Clean Power Plan Fate Rests on Congressional Intentions

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By Andrew Childers

Sept. 28 — The fate of the Obama administration’s carbon dioxide limits for power plants will likely turn on whether federal appellate judges believe Congress clearly granted authority to the Environmental Protection Agency to regulate that broadly, attorneys who argued the case said.

“That was the biggest thing that came out of the day. Does there have to be clear congressional authorization,” West Virginia Solicitor General Elbert Lin, who helped argue against the Clean Power Plan, said at a Sept. 28 discussion held by Georgetown Law.

The U.S. Court of Appeals for the District of Columbia Circuit heard nearly seven hours of argument Sept. 27 over the EPA’s rule (RIN:2060-AR33), which sets limits on carbon dioxide emissions from the power sector in each state. The rule is being challenged by more than two dozen states, which are charged with implementing the standards, as well as several utility and industry groups ( West Virginia v. EPA, D.C. Cir. en banc, No. 15-1363, 9/27/16 ).

“If you think it’s OK to use the Clean Air Act to regulate carbon from power plants, this is a really sensible, cost-sensitive, pragmatic way to do it in light of how the industry already operates,” said Sean Donahue of the law firm Donahue & Goldberg LLP in Washington, who represented environmental groups in the case.

The Clean Power Plan was issued under Section 111(d), a rarely used provision that requires the EPA to determine the “best system of emission reduction,” which states then implement. Previously, the EPA interpreted that to mean pollution controls that can be adopted by individual sources. But under the Clean Power Plan, the EPA has read “system” far broader than before, arguing the entire interconnected grid network constitutes a single system and the best means of controlling carbon dioxide pollution is by shifting electricity generation from coal-fired utilities to cleaner alternatives.

Did Congress Speak Clearly—Or at All?

“It is a fundamentally and qualitatively different use of the Section 111(d) power and I think the court got that,” Lin said.

Opponents of the rule argue that the EPA’s reading of its power is so expansive and the Clean Power Plan is so transformative for utilities that it should not be subject to the usual judicial deference afforded to agencies interpreting statutes, an exception known as the major questions doctrine. They also argue that Congress must clearly grant the EPA such broad authority.

“That’s the point of the clear statement doctrine,” Lin said. “If the power being exercised is so transformative and large, that’s the kind of power courts assume Congress wouldn’t have delegated implicitly through ambiguity” in the provisions of Section 111(d).

Not only will judges have to consider Congress’s intention when it last updated the provisions of Section 111(d) in 1990; the court may also consider the fact that legislators have failed to act on climate change, including a nationwide cap-and-trade bill that failed to pass the Senate in 2010, said Thomas Lorenzen, a partner at Crowell & Moring LLP in Washington, who represented electric cooperatives in the litigation.

“What do we take from congressional inaction over the years?” he asked.

But Supreme Court Has Spoken

Although Congress has never explicitly told the EPA it has the power to address climate change, the U.S. Supreme Court has, including in a 2011 decision that specifically cited the same provision the EPA used for the Clean Power Plan ( Am. Elec. Power Co. v. Connecticut, 131 S. Ct. 2527, 2011 BL 161239, 72 ERC 1609 (2011)).

Utilities in that instance had supported the EPA’s Clean Air Act authority to regulate carbon dioxide emissions under Section 111(d) rather than face several common law claims brought by states, but power companies now oppose how the EPA has structured the Clean Power Plan.

“They’re trying to parse that now to say if it’s done in a certain way there’s no deference given and you have to give it another standard of review,” said Morgan Costello, an assistant attorney general in the New York attorney general’s office, which has supported the EPA.

But opponents of the rule argue it’s not a matter of whether the EPA can use that authority to regulate power plants, but rather that the structure of the Clean Power Plan far exceeds what is permissible under the statute.

“Is that tool a sledgehammer or a jeweler’s hammer?” Lorenzen asked.

He predicted the court will not issue a decision until January at the earliest.

“The D.C. Circuit is going to be looking for as near to a unanimous decision as they can in part because this is an important case and in part because the Supreme Court is irretrievably fractured,” he said.

To contact the reporter on this story: Andrew Childers at AChilders@bna.com

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

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