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Court Prods EPA Authority, Questions Climate Rule’s Adequacy (1)

Oct. 8, 2020, 6:52 PM; Updated: Oct. 8, 2020, 9:36 PM

Federal judges grilled government lawyers Thursday on the Trump administration’s decision to replace an ambitious Obama-era climate program with an industry-friendly rule.

The U.S. Court of Appeals for the District of Columbia Circuit heard hours of remote arguments on whether the Environmental Protection Agency blundered when it scrapped the sweeping Clean Power Plan in favor of more a modest effort to address greenhouse gas emissions from power plants.

The arguments stretched more than eight hours, with questions from the three-judge panel touching on statutory specifics, overarching legal questions of agency power, and even Electricity 101—from mining a single piece of coal to turning on a light switch.

A key point of contention in the case is whether the Clean Air Act mandates a narrow, facility-specific approach to emissions reductions, as the Trump administration argues—or allows the EPA to target the sector more holistically.

Narrower Approach

The narrower approach stems from Trump officials’ tight reading of the Clean Air Act, which—if endorsed by the D.C. Circuit or the Supreme Court—will limit how future administrations use the law to tackle emissions from the power sector, the nation’s second-biggest source of greenhouse gases behind transportation.

Judges Patricia A. Millett and Cornelia T.L. Pillard drilled into the text of the law and pressed for details on how the Clean Power Plan would have worked, and whether the EPA is meeting its legal responsibilities through the replacement Affordable Clean Energy rule.

Millett described the new rule as a set of “thoughts and ideas, some suggestions” for cutting emissions—a loose approach she called unprecedented.

Judge Justin R. Walker, meanwhile, signaled he views the Obama-era approach with a level of judicial skepticism reserved for “major rules” with significant economic effects.

“How can something not be a major rule,” he asked, when President Barack Obama described it at the time as “the single most important step America has ever taken” to address climate change?

Best Way to Cut Emissions

At issue is the Clean Air Act’s mandate that the EPA use the “best system of emission reduction” to address air pollutants.

Trump officials say the Clean Air Act’s mandate refers to efficiency upgrades that can be made within the so-called fenceline of individual power plants.

New York Deputy Solicitor General Steven C. Wu and other lawyers for a coalition of left-leaning states, environmentalists, public health groups, and clean energy companies attacked that conclusion during Thursday’s arguments, calling it both unjustified and inadequate to meaningfully reduce greenhouse gas emissions.

Instead, Wu defended the Obama’s administration’s approach, which determined that the best system for addressing carbon dioxide from the power sector included switching off some fossil fuel-fired power generation in favor of clean energy, through a sector-wide emissions credit system.

Wu argued that the Clean Air Act’s “broad language” is intended to give the EPA flexibility.

But the broader Obama-era approach was “revolutionary,” and not a normal or permissible use of the Clean Air Act, said Justice Department attorney Jonathan D. Brightbill, representing the EPA.

Major Rule?

Walker emphasized Brightbill’s point in multiple lines of questioning that sought to highlight the Obama rule’s significance. Walker asked Wu whether the Clean Power Plan qualified as a “major rule” that would warrant a closer level of review by the court.

The judge referenced various comments from environmental groups and politicians who lauded the regulation as “groundbreaking” and historic when the EPA finalized it in 2015.

Under the major questions doctrine, rules with big economic and political significance must stem from a clear grant of authority from Congress. Critics of the Clean Power Plan say the Clean Air Act doesn’t speak clearly to the issue.

Wu responded that while the Clean Power Plan was major in the “common sense,” it didn’t trigger the type of special scrutiny judges apply under the major questions doctrine.

Walker returned to the issue repeatedly throughout Thursday’s session, adopting a persistent interrogation style that raised eyebrows among some court watchers.

“His questions, they’re more political,” Vermont Law School professor Patrick Parenteau said. “They’re more conducive to kind of a legislative debate.”

Trump appointed Walker to the D.C. Circuit earlier this year.

Legal Saga

The regulatory and legal saga over EPA climate rules goes back years. The Obama EPA adopted the Clean Power Plan in 2015, and defended it in an extraordinary eight-hour oral argument session at the D.C. Circuit in 2016.

The rule never took effect, as the Supreme Court froze implementation while litigation was pending. And the circuit court never decided the case; the litigation was disrupted when Donald Trump won the presidency. The EPA eventually scrapped the Clean Power Plan and last year adopted the narrower Affordable Clean Energy rule, which focuses on upgrading individual coal-fired facilities.

Thursday’s arguments delved into the adequacy of the Affordable Clean Energy rule. Donahue Goldberg Weaver & Littleton’s Sean Donahue, who represents environmentalists, took aim at the EPA’s failure to include binding emissions limits, and its decision to exempt oil- and gas-fired power plants from the upgrade requirements.

Millett cornered Brightbill, the government lawyer, on the rule’s lack of actual emissions limits, and how certain power plants, in consultation with state officials, could avoid making improvements altogether by showing it would be too costly.

“Is it hard to imagine that a large percentage of coal plants would be able to make that same showing?” she asked.

Brightbill noted that such actions would be subject to review by the EPA and courts—a response Millett appeared to find unsatisfactory, wondering aloud how a court could weigh whether those decisions were arbitrary and capricious.

Walker raised similar questions, asking if the EPA’s new plan is a “standardless standard by design.”

He noted that the approach could be “dangerous” by giving the agency broad discretion to decide whether a state plan should be approved—a system that could vary widely in different administrations.

Attacks from the Right

The panel also heard arguments Thursday from a small coalition of coal companies that questioned the EPA’s ability to promulgate even the narrower Affordable Clean Energy rule without a threshold finding that greenhouse gas emissions from power plants endanger public health.

The companies also made a complex argument—that has persisted in some conservative Clean Air Act criticism for years—that the EPA’s attempt to regulate carbon dioxide from power plants under one section of the law is barred because the agency already regulates those sources under another provision.

Justice Department lawyer Meghan Greenfield, also representing the EPA, pushed back on both arguments, saying the companies were misreading the Clean Air Act.

Thursday’s arguments stretched to more than three times their scheduled 2.5 hours. Pillard noted the complicated nature of the Clean Air Act questions and said “it took a full en banc court nine hours just to do one of the issues” back in 2016.

The Sierra Club is part of the coalition opposing the Affordable Clean Energy rule. The group has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

The case is Am. Lung Ass’n v. EPA, D.C. Cir., No. 19-1140, oral arguments held 10/8/20.

(Updates with additional reporting throughout.)

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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