NRDC Clean Air program director John Walke blogs about the two clean air court cases: Clean Air Has Its Day In Court

Two of the most important health standards ever adopted by the Environmental Protection Agency to reduce harmful air pollution from power plants had their day in court this week. Actually two courts: the Supreme Court heard arguments on EPA’s Cross-State Air Pollution Rule (CSAPR), which targets smog and soot pollution emitted from power plants in upwind states that travels across state boundaries to foul the air in downwind states. Down the street in the U.S. Court of Appeals for the D.C. Circuit, a three-judge panel heard challenges from industry, conservative states and some environmental groups to EPA’s Mercury and Air Toxic Standards (MATS) for coal- and oil-burning power plants.

EPA has projected that together these two rules will prevent up to 45,000 premature deaths, 20,000 nonfatal heart attacks, and more than a half million asthma attacks every year once the standards are implemented.

Both EPA standards appeared to fare well with the jurists. Most of the eight Supreme Court justices hearing the case (Justice Alito having recused himself) appeared sympathetic to the complexity of the statutory task facing EPA, and the need to respect EPA’s expertise and discretion in carrying out complicated Clean Air Act responsibilities to safeguard air quality and communities in downwind states.

The D.C. Circuit judges appeared unmoved by the frontal assaults mounted by the utility industry and a handful of states to bar EPA from effectively reducing hazardous air pollution at all from power plants. Of course, any lawyer will tell you it is a perilous undertaking to predict the outcome of a court case based on the oral argument, and NRDC is a party in both cases, so caveats are justified.

Other observers also thought both cases went well for EPA. On the legally sophisticated SCOTUSblog.com, Lyle Denniston wrote that in the cross-state case, “the EPA could walk away from Tuesday’s oral arguments on how the agency acted to limit foul air from floating from state to state, with a sense that maybe it did it about right. As usual, it faced some criticism, true, but this time that did not dominate.”

Professor Richard Revesz, director of the Institute for Policy Integrity at the New York University School of Law, also “thought that the argument went very well for the government, for EPA” in the Supreme Court. Getting to the heart of the matter, he observed that “the government was able to engage the justices on its core point, which is that costs can be taken into account in setting the pollution control burden between upwind and downwind states, and that’s the core of the case.”

Trade press articles discussing the MATS case noted that the three judge panel “appeared to side with the EPA on the key issue of whether the agency met a statutory threshold of finding it is ‘appropriate and necessary’ to regulate utility air toxics.”

Summary of Legal Issues in the Cross-State Air Pollution Rule case

The Supreme Court granted certiorari on three issues:

1. Whether the court of appeals lacked jurisdiction to consider the challenges on which it granted relief.
2. Whether States are excused from adopting [State plans] prohibiting emissions that “contribute significantly” to air pollution problems in other States until after the EPA has adopted a rule quantifying each State’s interstate pollution obligations.
3. Whether the EPA permissibly interpreted the statutory term “contribute significantly” so as to define each upwind State’s “significant” interstate air pollution contributions in light of the cost-effective emission reductions it can make to improve air quality in polluted downwind areas, or whether the Act instead unambiguously requires the EPA to consider only each upwind State’s physically proportionate responsibility for each downwind air quality problem.

Oral Argument

Question One: To the surprise of most, after the Court had expanded oral argument time from 60 minutes to an unusual 90 minutes just days before the argument, none of the parties nor the justices even mentioned the jurisdictional issues. It’s hard to say how this issue will be resolved, but at the very least, the justices were eager to discuss the merits and it appears that the jurisdictional issues may be of less importance to the Court than previously believed. If the justices do reach the merits, however, along the way they could end up creating important caselaw on the topics of administrative exhaustion and subject matter jurisdiction under the Clean Air Act and even the Administrative Procedure Act.

Question Two: Both the parties and the justices did discuss the second issue. In essence, this concerns whether the Act requires EPA first to undertake another lengthy federal rulemaking to define key legal understandings before upwind states are then given another chance to try (and fail, as many have) to abate their own pollution contributions to downwind states’ air quality problems. This topic too was discussed less than expected.

Chief Justice Roberts made one seemingly important observation favorable to EPA’s position. When the Texas solicitor general argued that EPA had unfairly required upwind states to submit pollution control plans to EPA before those states knew what their Good Neighbor program obligations were, the Chief Justice responded: “Well, it’s — it’s certainly — it’s certainly hard, but it is what the statute says; and it seems to me that if EPA had taken a different view, it would have been contrary to the statute.”

Question Three: The court and the parties spent the majority of the 90 minutes discussing this issue. EPA and just the industry challengers (importantly, see below) disagree over whether EPA may consider the cost and cost-effectiveness of pollution reductions in determining each upwind state’s contribution to transboundary pollution problems. The industry challengers argued that EPA could not consider costs, and must instead apportion responsibility based on geographically proportionate air quality factors alone. EPA and all the parties supporting the agency in the Supreme Court view this to be overly simplistic, less effective and perhaps even impossible to administer. Instead, EPA argues that it may consider the costs of effectively controlling upwind air pollution contributions in conjunction with air quality factors.

With the exception of Justice Scalia, who spoke out forcefully against EPA’s position, most of the remaining Justices who did speak appeared receptive to siding with EPA. Justice Kennedy, for example, remarked that “the word ‘significantly’ does import a judgmental component” granting EPA some degree of latitude and could mean more than merely physical “amounts” of pollution, as the industry parties argued. Comments from other justices―including a series of increasingly entertaining hypotheticals involving sheep and basketball and knives―suggested the understanding that the realities of multi-pathway air pollution are more complex than the simplistic proportionality approach adopted in the lower court ruling.

Mercury and Air Toxics Standards Case

It’s not possible to succinctly describe the range of complex legal and technical issues in the D.C. Circuit lawsuits that consumed nearly 4 hours of argument time. The industry and state challengers to MATS mounted a series of somewhat audacious frontal assaults against EPA’s very ability to reduce mercury and nearly seven dozen other highly toxic air pollutants from power plants using the law’s most effective tools.

There is no dispute that Congress intended these tools for every other industry in the country, nor that power plants are far and away the largest industrial emitters of toxic air pollution in America. (In 2011, EPA estimated that the following portions of all air pollution in the United States came from power plants: 50% of mercury emissions, 62% of arsenic, 77% of acid gases and 60% of sulfur dioxide comprising deadly particulate matter pollution.)

So there was an especially perverse audacity to the industry arguments that power plants did deserve to be treated differently―vastly more leniently―than any other industry. The attorney representing the hostile utility companies actually began his presentation by arguing that power plants “are factually different from” other industrial sources; that “trace amounts” of hazardous elements “occur naturally in coal”; and that Congress understood that hazardous air pollutants from power plants pose “insignificant health risks.”

Fortunately, these arguments and related attacks on EPA’s core regulatory authority did not appear to gain much traction with the judges. While a few subsidiary legal issues did face some skeptical questions from the bench, if the court upholds EPA’s authority and the standards as a whole then we should enjoy essentially the same levels of overall reductions in hazardous air pollutants and deadly soot pollution. The rule’s emission standards for acid gases and particulate matter will continue to drive the real-world pollution control, retirement and repowering decisions by companies.

Industry’s Campaign for Creative Destruction

The industry and state challengers to CSAPR had not argued during the rulemaking or in their briefs to the D.C. Circuit below that EPA was prohibited from considering cost in interpreting the term “significantly” and implementing the statutory Good Neighbor program. Judge Kavanaugh did not argue in his opinion below that EPA was barred from considering cost.

Only in the briefs to the Supreme Court did some industry challengers argue for the first time that the Clean Air Act barred EPA from considering cost in carrying out the Good Neighbor program. Indeed, in a remarkable display of chutzpah, these challengers accused EPA in the Supreme Court of “largely ignoring” a Supreme Court cost precedent (American Trucking v. Whitman) that these challengers themselves had never cited. Further reflecting the switcheroo, scattershot nature of their Supreme Court arguments, industry had told the lower court that they were “not advocating” the implementation approach that they then turned around and argued to the Supreme Court that the statute mandated.

The attorney arguing on behalf of EPA from the Solicitor General’s office nicely captured the paradox―one might say, hypocrisy―at the heart of the utility challengers’ legal stance that EPA is barred from considering cost under the relevant statutory provision:

I mean, one of the ironic things about this case is that the only ill consequence of overcontrol is cost. That is, this is not a situation in which there is some . . . distinct public health problem. . . that is caused if power plants are emitting too little NOx or SO2. The only reason that people worry about overcontrol, about reducing emissions more than they need to be, is that it costs money. And if that’s the problem to be avoided, it seems strange that EPA can’t take account of costs in theorizing a solution.

This explanation pointedly highlights that the industry challengers are not in fact seeking sensible cost solutions to the dilemma of transboundary air pollution; they are seeking annihilation of EPA’s standards and extended delay until EPA has the chance to reissue standards (for the third time) still required by law, at which point industry litigants will again mount new attacks in service of creative destruction and delay.

During the Supreme Court oral argument, in one of the more noteworthy exchanges, the Texas solicitor general admitted that the state challengers did not share the view of their industry co-challengers that EPA was prohibited from considering cost. This division between the state and industry challengers, and even within the group of industry challengers, cannot help the most strident industry challengers’ cause arguing that the statute plainly bars consideration of cost.

The industry and state challengers to MATS in the D.C. Circuit presented more of the same, but with an even more startling twist: there the challengers argued that a similarly ambiguous statutory term (“appropriate” v. “significantly”) actually required EPA to consider cost. For all you lawyers out there, these challengers had argued in their briefs that the “plain meaning” of the statutory term “appropriate” required this result under step one of the famous case of Chevron v. NRDC.

This prompted a marvelous exchange during the D.C. Circuit oral argument in which Chief Judge Garland confronted this legal position with some apparent incredulity, leading him to ask the Michigan attorney representing the state challengers whether he agreed that it would be a “reasonable reading” under Chevron not to require EPA to consider cost. The Michigan attorney was forced to respond Yes, raising eyebrows and the question what his industry co-litigants must have thought about that response. Judge Kavanaugh remarked that this response was decidedly not what the industry-state challengers’ brief said.

So what was the aim of the industry and state challengers in arguing that the Clean Air Act requires consideration of cost in answering the threshold question whether to reduce hazardous air pollutants from power plants using the law’s most effective technology-based program? The same as the industry-state challengers’ objective in the CSAPR case, actually: blowing up EPA’s regulation altogether. The challengers’ D.C. Circuit brief says with ruthless efficiency: “EPA’s failure to take costs into account, as Congress intended, requires vacatur of the MATS rule.”

Like the industry and state challengers in the Supreme Court, the similar challenges in the D.C. Circuit amount to a campaign to destroy the entire effort to reduce hazardous air pollution from power plants. Fortunately, the legal arguments underlying this nullification campaign did not appear to fare well.

EPA’s legal position in both cases is consistent regarding its authority to consider cost―or not―in the statutes the agency administers: faced with ambiguous statutory language, EPA believes it has the legal discretion to consider or not consider cost, so long as cost is not a clearly prohibited consideration based on statutory indices (as it is in Clean Air Act section 109; see American Trucking v. Whitman); so long as EPA’s statutory construction is a permissible one; and so long as EPA provides rational grounds for when and whether it decides to consider cost based on the facts and statutory context.

One final observation worth making about the industry stances in both cases: it is striking how much the industry challengers have failed to advance any coherent alternative regulatory scheme that would give meaning to carrying out the Clean Air Act’s health objectives. That is not their concern. Escaping effective regulation is.

The industry challengers have not yet provided a sensible explanation for how to carry out the Good Neighbor program in a way that would protect downwind communities and take into account the complex, multi-pathway nature of transboundary air pollution. Justice Kagan rightly suggested that the mathematical “proportionality” dictate in the lower court ruling is “simplistic.” Justice Roberts repeated EPA’s description of transboundary air pollution pathways as a “spaghetti matrix.” The figure below shows how right he is.

In the MATS case, the industry challengers’ concern for a coherent regulatory solution is similarly absent. Despite over 13 years fighting EPA’s efforts to effectively reduce all hazardous air pollutants from power plants, utility industry attorneys have yet to describe in any meaningful way what regulations they do believe the law allows and why that approach would be effective. Counsel for the public health and environmental parties memorably described industry’s vague alternative as a “wide-open, utilitarian balancing test.” Again, effective regulation is not the industry challengers’ concern.

Stepping back to assess the industry challengers’ conflicting legal interpretations regarding the permissibility of EPA considering cost in each case, one cannot help noticing that the result-oriented outcome of these contradictory positions would be to invalidate EPA’s clean air standards in both cases. After thousands of pages of comments and legal filings, all the rhetoric about states’ rights and economic calamity and a war on coal, the industry lawsuits come down to one common enterprise: blowing up EPA’s health standards that safeguard the air we breathe, and delaying replacement standards as long as possible while power plants keep on polluting.

The EPA clean air standards appear to have faced an overall favorable reception in court, and one hopes industry’s campaign of destruction will fail. It seemed like clean air had a pretty good day in court. Let’s hope the courts will uphold these standards to deliver healthier air and better days for all Americans.