Last June 18th, the U.S. Environmental Protection Agency released what is undoubtedly its most significant proposed rule ever: its Clean Power Plan. If finalized, the rule would reduce carbon dioxide emissions from America’s power plants by 30 percent from 2005 levels by 2030. It would fundamentally restructure the nation’s electricity sector, requiring states to increase their use of renewables like wind and solar, lower electricity demand through energy efficiency and demand-side management efforts, and use significantly more natural gas and less coal to generate electricity.
Within hours of the release of the proposed rule, four attorneys from the national law firm Squire Patton Boggs filed a 46-page petition in the U.S. Court of Appeals for the District of Columbia Circuit on behalf of Murray Energy, the largest underground coal mining company in America. The petition asks the court to issue an extraordinary writ because the text of the Clean Air Act (CAA) “unambiguously prohibits” the EPA’s proposal. Soon after, nine mainly Republican-run states filed an amicus brief in support of Murray Energy’s petition, claiming that it “is difficult to imagine a case where an agency’s non-final action is more obviously ‘in excess of the agency’s delegated powers’ ” from Congress. The states then followed up with their own lawsuit on the same grounds.
To some, those actions might seem like business as usual. After all, practically every major rule the EPA issues comes under fire from conservative politicians and affected industries. But amid all the rhetoric and political posturing, the question raised in this case is a good one, and one that we think everyone (including the EPA and supporters of climate regulation) should want the courts to decide now: does the EPA actually have the statutory authority to issue its Clean Power Plan?
Legislative disharmony / The answer lies in how the courts ultimately decide to interpret section 111(d) of the CAA, which the EPA cites as its sole authority for its Clean Power Plan. The problem is that if you pick up a statute book and read section 111(d), it says the EPA cannot use the section to regulate any plants that are already regulated under the agency’s air toxics program. Mercury emissions from existing coal-fired power plants are already regulated under the air toxics program, so—as the EPA has acknowledged—a “literal reading” of section 111(d) would effectively prohibit the agency from issuing its Clean Power Plan in any form.
But the analysis may not be that simple. When Congress last updated the CAA in 1990, a Democrat-controlled congressional committee screwed up: they inadvertently failed to harmonize the House and Senate language in section 111(d) and both versions were signed into law. Only the House version ended up in the statute books, yet technically both versions are the law.
The difference between the House and Senate language is subtle but important. Unlike the House version, which focuses on whether plants are regulated elsewhere, the Senate version says the EPA can regulate existing plants using section 111(d) so long as the pollutant being regulated is not toxic. Carbon dioxide is not toxic to humans, so the Senate version gives the EPA the authority it wants.
Enter the EPA’s lawyers, who argue that the discrepancy between the House and Senate versions of section 111(d) creates a conflict that renders the statute ambiguous. And when a statutory provision is ambiguous, the courts defer to the agency’s interpretation so long as it is reasonable. The EPA says its interpretation is reasonable because the 1990 amendments were aimed at expanding—not contracting—the agency’s authority to regulate air pollution.
Murray Energy and its state allies disagree. They argue that the pro-industry House amendment significantly changed the scope of section 111(d) compared to its pre-1990 form and was included in the legislative history on a list of substantive changes to the CAA. By contrast, the pro-EPA Senate amendment merely updated a statutory cross-reference in section 111(d) and was included in the “Conforming Amendments” section of the bill, meaning it was a mere clerical amendment. Murray Energy and the states argue that such errors are common in complex, modern legislation and that courts ignore the clerical amendment when there is a substantive amendment available.
Even if the courts disagree on this point, there is another reason the EPA could lose. Because both amendments were signed into law, courts will generally attempt to give effect to both, if it is possible to do so. Although the House and Senate versions create different results for the EPA, they are not necessarily conflicting. The agency could use section 111(d) to regulate carbon dioxide (a non-toxic pollutant) from other types of sources that are not subject to the air toxics program (of which there are many). But the EPA’s Clean Power Plan cannot comply with both amendments, which is why we think industry has the stronger argument.
Now or later? / So, if the EPA could lose, why should the agency and other supporters of climate regulation want the courts to decide now?
The answer is that delaying a decision will not help lower emissions, which is supposed to be the EPA’s goal.
For one thing, most states will ignore the EPA’s proposal until it is finalized, and even then they will not need to start complying until 2020, which is too far off to significantly influence behavior anytime soon. On the other hand, if the EPA were to lose in court now, there might still be time before President Obama leaves office at the end of 2016 to mitigate the loss. For example, the EPA could decide that regulating carbon dioxide emissions is more important than regulating mercury emissions, and withdraw its mercury air toxics rule for some (or all) power plants, thereby potentially opening the door to section 111(d) regulation for those sources. Or the EPA could go after additional greenhouse gas reductions from other sources, like cars, which it is allowed to do under other parts of the CAA. Or the EPA could ratchet down regulation of other power plant pollutants (like sulfur dioxide) that would drive up the cost of coal-fired electricity as compared to other generation options.
Unfortunately, the EPA seems more concerned about winning the Murray Energy case than helping the environment. On November 2nd, the agency filed its brief in the case. Instead of asking the court to decide the issue now, the EPA asked the court to dismiss the case as premature. We think that was a mistake, and as supporters of reasonable climate change regulation, we hope the court looks past the EPA’s procedural arguments and decides the question of the agency’s authority under section 111(d) now.
At a minimum, answering the substantive legal question now—even if the EPA ends up losing—would save the agency, states, and industry the substantial amount of time and resources necessary to work on a large, complex, and contentious rule that may never actually materialize. And you never know—the court could find that section 111(d) gives the EPA the authority it wants, which would end this debate and allow states and the regulated community to focus on implementing the Clean Power Plan rather than trying to thwart it.