Clean Power Plan

Crowell & Moring's Lorenzen says rule will not survive legal challenges

As states consider next steps following the Supreme Court's stay of U.S. EPA's Clean Power Plan, what is the legal future of the rule? During today's OnPoint, Thomas Lorenzen, a partner at Crowell & Moring and a former assistant chief in the Department of Justice's Environment and Natural Resources Division, discusses how parties involved in the pending litigation may be adjusting their strategies as a result of the stay. He also gives his perspective on how recent events could impact President Obama's climate legacy. (This interview was recorded before the death of Justice Antonin Scalia.)


Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Thomas Lorenzen, a partner at Crowell & Moring. Tom previously served as assistant chief in the Department of Justice's Environment and Natural Resources Division. Tom, it's good to have you back on the show.

Thomas Lorenzen: Great to be here as always.

Monica Trauzzi: So, Tom, a surprising and unprecedented move by the Supreme Court, granting a stay on the Clean Power Plan. Just in terms of legal history, how significant is this step?

Thomas Lorenzen: It's huge. It really is unprecedented. We have uncovered no instance of this happening before. The solicitor general in the United States' brief to the Supreme Court said they weren't aware of anything like this either. But this is an extraordinary rule.

Monica Trauzzi: What was your reaction when you heard the news?

Thomas Lorenzen: A bit of surprise, not as much as maybe some had thought. I think if you look at the Supreme Court critically you could count four votes for ... just from the UR case. And the critical question was going to be how did Justice Kennedy react? We now know. There are five justices on the Supreme Court that have what I would characterize as grave doubts about the legality of this rule.

Monica Trauzzi: And how much of a question mark now is Justice Kennedy moving forward, considering Mass. v. EPA versus this decision?

Thomas Lorenzen: Well, we don't know. I mean, obviously there is considerable concern on the Supreme Court. Massachusetts v. EPA establishes a general principle that EPA can regulate greenhouse gases under the Clean Air Act. What had not been answered and what is slowly being answered through the cases is what are the specific tools that EPA has to do that. In the American Electric Power case the court pointed to Section 111 as a tool that EPA could use, but the scope of that tool, the strength of that tool had not been defined. Now we're getting to that question.

Monica Trauzzi: How does the stay decision impact the D.C. Circuit's proceedings? And what do you think it signals to the D.C. Circuit panel?

Thomas Lorenzen: Well, it signals to the D.C. Circuit panel that this case has the attention of the Supreme Court and that here are five justices that are leaning against the rule. So they are going to be thinking critically -- as they would have already -- but critically about what their decision or opinions -- because there may be multiple opinions -- say, because those will be directed to that audience of justices. So this could -- it's not going to slow down the litigation. Briefing is going to continue apace. Oral argument will be held June 2nd and probably June 3rd as well. But the court is going to take that summertime to really think this through as they issue their opinion.

Monica Trauzzi: And the panel, when it was first announced, was initially thought to be potentially more favorable to EPA, just based on the makeup. How does that weigh against what the Supreme Court has done now? Does that kind of not matter anymore?

Thomas Lorenzen: You know, the judges on the D.C. Circuit are among the very best in the country, and their politics don't predict their judicial outcomes. We know that Judge Rogers has typically been deferential to EPA on this sort of rulemaking. We do know that Judge Henderson expressed some doubt about this rulemaking when this case was before the court in the context of the Murray Energy and West Virginia cases. Judge Srinivasan is the big question. He's a recent appointee. He's an Obama appointee. But he's also a very thoughtful jurist. I worked with him when he was at the SG's office, and he is going to be looking at this -- as will all the judges -- with the questions in mind: Does EPA have this authority? Can you from these minimal terms best system of emission reduction get to this broad program that really fundamentally transforms the electric sector?

Monica Trauzzi: As someone who has managed the legal defense of EPA's rules, what's happening right now behind the scenes with the parties who will be arguing before the D.C. Circuit? And do you think EPA's having any conversations about shifting strategies?

Thomas Lorenzen: I think that they're proceeding ahead as they were. They are going to defend this rule to the utmost; that is their job right now. Nothing has changed there. So for Justice they are full speed ahead. At EPA they have to be thinking about what comes next if this rule doesn't survive, and that's going to depend a lot on what the nature of the court's opinion is. If this case goes down on the Section 111-112 argument, that EPA can't do a rule for power plants when it's regulating them at the same time under Section 112 for hazardous air pollutants, that's one thing. But if the court says, "You can't do a best system of emission reduction that essentially goes beyond the fence line," EPA has got to be thinking about what could we do next and what other statutory authorities do we have.

Monica Trauzzi: There are so many questions right now for all of the parties involved: states, utilities. Many states have already starting working on compliance mechanisms. What should they be doing now, and how many do you anticipate will just stop what they've been doing?

Thomas Lorenzen: We're hearing different things from differing states. The states that are the petitioners in the challenges to EPA I expect are probably going to put down their pens. They're going to wait to see what comes of this rule. They were the ones that said, "We don't want to prepare plans right now while the legality of the rule is in question." Other states -- California, some of the RGGI states -- are likely to continue to work because they have their own state programs designed to deal with greenhouse gases. So they may try to prepare for the future or just go off on their own.

Monica Trauzzi: What do you believe the fate of the power plan is?

Thomas Lorenzen: My personal opinion is the power plan is not going to survive. I think that EPA overreached in its attempt to use Section 111(d) to achieve reductions from things other than the sort of technological and operational measures that have traditionally been understood to be the tools you can use for individual plants. Trying to transform the energy sector, trying to go beyond the fence line and say that a plant can do what its owners or operators can do -- invest in renewables, transfer generation from higher-emitting to lower-emitting sources, training programs -- does not appear to be what Congress contemplated in Section 111(d). So I think EPA's got some hard times ahead of it on this one.

Monica Trauzzi: What's the impact of all this on President Obama's legacy on climate change?

Thomas Lorenzen: Well, his legacy on climate change goes well beyond this rule. This is an element of what he's attempting to do. Under the Paris accord he is going to try to proceed as quickly as he can to do as much as he can. But it is now a matter for the next president almost certainly. This will not get through the courts before the next president is in office.

Monica Trauzzi: All right, Tom, we'll end it there. Thank you for your perspective, as always.

Thomas Lorenzen: My pleasure.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]



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