chevron-down Created with Sketch Beta.
November 01, 2016 Feature

Part One: The Clean Power Plan: Legal Challenges and Prospects

Rob Brubaker & Eric Gallon

Editor’s Note: This is the first of a two-part article regarding the future of the Clean Power Plan, which the Environmental Protection Agency issued in October 2015. In Part One, our authors analyze the legal challenges to the plan. In Part Two, our authors will analyze the prospects of the plan in light of the recent election of Donald J. Trump, including the possible legal paths available to the new administration (and its opponents) to roll back (or preserve) the Clean Power Plan. Part One is based on the Report of the Environmental Committee, which appeared in the Section’s 2016 Recent Developments in Public Utility, Communications & Transportation Law.

In June 2013, President Barack Obama issued his Climate Action Plan, a twenty-one page document that outlined the executive actions he planned to undertake in three areas: “cut[ting] carbon pollution in America,” “prepar[ing] the United States for the impacts of climate change,” and “lead[ing] international efforts to combat global climate change and prepare for its impacts.” As part of the first category of executive actions, President Obama directed EPA to issue revised New Source Performance Standards (NSPS) for greenhouse gas (GHG) emissions from new fossil-fuel-fired electric generating units (EGUs) by September 2013. He also directed EPA to propose performance standards for GHG emissions from existing fossil-fuel-fired EGUs by June 2014, with final regulations to be issued by June 2015.1 EPA finalized and published both rulemakings in late October 2015.

The latter rulemaking, informally called the Clean Power Plan, resulted in an unprecedented Supreme Court order staying the plan’s enforcement until its legality can be determined. For now, the plan is before the D.C. Circuit, which will have the first shot at determining whether the plan is within EPA’s authority under Clean Air Act § 111(d). And although the 156 petitioners challenging the plan have presented a number of legal arguments, the central issues raise questions of Chevron deference, namely, whether the plan represents a creative but lawful interpretation of an existing but seldom used statutory provision or an unlawful attempt to legislate at the agency level.

On October 23, 2015, EPA published both its final NSPS for GHG emissions from new, modified, and reconstructed EGUs2 and emission guidelines for GHG emissions from existing EGUs.3 Both rulemakings are now being challenged in the D.C. Circuit.4 Signaling the extraordinary stakes in the rule directed at existing sources, the D.C. Circuit took two unusual steps—first, it initially set the case for expedited briefing and oral argument to occur in June 20165 while denying a request to stay the rule. After the Supreme Court granted the stay request the D.C. Circuit had denied, the appellate court, sua sponte, took the highly unusual step of announcing it would proceed directly to en banc consideration, foregoing the normal step of a three-judge panel hearing the case.6 The oral argument on September 27, 2016, lasted more than seven hours.7

In setting the NSPS for GHG emissions from EGUs, EPA split the source category into four subcategories—new steam generating units (SGUs), modified SGUs, reconstructed SGUs, and new and reconstructed stationary combustion turbines—and set a different standard for each subcategory.8 For example, for new SGUs, EPA chose a standard of 1,400 lb CO2/MWh-g, based on the rates achievable by efficient new supercritical pulverized coal utility boilers using partial carbon capture and storage. For existing sources, EPA split the category into two subcategories, fossil-fuel-fired EGUs and natural gas combined cycle (NGCC) units, and established different “emission performance rates” for each subcategory. But those performance rates are not expected to be directly enforceable against any EGU unless a state so chooses. Instead, EPA applied these putative unit-specific rates to each state’s baseline generation portfolio to establish state-by-state rate-based CO2 carbon intensity goals.

EPA set interim state goals for 2022–2029 and final goals for 2030–2031 and thereafter. And because each state’s generation portfolio is different, the goals are different.9 Finally, EPA translated the state rate-based goals into mass-based goals for those states that choose to submit a mass-based plan. If the courts uphold the Clean Power Plan, states will need to submit plans to achieve their state goals, either by directly imposing performance rates on affected units or by adopting “state measures” plans that include other, state-enforceable GHG-reduction measures. State plans may also allow for intrastate and/or interstate trading of emission reduction credits or allowances. Alternatively, states may choose to let EPA impose a federal implementation plan (FIP).10

The original due date for state plan submittals was September 6, 2016, but that deadline has been put on hold. Less than three weeks after the D.C. Circuit, holding that the coalition of states challenging the plan “ha[d] not satisfied the stringent requirements for a stay pending court review,” denied motions to stay the plan until its legality could be decided,11 five justices of the Supreme Court disagreed. In a decision the New York Times reports was “unprecedented” for a regulation awaiting review in a lower federal court,12 the Court stayed enforcement of the Clean Power Plan until judicial review, including any review by the Supreme Court, is complete.13 With the D.C. Circuit not hearing argument until September 2016, the court’s hearing it en banc (with the potential for multiple opinions and more time needed to issue a decision), and the likelihood of a Supreme Court challenge if the plan is affirmed, the stay will likely continue into 2018 at the least. Even assuming the plan is affirmed, there will potentially be further dispute over the degree to which deadlines in the plan should be delayed due to the intervening stay.14 Meanwhile, with the election of Donald J. Trump, the states and all three branches of the federal government will be re-examining the Clean Power Plan going forward—a subject that will be taken up in Part Two.

Chevron Deference versus Utility Air Regulatory Group Skepticism

In their briefs before the D.C. Circuit, the petitioners raised a number of arguments, some targeted at the plan as a whole and others at its particular impact on specific states. The petitioners’ two main general arguments are (1) EPA’s regulation of hazardous air pollutants from EGUs under § 112 of the Clean Air Act forecloses EPA’s regulation of GHGs from EGUs under § 111(d) of the Act; and (2) EPA’s reliance on “generation-shifting” (requiring affected sources to curtail generation and obtain electricity from lower-emitting generators outside the source category) as a component of its “best system of emission reduction” (BSER) for GHGs from EGUs is unlawful. Both arguments rely on Chevron Step Zero, Step 1, and Step 2 arguments. Consequently, the D.C. Circuit’s (and, ultimately, the Supreme Court’s) holdings in this appeal will not just determine the scope of EPA’s authority under §111(d) and, in particular, its ability to rely on production-shifting more generally as a means of emission control, but also the future of Chevron deference itself.

Argument (1): Section 111(d) and Section 112

The petitioners’ first argument relates to the relationship between Clean Air Act §§ 111(d) and 112. Section 111(d) authorizes the establishment of standards of performance only for existing sources that would be covered by an NSPS if they were new sources. But the Act contains two important, additional limitations: states must establish standards of performance only “for any air pollutant . . . [1] for which air quality criteria have not been issued or which is not included on a list published under Section 7408(a) of this title or [2] emitted from a source category which is regulated under Section 7412 of this title [Clean Air Act § 112]. . . .”15

The first limitation is clear-cut: states may not establish existing source performance standards for emissions of criteria pollutants (carbon monoxide, lead, nitrogen oxides, ozone, particulate matter, and sulfur dioxide). But according to the EPA, the second limitation does not mean what it says—and, for that matter, does not really say what the U.S. Code says.

The petitioners’ argument on this point is straightforward. Power plants are regulated under 42 U.S.C. § 7412, specifically, by EPA’s Mercury and Air Toxics Standards (MATS Rule), which EPA originally published in 2012.16 “[B]ecause . . . coal-fired generating units are already regulated under Section 112,” the petitioners assert, EPA may not also regulate that source category under § 111(d).17 In support of this position, the petitioners point to a footnote in the Supreme Court’s opinion in American Electric Power v. Connecticut, written by Justice Ginsburg before EPA finalized the MATS Rule, that said “EPA may not employ § 7411(d) [to regulate carbon dioxide emissions from fossil-fuel fired power plants] if existing stationary sources of the pollutant in question are regulated under . . . the ‘hazardous air pollutants’ program, § 7412.”18

EPA argues that the purpose of the Clean Air Act and statutory context indicate § 111(d) should reasonably be interpreted to “exclud[e] . . . only a source category’s emissions of hazardous pollutants regulated under Section 112.19 EPA further notes that Congress actually adopted two conflicting amendments to § 111(d) in 1990: one from the House of Representatives and one from the Senate. The House language, which was included in the final amendments under the heading “Miscellaneous Guidance,” was codified in 42 U.S.C. § 7411(d).20 The Senate language, which was included in the final amendments as a “Conforming Amendment” and was not codified in § 7411(d), read that states could “establish[ ] standards of performance for any existing source” only for those air pollutants “not included on a list published under Section 108(a) or 112(b). . . .”21 EPA argues that both amendments must be given effect and that best way to do so would be “to authorize regulation where either the pollutant is not listed as hazardous, or the source category is not regulated under Section 112.”22 EPA also dismisses the AEP v. Connecticut footnote as “dictum,” “at least half wrong,” and not truly representative of either the Court’s or the AEP petitioners’ position.23

The petitioners, anticipating EPA’s argument, assert that § 111(d) is unambiguous and, therefore, not open to the kinds of interpretation or gap filling in which EPA is attempting to engage.24 They further assert that the Office of the Law Revision Counsel of the U.S. House of Representatives, responsible for compiling the U.S. Code, correctly disregarded the Senate’s “extraneous” conforming amendment and instead incorporated the House’s “previously executed substantive amendment” into § 111(d).25 In the alternative, they argue that making both amendments effective would result in a rule that excludes both air pollutants regulated under § 112 and source categories regulated under § 112, which would still render the plan unlawful.26

Thus, the dispute over whether Clean Air Act § 111(d) prohibits regulation of source categories that are already regulated under Clean Air Act § 112, or only pollutants that are already regulated by § 112, comes down to a dispute between arguments under Chevron Step 1 (petitioners) and Chevron Step 2 (EPA). The petitioners ask the D.C. Circuit to conclude that the language of § 111(d) is clear.27 EPA tells the D.C. Circuit that “[t]he text of Section 111(d) . . . is ambiguous, and . . . EPA’s reasonable interpretation is entitled to deference,”28 even when it comes to its interpretation of the House and Senate’s differing amendments to § 111(d) in 1990.29

Argument (2): Generation Shifting as BSER

The second main area of dispute, EPA’s sector-wide “generation shifting” approach to determining the CO2 “emission performance rates” for the two subcategories of EGUs subject to the Clean Power Plan, lies both inside and, potentially, outside the traditional Chevron framework.

The Clean Air Act’s New Source Performance Standards and existing source emission guideline provisions both require the establishment of “standards of performance,” which the Act defines as:

a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.30

Under § 111(b) of the Act, EPA publishes New Source Performance Standards. But § 111(d) gives states the primary responsibility for establishing standards for existing sources. Once EPA promulgates NSPS for a particular source category, each state containing an existing source in that category is to “submit to the Administrator a plan which . . . establishes standards of performance” for those existing sources.31 Rather than describing the state plans to be submitted, the Act directed EPA to “prescribe regulations” for the development and submission of those plans.32 And under those regulations,33 EPA publishes “guideline documents” that “provide information for the development of State plans,” including “[a]n emission guideline that reflects the application of the best system of emission reduction (considering the cost of such reduction) that has been adequately demonstrated for designated facilities, and the time within which compliance with emission standards of equivalent stringency can be achieved.”34 Thus, both NSPS and existing source performance standards are based on the “best system of emission reduction,” or BSER, that EPA determines is “adequately demonstrated” for the sources in a given source category.

When EPA promulgated its implementing regulations for § 111(d) in 1975, it opined that Congress intended EPA to base BSER on “the availability and costs of control technology[.]”35 And since then, EPA has “frequently referred to [BSER] as the ‘best demonstrated technology’ (BDT).”36

But in the Clean Power Plan, EPA reinterpreted “system of emission reduction” to mean any “set of measures that work together to reduce emissions,”37 resulting in a seeming shift from “technologies” to “measures.” In particular, for the first time, EPA “consider[ed] emission reduction approaches that focus on . . . the overall source category [ ] by shifting generation from dirtier to cleaner sources[,] in addition to emission reduction approaches that focus on improving the emission rates of individual sources.”38

By looking at “BSER from the perspective of the source category as a whole,”39 EPA came up with a BSER made up of three “building blocks”: (1) instituting heat rate improvements at affected EGUs, (2) substituting generation from gas-fired EGUs for generation from coal-fired EGUs, and (3) substituting renewable generation for generation from affected EGUs.40 In a nod to EPA’s past practices, the agency asserted that those “building blocks are the EPA’s determination of what technology is adequately demonstrated.”41 And EPA emphasized that “emissions trading is an integral part of [EPA’s] BSER analysis.”42 EPA explained that building blocks two and three would require affected EGUs to “acquir[e] ownership interests in existing NGCC or RE facilities;” contract with the owners of such facilities; or in states with trading programs, purchase emission reduction credits or allowances from such sources.43 This power-sector-wide generation-shifting approach to BSER is the petitioners’ second main target.

Chevron Step Zero

The petitioners start off by making a Chevron Step Zero argument.44 Pointing to an early White House fact sheet that explained the Clean Power Plan would “drive a more aggressive transformation in the domestic energy industry,”45 the petitioners argue EPA has unlawfully “claim[ed] the authority to become a central planning authority for the power sector,” an area outside its traditional area of expertise.46 The petitioners assert the plan represents the first time in the forty-five-year history of § 111 that “EPA [has] asserted the authority to . . . force a source to subsidize ‘cleaner’ alternatives that would increase production at the source’s expense.”47 And the petitioners argue that EPA’s new interpretation of “system of emission reduction” to include “shifting production to other [cleaner] plants” could be applied to many other industries that involve “sales of interchangeable products or services,” thus vastly increasing EPA’s traditionally understood powers without clear congressional authorization.48

EPA’s response begins by denying that Chevron Step Zero exists. EPA points to the Supreme Court’s decision in City of Arlington v. Federal Communications Commission, in which the majority opinion (authored by Justice Scalia) noted that the Court has applied Chevron “[even] in cases where an agency’s expansive construction of the extent of its own power would have wrought a fundamental change in the regulatory scheme.”49 But EPA rejects the notion that it is stretching the bounds of its authority, arguing that it is simply setting “CO2 emission limitation[s] for fossil-fuel-fired plants,” not engaging in “‘central planning’ . . . for the power sector.”50 Indeed, EPA asserts the Clean Power Plan “leav[es] states and sources with enormous flexibility to meet” the plan’s requirements “through virtually any means they choose.”51 Still, EPA asserts that the statute’s directive to consider “energy requirements” when determining BSER requires EPA to consider “issues pertaining to grid reliability[ ] in setting Section 111(d) guidelines.”52 And EPA points to AEP’s holding that when it comes to GHG regulation, “[t]he Clean Air Act entrusts [the] complex balancing” of “competing interests,” including “our Nation’s energy needs and the possibility of economic disruption[,] . . . to EPA in the first instance, in combination with state regulators.” Finally, EPA brushes aside any concerns that its new interpretation of “system of emission reduction” could lead to an expansion in agency authority under § 111(d), asserting that power plant operations are “unique.”

Chevron Steps One and Two

Next, the petitioners switch to an analysis of the statutory text. The petitioners argue that Clean Air Act § 111(d) requires both BSER and standards of performance to be determined by reference to what can be accomplished at individual sources, i.e., “inside the fence line.” The petitioners note that standards of performance under § 111(d) are to be “establishe[d] for . . . existing source[s]” and “appl[ied] . . . to . . . particular source[s].”53 They note EPA’s concession, in the preamble to the Clean Power Plan, that BSER “must be limited to measures that can be implemented, ‘appl[ied],’ by the sources themselves. . . .”54 And they reject EPA’s assertion that such measures include “measures that source owners or operators can implement”55 by “shift[ing] generation to . . . lower – or zero-emitting generation” at other sources.56 Noting that § 111 separately defines “source” and “owner or operator,”57 the petitioners assert that “[a] rule that requires construction of or generation at a second facility is not a standard ‘for’ the first source at all, even if the first source’s owner or operator can somehow bring about the generation at the second facility.”58

Instead of “setting reduction requirements on a source-by-source basis,” the petitioners continue, EPA “is setting reduction requirements at the level of the entire source category.”59 Indeed, the petitioners assert that, by making the curtailment of fossil-fuel-fired EGUs and generation shifting a central component of BSER, EPA would convert § 111(d)’s required “standard[s] of performance” into standards of “non-performance”60 in contravention of the Act’s text. Lastly, the petitioners assert that EPA’s interpretation disregards the statutory directive that a “standard of performance” must “reflect[ ] the degree of emission limitation achievable through the application of the best system of emission reduction.”61 The petitioners note that the Act defines “emission limitation” to mean “a requirement . . . which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis,”62 and they assert that Congress intended the definition to preclude “intermittent controls,” such as “‘shifting’ production to other sources.”63

EPA, in response, asserts that Congress’s use of the broad term “system of emission reduction” was a “direct[ion] to consider a wide range of measures to reduce emissions from sources.”64 EPA asserts that interpreting “system of emission reduction” to include “cost-effective generation-shifting . . . is eminently reasonable,” given § 111’s purposes.65 It rejects the petitioners’ arguments that the statutory definitions of “standards of performance” and “source” and the requirement that standards of performance be “for” and “applicable to” existing sources are relevant to “the scope of measures that can be considered as part of [BSER].”66 And it disagrees that generation-shifting cannot be accomplished by affected EGUs themselves, asserting that simply reducing generation at one plant “accomplishes generation-shifting, because other sources must . . . increase . . . their operations to balance supply with demand.”67

EPA also defends its focus on category-wide emissions as “entirely appropriate,” asserting that “ignor[ing] total air-quality benefits as a relevant factor in selecting [BSER] . . . would be wholly inconsistent with the statute’s objectives. . . .”68 It argues that the word “performance” (in “standard of performance”) “refers to emissions performance,” so that the important thing is that each source is “reducing emissions . . . tied to [the source’s] operations.”69 And it accuses the petitioners of “mischaracteriz[ing]” the legislative history behind the definition of “emission limitation,” asserting that Congress was concerned only about power plant “load switching” that would “simply disperse pollutants away from higher concentration areas and towards lower concentration areas” rather than decreasing total emissions.70

Thus, the legal debate over EPA’s building-block-based BSER runs the Chevron gamut. If the petitioners convince the courts to see the plan the way they do—as an effort to sidestep Congress and remake the power sector through a breathtakingly expansive interpretation of a tiny, seldom-used, and oft-overlooked provision of the Clean Air Act—the court may find the plan unlawful. If EPA convinces the courts to view the plan the way EPA does—as an environmentally crucial but otherwise run-of-the-mill “regulation of pollution . . . which [only] indirectly affects energy prices and markets,”71 the courts may accept EPA’s argument that there is no Chevron Step Zero. The debate over EPA’s BSER then becomes a traditional debate under Chevron Steps One and Two, with the petitioners arguing that “[t]he text and structure of Section 111 unambiguously bar the ‘generation shifting’ the Rule imposes,”72 and EPA arguing that the petitioners’ “grab bag of textual snippets” should not prevent the courts from deferring to EPA’s “reasonable interpretation” of Clean Air Act § 111.73

Conclusion

How the D.C. Circuit (and, ultimately, the Supreme Court) view the Clean Power Plan may determine the extent to which the courts defer to EPA’s interpretations of Clean Air Act § 111. But beyond that, how the courts view the Clean Power Plan could alter or reinforce the law of Chevron deference and its boundaries for years.

The petitioners’ depiction of an EPA run amok, choosing sides and favoring cleaner forms of production in market after market, could lead the courts to reaffirm a jurisprudence that sets Chevron aside in cases of particularly vast economic or political significance. On the other hand, EPA’s depiction of the petitioners as Chicken Littles, needlessly panicking over a conservative plan that follows already existing industry trends and agency practices, could lead the courts to favor a jurisprudence that rejects Chevron exceptions and confirms the courts’ traditional deference to agencies’ interpretations of their governing statutes. And under Chevron Step Two, the courts are more likely to concede to EPA’s broad interpretation of the words “best system of emission reduction” (in Clean Air Act § 111(a)’s definition of “standard of performance”) as including shifting generation to lower-emitting sources. Of course, the election of Mr. Trump may affect how some judges view deference with (for example) some proponents of deference expansive enough to uphold the Clean Power Plan thinking twice about empowering executive agencies in a Trump administration.

But the courts may never reach the BSER issue. The petitioners’ simplest argument—although one that seemed to gain little traction at oral argument before the D.C. Circuit—is that Clean Air Act § 111(d) explicitly prohibits EPA from requiring the establishment of existing source performance standards for “any air pollutant . . . emitted from a source category . . . regulated under Section 7412 of this title[.]” Because electric generating units are regulated under Clean Air Act § 112, the courts could simply conclude that EGUs are currently exempt from regulation under § 111(d) and bypass the larger questions about Chevron Step Zero and the breadth of the term “best system of emission reduction” entirely.

Endnotes

1. The White House, Presidential Memorandum—Power Sector Carbon Pollution Standards (June 25, 2013), http://www.whitehouse.gov/the-press-office/2013/06/25/presidential-memorandum-power-sector-carbon-pollution-standards (last visited Dec. 12, 2016).

2. 80 Fed. Reg. 64510 (Oct. 23, 2015).

3. 80 Fed. Reg. 64662 (Oct. 23, 2015).

4. State of North Dakota v. EPA, No. 15-1381, Order (D.C. Cir. Mar. 24, 2016).

5. State of West Virginia v. EPA, No. 15-1363, Order (D.C. Cir. Jan. 21, 2016); Order (D.C. Cir. Jan. 28, 2016).

6. State of West Virginia v. EPA, No. 15-1363, Order (D.C. Cir. May 5, 2016).

7. A recording of the oral argument is available on the Court’s web site: https://www.cadc.uscourts.gov/recordings/recordings.nsf/DocsByRDate?SearchView&Query=september+27,+2016&Start=1&Count=10&SearchOrder=1&SearchWV=TRUE

8. See 80 Fed. Reg. at 64512–513, Tbl. 1.

9. Id. at Subpart UUUU, Tbl. 2. Hawaii and Vermont have no CO2 carbon intensity goals.

10. See 80 Fed. Reg. 64966 (Oct. 23, 2015).

11. State of West Virginia v. EPA, No. 15-1363, Order (D.C. Cir. Jan. 21, 2016).

12. Adam Liptak & Coral Davenport, Supreme Court Deals Blow to Obama’s Efforts to Regulate Coal Emissions, N.Y. Times (Feb. 9, 2016), http://www.nytimes.com/2016/02/10/us/politics/supreme-court-blocks-obama-epa-coal-emissions-regulations.html.

13. See, e.g., West Virginia v. EPA, No. 15A773, Order in Pending Case (U.S. Feb. 9, 2016).

14. See Alvin Powell, Clean Power Plan’s Legal Future ‘a Mess’, Harvard Gazette (Feb. 29, 2016), http://news.harvard.edu/gazette/story/2016/02/clean-power-plans-legal-future-a-mess/.

15. 42 U.S.C. § 7411(d)(1) (emphasis added).

16. See 77 Fed. Reg. 9304 (Feb. 16, 2012). In 2015, the Supreme Court held EPA unlawfully failed to consider cost when issuing the MATS Rule, but remanded the rule without vacating it. See Michigan v. EPA, 135 S. Ct. 2699 (2015). On remand, the D.C. Circuit remanded the rule to EPA, again without vacating it. See White Stallion Energy Ctr., LLC v. EPA, Nos. 12-1100 et al., 2015 U.S. App. LEXIS 21819 (D.C. Cir. Dec. 15, 2015).

17. State of West Virginia v. EPA, No. 15-1363, Opening Brief of Petitioners on Core Legal Issues (Petitioners’ Opening Brief) at 61–62 (D.C. Cir. Feb. 19, 2016).

18. Am. Elec. Power Co. v. Connecticut, 564 U.S. 410, 424 n.7 (2011), cited in State of West Virginia, Petitioners’ Opening Brief at 62.

19. State of West Virginia v. EPA, No. 15-1363, Respondent EPA’s Initial Brief (EPA’s Initial Brief) at 81 (D.C. Cir. Mar. 28, 2016) (emphasis omitted).

20. See Pub. L. 101-549, § 108(g), 104 Stat. 2465 (1990).

21. Pub. L. 101-549, § 302(a), 104 Stat. 2574 (1990) (emphasis added).

22. State of West Virginia, EPA’s Initial Brief at 92.

23. Id. at 94.

24. State of West Virginia, Petitioners’ Opening Brief at 66.

25. Id. at 72.

26. Id. at 74.

27. See id. at 66.

28. State of West Virginia, EPA’s Initial Brief at 79.

29. See id. at 93.

30. 42 U.S.C. § 7411(a)(1) (emphasis added).

31. 42 U.S.C. § 7411(d)(1).

32. 42 U.S.C. § 7411(d)(1).

33. EPA’s rules for adoption and submittal of state plans for what it calls “designated facilities” are set forth in 40 C.F.R. Part 60, Subpart B.

34. 40 C.F.R. § 60.22(b)(5).

35. 40 Fed. Reg. 53340, 53343 (Nov. 17, 1975).

36. 79 Fed. Reg. 1430, 1444 n.62 (Jan. 8, 2014).

37. 80 Fed. Reg. at 64720.

38. Id. at 64726.

39. Id. at 64744.

40. Id. at 64667.

41. Id. at 64735.

42. Id. at 64734.

43. Id.

44. See, e.g., Cass Sunstein, Chevron Step Zero, 92 Va. L. Rev. 187 (2006). Generally, Chevron Step Zero refers to the idea that when a rulemaking involves major or fundamental issues, deference to an agency’s statutory interpretations is reduced and Congress must speak with great clarity in ceding regulatory authority to an agency.

45. See, e.g., Joby Warrick, White House Set to Adopt Sweeping Curbs on Carbon Pollution, Wash. Post (Aug. 1, 2015), https://www.washingtonpost.com/national/health-science/ white-house-set-to-adopt-sweeping-curbs-on-carbon-pollution/ 2015/08/01/ba6627fa-385c-11e5-b673-1df005a0fb28_story.html (last visited Dec. 12, 2016).

46. State of West Virginia, Petitioners’ Opening Brief at 32–36.

47. Id. at 34.

48. Id.

49. 133 S. Ct. 1863, 1872 (2013), quoted in State of West Virginia, EPA’s Initial Brief at 41 n.30.

50. State of West Virginia, EPA’s Initial Brief at 53.

51. Id.; see also id. at 17 (noting that the Clean Power Plan “does not limit states and sources to using the specific measures identified by EPA as the [b]est wide range of measures to achieve the emission limitations”).

52. Id. at 52.

53. State of West Virginia, Petitioners’ Opening Brief at 41 and 43, citing, inter alia, 42 U.S.C. § 7411(d)(1).

54. Id., citing 80 Fed. Reg. at 64720 (emphasis in Brief omitted).

55. 80 Fed. Reg. at 64762.

56. State of West Virginia, EPA’s Initial Brief at 53; Petitioners’ Opening Brief at 42.

57. Id. at 44, quoting 42 U.S.C. § 7411(a)(3) (defining “source”) and (a)(5) (defining “owner or operator”).

58. Petitioners’ Opening Brief at 45.

59. Id. at 47.

60. Id. at 51.

61. 42 U.S.C. § 7412(a)(1) (emphasis added).

62. State of West Virginia, Petitioners’ Opening Brief at 52, quoting Clean Air Act § 302(k) (emphasis added in Brief).

63. Id., quoting H.R. Rep. No. 95-294, at 92 (1977).

64. State of West Virginia, EPA’s Initial Brief at 27.

65. Id. at 44.

66. Id. at 61. On the other hand, EPA asserts that because states can allow credit or allowance trading to help sources comply with EPA’s emission guidelines, EPA should be permitted to rely on that trading as a component of BSER. See id. at 47–48.

67. Id. at 45–46.

68. Id. at 64.

69. Id. at 65–66.

70. Id. at 67.

71. State of West Virginia, EPA’s Initial Brief at 55.

72. State of West Virginia, Petitioners’ Opening Brief at 41.

73. State of West Virginia, EPA’s Initial Brief at 60.

Rob Brubaker & Eric Gallon

Rob Brubaker ([email protected]) is a partner and Eric Gallon ([email protected]) is a senior attorney in the Columbus, Ohio, office of Porter Wright Morris & Arthur, LLP. Rob is a former chair of the Section of Public Utilities, Communications and Transportation.