Clean Power Plan

NRDC's Doniger, Sidley Austin's Martella debate legal future of rule

What is the legal future of U.S. EPA's Clean Power Plan, and how could the U.S. Court of Appeals for the District of Columbia Circuit's pending ruling on the regulation impact future Clean Air Act cases and rulemakings coming out of EPA? During today's OnPoint, David Doniger, director of the Climate and Clean Air Program at the Natural Resources Defense Council, and Roger Martella, a partner at Sidley Austin, discuss the most contentious issues being considered by the D.C. Circuit following last week's oral arguments. They also debate the precedent that could be set by the outcome of the litigation.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today are David Doniger, director of the Climate and Clean Air Program at the Natural Resources Defense Council, and Roger Martella, a partner at Sidley Austin. David, Roger, thank you both for joining me today.

David Doniger: Thank you.

Monica Trauzzi: David, we're about a week in following the D.C. Circuit's marathon oral arguments on the Clean Power Plan. You've both had time to reflect on and digest all that happened on that day. How are you feeling about EPA's position as things head into the next phase of litigation and where do you believe the agency is most vulnerable?

David Doniger: Well, I come away feeling pretty good about last week. EPA had a good day in front of that court. They were extremely — just as extremely well-prepared and diving deeply into these questions, but I find it very hard to see how the opponents get six votes to overturn the rule on any of the issues that were argued. So, you know, you can't be sure. We're feeling cautiously optimistic for the rule being upheld.

Monica Trauzzi: Roger, there were many people last week, court watchers who said that EPA came out slightly ahead. What do you think?

Roger Martella: Yeah, I'm curious to hear that and comments like David's, who I respect very much, talking about six votes. I mean, unless you're a mind reader, it's pretty hard to come up to those conclusions. Two of the judges didn't even ask any questions, so I don't know how you interpret anything with judges who don't even ask questions, but it's kind of a truism for litigators that you never want to walk out of an argument interpreting judges' questions, the way they ask questions to give some indication of the way that they're leaning. Those of us have done that have all been burned before.

I think from our perspective, we feel very good about the way things went. We couldn't have asked for a more prepared group of judges. They were inquisitive of both sides. They came in with the notion that they had not made up their decisions, that they were being open-minded about, you know, the kinds of questions they were asking, and the sense that they were going to walk away and give this strong consideration. I think that's the most any litigator could hope for in an argument like that.

Monica Trauzzi: Where do you think, though, because they did ask many questions, where do you think they pressed the challengers the most?

Roger Martella: I think everyone was focused on the lead arguments of the morning. What is really EPA's statutory authority on the fence line? Both sides were challenged by almost all the judges to really understand what's going to be a precedent-setting nature of the decision. The judges were truly engaged and prepared for all the arguments, but I think there was a weight on those arguments that the court's aware of, you know, where do we draw the line on EPA's ultimate statutory authority, knowing it's going to have impacts not only potentially on the energy sector, but future roles down the road. So they seemed to take that as seriously as everyone kind of thought they would knowing that's one of the lead issues in the case.

Monica Trauzzi: So, David, on the question of whether the agency's regulating beyond the fence line, and if the power plan is, in fact, in line with the best system of emission reduction requirement, there was back and forth between the judges on that, what was most compelling there?

David Doniger: Well, I think that Judge David Tatel summed things up quite well, both on the question of the standard of review, where the other side is arguing for a heightened test well beyond the Chevron deference, and then on the merits. And Judge Tatel said, in effect, this is a regulation of power plants which have been regulated many, many times before using tools that have been used many times before, like the market-based approaches. The costs are in the same ballpark as regulations before. What is transformational, what is so different? He said the only thing really different is the regulation of CO2, but the Supreme Court has already crossed that bridge. So if a majority of the judges see it that way, then EPA's going to do fine, both on the standard of review and on the ultimate question because best system of emission reduction is reasonably interpreted in this way. At least that's our view.

Roger Martella: If I could respond to that, I think what David's hitting on is what I saw as one of the two themes from the questioning during the day. The questioning David's focused on is one of those themes, which is an argument EPA was presenting. This is relatively routine. It's nonconsequential. We're just doing what we've always done and so what's the big deal here. The other theme which we heard from the judges as well was that this is more a rule of policy than it is a rule of law, that it truly is precedent ... nothing like we've seen before. And what I found curious was the government was actually trying to have it both ways. They were saying, on the one hand, nonconsequential, happening anyway, not a big deal, we've done this before, but opened the argument by saying this is the most important policy issue they're dealing with for a generation, part of a White House swearing ceremony — or signing ceremony that was sold around the world. And so there's this inconsistency in that position that this is entirely routine, but at the same time, the most important thing the government's doing right now.

Monica Trauzzi: Do you see new trends developing on deference?

Roger Martella: I think the court's definitely going to be looking at the issue of deference. We've seen a line of decisions from the Supreme Court that seem to be speaking to the D.C. Circuit on how it expects the lower courts, the courts of appeals to be looking where deference should be given and when a clear statement is required to be given deference, and one of the judges, Judge Kavanaugh in particular, kind of spoke in an academic way saying he's surveyed all those cases. He's kind of reconciled them together, and he seemed to appear that this was going to be a case where the judges are going to want to set the record for how they're interpreting this line of Supreme Court decisions all the way to the recent ... decision on when agencies are entitled to deference or when they're addressing significant matters of political and economic importance, the deference becomes less important for the agency.

David Doniger: You're right that Judge Kavanaugh is testing out those ideas, but I didn't see him get much pickup from that. Even Judge Griffith, one of the other appointees of a Republican president, asked some very tough questions of both sides, but of the opponents, what's so transformative here, what's so different from what's come before, either in the form of what EPA's doing or in the — or the magnitude. And you know, I've been asked how do you reconcile the importance of this and the routineness of this? Well, one of the reasons that it's turning out as it is is that the marketplace is moving so fast underneath the Clean Power Plan, and last year, for example, Congress extended the tax credits for wind and solar, and these are really pushing the transition from coal to cleaner power generation fast at this point so that the Clean Power Plan doesn't look as ambitious as perhaps it might have merely a year ago or two years ago when it was proposed. But it is very important to get started on regulating carbon pollution from the power plants to go — the point of the Clean Air Act is to go beyond what the market will do by itself to curb the pollution that's dangerous and isn't — there's no incorporation of the danger into private decisions when you can dump this stuff in the atmosphere for free.

Monica Trauzzi: Do you want to respond to that?

Roger Martella: Yeah, this was another theme of the day, and I think also demonstrates the inconsistency in the defenders' position. On the one hand, they're arguing it's our position that eventually you're going to be shutting down at some point, in our view, so we want to tell you when to shut down and how to shut down. You know, this may be inevitable in our mind, but we want to have regulatory control over that because we would prefer to do it that way. I think David's hitting that exact inconsistency I've been referring to, the notion that this is so important we have to expand our Clean Air Act jurisdiction in a way that's totally detached and unrecognizable under the statute, but it's happening anyway at the same time and so why not us just come in and regulate even though it's relatively nonconsequential. It's these types of inconsistencies that I think put the respondents in a difficult position.

David Doniger: I don't think the storyline that this is transformative and different from what EPA has done before sold with the judges. That's the keystone of the challengers' argument, that this is something big and new and different that EPA's never done before. They always say under this section, but the power sector's been regulated many different times on these same themes under different parts of the Clean Air Act, and there's nothing about Section 111(d) that suggests you cannot use these same techniques to regulate the power sector. In fact, the power industry in many states asked for these very flexible mechanisms to be available to them. I was intrigued by an analogy that the Justice Department attorney drew. He said their position is like that of a golfer who wants his handicap set playing a round of 18 holes with a putter. Then he wants to play against his handicap using all the clubs in the bag. And I think Judge Srinivasan and others were struck by the inconsistency in the other side's position.

Roger Martella: I'm sorry, if I could briefly — I'll be brief, but David says this is routine. This is a regulation the first. It's the first time a standard has come out that nobody can meet, the first time a standard has come out that's harder for an existing source than for a new source, the first time a standard has come out that requires the owner of a facility to invest in companies who are in the business of putting that owner out of business. And even one of the judges that David, I think, is probably counting on in trying to read the tea leaves questioned the EPA and said, "Can you cite another case where you've engaged in a regulation that requires you to invest in companies trying to put you out of business?" So these are the types of complexities, I think, that come through the questions from all the judges who seemed relatively inquisitive and open-minded on the outcome.

David Doniger: And I think they were satisfied with the answer that these credit instruments being — opening up a cheaper way to achieve a result is a long-standing way of doing things that always involves a transfer of resources from somebody to somebody else in order to achieve a pollution reduction more cheaply. That's built into the way the Clean Air Act has worked, especially in the power sector, for 25, 30 years.

Monica Trauzzi: Let's broaden this out a bit. How does what happens here with the Clean Power Plan with subsequent legal challenges potentially set a new standard for environmental litigation and rulemaking coming out of EPA?

David Doniger: I would think when the decision comes down — this is total guesswork on my part — that if they uphold the plan, they are going to — the decision will, in essence, say that this is fairly ordinary, that there's no big stretches here. They're not going to find that there is something wildly out of the ordinary and at the same time uphold it. So I don't see this like breaking new ground. This is going to be like almost every other Clean Air Act decision. It's going to stand or fall on the reasonableness of an interpretation under Chevron and not make a lot of new law.

Monica Trauzzi: Roger, what do you think?

Roger Martella: I obviously think we're going to get a decision that's going to be talking about the precedent-setting nature of this rulemaking, how this is like nothing that we've seen from what EPA's done in the past, this exertion into regulating sources on standards that they cannot achieve and broad-based regulation of the energy sector. I have no doubt that, regardless of the outcome, that issue's going to weigh heavily in the court decision. And even under David's scenario, which I don't agree with and don't predict, it will be interesting to see the extent to which David thinks that this is going to be another routine Clean Air Act decision, or does the court focus a decision like that specifically on the unique nature of the electricity sector? There were several conversations during the day, including in the briefs, about how integrated the utility sector is, the energy production sector, and does that factor into a decision as well.

Monica Trauzzi: So on timing, what are the next steps and what are the different scenarios we could see playing out with the Supreme Court now only having eight, when does the ninth come in? What are the different scenarios?

David Doniger: You know, somebody remarked that the plot twists here are more than in "Game of Thrones." It surprises you every turn this takes. The case has been expedited. At the same time, it's in front of 10 judges, so it will be interesting to see how long it takes them to decide. It could be, I would think, as early as December or it might go off into the first quarter of next year. That would be my guess. I'm not sure. It's depending on what the court decides and how convince — you know, how compelling the opinion — what the vote is. I'm not sure, actually, the Supreme Court will take the case. Probably they will, but there's a significant chance that they won't. Most appeals to the Supreme Court on Clean Air Act issues from the D.C. Circuit are turned down.

Roger Martella: I would agree that one thing we can predict about this case is how unpredictable it's been, but beyond that, I'm probably a little more thinking the case will take longer. We have 10 judges. I think we would agree it's not going to be a 10-0 decision on all issues, so can only move as quickly as the slowest of the 10 judges. So I would predict more closer to the first half of 2017 for a decision, and as with litigators' commandment to not predict outcomes of oral arguments, I wouldn't predict likelihood of ... other than to say this is a very unique case with the Supreme Court in an unprecedented way already has expressed a lot of interest in it, and so we would think that this would be a more likely candidate for ... than the typical Clean Air Act case coming up from the Supreme Court given — coming up from the D.C. Circuit given the existence of the stay.

David Doniger: The thing that makes this a mystery is that the court that issued the stay is not the same court we have today, and the court we have today will probably have a new justice, you know, in the time it takes this case to get there. So the court we have today is not the same as the court we will have.

Roger Martella: I would like to remind folks it only takes four justices to grant ... so to some extent, despite the fact we have eight justices instead of nine right now, presumably four of the justices that supported ... could support ... again.

Monica Trauzzi: All right, so many moving pieces. Thank you both for coming on the show. I really enjoyed this. I appreciate you both coming on.

David Doniger: Thank you.

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

[End of Audio]

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