“Unprecedented” is how the U.S. Supreme Court’s decision to block the Clean Power Plan is being described, and that is true. But the Clean Power Plan itself is unprecedented, using a little-enforced provision of federal air-pollution law to reshape the entire U.S. electric utility industry, away from coal-fired power plants and toward renewables and gas.
So call it a draw: The White House pushed the limits on using regulation to achieve what it can’t get done in Congress, and the Supreme Court pushed back by halting enforcement until the rule can be debated in court.
The Environmental Protection Agency argued against a stay, saying the rule’s first limits on CO2 emissions don’t kick in until 2022, plenty of time for challenges to work their way through the courts. But utility companies and 27 states argued for an immediate stay to avoid what happened the last time they challenged a major regulation in court and won. By the time the Supreme Court ruled against the EPA over a stringent rule on mercury emissions in last year’s Michigan v. EPA, utilities had already spent billions to comply. A top EPA official even boasted about it on the agency’s website.
So by taking the unprecedented step of blocking a rule before it can go into effect or even get a full hearing in court, the Supreme Court may be sending a message to the Obama Administration: You won’t get away with it twice.
The states and their allies in the utility industry “did a fairly good job of setting out what the rule requires right now,” said Thomas Lorenzen, a partner with Crowell and Moring in Washington who served as a top environmental lawyer in the Justice Dept. from 2003 to 2014. His clients, including rural electricity distribution cooperatives, “looked to future and said `If we need to be in a position to supply our customers with gas-fired electricity by 2022, we need to be in a position to build out the infrastructure right now.”
“You have to start making commitments now to shut down coal plants, shift generation over by 2022,” Lorenzen told me.
While it is easier to get a court to suspend a regulatory rule than an act of Congress, he said, “the odds are always less than 50/50.” To succeed before the Supreme Court, challengers must demonstrate the prospect of irreparable injury; the likelihood of at least four justices granting certiorari, or appellate review; the likelihood of winning at least five votes from the full court; and that the court can actually deliver some form of relief.
In their brief, the states had at least three strong arguments in favor of suspending the rule. First, in Michigan v. EPA, Justice Antonin Scalia had warned the administration against doing precisely what it did with the Clean Power Plan. Lawyers at the EPA seized upon a single section of the law, 111(d), which gives the agency authority to establish “standards of performance for any existing source” of generation. That was a stretch, because “existing source” refers to individual power plants. The EPA, citing ambiguity in the statute, transformed it into a term referring to entire utility networks. That allowed it to dictate new “standards of performance” that essentially require utilities to shut down their coal-fired plants and replace them with lower-carbon alternatives like gas or wind.
Scalia had warned against this sort of creative rulemaking in Michigan, especially when the supposed authority stems from a decades-old law. The Clean Air Act was passed in 1970 and substantially revised in 1990, long before anybody who voted for it considered CO2 a pollutant.
“When an agency claims to discover in a long-extant statute an unheralded power to regulate `a significant portion of the American economy,’ …we typically greet its announcement with a measure of skepticism,” Scalia wrote. “We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast `economic and political significance.’”
There is nothing new about federal agencies pushing the limits of their authority. The EPA pushed the other way during the Bush administration, refusing to recognize CO2 as a pollutant until the Supreme Court forced it to with Massachusetts v. EPA in 2007. But with the Clean Power Plan, the White House is seeking to enact sweeping changes in the electric grid in order to comply with international commitments to combat climate change, against the express wishes of a majority in Congress. The Supreme Court put it this way in Youngstown Sheet & Tube v. Sawyer, the 1952 decision rejecting President Truman's attempt to seize control of the U.S. steel industry : "When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb."
“This is a tough one for EPA,” said Lorenzen. “They were striving to achieve a huge emission reduction goal to support the President’s agreements with China and the Paris deal, and they ventured beyond the traditional tools in section 111.”
The states also argue the feds are trying to hijack their regulatory mechanism, including carefully engineered systems for ensuring reliable operation of the grid. If the states refuse to devise their own plans for cutting CO2 emissions, the EPA will impose them. The Supreme Court rejected such coercive tactics in the 2012 decision otherwise upholding the Affordable Care Act. That decision exempted the states from expanding Medicaid coverage under penalty of losing all Medicaid funding.
It’s likely a majority of justices have serious doubts about the legality of the Clean Power Plan. It’s also virtually certain that however the Court of Appeals for the D.C. Circuit rules on challenges to the rule, the losing side will appeal to the Supreme Court. That means the stay probably will remain in place at least until mid-2017, after a change in leadership in the executive branch. By issuing the stay, the Supreme Court did relieve pressure on the D.C. Circuit to issue a ruling by September, when the first deadlines under the rule kicked in. The three judges on the panel – Karen Henderson, a George H.W. Bush appointee; Judith Rogers, a Clinton appointee; and Sri Srinivasan, an Obama appointee – will have plenty of time to ponder the clear signals drifting down on them from above.
