Power Plant Mercury Standards Litigation May Signal High Court's View of Deference

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By Patrick Ambrosio

Feb. 19 — The U.S. Supreme Court's consideration of litigation challenging mercury and air toxics standards for power plants will be the next signal of how much judicial deference the Environmental Protection Agency and other federal regulations are afforded in interpreting statutory language, a panel of attorneys involved in environmental litigation said Feb. 19.

Speaking at an event sponsored by the D.C. Bar, the attorneys discussed whether the EPA should expect to receive less judicial deference following a 2014 Supreme Court decision that limited the agency's greenhouse gas permitting program.

In that 5–4 decision, the Supreme Court struck down the EPA's tailoring rule, which it held to be an “impermissible rewriting” of an unambiguous statutory threshold in the sections of the Clean Air Act covering prevention of significant deterioration construction and Title V operating permits (Util. Air Regulatory Grp. v. EPA, 134 S.Ct. 2427, 78 ERC 1585, 2014 BL 172973 (2014)).

Thomas Lorenzen, a partner at Dorsey & Whitney LLP, said the Supreme Court's view of judicial deference “maybe hasn't played itself all the way out yet.”

Upcoming Supreme Court consideration of the EPA's power plant standards for emissions of mercury and other hazardous air pollutants, as well as a lawsuit challenging the tax-credit subsidies for health care under the Patient Protection and Affordable Care Act, both will shed further light on the court's views, according to Lorenzen.

Chevron Case Raised 

“That's where we're going to see whether Chevron has really changed,” he said.

Lorenzen was referring to the Supreme Court's 1984 decision in Chevron U.S.A. Inc. v. NRDC, which established a two-part test for review of agency actions. Under Chevron, a court first must decide whether the plain text of the law is clear. If the law is ambiguous, then the court must decide whether the agency's interpretation of the law is permissible.

John Walke, clean air director for the Natural Resources Defense Council, said it remains to be seen whether the court's view of Chevron deference has changed. He said there are opportunities to read the decision in Util. Air Regulatory Grp. v. EPA narrowly based on it being a “special and unique case.”

Called ‘Exceptional Case.'

Kate Konschnik, director of Harvard Law School's Environmental Policy Program, agreed there were several facts in the greenhouse gas permitting litigation that made it an “exceptional case,” including that the agency's interpretation of the Clean Air Act conflicted with numerical thresholds included in the Clean Air Act for permitting requirements.

The EPA's tailoring rule increased the statutory thresholds of 100 tons per year or 250 tons a year of emissions of a regulated pollutant to 100,000 tons of carbon dioxide or carbon dioxide equivalent greenhouse gases. The agency did that so only larger sources of greenhouse gas emissions would have to obtain Clean Air Act permits.

The Supreme Court found the EPA lacked the authority to change those thresholds to accommodate its interpretation of greenhouse gases triggering permitting requirements.

Uncertainty on Future Decisions 

Konschnik said it is difficult to tell if the Util. Air Regulatory Grp. v. EPA opinion will mean something new for future litigation. A broad reading of the Supreme Court's decision could indicate a shift in who interprets ambiguous statutory language from federal agencies to the courts, she said.

The Util. Air Regulatory Grp. v. EPA opinion does make it “a lot more unclear” going forward how the EPA will fare in challenges to its regulations that are based on interpretation of the Clean Air Act, according to Konschnik.

In addition to the mercury and air toxics standards litigation, Konschnik also highlighted ongoing litigation challenging the Environmental Protection Agency's authority to regulate carbon dioxide emissions from power plants.

In its opening brief filed in the U.S. Court of Appeals for the District of Columbia Circuit, the EPA argued that its interpretation of ambiguously worded provisions of Section 111(d) of the Clean Air Act are due deference by the court (In re Murray Energy Corp., D.C. Cir., No. 14-112, brief filed 2/12/15; Murray Energy Corp. v. EPA, D.C. Cir., No. 14-1151, brief filed 2/12/15).

Konschnik said in that case, there are statutory terms up for interpretation and a need for contextual reading of the Clean Air Act.

“What will be deferred to and what won't be deferred to?” she asked.

Review of ‘Seemingly Ambiguous' Language 

Lorenzen said the litigation on the mercury and air toxics standards will focus on “seemingly ambiguous” language in the Clean Air Act.

The Supreme Court in November 2014 agreed to consider whether the EPA “unreasonably refused to consider costs” when it determined that it was “appropriate and necessary” to regulate emissions of hazardous air pollutants from power plants. Oral arguments in that litigation are scheduled for March 25 (Michigan v. EPA, U.S. No. 14-46, oral arguments scheduled 2/2/15).

Walke of the NRDC noted that Justice Antonin Scalia, who authored the majority opinion in Util. Air Regulatory Grp. v. EPA, also authored a 2001 decision finding that the Clean Air Act unambiguously prohibits the EPA from considering implementation costs when setting national ambient air quality standards (Whitman v. American Trucking Ass'ns, 531 U.S. 457, 51 ERC 2089 (2001)).

In that opinion, Justice Scalia indicated that Congress would have used other language in the Clean Air Act if it intended to require the agency to consider costs in setting national air standards to protect public health, according to Walke. There also is no “express mention” of cost in the term “appropriate and necessary” either, he said.

Dissenting Opinion Criticized 

When asked about the Supreme Court's decision to review the D.C. Circuit's April 2014 decision to uphold the mercury and air toxics standards, Lorenzen said the dissenting opinion D.C. Circuit Judge Brett Kavanaugh wrote carries “substantial weight” with the conservative wing of the Supreme Court.

Lorenzen noted that it only takes four votes for the Supreme Court to decide to review a case and described Kavanaugh as a “darling” of conservative justices on the Supreme Court.

In the dissenting opinion, Kavanaugh wrote that considering cost is “common sense and sound government practice” for an agency tasked with deciding whether it is “appropriate” to move ahead with a regulation (White Stallion Energy Center LLC v. EPA, 748 F.3d 1222, 2014 BL 103957 (D.C. Cir. 2014).

Walke criticized Kavanaugh's dissenting opinion, encouraging the audience to find the “winning case citation” that backs Kavanaugh's opinion on cost.

“It's just not there,” he said.

If the new test on agency interpretations of statutory language is what judges determine to be common sense, then Chevron “really has no meaning,” Walke said.

To contact the reporter on this story: Patrick Ambrosio in Washington at pambrosio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com