Despite Hoopla, Court Challenge to Clean Power Plan Likely to Fail

The much ballyhooed legal challenge to the Environmental Protection Agency's proposed Clean Power Plan, brought by coal companies and conservative state attorneys-general, ran out of steam today in the U.S. Court of Appeals in Washington. Judges Karen LeCraft Henderson, Thomas Griffith, and Brett Kavanaugh, a decidedly conservative panel, heard an hour and a half of oral arguments today in a packed courtroom. Here are three takeaways from the arguments:

1. No final action, no jurisdiction

The court showed little sympathy for the challengers' unprecedented proposition that they can sue EPA over the Clean Power Plan proposal, to stop the rulemaking in its tracks before the agency makes its final decision. Judges Griffith and Kavanaugh hit this point exceptionally hard, each saying that allowing premature challenges would lead the court into a "morass." Griffith asked repeatedly for any precedent allowing lawsuits over proposals, and any principle to govern when to intervene. The challengers conceded there is no precedent and could offer no principle. West Virginia's lawyer said, "There's always a first time..."

As Justice Department counsel explained, it's basic administrative law that one cannot challenge a proposed rule, before an agency has taken a final action that creates any obligations, before the agency explains its final legal, policy, and factual conclusions after considering and responding to public comments. This creates a full administrative record for courts to review, and there is none now. Challengers will have their day in court after EPA issues the final Clean Power Plan standards.

The challengers claimed that this case deserves an exception because it turns on a legal interpretation and will have big real world consequences. The states, they claimed, already have to expend resources to prepare. But Judge Kavanaugh said this situation is "not that extraordinary." He noted that many other cases turn on legal interpretations and have big consequences. Judge Griffith asked for any case where merely "bracing for the costs" of a proposed regulation conferred standing to sue, and the challengers had nothing to offer.

In short, there's no sign the court will take up the invitation to jump in before EPA has a chance to finish the Clean Power Plan.

2. A glimpse into the merits, no more

Lawyers for the coal companies and challenging states contended they had found a legal flaw so clear that the court should stretch the normal rules to decide it early. They claim the statute unambiguously prohibits EPA from regulating power plant emissions of carbon dioxide under the Clean Power Plan because the agency has already regulated power plant emissions of mercury under another provision.

Though the challengers contend this prohibition is black and white, it is anything but clear. Congress adopted section 111(d) in 1970 to assure that there would be "no gaps" in the Clean Air Act's coverage of dangerous air pollutants. Existing sources' emissions of pollutants that cause smog (ozone) and soot (fine particles) are curbed under one provision (section 110). Existing sources' emissions of especially toxic pollutants, such as mercury, are controlled under a second provision (section 112). And existing sources' emissions of any other dangerous pollutants, including carbon dioxide and five other heat-trapping pollutants, are regulated under a third provision (section 111(d)).

Indeed, in a 2011 case called American Electric Power v. Connecticut, the Supreme Court specifically ruled that section 111(d) of the Act empowers EPA to curb power plants' carbon dioxide emissions. In fact, power company lawyers in that case pressed that very argument upon the Supreme Court. That was then, this is now, it seems.

In a theory dreamed up only after the American Electric Power decision, the coal industry and its supporting states argue that Congress abandoned the "no gaps" approach in 1990 Clean Air Act amendments and put EPA to a Sophie's choice: You can protect people from power plants' mercury emissions, or from their carbon dioxide emissions, but not both. Power plants, they claim, must be protected from "double regulation."

This is total invention. Power plants emit a host of dangerous pollutants, and these emissions are regulated under at least a half dozen parts of the Clean Air Act. There's no basis for the theory that Congress thought power plants deserved protection against "double regulation," and no basis for thinking that Congress intended to force EPA to choose between curbing mercury pollution and curbing carbon pollution.

The briefs filed by EPA, by supporting states led by New York, by NRDC and other environmental groups, and by Calpine Corporation, a major power producer, all show that section 111(d) is there to curb dangerous pollutants that are not curbed under section 112. There are no gaps in the statutory scheme that let some dangerous pollutants off scot-free.

When EPA completes the rule, the court will apply the familiar principles of Chevron USA v. NRDC, to determine if EPA has reasonably interpreted the law. That's the Supreme Court case holding that Congress gave agencies the first opportunity to interpret the laws they are charged to implement. Under Chevron, when a statute is ambiguous, courts must defer to an agency's reasonable interpretation.

There's a special twist here because the 1990 amendments included two provisions modifying the same sentence in section 111(d) - each change giving that sentence a different ending. In the final rule, EPA will undoubtedly give its views on what each amendment means, and how the two interact. The court will then have to decide if EPA's interpretation is reasonable. Judge Griffith noted that Chevron deference applies not only when a single statutory provision is ambiguous, but also when two statutory provisions conflict. That's the view of a majority of Supreme Court justices in a case called Scialabba v. Cuellar de Orsorio.

The court dipped its toes into these legal interpretation questions, but little more. The judges seemed to accept the Justice Department's argument that EPA must be allowed to complete the rulemaking and definitively explain its final decision, including its interpretation of the interplay between sections 111(d) and 112. Questions of statutory interpretation will definitely come before the court once EPA issues its final standards. But there's no sign that this panel of judges will take them up now.

3. No interest in far-fetched constitutional theories

These cases have drawn the most public and political attention because of the involvement of Harvard Professor Laurence Tribe - hired by coal giant Peabody Energy but speaking today for all the challengers. He has launched far-fetched constitutional theories, including claims that the Clean Power Plan violates the Fifth and Tenth Amendments of the Constitution and usurps Congress's lawmaking powers. Professors Richard Lazarus and Jody Freeman at Harvard and Richard Revesz at NYU have shown how far out Tribe's theories really are.

Perhaps a little cautious in front of actual judges, Tribe today avoided some of the inflammatory language ("burning the Constitution") that he has deployed in congressional testimony and in the Wall Street Journal. But he did not really skimp, arguing today that the Clean Power Plan "commandeers" states into being mere "puppets" for the EPA.

This is a total distortion of "cooperative federalism," which has been at the heart of the Clean Air Act for 45 years, and which the Supreme Court has repeatedly approved. As it has dozens of times since 1970, EPA will set national standards to limit power plants' carbon pollution. Each state will then have the first opportunity to write plans to apply those standards to the power plants in that state.

Contrary to Professor Tribe, EPA cannot force the state to write a plan. But if the state declines, then EPA is charged with writing and enforcing a federal plan directly limiting those power plants' pollution. In this instance, EPA regulates the power plants directly (just as it does already for acid rain and toxic pollutants) - it does not force the state to do anything.

That EPA will regulate the power plants directly is the federal guarantee that makes the Clean Air Act work. But EPA cannot "commandeer" the states into regulating against their will.

Tribe argued that the threat of a "secret unknown plan" will force the states to knuckle under. In real life, as I've shown here, most states are actively engaged because both power companies and political leaders prefer to have the states in the lead making the choices involved in writing implementation plans, rather than leaving it to EPA.

In any case, EPA has announced that it will propose the contents of federal plans this summer, eliminating the scenario of mystery and dark threats that Professor Tribe imagines. States and other stakeholders will have a full opportunity to comment on the proposed federal plan regulations. When the elements of the federal plan are finalized, they'll serve both as a model to help states design their own plans and as a clear guidance on how EPA will curb power plants' emissions directly if a state chooses not to act.

For all the attention Professor Tribe has gotten these past few weeks, there's no sign that he made any dent in the court's thinking.

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In 2012 the appeals court summarily dismissed another premature challenge to EPA's proposed standards for carbon emissions for new power plants, in a case called Las Brisas Energy Center v. EPA. The two-paragraph ruling stated simply: "The challenged proposed rule is not final agency action subject to judicial review." That seems to be where this panel is headed too. Its opinion could be similarly short and sweet.