperative” federalism. 1

4. Energy Costs as Percentage of Annual Household After-Tax Income Source: www.americaspower.orgwww.americaspower.org ENERGY COST IMPACTS ON AMERICAN FAMILIES, 2001-2012 2

5. WHAT IS FEDERALISM?  Federalism is not an antiquated abstraction – rather it is a fundamental process for making critical legal and policy decisions.  Federalism is the process by which two or more governments share powers over the same subject matter or geographic area. 3

6. COOPERATIVE FEDERALISM AND NATURAL RESOURCE DEVELOPMENT AND USE  Congress has repeatedly intended for a meaningful federal-state partnership  Courts have enforced the partnership  “The Clean Air Act is an experiment in federalism, and the EPA may not run roughshod over the procedural prerogatives that the Act has reserved to the states....” Bethlehem Steel Corp. v. Gorsuch (7 th Cir.)  Politics challenge and erode the partnership. 4

7. EPA IS INCREASINGLY USURPING THE ROLE OF THE STATES  EPA has allowed its regulatory agenda to largely be defined by “Sue and Settle” Consent Decrees.  These Consent Decrees dictate how and when EPA must develop stringent new or modified regulations.  States responsible for implementing these regulations have little knowledge of or input in this process. 5

8. EPA’S SUE AND SETTLE STRATEGY PRIMARILY IMPACTS WESTERN STATES  A prime example of EPA’s practice of usurping the role of the States involves the Regional Haze program.  National Parks Conservation Assoc. et al. v. EPA  NPCA sued to compel EPA to take action on 45 State Regional Haze Plans.  “Settled” with a CD that grants EPA authority to promulgate a FIP concurrent with vetoing a SIP.  18 States opposed the CD.  WildEarth Guardians & NPCA v. EPA Consent Decree  Colorado, Montana, North Dakota, Utah & Wyoming. 6

9. REGIONAL HAZE  Congress established a “national goal” in 1977 for the “prevention of any future, and the remedying of any existing, impairment of visibility” in 156 Class I areas.  CAA §169A carefully prescribes roles for both EPA and the states.  Congress clearly determined that states can best determine for themselves the proper balance between visibility improvement and the costs that the state and its citizens should bear in relation.  EPA’s RH Regulations are in effect until 2064. 7

10. LEGAL CONTEXT FOR REGIONAL HAZE PLANS American Corn Growers et al. v. EPA (2002)  D.C. Circuit invalidated significant portions of EPA’s original Regional Haze Rules because it found that EPA’s actions were “inconsistent with the Act’s provisions giving the states broad authority over [regional haze] determinations.”  D.C. Circuit recognized the CAA “calls for states to play the lead role in designing and implementing regional haze programs.”  Court also affirmed statutory visibility “goal” vs. a requirement. 8

11. EPA IS SUBSTITUTING ITS JUDGMENT FOR S T A T E R E G I O N A L H A Z E D E C I S I O N - M A K I N G  EPA’s RH FIP campaign is based on nothing more than its substantive disagreement with the States’ discretionary judgments - EPA is actively vetoing SIPs.  Cost of EPA’s FIPs are routinely hundreds of millions of dollars greater than SIPs.  Impact on visibility, is in almost all cases, is not even humanly perceptible. 9

12. REGIONAL HAZE CONT’D.  EPA’s BART Guidelines  They are just that - Guidelines.  For power plants in excess of 750 MW - the Guidelines must be used.  For plants less than 750 MW - the Guidelines are not mandatory.  The Guidelines provide the States with recommendations, i.e. a State “may”, “should”, “can.”  As Congress intended, the States are to take the lead in designing and implementing their SIPs.  The States have substantial authority and discretion! 10

13. W HY I NDIVIDUAL S TATE D ECISION - MAKING M ATTERS ?  States cannot “clean up” identified visibility impairment caused by western federal land management activities (i.e. fire) or international sources.  States must be able to meaningfully use cost-benefit considerations to weigh the feasibility of reducing emissions (for non-health based regulations) towards a goal (vs. a requirement) by 2064.  States must be able to meaningfully use the “costs of compliance” factor to focus on cost effectiveness in terms of humanly-perceptible visibility improvement - not merely mandates for “emissions reduced”. 11

14. STATE OF OKLAHOMA ET AL. V. EPA – JULY 19, 2013 (10 TH CIRCUIT)  OK developed and submitted a RH SIP – EPA vetoed and imposed a FIP.  EPA’s FIP forces installation of additional equipment that will cost $1.2 billion to $1.5 billion.  What does EPA’s FIP do for visibility improvement?  Nothing – the purported “visibility improvement” is not even humanly perceptible. 12

15. STATE OF OKLAHOMA ET AL. V. EPA CONT’D.  A 2-1 decision by the 10 th Circuit recognizes the CAA is based on “cooperative federalism” but effectively ignores it, and instead approves EPA’s second guessing of OK’s SIP.  The majority notes that this is “close case,” but then ignored OK’s authority to implement the RH program.  The majority opinion fails to address whether OK properly weighed the BART factors – which it did - and instead focuses on where there may have been a few isolated instances of differences in cost data between a utility and EPA to support finding EPA’s FIP was proper. 13

16. STATE OF OKLAHOMA ET AL. V. EPA CONT’D.  The majority opinion applies the wrong legal standard of review, giving deference to EPA’s BART determinations.  The State’s BART and RP determinations should have been afforded deference.  Unless it can be shown that the State acted arbitrarily or capriciously, the State’s determinations must be respected by EPA.  The dissent got it right.  EPA’s FIP was arbitrary and capricious and usurped OK’s authority.  “[It will] result in adverse changes to what Oklahoma ratepayers will pay for electricity.” 14

17. PENDING REGIONAL HAZE FIP ACTIONS  North Dakota – 8 th Circuit Court of Appeals (Argued May 14, 2013)  ND exercised its authority and discretion to develop a refined visibility modeling program  ND properly weighed BART factors and determined appropriate technology  EPA rejected ND’s refined modeling program claiming it was “not reasonable.”  EPA is merely seeking to impose its different (and more costly) policy preferences.  This dispute is critical to the State’s regulatory authority. 15

18. PENDING REGIONAL HAZE FIP ACTIONS CONT’D.  Wyoming – 10 th Circuit  Utah – 10 th Circuit  Arizona – 9 th Circuit  New Mexico – 10 th Circuit 16

19. STATES TAKING A STAND AGAINST EPA  AL, AZ, GA, KS, NE, MI, ND, SC, TX, UT, & WY, submitted a FOIA request to EPA for public records related to EPA’s involvement in “sweetheart settlements” with environmental groups that lead to RH FIPs.  EPA denied the FOIA request saying it was ‘too broad’ and not in the public interest.  The 12 State AGs, led by Oklahoma, filed a federal suit against EPA for failure to comply with FOIA. 17

20. e conomy e nvironment e nergy security T HE O NLY S USTAINABLE E NERGY P OLICY 18

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