EPA’s Clean Power Plan Does Not Deserve Judicial Respect

On August 3rd, President Obama announced his administration’s signature global warming policy, known as the Clean Power Plan. In the simplest of terms, the Clean Power Plan empowers the Environmental Protection Agency to centrally plan the electric industry.

Don’t take my word for it! Top EPA political appointees have been candid about how the Clean Power Plan’s epochal purpose is to reduce greenhouse gas emissions by “transitioning” all electricity generation to a “carbon conscious economy.”

Of course, the EPA never before has tried to centrally plan the power sector. According to the agency, it is authorized to set national electricity policy by an obscure provision of the Clean Air Act called the existing source performance standards (ESPS) program.

By its terms, the ESPS program is a catchall for uncommon pollutants and stationary sources that are not a good fit for other, more mainstream, regulatory programs established by the Clean Air Act. From the Congress’s perspective, the ESPS provision was an afterthought, as there is virtually no legislative history attendant to the program. Over the last four decades, the EPA has used the ESPS sparingly to regulate five discrete and insular source categories: pulp mills, solid waste landfills, and acid, fertilizer, and aluminum manufacturing. And within these narrow industrial categories, States were allowed to regulate individual sources on a case-by-case basis.

The Clean Power Plan represents a stark departure from the EPA’s past practice under the ESPS program. Instead of regulating a few industrial categories on a source-by-source basis, the Clean Power Plan would regulate at once the entire electricity generating sector. In one fell swoop, the rule would extend the EPA’s authority beyond individual stationary sources—where the agency historically drew the line—to the electric system as a whole, including generation, transmission, distribution, and consumption.

In order to justify the Clean Power Plan’s unprecedentedly broad scope, the EPA had to adopt a new and impossibly expansive interpretation of the Clean Air Act. Indeed, the EPA’s novel reading of the Clean Air Act gives the agency unlimited authority to regulate. Under the terms of the ESPS provision, the EPA sets “standards of performance” based on the “application of the best system of emission reduction.” With the Clean Power Plan, the EPA for the first time has expanded its interpretation of “system” to “encompass virtually any ‘set of things’ that reduce emissions.” By the agency’s frank admission, there is “virtually” no limitation on what could be subject to regulation under the ESPS program!

This new and far-reaching statutory construction is a far cry from authorizing the regulation of a few industries on a source-by-source basis, which is how the agency interpreted the ESPS provision for over four decades. Likely due to the tenuousness of its statutory reading, the EPA took the highly unusual step of preemptively claiming so-called “Chevron” deference from the courts for its interpretation, even though the rule is months away from being subject to judicial review.

Chevron deference is a famous and oft-employed administrative law principle that federal courts should defer to reasonable agency construction of the statutes they are charged with administering, in reference to a seminal 1984 Supreme Court ruling, Chevron USA Inc. v. Natural Resources Defense Council, Inc. Whether or not the agency receives this judicial respect will in large part determine whether the Clean Power Plan survives the many legal challenges it will face.

In a recent paper, I investigated the agency’s preemptive request for deference, and I found it to be lacking. In fact, the agency’s Clean Power Plan contravenes every principle that undergirds the Chevron doctrine.

The Supreme Court anchored Chevron deference on the agency’s exercise of lawmaking power pursuant to a delegation of congressional legislative authority. Regulatory agencies are creations of Congress, and they issue rules with the force of law only when Congress grants them the power to do so. The Court reasoned that a congressional delegation of power includes an inherent authority to “fill gaps” in the statutory scheme by resolving textual ambiguities.

The problem for the EPA is that it enjoys no congressional delegation of authority to regulate the electricity sector as a whole. Instead, Congress in 1935 split this authority between federal energy regulators and the States. The bottom line is that EPA is attempting to exercise powers that Congress either delegated to other federal agencies or reserved for the states. And because the EPA lacks a congressional delegation commensurate with the authority the agency claims under the Clean Power Plan, the agency does not deserve respect from the courts.

Although a congressional delegation of authority is the sine qua non of Chevron deference, the Supreme Court also put forth two practical justifications.

First, the Court explained that agencies possess expertise within their subject matter that renders them better informed to parse imprecise terms in their enabling statutes. EPA, however, enjoys no such advantage. No office within the EPA has a mandate to study electricity markets. This makes perfect sense, insofar as Congress intended for the EPA to be an environmental regulator, not an energy regulator. Because the agency cannot claim expertise in regulating the entire electricity industry as an interconnected whole, as the Clean Power Plan and agency officials purport to do, the EPA’s interpretation of its authority pursuant to Clean Air Act is not entitled to deference.

Second, the Court reasoned that executive branch agencies merit judicial respect because they enjoy greater political accountability, by virtue of their connection to a popularly elected President, than do unelected judges. Yet for all intents and purposes, the Clean Power Plan was hidden from voters, due to President Obama’s conspicuous silence on global warming policy during his 2012 reelection campaign. Consider, for example, the following Associate Press headline from late October 2012: “Guns, Climate, Gays Missing in Presidential Race.” During the second debate, moreover, the President portrayed himself as a stauncher supporter of fossil fuels—including coal—than his Republican challenger. President Obama’s utter failure to subject this hugely consequential policy to voter scrutiny in any meaningful way militates heavily against the EPA’s request for Chevron deference.

The fate of the Obama administration’s marquee climate policy will largely depend on whether federal courts grant the EPA’s request for judicial respect. Because the Clean Power Plan violates every principle behind such deference, the agency’s request should be denied.

Originally posted in American Coal Magazine.