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EPA Authority Over Power Sector’s Climate Impacts Heads to Court

Oct. 7, 2020, 10:00 AM

One of the Trump administration’s biggest environmental rollbacks goes under the microscope Thursday, with federal judges set to hear arguments on the replacement of the Obama-era Clean Power Plan.

The U.S. Court of Appeals for the District of Columbia Circuit will weigh whether the Environmental Protection Agency violated the law when it scrapped the sweeping plan to cut greenhouse gas emissions from the power sector and adopted the narrower, industry-friendly Affordable Clean Energy rule.

The outcome could affect future administrations’ ability to address the planet-warming impacts of the power sector, the nation’s second-biggest source of greenhouse gases behind transportation.

The hearing is sure to spark some déjà vu, coming four years after the D.C. Circuit considered many of the same legal questions in a marathon argument session over the Clean Power Plan. The court never issued an opinion on the legality of that rule, putting the litigation on hold after President Donald Trump took office and announced plans to rethink the climate program.

“The D.C. Circuit is now presented with those same important issues that really go to Congress’s role in setting parameters for administrative agencies,” said Baker Botts LLP attorney Scott A. Keller, who previously fought the Clean Power Plan as solicitor general for Texas.

Environmental lawyers and scholars speculate that the D.C. Circuit won’t be the last stop for the debate, particularly if the three-judge panel hearing the case rejects the Trump administration’s narrow view of the Clean Air Act.

“If they disagree with the Trump EPA’s reading of the rule, then the question is how and when will that issue go to the Supreme Court?” said Jeffrey Holmstead, an energy industry lawyer at Bracewell LLP who isn’t involved in the ACE rule litigation.

Election Uncertainty

But if the court hasn’t issued an opinion before Inauguration Day, the looming election again may provide more answers on the future of EPA climate regulation than the D.C. Circuit.

If Democrat Joe Biden takes the White House, he’s expected to abandon the ACE rule in favor of more ambitious action, a move that could sideline pending litigation.

“With a new administration, hopefully, there’s going to be a reset on exactly what to expect out of the Clean Air Act,” Vermont Law School professor Patrick Parenteau said.

If Trump wins a second term, however, the outcome at the D.C. Circuit—and potentially the Supreme Court—will steer EPA climate rules for years to come. Trump-appointed leaders at the EPA are trying to lock in a Clean Air Act interpretation that sets tight limits on the agency’s authority to address greenhouse gases from the power sector.

“If the Clean Air Act can’t get at that pollution because of a very narrow interpretation of the act, then that ties the hand of the next administration, whoever that is,” said David Hayes, a former Obama administration official who now leads New York University’s State Energy & Environmental Impact Center.

‘Perilous Time’

Under the Clean Power Plan, the EPA targeted the entire power sector to try to reduce greenhouse gas emissions. The Affordable Clean Energy rule, by contrast, focuses on modest efficiency upgrades at individual coal-fired facilities.

Dozens of environmental groups, clean energy companies, and a coalition of left-leaning states led by New York have joined forces to argue that the Clean Power Plan repeal was unlawful, and that the ACE rule falls short of the Clean Air Act’s mandate that the EPA use the “best system of emission reduction” for air pollutants.

“The question really could not come at a more perilous time,” Sierra Club attorney Andres Restrepo told Bloomberg Law. “What does EPA have at its disposal under this section of the law to reduce emissions from this sector?”

The Obama administration’s approach recognized the “interconnected” nature of the electric grid, and the need to regulate it holistically, rather than in a piecemeal fashion, Clean Air Task Force senior counsel and legal director Ann Weeks said during a call with reporters this week.

Limits to EPA’s Power

Justice Department lawyers will defend the agency’s narrow regulatory approach during Thursday’s oral arguments, backed by a set of right-leaning states and business interests, including the U.S. Chamber of Commerce.

They argue that the Clean Air Act requires the agency to limit its standards to upgrades at individual coal-fired plants, rather than requiring improvements across the electric grid.

Keller, the Baker Botts lawyer, is helping to represent the state and industry coalition. He argued that the D.C. Circuit has an opportunity to clarify the limits of the EPA’s power under the Clean Air Act, and should take cues from the Supreme Court’s unprecedented 2016 decision to freeze implementation of the Clean Power Plan while litigation was pending in the appeals court.

That’s a question that will persist regardless of who wins the upcoming presidential election, he said.

“I’m not going to try to guess what could happen in the future, but safe to say that this dispute over what power Congress has given the EPA is going to remain regardless of what administration will be in power in 2021,” he said.

Attacks from the Right

As the EPA and its allies try to fend off arguments that the ACE rule doesn’t go far enough to address emissions, the agency will simultaneously defend against attacks from the right.

A small group of coal companies is waging a fight that the agency lacks authority to regulate greenhouse gas emissions from power plants at all. Another coalition is pushing to exempt certain biomass combustion from the ACE rule’s requirements. Environmental groups will argue alongside the EPA during those parts of the argument.

Judges Patricia A. Millett, Cornelia T.L. Pillard, and Justin R. Walker are hearing the case. The arguments will mark the first major environmental appeal for Walker, who was confirmed to the bench earlier this year.

The Sierra Club and NYU’s State Energy & Environmental Impact Center have 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. 18-1140, oral arguments 10/8/20.

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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