It has been one year since the Clean Power Plan was published in the Federal Register, and the oral arguments for the rule in the D.C. Circuit have been concluded for about a month now. In this relative “calm before the storm,” as we wait for the D.C. Circuit decision, the 2016 Presidential Election, and the result of the Clean Air Act Section 111(b) litigation, it is a good time to take a step back and review what has happened and what is yet to come.
The Publication of the Clean Power Plan & Challenges that Followed
As mentioned, one year ago, the Clean Power Plan was published in the Federal Register after what was already at that point a year-long battle opposing the transformational rulemaking. Publication of the finalized rulemaking on October 23, 2015, however, was not even close to the end of the battle. Hours after the Clean Power Plan was finalized, 26 states filed a petition for review and motion to stay the final rule, followed closely by coal industry champions Murray Energy Corporation, the National Mining Association, and American Coalition for Clean Coal Electricity in a joint petition for review and motion to stay. By the end of the day, six petitions had been filed, representing over 60 entities including industry, utility companies, interests groups such as the US Chamber of Commerce, and other states.
The Supreme Court Stay
In January 2016, the D.C. Circuit denied the petitioners’ motions for a stay of the rulemaking and granted expedited briefing, meaning that the December 22, 2015 implementation of the rule was still effective. However, on February 9, 2016, the US Supreme Court granted 29 petitioners’ motion for a stay to postpone implementation of the Clean Power Plan until litigation is completed. It was not only a rare suspension of an agency rule before the merits had been addressed by the lower court, but unknown at the time, it was also Justice Antonin Scalia’s last action on the Court before he passed away little more than 4 days later, which led to a problematic vacancy on the Court.
Notwithstanding the Supreme Court stay, EPA has developed a “Clean Energy Incentive Program” to encourage states to take “voluntary” early actions consistent with the Clean Power Plan. It is published in the Federal Register and comments on this controversial program can be filed until November 2, 2016.
The Oral Arguments
The oral arguments in the D.C. Circuit finally took place on September 27, 2016 before 10 judges on the en banc panel. Nearly every judge on the panel, save for two, asked a question. Some judges appeared to have serious reservations about the authority of EPA to promulgate the Clean Power Plan, whereas other judges seemed comfortable with EPA’s authority. Still, other judges seemed to hone in on one or two key issues in particular, including:
- EPA’s deference under Chevron;
- Interpretation of the legal authority under Section 111(d) of the Clean Air Act;
- Separation of powers between the state’s authority and federal authority under the 10th Amendment;
- The inability of states or power generators to achieve the standards in the Clean Power Plan; and
- Various procedural issues including the inadequate notice for public comment after EPA changed the final rule so drastically from the proposed rule.
Going forward, it is difficult to predict how the D.C. Circuit will rule and, if it is as close of a decision as many predict it will be, which judge will be the deciding vote. Based on how the judges’ questions were split on certain issues, it would not be surprising to see multiple opinions.
The 2016 Presidential Election and Fate of the Supreme Court
Predictions are typically a futile endeavor and the Clean Air Act Section 111(d) decision will not come down until at least January 2017 at the earliest. Much could happen in the meantime. For example, one way or another, we will have a new president elected and inaugurated before the decision in the D.C. Circuit comes out. The EPA administration could change hands or continue down the same path.
Additionally, it is possible that a Supreme Court nomination could be secured by the time one of the parties (likely) appeals the D.C. Circuit decision. If that does not happen, however, it could create an evenly split Supreme Court decision, which means the D.C. Circuit decision will stand as law of the land.
The Section 111(b) Litigation
Even notwithstanding the above, the D.C. Circuit’s decision could be derailed by a subsequent decision over the New Source Performance Standards (NSPS) rule and EPA’s regulation of new power plants under Clean Air Act Section 111(b). The briefing for that challenge has just commenced and a decision is not likely to be reached until the end of 2017. Because rules under 111(b) are a necessary prerequisite to any regulation under 111(d), the outcome of the 111(b) case is directly tied to the fate of the 111(b) litigation, a fact that was observed by the court in the recent oral arguments in the 111(d) case.
The Next Chapter
For now, much of the short-term focus is directed toward the 2016 presidential election and the Section 111(b) litigation. All in all, the only firm conclusion we have to offer is that even one year after the publication of the Clean Power Plan, the battle between industry and EPA is very far from over. What occurs over the next 3-5 months will be crucial in determining the long-term fate of those in the energy sectors and the reach of EPA’s authority.