Is EPA’s Clean Power Plan Unlawful under the Very Provision that Supposedly Authorizes It?

by Marlo Lewis on December 22, 2014

in Blog

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EPA’s Clean Power Plan establishes carbon dioxide (CO2) performance standards for each state’s electric power sector. The standards are calibrated in lbs. CO2/MWh, which translate into statewide CO2 emission caps. On average, states will have to reduce their power-sector CO2 emissions 30% below 2005 levels by 2030.

The CPP is unlawful for a multitude of reasons, but surely one of the most bizarre is that EPA’s alleged statutory authority, §111(d) of the Clean Air Act (CAA), prohibits the agency from promulgating any such regulation.

Specifically, §111(d) bars the adoption of performance standards for existing facilities in source categories already regulated under §112. EPA has been regulating power plants under §112 since December 2011, when it finalized the Mercury Air Toxics Standards (MATS) Rule.

On the day EPA published the CPP in the Federal Register (June 18, 2014), Murray Energy, the nation’s largest privately-owned coal company, petitioned the D.C. Circuit Court of Appeals to stop EPA from further work on the rulemaking. The petition argued that EPA’s §111(d) regulatory authority is limited to existing sources not already regulated under §112. Eight days later, nine states led by West Virginia filed an amicus brief in support of the petition. And last week, Murray Energy submitted a brief urging the Court to halt EPA’s “illegal” rulemaking and vacate the agency’s “erroneous legal opinion” that it may doubly regulate sources under §111(d) and §112.

EPA, of course, argues that the §112 exclusion in §111(d) does not apply to CO2 and does not preclude the agency from requiring states to adopt CO2 performance standards for existing power plants.

Today’s post will review the legal arguments, pro and con, on whether EPA may regulate existing power plants under both §111(d) and §112.

Once EPA has established performance standards for new facilities within a source category, CAA §111(d) requires states to adopt performance standards for existing facilities within the same category. EPA’s Carbon Pollution Standards rule, proposed in September 2013, would establish CO2 performance standards for new coal and natural gas power plants. So EPA claims the Carbon Pollution Standards rule obligates states to adopt CO2 performance standards for existing power plants.

As mentioned, however, §111(d) exempts existing facilities in source categories regulated under §112 — an exemption covering power plants thanks to EPA’s nonsensical MATS rule.

On the same day EPA proposed the CPP, it also published a legal memorandum that examines, among other issues, the §112 exclusion. The relevant section is pages 20-27, which may be summarized as follows:

  1. The House and Senate passed different “versions” of §111(d) in the 1990 CAA Amendments. The House-passed version is the one included in the U.S. Code, but both versions are in the Statutes at Large and, thus, both are valid law.
  2. While the House-passed version prohibits 111(d) regulation of any air pollutant “emitted from a source category” regulated under §112, the Senate-passed version prohibits 111(d) regulation of any air pollutant listed as a hazardous air pollutant (HAP) under §112(b), whether or not EPA is actually regulating sources of that pollutant under §112.
  3. Since CO2 is not a HAP, the Senate-passed version does not prohibit 111(d) regulation of CO2 emissions from existing power plants.
  4. Because the two versions “conflict,” the law is “ambiguous,” so EPA must use its judgment to determine what the provision means.
  5. In EPA’s judgment, elements of the two versions should be combined such that §111(d) may not regulate any HAP from a source category actually regulated under §112.
  6. Thus, although §111(d) as it appears in the U.S. Code bars EPA from requiring CO2 performance standards for existing power plants, a synthesis of the House and Senate versions allows EPA to do so.

EPA’s argument is incorrect. There are not two “versions” of §111(d), because the Senate entry in the Statutes at Large is a drafting error. And even if both amendments were valid, their prohibitions are complementary rather than conflicting, so EPA would still be barred from regulating existing power plants under §111(d).

EPA’s 2005 Legal Analysis

EPA’s legal memorandum is based on a legal analysis the agency conducted for its Clean Air Mercury Rule (CAMR) in 2005. As EPA acknowledges in that analysis, the Senate entry in the Statutes at Large is a “conforming amendment” (a clerical revision); in contrast, the House-passed version is a “substantive” amendment (pp. 187-193). A conforming amendment, which is not intended to change the law, should not be given equal weight with a substantive amendment, which is intended to change legislative policy.

In any event, in 2005, EPA acknowledged that the Senate-passed version “appears” to be a “drafting error and should not be considered.” EPA commented: “It is hard to conceive that Congress would have adopted section 112(n)(1)(A), yet retained the Senate amendment to section 111(d).”

EPA offered no further explanation, but Congress’s retention of the Senate language is indeed “hard to conceive.” CAA §112(c)(1) requires EPA to list “all categories and subcategories” of “major sources” of the 189 air pollutants listed as HAPs in §112(b). CAA §112(d)(1), in turn, requires EPA to promulgate maximum achievable control technology (MACT) standards for all listed HAP categories and subcategories. With one important exception: power plants.

Even though mercury is listed as a HAP in §112(b) and power plants emit mercury, §112(n)(1)(A) requires EPA to list power plants as a HAP source category only if the Administrator determines, through a multi-year study, that such regulation is “appropriate and necessary” after “imposition” of other CAA “requirements.”

The Administrator might determine, for example, that regulations promulgated under the Title IV acid deposition program supplemented by §111 performance standards, which are less stringent than MACT standards, would adequately control HAP emissions from power plants. In other words, in 1990, Congress gave EPA the discretion to determine that listing power plants as a HAP source category subject to MACT standards is not “necessary and appropriate.”

Such a determination was, in fact, the basis of EPA’s Clean Air Mercury Rule, which sought to use Title IV and §111 authorities to control power plant mercury emissions. Although the D.C. Circuit Court of Appeals struck down the CAMR in New Jersey v. EPA (2008), there was no dispute about whether the 1990 CAA amendments gave EPA the option to regulate power plant mercury emissions under §111.

The Court vacated the rule for a different reason. In 2000, EPA had determined that MACT regulation of power plant mercury emissions is “necessary and appropriate.” In 2005, EPA did not properly de-list power plants as a HAP source category prior to finalizing the CAMR.

In short, what’s “hard to conceive” is that Congress meant to adopt a clerical amendment that would severely limit EPA’s ability to consider alternatives to MACT regulation of HAP emissions — an option Congress expressly and exclusively provided for power plants under §112(n)(1)(A).

Murray Energy and State Amicus Brief Analyses

In addition, as nine state attorneys general argue in their June 25, 2014 amicus brief, the Senate’s conforming amendment is “clearly” a drafting error “because it sought to make a clerical correction to Section 111(d) rendered unnecessary by a superseding substantive amendment.” Specifically, the Senate amendment attempts to update a cross reference to “§112(b)(1)(A)” in the pre-1990 §111(d) by replacing it with “§112(b).” However, the House amendment eliminated the reference to §112(b)(1)(A), rendering the Senate’s amendment unnecessary and inapplicable.

Murray Energy’s December 15, 2014 opening brief makes the same point. In the Statutes at Large, the two amendments are labeled SEC. 108(g) and SEC. 302(a). They appear as follows:


(g) REGULATION OF EXISTING SOURCES.—Section 111(d)(1)(A)(i) of the Clean Air Act (42 U.S.C. 7411(d)(1)(A)(i)) is amended by striking “or 112(b)(1)(A)” and inserting “or emitted from a source category which is regulated under section 112”. . . .


(a) Section 111(d)(1) of the Clean Air Act is amended by striking
“112(b)(1)(A)” and inserting in lieu thereof “112(b)”.

Because the House substantive amendment already eliminated what had been §112(b)(1)(A) in the pre-1990 text, the Senate conforming amendment could not be “executed.” The House Office of Law Revision Counsel explained:

Subsec. (d)(1)(A)(i). Pub. L. 101–549, §302(a), which directed the substitution of “7412(b)” for “7412(b)(1)(A)”, could not be executed, because of the prior amendment by Pub. L. 101–549, §108(g), see below.

Murry Energy’s brief notes the absurdity of basing a dramatic expansion of EPA’s regulatory power on a clerical amendment’s “superfluous” deletion of “six characters” from a cross-reference:

The legal irrelevance of the conforming amendment here is especially obvious for it would do nothing other than update a reference by deleting the text “(1)(A).” It beggars belief that the superfluous instruction to remove these six characters when the entire reference “112(b)(1)(A)” had already been removed by a substantive amendment with real force and purpose could cloud the meaning of the Clean Air Act, let alone form the basis for a massive regulatory undertaking seeking to utterly transform the nation’s energy system.

But wait, there’s more! The brief also points out that, in 1995, the Clinton Administration EPA unambiguously affirmed the correctness of the House amendment and, thus, of §111(d) as adopted in the U.S. Code. For readability, I will divide EPA’s commentary into three paragraphs:

Section 111(d)(1)(A) was twice amended by the 1990 Clean Air Act Amendments. Pub. L. 101-549, section 302(a), directed the substitution of “7412(b)” for “7412(b)(1)(A),” and Pub. L. 101-549, section 108(g), substituted “or emitted from a source category which is regulated under section 7412 of this title” for “or 7412(b)(1)(A).” Title 42 of the U.S. Code adopts the amendment of section 108(g) with the explanation that section 302(a) could not be executed because of the prior amendment by section 108(g). 42 U.S.C. section 7411 (Supp.IV 1993).

The EPA also believes that section 108(g) is the correct amendment because the Clean Air Act Amendments revised section 112 to include regulation of source categories in addition to regulation of listed hazardous air pollutants, and section 108(g) thus conforms to other amendments of section 112. The section not adopted by title 42, 302(a), on the other hand, is a simple substitution of one subsection citation for another, without consideration of other amendments of the section in which it resides, section 112.

Thus EPA agrees that CAA section 111(d)(1)(A) should read “[t]he Administrator shall prescribe regulations which . . . establish[] standards of performance for any existing source for any air pollutant . . . which is not . . . emitted from a source category which is regulated under section 112.” [EPA, Air Emissions from Municipal Solid Waste Landfills – Background Information for Final Standards, 1995, pp. 1, 5-6] 

So during the Clinton Administration, EPA concluded that existing sources already regulated under §112 may not be regulated under §111(d). Yet neither the CPP nor EPA’s legal memorandum acknowledges that EPA previously affirmed the correctness of the House amendment and §111(d) as published in the U.S. Code, under which the CPP is plainly unlawful.

House Energy and Commerce Committee Report

On December 16, 2014, the House Energy and Commerce (E&C) Committee released EPA’s Proposed CO2 Regulations for Existing Power Plants: Critical Issues Raised in Hearings and Oversight. The report reproduces the Statement of Senate Managers on the House-Senate conference committee that finalized the text of the 1990 Clean Air Act Amendments. The pertinent language follows:

In addition, the House amendment contains provisions for a technology clearinghouse to be established by the Administrator, for amending section 111 of the Clean Air Act relating to new and existing sources, for amending section 302 of the Clean Air Act which contains definitions, to provide a savings clause, to state that reports that are to be submitted to Congress are not subject to judicial review, and for other purposes.

Conference agreement. The Senate recedes to the House except that with respect to the requirement regarding judicial review of reports, the House recedes to the Senate, and with respect to transportation planning, the House recedes to the Senate with certain modifications. [Emphasis added]

So the Senate Managers plainly state that the Senate “receded to” the House amendment’s provision “amending section 111 of the Clean Air Act relating to new and existing sources.”

Note, too, that the Senate Managers do not even mention the Senate amendment on §111(d) — apparently because a conforming amendment superseded by a substantive amendment is not important enough to discuss. The E&C Committee opines:

This language [the Senate conforming amendment] was not expressly considered by the conferees because such consideration was unnecessary. The language served as a technical correction, the point of which was to replace a statutory reference that had been rendered obsolete by amendments to section 112 with a reference that would accurately conform to the revised section 112. This technical edit inadvertently remained in the legislation taken up by Congress. Once the substantive House provisions were adopted, this technical edit was rendered non-executable because the reference it replaced no longer existed. Subsequent review by the Office of Law Revision Counsel correctly identified this obsolete provision and corrected it in the U.S. Code.

No Conflict; Hence, No Ambiguity

Even if the Senate conforming amendment were not a drafting error, EPA would still have no authority to mix and match elements of the House and Senate amendments to suit its regulatory convenience. Although, as explained above, the Senate amendment conflicts with EPA’s discretion under §112(n)(1)(A) to regulate mercury emissions from power plants under §111, the prohibition in the Senate amendment does not conflict with the prohibition in the House amendment. Hence the two prohibitions create no ambiguity allowing EPA to tamper with the provision as it appears in the U.S. Code.

Here’s why. The House amendment — §111(d) as published in the U.S. Code — prohibits EPA from regulating existing facilities under §111(d) if those are in a source category already regulated under §112. The Senate amendment prohibits EPA from regulating air pollutants under §111(d) if those are listed as HAPs under §112(b). The two prohibitions are easily combined. If both amendments in the Statutes at Large are deemed valid, then EPA may apply §111(d) neither to source categories regulated under §112 nor to HAPs listed under §112(b).

Why It Matters!

The unlawfulness of the Clean Power Plan under the very provision that supposedly authorizes it is a very big deal. The CPP is not just another bureaucratic power grab. It is potentially an Archimedean lever for transforming American politics.

In brief, the CPP is a plan to cartelize state energy policies along the product lines of California’s Global Warming Solutions Act and the Northeast States’ Regional Greenhouse Gas Initiative (RGGI). Households and businesses would no longer be able to vote with their feet against ‘progressive’ (Blue State) energy policies, removing an important check — a shrinking tax base — on regulatory excess. Politicians still advocating pro-growth (Red State) energy policies within an EPA-administered policy cartel would be marginalized and look quixotic.

Consider also that many U.S. congressman and senators learn their chops in state government, and most politicians are weathervanes anyway. If, between now and 2030, the vast majority of states are ‘cooperating’ with EPA on climate policy, congressional resistance to cap-and-trade, national renewable energy quota, and UN-sponsored climate treaties could be very hard to sustain.

The good news is that the CPP is a legal mess, very likely to be overturned in court, and certain to be challenged by the GOP-led Congress in 2015. Note also that Obama negotiators emphasize the CPP in the current round of climate treaty negotiations as the core of America’s emission-reduction pledge (our “intended nationally-determined contribution”). Sooner or later, EU and Chinese leaders will figure out that Obama officials are bargaining with chips they don’t have and making pledges they can’t keep.

For the President, the CPP and a successor agreement to the Kyoto Protocol are ‘legacy policies’ on a par with Obamacare. The CPP’s legal flaws make the President’s climate agenda a greenhouse of cards. If so, the President’s second term should accomplish little beyond the motor vehicle greenhouse gas emission standards adopted in his first term.

Those standards continue to ratchet up from 34.1 mpg in 2016 to 54.5 mpg in 2025. But with oil prices falling, auto companies already find it harder to sell hybrids and make a profit. If oil prices remain low, some rollback of EPA mobile source greenhouse gas regulations may also become politically feasible. 




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