Rule freezes ‘part of the landscape’ at EPA

Source: Amanda Reilly, E&E reporter • Posted: Friday, February 19, 2016

U.S. EPA is exploring new territory when it comes to the Supreme Court’s decision to freeze the Clean Power Plan, the centerpiece of the Obama’a administration’s climate agenda, several former agency officials said this week.

“Stays are quite unusual,” said Robert Sussman, who held positions in EPA during both the Obama and Clinton administrations. “I don’t think there are clear guideposts.”

What is clear is that EPA can’t legally enforce the Clean Power Plan with the high court’s stay in place. It can’t, for example, approve state plans or punish states that delay their planning processes.

But even with the stay in place, former EPA officials agree the agency has leeway to continue at least some implementation activities.

“A judicial stay that prevents the rule from going into effect should be seen as different from, for example, an appropriations rider, which would effectively serve to prevent the agency from using its resources to work on such a thing,” said Scott Fulton, former EPA general counsel in the Obama administration, who is now president of the Environmental Law Institute.

Still, EPA needs to be “very careful, very thoughtful about what they do” during the stay, said Sussman, who is now a consultant on environmental and energy issues. Opponents, he said, will likely look “very closely to see whether EPA is adhering to the stay.”

“EPA can and should remain very active on climate change and certainly should be working within the community of stakeholders. But the things that they do have to be within their legal authority,” Sussman said. “I think if they start doing things that are outside their authority, then people on Capitol Hill are going to be very upset with them.”

In a 5-4 decision Feb. 9, the Supreme Court froze the Clean Power Plan, a rule requiring states to reduce carbon dioxide emissions from power plants, pending litigation. The weekend death of Justice Antonin Scalia, who had long been leader of the court’s conservative wing, has made the measure’s fate even murkier.

States had been facing a September deadline to submit initial rule compliance plans or to demonstrate progress toward completing those plans. That deadline, and others in the next few years, may be pushed back even if the courts end up upholding the program.

EPA’s top officials say they will respect the high court’s stay and potential implementation delays. At the same time, they are pledging to continue working with states that voluntarily want to move forward.

“I wouldn’t advise anybody to be thinking about doing anything differently than you’ve already been thinking about doing,” EPA acting air chief Janet McCabe told state regulators last week.

Even though many states have said they intend to halt planning activities, a handful of states have already committed to continuing the planning process.

‘Nothing has changed’

Bill Becker, executive director of the National Association of Clean Air Agencies, said he was cheered by EPA officials’ comments. A state that continues the planning process will be ahead if the Supreme Court eventually upholds the Clean Power Plan, Becker said.

“EPA should continue having calls, provide training where necessary, have webinars, conduct workshops, possibly provide guidance on [evaluation, measurement and verification] and energy efficiency. They attend our meetings if we ask them, respond to questions,” Becker said. “Nothing has changed — so long as the states are voluntarily requesting this information.”

Bob Perciasepe, former deputy administrator at EPA during the Obama administration, said it’s important for EPA to recognize that many states, regardless of the Clean Power Plan, are moving toward putting a price on carbon.

Perciasepe, who is now president of the Center for Climate and Energy Solutions (C2ES), urged EPA to do whatever it could to continue that trend.

“If I’m at EPA,” he said, “I certainly want to be looking at companies that have made significant commitments, I want to look at cities that are taking leadership action and work with as many states who are desiring to continue to prepare for a time when they’re going to have to deal with greenhouse gases.”

William Reilly, who served as EPA administrator during the George H.W. Bush administration, described himself as “astonished” by the high court’s action and encouraged EPA to cement partnerships with utilities during the stay.

He suggested that the agency should seek to establish phaseout schedules for older coal-fired power plants under other Clean Air Act programs to reduce nitrogen oxides and sulfur dioxide.

“The optimal approach for the utilities industry is work out a schedule with EPA with respect to specific plants,” he said.

During the stay, Fulton suggested, EPA may also want to take a look at remaining petitions asking the agency to reconsider the rule. Those petitions could allow for some fine-tuning, he said.

“If the agency looked at those petitions for reconsideration,” he said, “and thought, ‘Gee, if we addressed this point or that point, it might also add to the defensibility or the workability of the rule,’ then the agency might well make that kind of adjustment.”

‘Perception issue’

EPA must still walk somewhat of a line to make sure it’s not going too far during the stay, observers have said.

Michael Goo, a former senior policy adviser at EPA during the Obama administration, said it is important for EPA, if it wants the Supreme Court to eventually uphold the Clean Power Plan, to not do anything that could be seen as an affront.

“To the extent that states want information and to plan on their own and have specific questions for EPA, I think that EPA could, as part of its responsibility, go ahead and answer those questions,” said Goo, a partner at the consulting firm AJW Inc. “There’s a question of how proactive EPA should be. I expect EPA would err on the side of caution.”

EPA would do well to downplay the newness of the Clean Power Plan in public statements over the next several months, said Robert Verchick, who helped shape EPA’s climate strategy as deputy associate administrator for policy at EPA in 2009 and 2010, and who has defended EPA regulations in Congress.

Verchick said he believes conservative Supreme Court justices may have gotten “a little scared” about the ambitious nature of the Clean Power Plan.

“If I’m at EPA, I would want to make sure how I describe and discuss the Clean Power Plan regulations would be in a way that suggests or emphasizes the normalcy of what it is,” Verchick said, “rather than emphasizing or suggesting that this is a blockbuster regulation that’s going to change the course of the global economy or the course of climate change globally.”

EPA would also do well to emphasize that the agency is not forcing states to take any specific actions, said Verchick, now president of the Center for Progressive Reform.

The agency has to also worry about saying or doing something that could be used against it in further legal proceedings, cautioned Jeff Holmstead, who served as EPA air chief during the George W. Bush administration. Holmstead is currently a partner at Bracewell LLP representing challengers to the rule.

To that end, Holmstead said, EPA should be wary of finalizing its proposed model trading rules, which are meant to guide states in setting up a carbon trading system. It would look “a little bit like you’re thumbing your nose at the Supreme Court,” he said.

But James Rubin, an attorney at Dorsey & Whitney LLP, said nothing in the stay prevents EPA from continuing to work on the model rules, a proposed federal plan for states that don’t comply, and an incentive program for states that move early.

“There’s always a perception issue,” Rubin said. “I imagine EPA doesn’t want to be seen as taking action that would be seen as unauthorized, but that’s less a concern for the court as politically.”

Becker, who spoke with EPA officials Tuesday, said the agency has still not decided whether to move forward with finalizing those other parts of the Clean Power Plan.

‘It all got resolved’

EPA has experienced legal stays of major air rules a few times in its history. In her remarks to state air regulators last week, McCabe cited two examples.

In the late 1990s, the U.S. Court of Appeals for the District of Columbia Circuit froze what’s known as the agency’s “NOx SIP Call.” Under the rule, EPA rejected nitrogen oxide reduction plans by 22 states and Washington, D.C. The court lifted the stay in 2000.

The courts also stayed the agency’s cross-state air pollution rule (CSAPR), a regulatory regime for Northeast states to prevent air pollution from harming downwind areas. The D.C. Circuit lifted its stay in 2014 following a favorable Supreme Court ruling.

“Time went by, and people had questions, and it all got resolved,” McCabe said of the two previous stays. She added, “I think history shows that those things get worked out.”

Former EPA officials say it’s difficult to draw parallels between those prior stays and the Clean Power Plan because the new action is so unprecedented and the rule itself is different from anything the agency has done in the past.

In the case of CSAPR, for example, EPA was still able to enforce and implement a different Bush-era program while legal action played out on the new standards.

But there are still a few lessons EPA can glean from the past freezes of its rules, some observers said. Becker said states should look toward the CSAPR case as evidence for continuing Clean Power Plan planning efforts.

“The CSAPR rule was reaffirmed, and it demonstrated that states should continue the momentum that they had gained in the past,” Becker said, “especially since the kinds of regulatory approaches that were being contemplated were sensible ones that should have been pursued anyway.”

Holmstead says EPA may not be able to immediately reinstate the Clean Power Plan even if the Supreme Court upholds it. In the case of CSAPR, the high court remanded the rule back to the D.C. Circuit for further proceedings, and EPA had to tweak deadlines and make other adjustments.

“Even if the Supreme Court ultimately upholds the rule, there will be another round of EPA rulemaking to figure out exactly what the compliance obligations are,” he said.

‘Severe’ impact on employees

Former EPA officials said agency staffers understand the political environment in which they work, but predicted the unprecedented stay and uncertainty would likely affect morale within the agency.

“I’ve been at the agency when things like this happened. The immediate impact on the employees can be very severe,” Sussman said. “People can wake up one morning and say, ‘Well, I’ve been devoting the last three years of my life to the Clean Power Plan, and now it’s gone. What do I do now?'”

Sussman compared it to the feeling when President Obama decided in 2011, in the midst of an election season, to put the kibosh on a proposal to tighten the national ambient air quality standard for ozone pollution.

“That was a big shock to everybody,” he said.

Reilly, the EPA administrator under President George H.W. Bush, said EPA is already struggling with low morale because of critics in Congress and comments made by Republican presidential candidates targeting the agency’s actions.

“I don’t think that morale, frankly, is very high,” Reilly said. “There are a lot of critics and not many defenders.”

Goo, the former senior EPA policy adviser, predicted that career staff at the agency would pick themselves up.

“All of [EPA’s] rules are litigated. The agency has had adverse opinions that were later reversed. It’s had stays. It’s fought its way through various reconsideration petitions,” Goo said. “People expect this as part of the landscape of what you’re dealing with when you work at EPA.”

“Sure,” he added, “there’s a moment when people say, ‘Oh, that wasn’t good.’ Then they go back and roll up their sleeves and continue work.”