The U.S. Environmental Protection Agency’s newly proposed carbon-emissions rule will spark legal challenges that could shape its authority to regulate the energy industry under the Clean Air Act, environmental law experts said.
“There’s a 100 percent likelihood it will be litigated,” said Roger Martella Jr., a partner in the environmental group at Sidley Austin. “This is likely to be the single most controversial rule from the EPA during the Obama administration.”
That a proposed EPA rule would be controversial and litigated is not exactly surprising. This rule, however, is broader than most in its interpretation of the law and its effect on the energy business, the lawyers said.
The administration announced Monday that power plants must reduce by 30 percent their carbon-dioxide emissions by 2030.
“In essence, people view this as the shutdown of coal-fired power plants, or at least a large number of them,” said Allison Wood, a partner who focuses on climate change at Hunton & Williams. “This is the testing ground for how far can the EPA go, and what can the EPA require the states to do.”
The rule will be subject to judicial review by the U.S. Court of Appeals for the D.C. Circuit when final in 2015, the lawyers said. Potential challengers include the operators of coal-fired power plants and states that produce or obtain energy from coal, Wood said.
Other energy companies including oil refineries will get involved as well, since the outcome of this battle will influence the future of their industries, Wood said.
The challenges will attack the EPA’s legal justification for its rule. The agency is depending on a section of the Clean Air Act that the courts have rarely tested because it is rarely used and has never before been applied on this scale.
At issue is whether the EPA is going beyond the intent of Congress, Martella said.
On Monday, Senate Minority Leader Mitch McConnell (R-Ky.) called the proposed rule “an end-run around Congress” that spares states like California and New York while “inflicting acute pain on states like Kentucky.”
McConnell said he would offer legislation on the matter this week, “because the president and his allies should not be allowed to get away with this. Congress must listen to the families who will be hardest hit by these rules—even if the president won’t.”
Challengers also might focus on the technical, specific standards required for each state under the rule. They could try to reverse-engineer how the EPA got to these targets, to see whether any part of the formula was arbitrary or capricious, Martella said.
Wood said companies likely would challenge whether the EPA can require states to pursue options outside the power plants themselves to try to meet that 30 percent reduction in emissions. The rule would allow states to weigh alternatives including demand-side energy-efficiency programs and renewable portfolio standards, or even allowance-trading programs.
“One question will be how much states want to push back and say, ‘We don’t have to do what you say,’ ” Wood said.