United States: D.C. Circuit Hears Challenge To Clean Power Plan Regulations

On April 16, 2015, the United States Court of Appeals for the District of Columbia ("D.C. Circuit") heard oral arguments in two consolidated cases that challenge EPA's proposed greenhouse gas emission standards for existing coal-fired power plants (the "Clean Power Plan"). The two cases — Murray Energy v. EPA, No. 14-1112 (D.C. Cir.) and West Virginia v. EPA, No. 14-1146 (D.C. Cir.) — were heard by a three-judge panel comprising Judges Thomas Griffith and Brett Kavanaugh (appointed by George W. Bush) and Judge Karen Henderson (appointed by George H.W. Bush).

In both cases, Murray Energy and a group of states ("Petitioners") are challenging EPA's legal authority to promulgate the Clean Power Plan, arguing that EPA is precluded from regulating existing coal-fired power plants under Clean Air Act ("CAA") § 111(d). Petitioners contend that the Clean Power Plan represents an impermissible "double regulation" because EPA already regulates such facilities under CAA § 112 (the Mercury and Air Toxics Standards, or "MATS"). Articles in the Summer 2014 and Fall 2014 editions of The Climate Report have detailed the issues and arguments in each case.

While the three-judge panel heard arguments on the merits of the double regulation issue, a significant portion of oral arguments was spent on whether the court had jurisdiction to block an agency rulemaking that had not been finalized. Petitioners argued that the Clean Power Plan should be blocked before EPA finalizes the rule because: (i) statements made by EPA — specifically regarding the issue of double regulation — indicate that EPA's final rule will substantively mirror the proposed rule; (ii) the Clean Power Plan is unprecedented in scope and will cause ongoing, irreparable harm to states that attempt to implement it; and (iii) the double regulation issue — if found in Petitioners' favor — would serve as an absolute prohibition against any EPA regulation of existing coal-fired plants. In defense of the proposed rule, lawyers for EPA emphasized to the three-judge panel that the Agency had invited comment on the Clean Power Plan, and that the Clean Power Plan should not be subject to litigation until EPA has issued a final rule that both incorporates and responds to comments it has received.

Members of the three-judge panel appeared hesitant to grant Petitioners' request for a writ blocking EPA's proposed rule, noting the extraordinary and difficult nature of issuing a decision on the contents of a rule that has yet to be finalized. When asked for legal precedent for the type of relief that Petitioners sought, Petitioners could not cite any case in which a court has similarly halted a proposed rulemaking. In contrast, the D.C. Circuit and the District Court for the District of Nebraska have both reached the opposite conclusion in recent cases, dismissing for lack of jurisdiction challenges to EPA's proposed rules for carbon emissions at new power plants. Nebraska v. EPA, 4:14-CV-3006, 2014 U.S. Dist. LEXIS 141898 (D. Neb. Oct. 6, 2014); Las Brisas Energy Ctr., LLC v. EPA, Order No. 12-1248, 2012 WL 10939210 (D.C. Cir. Dec. 13, 2012) (regarding EPA's since-withdrawn 2012 proposed rule). EPA cited both cases in its Response to Murray Energy's Petition, and counsel for the Environmental Intervenors briefly raised the Las Brisas case in oral arguments, but no member of the three-judge panel commented on either case.

A decision in this case is expected from the three-judge panel this summer; however, the issues raised by Petitioners may be rendered moot prior to that time. On March 25, 2015, the U.S. Supreme Court heard oral arguments in Michigan v. EPA, a case in which EPA's MATS rulemaking is being challenged on the basis that EPA refused to consider costs in determining whether it was appropriate to regulate hazardous air pollutants emitted by electric utilities. If the Supreme Court overturns the MATS rulemaking, the D.C. Circuit could find that the Clean Power Plan no longer poses any threat of serving as a double regulation on existing coal-fired power plants.

Regardless of the outcome of these consolidated cases, this litigation foreshadows the upcoming legal battle that will ensue once EPA finalizes the Clean Power Plan.

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