A FLORID (AND POSSIBLY SIGNIFICANT?) ACE DISSENT

Posted on January 26, 2021 by Dick Stoll

On January 19, 2021, the D.C. Circuit issued its long-awaited decision on the Trump EPA’s Affordable Clean Energy (ACE) rule.  American Lung Assn. v. EPA, No. 19-1140.  The ACE rule was the Trump EPA’s repudiation of the Obama EPA’s Clean Power Plan (CPP) under the Clean Air Act. 

Two spoiler alerts:

(1)    I will not in this blog even begin to analyze the extremely lengthy and complex majority and dissenting opinions.  I am too retired for that.  Hopefully an unretired Fellow will be helping us with that soon. 

(2)   I will not offer any views on which of the opinions is more meritorious, because I really don’t know.   I will conclude by saying, however, that new legislation would sure be nice. 

The most critical issue in both the ACE and the CPP is fairly simple.  In regulating coal-burning electric power plants under the CAA for climate purposes, is EPA authorized to impose “beyond-the-fenceline, generation shifting” measures?  These measures will hereafter be referred to as “BTFGS.” 

Or put another way, may EPA go beyond plant-specific emission controls, and impose measures that effectively require power companies to secure emission reductions on a company-wide or grid-wide basis?  If so, power companies may be forced to shift some (or all) of their capacity to non-coal-fired generation (such as natural gas) or even shut down some (or all) of their coal-fired generation.

The Obama EPA based its CPP on BTFGS requirements.  The Trump EPA repealed the CPP and issued ACE, which imposed no BTFGS measures.  In doing so, the Trump EPA took the position that the CAA’s plain words did not authorize BTFGS measures.

The D.C. Circuit’s new 2-1 American Lung decision — joined by Judges Millet and Pillard — rejected the Trump ACE.  The majority fully embraced the Obama CPP position that the CAA authorizes BTFGS measures.  Judge Walker dissented (more on that below).

The majority decision was hailed by many as giving the Biden EPA a “green light” to fashion effective climate regulations that the Trump EPA would never entertain.  This may or may not prove to be correct, however, if the Biden EPA decides to require BTFGS measures in future climate rules.  For even though the new decision may stand as binding in the D.C. Circuit, we must consider the U.S. Supreme Court (SCOTUS).

Two points on SCOTUS.  First, recall that in totally unprecedented fashion, SCOTUS in 2016 stayed the Obama CPP pending review, with the result that the CPP never came into effect before the Trump EPA repealed it.   The stay was issued by a 5-4 Court that included five conservative leaning and four liberal leaning Justices.  No opinion accompanied the stay, but it is fair to assume the conservative majority was skeptical of the Obama BTFGS position.  If any rule that relies on BTFGS comes before SCOTUS in the next few years, it will presumably face a Court that includes six conservative leaning and three liberal leaning Justices.

Second, and now I get to the Walker dissent.   Judge Walker, a recent Trump appointee, was well known on Fox News and other outlets for his strong conservative views before his appointment.   His dissent is a testament to those views.  

Whether you agree with Judge Walker or not, you may have fun reading his florid opinion.  I have attached a copy, in which I have highlighted various notable passages.  He throws in cites to Arthur Conan Doyle (p. 9), Shakespeare (p. 33), and Lawrence of Arabia (the movie, p. 14).  He explains that the U.S. Senate is designed to protect small States (pp. 3, 5).   He postulates that the doomed Obama 2009 legislative climate effort would have succeeded if there were proportional representation in both Houses of Congress (p. 6).  He engages in amusing word play (pp. 3, 35).

But why am I even bothering with Judge Walker’s dissent?   Recall that in 2014, then-D.C. Circuit Judge Kavanaugh filed a dissent in a CAA case against a majority opinion favoring stronger environmental controls.  White Stallion v. EPA, 748 F. 3d 1222 (2014).   On review, a 5-4 SCOTUS (with the conservatives in the majority) reversed the D.C. Circuit ruling, adopting and quoting from the reasoning in Judge Kavanaugh’s D.C. Circuit dissent.  Michigan v. EPA, 576 U.S. 743 (2015).

So not too long ago, a narrow conservative SCOTUS majority adopted the reasoning of a dissent from a conservative D.C. Circuit Judge to reverse a more environmentally protective D.C. Circuit opinion.  I suppose it could happen again, with an even more conservative SCOTUS now.  And by the way, Judge Walker clerked for Judge Kavanaugh when Kavanaugh was on the D.C. Circuit. 

Again, I offer no view on what I think the courts should do with BTFGS.  What I really hope is that Congress will enact CAA amendments to clarify EPA’s climate authorities.   Now that we have a Democratic President, House, and (barely) Senate, maybe this can finally happen.  Maybe the Senate will do away with the filibuster, or — even without that — enough Republicans in the Senate could come along?  There’s always hope. 

NSR Regulatory Reform—the saga continues

Posted on September 18, 2019 by William Brownell

In 2002, EPA promulgated a Clean Air Act new source review (NSR) “reform rule” to clarify the confusion created by inconsistent guidance and judicial decisions on NSR applicability.  That clarification effort had only limited success, as inconsistent interpretations of the NSR applicability rules continued to emerge as those rules were applied by state regulators and courts.  In perhaps the most extreme example of regulatory confusion, a three judge panel of the Sixth Circuit issued five opinions with three different interpretation of the same regulatory language.  DTE I, http://www.opn.ca6.uscourts.gov/opinions.pdf/13a0080p-06.pdf.  DTE II, http://www.opn.ca6.uscourts.gov/opinions.pdf/17a0006p-06.pdf.

The Trump Administration has embarked on a new clarification effort.  In what EPA’s Office of Air and Radiation dubbed a “singles and doubles” approach, EPA issued guidance and undertook rulemaking on key applicability issues, including emissions projections, emissions accounting, and project aggregation.  In conjunction with the Affordable Clean Energy rule, EPA then proposed a more fundamental change to the NSR applicability rules under which a project would trigger NSR only if it resulted in both an hourly and annual emissions increase.

That EPA is still struggling with clarification of its NSR rules two decades after it began a series of significant NSR enforcement initiatives illustrates how controversial this program has been and continues to be.  From an environmental standpoint, however, the NSR program has become less significant. Industrial sources are largely well-controlled for a variety of reasons other than NSR.  And in the electric utility sector, the steep drop in the price of natural gas has resulted in current or planned retirement of many coal-fired generating units.  As a result, there is little to be gained from injunctive relief even in a successful NSR enforcement action.

All of this says that there should be wide-spread support for EPA completing its NSR clarification efforts.  Regulated entities have every incentive to comply with NSR.  From the regulators standpoint, the limitations the Supreme Court put on regulatory re-interpretation in Kisor v. Wilkie, should create its own incentives for regulatory clarity.