Cases & Deals

Oklahoma Gas and Electric obtains stay from Tenth Circuit of EPA’s final rule on Oklahoma's regional haze state implementation plan

Client(s) OGE Energy Corp.

On June 22, 2012, the Tenth Circuit Court of Appeals granted a request by Jones Day client Oklahoma Gas and Electric Company to stay an EPA rule that would have required OG&E to spend over $1.2 billion over the next five years to install emissions control technology. The case before the Tenth Circuit is a challenge to the final rule adopted by EPA for regional haze from emissions from certain sources in Oklahoma. In order to improve the visibility at various national parks and other federal lands, the Clean Air Act requires each State to balance certain identified factors and determine the best available retrofit technology (BART) applicable to qualifying facilities in the State. Oklahoma reviewed available control technologies for sulfur dioxide emissions from OG&E’s coal-burning units and determined that the installation of dry scrubbers on OG&E’s units would not be cost-effective, particularly in comparison to the minimal improvement in visibility from the application of those scrubbers. Oklahoma went on to select the continued burning of low sulfur coal as BART for the OG&E units.

When Oklahoma submitted its determination to EPA, however, the federal agency refused to approve the state’s plan. Based on its own analysis, EPA concluded that scrubbers should be required at the OG&E units. Thus, EPA issued a final rule on December 28, 2011 disapproving the state’s plan to require the use of low sulfur coal and promulgating in its place a federal implementation plan (FIP) setting emission limits that would require the installation of dry scrubbers.

OG&E, together with the State of Oklahoma and Oklahoma Industrial Energy Consumers, moved the Tenth Circuit to stay the effectiveness of EPA’s final rule. OG&E argued that it is likely to succeed on the merits of its challenge to the final rule because the Clean Air Act gives the power to determine BART to the States and not EPA and because EPA’s own cost analysis was fundamentally flawed, arbitrary and capricious. In addition, movants argued that they (and the citizens of Oklahoma) would suffer irreparable injury because the State’s authority had been eviscerated and OG&E would be required to start spending millions of dollars immediately to meet the compliance deadline in the final rule. The Tenth Circuit found that “the stay factors have been met in this case” and granted a stay of the final rule pending hearing by the merits panel.

State of Oklahoma, Oklahoma Industrial Energy Consumers, and Oklahoma Gas and Electric Company v. EPA and Sierra Club, as intervenor, Nos. 12-9526 & 12-9527 (10th Cir.)