By Michael Brooks

Since EPA finalized its Clean Power Plan last August, RTOs have been working to evaluate the compliance options for states in their territories and how they may affect energy prices and transmission needs.

Last week, the Supreme Court gave them another variable to account for.

The court’s surprise stay prevents EPA from enforcing the rule pending the outcome of court challenges, meaning states will most likely not have to file compliance plans or extension requests by September, as the rule requires.

RTOs said they will continue to analyze the plan but that it was too early to say how the court’s stay would affect their evaluations. (See related story, RTOs, States Respond to CPP Stay.)

States Hedging Bets

The stay was requested by officials from 29 states, led by Texas Attorney General Ken Paxton and West Virginia Attorney General Patrick Morrisey.

When EPA released its final version of the Clean Power Plan, Senate Majority Leader Mitch McConnell advised states to ignore the rule, calling it illegal.

On Wednesday, Paxton told reporters that Texas would heed that advice. “We had no plans to proceed with anything other than fighting this,” he said in a joint conference call with Morrisey.

And, he said, the state has no intention of preparing a compliance filing in case the rule is ultimately upheld. “The whole point of the stay is to stop us from having to provide any implementation plan, so we’re not moving forward with anything until this case is resolved,” Paxton said.

But while the plaintiff attorneys general joined Paxton in celebrating, some states are hedging their bets.

In Arkansas, Attorney General Leslie Rutledge said the stay “helps ensure that Arkansas and other states are not forced to comply with a rule that will likely be found unlawful and will skyrocket energy rates.”

But Department of Environmental Quality Director Becky Keogh and Public Service Commission Chairman Ted Thomas said that the state would “balance our obligation to be wise stewards of taxpayer money with our obligation to be fully prepared should the Supreme Court ultimately uphold the plan.”

The two officials, who have been leading the state’s work on an implementation plan, scheduled public hearings around the state to gathered stakeholder feedback. An ADEQ spokesperson last week did not know the status of those hearings.

“We’re evaluating our options on next steps,” Keogh said. “We’re seeking input from our stakeholders on what those next steps will be and will continue to engage our stakeholders on environmental policy matters.”

States that were not part of the challenge, such as Virginia and Pennsylvania, said they will continue to work on their compliance plans regardless of how the case proceeds.

“We will stay on course and continue to develop the elements for a Virginia plan to reduce carbon emissions and stimulate our clean energy economy,” Virginia Gov. Terry McAuliffe said in a statement.

For its part, EPA remains open to engaging with states.

“EPA firmly believes the Clean Power Plan will be upheld when the merits are considered because the rule rests on strong scientific and legal foundations,” EPA said in a statement posted on the rule’s website. “For the states that choose to continue to work to cut carbon pollution from power plants and seek the agency’s guidance and assistance, EPA will continue to provide tools and support.”

EPA Administrator Gina McCarthy told state regulators that they should continue work on emissions reductions. The stay “doesn’t mean we won’t continue to support any state that voluntarily wants to move forward,” she said at a meeting of the National Association of State Energy Officials in D.C.

President Obama also put on a brave face at a Democratic National Committee fundraiser in California on Thursday. “One of reasons I want to talk about this is because in the last couple of days I’ve heard people say, ‘The Supreme Court struck down the Clean Power Plan rule,’” Obama said. “That’s not true, so don’t despair, people. This a legal decision that says, ‘Hold on until we review the legality.’ We are very firm in terms of the legal footing here.”

‘Baked In’

Exactly why the court took the highly unusual — if not unprecedented — step to grant a stay before a lower court ruling on the merits is unknown. The one-page order provided no details. (See related story, Supreme Court Blocks Clean Power Plan.)

Opponents of the rule asked the court to prevent EPA from “baking in” its mandates before the court could rule to avoid a repeat of Michigan v. EPA, in which the court declared EPA’s Mercury and Air Toxics Standards illegal.

In their stay application, the plaintiffs pointed out that by the time the court reached a decision, most companies had put in place irreversible plans to shutter or upgrade plants to comply with the rules. (See MATS Challenge Too Late for Targeted Coal Plants.)

“The day after this court ruled in Michigan that EPA had violated the Clean Air Act in enacting its rule regulating fossil fuel-fired power plants under Section 112 of the CAA, EPA boasted in an official blog post that the court’s decision was effectively a nullity,” the plaintiffs wrote. “Because the rule had not been stayed during the years of litigation, EPA assured its supporters that ‘the majority of power plants are already in compliance or well on their way to compliance.’”

“In the present case, EPA is seeking to similarly circumvent judicial review, but on an even larger scale” and “deploy again the cynical tactic that [it] successfully used just last term to nullify this court’s holding” in the MATS case, they wrote.

— Amanda Durish Cook, Rich Heidorn Jr., Suzanne Herel, Tom Kleckner and William Opalka contributed to this report.