Trump carbon rule defense: A double-edged sword?

Source: By Niina H. Farah, E&E News reporter • Posted: Tuesday, November 5, 2019

The Trump administration’s courtroom defense of its Clean Power Plan repeal could blunt its own efforts to craft standards for carbon dioxide emissions from power plants, legal experts say.

EPA has taken an unexpected approach to defending its rollback of the Obama-era rule against challenges by states, environmental groups, public health organizations, and even industry and conservative groups in federal court, Joseph Goffman and Caitlin McCoy of Harvard University’s Environmental and Energy Law Program wrote in a recent analysis.

“They are using a strategy that is riskier than it needs to be,” said McCoy, a clean air and energy fellow in the Harvard program. “They are seeking a ruling that constrains their authority under the Clean Air Act.

“They are actually trying to limit their own authority and the authority of future administrations to take action on pollution from existing power plants.”

McCoy and Goffman, executive director of the Harvard program and a key architect of the Obama-era Clean Power Plan, say EPA is looking to the U.S. Court of Appeals for the District of Columbia Circuit, where challengers of the Affordable Clean Energy rule have filed their complaints, for support of the agency’s new position within the text of the Clean Air Act.

The statutory language, Trump’s EPA argues, does not allow for actions like emissions trading or generation shifting that are at the heart of the Clean Power Plan.

At the same time, EPA is forgoing asking the court to defer to its interpretation of the Clean Air Act — a much more common agency strategy in litigation over rulemaking.

But if the judges don’t buy the Trump administration’s argument on the statutory language, they could instruct EPA to rethink its strategy.

That not only would delay implementation of the Trump administration’s replacement rule, but also would mean EPA would lose its “high-reward path” of judicial support for a narrower reading of the agency’s authority under the Clean Air Act, McCoy said.

An EPA spokesman said it is up to Congress to define the limits of EPA’s power to regulate greenhouse gas emissions.

“EPA must rely on Congress to grant additional authority when needed, rather than pretend EPA has the ability to make its own laws if it can simply describe a grave enough problem, as was attempted in the Clean Power Plan,” EPA press secretary Michael Abboud wrote in an email.

He also pointed to Goffman’s own connection to the Clean Power Plan, a rule that Trump’s EPA has maintained overstepped states’ jurisdiction with its broad focus on electrical generation and distribution systems. While he was at EPA, Goffman’s legal approach had been that “a very small paragraph” of the Clean Air Act was ambiguous, Abboud wrote.

“Our approach is to restore the longstanding EPA understanding of the CAA that stood across multiple administrations,” Abboud added.

“We’re not surprised that the Harvard article deemphasizes that point, nor are we surprised that Mr. Goffman continues to advocate for vast power to be attributed to EPA by questioning the rule of law approach that we take in the ACE rule,” he wrote.

“To remain a nation of laws and not of men, EPA must remain faithful to the legal authority granted to us.”

‘The crux of the problem’

When an agency presents an argument that it is making a reasonable interpretation of the law, courts will often defer to the agency’s expertise under the doctrine known as Chevron deference.

But EPA might have trouble defending a rule that says the best approach for states to reduce emissions from existing power plants is to take action at the facility level, or “inside the fence line,” Goffman and other legal experts said.

EPA could have argued both that the Clean Air Act compelled the agency’s interpretation that power plant regulations could only use an “inside the fence line” approach, and that — even in the event that it didn’t — EPA had selected a reasonable option among a number of possibilities in developing the ACE rule, Goffman said.

“The riddle is, why didn’t they do that?” he said. “Why did they just argue that the statutory language is compelled and not argue that it is reasonable?”

Goffman said the agency may have avoided this route because it did not want the court to analyze the record in the case.

For example, EPA would have to defend as reasonable its exclusion from the ACE rule practices like emissions trading and generation shifting that already exist in the power sector and had been included in two prior rules under Clean Air Act Section 111(d), which governs existing sources of air pollution.

“If you look at the record, the agency is saying Congress meant for us to ignore the most important information available,” Goffman said. “That’s where the house of cards collapses.”

The Harvard analysis homes in on “the crux of the problem” EPA faces by turning away from the agency’s prior readings of the Clean Air Act, said David Hayes, executive director of the New York University School of Law’s State Energy & Environmental Impact Center.

In crafting the Clean Power Plan, EPA interpreted the statute to allow for power plants to switch to lower-emitting fuels, or to use emissions trading, as potential compliance methods. A decade earlier, the agency came to a similar conclusion in the 2005 Clean Air Mercury Rule, which also interpreted the “best system of emissions reductions” to include emissions trading.

Hayes said EPA was “putting all its eggs in one basket” by saying that the language of the Clean Air Act was so clear and unambiguous that the court didn’t have to look at how the agency had interpreted the statute in the past.

“It tries to stonewall these previous interpretations; it does not acknowledge them; it doesn’t explain them away,” he said. “It focuses on what I think is a tortured reading of the language to limit the possibility of a system only within the fence line.”

Rule redo?

The D.C. Circuit could decide to send the agency back to work on its carbon rule — or maybe even revive the Clean Power Plan, legal experts say.

“If they decide the rule has no legal basis, it would seem they should vacate the rule, both the ACE and the repeal rule,” said Lewis & Clark Law School professor William Funk.

Such a ruling could also leave an opening for a future administration to build on the Clean Power Plan to develop even tighter standards for power plant emissions from existing sources.

EPA’s main focus isn’t upholding the ACE rule, but ensuring a more strategic approach to greenhouse gas emissions controls under future administrations, said Bracewell LLP partner Jeff Holmstead.

He questioned whether the D.C. Circuit would have the legal authority to bring back the Clean Power Plan, which the Supreme Court froze as litigation played out over the Obama rule. Those lawsuits have since been dismissed.

“They wouldn’t say EPA’s interpretation was incorrect,” said Holmstead, a former EPA official under the George W. Bush administration. “The only risk to the agency is that the D.C. Circuit disagrees and says the agency’s discretion is broader than you think.”

In that case, EPA would have to go back to the drawing board on its power plant rule.

“I think the main motivation for the administration is they did want to establish the limits of what EPA can do under Section 111,” he said.

ACE rule’s legal future

The legal battle over EPA’s carbon rule could eventually get to the Supreme Court.

Holmstead said the chances that the justices would take the case are “quite high,” given the contentious and highly visible nature of the conflict over power plant regulation.

But first, the D.C. Circuit must decide whether to grant a request by EPA and its allies to expedite the appeals court litigation and must — eventually — rule in the case.

ACE rule challengers have urged the court not to fast-track the proceedings.

“I think the administration should be concerned — as explained in the paper — [the court] may remand back to the agency, and that would complicate the ability to take this directly back to the Supreme Court,” said Hayes of the State Energy & Environmental Impact Center.

The D.C. Circuit has not yet scheduled oral arguments in the consolidated ACE rule lawsuit, which challengers launched this summer.