D.C. Circuit grills Trump admin on carbon rule

Source: By Niina H. Farah, E&E News reporter • Posted: Monday, October 12, 2020

A panel of federal judges yesterday questioned whether the Trump administration made the right call when it unwound a signature Obama-era climate rule and replaced it with a much less stringent regulation.

In a marathon virtual hearing that lasted more than nine hours, a three-judge panel for the U.S. Court of Appeals for the District of Columbia Circuit peppered a long roster of attorneys with questions about EPA’s precise authority to regulate carbon emissions from power plants under the Clean Air Act.

The agency under President Trump has maintained that the statute clearly directs EPA to require types of emissions reductions that could be applied directly to power plants and that the Obama administration overstepped its authority when it drafted the 2015 Clean Power Plan (CPP), which took a systemic approach to regulation.

Challengers of the Affordable Clean Energy (ACE) rule asked the D.C. Circuit to toss the Trump regulation and send the agency back to work on the CPP, which Trump’s EPA repealed and replaced and is now years out of date.

“We don’t think putting the Clean Power Plan back in effect now makes any sense,” said Sean Donahue, a partner at Donahue, Goldberg, Weaver & Littleton, who represented environmental and public health challengers.

While the ACE rule’s critics didn’t have a set deadline for a potential agency remand, they said they would like to see EPA respond as “expeditiously as possible,” said Jay Duffy, associate attorney at the Clean Air Task Force.

Judges Patricia Millett and Cornelia Pillard, both Obama appointees, questioned the agency’s decision not to set emissions limits under the ACE rule. They asked attorneys how either the agency or the courts would be able to prevent states from simply submitting plans that argued their aging coal-fired fleet could not adopt any of the retrofit technologies EPA recommended.

After some back-and-forth, Department of Justice Deputy Principal Assistant Attorney General Jonathan Brightbill said it could be consistent with the best system of emission reduction for a particular plant not to adopt any retrofit technology.

“It’s not hard to imagine that the large percentage of power plants would be able to make that same showing,” Millett responded.

Brightbill suggested that a state plan that allowed exceptions could be deemed arbitrary and capricious by the court, but Millett appeared unpersuaded.

“How would we tell?” she asked.

Judge Justin Walker also expressed skepticism about how EPA’s current approach would affect federal approval of state implementation plans, saying the process under the Trump regulation “puts enormous unchecked power in the hands of EPA.”

West Virginia Solicitor General Lindsay See responded that the idea of the rule was that EPA and the states would work hand in hand.

Earlier in the hearing, Walker also questioned whether a different system might yield more emissions reductions.

“Is it true that there are less emissions because of the fact that states are doing some version of cap and trade?” he asked.

“It’s kind of undeniable,” Millett interjected.

‘Squirt gun to put out a five-alarm fire’

Challengers to the ACE rule warned the D.C. Circuit that the narrow regulation would have little impact on the growing threat climate change poses to the environment and to public health.

The final rule sets no standards for emissions reductions and instead provides states with a list of recommended technologies for making heat rate improvements at power plants.

“It’s like using a squirt gun to put out a five-alarm fire,” said Donahue.

The judges asked whether emissions reductions the power sector had already achieved in the absence of regulation should also be taken into consideration.

“What I’m asking is, this is a five-alarm fire,” Millett said. “Is it permissible for the agency to say, ‘It turns out we only need a squirt gun because the market brought in six fire trucks with big hoses?'”

Donahue assured the court that even with the industry action, the sector would remain the second-largest source of greenhouse gas emissions for years to come, and regulation was still needed.

The judges asked pointed questions about how the court should interpret the language of the Clean Air Act and were curious about arguments that the statute’s language precluded certain types of emissions reductions.

“Should we interpret the statute to prohibit generation shifting or emission trading?” asked Pillard, referring to compliance options embraced by President Obama. “That seems like the opposite of a federalism argument.”

She asked, “Why would you be arguing that the statute forecloses choices?”

Millett noted that the Clean Air Act had long been known to be “technology forcing.”

“The whole point of the Clean Air Act is, there has to be a balance,” said Millett. “Some choices are having deathly consequences for the United States. The Clean Air Act gets to step in and set standards for what you put in the air.”

Reading the tea leaves

Court watchers said the D.C. Circuit appeared to be leaning toward siding with the Trump administration’s challengers, although the judges’ positions weren’t always clear throughout the argument.

“There was a lot of talk about the government’s interpretation of Section 111” of the Clean Air Act, which defines what qualifies as the best system of emissions reduction, said Caitlin McCoy, a staff attorney at the Environmental & Energy Law Program at Harvard Law School. “I didn’t get a sense whether they were on board.”

By contrast, the judges’ questioning grew more intense when it came to specifics of the ACE rule.

“The rule is a loophole,” McCoy said. “It was built to allow states to do nothing. It was built to provide an explanation about why plants can’t make any improvements because there is no meaningful criteria for it.”

Others raised concerns about some of Walker’s comments earlier in the hearing when he asked about the potential application of the major questions doctrine, which holds that courts should not defer to agency interpretations involving matters of significant political and economic consequence (Greenwire, Oct. 8).

“Judge Walker’s questions implied that if someone called, or could call, a rule ‘groundbreaking’ or ‘significant,’ it becomes a ‘major rule’ that requires a clear statement from Congress,” Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia Law School, wrote in an email.

That is not how the doctrine has been applied in the past, he said, adding that doing so now would be a “dangerous approach.”

“If that becomes the rule, then many agencies will be prevented from doing many of the things they do, simply because many of the things federal agencies do are ‘major’ in the common sense of the word,” Burger wrote.

Depending on the outcome of the case and the presidential election, the whole matter could eventually fall to a Biden administration, said Jeff Holmstead, a partner at Bracewell LLP.

“I think there will be pressure for them to do an amplified version of the Clean Power Plan,” Holmstead said in an interview ahead of yesterday’s arguments. “On the other hand, I think they realize that the likelihood that that will be upheld in the Supreme Court is pretty low.”

Reporter Pamela King contributed.