Federal appeals court judges posed tough questions to both sides of the dispute over the Obama administration's proposed Clean Power Plan (CPP), but a ruling is not expected for months, and the entire issue may not be settled until 2018, according to an attorney who attended last month's oral arguments.
Meanwhile, the American Gas Association (AGA) said it is working with its members to prepare for the CPP, in the event it does become the law of the land.
On Sept. 27, the full U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments in the case State of West Virginia et al v. EPA et al [15-1363]. Twenty-seven states have sued over the CPP, arguing that it is an overreach by the Environmental Protection Agency (EPA).
"It was a long day," Megan Berge, a partner with Washington, DC-based law firm Baker Botts LLP, told NGI on Friday. "It was eventful. The court was extremely well prepared, and you had really tough questions pitched at both sides by an array of judges -- different judges being more active at certain times than others."
In an unusual move, the appellate court decided last May to cancel having a traditional three-judge panel hear the case and instead opted for 10 of the court's 11 judges to make a ruling en banc (see Daily GPI, May 18). The 11th judge, Merrick Garland, President Obama’s nominee to the Supreme Court, was recused from the case.
Berge said that after seven hours of argument, it was apparent that the major sticking point in the case revolved around what standard the court would apply to determine legal questions. Specifically, the court will try to determine whether the EPA has the statutory authority to enact the CPP because certain terminology in the federal Clean Air Act (CAA) is ambiguous. If the EPA's interpretation of the CAA is deemed reasonable, the rule will stand under "Chevron deference," a legal term that originated from a landmark 1984 Supreme Court case, Chevron USA Inc. v. Natural Resources Defense Council Inc.
Conversely, the court could also decide to apply the "major questions doctrine," a standalone exception to Chevron deference.
"That's where the vast majority of the focus was [in court]," Berge said. "Once you figure out what standard applies, meaning how much deference is given to EPA, that's going to determine how they approach the legal question: whether or not the statutory authority is in the CAA for EPA to have come up with this program."
Berge said that if the major questions doctrine is applied, "then you are taking a hard look and applying a higher bar to EPA's interpretation. A lot of the argument was focused on whether the rule is so transformative as to be a major question. It's not just a question about the cost, it's also a question of authority and how it's going to dictate changes within the electric sector.
"That issue was front and center. It was the very first argument of the day, and it was the theme that continued throughout the day."
The crux of the states' opposition to the CPP lies with CAA, which Congress amended in 1990. Lawmakers at that time prohibited the EPA from regulating hazardous air pollutants (HAP) at national standards under more than one section of the law. Specifically, the states said Congress expanded Section 112 of the CAA to include source categories for HAP, but EPA could not also regulate source categories under Section 111(d), a rarely used part of the law where EPA was granted the authority to require states to invoke HAP standards.
Berge said her firm is representing five petitioners in the case: four electric generating companies and one national trade association. Although the appellate court usually renders a decision within four months of oral arguments, a ruling on the CPP could take as long as six months, she said.
"Folks need to remember that while there was an extensive number of arguments actually raised in [the oral arguments], there were even more arguments that were just briefed. If the court is going to uphold the rule, that means they have to address all of the arguments."
In January, the appellate court denied a motion by several states and power generators to stay implementation of the CPP until all legal challenges were resolved. The Supreme Court then issued stays in two related cases in February (see Daily GPI, Feb. 10; Jan. 22).
Berge said an eventual appeal to the Supreme Court is likely.
"I think they will take it," she said. "I think the stay that was issued by the Supreme Court sufficiently indicates a level of interest that the court will take the petition...Our projection is the issue won't be resolved until 2018."
The Obama administration unveiled the final version of the CPP in August 2015 (see Daily GPI, Aug. 3, 2015). The plan, which embraces renewables, solar and wind power, but not so much natural gas, calls for states to reduce emissions by 32% below 2005 levels by 2030.
Under the CPP, states must develop and implement plans that ensure power plants in their state -- either as single plants or as a collective group -- achieve goals for reducing carbon dioxide (CO2) emissions between 2022 and 2029, and final CO2 emission performance rates by 2030. The CPP gives states the option of choosing between either an emissions standards plan or a state measures plan to reduce emissions. They would also have the option of trading emissions rate credits with other states.
AGA members making preparations
During a meeting with reporters Wednesday, Richard Meyer, AGA manager for energy analysis and standards, said its members faced various challenges with the CPP.
"It really depends where they are, what state they're in, and to consider the politics," Meyer said. "In some states, you have attorneys general that are behind supporting the suit against EPA, but are still going ahead with their state implementation plans."
"Our position at AGA has always been one that the direct and distributed use of natural gas can and should play a role where states wish to incorporate those elements into their state implementation plans. [We have] been working...to help create the space for our members to move within their states and processes to develop a state implementation plan."