The US Environmental Protection Agency’s ambitious regulatory agenda potentially could push more energy cases to the US Supreme Court in 2015, speakers agreed at a Sept. 18 forum sponsored by George Mason University Law School’s Law & Economics Center.
“We’re on the brink of a new regulatory regime from EPA, particularly for the energy sectors,” said Kirsten L. Nathanson, a partner in Crowell & Moring LLP’s environment and natural resources group in Washington. “It’s broadly written, vaguely in many respects, with plenty of room to offer interpretations.”
Challenges working their way upward through the federal court system could put pressure on the high court to consider addressing whether EPA and other federal regulatory agencies can reinterpret regulations, she said during the discussion at the National Press Club.
“The government has a clear interest to remove all hurdles from changing regulations,” Nathanson said. “A new administration can present an opportunity to remove an onerous regulation, but also can remove one that’s favorable to a regulated industry. So the question is if it’s better to solidify a regulation even if it’s not entirely favorable.”
The Supreme Court normally doesn’t change regulations outright, but remands cases back to lower courts for reworking, observed Roger R. Martella Jr., a partner in Sidley Austin LLP’s environmental practice group in Washington. The court’s past term was seen by some as a complete victory for EPA, “but as we look more closely, it was a mixture of results,” he said.
Greenhouse gases
In a challenge to EPA’s greenhouse gas regulations, the high court said the agency erred in deciding it could look to GHGs when an industrial facility is in its preconstruction phase when only conventional pollutants such as sulfur dioxide and ozone should be considered, Martella said.
But a second part of the decision said that if a plant triggers requirements for systems to limit such conventional pollutants once it’s built, it also could be required to address GHGs, he added.
“A number of significant consequences came out of this,” said Martella said. “Facilities which were trying to get preconstruction permits for GHG emissions no longer had to, and EPA issued a memo in July saying this was so.” Its original plan to eventually regulate shopping centers and other smaller GHG pollution sources “is off the table now,” he said.
He said nuisance cases and climate change decisions likely will head for the Supreme Court in the next 2 years. “The obvious leader is EPA’s new source performance standards for new electric utilities, which are more energy than environmental issues,” Martella said. “The administration made clear these rules will be finalized by June 2015. Their viability could hinge on a Supreme Court decision down the road.”
Ceding authority
Richard O. Faulk, the GMU Law & Economics Center’s senior director and a partner in Hollingsworth LLP’s Washington office, said the situation reflects the growing tension between federal and state governments.
“When our nation was established, the system was supposed to be a balanced separation of powers working together to solve problems,” Faulk said. “But Congress decided to delegate lawmaking authority to administrative agencies that sit inside the executive branch, effectively ceding part of its power. The agencies began to make decisions, and the courts began to have to review their decisions.”
Courts don’t always fully review a regulation, but cede authority to rework a regulation to the agency, he said, adding, “There is a growing power feeding the administrative agencies and the executive branch. Since our nation was founded on a mistrust of executive power—namely a king—courts have to tell agencies that they don’t have explicit power to regulate every aspect.”
He said an Iowa corn processing company had a federal permit issued through the state when EPA decided more needed to be done and filed a public nuisance lawsuit in an Iowa court demanding an equipment upgrade. Citizens’ groups appealed to the state supreme court, which ruled EPA permits did not preclude a state public nuisance action, essentially regulating by injunction and requiring replacement of the equipment, Faulk said.
“I suspect that the man on the street, and even someone who sits on the Supreme Court, is beginning to ask whether we should defer to the body which drafted the law instead,” he said. “There is a four-person group on the court saying this sort of deference is not the sort of empowerment we want to give to executive agencies.”
Nathanson noted, “This court may well change the text of an administration over the DC Circuit Court’s more practical position to put speed bumps along an agency’s road to swiftly change its regulations.”
Contact Nick Snow at [email protected].
