Supreme Court Puts the Clean Power Plan on Hold

clean-power-planOn February 8, the United States Supreme Court issued a terse order that by a five-to-four vote enjoined the Environmental Protection Agency from taking any steps to implement its Clean Power Plan. That most ambitious plan sought to impose a comprehensive long-term set of limitations on the use of coal, and indeed all energy sources, inside the United States. The order itself was a black box, which in its entirety reads:

West Virginia, et al. v EPA, et al.

The application for a stay submitted to The Chief Justice and by him referred to the Court is granted. The Environmental Protection Agency’s “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” 80 Fed. Reg. 64,662 (October 23, 2015), is stayed pending disposition of the applicants’ petitions for review in the United States Court of Appeals for the District of Columbia Circuit and disposition of the applicants’ petition for a writ of certiorari, if such writ is sought. If a writ of certiorari is sought and the Court denies the petition, this order shall terminate automatically. If the Court grants the petition for a writ of certiorari, this order shall terminate when the Court enters its judgment.

Justice Ginsburg, Justice Breyer, Justice Sotomayor, and Justice Kagan would deny the application.

The ruling here is in effect tantamount to a preliminary injunction, which means that the Court has (implicitly) found that the burdens of compliance are high in a situation where the challenge on the merits is likely to prove successful. But instead of a full-dress opinion, the order is devoid of any argument on any side of the question. Its message is nonetheless major. Both critics and supporters of the order alike agree that it is largely unprecedented for the Supreme Court to intervene in litigation before it has wound its way up through the lower courts. Yet in this instance, the five conservative justices of the Supreme Court did just that, and made it clear that the order extended at the very least through the resolution of the matter in the Circuit Court, and, in all likelihood, until there is a final resolution of the issue in the Supreme Court itself. The chances that the Court will not review the decision of the Circuit Court are virtually zero. In government, as in life, time is money, and this decision delays the implementation of the program by at least two years, past the end of the Obama administration. It also signals unmistakably that the plan is in serious jeopardy, by the same five-to-four vote.

The harder question is whether the decision is a good thing. To Press Secretary Josh Earnest, the question was easy, for he was “confident” that the Administration would ultimately on the merits. But he offered no reasons for his conclusion, and indeed the brief that West Virginia filed in this case seeking the stay was a strong and well-crafted argument, which talked only about the EPA’s authority to issue an order of this magnitude and not the merits and risks of coal as fuel relative to other sources of energy.

The simple reason why the Court’s order was unprecedented is that the action of the EPA was itself unprecedented insofar as it seeks to muscle the states into making major decisions about the entire structure of energy production in the United States. The legal situation, which I have discussed previously at Defining Ideas is complex to say the least, but it is important to understand how the EPA seeks to leverage its legitimate power of emissions into a broader mandate to run the entire energy system from Washington.

The basic design of the Clean Air Act has a complex division of powers between the federal government and the states. The gist of this arrangement is that the initial move is by the federal government, which establishes National Ambient Air Quality Standards (NAAQS). Once these determinations are set, the individual states get first crack in designing the compliance program through its state implementation plan, commonly called a SIP. That SIP is then reviewed by the Federal Government, which can issue its own federal implementation plan, or FIP, if it disapproves of the state plan. There is at present relatively little legislative control over how EPA uses this power. It is an obvious source of political intrigue if it decides on output limits that are more severe for some states than for others.

The correct use of power in these situations is for the federal government to work out incrementally its disagreements with the state over the levels of permissible implementation. But under the clean power plan, the EPA ups its power by another notch. Its maneuver is to tell the states that it has this option: either regulate all types of energy that are produced within its boundaries, and regulate their mode of distribution of over the energy grid or we, the EPA, will impose draconian emissions restrictions at the federal level. The reason that this process is illegitimate is that the FIP is not intended to implement the statutory mandate on emissions, not to rewrite the statute so as to leverage federal control into areas not ordered by Congress.

Yet that was what was done. The initial statutory mandate calls for the use of “the best system of emission reduction” that takes into account both cost and nonair quality and health benefits. The sensible reading of the term BSER is that it deals with the equipment that controls emissions. But in the hands of the EPA, the focus on that technical issue is displaced by a freestanding inquiry into addressing three independent building blocks for the total program. The first of these asks the state to alter coal-fired plants “to increase efficiency,” which surely falls into the mandate, so long as the correct limitations are imposed.

The second however demands the substitution of “natural gas combined cycle generation for generation from coal,” which goes decidedly outside the statutory language” and gets the EPA into the industry-policy business of deciding what forms of energy should be used and why, which is a far broader emission. It is, of course, the case that if the correct measures are put in on the first prong, many suppliers may shift their production to other sources of energy, but under the CAA that is a business decision not a regulatory one. The same argument can be said about the requirement about the still more costly switch from carbon sources to wind and solar, which is a far more ambitious agenda to sources that have serious problems of reliability and price, not to mention their own adverse environmental effects. In addition, the EPA sought to impose aggressive limitations on the system of distribution of energy within the state, which is outside of its direct mandate, and within the mandate of the states. By posing the risk federal encroachment on state sovereignty, the EPA attracts a higher standard of review for its actions, which again tilted the odds in favor of its request.

Making the argument that the EPA exceeded its statutory mandate does nothing to resolve the question of what is the best system design for the regulation of coal use. In my view, that problem is best approached by determining the level of pollutants from different sources, which can then be taxed in accordance with their output, regardless of age. That approach does not favor old over new sources, and thus would encourage the construction of new and better facilities than the existing inefficient plants that require constant and costly upgrading, which is done to avoid the exacting new permit standards under the CAA. In order to do this, the EPA could not move on its own, but would have to persuade Congress to alter the current system of regulation. But that is precisely the point. There is no rational method of regulation within the current statutory framework. Too many years have been lost to EPA indifference to systematic issues of regulatory reform. Perhaps one unintended benefit of the current Supreme Court order is that it will encourage all parties to think outside the current statutory box. It ought to be easier to come up with a plan that is far better than the one that we have.

These decisions, it must be stressed, are not cheap, because it is necessary for the states to undertake extensive actions today in order to thwart the federal takeover of the situation tomorrow. What that means is that states are committed to make expenditures to meet standards over which there are serious doubts before they have a chance to challenge the final determination in court.

  1. Lily Bart

    Five to Four wins, but is too close for comfort.

    We need to make sure the next president chooses Justices wisely. Donald Trump cannot be trusted to choose well (meaning conservatively).