Judge Dismisses Novel Oklahoma Suit Seeking To Block Proposed ESPS

Source: By Lee Logan, Inside EPA • Posted: Tuesday, July 21, 2015

Rejecting Oklahoma’s aggressive calls for action, a federal judge has dismissed the state’s novel suit seeking an injunction blocking EPA from finalizing or implementing its greenhouse gas (GHG) rule for existing power plants, ruling that the state has not outlined any “exceptional circumstances” for why the court has jurisdiction to review the proposed GHG rule.

In a July 17 ruling, Judge Claire Eagan of the U.S. District Court for the Northern District of Oklahoma says that the state has not shown the court has jurisdiction to review the proposed rule and that plaintiffs will be able to make their case once EPA promulgates a final rule in the coming weeks.

“Plaintiffs have not shown that this Court has subject matter jurisdiction to hear their claims concerning the proposed emission standards for coal-fired power plants and, upon issuance of a final rule, plaintiffs will have a forum in which they can seek judicial review of the emission standards,” she wrote.

Eagan writes that the Sooner State’s claims — that immediate judicial review is needed to prevent irreparable harm — “are exaggerated,” and that there is “no reason to believe that plaintiffs will have to wait long before renewing proceedings in the [U.S. Court of Appeals for the District of Columbia Circuit] if they intend to challenge the final rule.”

The ruling in State of Oklahoma, et al. v. Gina McCarthy, et al. marks the fourth time that industry and states have failed in challenging proposed versions of EPA’s GHG rules for power plants.

The D.C. Circuit in December 2012 ruled in Las Brisas Energy Center LLC v. EPAto reject an industry suit over the first version of EPA’s GHG rule for new plants, and a district court in October 2014 dismissed Nebraska’s suit over the latest proposed version of the new source rule.

More recently, the D.C. Circuit in June rejected a series of suits brought by a coalition of states and coal mining firm Murray Energy Corp. over EPA’s proposed existing source performance standards (ESPS), finding that it lacked jurisdiction to review a proposed rule under the All Writs Act.

The latest ruling comes just two days after Oklahoma filed a new motion aggressively urging the court to consider a renewed request for a preliminary injunction of the rule, even though Eagan had limited initial briefing solely to questions about the court’s jurisdiction to hear the suit.

Oklahoma in the July 15 motion argued that quick action is needed to prevent “imminent” irreparable harm to the state, citing “credible reports” that EPA will sign the final ESPS “in the coming weeks.”

Those include an Inside EPA report that quotes sources saying EPA plans to release the final rule before Aug. 10 so that President Obama can unveil the measure before he leaves Washington for a vacation that is slated to run through Labor Day.

As such, the state says “substantial additional injury is more imminent than [it] had previously understood.” It asked the court to require EPA to submit a combined response on the jurisdiction issue and the injunction request by July 30, with a court ruling by Aug. 7.

Quick Ruling

Eagan supplied the court’s ruling much sooner, finding “that further briefing from any party is unnecessary, because plaintiffs have failed to establish that the Court has subject matter jurisdiction over this case.”

The ruling means that EPA no longer has to respond to Oklahoma’s July 8 brief on the jurisdiction issue, and it also moots the state’s recent renewed push for a preliminary injunction of the rule.

The novel and aggressive push by Oklahoma to block the ESPS before it is final could foreshadow creative legal efforts to scrap or undermine the rule in the coming months, given that the state argued that traditional judicial review procedures are inapt to correct the “evils posed by the agency’s actions.”

Oklahoma’s underlying argument on why the court had jurisdiction centered on federal courts’ “residual” authority granted under title 28, section 1331 of the U.S. Code, which grants federal courts what is commonly known as “federal question jurisdiction.”

“There’s a presumption of reviewability under federal law when federal statutes don’t provide specifically for review in a particular circumstance,” a source familiar with the matter said earlier.

The source added that the authority became available after the D.C. Circuit rejected the earlier ESPS suits and is available until EPA finalizes the ESPS.

The state said federal courts have “residual” jurisdiction to hear challenges to “plainly” illegal actions, even before they are final, if waiting to challenge a final action would injure petitioners. It argues this is the case with the ESPS.

The argument rested heavily on the 1958 Supreme Court ruling in Leedom v. Kyne, which allowed employees to challenge a non-final action by the National Labor Relations Board.

But Eagan writes in her ruling that the 10th Circuit “has emphasized that the Leedom exception is ‘very limited’ in scope and is to be ‘invoked only in exceptional circumstances.’”

Unlike in Leedom, “this is a case where the judicial review sought by plaintiff is simply premature, rather than wholly prohibited by statute, and plaintiffs will have a forum to challenge the emission standards before they take effect,” Eagan writes.

She also faults the state’s arguments that a “plain” reading of Clean Air Act section 111(d) — the section the agency is using for the GHG rule — shows that EPA lacks authority for the ESPS because the agency already regulates power plants’ mercury emissions under section 112 of the law.

The argument — which is identical to the claims cited in the Murray litigation — “simply highlights the complex nature of the [air law’s] regulatory and administrative scheme, and this is not the type of alleged violation of a ‘clear and mandatory’ duty for which review is appropriate under Leedom,” the judge writes.

As such, “these issues of administrative authority to enact regulations under the [air law] are precisely the kinds of issues reserved for judicial review proceedings before the D.C. Circuit.”

Underscoring the point, Eagan later writes: “The ultimate issue of whether the EPA has the authority to promulgate the disputed emission standards pursuant to [section 111(d)] must be decided by the court with exclusive jurisdiction over these matters, and that court is the D.C. Circuit.”

‘No Prospect’ For Relief

In its earlier filings in the suit, Oklahoma had argued that the traditional judicial review procedure under section 307 of the air act is inappropriate for this rulemaking.

Estimating “optimistically” that the D.C. Circuit could undertake expedited stay proceedings in 280 days, and that the rule would be signed in about 50 days, “Oklahoma has no prospect of obtaining any relief for about a year and will continue to accrue per se irreparable injury during that time.”

In its renewed motion for an injunction, the state argued, “In the usual case, [section 307 review] works out well enough: although it may take the D.C. Circuit months to act on a stay request or conduct expedited proceedings, typical regulatory phase-in periods do not force regulated parties to make irreversible decisions prior to such consideration by the court. But when an agency is acting in bad faith, asserting ultra vires power to force regulated parties to take irreversible compliance steps at the earliest possible stage, Section 307 review breaks down.”

The proposed ESPS would not require compliance to begin until 2020. It would also give states a year to craft a compliance plan, with a deadline likely in late 2016. There is also the possibility of a year-long extension if the state requires legislative or regulatory actions to comply.

Despite that proposed compliance phase-in, Oklahoma contended that utilities will likely begin to seek rate recovery proceedings for expected compliance actions quickly after the rule is finalized, which would trigger the state utility commission to spend resources to accommodate such proceedings.