In one of its last acts before the death of Justice Scalia earlier this year, the U.S. Supreme Court stayed the implementation of President Obama’s signature initiative to address climate change—the Clean Power Plan, which limits greenhouse gas emissions from existing power plants. Scalia’s death brought even more uncertainty to a proposal already racked with debate. As lawyers from opposing sides of the case prepare for oral arguments on June 2nd, two of those lawyers took time out to discuss and debate some of the key issues at an event at the University of Chicago.
Thomas Lorenzen, a partner at Crowell and Moring, LLP who represents the National Rural Electric Cooperative Association and Sean Donahue (Law ’92), a partner at Donahue and Goldberg, LLP who represents environmental groups such as the Environmental Defense Fund, went head-to-head at the event hosted by EPIC, the Abrams Environmental Law Clinic and the Environmental Law Society on May 5th. Interestingly, they were both once on the side of EPA as former Justice Department attorneys.
The two first took up the Section 112 exclusion issue. Lorenzen explained that the issue revolves around a legislative glitch that occurred when the 1990 amendments to the Clean Power Plan were signed into law. Somehow, the congressional conference committee that was supposed to reconcile different House and Senate versions of Section 111(d), missed that there were different versions. Both got signed into law, and for procedural reasons the House version was codified. The Senate version continued using the same approach that had been being used: certain pollutants are regulated under Sections 108-110, certain ones are regulated under Section 112, and all the rest are regulated under Section 111. The House version, as read by the challengers of the rule, departed from this approach, saying that if a source category is regulated under Section 112 that source category may not be regulated under Section 111(d). That poses a problem for the regulation of power plants because, since 2012, they have been regulated under Section 112 for mercury and other air toxics.
So the key questions, Lorenzen said, is: “Does the House version govern? And if it does, what is the correct interpretation of the House version?”
Donahue explained how context matters in this “fascinating legislative process dispute.” He said that the 1990 amendments to the Clean Air Act where all about “putting the screws to EPA about regulating more substances faster.” So, it doesn’t make sense that if Congress’s intent was to make the Act tougher, that they would have wanted to exempt certain emissions.
“The fact that Congress would have quietly, with no indication that this was its intent, exempted a whole category of pollutants we think is extremely implausible,” Donohue said. “It’s like saying because a restaurant is subject to the fire code it doesn’t have to comply with food handling requirements.”
Donohue believes both the Senate and House wanted Section 111(d) to capture pollutants that weren’t already being regulated by the other provisions. And he says, industry is on the record of saying such. In a case Connecticut and other states brought against large emitters—American Electric Power vs. Connecticut—the Supreme Court, at the urging of industry, said they couldn’t make federal common law on this issue because the Clean Air Act already regulates this issue. And in particular, they cited Section 111(d).
“So for industry now to say ‘actually Section 111(d) doesn’t apply at all and you’re out of luck’ that’s a remarkable turnaround,” Donohue said.
But, Lorenzen pointed out that the American Electric Power vs. Connecticut decision was written before the Mercury and Air Toxics Standards were in place. And, there is a footnote in that decision that quotes the House version of Section 111(d).
With no clear one side ahead of the other, Lorenzen and Donohue moved on to what they both agreed is at the heart of the case: What does the term best system of emission reduction mean? In the statute, it remains undefined.
In EPA’s view, and that of some power companies, Donohue noted, the best system of emission reduction locks into regulation what industry is already doing—shifting generation from one source to a lower-emitting source and purchasing emissions from those lower-emitting sources to bring down the emissions of a particular coal or gas-fired unit. The rule requires a 32 percent reduction in CO2 emissions by 2030, relative to 2005 levels. But, Donohue said, we’re already half way there based on industry trends, the switch from coal plants to natural gas and renewables and some state programs that predate the Clean Power Plan.
Lorenzen questions this argument.
“The fact that someone might be doing something voluntarily doesn’t mean that EPA could require it. Compliance measures have always been deemed to be within the authority of the states or the sources,” Lorenzen said.
Lorenzen, arguing the opponents’ view of the definition of the best system of emission reduction, said EPA is limited to the changes that can be implemented at an individual source—i.e. within the fence of the power plant. He gives Supreme Court precedent that backs up this reasoning.
In the Utility Air Regulatory Group vs. EPA, the Supreme Court said that they will look skeptically upon EPA attempts to regulate broad swaths of the economy based on vague congressional language. Lorenzen noted, however, that this was a 5-4 decision and included Justice Scalia.
“To the extent that you’re trying to reduce emissions from fossil-fired generation, you have to ramp up generation from renewables or gas because demand is constant and that means some coal units and some gas units will need to shutter. Is it permissible for EPA, under a section that is about emission rates, to effectively require some units to shutter?” Lorenzen asked, noting that Section 111 has never been used this way. “Does it give EPA that authority to basically direct, your plant must shut down in favor of yours?”
Donohue disagreed with this premise. “Even if EPA had done an inside the fence line approach and said you have to capture your carbon and bury it underground or you have to shift from coal to at least partially gas…that’s going to be costly and drive a lot of companies out of business. So what’s happening is this rule takes an economic approach to the problem. The question is: does the statute rule that out?”
He noted that there is an amicus brief from the coal-heavy power company Dominion that actually supports EPA. According to Donohue, Dominion says “these arguments being made to support winning this case are not arguments we want to subscribe to because we, as our peers on the other side often do, value flexibility and least-cost market-oriented solutions.”
Lorenzen and Donohue had time to debate in full just these two central challenges to the Clean Power Plan. Other questions remain, including: Has EPA overstepped its statutory role and intruded on the role of the states? Is the rule so entirely different from the original proposal that it must be sent back to the agency for a new round of notice and comment? And has the best system of emissions reduction been adequately demonstrated and has EPA shown that the emissions standards can be achieved by the sources that have to comply with them?
All of these questions will be argued in June in what will be the next episode in the legal drama surrounding the Clean Power Plan. Which side will come out the winner, is still up for debate.