SUPREME COURT:

EPA win streak the lone bright spot in a tough term for Obama

While the Supreme Court dealt President Obama some heavy blows this term, the administration largely got what it wanted on environmental policy.

The two highest-profile environmental cases -- the challenge to U.S. EPA's greenhouse gas regulations and the assault on the agency's regime for air pollution drifting across state lines -- produced what were arguably the administration's biggest wins in the term that ended last week.

"I would have to say that EPA had a quite good Supreme Court term," said Willy Jay, a former Department of Justice attorney now at Goodwin Procter LLP.

The administration even prevailed when it took an anti-environmental stance in a case involving a North Carolina hazardous waste site.

Those wins came as the Supreme Court ruled against Obama in some of the most closely watched cases this term. In one, the court struck down aggregate limits on campaign contributions. It also trimmed Obama's recess appointment authority, nullifying three picks for the National Labor Relations Board (Greenwire, June 26).

Further, the court in Burwell v. Hobby Lobby sided with challengers to Obama's health care overhaul law that claimed it infringed on their religious beliefs by requiring them to cover contraception costs in insurance policies for female employees.

Those decisions stand in contrast to the court's upholding EPA's Cross-State Air Pollution Rule, or CSAPR, in April. After a federal appeals court threw out the regime for 28 Eastern states, EPA asked the Supreme Court for review.

The result was a 6-2 win for the agency in EPA v. EME Homer City Generation LP. EPA's two previous attempts to regulate cross-state pollution under the Clean Air Act's "good neighbor" provision had been vacated in court. The Supreme Court decision, which deferred to EPA's decision to consider costs in setting emission limits, resurrected CSAPR (Greenwire, April 29).

Justin Pidot, a former DOJ attorney who is now an environmental law professor at the University of Denver Sturm College of Law, said the decision illustrated a reluctance by the high court to wade into esoteric details of the agency rule.

"The Supreme Court likes to meddle, but when things get too highly technical, they back off," Pidot said. "The EME Homer case is a classic example of that.

"It was a big win for EPA in the end," he added. "Their track record on the interstate transport rule had been pretty bad."

EPA fared nearly as well in a broad challenge to its first regulations for heat-trapping gases. After a federal appeals court upheld the entire program, 17 states and a host of utility and chemical trade associations asked the Supreme Court to review nearly every aspect of the regime, from EPA's finding that greenhouses gases endanger public health to motor vehicle standards.

The court agreed to consider only whether the tailpipe rules triggered the inclusion of greenhouse gases in compliance permits that stationary sources must obtain before construction of modification. The limited scope of the case was viewed as an early win for the agency.

And in a 5-4 ruling two weeks ago, the high court trimmed EPA's authority, holding that the agency could not require stationary sources like power plants, chemical facilities or industrial boilers to obtain Prevention of Significant Deterioration, or PSD, permits because they emit only greenhouse gases.

The court also threw out EPA's "tailoring rule," which revised the tonnage threshold for greenhouse gases that qualifies a source for the PSD program.

But that rule was rendered largely irrelevant because the court also ruled that EPA could require facilities that already qualify for the program because of emissions of other conventional pollutants to take steps to limit their greenhouse gases. Those sources currently account for 83 percent of the country's greenhouse gases, while EPA's more expansive rule would have covered 86 percent -- a difference of only 3 percent (Greenwire, June 23).

Michael Gerrard, an environmental law professor at Columbia University, said EPA likely welcomed the decision.

"It's remarkable that EPA emerged from this assault ... with its basic authority reaffirmed and its regulations only bruised," Gerrard said. "One small corner of one secondary program was annulled; everything else is intact."

Still, others cautioned that there were ominous signs in conservative Justice Antonin Scalia's opinion.

Roger Martella, a former EPA general counsel who now represents industry interests Sidley Austin LLP, said Scalia made it clear that EPA does not have a "blank check" in drafting climate change regulations.

That language will be important to future challenges to EPA's proposed greenhouse gas standards for new and existing power plants. The agency plans to finalize those rules next year, and they are sure to be challenged in court.

Specifically, Martella said, the ruling may rein in EPA after other recent legal wins that have "emboldened EPA to go farther and farther."

Pidot agreed that there were some "alarming signals" for EPA in Scalia's opinion.

Scalia, he said, seemed to be saying EPA "can't interpret their authority in a way that is too expensive or expansive. If that's true, that's a huge deal."

What will be most important in a challenge to the power plant standards, should they reach the Supreme Court, Pidot said, is whether Justice Anthony Kennedy, the court's usual swing vote, "buys that logic." He added that it is immediately unclear whether Kennedy backs such a sweeping principle.

Jay, of Goodwin Procter, added that the two rulings show EPA has done unexpectedly well at the Supreme Court.

"Despite what one says about it being a pro-business court, the EPA's win-loss record in the court is really quite good," Jay said, "and one of the biggest losses -- [2007's] Massachusetts v. EPA -- was a case where the court sided firmly with broader regulatory power."

The third environmental case of the term, CTS Corp. v. Waldburger, involved an attempt from two dozen Asheville, N.C., landowners to recover damages stemming from toxic groundwater contamination at a former electronics manufacturing plant.

CTS Corp., of Elkhart, Ind., argued that the lawsuit was barred by North Carolina's 10-year deadline on filing from the last instance the defendant acted. In this case, CTS sold the property in the late 1980s.

The Obama administration intervened in the case on behalf of CTS because the Department of Defense faces about a dozen similar lawsuits stemming from groundwater pollution at Marine Corps Base Camp Lejeune in Jacksonville, N.C. (Greenwire, April 8).

Despite the landowners' contention that the federal Superfund law was intended to pre-empt such state deadlines, the high court sided with CTS and, by extension, the Obama administration (Greenwire, June 9).

The day of the ruling, the administration sought to dismiss the Lejeune cases filed by Marines and their families (Greenwire, June 10).

Winning by avoiding a fight

EPA also benefited this term from cases that the Supreme Court declined to take up.

For example, the high court in March opted not to review a broad challenge to EPA's decision to revoke a Clean Water Act permit for a mountaintop-removal strip mine in Logan County, W.Va.

EPA in 2011 retroactively vetoed several parts of Arch Coal Inc.'s 2007 Army Corps of Engineers permit. It was one of the first times the agency had used such authority for a permit that had already been issued.

Business interests claimed that the decision created regulatory uncertainty surrounding the Section 404 permits, claiming it showed EPA could revoke them whenever it wanted.

"The decision below destroys regulatory certainty and overturns the settled expectations of the regulated community," Arch's attorney, former U.S. Solicitor General Paul Clement, wrote in its petition to the court (Greenwire, March 24).

By not taking up the case, EPA, which won in lower court, sidestepped a high-profile and politicized case.

"Not having to deal with mountaintop-removal issues at the Supreme Court is a big win," Pidot said. "Not that EPA wouldn't have won -- maybe they would have -- but better not to have to fight the fight."

Next term

EPA's wins this term may also to stand out for some time because the agency appears unlikely to make a return to the Supreme Court next year.

The next high-profile EPA policies of the Obama administration -- its greenhouse gas standards for power plants and recent regulations to expand the number of water bodies that qualify for Clean Water Act protections -- are sure to be challenged in court. But that litigation likely won't reach the Supreme Court by next year.

Industry has asked the high court to review an appeals court ruling upholding EPA's air standard for smog-causing ozone, but it remains to be seen whether it will grant review. The justices have previously passed on challenges to EPA's air standards.

"EPA is going to have a lull year next year," Pidot said.

Twitter: @GreenwireJeremy | Email: jjacobs@eenews.net

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