Monday, August 27, 2018

Trump EPA's Affordable Clean Energy Plan Would Be More Aptly Titled the Coal Energy Plan

by Michael C. Dorf

Last week the Environmental Protection Agency announced a proposed new rule governing emissions from existing power plants. The proposed rule--titled the Affordable Clean Energy (ACE) rule--would substitute for the Obama administration's Clean Power Plan (CPP), which the Trump administration had previously announced that it proposed to repeal (and which had not yet gone into effect, thanks to a 2016 Supreme Court order staying it so that lawsuits seeking to block it could proceed first). CPP was the Obama administration's domestic effort to live up to the US's obligations under the Paris Climate Accord. With Trump having withdrawn the US from the Paris Accord, he felt no need to keep it in place--and has been affirmatively hostile to it in order to favor his supporters in the coal industry.

Of course, the proposed repeal of CPP does not actually state that it is a giveaway to coal executives and miners. Instead, the EPA under Trump contended that CPP exceeded the agency's statutory authority and imposed costs that were not commensurate to its benefits. "Clean Air is Unaffordable to Coal Industry" would have been a more accurate description of the Trump policy than the misleading "Affordable Clean Energy."

Readers who never studied (or forgot what they learned in) administrative law may be wondering why I refer to the Trump actions as proposals rather than as actions. The answer is a combination of the Administrative Procedure Act and the Clean Air Act, which impose various procedural hurdles--including the possibility of lawsuits--to agency actions, including some repeals of existing regulations.

In a moment I'll dive a little further into the weeds of what the EPA is doing here, but I should say first that I agree with the big-picture account one sees in the press. CPP repeal and ACE adoption would confer massive benefits on the coal industry, thus substantially undercutting what had been a serious effort to reduce greenhouse gas emissions from power plants. And because the technologies that reduce greenhouse gas emissions typically also reduce emissions of toxic pollutants, CPP repeal and ACE adoption would result in substantial harm to human health. As the NY Times reported last week, the Trump EPA's own calculations indicate that the shift from CPP to ACE would result in 1,400 additional deaths per year, due to fine particulates.

How will the lawsuits challenging CPP repeal and ACE fare? I'm not optimistic.

To be sure, there is one reason to be modestly hopeful. For decades, courts have deferred to reasonable agency interpretations of the statutes the agencies are charged with enforcing under the principle most commonly associated with the 1984 SCOTUS decision in Chevron USA v NRDC. However, in recent years, prominent conservative jurists--including Justice Gorsuch when he was an appeals court judge and Judge Kavanaugh--have sought to substantially limit the scope of Chevron deference. I think the assault on Chevron is misguided and in the long run would do more harm than good, but if five SCOTUS justices do cut back on or even overrule Chevron, that could have the effect of making it easier to challenge agency action, including the EPA's proposed CPP repeal and ACE plan.

But I still highly doubt that would be enough for the legal challenges to succeed in the SCOTUS. After all, five justices of the Supreme Court were willing to stay the implementation of CPP, which suggests that four of the remaining justices (Kennedy was among the five) thought that CPP exceeded the EPA's authority even with Chevron deference or they thought as much by applying their own best judgment about what the Clean Air Act authorizes. Either way, five justices (assuming the confirmation of Kavanaugh) would be likely to say that the less aggressive measures proposed by the Trump EPA are permissible.

That's a prediction, not my legal analysis. My own view is that ACE should only be sustained if the Court grants very strong Chevron deference to the EPA. The key to understanding why can be found in Section 111 of the Clean Air Act. It requires the EPA Secretary to promulgate a "standard of performance" for new power plants as well as existing ones. That term is defined in Section 111(a)(1) as requiring a standard that "reflects the degree of emission limitation achievable through the application of the best system of emission reduction."

The Obama administration's CPP was vulnerable to legal challenge (and the SCOTUS by a 5-4 ideologically divided vote blessed the challenge on an interim basis) because the CPP adopted aggressive interpretations of what counted as a regulable "existing source" and "best system." Under the CPP, a coal-fired plant per se was not necessarily the relevant existing source; rather, an existing source could refer to the company or utility that provided electric power in a region. Likewise, "best system" was not limited in the CPP to the best system possible for a coal-fired plant but for electricity generation more broadly. The CPP then set performance standards that could not be met by coal-fired plants, effectively requiring existing plants either to convert to a less CO2-intensive source (such as natural gas) or, if that were not feasible, to close and either be replaced by new non-coal plants or to purchase power generated by wind, solar, or some other relatively clean source.

The CPP was, in my view, justified on policy grounds, although I acknowledge that it relied on an aggressive reading of Section 111 of the Clean Air Act. Still, aggressive does not mean illegal. I think that the CPP should have been sustained under traditional administrative law principles. The Chevron case itself upheld the Reagan administration's decision to shift from a view of "source" in Section 111 of the Clean Air Act that focused on particular emitting devices to a broader "bubble concept" that covered an entire facility. In Chevron, the Court deferred to this broad definition in upholding a shift from a stricter to a laxer environmental policy, but the point of the Chevron doctrine is to leave such policy choices to the executive branch where the language of the statute does not rule them out. That's why I think that on the merits, the CPP ought to have survived judicial review under Chevron.

That does not, however, mean that the CPP was the only permissible understanding of Section 111 as applied to existing sources. And if all that the Trump administration's ACE did was to roll back the CPP to revert to a prior understanding of Section 111, then it too would be entitled to Chevron deference. However, if I understand the ACE proposal correctly, it does more than roll back Clean Air enforcement to the pre-CPP status quo.

ACE would define "best system" of emissions reduction to mean best-for-the-kind-of-plant at issue. The Trump EPA disclaims the authority to promulgate requirements "that would fundamentally redefine the nature of the source." Thus, it will not construe Section 111 to authorize performance standards that could only be achieved by switching fuels (from coal to natural gas or biomass, say). I could be wrong about this, but I think that what the Trump EPA proposes to do under ACE is to allow a coal-fired plant to continue to burn coal even if burning some other fuel would produce substantially less CO2 per kilowatt-hour AND even if the plant could feasibly be converted to the other fuel at a cost that would be justifiable. Some coal plants convert to other fuels simply in response to market pressure, but those that do not, under the Trump plan, would not be required to take environmental externalities into account at all.

The Trump EPA's fact sheet on ACE says that it would merely "return EPA’s actions to its understanding that the 'best system of emission reduction' for a source should be based only on measures that can be applied to or at the source," rather than, as in CPP, considering shutting down plants. But I read it as going further. A performance standard that can be met by switching from coal to natural gas can, at least in many places, be met "at the source." By disclaiming the authority to require plants to switch fuels, ACE reveals its true purpose of aiding the coal industry.

Or at least that's how it looks to me. I'm not an environmental law expert, and, as I've said, I could be reading any of the materials wrong or misunderstanding the regulatory history. Moreover, much would depend on how the administration enforces ACE. But that's hardly a basis for taking comfort. Given the underlying politics, we can fully expect the Trump EPA to go easy on coal.

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Postscript: In a blog post last week, I promised that this week I would revisit an article I co-authored in 1998 in connection with ACE. The foregoing is the promised discussion, even though I haven't touched on the article. What I had intended to say was something like this:

In the 1998 article, Prof. Sabel and I described and mostly touted the advantages of regulation via performance-based "rolling" standards that continually adjust to reflect advances achieved through decentralized experimentation, as contrasted with command-and-control regulation. Some readers of the article mistook what we called "democratic experimentalism" for old-fashioned devolution or decentralization, but we had tried to make clear that the approach we described included a vital role for a central authority in coordinating local experimentation by publicizing results and holding relatively local actors accountable to continually ratcheted-up standards.

That distinction also should have sufficed to answer critics who argued that democratic experimentalism could and would be used as a cover for deregulation. One might point to the Trump EPA's ACE proposal as an example of that phenomenon: under a regime of performance standards it would devolve substantial regulatory authority to the states. But our (assuming Prof. Sabel would agree) answer would be the same here: Of course it is possible to pervert any approach to regulation or engage in a sham form of it. Here, as elsewhere, the Trump administration's bad faith reveals that laws and institutional structures alone cannot prevent terrible abuses, absent some threshold of commitment by enough relevant actors to make the system work as it was designed.

I ended up not writing that in the body of the post, however, because the more I studied the ACE plan, the more I concluded that its central move did not exploit anything particular to a performance standard regime. Its central move is much simpler than that: protecting the coal industry.