Courthouse Steps Oral Argument: Ohio v. Environmental Protection Agency

 

Emily Manning:  Hello, everyone, and welcome to this Federalist Society virtual event. My name is Emily Manning, and I’m an associate director of practice groups with The Federalist Society. Today, we’re excited to host a Courthouse Steps Oral Argument discussion on Ohio v. Environmental Protection Agency.

 

We’re joined today by Megan Herzog, Matt Kuhn, Viktoria Seale, and our moderator today is Matt Leopold, partner with the law firm of Hunton Andrews Kurth in Washington, D.C. He previously served as the general counsel of the United States EPA where he was involved in defending EPA rulemakings in the Court. He also served as the general counsel for the Florida Department of Environmental Protection. Early in his career, he was an attorney at the U.S. Department of Justice Environment and Natural Resources Division. If you’d like to learn more about today’s speakers, their full bios can be viewed on our website, fedsoc.org.

 

After our speakers give their opening remarks, we will turn to you, the audience, for questions. If you have a question, please enter it into the Q&A function at the bottom of your Zoom window, and we will do our best to answer as many as we can. Finally, I’ll note that all expressions of opinion today are those of our guest speakers, not The Federalist Society. With that, thank you for joining us today, and Matt, the floor is yours.

 

Matthew Z. Leopold:  Thank you, Emily, for that introduction. And welcome again, everyone, to The Federalist Society’s Courthouse Steps on the oral argument in Ohio v. EPA, which the Court heard a week ago today on February 21. My name, again, is Matt Leopold, and I’m moderating today’s event. And I’m pleased to have with us some incredible panelists to break down this complex case and give us insights into what the Court might be thinking on this matter.

 

First, I’d like to introduce Matt Kuhn, who serves as the Solicitor General of the Commonwealth of Kentucky. As Solicitor General, Matt oversees the office’s civil and criminal appellate litigation and supervises the office’s filings of amicus briefs. He’s argued in the Supreme Court of the United States, the U.S. Court of Appeals for the Sixth Circuit, and the Supreme Court of Kentucky. He previously served as Chief Deputy General Counsel for the governor of Kentucky and in private practice at the law firms of Jones Day in Washington and Stoll Keenon Ogden in Louisville, Kentucky. He also served as a law clerk for Judge Raymond Gruender of the Eighth Circuit and is a graduate of Furman University and Columbia Law School.

 

Next, we’re pleased to have with us Megan Herzog. She is a Massachusetts-based attorney whose practice is focused on environmental, natural resources, and energy litigation and administrative advocacy. Megan is a 2011 graduate of Stanford’s Law School where she was co-editor in chief of the Journal of Law, Science, and Policy. She also holds a Master of Science from Stanford in the Environment and Natural Resources. She has had fellowships at the Environmental Law Institute in Washington, D.C., and at the UCLA Law School’s Emmett Institute on Climate Change and the Environment. She previously served at the Massachusetts Office of the Attorney General in the Energy and Environment Bureau, and she has led state government coalitions in several actions in the U.S. Supreme Court and the U.S. Court of Appeals for the D.C. Circuit and before the Federal Energy Regulatory Commission.

 

We’re also very fortunate to have with us Viktoria Seale. Viktoria is the Regulatory Affairs Director for the National Rural Electric Cooperative Association, which represents nearly 900 not-for-profit electric cooperatives and other rural electric utilities. She advocates before the federal government for NRECA members on environmental, permitting, and other regulatory issues. Viktoria has extensive federal government experience and has worked on a wide range of complex legal, regulatory, and legislative policy matters. Prior to joining NRECA, she served as the general counsel and chief of staff for the White House Council on Environmental Quality and helped lead significant initiatives, including the comprehensive update to CEQ’s NEPA regulations. Viktoria’s a graduate of Rhodes College and received her J.D. from Chicago-Kent College of Law.

 

So with that, I do want to provide a little background on this case as it arises in an unusual posture of a petition application for a stay pending appeal with the U.S. Supreme Court. And generally, the Court must decide two basic questions: whether it should stay the EPA’s federal admissions reductions rule, known as the Good Neighbor Plan, and whether the admissions controls imposed by the rule are reasonable regardless of the number of states subject to the rule. A little background on the Clean Air Act and how this case arises: the Clean Air Act is a statute that embraces a model of cooperative federalism to address nationwide air pollution and provides an essential rule to state regulators. EPA is charged with setting national ambient air quality standards that are uniform across the nation for certain air pollutants, and the states retain the primary responsibility of assuring air quality within their borders.

 

Relevant to this case, EPA issued the 2015 Ozone National Ambient Air Quality Standards, and in issuing these standards for ozone pollution, it triggered states’ obligations to update their state implementation plans, or SIPs, under the act. The Clean Air Act recognizes that air pollution is transient and heedless of state boundaries, and it may be transported by air currents from upwind to downwind states. To account for these obligations, a state plan must address activity within the state that emits air pollutants in amounts that will “contribute significantly to nonattainment or interfere with another state’s maintenance of any air quality standard.”

 

This statutory requirement is known as the Good Neighbor Provision, and it is Congress’s chosen method of balancing interests in upwind and downwind states. States typically meet these obligations by crafting SIPs, or state implementation plans. Among other things, SIPs must show that the state will comply with the act’s Good Neighbor Provision, which importantly requires upwind states to reduce emissions to account for pollution beyond their borders.

 

But if EPA determines that a state has failed to meet its Good Neighbor obligations, it may disapprove a SIP and issue a federal implementation plan known as a FIP. That is exactly what EPA did here that gives rise to this dispute. Numerous states have asserted, however, that the Clean Air Act is clear that if a state plan meets the Clean Air Act requirements, EPA shall approve the SIP.

 

To craft the federal implementation plan, EPA used a four-part approach. First, they used modeling and monitoring data across the 48 contiguous states to identify areas known as “receptors.” Second, EPA used that modeling to quantify pollution contributions from upwind states to the receptors in downwind states. Third, EPA identified upwind emissions that “contribute significantly to nonattainment” and used cost-effectiveness assessments of potential emissions controls. And finally, EPA proposed to enforce control measures to prohibit those significant emissions.

 

Examples of the emissions controls that EPA mandated are enhanced operation of existing controls at power plants to address nitrous oxide emissions, and also EPA required for the first time installing new control technologies to address emissions reductions for other industries such as natural gas pipelines, cement kilns, steel industry reheat furnaces, and paper industry boilers. The federal plan also allows for banking and trading of unused emissions allowances and a new approach called dynamic budgeting to prevent surpluses from accumulating and reducing stringency of the plan.

 

With that backdrop, this case was brought before the Supreme Court by Ohio, Indiana, and West Virginia, as well as eight trade associations and seven companies. Ohio submitted its plan in September 2018 and Indiana in November of that same year and West Virginia in February 2019. But in February 2022, EPA proposed to disapprove submissions of 19 different state plans, and a few months later, EPA disapproved four more, bringing the total number of disapproved SIPs to 23 states.

 

Approximately two months after proposing to disapprove the SIPs and before the deadline commenting on the disapproval expired, EPA proposed the federal implementation plan addressing regional ozone transport, AKA the Good Neighbor Plan. This federal plan sought to resolve the good neighbor obligations for roughly half the country. In separate litigation in regional circuits around the nation, various states filed petitions for review of EPA’s disapproval of the 12 SIPs, and those circuit courts have stayed EPA’s disapproval as to those 12 SIPs pending disposition of those cases. Importantly, that means that EPA’s federal implementation plan cannot move forward in those 12 states for the time being.

 

The three states and industry participants here took a different course. They filed petitions for review in the D.C. Circuit, challenging EPA’s federal implementation plan and seeking a stay pending appeal. But on September 25 of last year, the D.C. Circuit denied the parties’ application to enter a stay. Shortly thereafter on October 13, the states filed an application for stay with the Supreme Court, and in the unique development, the Court set oral argument on the motion.

 

So one more thing before I turn to the panelists, I wanted to recite just the basic, relatively familiar standard for stay pending appeal which is at issue here because some have argued that the Court might hold the applicants to a higher standard. But just to review, that standard is whether states have shown the likelihood of success on the merits, whether the stay will substantially injure other parties interested in the proceeding, and whether there will be irreparable injury absent a stay and where the public interest lies. So with that, I want to turn to our panelists, and I’ll ask Matt, as the only government representative on the panel, if you’d go ahead and start us off.

 

Matt Kuhn:  Well, thanks for the invitation to speak about this really important litigation. And though I’m the only government person on here, both upwind and downwind states do have a very significant interest in this case. I’m on the upwind side of it.

 

So let me place for you -- I want to make three quick points before we get to some questions to help frame. The first is to explain what my state, Kentucky’s, role has been in this. We are one of the 23 states whose SIP was disapproved, and as a result, we’re one of the 12 states that got a stay of that SIP disapproval. So we got our stay in the Sixth Circuit, first as an administrative stay in May of last year and as a full-blown stay in July of 2023.

 

So we are similar to the stay applicants in the sense that we had our SIPs disapproved, but we’re a bit different than especially Ohio and Indiana in the fact that we have a stay. And so, that’s why Kentucky is not seeking emergency relief from the U.S. Supreme Court because we’re protected by the Sixth Circuit stay, but Kentucky is part of the reason our sister states are seeking emergency relief from the U.S. Supreme Court. So Kentucky is very much interested in what happens in the U.S. Supreme Court in Ohio v. EPA. But we are a bit on the outside looking in.

 

The second introductory point that I wanted to make is just to impart from an upwind state perspective how important our SIP disapproval litigation is. We didn’t just file this to gum things up and make it hard for the EPA to impose a follow on federal plan on us. Our agency, in 2019, proposed our SIP, spent a lot of time on it. It’s a lengthy document. A lot of thought and effort went into it, and we did not get a SIP disapproval until almost two years after the EPA’s deadline to act.

 

And surprisingly, when our SIP was disapproved, they relied on an entirely new dataset that we had not gotten the opportunity to utilize. And that dataset changed the sites that we’re linked to, so our state had no opportunity to engage with the dataset that the EPA imposed to disapprove our SIP. The EPA disagrees, but we think that’s a pretty textbook violation of arbitrary and capricious, the standard from the APA.

 

We sued, as I’ve noted, and we’re one of the 12 states that got a stay. EPA’s record in the SIP litigation so far is not very good. By my count, they’ve lost stay motions in the Fourth, Fifth, Sixth, Eighth, Ninth, and Tenth Circuits, although the Tenth is now been transferred to the D.C. Circuit. So the SIP litigation is related to the FIP litigation, but at least in the upwind states’ view, it’s very meaningful litigation.

 

The third point that I’ll make—and it’s just a general observation about the oral argument last week—is I think panelists here, we can disagree about what the right answer is, but one thing I think there may be general agreement about is that it was good that oral argument was held. This is very complicated, and the more the justices can look at this closely and ask questions, I think, the better. One of the more interesting exchanges at oral argument was Justice Kavanaugh getting the federal SG’s office to concede that oral argument was a good thing.

 

In particular, I think several members of the Court are interested in talking about the standard for seeking emergency relief, something that -- we’ve seen a lot more emergency requests. But we haven’t seen a serious -- I guess we’ve seen an argued case, but we need to see more argued cases with more clarification about what that standard is. So apart from the CAA issues that they’re going to resolve, my expectation is that we’ll get some clarity for stay applicants and those opposing stays on how to approach it. And I think oral argument on that issue was a very good thing.

 

Matthew Z. Leopold:  Thanks so much, Matt. Megan, let’s turn to you for your thoughts.

 

Megan Herzog:  Thank you. I’m so pleased to join today to share some insights. I’m counsel for Environmental Defense Fund, which is one of the health and environmental organization interveners supporting EPA in this litigation, though my remarks today, I’m just speaking for myself. And I thought I would also highlight three things about last week’s argument that particularly stood out to me.

 

So the first is I think there’s extraordinary fact that this is a case where the core claim is a procedural one, and there’s not [inaudible 00:16:28]. It’s not a case where the applicant’s main claim is that EPA lacked statutory authority or major question or anything like that. It became clear at argument that what the applicants are instead arguing is that EPA failed to provide enough explanation as to why the rule remains reasonable, even if one or more of the originally covered 23 states struck out as has at least temporarily happened here because of the stays in the SIP litigation.

 

So the applicants aren’t claiming that there’s a practical problem with the 11-state rule, which is working fine, and they even conceded at argument that the number of states might not make any difference. So the real upshot here is that the rule could be valid if EPA had just [inaudible 00:17:17] states dropping out in theory. So I think it’s quite unusual for litigants to seek a stay of a federal rule from the Supreme Court on the basis of a procedural claim like this. And there’s a few reasons. Right?

 

It’s a principle of administrative law that procedural errors only matter if they’re prejudicial. The Clean Air Act has its own particularly robust harmless error rule for very important public health rules like this. And on top of that where we have a rule like this that’s providing health benefits to millions of people, even if there were a serious substantive [inaudible 00:17:52], the rule would typically be left in place while the agency corrects it.

 

So this is even a situation where the remedy that applicants could show a likelihood of winning on the merits is remand without vacatur. So we could have a situation where the Supreme Court, if it stayed the rule now on grounds of then allegedly insufficient explanation, it could actually give the applicants more relief than they would get if they ultimately prevailed. So all of this makes, I think, for an extremely unusual set of applications, and it highlights how one of the consequences of a stay grant here could be to invite more emergency applications to the Court in circumstances where I think many litigators would previously not be entertaining that possibility of granting stay.

 

The number two thing that struck me about last week’s argument was how the Court engaged in balancing the harms, or maybe more rather how it didn’t do so. So the Court -- this is only the third time in the last half century that the Court has heard argument without merits briefing. So maybe it was unsurprising that the justices seemed to fall back into the usual role of acting like it was an ordinary merits argument, but I thought the lack of interest from the bench at least at argument in sifting and weighing the evidence of harms was pretty striking. So this might be typified, for instance, by statements from the bench that harms to regulated industry and to the public and the states who’re beneficiaries of the rule were a wash, that there were states on both sides. And there’s a sense that, therefore, all that’s left for the Court to do is to decide merit.

 

And there were some questions that keyed in on issues of cost, interrogating industry counsel about whether they, in fact, experienced the cost they predicted while there was an effect, but then counsel fell back on the declaration [inaudible 00:19:53] many months earlier. And there was just this sense, I think, that the Court wasn’t yet sure how they should approach the task of assessing the strength of the evidence and rebuttal evidence and how to go about [inaudible 00:20:07]. And there was a suggestion from opposing counsel at argument that the stay standard would be akin to something like checking the boxes of unrecovered [inaudible 00:20:22]. And that standard would, I think, also if followed by the Court here, be not only disruptive to important regulatory programs, but it could, again, invite more emergency applications [inaudible 00:20:34] they might have expected and want to entertain.

 

And the final thing I’ll note that was surprising to me was, I think, the lack of attention to the statutory contents to the stay applications. So as I mentioned earlier the suggestion arose at argument that since both sides claimed harm, everything then turns on the merit. And this premise seems particularly flawed in context of the good neighbor provision where Congress recognized upwind states are getting the benefit of economic activity while exporting [inaudible 00:21:07] who then deal with all the consequences of [inaudible 00:21:14]. And this is an instance where Congress made the judgment that upwind states have to eliminate their [inaudible 00:21:19], and the statute set up the requirement that every area of the country attain minimum standards by particular deadlines and imposes [inaudible 00:21:29] consequences for failure to do that.

 

So in this context, a stay that leaves pollution unremedied would seem really at odds with Congress’s faith [inaudible 00:21:39] judgments in the Clean Air Act, and it didn’t seem to me like the Court at least at argument was really grappling with [inaudible 00:21:50]. And these were all reactions to the argument that may or may not ultimately be reflected in the Court’s decision, of course, but I appreciate the chance to share. And I’m looking forward to hearing the rest of the panel and discussing more.

 

Matthew Z. Leopold:  Thanks so much, Megan, for those insights. Viktoria, let’s turn to you. I think you’re muted at the moment.

 

Viktoria Seale:  Thanks, Matt. Sorry about that. We, too, appreciate being included in this panel discussion today. As Matt mentioned, I’m a regulatory affairs director for the National Rural Electric Cooperative Association, or NRECA, which I use the shorthand since our trade association name is long. We are a party to this emergency application for a stay pending before the Supreme Court. I will say that I’m also going to be making these remarks based upon my own individual impressions on the argument and so forth, but I thought it might be helpful to start out by providing a little bit of background about the folks that we represent.

 

So these are the nearly 900 not-for-profit electric cooperatives that serve 42 million people in 48 states, ordinarily 13 percent of the nation’s population. So we’re an unusual part of the electric utility industry. We are owned by the people we serve, so we’re not for profit. We operate at cost and without a profit incentive.

 

And of course, being based in the communities that we serve, our members are really committed to providing safe, reliable, and affordable electric service. And affordability is really front of mind as well as reliability as our members serve 92 percent of the nation’s persistent poverty counties. So these are areas that are sparsely populated, primarily residential, and often the most expensive and hardest to serve areas of our country.

 

And because of this kind of territory that we cover, our folks are also the ones that maybe can least afford increases in cost. Because of the way that our members are structured as a nonprofit entities, we have no investor equity shareholders who can bear the cost of generation assets or investment in new or alternative generation resources. So consequently, the full burden of regulations that affect our members affect actually their consumers at the end of the line.

 

So turning to the rule and the argument that we heard last week, I might differ a little bit with the previous panelists in that I do think that it wasn’t just procedural issues that were addressed by the applicants but really substantive questions, not just that EPA did not consider a smaller version of the 23-state plan that it originally designed but that it really -- that that kind of goes to the heart of whether or not they would’ve designed the same plan for a smaller group of states. I’d also say that, clearly, a critical issue is this question of irreparable harm, and I think one thing for folks to understand is that even if -- and in this case some of these requirements don’t go into effect until 2026-2027. That doesn’t mean that compliance doesn’t start now or really before when the rule went final.

 

It takes many years for utilities to go through the process of deciding whether to undertake NOx control upgrade projects for specific units. Among other things, they’re going to have to engage in design, engineering, procurement. For our members in particular because they often finance pollution control projects using federal financing, the National Environmental Policy Act is triggered, NEPA. So there are just a lot of different considerations, a lot of different components to coming into compliance with a regulation, and it doesn’t happen three years down the road. It happens now when the rule takes effect that that process has to begin because it is lengthy and there’s a lot involved in it. So just to kind of, I guess, provide that clarity.

 

As far as impressions from the argument, I think that I came away from the argument thinking that the two justices that were maybe the most difficult to read in terms of where they might be going on this stay request is Chief Justice Roberts and Justice Amy Coney Barrett. And their questions didn’t reveal as much as maybe others did, so I’ll stop there and just look forward to engaging in this conversation about the oral argument last week.

 

Matthew Z. Leopold:  Great. Thank you so much for your remarks and everyone’s remarks. And I wanted to just remind folks that before we get into some questioning with the panel here that we will take questions online, and please submit your questions for the panelists through the Q&A function throughout. And we’ll have time for audience questions at the end.

 

So first of all, I want to get back to something that a number of you have mentioned -- is this extraordinary posture that we find this case in where we don’t have a ruling below in the D.C. Circuit yet. Matt pointed out that Justice Kavanaugh quipped about oral argument making this better, but that being said, what are your thoughts about why the Court took this case given that it’s pretty unusual? And I have some of my own thoughts, perhaps the federalism issues, but what do folks think about why the Court deemed this important enough to take this case?

 

Matt Kuhn:  I’ll kick it off. So a couple of things, I think the Supreme Court the last three or four years has been pretty active in looking at big cases about the federal exertion of power. I think that in even doing so some on the emergency docket -- Megan mentioned how unprecedented this is in the last 50 years. But the OSHA vaccine mandate case was the last time that oral argument was granted on a stay application like this. Before that, the time previous was 1971.

 

But again, my point is I think we’ve seen the Court active on the emergency docket in cases that involve federal exercises of power. And so, Alabama Realtors is one. The OSHA vaccine is another. And so, I think it’s consistent, perhaps, with that.

 

I do think the Court has -- also another aspect of this is the agency that was involved, the EPA. The Court has, again, in the last couple of years, seemed pretty skeptical of some things the EPA has done from the Sackett decision involving the WOTUS Rule where the EPA issued a new rule while the case was pending there for a decision. And a key part of that rule got zero votes at the U.S. Supreme Court in the Sackett case. I think West Virginia v. EPA is another instance of that. I do think that the competing theories of harm here made this pretty interesting with the upwind states. The downwind states—clients, like Viktoria’s client -- and I do think that made sort of an -- added an interesting spin to this.

 

And the last thing I’ll say is that I think that the Court is seeing more and more of these emergency court requests. I don’t think anybody would dispute that, and I think taking oral argument to spell out the standard a bit more -- there was disagreement between the parties. You’ve got two frequent fliers and emergency stay requests in opposition. You’ve got the federal SG and you’ve got the states, and we’re active on the emergency docket, both of us.

 

So we’re all there. It seems like a pretty good vehicle to provide some guidance about that, which is why so many of the questions were focused on that. So I don’t think there was any one reason why the Court took review. But I think all of those combined to make this a pretty good vehicle not only to resolve the legal issue that we have here but also some of the procedural aspects of emergency relief.

 

Matthew Z. Leopold:  Thanks, Matt, for that. Anyone else on that question? If not, I kind of wanted to jump into something Matt alluded to which was the standard of review and what is the proper standard of review for a stay application in this posture. There was some suggestion in the briefing that there should be a higher standard, but the justices -- some of them pushed back on that at oral argument. Can anyone offer thoughts about that and where that might be going?

 

Megan Herzog:  I can at least jump in first with some thoughts. So yes, there was a lot of discussion from the bench and counsel at argument about this concept of cert worthiness or extraordinariness and where it fits in with the standard. Is it extraordinary harm? Is it part of the merit standard? How do we judge cert-worthiness in this posture, in this context?

 

And I think the impression left was definitely that this is something that the justices are working through and grappling with. I think, as an observer of that argument, that there was a lot of discussion of this factor but maybe not some particular attention to identifying a particular question of law or fact in this case. But they grappled with those standards, and so I’ll be really interested to see what the Court says in its decision to the extent there is one.

 

But one thing that I noted was also a lot of questioning from the bench, typified by Justice Jackson in particular, about how the failure to identify some kind of cert-worthiness, extraordinariness—however we want to term that within the stay standard—could be to the effect of inviting a flood of emergency applications on the Court’s docket, which we know is something that not all of the justices are interested in. And so, there’s this sort of importance on clarifying this point to think about management of the emergency docket.

 

Matthew Z. Leopold:  Yeah. Go ahead.

 

Viktoria Seale:  I was just going to say, Matt -- just dovetailing with those comments, and I thought that the discussion of cert worthiness, which really is peppered throughout the oral argument -- I thought it got particularly interesting when Justice Barrett started asking the government if they thought that it was cert worthy or would they ever. And I think that it seems that Justice Barrett, not only in this case but in prior cases, seems to really be focusing on this as an element of whether or not there would be success on the merits.

 

Now, whether it’s a separate consideration or it’s just part of that, I think that was a little bit unclear. And you saw that conversation going back and forth in between, I think it was -- and I’m probably going to be misspeaking, but perhaps Kavanaugh and others. And he and Barrett, I think in previous cases, have kind of explored this idea of cert worthiness as well. I’m not sure if it’s necessarily happened orally but in writing as well. And I don’t know if Matt wants to jump in on that, too.

 

Matt Kuhn:  Yeah. So I thought the Barrett questioning on this was fascinating because she was the one in the Does 1-3 v. Mills case that she wrote us a very short separate decision joined by Justice Kavanaugh where she said that cert-worthiness is built into the idea of likelihood of success on the merits. And I think their thinking there was essentially that we’re a court of last resort. You should not be coming to us in the ordinary course. And so, therefore the four-part Nken standard, the four-part stay standard or the four part -- there it was an injunction standard, which is a question of whether that applies here -- but that -- because we’re a court of last resort and these should not be brought to us all the time, and because we’ve got a certiorari consideration, we need to build that in to the merit standard.

 

And I think there was some agreement with Justice Barrett on that. Justice Kavanaugh explained very directly why he thought this was cert worthy. Justice Jackson was also keyed in on that, and so I think there’s an interesting kind of ideological agreement, perhaps, that cert worthiness may be built into this.

 

Now, the state’s position is that this is just a straight-up stay standard and that the cases about this cert worthiness are from an injunction pending appeal standard. And the stay standard’s just different. For example, if you look at the vaccine mandate ruling, that was a stay one, and there was no discussion of cert worthiness there. Yet, they granted a stay. So again, I think that’s maybe one of the reasons the Court took oral argument here is to not only rule on the stay requests but to give guidance to the bench and bar because they’re getting more and more and more of these emergency requests.

 

Matthew Z. Leopold:  Yeah, I agree. That was very interesting exchanges and could have broad, sweeping impacts on the emergency docket of the Court. Turning to some other issues that came up, there were some justices who were reaching out potentially for a way to resolve this on procedural grounds, and for environmental practitioners who practice the Clean Air Act, you’re probably familiar with the Clean Air Act’s reconsideration provision that if something came up after the rule was finalized or promulgated, that commenters couldn’t have anticipated, the Clean Air Act does have a special provision to allow a motion for -- or a petition for reconsideration. This was featured pretty prominently as a potential question about whether petitioners had exhausted their remedies. Any thoughts on that and how the Court might resolve that issue?

 

Matt Kuhn:  Yeah. I’ll weigh in first. I thought that was interesting. Justice Kagan had a really memorable question of Ohio’s deputy SG when she’s like, “There’s a lot of stuff here.” And she said, “And stuff means vehicle problems.” And one of the vehicle problems she pointed out was the reconsideration provision. The CAA has an interesting reconsideration provision, which if something arises that couldn’t have prompted a comment that the Agency could rely on, the commenter can then seek reconsideration. There’s no real timeline. The Agency can do what it wants with it, and then you can sue the Agency in the D.C. Circuit if you want to.

 

But the states pointed out that reconsideration really has a limited ability to stay. It’s only a three-month stay, so I don’t think that’s a really full remedy. Moreover, there were comments about the state implementation plan and the problems with the disapprovals of the SIPs. If you actually look at the final rule under consideration, it deals with those comments. The CAA’s comment provision doesn’t require exactitude. It requires reasonable specificity. And so, I think this was pretty straightforward.

 

On the reconsideration, Justice Alito had a great exchange with the federal government, just pointing out the limits of relief that some motions for reconsideration have, in fact, been filed about these issues. And they’re just sitting there. The Agency hasn’t resolved them. Chief Justice Roberts had a great exchange with the Solicitor General’s Office for the federal government, asking, “Do you plan to think about how the 11 versus 23 changes?” And the answer was no. So although it is, to quote Justice Kagan, “stuff,” I think that, at least in my view—again, I’m biased, and this is just me speaking—I don’t think that’s going to be, ultimately, an impediment to the Court ruling on the stay request.

 

Megan Herzog:  I can just add one thing that I think is interesting about this and going back to -- I’m glad that Matt can raise Justice Kagan’s comments about stuff because I think that sort of highlights how unusual this argument and this case posture is for the Supreme Court where they’re thinking about things like exhaustion bars and whether issues were exhausted in comments and the adequacy of the Agency’s response to comments. And I think that these are the kinds of record-based review type things, these kinds of skirmishes between agencies and regulated parties that are super common in D.C. litigation over these rules but are not something that we typically think of the Supreme Court as engaging in or sort of wanting to engage in.

 

And I think we saw just a little bit of that unusualness in this case where I think this is an extremely complex record, and at times, I think the justices may have got a little caught up in some of the complexities. I think they keyed in on the recon issue in particular, but just speaking more generally, there’s a lot of complexities here. And it’s sort of highlighting the oddness of this sort of record review case being at oral argument in the Supreme Court.

 

Matthew Z. Leopold:  Yeah. And I want to drill down a little bit on this notion of was it possible for EPA to really anticipate that litigation subsequent to the promulgation of the rule would’ve set aside these SIPs, and therefore, they should’ve anticipated that outcome. That was just something a number of the justices were grappling with, and is that proper for reconsideration? What are the limits on what the administrative agency has to look at?

 

Viktoria Seale:  Well, I’ll just say, Matt, that clearly the Agency did contemplate this because they included a severability provision, and that was something that wasn’t included in the proposal but rather appeared in the final. So there seems to be some contemplation of the fact that one of the states could drop -- one of the SIP disapprovals could’ve been found invalid. And therefore, it wouldn’t apply. So the questioning that went on about exactly -- did they need to kind of look at every single permutation of combination of number of states that could be in or out, that, I think, kind of misses the point that they clearly understood by responding in that way and including that in the final rule—that there was some possibility that what they had finalized may not continue as it was.

 

Matthew Z. Leopold:  Well, let me pose this to Megan. What do you think about the argument that with only 11 states participating can there be a coherent federal plan as was initially contemplated by EPA?

 

Megan Herzog:  Well, I think what I would say to that is that this rule was designed to be a remedy for each of the covered upwind states addressed under the rule. And so, what we have is a design and structure that was from the outset designed to be something that applied to each individual state and that was, as EPA noted, specifically in the rule would work fine regardless of some geographics [inaudible 00:43:19] states. And I think this is typified by the point that the Clean Air Act itself contemplates that states can adopt a SIP and a federal plan at any time, that we have a long history of these rules where states come in and out, where we have this sort of contemplation even in this rule itself and that EPA will later come back and add additional states.

 

And so, it’s sort of just infused cohesively throughout the rule. I think it’s hard to find an example of another program more explicitly design to change in coverage of states, but that -- and I think that that, in real time, the Court was kind of grappling with all these complexities and issues. And it’ll be interesting to see when they go back to the [Inaudible 00:44:02] what they think.

 

Matthew Z. Leopold:  Yeah. I think even at one point, the Court or one of the justices pointed out that do we really need to have 23 separate FIPs. Matt, is that really workable or necessary for EPA to do 23 separate FIPs, or what’s wrong with one FIP to address all the states?

 

Matt Kuhn:  Yeah. So I think Justice Kagan brought up that -- or he asked the states are you really requiring the federal government or EPA to contemplate every different permutation. I think the answer to that is pretty clearly no. I think Justice Kavanaugh was sort of the most vocal advocate for this position, but I think Justice Gorsuch hinted at it as well and the Chief Justice did.

 

Part of the problem is, at least from the states’ perspective, that the EPA’s rule said it’s severable but didn’t explain why, didn’t explain how it would work, didn’t explain if there’s some sort of minimum quantum of states that have to be in the rule or not. I think the states’ position is not that you need to consider every permutation; you just need to consider it. You need to give it reasoned consideration under the EPA.

 

And I think one of the most important questions from oral argument was the Chief Justice of the federal SG when he said, “Would EPA have proposed the same rule if the least emitting of the 23 states was the only state that was ultimately in the plan?” And the answer from the federal government was no. Well, so it has to be the case that, at some point, enough states drop out of this that EPA says, “No, the plan doesn’t work.” And we don’t know what that is because the final rule just doesn’t discuss it. It says it’s severable, and it moves on.

 

And as Justice Gorsuch pointed out, it says it’s severable. They added the severability part of this in the final rule, and nobody got to comment on it. And so, not only did they not explain it, they didn’t give an opportunity to comment on it. And so, I think that the notion that EPA should’ve considered every permutation just mischaracterizes what the states view as a problem with this plan.

 

Matthew Z. Leopold:  I agree that a lot of the types of merits arguments that the Court did consider seem to be more APA-type arguments under State Farm and similar cases. I didn’t hear much at all about the technical arguments that maybe industry’s making. Viktoria, how is the Court supposed to get into those technical issues, or can they on this record before the Court?

 

Viktoria Seale:  I mean, I think it’s difficult to get into those technical issues at this stage and generally difficult to get into these technical issues. These Clean Air Act rulemakings are extraordinarily complicated, and in the current posture of the question before the Court, I think they really can’t go there. However, they have to -- as part of that question on will the petitioners likely be successful on the merits, there’s some of that that they’re touching on. But clearly, the complexities of this rule and how it operates and the concerns that petitioners have raised with the lawfulness of it and all sorts of facets of it that are different than prior rules are, I think, just beyond what the Court could get into at this stage.

 

Matthew Z. Leopold:  Right. I mean, can you shed a little bit more light on what industry might be facing in some states versus others? Because there’s complex budgeting and trading in allowances that the Court didn’t really talk much about but the rule certainly features. If it went forward only in 11 states that remain participating, it might create odd incentives or disjointed incentives.

 

Viktoria Seale:  Sure. So as I mentioned earlier, sources have to -- that are still in a state where the underlying SIP rule hasn’t been stayed, need to be determining what they’re going to do to come into compliance with the rule now and taking steps to do so. And of course, as I mentioned, that may include deciding whether to undertake some sort of NOx control upgrade project. However, if a source determines that that’s just not possible—maybe because of features of their site, their particular plant, all sorts of other considerations—they’re going to be forced to buy emissions allowances from other parties, decrease their production, or potentially cease operations altogether.

 

And because there’s going to now be fewer emissions allowances and higher demand due to 12 states being removed from the plan, there’s real potential that that causes a lot of upheaval in that market. And so, there could be a significantly higher premium that these facilities will need to pay in order to obtain those allowances. So there’s just a lot of complexities and impacts that are occurring now. And we have, of course, members who are in states where the SIP disapproval’s been stayed and the EPA has then come in and also stayed the applicability of the rule. And then we also have members who are currently subject to the requirements, so it’s a really complex landscape with now only 11 states being subject to the plan.

 

Matthew Z. Leopold:  I will say complex litigation landscapes are not uncommon in EPA rulemaking contexts. I think for folks who watched the WOTUS litigation, it’s stayed in half the country. It’s not stayed in the other half. There’s multiple district courts considering those cases. But maybe, Megan, to you, notwithstanding that, doesn’t the Agency and the downwind states have a pretty strong interest here that the harm that they’re experiencing in their states needs to be addressed in the near term because otherwise, the upwind states are getting a free ride on the controls in the downwind states?

 

Megan Herzog:  Yeah. That’s exactly right, and I think, Judy Vale, the counsel for New York, laid this out very well at argument. The consequences of the upwind contributions continuing under a stay is that the downwind states will have no remedy even as they continue to face attainment deadlines under the Clean Air Act [Inaudible 00:51:35] that are going to continue to go forward. And for folks who maybe aren’t quite as familiar with the Clean Air Act, we have [Inaudible 00:51:43] set up here where states are required to meet the national air quality standards, and they’re judged based on their highest ozone days in prior years.

 

And then these deadlines continue throughout time, and so at any given moment it’s really important for these downwind states to have significant contributions from upwind states eliminated as they’re trying to meet their air quality standards. And the consequences for failing to meet air quality standards are not just that their residents are breathing unhealthy air, which is [inaudible 00:52:17] epidemic cost but also that there are statutory consequences that ratchet it up for the downwind states that actually require them to impose further economic [inaudible 00:52:28] on industry in their own state. So this isn’t a case where those burdens would be lifted on downwind states under a stay. The attainment compliance would continue to rule, and they’d continue to be subject to these consequences.

 

And so that’s sort of in the background, I think, of the harm balancing in this case, too. It wasn’t clear that the Court was considering a lot of that during the argument, but it's certainly in the papers. And that’s something that I hope they all will give really due consideration to as they reach their decision.

 

Matthew Z. Leopold:  Yeah. That’s right. It wasn’t a lot of discussion of what the downwind states are facing because the ozone acts are not stayed while this litigation’s going on. EPA’s going to continue to require all states to come into compliance with the Ozone Act standards. So that is ongoing in the backdrop against what the downwind states are arguing. But it does kind of raise maybe a question.

 

I’ll throw this to Matt. If the Good Neighbor Plan is stayed altogether, it has baked into it compliance deadlines that are going to pass during the pendency of the litigation likely. Right? And then, of course, the big question is industry is not going to invest in controls until it knows the outcome and it has certainty on what the obligations might be. How is the Court supposed to handle those deadlines and effective dates built into the rule?

 

Matt Kuhn:  So I think that’s largely, at least in our view, a problem of EPA’s own making. EPA, of course, had the legal authority to immediately impose this federal implementation plan so soon after denying all these state implementation plans. But they didn’t have to. They had a two-year window within which to work. Concerns about downwind states, EPA delayed almost two years past their statutory deadline to act on Kentucky.

 

So I think EPA talking about downwind states, they don’t come to it with clean hands. If it was such a concern, they shouldn’t have delayed two years past. So I do think that the downwind states concerns are, of course, baked in to what we’re going to -- baked into the applicable standard. I think everybody agrees with that. I do agree with Megan; there wasn’t as much discussion of that particular point at oral argument, though New York’s counsel did do a good job, I thought, of focusing the Court on that.

 

Matthew Z. Leopold:  Good. I do have one question from the audience here, and it goes back to what we were talking about earlier about why the Court might be motivated to hear this case. And the question is: is the EPA the agency that has the most decisions against it overall? If so, is this because they most frequently go past their authority? And so, I think the questioner’s getting at -- is there some skepticism of some of EPA’s actions developing at the Court? Anybody want to tackle that one?

 

Megan Herzog:  I don’t have a tally of the respective agencies’ win/loss rate in the Supreme Court recently, but I think it is fair to say -- as any just even neutral observer of the Court I think would recognize that this Court comes to cases involving EPA with, it seems like, some particular skepticism. And I think that sort of brooding sense that whatever happened here it was certainly EPA’s fault was something that came through for me in kind of hearing some of the questions from the bench at argument.

 

And so, perhaps that’s a starting position, but this, just to reiterate, is really not a case about EPA’s expanding the bounds of its statutory authority. It's really, at least in the core claim that applicants have raised, much a more procedural, as Matt was saying, APA-type case. And so, I think that really distinguishes it from some of the past cases that the Court has taken.

 

Matthew Z. Leopold:  Thank you for that. Well, we’re getting close to time, so I do want to wrap up and give everyone an opportunity to make some predictions if you’re interested. How do you think this case is going to turn out? Matt, we’ll go to you with that.

 

Matt Kuhn:  Thanks for starting with me there. So a couple things. The first thing is the fact that there was such a lag between the applicants’ applications being filed and oral argument being scheduled -- my memory is the applications were briefed November 1, and we didn’t get an oral argument until February. I think that suggested that, perhaps, the justices may have already exchanged some drafts and that in exchanging drafts they realized they wanted to have oral argument. So I do think that we could see a quicker decision. If I had to guess, this is not an end-of-June decision, especially given the lag between the applications being briefed.

 

On a prediction, I can’t give you a vote breakdown. I agree with Viktoria that the hardest members of the Court to read were the Chief Justice and Justice Barrett, and so I’m really interested to see where they come down. And either or both of their votes could prove dispositive. So I think that’s about -- I think that a lot of the media coverage has suggested that it’s more likely that the applicants are going to get a stay, but these are hard cases.

 

And I think one of the things that was enjoyable for me, as a guy who struggles to understand the Clean Air Act, even though I’m litigating it, to see the justices struggle just gave me a shot in the arm to say, “Hey, it’s not you. Even the height of our judicial system is struggling with the same issues that you’re struggling with in Frankfurt, Kentucky.” And so, I think that was, for CAA practitioners like me -- I enjoyed seeing the justices struggle a little bit, and I think that’s good for practitioners and I think for the American public to see as well.

 

These are hard questions. They’re consequential. They matter. They affect upwind states. They affect downwind states. And so, to go back to my point at the beginning, it’s great for the public to see the justices struggling with these deeply consequential questions that are going to affect states from sea to shining sea.

 

Matthew Z. Leopold:  Yeah. Viktoria, we’ll go to you for closing thoughts.

 

Viktoria Seale:  It’s hard to top Matt. I think he just really summed everything up, and it is a consequential case. I do agree with him that because there has been such a lag in timing that I would expect to see a decision from the Supreme Court sooner rather than later. But I won’t make any predictions beyond that, but look forward to the outcome and appreciate the opportunity to participate in this discussion.

 

Matthew Z. Leopold:  Thanks, Viktoria. And Megan, we’ll give you the last word.

 

Megan Herzog:  Thanks. Like Matt, I, too, was listening carefully to hear Justice Barrett’s and Chief Justice Roberts’s questions, and I don’t think I can predict how this one will turn out. I hope, personally, that they will deny the applications, but maybe one thing that we can all predict is that in cases on the emergency docket, there’s often not accompanying opinions. There’s a one sentence [inaudible 01:00:19], but it seems like this is likely to be a case with, perhaps, multiple opinions written with some reasoning that provides some light on how the Court sees the docket at this point. That would be really interesting.

 

Matthew Z. Leopold:  Great. Well, thank you so much, panelists, for a fascinating discussion, and we’ll, of course, be watching to see what the Court does with this one. With that, I’ll turn it back over to Emily to close us out.

 

Emily Manning:  On behalf of The Federalist Society, thank you all for joining us for this great discussion today. Thank you also to our audience for joining us. We greatly appreciate your participation. Check out our website, fedsoc.org, or follow us on all major social media platforms @fedsoc to stay up to date with announcements and upcoming webinars. Thank you once more for tuning in. And we are adjourned.