Commentary: Does the Michigan v. EPA decision doom the Clean Power Plan?

The U.S. Supreme Court’s June decision that rejected a Clean Air Act regulation limiting mercury emissions from power plants looms over the Obama administration’s push to cut those facilities’ greenhouse gas emissions and, given the reasoning employed by the five justices in the majority, it’s possible that the Clean Power Plan could be at risk of a similar fate.

In Michigan v. Environmental Protection Agency Justice Antonin Scalia concluded that the CAA provision at issue there requires EPA to consider the potential costs of an emissions limit to the polluter before it concludes that the limit is, in the words of the statute, “appropriate and necessary.” That decision, which was joined by fellow Republican appointees Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito, could be understood as a departure from the way the Court has traditionally interpreted the environmental laws.

For the past thirty or so years, the Court has tended to uphold an agency’s interpretation of a statute that authorizes it to write regulations if that interpretation is “reasonable.” In the words of the majority opinion in a case called Chevron USA, Inc. v. Natural Resources Defense Council, Inc.:

“First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”

Section 112 of the CAA does not say when EPA must consider the costs of a potential regulation, but instead requires only that EPA do so before issuing that regulation. In fact, EPA made clear that it would consider the costs of compliance with the Mercury and Air Toxics rule struck down in Michigan v. EPA before the regulation was finalized.

According to the Chevron rule that traditionally governs, the Court should have upheld the MAT rule against the attack leveled against it because the EPA’s administrator reasonably understood the statutory language to permit the agency to consider compliance costs after deciding that some limit on mercury and other toxic air pollutant emissions from coal-fired power plants is needed to protect public health and the environmental quality of the atmosphere.

But it didn’t. Instead, Scalia wrote that EPA had tried to “gerrymander” the Chevron rule by ignoring a part of the CAA. To Scalia and the justices that joined his opinion, the word “appropriate” necessarily includes consideration of compliance costs.

The Clean Power Plan, like the MAT rule, is based on a two-step process in which EPA first decided that limits on carbon dioxide emissions are needed to advance the goals of the CAA. This conclusion, known as an “endangerment finding,” preceded the agency’s consideration of the costs to industry; those costs were taken into account before the Clean Power Plan was announced in early August.

Will the Supreme Court apply the reasoning of Michigan v. Environmental Protection Agency in the inevitable challenge to President Barack Obama’s signature program for limiting the damage coal combustion does to the atmosphere? Or will it conclude, instead, that its interpretation of “appropriate and necessary” is irrelevant because a different section of the CAA authorizes the Clean Power Plan?

We cannot know that until litigation that aims to eliminate the Clean Power Plan reaches the justices. But there may be cause to worry. For one thing, Justice Thomas wrote, in his concurring opinion in the Michigan case, that he thinks deference to agency interpretations of statutes might violate the Constitution’s separation of powers doctrine. Justice Alito seems to think the Chevron doctrine has to go, too, and Scalia himself has indicated some skepticism about the degree to which courts refrain from second-guessing an agency’s understanding of a statute’s meaning. The Court’s most senior justice, Scalia has voted not to defer to an agency statutory interpretation in nearly half the cases that raise the issue since John Roberts became chief justice ten years ago.

It is not clear that Chief Justice Roberts outright opposes the idea of deferring to agency interpretations of statutes, but he has indicated a willingness to limit the circumstances under which that deference is due.

Because the Court’s four justices appointed by Democratic presidents (Ruth Bader Ginsburg, Stephen G. Breyer, Sonia M. Sotomayor, Elena Kagan) have not indicated any inclination to overrule the decision in the Chevron case, the fate of much of the country’s environmental regulatory apparatus is in the hands of Justice Anthony M. Kennedy.

The cacophony surrounding the 2016 Presidential election will be laced with arguments over issues big and small. The question whether EPA, or for that matter, the agencies that manage everything from our food supply to wildlife and the public lands, will have their decisions subjected to scrutiny by politically conservative judges who are inclined to favor the interests of industry or instead whether the expertise those agencies have shown will be granted the respect it deserves is one that the justices who replace 82-year old Ginsburg, 79-year old Scalia, 79-year old Kennedy, or 77-year old Breyer should keep in mind when they cast a ballot for the candidate who will appoint them.

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Supreme Court poised to decide fate of mercury emission limits

The fate of a contentious U.S. Environmental Protection Agency rule limiting mercury emissions from electric power plants will be decided by the nation’s highest court sometime in the next few days in a case that could force EPA to factor in regulatory compliance costs when deciding if an air pollutant is harmful to human health.

The case turns on the question when EPA must consider industry’s compliance costs in the process of imposing emission limits on the category of air pollutants that are considered hazardous to human health and the environment.

Section 112 of the Clean Air Act imposes the requirement of a so-called “air toxics determination” before the agency can set limits on the discharge of those toxic pollutants to the atmosphere.

The statute provides that EPA must “list” all sources of air pollutants that  “present[] a threat of adverse effects to human health or the environment” that “warrant[] regulation under this section.” Once EPA lists a source of such a hazardous air pollutant, the agency is required to set standards that achieve the “maximum degree of reduction in emissions,” considering factors including compliance costs, energy requirements, and non-emission related health and environmental impacts.

The administration of former President Bill Clinton decided in Dec. 2000 that regulation of mercury, particulates, and toxic gases from electric  power plants is necessary to protect public health and the environment. The subsequent administration sought to alter that determination, but its effort to do so was rejected by a federal appeals court in 2008.

The Obama administration proceeded with development of a so-called Mercury Air Toxics rule and finalized it in Feb. 2012.

According to a fact sheet prepared by EPA, the rule would likely save up to 11,000 lives per year. About 1,400 coal-and oil-fired power plants would be affected.

During the process of finalizing the MACT rule, EPA evaluated the costs that electric utilities may incur in order to comply with the 2012 emission limits. The agency determined that the total annual costs of compliance would be about $9.6 billion. That compares to yearly public health benefits that range from $37 billion to $90 billion.

Lawyers for industry and some state governments challenged the rule in court, arguing that EPA must consider industry’s costs of compliance with emission limits before deciding that regulation of those emissions is necessary.

They lost before the U.S. Court of Appeals for the District of Columbia Circuit, which ruled in 2014 that EPA had properly considered costs at the stage of the process at which the emission limits were set.

Only one member of the three-judge panel that heard the case at the appeals court level, an appointee of former President George W. Bush, agreed with the industry lawyers’ argument.

“It’s just kind of inconceivable that Congress meant for EPA to do a cost-benefit analysis at the decision-to-regulate stage,” Karl S. Coplan, a professor of law at Pace University Law School, said. “It’s a technology-based limitation, not a health-based limit. EPA must consider costs at the stage of what the limit must be. There’s no point in making EPA consider costs at the should-we-regulate stage and then again at the what-the-limit-should-be stage.”

The Supreme Court has generally required federal courts to defer to agency interpretations of the statutes they administer if the language at issue is ambiguous and the agency’s reading is reasonable. This approach to deciding cases involving challenges to agency action, known as the Chevron doctrine, is a cornerstone of administrative law.

Coplan does not think that the MACT case before is likely to induce a majority of the justices to abandon the doctrine altogether.

“I think there are some justices that are uncomfortable with it,” he said. “But their discomfort seems to depend on which side it comes up. It’s fair to say that Justice Scalia is one of those who has expressed skepticism about it in the past.”

If the Court does not turn away from the Chevron doctrine, then the only rationale it would have to reject the MACT rule would be would be that the text of the Clean Air Act that appear to foreclose consideration of costs at the stage of deciding whether a pollutant is dangerous to human health and the environment actually does require the agency to consider such costs then.

“The finding by EPA that regulation of electrical utility industry emissions is appropriate was made many years ago and the practical effect of this decision, depending on how it comes out, could be a real setback for EPA’s regulation of coal-fired power plants and for cleaning them up,” Coplan said.

The Supreme Court heard oral arguments in the case on March 25.