Regulatory Reform

Clean Power Plan Legal Battle Begins

Early last week, the U.S. Environmental Protection Agency (EPA) released its final version of the Clean Power Plan, the federal regulation designed to reduce carbon dioxide emissions from fossil fuel-fired power plants by roughly one-third from 2005 levels.

Mere days after the final rule was released, Elbert Lin, solicitor general of West Virginia (and a speaker at ALEC’s 42nd Annual Meeting in late July), submitted an application to EPA requesting an administrative stay on behalf of 16 states (West Virginia, in addition to Alabama, Arizona, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, Utah, Wisconsin, and Wyoming). In granting a stay, EPA could temporarily set aside implementation of the rule until the courts have had a chance to review the legality of the regulation. Unsurprisingly, Lin’s deadline of 4:00 PM EST on August 7th came and went without any action from EPA.

According to a report in the Wall Street Journal, industry representatives and state attorneys general are currently preparing lawsuits that will soon be filed against EPA. These legal challenges will likely consist of a couple different arguments:

  • In 1990, Congress passed amendments updating the Clean Air Act. In doing so, the Senate and the House of Representatives inadvertently adopted two versions worded slightly differently. Despite this ambiguity, it appears that EPA cannot regulate under 111 existing facilities in source categories already regulated under §112. Since EPA’s illegally promulgated MATS rule falls under §112, regulating greenhouse gas emissions from power plants under §111 could be problematic. Unsurprisingly, EPA has interpreted the statute in a way that grants the agency wide latitude in regulating greenhouse gas emissions.
  • The Clean Power Plan will compel states and utilities to make significant changes in how electricity is generated in each state. Instead of merely requiring that certain technologies be installed on affected units (i.e., inside the fence of the power plant), EPA will direct states to deploy greater amounts of renewables or natural gas to generate electricity (i.e., outside the fence). This transformation of a state’s utility mix appears to go far beyond the hitherto scope of EPA, which is to merely establish “standards of performance for any existing source.”

As the Clean Power Plan is litigated and courts inevitably turn to whether or not EPA reasonably interpreted the ambiguous statute in the 1990 Amendments to the Clean Air Act, it might be worth keeping a couple recent Supreme Court developments related to the Chevron Deference in mind:

  • In the recently decided case King v. Burwell, the Court, despite upholding the federal subsidies for residents of states that do not create exchanges, declined to give deference to the administration’s interpretation of an ambiguous provision of the Affordable Care Act.
  • In Michigan v. EPA, the Court ruled against EPA’s interpretation of the ambiguous phrase “appropriate and necessary” as not necessarily needing to consider compliance costs when developing the MATS rule.

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth