Context of EPA’s Bombshell Announcement That It Will Propose a Model FIP for the Clean Power Plan

by William Yeatman on January 10, 2015

in Blog

Formerly at NRDC

Formerly at NRDC

It is well established that the Clean Air Act doesn’t empower EPA to order States to comply with federal regulations. Congress can’t command States to legislate into existence regulatory regimes (New York v. United States, 505 U.S. 144 (1992)) and the President can’t commandeer state officials (Printz v. United States, 521 U.S. 898 (1997)).

Instead, the Clean Air Act gives EPA two options to achieve its regulatory ends when faced with an uncooperative State: (1) direct federal implementation; and (2) conditioning state receipt of federal highway funds upon regulatory compliance.

First, the agency may execute the regulation on its own. Hodel v. Virginia Surface Mining and Reclamation Association, 452 U.S. 264 (1981). There are almost 20,000 EPA employees scattered about 10 regional offices across the country. These bureaucrats can and do directly implement federal regulatory regimes. When they do so, it’s known as a “federal implementation plan.”

For example, a number of States balked at EPA’s 2010 rule imposing a Clean Air Act permitting regime for greenhouse gas emissions. Because they refused to play ball, federal bureaucrats implemented and operated the program, independent of the recalcitrant States. (75 FR 82246, 75 FR 82429)

Under the Clean Air Act, EPA is required to implement a federal plan if a State refuses to comply with an agency rule. (42 U.S.C. §7410(c)). Nonetheless, the agency cannot always fulfil this responsibility due to EPA’s finite resources. That is, there are some regulatory tasks that would require too much effort for the federal government to perform; their implementation would monopolize the agency’s time.

Consider, for example, an automobile inspection and maintenance program that is necessary to control tailpipe emissions, and thereby achieve the Clean Air Act’s purposes. The EPA simply doesn’t have the resources to inspect and maintain millions of cars.

In fact, this was an actual problem for the agency during the 1970s. Goaded by environmental special interest lawsuits (NRDC v. EPA, 475 F. 2d 968 (D.C. Cir. 1973)), the agency required States to implement inspection and maintenance programs. Yet the agency conceded that the task exceeded its limited resources (37 FR 10842, 10844), and therefore sought to compel State compliance. The agency’s awkward (and legally dubious) mechanism for doing so was to subject state officials to Clean Air Act civil penalties, pursuant to the following reasoning: (1) automobiles emit pollution by driving on roads; (2) states maintain roads; (3) consequently, State officials are liable for automobile pollution. (see, e.g., Maryland v. EPA, 530 F. 2d 215 (4th Cir. 1975) at 224)

As a direct result of this circumstance, Congress in 1977 empowered EPA to withhold highway funding from a non-compliant State whose ambient air quality violates national standards. In 1990, Congress greatly expanded this authorization, such that the highway funding sanctions became wholly discretionary. (42 U.S.C. §7410(m)).

Above I’ve described the two Clean Air Act mechanisms by which EPA can achieve its ends when a State won’t act: (1) a federal implementation plan; and (2) sanctions. This subject is topical because EPA in July will issue a Clean Air Act regulation known as the Clean Power Plan. It’s the Obama administration’s marquee climate policy, but it is staunchly opposed by many States. And some of these States have indicated that they won’t expend any resources in complying.

This raises the question: What will the EPA do?

Many (myself included) had presumed that EPA would be limited to sanctions in trying to compel compliance from those States disinclined to participate. I had thought that the unprecedented scope of the Clean Power Plan—as I explain here, the rule would completely overhaul the electricity industry—would effectively prohibit a federal implementation plan. Such an undertaking, I had assumed, would take far too much time and effort for an agency that already fails to achieve the overwhelming preponderance of its responsibilities.

I was wrong. In a teleconference this week with reporters, EPA’s Janet McCabe, head of the Office of Air and Radiation, announced that the agency would start work on a model federal implementation plan for the Clean Power Plan. The model FIP will be proposed contemporaneously with the promulgation of the final Clean Power Plan. Thus, EPA intends to avail itself of both the means provided by the Clean Air Act to force a non-compliant state’s hand.

This is a huge deal, one that we’ll unpack in detail here at over the next couple days. Tomorrow, I’ll explain why EPA felt it had to take this action (hint: it pertains to Obamacare). And on Monday, I’ll explain how the operational realities of the electric industry will constrain what EPA can do (hint: get ready for an EPA-imposed cap and trade!).

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