Cooperative Federalism Hangs in Balance before the Supreme Court

by William Yeatman on May 6, 2014

in Blog

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In a post yesterday, I explained that the Supreme Court’s 6-2 ruling in EPA v. EME Homer City Generation denied States a broad right to be a “first implementer” under the cooperative federalism scheme established by the Clean Air Act. While EPA v. EME Homer City Generation is undoubtedly an important federalism case, there is a cert petition before the Supreme Court with implications far more profound for the balance of power between States and EPA under the statute. In the petition, which I’ve reposted at the bottom of this post, the State of Oklahoma has appealed to the Supreme Court to answer the following question: Which sovereign merits judicial deference when State and Federal governments disagree over factual findings in the course of implementing the Clean Air Act?

Recently, I described this supremely consequential matter:

The Clean Air Act is a “cooperative federalism” arrangement, which establishes a State-Federal partnership to improve the nation’s air quality. Because both sovereigns carry a congressional grant of authority, both possess legitimate claims to judicial deference. Complicating matters further, the State, in exercising its share of congressionally delegated authority pursuant to the Clean Air Act, funds its own implementing agency, which establishes its own administrative code. As a result, each sovereign that is responsible for executing the Clean Air Act can claim a congressional delegation, agency expertise, and political accountability—i.e., all the trappings of deference. So what happens when State and Federal Governments, in the course of implementing their respective delegations of authority, disagree on factual findings, with billions of dollars in compliance costs at stake? To which sovereign should the courts defer?

It’s a tricky question, and much depends on the answer. For starters, the principle of deference to agency fact findings, discretionary determinations, and statutory interpretations is a powerful shield for agency decisions running the gauntlet of judicial review. Whichever sovereign carries this defense is much more likely than not to win the day when a court reviews a federalism conflict pursuant to the Clean Air Act….Both state and federal agencies could render reasonable, yet different decisions on the same matter. In the case of such a federalism dispute, a reviewing court is in no position to split the difference. It must choose which sovereign merits respect, and which doesn’t.

Those are the stakes. And here are the details behind the cert petition that, if granted by the Supreme Court, would lead to a reckoning over these stakes:

  • There’s a Clean Air Act program to protect visibility known as Regional Haze. Because it’s an aesthetic regulation, and not a public health regulation, the Clean Air Act accords States a uniquely high degree of authority vis a vis the EPA (relative to other regulatory regimes established by the law). In 2010, the State of Oklahoma proposed Regional Haze controls for 6 power plants. In 2012, EPA rejected Oklahoma’s Regional Haze plan; the agency justified its disapproval based on a claim that the State’s cost estimates were erroneous, which (allegedly) led to the State undervaluing certain control options. Rather than allow Oklahoma to correct the alleged error, as is permitted by the Clean Air Act, EPA imposed a federal plan that cost $1.8 billion more than the State’s plan.
  • Oklahoma sued in the 10th Circuit Court of Appeals. At issue in the case, Oklahoma, et al. v. EPA, et al., 723 F. 3d 1201 (2013) was a state-federal dispute over a factual determination: the costs of pollution controls.
  • In a 2-1 split decision delivered in July 2013, the 10th Circuit upheld the EPA’s rejection of Oklahoma’s Regional Haze plan. Instead of deciding whether Oklahoma cost estimate was ‘reasonable,’ the court decided whether EPA’s rejection of the state’s factual finding was reasonable. That is, EPA received all the deference; Oklahoma received none. Even then, it was only by a closely divided decision that the court sided with EPA. Alas, the 10th Circuit’s ruling has since become controlling precedent in a suite of State challenges to EPA Regional Haze takeovers.
  • On January 29, the State of Oklahoma filed a petition for writ of certiorari seeking review of a divided 10th Circuit panel decision. This is the cert petition that is the subject of this post (reprinted below).

It’s not hyperbolic to say that cooperative federalism under the Clean Air Act hangs in the balance. If the States, as regulators with initial responsibility under the Clean Air Act, are denied the discretion to conduct reasonable fact-finding, then cooperative federalism will cease to have any functional meaning, because the States would become a second class partner.


OK v EPA Petition


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