Clean Power Plan

Harvard's Lazarus and Freeman discuss marathon day of arguments, talk outcomes and next steps for rule

Following years of debate over U.S. EPA's Clean Power Plan, the U.S. Court of Appeals for the District of Columbia Circuit heard arguments yesterday in the lawsuit challenging the rule. During today's OnPoint, Richard Lazarus and Jody Freeman, professors at Harvard Law School, discuss the reactions coming from the 10-judge panel on the key issues and arguments in the case. They also explain why they believe the court's final ruling will more than likely favor EPA.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today are Richard Lazarus and Jody Freeman, professors at Harvard Law School. Thank you both for joining me.

Jody Freeman: Thank you.

Richard Lazarus: Yeah, thanks a lot.

Monica Trauzzi: So a very exciting day today for anyone in the energy and environment space. The Clean Power Plan oral arguments before the D.C. Circuit were definitely the hottest ticket in town for us nerds. Significant proceeding with 10 judges participating. The arguments ran longer than scheduled. There were many questions from the judges. How significant of a day was this?

Jody Freeman: Well, it was a big day for climate regulation, and it has real implications internationally, not just domestically. So I think there's no way around saying important event, so really fun to be there. But the one really corny reaction I had to this whole thing is that I think it was a great day for law. I thought the legal arguments were really high-quality on both sides. The judging was spot on. People were prepared. It was a treat to be in the courtroom. People were focused on the issues. Not a lot of posturing, not a lot of excess or irrelevant discussion; it was just a really great day of legal argument.

Monica Trauzzi: Hmm. And, Richard, you were impressed by the panel.

Richard Lazarus: Yeah, I was. I mean, the fact is a normal D.C. Circuit case is for 20 minutes with three judges. The case today started at 9:30 in the morning and basically went the whole day. And we had — instead of two advocates, there were about 19 advocates. And you would think, right, that that would get a little tedious after a while? Everyone was into it. It was just high-quality advocacy from both sides. And in clean air cases, sometimes you get there and the judges just — it's so complicated and technical, they get lost. No one was lost. The judges were on. They asked good questions. They enjoyed the argument. They enjoyed each other's company.

Monica Trauzzi: So let's dig into some of the issues. On the statutory issues, how did the challengers do in making the case that the CPP violates Section 111(d) of the Clean Air Act?

Jody Freeman: So look, this is I think the tough issue in the case. The question is, can EPA use the method it used? Can it define the best system of emission reduction the way it did, to think about all the ways you can cut emissions, considering everything you can do on the grid? It's a broad interpretation that allows EPA to set a more stringent standard, because it's saying that sources can do lots of things like invest in renewable energy and switch to natural gas and things of that nature, and the other side's saying, no, all you can do is regulate emissions reductions that a source can implement on site at the source. And that's the essence of it. It's hard because all the statute says is it's best just to move emission reduction for sources. So we all anticipated that would be a tough exchange, that the bench would be hot and have lots of questions, and they did. I actually think EPA did really well. I think they came in and put their best arguments forward, and quite rightly, judges tried to say, "What are the limits to this?" They tried to ask them about whether, in fact, Congress had been clear enough about this to authorize this kind of interpretation. And there we saw Judge Kavanaugh, for example, say, "You know, I really would expect a clearer statement from Congress for matters this important, for regulations this far-reaching." But I'm not sure he had many friends in that position. So I think that was the hardest bit. We can talk about the other issues, too, but for me that was really the linchpin.

Richard Lazarus: Yeah. Yeah, that was the crucial issue, and it's the one which I thought EPA had a very, very strong argument as a matter of policy. And they had a good argument on the law, but it wasn't a slam dunk. So there's gonna be a — a big question going in: How were the judges gonna react to it? And I thought there was a chance we'd walk out of the courtroom today with a pretty clear sense that EPA in fact was gonna lose the case. Instead I came away thinking, "I think they've got a very good shot at winning," and I'm quite cautiously optimistic for EPA, that they're gonna win this case. I did not see — there are basically 10 judges. EPA needs five votes. A tie goes for EPA. I didn't see five votes for the other side. I thought I saw five votes at least for EPA. And the key moment for me at the argument was when Judge Sri Srinivasan spoke. He is a terrific judge. He's sort of a moderate on the court. He used to work for a law firm. He's a really rigorous lawyer. And he basically said that he saw a lot of force, what EPA was saying, their interpretation of the system. It just made intuitive sense to him. And when EPA was arguing, he seemed to be nodding. When _____ _____ favor, he was nodding. He challenged the other side — again, in not an unfriendly way. He said, "Explain to me why my logic is wrong here." And if you've got a judge like Sri Srinivasan on your side, at that point I say I think EPA's got five and maybe more.

Jody Freeman: One more thing about Sri Srinivasan. He did something quite important, at least for purposes of reading the tea leaves. He indicated that he thought that if industry could use all of these different methods to comply with the rule, like switching to natural gas, investing in renewables, all these alternatives, then why wasn't it fair enough for EPA to think about their availability when setting the standard itself? He seemed to believe there should be symmetry there, and that fed right into EPA's position.

Richard Lazarus: Right. And it's a wonderful way that the EPA lawyer tried to explain. But the other side, the challenge _____ _____, they were saying, "It's as though EPA had to assume that someone who golfed only had a putter, and they had to predict their handicap based on they only had a putter in their bag, when in fact they had an incredible driver, and a whole series of clubs in their bag." And it's only fair for EPA to take in kind of what reality is and what industry really does. It was a very effective analogy. The judges all liked it. Even Judge Kavanaugh gave it a big smile for effective advocacy. And then in a very telling moment, when the counsel for interveners, in favor of EPA, for the bunch of utilities, _____ utilities and power systems, stood up and he said, "Actually, what EPA says is the system, that is the system. That is what we do." And you saw a lot of nodding by the judges, and again very significantly, Judge Sri Srinivasan.

Monica Trauzzi: Much has been made over the fact that the final rule did not look at all like the draft rule. How did that discussion play out today?

Jody Freeman: I thought by the time the court got to that — we call it the logical outgrowth issue; it was the final, logical outgrowth of the original — that we both thought they were tired. We talked about that. But, you know, the government's argument was really energetic, even though it was late in the day, and I think they did perk up. They made a good argument. The government really covered all the bases, saying they had noticed. The industry knew what was going on with this rule. We had so many meetings. We had a supplemental notice to them. It's almost impossible to believe — in other words, he was just saying, "It's just not credible that a sophisticated industry like this, with all of the importance of this rule, how long it took, how much outreach we did, how much — that they couldn't have known." And I thought the court seemed quite sympathetic to that.

Richard Lazarus: Yeah. Actually, that was an issue which I was really — I was watching closely, because I thought, you know, there's some sort of superficial good message to the challengers here about how different the two were, so the question was, was the court gonna be sympathetic to that or not? And what happened is when counsel for the petitioner set up, he spent almost all of his time on a threshold question of whether or not this was even before the court right now. And he tried to persuade the court that they should overrule some precedent they have from panel decisions, and the court seemed pretty distracted by that, not fully engaged in the question of whether the proposed and final were some different. And then when the government set up and gave a — I think, as you say, a very forceful argument, for the court to rule against the government on an issue like that, they're gonna challenge them very hard, because they want to make sure they have the government's best arguments. They didn't challenge the government lawyer that much, and in fact Judge Kavanaugh, who you would expect to be the champion of that issue, he actually made it quite clear. He said, "You know, I think when the government does big changes, I think that's a good thing when they make big changes."

Jody Freeman: He said, "You showed you learned something," which is exactly the point of any agency shifting positions is, you know, oh, you showed you're flexible and you listened to comment.

Richard Lazarus: Yeah, so he didn't seem to be someone who would be really aggressive in applying that test, that the proposed can't change so much to the final. He seemed to be sympathetic to the idea that it could change. And if that's the case, he seemed to be not that likely to want to establish precedent which punished the agency from learning from the process.

Monica Trauzzi: Let's talk about your colleague Laurence Tribe. Initially, when we first found out that he would be involved in the proceedings, it was seen as very controversial. How did he do today?

Jody Freeman: Well, he stood up — he was supposed to focus his arguments on a constitutional issue that has to do with commandeering of the question of whether the EPA rule here interferes with the states, it goes too far into the core of power and interferes with sovereignty. He actually didn't stick to that. He did meander somewhat into other issues that had come up over the course of the day. He talked about the threshold question of whether EPA even has the authority to do this in the first place, which we haven't talked about yet, but people are worried about that one. I think today that one was put to rest. The panel seemed to be very sympathetic to the idea that the two conflicting provisions about EPA's authority, this very technical issue, are ambiguous, it's not easy to resolve on its face, and that EPA should have some room to interpret and make sense of that provision. So that's something that professor Tribe went back to and tried to talk more about, but I don't think there was much traction there. I don't think he got much traction when he went back to concern about separation of powers here. So I'm not sure that it landed with the panel, his argument, but of course it's always a delight to see our colleague argue, and I think the panel felt the same way _____ _____

Richard Lazarus: Yeah, that's exactly right. I mean, Larry Tribe is a wonderful friend of ours. He's a terrific colleague, and obviously he's just an outstanding and famous, deservedly so, constitutional law scholar. You could see that on the faces of the judges when he was arguing. They were smiling. They enjoyed hearing him. You know, he's fun to watch. He's a good advocate in the positions he makes. But at the end of the day, as Jody alluded, there wasn't a lot of constitutional law there. As you may remember, when Larry Tribe was brought in, I mean, more than a year ago now, it was all about how the Clean Power Plan was burning the Constitution and how it was unconstitutional for the takings clause, unconstitutional for this and that. Almost all that was gone by the time the case was argued today. I mean, the big arguments, the big — with the statutory law, Tribe was under the court's order given six minutes in the case. All the other big statutory issues were before, and when he got to the constitutional law stuff, no more takings clause. It's all gone. And it was nominally separation of powers, nominally 10th amendment. All it really was was a retread of the arguments from the morning, done in this wonderful style to watch — a terrific advocate, but it was basically just going over what happened in the morning. And as I think Jody said, I didn't feel the traction. I saw the admiration.

Monica Trauzzi: Hmm. All right, so now let's talk about next steps. We await a decision, of course, which may come at the end of this year, early next year. Will the Supreme Court definitely take it up, or are they waiting to see how the panel goes and potentially we might see the court decide to not take it up?

Jody Freeman: Well, there are so many unknowns here. I mean, you cannot make this stuff up. You know, a 10-judge en banc panel that in theory could tie. I don't think any of us think there would be a tie, but the idea that that's possible. The eight justices on the Supreme Court awaiting a ninth — there's so much —

Richard Lazarus: The stay —

Jody Freeman: The stay — I mean —

Richard Lazarus: The last —

Jody Freeman: The death of Scalia within a week of the stay.

Richard Lazarus: The last vote Justice Scalia had on the court was the stay, which is just phenomenal, the last thing he did.

Jody Freeman: But given all that, even — we still have all this uncertainty. I think just to answer your question, I think everybody thinks the Supreme Court's gonna take this up. And I'm interested to see if you think that's for sure, but I think it's very likely. And the question is, you know, how long does it take for this to get decided? A lot of issues in this case — I mean, it's two very big ones, but then as we saw today, many more other procedural ones, so it could take some time. And then we have to wait to see what will happen with the election and whether we'll see a ninth justice anytime soon, because that'll still take some time. So if I were a betting woman, I would bet we're gonna have the Supreme Court weigh in on this case.

Richard Lazarus: Yeah, it's — you know, the odds are very heavy that this will be a Supreme Court case. I mean, it could not be. I mean, actually one of the last en banc Clean Air Act cases I remember was in the late 1980s, and the court actually wasn't even asked to hear it. That's because the court decided 11 to zero.

Monica Trauzzi: Right.

Richard Lazarus: It was all on one side. So if you've got a lopsided vote here, I don't think the court would take it. That seems unlikely. There will be a split here. The interesting thing is the timing, because if EPA were to lose this case, they could lose it relatively quickly. In other words, all EPA has to do is lose it on one big issue and the court doesn't have to address all the other issues. So they could — but I think the fastest that would happen, 'cause there'd still be a loud dissent — the fastest would be December, and more likely January. If it's December or January, that's too late for the Supreme Court to hear it 'cause they have to petition this year. They'd have to hear it next fall. Now if EPA were to win the case, the court has to address all the issues, and that could take a lot longer. That could take four, five, six, seven, eight months if they —

Jody Freeman: Which gives you time to have a ninth justice.

Richard Lazarus: Which gives you more — but either way, either way this case will not be heard by the United States Supreme Court, I think it very likely, until next fall. It's not gonna happen this spring because they have to write this opinion, they decide the case. The lot — even the quickest they could do it would be December or January. You then have time to petition. The court's cutoff time is mid-January. The court has to accept a case by mid-January to basically schedule for argument this term. Again, there are always exceptions. People could say this is an emergency, it has to be done sooner. It happens like in a case like Bush v. Gore. I don't think this is down that track.

Jody Freeman: But two other things arise here. One is, first of all, that there will likely be some effort to have the stay lifted if the en banc panel rules in favor of EPA while we wait, and that will be a game changer if it happens, because of course then the states will have to get moving again and we'll see compliance planning develop and that will change everything on the ground at least for the companies regulated by this rule. The other thing to keep in mind is Judge Kavanaugh's very well known for writing terrific cert opinions in the form of a dissent —

Richard Lazarus: Right, right.

Jody Freeman: Cert petitions, pardon me, in form of a dissent. We already saw from what he said today on the bench what his dissent, if it turns out to be a dissent in this case, will look like, how he will say this is a major question of incredible importance, economically and politically significant, we should have a clearer statement from Congress, separation of powers requires that we have Congress do this, not EPA —

Monica Trauzzi: Right.

Jody Freeman: All of that will go into this opinion, and it will tee up all of the issues beautifully for the Supreme Court.

Richard Lazarus: Right. One difference, though, for Judge Kavanaugh now is there now other judges on that bench who, like Judge Kavanaugh, are terrific advocates. There are three new ones who are actually some of the best Supreme Court advocates in the country. That's Judge Patty Millett, Judge Nina Pillard and Judge Sri Srinivasan. They're gonna be just as able to write dissents, if it comes down to that, which serve as effective cert petitions.

Monica Trauzzi: So fascinating. We have so much to watch. [Laughter] Thank you both for coming on the show.

Jody Freeman: Thank you.

Richard Lazarus: Well, thank you.

Monica Trauzzi: We very much appreciate it. Thank you.

Richard Lazarus: Thanks a lot.

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

[End of Audio]

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