In January 16, 2018, the comment period will close on the Environmental Protection Agency’s notice of proposed rulemaking (proposed rule), issued in October 2017, that would repeal the Clean Power Plan (CPP), an Obama Administration rule that would have regulated greenhouse gas emissions from electric power plants. The Supreme Court has ruled three times since 2007 that EPA has the authority and responsibility to limit greenhouse gas emissions under the Clean Air Act. When the Obama Administration promulgated the CPP in August 2015, EPA viewed it as “confirm[ing] the international leadership of the U.S. in the global effort to address climate change.” The CPP was also the subject of high-profile litigation following its issuance. The CPP was famously stayed by the Supreme Court in February 2016, just before Justice Scalia’s passing. And litigation challenging the CPP remains pending in the D.C. Circuit, which heard the first and only oral argument in the case sitting en banc (a rare occurrence) in September 2016.
The Trump Administration’s proposed rule to repeal the Clean Power Plan disagrees with the Obama Administration’s previous interpretation of Clean Air Act section 111(d). The Obama Administration interpreted section 111(d) to allow it to require compliance with overall emissions limits that effectively require changes outside the “fence line” of power plants, including shifting power generation to cleaner sources from sources deemed to be less clean. In the Trump Administration’s view, section 111(d) is limited to authorizing EPA to require the best system of emissions reduction (BSER) achievable through technological improvements within individual power plants. The Trump Administration’s proposed rule also reassesses the cost of complying with the CPP, which opponents had argued was improperly minimized by the Obama administration. EPA has not yet proposed an alternative rule to replace the CPP, but EPA has stated that it intends to issue an Advance Notice of Proposed Rulemaking in the near future that will solicit information on systems of emission reduction that are in accord with the legal interpretation set forth in EPA’s proposed rule to withdraw the CPP.
With the comment period closing shortly, a number of important legal and policy questions are now on the horizon, including these: (1) likely next steps in the still-pending litigation challenging the Clean Power Plan; (2) the administrative law issues and litigation possibilities that are likely to arise when and if EPA proceeds with its proposed repeal of the CPP; and (3) questions about the options that the Administration has for crafting a proposed replacement rule; and (4) questions about the prospects for litigation challenging any such replacement. EPA, industry parties, and non-governmental organizations all have strong and disparate views on the substantive legal and policy paths that EPA should pursue to comply with its statutory obligations and protect the environment, without imposing inappropriate burdens on regulated parties.
David Doniger, Director, Climate & Clean Air Program, Natural Resources Defense Council
Tom Lorenzen, Partner, Crowell & Moring LLP
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Dean Reuter: Welcome to the Federalist Society's Practice Group Podcast. The following podcast, hosted by the Federalist Society's Environmental Law & Property Rights Practice Group, was recorded on Wednesday, January 3rd 2018, during a live Teleforum conference call.
Welcome to the Practice Groups' Teleforum conference call as today we discuss the Clean Power Plan. I'm Dean Reuter, Vice President, General Counsel and Director of Practice Groups here at the Federalist Society. Please note that all expressions of opinion are those of the experts on today's call. Also, this call is being recorded for use as a podcast in the future and will very likely be transcribed.
We are very pleased to welcome two experts to today's call. We're going to hear opening remarks from each of some 10 to 15 minutes and then questions from the audience. We'll hear first from Tom Lorenzen. He's a partner at Crowell & Moring right here in Washington D.C., I believe, and he'll be followed in opening remarks by David Doniger. He's the Director of Climate & Clean Air program at the Natural Resources Defense Council. Let's begin with background and then his opening remarks.
Mr. Lorenzen, the floor is yours.
Tom Lorenzen: All right. Thank you very much and good afternoon everyone. Happy New Year. I'm going to start by giving everyone a little bit of history of the Clean Power Plan, where it originates. I'll give that with a little bit of insight because I was actually the person at the Department of Justice who was in charge of defending the government in the Massachusetts versus EPA case, and later in what became the UARG versus EPA case at the Supreme Court Coalition versus Coalition for Responsible Regulation versus EPA, which dealt with the first suite of greenhouse gas regulations.
As you may all recall back in 2007, the Supreme Court first delved into the issue of greenhouse gas regulation holding in Massachusetts versus EPA that the term pollutant within the meaning of the Clean Air Act was capacious and could readily encompass the idea of greenhouse gases as pollutants in part because pollutant was defined as something that could affect welfare as well as health, and welfare was very specifically defined in the act to include both effects on weather and climate, hence [GHC's 00:02:19] work within the ambit of that term pollutant.
After that we came to what I think is a very important case for consideration of where the Clean Power Plan goes from here, and that is the American Electric Power versus Connecticut case in which the Supreme Court held that federal common law nuisance suits against greenhouse gas emitters like power plants were essentially displaced by the Clean Air Act, both because of the existence of authority for EPA to regulate greenhouse gases generally, and because, as the court noted in that case, EPA was in the process of regulating greenhouses gases. It had at that time proposed the first suite of regulations.
That takes us to the third Supreme Court case, UARG versus EPA, in which the Supreme Court reviewed the D.C. Circuit's decision in Coalition for Responsible Regulation versus EPA, that had upheld that first suite in its entirety. The Supreme Court in UARG upheld most of that first suite of regulations. This was the vehicle, Light-Duty Vehicle Greenhouse Gas rule, but it struck down EPA's attempt to tailor how the Clean Air Act applies to stationary sources of greenhouse gases, finding that EPA's attempt to raise the numeric thresholds for regulation, from the statutory levels to a much higher level, could not be squared with the statute.
There's a very important statement in the UARG decision from the Supreme Court that I think is worth repeating here, because it becomes important later when the Supreme Court takes up the Clean Power Plan on a stay motion. What Justice Scalia and the majority said in the UARG is that "... when an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism. We expect congress to speak clearly if it wishes to assign to an agency decisions of vast economic and political significance."
So this is what we call the Clear Statement Test where you're dealing with very significant regulatory issues such as control of greenhouse gases. The Supreme Court has indicated it's going to expect congress to speak with clarity and some precision about how it intends the agency to proceed. So, one final note about the UARG case that I think David will point out if I don't, and that is that some did seek review by the Supreme Court during that case of EPA's finding that greenhouse gases do pose an endangerment to public health and welfare, and the Supreme Court specifically declined to take up that issue, so that may come up in questions later. I'm not going to further address it right now, but I think it is very well worth noting.
So that leads us to the Clean Power Plan which was promulgated in 2015 with the intent of achieving a 32% reduction in greenhouse gas emissions from 2005 levels by 2030. What it proposed to do was apply Section 111 of the Clean Air Act, which is generally about new and existing source performance standards to existing power plants through four building blocks, or actually the final three building blocks. Building block 1 being individual unit heat rate improvements, building block 2 being generation, shifting from coal-fired units to natural gas-fired units, and building block 3 being a shift from fossil fuel-fired units to renewable resources such as wind and solar.
And the big question in this case, and there are many — I just want to focus on the big, is whether EPA can require generation shifting under the authority of Section 111. In other words, is Section 111 about what you can do technologically or operationally to a single unit to improve its emissions performance, or can it be used, as EPA purported to use it in the Clean Power Plan, to shift generation from higher emitting units to other units perhaps owned by other people or other entities, that have lower emissions?
The Clean Power Plan was challenged in October 2015 immediately upon its publication in the Federal Register, and the challengers, including my clients, the Rural Electric Cooperatives, immediately sought a stay from the D.C. Circuit of that rule pending judicial review. That stay was denied and the challengers, in a somewhat extraordinary move, went to the Supreme Court seeking its review of the D.C. Circuit's denial of the stay motion. In another extraordinary move, the Supreme Court, on February 9th 2016, granted that motion for a stay, something the Supreme Court has never done before and has not done since. So the Clean Power Plan became stayed for purposes of implementation and enforcement in February 2016, and it remains stayed to this day.
The case returned to the D.C. Circuit where they took briefing and then heard argument on a case en banc in September of 2016. Again, that is extraordinary. The D.C. Circuit has typically heard cases before three-judge panels before ever considering whether the case should be heard en banc, but this case the court deemed sufficiently important, likely because of that Supreme Court stay to take it en banc in the first instance.
We are now well over a year past that oral argument, and we have no decision because of the election of Donald Trump as President and because of EPA's indication, both informally and now formally, that it intends to reconsider the Clean Power Plant. There has therefore been in abeyance since the spring of 2017 while EPA reconsiders. Normally such abeyances, pending reconsideration, are long-term abeyances. The D.C. Circuit, however, has proceeded very cautiously here, granting abeyances on a rolling 60-day basis with each new abeyance being extended only after a report from the government indicating the progress that it is making towards revisiting that rule. I think that this too is due to the fact that there is a Supreme Court stay and the court is wary of having that stay continue in perpetuity without some assurance that the agency is going to act to revisit the rule.
Now we have two new actions from the administration on which it is seeking public comment. The first is a proposed rescission of the rule that argues that the rule was unlawful, as EPA currently interprets the Clean Air Act, because it proposed to regulate beyond the fence line of the individual facility. Comments on that proposed rescission are due by January 16th. On January 18th, EPA followed that up with an advanced notice of proposed rulemaking in which it seeks comment on what might be the form of a replacement rule. For instance, would that replacement rule be a building block 1 heat rate improvement rule, or might it be something else? And also, what should be the division of authority between EPA and the states in implementing such a rule? That's the historical background.
Very briefly, since I have taken a good deal of time to give you that background, let me just focus on the legal issue here that I think is key to this, and that is what is the scope of EA's authority under Section 111? I am not going to get into a debate today, at least pending questions, about whether EPA has authority to regulate greenhouse gases, whether there is endangerment. To me, this is a question of what authority did congress give EPA in Section 111?
If you look at Section 111, it is very clearly labeled "new source performance standards". They are standards that are applicable to an individual source, and an individual source is defined very particularly by the statute. The statute says, in Section 111 A3, that a stationary source is a building, a structure, a facility, or an installation, which emits or may emit an air pollutant. It is not a conglomeration of sources, which is what EPA's Clean Power Plan purported to do.
EPA, in the Clean Power Plan, deemed the source to be basically co-extensive with the owner and operator of that source, and therefore anything the owner or operator could do, such as investing in wind or solar, or buying credits from someone else, was deemed by EPA to be something that the source itself is doing. I think that is a wrong interpretation and I note that the statute actually defines the owner and operator as something that is quite separate from the source. The owner and operator is defined, in Section 111 A5, as the person who owns, leases, operates, controls or supervises a stationary source.
If congress had intended the owner and operator to be the same as the source, you would've expected owner or operator to be included within the various things that are used to define the stationary source itself: building, structure, facility, installation. It would've also said, "... or the owner or operator of such." It does not and I think that's quite telling.
So, to my mind, what EPA is limited with is the authority to impose technological and operational requirements on the individual source to improve its emissions performance. It was not intending to limit the hours of operation of a source, or to limit the number of units of a good [inaudible 00:13:18] electricity that a source could produce. That is the purpose of other provisions of the statute, such as the National Ambient Air Quality Standards, but that is not the authority that EPA invokes for the Clean Power Plan.
And I think that is where I will stop and turn it over to David to fill in and to offer his rebuttal.
David Doniger: Hi, this is David Doniger with Natural Resources Defense Counsel, and I appreciate the chance to be here with the Federalist Society, once again.
You might not be surprised I have a different view. In my view, the EPA, the current EPA, is misinterpreting the Clean Air Act, misrepresenting how the power plants operate in the real world, and cooking the books on the science and the economics. Scott Pruitt frequently says that he wants to provide more regulatory certainty, but the proposed repeal is only magnifying the power industry regulatory uncertainty. If the administrator finalizes the proposed repeal, he'll be in clear violation of the Clean Air Act, and the regulated industry is not going to have a very clear idea of what is expected in the future.
Same goes for the potential replacement proposal. In our view, the repeal proposal imagines non-existent legal restrictions on EPA's authority to adopt emission limits that apply to the individual power plants, and it ignores EPA's authority and responsibility to issue standards that are receptive and that economically reduce power plants' carbon dioxide emissions. The proposed repeal rejects common sense regulatory tools that EPA and states have used for more than three decades that reflect how power plants actually operate, and that have broad support in the power industry.
Section 111 D of the Clean Air Act requires, as Tom said, "... the administrator to establish emission guidelines that set performance standards for existing power plants that reflect the pollution reduction that can be achieved using "the best system of emission reduction." That includes taking into account costs and other factors." The goal of this, like many other Clean Air Act provisions, is to reduce dangerous air pollution as effectively as possible at reasonable cost.
Now, EPA has long recognized the fundamental characteristics of the power sector that differ from most other categories of stationary sources. Power plants are interconnected to the grid, they operate independently to supply just the amount of overall electricity that's demanded by users across the grid from moment to moment, for all kinds of power generators. Both those that are polluting and those that are pollution-free contribute to the generation mix, and when one operates more, another operates less. There's no other industrial category that has these characteristics.
With broad industry support over the last 30 years, EPA and states have developed and employed market-based tools, including emission reduction credit systems that fit the way power companies operate to efficiently regulate their pollution. The Clean Power Plan recognized that these characteristics of the power sector, and these regulatory tools, must be taken into account in interpreting the statutory terms' best system of emission reduction, and deciding on emission levels that plants can meet at reasonable cost.
So here's where Tom and I differ. The Clean Power Plan's central regulatory requirement is a carbon dioxide emission limit, a rate limit, for each individual coal or gas-fired power plant, which that plant can choose to meet, at reasonable cost, by accommodation and measures, by adding technology or switching fuels at the plant itself, or by using emission credits generated by the operation of some other lower-emitting plants on the interconnected grid. That definition of the best system of emission reduction accomplishes more emission reductions at lower cost, and with more flexibility for plant owners and operators, than is possible under the administrator's proposed reinterpretation.
Mr. Pruitt wants to lock the agency into an interpretation that produces the same emission reductions, only at much higher cost and less flexibility, or, much more likely, that produces little or no emission reductions within the same cost range or less. That is a strange result, and it places a high burden on the administrator to show hard legal obstacles that require this constricted, expensive and ineffective approach. Why is it reasonable to adopt this interpretation when in the Clean Power Plan alternative that he wants to reject, fits with the power industry's realities, follows long-established regulatory approaches developed for that industry, and produces more pollution reduction at lower cost?
So, let me just say, there are no such hard legal obstacles in Section 111, nothing in the terms applicable to or at a source. These are, in quotes: "applicable to," or "at" a source. Nothing in those terms compels the proposed constricted interpretation. The Clean Power Plan's emission limits that I described apply to and are achievable by each individual source using the combination of technology, fuels and emission credits that it chooses. Nothing in the terms that its system of emission reduction compels the proposed interpretation. These terms don't limit standards to in-plant technology and fuel choices only.
Credit systems have been used for decades. The Supreme Court specifically approved emission standards, then incorporated a credit system to achieve significant emission reductions under similar statutory language of Section 110 in a case called EPA versus EME Homer City Generation. Nothing in the act definitions supports the proposals' distinction between a power plant and its owner or operator who is, by law, responsible for the power plant's compliance. Section 111 D clearly provides for EPA to determine the level of reductions that a, quote, "satisfactory" unquote, state plan must achieve.
Finally, there is no judicial requirement or a clearer statement of authority than the Clean Air Act already provides. In particular, the idea is that the Clean Power Plan is of such magnitude that congress surely would've said something more specific. Well, that premise is wrong because the Clean Power Plan is actually quite readily achievable and doesn't have the major talking impacts that the challengers claimed. So even under this idea that decisions of huge moment need some special clarity, I don't think this is a decision of huge economic or political significance.
We're obviously disappointed that the D.C. Circuit didn't rule after the September 2016 oral argument. They have been dolling out their abeyances, as Tom indicated, in short-term, 60-day increments, so at least that's some indication that there's some on the court who are uncomfortable letting this drift on and on, and if the agency continues on the current path, there's at least a possibility that the D.C. Circuit will issue its ruling in the original case still, or otherwise intervene to speed things up.
Meanwhile, we're preparing comments on the repeal proposal, which are due January 16th, although I think there's an expectation that deadline will have to change since the administration has promised three more public hearings, and the law requires 30 days to pass after the last public hearing before the common period may close. Further, the advanced notice of the replacement proposal is up for comment now. I think the comment is scheduled to end at the end of February, but that's not even a proposal, so the agency has not even made clear yet whether it intends to produce a proposed replacement rule or to go final with a final replacement rule. This story is a long way from being over and, when it is, we'll see them in court.
That's the end of my opening.
Dean Reuter: Thank you very much, gentlemen.
This is Dean Reuter again. Let me open the floor to questions right away. We'll let people begin to queue up. I might have a question or two of my own. But in a moment we'll all hear an announcement that will say the floor mode is on. After you hear that announcement, push the star button and then the pound button to indicate that you have a question.
So once again, if you have a question for either of our guests, push the start button and then the pound button on your telephone. We'll get to the questions in just one moment.
I want to go back briefly to Tom Lorenzen and give him a chance to respond, and then maybe to David Doniger, once again. But one thing that caught my ear that I think I heard David Doniger say was that repeal of the current rule by the EPA would be a clear violation of the Clean Air Act. So, Mr Lorenzen, in your remarks, if you could speak to that and then take a minute or two and talk about any other issues you heard from Mr. Doniger.
Tom Lorenzen: Okay, I will. Yeah, a few things. Let me respond specifically to that first. Section 111 does require that there be a rule for existing sources once there is a rule for new sources, and that continues to be a rule for new sources on the books. It was not stayed by any court, it requires partial carbon captured sequestration for new coal units and NGCC natural gas combined-cycle for new gas units, and when there is a rule for new sources, EPA is obligated by the statute to promulgate a rule for existing sources.
Now, the statute doesn't say anything about the temporal connection between the two, and so if EPA repeals or rescinds, pardon me, the current rule and does not immediately replace that with an existing rule, I don't think that that would itself constitute a violation of the act. EPA has out there an ANPR for a replacement rule, and we'll see what EPA does with that.
There are a couple of other things that I just wanted to know in response to David's comments. He noted, correctly, that there are a lot of things that utilities are doing voluntarily to shift generation from coal to gas and from fossils to renewables, and there are many things that those utilities are doing not just voluntarily, but as a consequence of state renewable portfolio standards and other state laws and regulations. The fact that the sources may be doing that voluntarily, or because the states require them to, does not itself give EPA the authority to require them to do that itself. EPA's authority is always dependent upon what congress specifically puts in the statute.
I think the fact that the Supreme Court stayed the Clean Power Plan, an extraordinary order, is indicative of the Supreme Court's discomfort with the paucity of authority upon which EPA was founding its rule. And so I think that there is in fact good cause for David to be concerned that if the Supreme Court were ever to review the Clean Power Plan, as promulgated by the Obama administration, it would not survive judicial review because it conflates sources with owners and operators and because it goes beyond the fence line, something that EPA has never done before and did not even do in the New Source rule.
The New Source rule is an inside the fence line rule. One can debate whether carbon captured sequestration has bee adequately demonstrated to be available, but it is the sort of standard that at least is within how EPA's traditionally interpreted its authority under Section 111 of the Clean Air Act.
Dean Reuter: Mr. Doniger, give you a minute or two to respond there, and is that what you meant when you said that repeal of the current rule by the current EPA would be a clear violation of the Clean Air Act?
David Doniger: Well, what I believe is that there is a clear duty to, and Tom pretty much summarized the same thing. Once there's been an endangerment determination, and a determination as it was in the New Source rule that power plants are, obviously, a major contributor to the pollution that endangers public health and welfare, then there is a legal duty to issue a standard. At least two judges of the D.C. Circuit, Tatel and Millett, made a point in a statement that accompanied one of the 60-day extensions, that we've had so far, of noting that the delay itself may create a legal problem because there is this duty to curb this pollution.
So I don't think that the administration can just take its own sweet time about this and repeal without a replacement or repeal without an effective replacement. To substitute a plan for a plan that was going to reduce carbon pollution by a third, a replacement plan that would reduce it by a percent or two, is not an adequate replacement. And, like I said, we'll see them in court about this if that's the way this transpires.
I also think that Tom and others read way too much into the Supreme Court's stay. Yes, it was exceptional, it was unusual. It came five to four on not just the premise from the challengers that what EPA had done was contrary to law, but also that it would reek enormous immediate harm upon states who would be required to start writing their implementation plans.
Another interpretation of what the Supreme Court did is that in the expectation that the D.C. Circuit, which had expedited the case, would rule promptly and then questions of appeals would be coming to the Supreme Court in due course, the Supreme Court thought that it made sense to pause the implementation while the litigation over the validity of the plan went forward. Instead, as a consequence perhaps of the election, we're in a limbo that the Supreme Court certainly didn't anticipate, that no one anticipated, where it is normally the case that any administration can reconsider the rules issued by a prior administration, but you do that through the administrative procedures. And while you do that, the ordinary rule is that the previous regulation remains in effect, and that is in fact the rule being followed by the courts and, maybe reluctantly, by the new administration in other areas like methane, like the New Source rule for power plants, like vehicle standards, and so on. But this is the one case where the existing rule is in limbo and yet there are no new rules.
It's a very unfortunate situation, highly unprecedented, but I think it's wrong to conclude that a majority of the Supreme Court has its mind made up on the interpretation of the Clean Air Act. The Environmental Protection Agency, or, let me say, our side, actually, tends to win in the Supreme Court on Clean Air Act issues. Sometimes our side is aligned with the Environmental Protection Agency; not now, of course, but our side has a pretty good track record in the Supreme Court on Clean Air Act interpretation. I'm not counting our chances out.
Dean Reuter: Very good. We've got three callers with questions in the queue, so let's turn to the audience now and take our first question of the day.
Brendan Kirby: Hi, this is Brendan Kirby from LifeZette. Thanks for doing this.
I guess probably what most regular people hear the most about with these legal issues and regulatory battles is how much it actually could impact their bottom line. I was wondering if both of you could give a sense for what the cost would be for consumers under the original Clean Power Plan versus the alternative that the Trump administration is developing. Do you have a sense for either in the aggregate, or in terms of cost to the average household or something like that, what the differences will be?
Tom Lorenzen: Well ... this is Tom ... I do not actually have an answer to that for you. I'm not an economist and I haven't tried to develop those sorts of figures. I think it's worth noting, and David would certainly agree with this, that the utility industry had already significantly shifted generation over to lower-emitting sources. I think we are more than halfway to that 32% emission reduction target just from voluntary and state measures without significant uptake in consumer prices, but it's the next set of shifts that becomes incrementally more expensive.
David Doniger: Well, I can reflect on the economic analysis that the EPA put forward in support of the Clean Power Plan. They project, in 2030, things would ramp up till then, but in 2030, just as a snapshot, that the net cost would be around $8 billion and the benefits are a combination of the benefits of reducing risks of climate change, the benefits of reducing respiratory illnesses and deaths from sulfur dioxide and ozone, particularly the ozone pollution which come from coal-fire plants and would go down as a co-benefit of carbon reductions. But those together, the carbon benefits and the other pollutant benefits, were worth about $50 billion a year in public health and public benefit, as a against 8 billion in costs. They also projected that the uptake in the use of energy-efficient appliances and improvements in our buildings, and so forth, would mean that the average home owner's bill would actually go down rather than up in this period.
Tom has already made the point that the industry is already largely on the pathway to meet this to market trends and state regulations. It's very, very hard to make the case that the Clean Power Plan was an overly ambitious reach. In fact, the right thing to do now would be not to repeal it, but to strengthen, because the purpose of the Clean Air Act is to go further than market forces will take us on their own when you have serious pollution hazards that the marketplace is not covering on its own.
Dean Reuter: Once again, if you have a question, push the star button and the pound button on your telephone. We still have three questions pending, so let's turn to the next caller.
Leo Dombrowski: Yes, hi, this is [Leo Dombrowski 00:36:10], Chicago Chapter member. I know there's been a lot of dispute about the cost and benefits of the Clean Power Plan and EPA's estimates, et cetera. I have a question regarding the effectiveness of the plan.
A couple of years ago, Gina McCarthy, who was then head of the U.S. EPA, testified in front of congress, as did a few others from U.S. EPA, and they testified that at best, the Clean Power Plan would reduce global temperature by only 1/100th of a degree celsius. Since that is the case, why would we go about spending all this money, killing who knows how many jobs and redoing the ways we generate electricity for really no effect on global temperature?
David Doniger: Well, let me take a crack at that. This is David Doniger. First of all, any one measure to deal with a global or climate change problem is going to look relatively small on its own, but when you put them together, you get a much bigger effect. And when the United States shows its bona fides and its willingness to act, that actually triggered a global movement to action from China, from India, from all the other important players. We were on the road, in fact the rest of the world still is on the road, to significantly changing the emissions forecast, the emissions future, and moving away from the continued growth of fossil fuels.
Second thing I would like to take issue with, your premise that this is costing American jobs. Actually, the fastest area of job growth in the United States is in clean energy. This is where the jobs growth is. There are three times as many jobs in clean energy as there are in the fossil fuel extraction industry. Even in the coal industry, the future is for fewer jobs, even apart from these questions, simply because coal companies continue to replace workers with machines. So if you want to look for the new jobs in this country and the employment future, you need to move towards clean energy and away from the older technologies in the power sector.
Tom Lorenzen: Let me now respond to that, and I'm going to take off my private lawyer head and put on my old DoJ head. It's a very interesting question, but I think it's somewhat of a red herring, and to this extent I will agree with David. It's not about how much or how little impact a particular regulation may have. A lot of EPA's regulations are built incrementally on top of one another to achieve environmental improvement, but it also points out a flaw with what EPA did here and what David has been arguing, which is that a replacement rule, a building block 1 rule, would not be legally sufficient because it only achieves a few percentage points reduction in emissions compared to the Clean Power Plan, which is supposed to achieve 32%. That is utterly irrelevant.
I think one of the big errors that EPA made in the Clean Power Plan was starting with a number that they wanted to achieve. President Obama had touted that he wanted to achieve 30% emission reductions by 2030. Gina was able to crank that up to 32%, but it's irrelevant. You start by defining the technology, the system of emission reduction the source can use, and then you build from there what the level of reductions is going to be at that standard.
I think it's also just very interesting to note that the standard that EPA proposed for existing plants, the most challenged plants in terms of meeting a standard, 1305 pounds of CO2 per megawatt-hour for a coal-fired plant, is actually lower than the standard that even the newest coal-fired power plant, including employing carbon capture sequestration, was supposed to meet. 1400 pounds per megawatt hour. Simpy not possible, So this actually goes to a point that David put out earlier that, well, plants can do this by shifting generation. Plants can only meet the standard by shutting down or by curtailing their production in favor of someone else, something that's not even demanded of new plants.
So I think, again, the focus on how much reduction does it achieve is a red herring because that's not what this part of the statute is about. That's what the National Ambient Air Quality Standards are about, not the New Source Performance Standards.
David Doniger: I have to disagree with several points there, my friend, Tom. First of all, I'm not aware at any point that President Obama dictated the reduction that was to be achieved and the EPA went off to achieve something else. It was built from the bottom up. The 30% number, as I recall, was the number that EPA thought would come from the proposal by 2030, and that's the number, if President Obama mentioned 30% at any point, that's the reason he mentioned it because that was the number proposed.
Now, I also disagree with the notion that you don't care about or you don't look for the way to achieve the largest possible reduction you can at a reasonable cost. That's inherent in the term "best system of emission reduction". It's inherent in the term "standard of performance" which is an emission limitation that reflects the best system of emission reduction at a reasonable cost. I'm paraphrasing the section, but I think you'll find it accurate in substance.
It's actually possible, if EPA were to take this, with the approach that some are recommending, that you could actually have more pollution rather than less as a result, because if you make existing coal-fired power plants more efficient, they will be more economic to run and they will displace cleaner resources from the dispatch order, so you may get counterproductive results from the very proposal that Scott Bruitt is considering.
Lastly, even within this idea of measures that are available to the plan itself, yes, I mentioned credit measures, but I also mentioned technology and fuel changes. Now, coal plants can burn gas. Sometimes they do when the gas price is low enough, just on economic grounds alone. It's not the best way to burn gas. It'd be better to burn gas in a combined-cycle gas plant, but coal plants can burn gas, and when they do that they produce remarkably lower CO2 emissions.
Coal plants can also install carbon capture technology. Now, if everyone had to do that, that's probably too expensive, but if a few did that and others gleaned credits from those that did it, you might have a very economic proposition. So there are ways that coal plants can reduce their emissions much more substantially than one or two per cent efficiency improvements, and there are ways that they can do so even more cost-effectively by using credits from uprating or further operation of cleaner sources across the grid. That's the way it works.
Dean Reuter: Once again, if you have a question ... we've got about 15 minutes left, two questions pending, push the star button then the pound button on your telephone. Let's check in with another caller.
Robert Henicky: Gentlemen, good afternoon. My name is [Robert Henicky 00:45:06], I'm calling from Austin, Texas.
What I was curious on, to get each of your thoughts, involved the endangerment finding. As I think everyone's aware, in 2009 EPA adopted endangerment finding under Section 202, which applied to mobile sources, and that 202 endangerment finding was the basis of this rule for stationary sources under Section 111, even though in the Clean Air Act there's a different standard for adoption of endangerment findings under either section.
I guess, David, my question for you is your argument on why you think a 2009 endangerment finding is valid in applying to this rule under 111, and I guess, Tom, my question for you is, if the administration is going to move forward and adopt a new stationary source regulation under 111, do you think that that requires them going back and adopting a new 111 endangerment finding whether or not without even discussing the validity of the 2009. Thank you.
David Doniger: Sure. This is David. First of all, the endangerment finding in 2009 had two parts to it. The first part is the determination that the greenhouse gas air pollutants built up in the atmosphere as a result of human emissions are endangering public health and welfare. That finding was Mount Everest-size strong in 2009 and it's only grown bigger and stronger since then, which is evidenced by the report issued by the science agencies of the Trump administration in, I think it was October, that it has unprecedented levels of conviction and certainty that the greenhouse gases are in fact changing our climate, and that was cleared by the Trump administration. So, an effort to reverse the endangerment finding is fool's errand, and that's, I think, one reason why not even this administration has launched that effort.
With the second part of the endangerment finding was the contribution finding, and what EPA found in 2009 was that greenhouse gases from all sources endanger, and the vehicles contribute to that endangerment. Now, what EPA found with respect of power plants in the New Source rule, and I think it was 2015 ... Tom may correct me on that, is that power plants also contribute. In that case they found contribute significantly, which is the legal test under Section 111.
The conclusion from 2009 that the build-up of the pollution in the atmosphere endangers our health and our welfare, and the specific conclusion that power plants contribute significantly to that pollution, perfect the endangerment and contribution finding for the power sector. There's nothing more needed. There's nothing separate needed beyond that. And I would submit that any effort to roll that back is a loser in the D.C. Circuit and the Supreme Court, in any court.
Tom Lorenzen: This is Tom. I will note that there is a legal distinction between Clean Air Act Section 202 under which the Light-Duty Motor Vehicle Standards were promulgated, and Section 111 under which the Stationary Source Standards are promulgated in terms of what is required to find endangerment.
If you look at Section 202 A1, it calls for a finding of endangerment where the administrator determines, as it says here, "... a pollutant which in his judgment cause or contributes to air pollution which may reasonably be anticipated to endanger public health or welfare." Notice the lack of that word "significant" in Section-
David Doniger: Sorry, I pointed that out.
Tom Lorenzen: Yeah, and in Section 111 there is that notable distinction that it requires a significant contribution. I have not seen any proposal from the EPA at this point to reevaluate the endangerment finding. Would it make sense if they re-promulgate a rule to include an independent endangerment finding with it? Certainly. One that is tethered to Section 111. But again, I haven't seen anything of that sort.
David Doniger: Well, my point is that they've already done that. That's what they did in the New Source rule. They determined that power plants contribute significantly to the air pollution that endangers our health and our welfare by exacerbating climate change.
Dean Reuter: We seem to be generating as many questions as we're asking this time with three question on the board, so let's try and get to as many of these as possible.
Go right ahead caller.
Zoe Tovin: Hi, this is Zoe [Tovin 00:51:03] from BuzzFeed. Thanks for the call.
I have two questions. They're related procedural questions. The first being, depending on how long the repeal process takes, could either of you anticipate a time when the D.C. Circuit will no longer hold the case before it in abeyance, or would you expect them to continue doing that until the repeal process is concluded?
And then the second question is, if at the point its repealed, entities or whomever wanted to challenge that, file some kind of legal challenge to that, would you expect them to do that in the context of the existing case authority before the D.C. Circuit, or would that need to likely be filed from the beginning and start a new case for that?
David Doniger: This is David.
Tom Lorenzen: [crosstalk 00:51:54]. David-
David Doniger: Okay, Tom.
Tom Lorenzen: ... let me tackle this one first.
David Doniger: Yeah, okay.
Tom Lorenzen: The first part is how much patience will the D.C. Circuit have? I'm going to be careful about this because this is pending litigation. David and I are both parties in that. I'm not going to try to predict what the court will or won't do in this specific case.
The D.C. Circuit is unusually attuned to the fact that there are administrations that change, and they are typically quite reluctant to issue what I would call an advisory decision, which is one that really wouldn't have legal effect because the new administration's thinking of reversing course. So, in the usual case, they will give the administration a lot of leeway.
I will just give one historical example from when I was in the Department of Justice. At the tail end of the Bush administration, the George W. Bush administration, EPA promulgated an ozone NAAQS of 75 parts per billion, which Lisa Jackson, the new head of EPA for President Obama, considered to be insufficiently stringent. In fact, she even testified and said in many public hearings, much to my consternation, since I was going to be charged with defending this thing, that it was legally indefensible. That case was put in abeyance.
The challenges brought by David Doniger, NRDC and others, was put in abeyance for well over two years while EPA thought about that rule, and there was no point during that which the court threatened to revive the case. It kept it in abeyance for quite some time, in fact until the Obama administration itself abandoned its efforts to reconsider the rule and ended up defending the Bush administration's ozone NAAQS. So I think that that example shows how reticent the D.C. Circuit is to interfere in that administrative process. They recognize the separation of powers as much as any court in the country.
Now, if a challenge arises to the rescission, the rescission itself is a new rule, even though it's a negative rule, an undoing of a rule, and it requires its own petition for review filed separately. It has a separate record. I would assume that there are parties like NRDC that will try to consolidate with the underlying challenges to the Clean Power Plan, but those will almost certainly be pushed back against.
David Doniger: That's a pretty good summary. I would just say that the difference between the way the D.C. Circuit has dealt with this case and others is that for a good number of the others where the rule remains in effect, the court has agreed to suspend the litigation that was underway against the Obama rules indefinitely until, presumably, the Trump EPA issues whatever new rule it chooses to issue or ultimately says it's not going to.
But this one is different because of the limbo that I described earlier, and as a result, the D.C. Circuit has been dolling out the deferrals of the existing litigation 60 days at a time. There'll be another report due from the government very shortly. I don't remember exactly when but in the next week or so, I think. And depending on what they say, there may be replies from our side, and we have been urging the court to decide the case or continue, at the most, to hold this in very short-term abeyance.
Now, undoubtedly when and if the repeal is promulgated, we will challenge the repeal in new cases. I don't know whether we would seek to move them separately or consolidate them with the existing case. Just don't know. But one thing's for sure, we will challenge the repeal.
Tom Lorenzen: If I might, there's one thing I do want to know, and this goes back to a point that David made earlier and then just sort of reiterated now. The D.C. Circuit is clearly concerned, to some extent, about the fact that there is a Supreme Court stay out there and that this rule is on the books but is not being implemented in any way. The Supreme Court on the other hand doesn't appear to be concerned by that. The Supreme Court has had it within its power since February 2016 to revisit that stay and lift it at any time. It appears to be quite content to let that stay continue.
David Doniger: They don't normally check in on things unless someone asks for them, and it's true [crosstalk 00:57:09]
Tom Lorenzen: And no one has asked them. No one has asked [crosstalk 00:57:11]
David Doniger: But that may happen-
Tom Lorenzen: [crosstalk 00:57:13]
David Doniger: That may happen too at some point.
Tom Lorenzen: And I think that given the current makeup of the court, it's quite unlikely that if they were asked, they would lift it.
Dean Reuter: Let's see if we can get one more question in. We've got two questions pending.
Go ahead caller.
Gregory Roberts: Hi, this is Gregory Roberts from the Energy Daily. I want to revisit what the penultimate questioner touched on which is this whole endangerment issue. If you look at the advanced notice of potential rulemaking or proposed rulemaking that came out a couple of weeks ago, they spend a couple of pages kind of saying the endangerment finding doesn't matter. In doing so, they cite arguments made by the Obama EPA in 2015 where they talk about how they don't need the endangerment standing to issue the CPP.
What do you make of that? The ANPR doesn't take a position on that, it just kind of puts it out there. So what's your reaction to that? Well, what's your reaction to that?
David Doniger: Yeah, so this is David. There is a theory that under Section 111 you only need to make an endangerment determination once, let's say about power plants, about the first pollutant that comes along, that it admits that is a health hazard. That determination was made way back in the early '70s with respect of power plants and their emissions of conventional pollutants like sulfur dioxide.
There is another theory that when you add a new pollutant, you need to make a new contribution finding. Again, the endangerment part had already been decided, but the part under this theory that would need to be added is the determination that the category contributes significantly to that kind of pollution, and EPA made both determinations in the 2015 rule on new sources. They said, "We don't need to make a new endangerment determination, but if we do need to, here, we make it," because these power plants' emissions are of such magnitude that they very significantly contribute to the carbon population pollution that endangers public health and welfare.
The interesting thing, and I haven't read it, is over again in the last couple of weeks, but my recollection of the advanced notice is that it forgot about the fact that EPA made the second finding, the finding that there is in fact a significant contribution to the global warming pollution from the carbon emissions of the power plants. It was a quite bizarrely written part of the advanced notice.
Tom Lorenzen: Well, I won't comment on the last part of that, but I did note with interest, as well, the language about how one interprets the endangerment provisions of Section 111, whether it just requires a finding that sources within the category emit pollutants that endanger generally, the finding that was made many, many years ago, or whether it does require a pollutant-specific finding. I think what EPA has done here in the ANPR is kept its options open. It has put that language out as, "This is what the Obama administration said, and we might comment on that." And they'll figure out then what to do.
The interesting thing about an ANPR is that it has no official legal status. It's not a proposal, it's certainly not a final action, so it's really nothing more than the agency's own cogitations.
David Doniger: I describe it as the trailer for a movie that the studio hasn't decided to make yet, and in this case the movie's called The Diary of a Wimpy Replacement.
Dean Reuter: Well, gentlemen, I'm afraid we're going to have to leave it right there. We're already over time. I do want to thank you on behalf of the Federalist Society. It's been a very interesting discussion. More to follow, undoubtedly. It sounds like maybe one thing that both our experts can agree on is the possibility of litigation going forward. But thank you both for joining us today.
I also want to thank the audience for joining us and for your questions. A reminder to our audience about our next scheduled Teleforum call tomorrow, two p.m. eastern time at this same number. We'll be talking about prosecutorial immunity. But until that next call, we are adjourned.
Thank you very much everyone.
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