By Eric Wolff (SNL)
The U.S. EPA's proposed carbon dioxide rule appears likely to survive its first court challenge, a panel of judges from the U.S. Court of Appeals for the District of Columbia Circuit indicated at oral arguments on April 16.
West Virginia and coal producer Murray Energy Corp. argued that even though the rule was still in the draft stage, it was such an unusual regulation that the court should rule. They may have found a willing ear in Judge Karen LeCraft Henderson, but Judges Brett Kavanaugh and Thomas Griffith seemed concerned that wading into what they called a routine rulemaking process would open the court to a wave to future challenges.
"Typically, we're not in the business of guessing what the final rule would look like," Griffith said. "You're inviting us into a morass."
Is the challenge ripe?
The EPA proposed the Clean Power Plan, as the proposed rule is called, in June 2014 with the intention of finalizing it a year later. The far-reaching rule immediately inspired a storm of protest, particularly from states dependent on coal production or coal-fired power. Murray Energy and a coalition of states led by West Virginia Attorney General Patrick Morrisey each filed separate challenges soon after the proposal was published in the Federal Register. They argued that the proposed rule was so far reaching that the court should rule on it, despite going against most, if not all, precedent on proposed or final rules.
Environmental groups derided the challenges, because the draft rule did not constitute a final agency action. While the EPA routinely fields court challenges from all comers on their final rules, the courts are typically unwilling to step into the rulemaking process before a final version is published.
Petitioners must overcome this jurisdictional hurdle before the court will rule on the legal questions. West Virginia Solicitor General Elbert Lin argued that the proposed rule would have such a broad impact and therefore the justices should rule now. Lin also argued that while the EPA might be finalizing the details of the rule, the agency has already decided that it is legally justified. While the details of the rule might change in the final version, he said the EPA is already dead set on authorizing it under Section 111(d) of the Clean Air Act.
Those concerns about rulemaking came up again and again, even when the questions before the justices focused on other issues. Laurence Tribe, a professor at Harvard Law School and former Obama adviser who argued on behalf of coal producer Peabody Energy Corp., tried to introduce Constitutional issues to the discussion, but he found himself arguing the same jurisdictional point.
"You don't have to wait for the guillotine to fall, or to decide which part of the neck will be cut," he said.
The judges often deferred to the widely respected Tribe but seemed unpersuaded. "It's not that extraordinary," Kavanaugh told petitioners.
Griffith said the case was about "garden variety" rulemaking. But he appeared to waver slightly when he pressed the government on comments made by EPA Administrator Gina McCarthy, who has often said the rule will go forward and therefore may have already decided that a final rule would be authorized by section 111(d), regardless of comments. "So the comment period is a sham," he said.
But Griffith later expressed concern that if the court ruled on the case, it would "open up the floodgates" to challenges to other regulatory rules. Anyone who didn't like a rule might be incented to challenge a proposed rule and then the final rule once it was issued, the judge suggested. Moreover, neither Tribe nor any of the other petitioners could cite a case in which a court ruled on a proposed rule.
The sympathetic judge
The petitioners did seem to get some sympathy from Henderson, who at times appeared to be searching the Clean Air Act for the right to rule in this case. The Clean Air Act explicitly funnels all challenges to agency rules to the D.C. Circuit, and it only allows challenges after final rules are published. Henderson pressed government attorneys on whether parts of the Clean Air Act left open a loophole, but she seemed to come away persuaded that it did not.
Instead, she seemed open to the idea that an "extraordinary writ" stopping the rule could be justified for some of the reasons Lin laid out. She cited a brief by Sunflower Electric Power Corp., a Kansas power cooperative, reporting that the co-op would need 18 months to four years to prepare for the Clean Power Plan, suggesting that it would have to begin working on a compliance plan immediately. "That seems an extraordinary cost right now," she said.
In its challenge, West Virginia tried to get past the jurisdictional issue by challenging a settlement between states, environmental groups and the EPA that set a schedule for issuing a rule on greenhouse gases. The agency never met the deadline. The settlement was finalized in 2011, and as such a 60-day window for challenging it had passed. West Virginia's Lin argued that because a rule now existed, the settlement had "ripened" for challenge. The justices gave short shrift to this argument, and they spent the least time on it.
Should the judges decide to rule on the merits of the case, they will answer a legal question as to whether the EPA has the authority to choose between conflicting Senate and House versions of the Clean Air Act. The House version appears to forbid the agency from regulating power plants again under Section 111. But under doctrine laid out in Chevron U.S.A. v. Natural Resources Defense Council, judges defer to agencies when the agencies must interpret conflicting legislative language. Griffith in particular seemed to believe the EPA would likely receive deference in this case.
Tribe argued that the Senate version of the language was "inoperative." He went through the legislative procedural history of the Senate language and argued that it didn't really exist as law, and he seemed to persuade the justices that this may be the case. EPA and its intervenor supporters argued that it was in the law, because the president signed it, regardless of this history, but Tribe's argument seemed to carry weight with Kavanaugh. Should the judges reach this issue, they may find against EPA on the merits.
Timing is crucial
The EPA has said it will finalize a rule this summer. In Griffith's view, the court can "just wait a few months" and it will have a final rule with a final legal justification that everyone can argue about. The court often takes months after oral arguments to decide a case. To take one example, White Stallion Energy Center v. EPA, which involved EPA's Mercury and Air Toxics Standards, was argued in December 2013 and a ruling was handed down in April 2014.
If the court takes that long to resolve this case, it could signal that the D.C. Circuit has decided to reach a legal conclusion on the question of law. Environmental attorneys seemed to think a dismissal on jurisdictional grounds could come in a matter of weeks, well before a final rule is published. But if the court decides to write a full legal analysis, doing so could take until after a final rule is published. Opinions on what happens then vary.
Industry attorneys Peter Glaser, a partner with Troutman Sanders LLP, and Brian Potts, a partner with Foley and Lardner LLP, both said a legal ruling against the EPA could vacate the final rule, even if it comes out before the ruling. Potts said the court could even potentially try to time publication of a decision until right after a final rule specifically to get past the procedural question.
Environmental attorneys, speaking on background, seemed skeptical of that. They argued that publication of a final rule pre-empts the proposed rule and all court cases associated with it. By that argument, the court process would then begin again.
All of which may happen anyway, especially if the court never decides the legal question.
"This cast of characters will return to the court, with many of the same of substantive arguments, plus a whole slew of other arguments," Richard Revesz, director of the Institute for Policy Integrity and a dean emeritus of the New York University Law School, said on a media call. "I think we expect a full review of all the other issues."
The cases are West Virginia v. EPA (14-1146) and Murray Energy v. EPA (14-1112, 14-1151).