To Comply or Not to Comply: EPA, Industry, and Congress Tussle over Regulatory Implementation Timelines

September 24, 2015

According to a recent report issued by the American Association for the Advancement of Science, there is overwhelming evidence not only that human-caused climate change is occurring, but also that the levels of greenhouse gases (“GHG”) presently in the atmosphere and currently being emitted are already having calamitous effects—increasing the spread of infectious diseases as well as incidences and magnitude of droughts, floods, heat waves, and severe storms.[1] Undoubtedly, this potentially devastating cause-and-effect not only makes responsive action important, but it also makes the timeliness of any such action paramount to its success. With that in mind, last summer, President Barack Obama exercised executive power under the Clean Air Act[2] to direct the Environmental Protection Agency (“EPA”) to issue a regulation that would restrict GHG emissions from power plants.[3] In response, EPA officially issued a proposed rule seeking to limit pollution from the nation’s 600 coal-fired power plants.[4]

This action, though hailed by many as President Obama’s “most forceful effort” yet in combating the dire effects of climate change, has not been without its detractors.[5] One detractor in particular, Murray Energy Corporation, filed a petition to challenge the proposed rule in court.[6] This challenge involved a legal issue that was both interesting and rife with practical consequences. Specifically, despite the fact that EPA had not yet issued a final, legally effective rule—a requirement for courts to exercise jurisdiction in considering such a challenge[7]—Petitioners argued that they had standing to challenge the proposed rule because it forced them to incur costs and expenses in anticipation of a final rule in order to meet that rule’s expected compliance deadlines.[8] Particularly, Petitioners argued that, despite not yet having taken any legally enforceable action, EPA had, by way of its proposed rule, effectively forced operators of coal-fired plants to implement pollution-reduction technologies and procedures as preparation for future, expected action.

Under the Administrative Procedure Act, only “[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in court are subject to final review.”[9] The Supreme Court has set out two requirements that must be met for an agency action to be considered “final”—the action must be the “[c]onsummation of the agency’s decision-making process,” and it must determine “rights and obligations” or “impose legal consequences.”[10] Petitioners advanced three arguments as to why the D.C. Circuit ought to hear the challenge: first, that the court had authority to consider challenges to non-final rules under the All Writs Act;[11] second, that EPA’s public statements about its legal authority to regulate carbon dioxide emissions from existing power plants constituted final agency action subject to legal review;[12] and third, that the court could hear the issue not as a direct challenge to the proposed rule but instead as a challenge to a 2011 settlement agreement between EPA, several states and environmental groups.[13] Tellingly, the D.C. Circuit needed only a few brief paragraphs to reject each of these three arguments.[14] Declining to consider the underlying challenge to EPA’s proposed rule, the court reiterated its long-held stance that “[a]gency action is final when it imposes an obligation, denies a right, or fixes some legal relationship,” and that a “proposed rulemaking generates no such consequences.”[15]

As such, any related challenge must wait until after promulgation of the final rule. Unfortunately for those in the industry, however, this ruling does nothing to quell concerns over the necessity of taking preemptive (and costly) steps towards future compliance in the interim. With this specific concern in mind, the House of Representatives passed the Ratepayer Protection Act (“RPA”) by a 247-180 vote, split mostly down party lines.[16] Among other things, the RPA would delay the implementation of the final version of EPA’s proposed rule until they pass muster in courts, and would additionally extend the compliance periods contained therein.[17]

Obviously, such a law would benefit industry by allowing plant operators to forego costly implementation of technology and procedures necessary under the EPA rule until after the rule’s validity is confirmed. Given that such steps can prove particularly costly[18]—and given that the validity of recent EPA rules has been vehemently contested[19]—it certainly makes sense, on some level, to require scrutiny of the rule before industry is forced to make expenditures in preparation for the rule’s issuance. At the very least, it seems clear that forcing energy companies to spend large amounts of money to comply with rules that may never even become rules is not desirable. However, it is not hard to imagine the RPA creating a slippery slope—where the validity of all EPA rules must be examined by courts before they become effective. While, on its face, this may not seem to be much of an issue—some may even consider it advisable—the resulting administrative inefficiency would be crippling for EPA. The regulatory process would have both an added time-hurdle and the added expense of all but guaranteed litigation. Given the extreme time-sensitivity of dealing with climate change—the issue at the heart of many of these rules—this is at least equally undesirable.

Ultimately, there is no simple solution. Perhaps better cooperation and coordination between agencies, industry, and even Congress, could lead to a better rulemaking timeline. Perhaps amending the Clean Air Act could lead to greater equity and efficiency in regulation. Perhaps both steps—and even others—are necessary. But regardless of what solution is pursued, it should be pursued with urgency; a planet is a terrible thing to waste.

Preferred Citation: Nicholas Kunkel, To Comply or Not to Comply: EPA, Industry, and Congress Tussle over Regulatory Implementation Timelines, LSU J. Energy L. & Res. Currents (September 24, 2015), https://jelr.law.lsu.edu/?p=1237.

[1] What We Know: The Reality, Risks, and Response to Climate Change, AAAS Climate Science Panel (2014).

[2] See generally Clean Air Act, 42 U.S.C. §§ 7401–7671.

[3]See Presidential Memorandum – Power Sector Carbon Pollution Standards (June, 25, 2013); http://www.whitehouse.gov/the-press-office/2013/06/25/presidential-memorandum-power-sector-carbon-pollution-standards [http://perma.cc/D6AW-9DRJ].

[4] See Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units, 79 Fed. Reg. 34,830 (June 18, 2014) [hereinafter “Proposed Rule”].

[5] Coral Davenport, Governments Await Obama’s Move to Carbon to Gauge U.S. Climate Efforts, N.Y. Times (May 26, 2014); http://www.nytimes.com/2014/05/27/us/politics/governments-await-obamas-move-on-carbon-to-gauge-us-climate-efforts.html?_r=0 [http://perma.cc/BU5C-VLDD].

[6] See In re Murray Energy Corp., 788 F. 3d 330 (D.C. Cir. 2015).

[7] See In re Murray Energy Corp., 788 F. 3d 330, 335 (D.C. Cir. 2015) (“After EPA issues a final rule, parties with standing will be able to challenge that rule”).

[8] Id. (“Petitioners contend, however that we should consider their challenge now because they are already incurring costs in preparing for the anticipated final rule”).

[9] 42 U.S.C. § 7607(b)(1).

[10] Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (internal quotations omitted).

[11] See In re Murray Energy Corp., 788 F. 3d 330, 335 (D.C. Cir. 2015); See also 28 U.S.C. § 1651(a).

[12] In re Murray Energy Corp., 788 F. 3d 330, 335-36 (D.C. Cir. 2015).

[13] Id. at 336.

[14] Id. at 335-36.

[15] Action on Smoking and Health v. Dept. of Labor, 28 F. 3d 162, 165 (D.C. Cir. 1994). See In re Murray Energy Corp., 788 F. 3d 330, 335 (D.C. Cir. 2015).

[16] Govtrak, Summaries for the Ratepayer Protection Act of 2015, https://www.govtrack.us/congress/bills/114/hr2042/summary [https://perma.cc/26RH-HMWJ]; See H.R. 2042, 114th Cong. (2015).

[17] H.R. 2042, 114th Cong. (2015).

[18] See, e.g. 73 Fed. Reg. 44,354, 44,355 (July 30, 2008) (warning that prior EPA rule “would have a profound effect on virtually every sector of the economy”).

[19] Cf. Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014) (reversing D.C. Circuit decision to uphold EPA rule); EPA v. EME Homer City Generation, 134 S. Ct. 2427 (2014) (reversing D.C. Circuit holding that EPA rule was invalid).