Former EPA General Counsel Martella says Clean Power Plan will not survive legal challenges

Source: By Monica Trauzzi, E&E • Posted: Friday, November 7, 2014

How could political shifts in Washington following this week’s midterm elections impact President Obama’s aggressive climate action agenda? During today’s OnPoint, Roger Martella, a partner at Sidley Austin LLP and the former general counsel at U.S. EPA, discusses the legislative and legal battles ahead for EPA’s Clean Power Plan and Clean Air Act regulations. Martella also explains why he believes the existing source standard will not survive in court.

Click here to watch today’s OnPoint.

Monica Trauzzi: Hello and welcome to OnPoint. I’m Monica Trauzzi. With me today is Roger Martella, a partner at Sidley Austin and the former general counsel at U.S. EPA. Roger, always great to have you on the show.

Roger Martella: Thanks for having me back, Monica.

Monica Trauzzi: Roger, let’s start with some politics. The outcome of this week’s elections will likely have a direct impact on a series of EPA regulations. What do you see as the top contenders fixing a potential legislative fix if the GOP takes the Senate?

Roger Martella: Sure. Well, I think the contenders for the focus of Congress will be the three things that are the most important to the administration as well: the climate change portfolio, the New Source Performance Standard and the ESPS, the Existing Source Performance Standard; the ozone NAAQS proposal, which is due in December and finalizing that before the end of the administration; and Waters of the United States. These are the three most important, must-do items left for the Obama administration. These would be the three most important oversight issues for a Republican Congress.

And I would add a fourth as well. As we get closer towards the end of the administration, there’s going to be increasing focus on midnight regulations, guidances, notices, sue-and-settle-type agreements, and I could foresee Congress turning back to its focus on some administrative mechanisms to have greater oversight on things that might not be regulations but are attempts to bind the next administration after the Obama administration.

Monica Trauzzi: So how should the White House then be preparing for a potentially different political climate that may follow the midterms as it heads towards the last two years of its Climate Action Plan implementation?

Roger Martella: Well, as someone who was in a Republican administration when it flipped to Democratic control in Congress, I can say what is more of a factor is not so much the things that involve the president, like a Congressional Review Act or budget negotiations or even appropriations riders. It’s things where Congress can unilaterally act, and that’s primarily oversight. Oversight can be the single most significant factor in terms of slowing down an agenda, frustrating an agenda, calling into question things the administration’s trying to do. So the No. 1 thing would be to make sure that they’re fully prepared on oversight issues, not only on the substance but on procedural battles that could arise over things like executive privilege and documents that they might want to access.

Monica Trauzzi: How could the outcome of some tight governors’ races impact state implementation of the Clean Power Plan?

Roger Martella: One of the most significant questions for states right now who are looking at the Clean Power Plan is how do they comply with it. There’s a very significant question about how EPA can force states to switch from coal to natural gas and to rely increasingly on renewables when there’s no authority for EPA to do that themselves. So a lot of states are looking at this and saying, “Do we even need to submit a plan?” I think those answers are going to be decided to some extent by changes in political leadership in some of those states, and we could see states today that are looking to support EPA and comply with it do 180 degrees and decide we’re not even going to submit a plan because we don’t believe there’s legal authority for EPA to enforce us to do this.

Monica Trauzzi: All right, so moving on, EPA and DOJ announced a settlement this week with automakers that resolves alleged Clean Air Act violations for vehicle greenhouse gas emissions. How significant of a win is that for the agency, and what does it mean moving forward?

Roger Martella: Well, there’s a significant dollar component to that, but I think what really EPA cares about here is the symbolic significance. This is the first major greenhouse gas settlement for the agency, only three years into greenhouse gas regulation, so we’re at the infancy of greenhouse gas enforce matters. This is probably the first one. And EPA announces it also as the largest settlement in the history of the Clean Air Act. So there is that symbolism there I think that’s most important to EPA. It wants to send a message that greenhouse gases are just as important if not more important than anything else the agency is doing, and it can prove that by showing that the largest settlement it’s ever reached on the Clean Air Act is not for sulfur dioxide or nitrogen oxide or ozone or lead. It’s for greenhouse gases.

Monica Trauzzi: So moving on to the Clean Power Plan. Last week EPA announced a notice of data availability. Why did the agency do this, and what are the impacts?

Roger Martella: I think the agency did this because it was hearing from stakeholders who would otherwise be supportive of the role that there were some problems that needed to be reconsidered. These are states, NGOs, even some utility groups who are sympathetic to EPA saying, “We want to support you, but you might’ve gotten some things wrong along the way and you need to think about some new issues.” So EPA put out this notice of data availability to say, “We’re thinking about expanding our consideration of some issues along the way to open the door to these topics.” It’s interesting because it doesn’t actually change the proposal; the proposal’s still the proposal, and arguably legally it doesn’t do enough to allow EPA to expand the ultimate proposal at the final day. But it is an effort I think to address some of the concerns raised by groups that are otherwise supportive of EPA.

Monica Trauzzi: And you think we could see groups try to argue for a deadline extension, both on the comment period and a final rule?

Roger Martella: I think that’s right. I mean, they’ve given barely for the notice of data availability, which is typically something that would require a minimum of two. So I think we’re going to see, given that complexity of it, that’s just realistically not a reasonable deadline. So we’re going to see requests for extensions both on that and probably even reconsidering the June 2015 deadline for finalizing the ESPS.

Monica Trauzzi: So as we head towards that December 1st close of the public comment period on the Clean Power Plan we’re expecting a range of comments. What are the legal issues you’ve identified that you believe will prevail?

Roger Martella: Sure. Well, there are scores of legal issues that evolve looking at the role, lining it up to the case solved, the legislative history, and past application. And maybe I could summarize it this way. I think the strongest thing EPA has going for it is the policy that it’s pursuing here, that it’s pursuing the most important environmental policy of a generation, taking the most significant action the country has taken to address climate change. And when you look at what other options are available, the likelihood of congressional action seems unlikely. So the courts seem increasingly willing to defer to EPA. The courts seem to recognize that EPA is the only game in town and willing to defer. So we start with that very significant advantage that EPA has, that the policy here is something that the courts are going to be largely deferential to.

But we have to balance that with the legal precedent of what they’re doing. This is the first time in the 40-year history of the Clean Air Act where they’re effectively saying, “We’re going to look at one entity that’s liable under a rule and hold it accountable and liable for the actions of third parties who have nothing to do with that rulemaking and allow states to hold those third parties legally liable because of that coal-fired power plant.” You combine that with the fact that the Supreme Court recently said in June that EPA can’t use a single provision in the Clean Air Act to broadly regulate the economy. I think ultimately the courts are going to be compelled to focus on the precedent of that and to not open the door to EPA kind of boot-strapping that legal authority that could really be precedent down the road and ultimately, despite the important policy, the rule’s not going to survive judicial review.

Monica Trauzzi: So you don’t think that this rule will survive if it goes to court.

Roger Martella: And I don’t say that lightly, ’cause I have taken a really hard look at it and I recognize the importance of the policy here and what the administration’s trying to do. But the legal precedent of saying for the first time in 40 years without any congressional authorization that one entity can be now held liable beyond the fence line for the independent actions of third parties and vice versa, I think any court’s going to have a hard time opening that precedent up long term, not only for the utility sector but for the next generation of rulemakings coming out of EPA for other sectors.

Monica Trauzzi: Sure. This is going to be very interesting to watch.

Roger Martella: Yes.

Monica Trauzzi: Thank you for coming on the show.

Roger Martella: Thank you, Monica.

Monica Trauzzi: And thanks for watching. We’ll see you back here tomorrow.