U.S. EPA critics were dismayed as federal judges this week kept intact a major Obama administration rule to slash mercury emissions from power plants, but others saw a silver lining.
Having the mercury rule in place, they say, bolsters their arguments against another major rule, EPA's Clean Power Plan.
In the litigation over that landmark rule to limit power plants' greenhouse gas emissions, a central argument made by EPA's critics is that the agency lacks authority to issue the climate rule using the Clean Air Act's Section 111(d) because the 2011 mercury rule already regulates power plants under a separate section of the air law.
By keeping the structure of EPA's power plant mercury rule "largely in place, the lower court has preserved the argument that the [Clean Power Plan] is effectively pre-empted ... under Clean Air Act text" and case law, said Scott Segal, an attorney at Bracewell & Giuliani who represents utilities.
For states and industry groups opposed to both rules, the issue presents a legal paradox.
"If you're challenging the rule in one place, you're supporting it in the other," said Suzanne Murray, a former EPA regional general counsel who's now a partner in the Dallas office of Haynes and Boone.
The connection between the two rules is a complicated one that involves some legislative confusion.
EPA issued its climate rules for power plants under Section 111(d) of the Clean Air Act. But two versions of that section were signed into law, one from the Senate and one from the House. Critics of the EPA rule contend that one version bars EPA from issuing standards under 111(d) for sources of pollution already covered by other regulations. The mercury rule regulates power plants under Section 112 of the clean air law, so foes of the climate rules say the 111(d) regulation is unlawful.
The Supreme Court's June ruling that the mercury rule was illegal raised questions about whether that decision could undermine the arguments against the climate rule (Greenwire, June 30).
But the high court didn't strike down the rule, opting instead to send it back to the U.S. Court of Appeals for the District of Columbia Circuit. That lower court Tuesday agreed to hold the rule in place to allow EPA to adjust it in line with the high court's ruling (Greenwire, Dec. 15).
Thomas Lorenzen, a former Justice Department environmental attorney now representing industry clients at Crowell & Moring, said the D.C. Circuit's decision preserves industry's argument "that existing coal-fired power plants cannot be regulated under Section 111(d) because they are regulated under Section 112."
Industry and state attorneys find that argument persuasive.
They raised the issue during their failed attempt at blocking the climate rule before it was finalized and in recent arguments to the D.C. Circuit saying the final rule should be halted while the litigation plays out.
"[G]iven that such power plants are extensively regulated under Section 112 ... the exclusion forecloses EPA from invoking Section 111(d) to doubly regulate those same plants," a state coalition led by West Virginia told the court earlier this year.
But the Obama administration and its allies have argued the other version of Section 111(d) -- the one that originated in the Senate -- says only that EPA cannot redundantly regulate a pollutant. That would allow its greenhouse gas rule. They also say that the two versions are ambiguous and that the agency deserves deference from the court in interpreting unclear statutory language (Greenwire, April 16).
"This argument that a mercury rule blocks the carbon rules is a loser," said David Doniger, an attorney at the Natural Resources Defense Council that supports EPA in the lawsuits attacking the climate rule.
"Basically, they're arguing that Congress wrote the law to force EPA to pick your poison and you can't regulate carbon if you've regulated mercury. That's not a sensible interpretation, and it's not driven by the statutory language." He added, "EPA in its brief has shown very adequately that the statute either unambiguously gives them the authority" to regulate under Section 111(d) or that it's a "reasonable interpretation" of the law.
The legal battle over the mercury rule is expected to flare up again after EPA issues its revised rule. That could create further uncertainty about the rule that might spill over into the Clean Power Plan litigation that's expected to wind up in the Supreme Court and might drag on until 2018.
Justin Savage, a former DOJ environmental attorney now at Hogan Lovells, said the mercury decision is "helpful" to the arguments against the Clean Power Plan, "but I anticipate renewed challenges to the mercury rule."
Legal experts predict that EPA will face challenges over how it measured so-called co-benefits when crafting the mercury rule. The issue came up during oral arguments over the mercury rule in the Supreme Court, and D.C. Circuit Judge Brett Kavanaugh predicted that EPA's calculation of health benefits not directly attributable to reductions in mercury will be the "key battleground" in the next round of litigation over the rule (Greenwire, Dec. 7).
"The bottom line is that there's still going to be some question about whether the mercury rule might have to be remanded yet again on this question of co-benefits," said Vermont Law School professor Patrick Parenteau. "It might mean that the mercury rule remains in limbo for some period of time."
Parenteau said he doesn't think EPA's position in the climate litigation will change in light of the mercury case. "They're going to continue to say, 'Yes, coal plants are regulated under 112. So go ahead and argue if you want that we can't regulate them both under 112 and 111(d). ... I think it crystallizes the question."
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