//  1/8/19  //  In-Depth Analysis

Last summer, the Trump EPA announced that it planned to reconsider the Obama EPA’s conclusion that it is “appropriate and necessary” to regulate mercury emissions from power plants.  At the time, I warned that any such “reconsideration” would violate the law.  D.C. Circuit precedent unambiguously provides that—once an “appropriate and necessary” finding has been made—the EPA must regulate power-plant emissions.  It can’t duck its duty to regulate by announcing that it has “reconsidered” a previous administration’s “appropriate and necessary” finding.  

Well, the proposed rule is out.  And (surprisingly!) it doesn’t propose to violate the law.  What does it do?  That’s where things get weird.  

To appreciate why, we have to take a spin through the convoluted history of the regulations at issue.  In 1990, Congress passed a law which instructed EPA to regulate power-plant emissions of mercury and other hazardous air pollutants if EPA (1) conducted a study; and (2) concluded that regulation is “appropriate and necessary.”  Answering that Congressional command, the Clinton EPA did the study, and concluded that regulating power-plant emissions is indeed “appropriate and necessary.”  But the Clinton EPA never actually issued substantive pollution-control regulations.  Instead, it left that task to the George W. Bush Administration.   

Upon assuming power, however, the Bush EPA tried to walk back the Clinton EPA’s “appropriate and necessary” finding, and exempt power plants from regulation.  But in a case captioned New Jersey v. EPA, the D.C. Circuit held that EPA can’t do that. Once EPA has made its “appropriate and necessary” finding, the D.C. Circuit ruled, power plants are subject to regulation.  Even if EPA later changes its mind about whether regulation is “appropriate and necessary,” power plants can’t be de-regulated.  Instead, they can be exempted from regulation only via an entirely separate statutory “de-listing” process.[1]

Then the Obama Administration took office.  For reasons not particularly relevant here, the Obama Administration decided to “confirm” the Clinton-era “appropriate and necessary” finding.  It then issued substantive regulations, known as the MATS Rule, which limited power-plant emissions of mercury and other air toxins.  Those substantive standards have been in effect since 2011.

But that’s not the end of the story—not even close.  In 2015, in a case captioned Michigan v. EPA, the Supreme Court vacated the Obama EPA’s “confirmatory” appropriate-and-necessary finding, and required it to reconsider.  The Obama EPA did so and, in 2016, issued a revised finding that it is appropriate and necessary to regulate power-plant emissions. That revised finding kept in place the substantive MATS standards.  And the Obama Administration’s  2016 finding is final—though crucially (and more on this later), a challenge to that finding remains pending in the D.C. Circuit.

That brings us to the Trump Administration’s proposed rule.  The proposed rule does, indeed, “reconsider” the Obama EPA’s 2016 “appropriate and necessary” finding, and concludes that it’s invalid.  But it stops there.  The proposed rule expressly—and correctly—recognizes that the D.C. Circuit’s decision in New Jersey means that EPA can’t roll back substantive regulations just because it’s “reconsidered” an earlier “appropriate and necessary” finding.  So, the proposed rule effectively says: “Hey! We no longer think it’s ‘appropriate and necessary’ to regulate power plants.  But we’re going to keep doing it anyway, because we realize we have to.” 

That’s bizarre.  The point of a rulemaking is typically to do something (or decline to do something), not to answer a question that—at the outset—can’t possibly have any real-world effect.  But that’s precisely what the Trump EPA’s proposed rule does.  In light of New Jersey, its “reconsideration” of the appropriate-and-necessary finding is nothing more than an academic treatise about why a prior agency action is incorrect.  If put into effect, it will have exactly as much real-world consequence as this blog post.

So, what gives?  Why is the EPA going through the process of “reconsidering” the appropriate-and-necessary finding when it won’t have any real-world effect?  I see at least three possibilities:

1. Setting up an invalidation of MATS?

The first possibility is that maybe the final “reconsideration” rule won’t be as toothless as the proposal. The proposed rule, after all, is just that: a proposal.  The rule won’t be finalized until after EPA receives public comment.  And although the proposedrule correctly recognizes that the D.C. Circuit’s decision in New Jersey prevents EPA from undoing any substantive regulations, there is a caveat. The proposed rule sketches out—and seeks comment on—two theories under which EPA could evade New Jersey, and undo the substantive mercury regulations. 

Both of those theories are farfetched at best.  The first theory is that New Jersey is distinguishable because, at the time New Jersey was issued, there were not yet substantive mercury regulations in place.  The second is that the Trump Administration can ignore New Jersey because, in Michigan v. EPA, the Supreme Court vacated the Obama Administration’s first appropriate-and-necessary finding.  And, that theory suggests, the Trump EPA’s “reconsideration” of the Obama Administration’s second appropriate-and-necessary finding is “a continuation of the Agency’s response to the Supreme Court’s remand, and New Jersey does not limit the effect of an action made in response to a Supreme Court decision.”

If those theories seem confusing, that’s because they are.  New Jersey was a straightforward decision—based on the statutory text—which held that, once an “appropriate and necessary” finding has been made, power plants are locked into EPA regulation.  New Jersey in no way turned on whether substantive mercury regulations had yet been issued.  And nothing in the Supreme Court’s decision Michigan v. EPA suggested that the D.C. Circuit’s (unanimous) ruling in New Jersey was incorrect, or that EPA could somehow circumvent the statute on which New Jersey was based. 

For what it’s worth, it’s not even clear the Trump EPA thinks these theories are viable.  That, presumably, is why it didn’t propose them—it just sought comment on them as “alternatives.”  Still, the inclusion of these alternative theories in the proposed rule is unsettling.  It raises the possibility that a final rule could undo the substantive regulation of hazardous air pollutants from power plants. Such a rule, of course, would fly in the face of New Jersey, and would be blatantly unlawful.

2. Attacking co-benefits?

A second possibility, floated in several circles, is that the Trump Administration is setting the stage for a broader attack on what are known as “co-benefits.”  When issuing a rule, EPA often must calculate the costs and the benefits of regulation.   When it does so, it typically takes stock of all the costs and benefits—direct and indirect—that might result.  Thus, for example, if a rule aimed at reducing greenhouse-gas emissions will also reduce emissions of dangerous soot, EPA will count the soot-related health benefits as a “co-benefit” of the greenhouse-gas rule. 

The co-benefits concept played a starring role in the Obama EPA’s 2016 “appropriate and necessary” finding.  When issuing the finding, the Obama EPA concluded that regulating airborne mercury alone would result in $4-$6 million in annual monetized benefits.  But importantly, power plants that reduce their airborne mercury emissions also inevitably reduce their emissions of other deadly pollutants—like particulate matter and sulfur dioxide.  And the Obama EPA estimated that reduction in those pollutants’ emissions would save up to 11,000 lives a year, and up to $90 billion in monetized benefits.  Those extraordinary co-benefits, the Obama EPA said, strongly supported the appropriateness and necessary-ness of mercury regulation.

In its proposed rule, the Trump EPA concluded that it was inappropriate for the Obama EPA to place so much weight on co-benefits.  At least in the context of the “appropriate and necessary” finding, the Trump Administration said, co-benefits related to particulate matter must take a back seat to the direct benefits of mercury and air-toxin emission reductions.  And because the Obama EPA so heavily emphasized co-benefits, the Trump EPA concluded, its appropriate-and-necessary finding was wrong.

So, is EPA’s proposed rule (which again, has zero substantive effect) meant to set up a broader attack on the very idea of co-benefits?  Perhaps, but there are at least two good reasons to think otherwise.

First, given the Trump EPA’s clear de-regulatory agenda, it’s not at all clear it wants to take the concept of co-benefits off the table.   Yes, co-benefits have come under attack by some of Trump’s allies.  But co-benefits, as a concept, are ideologically neutral—and can be used both to justify regulation and to justify de-regulation.

Take, for example, the Trump EPA’s recent proposal to undo automobile fuel-efficiency standards, which are a key component in the fight against climate change.  That rollback proposal relied heavily on purported “co-benefits” of lower fuel-efficiency standards.  The justification proceeded like this: (1) new cars are safer; (2) higher fuel-efficiency standards make new cars more expensive; (3) when cars are more expensive, people are less likely to buy them; and (4) when people don’t buy safe new cars, they’re more likely to die in a car crash.[2]   

That’s a pretty attenuated chain of logic, and one that is far removed from the core goal of fuel-efficiency standards: checking greenhouse-gas emissions. It is, in other words, a textbook use of “co-benefits.”  And it seems unlikely Trump’s EPA would want to undermine its own proposed fuel-efficiency rollback, or prevent itself from relying on co-benefits to justify deregulationin the future. So, an all-out attack on co-benefits seems improbable.

Second, and consistent with the above, the Trump EPA’s “reconsideration” of the appropriate-and-necessary finding does notsuggest that it is generally inappropriate to consider co-benefits.  Instead, it concludes that in the context of this particular statute—which is focused on one class of pollutant—it is inappropriate to give “equal weight” to the benefits that accrue from emission-reductions from another class of pollutants.  In fact, the Trump EPA goes out of its way to note that:

[a]lthough an analysis of allbenefits and costs is [sometimes] appropriate . . . . this does not mean that equal consideration of all benefits and costs, including co-benefits, is appropriate for the specific statutory appropriate and necessary finding called for under CAA section 112(n)(1)(A).  Rather this finding is necessarily governed by the particular statutory language and context of this provision.

The proposed rule, in other words, seems gerrymandered to conclude that the Obama Administration’s reliance on co-benefits was inappropriate in the specific context of deciding whether to regulate power-plant mercury emissions.  But it suggests that other uses of co-benefits may still be appropriate. Given that, it seems unlikely that the proposed rule is the opening salvo in a broader war against co-benefits. Instead, we can probably expect the Trump EPA to strategically make use of co-benefits when the concept fits its deregulatory agenda—and attack co-benefits when they cut against that agenda.

3. Setting the Stage for A Litigation Heist

Finally, there is third possibility: despite being styled as a “rule,” EPA’s reconsideration of the appropriate-and-necessary finding may not be about agency action at all.  Instead, it could set the stage for a forthcoming attempt to undo the Obama EPA’s finding in court.  And if the Obama EPA’s appropriate-and-necessary finding falls, there is a good chance that the substantive MATS rule falls with it.

Recall that—though the Obama Administration’s 2016 appropriate-and-necessary finding is administratively final—it remains subject to litigation.  After the finding was issued, a number of industrial actors and states sought review in the D.C. Circuit.  Those parties agued, among other things, that the Obama EPA’s heavy reliance on co-benefits was unlawful.  Initially, the Obama EPA was charged with defending its own finding.  But when Donald Trump won the presidency, that task fell to the Trump EPA.   Rather than defend the appropriate-and-necessary finding, EPA sought and received a stay of the D.C. Circuit proceedings.  The litigation has been on hold for nearly two years. 

The Trump Administration’s “reconsideration” of the Obama EPA’s appropriate-and-necessary finding will almost certainly restart that litigation.  When the proposed rule is finalized, expect EPA to inform the D.C. Circuit that it no longer supports the Obama finding.  Then, expect the Trump Administration to join its ideological allies and argue against the Obama finding in the D.C. Circuit. 

At first blush, there won’t be much practical consequence if the Trump EPA switches sides.  The Obama EPA’s appropriate-and-necessary finding will still be vigorously defended.  Dozens of well-lawyered blue states and environmental groups have already intervened in the litigation, and will defend the Obama finding.  Of course, you never want the United States to oppose you in litigation.  But let’s be real: the Trump Administration was never going to defend the Obama EPA.  As Oklahoma Attorney General, former Trump EPA Administrator Scott Pruitt joined the states which sued to stop it.  It was inevitable that the Trump Administration was going to abandon the appropriate-and-necessary finding.

But then why go through the process of rulemaking?  It’s not as though the Trump EPA hadto issue a substantively empty “rule” to stop defending the appropriate-and-necessary finding in court.  It could have just declined to defend it.  Since taking office, the Trump Administration has regularly abandoned Obama-era litigation positions, on issues ranging from labor to voting rights to civil rights.  Perhaps most egregiously, the Trump Administration declined to defend the Affordable Care Act against a challenge that was “so self-evidently without merit” that career lawyers withdrew their appearance in the case, rather than have their professional reputations torpedoed by the Administration’s decision not to defend.[3] 

So plainly, isn’t an administration that’s squeamish about taking new positions for the first time in court.  What, then, makes this case different?  Why did the Trump EPA feel the need to issue a toothless, academic “rule” before switching sides in court?

Here’s a guess: I suspect the proposed rule is an attempt to seize  the mantle of judicial deference away from the Obama EPA.  Under the familiar legal doctrine of Chevron deference, courts must defer to an agency’s “reasonable” interpretation of an ambiguous statute.  And there is no doubt that courts must give Chevron deference to the EPA’s interpretation of the phrase “appropriate and necessary”—in Michigan v. EPA, the Supreme Court said as much.  That means the D.C. Circuit must defer to the Obama EPA’s appropriate-and-necessary finding, and can vacate it only if it is unreasonable.

 But if the Trump EPA issues finalizes a “rule” which “reconsiders” the Obama finding, it raises the question: which agency is entitled to deference?  The Obama EPA, which issued the only appropriate-and-necessary rule that has legal consequence?  Or the Trump EPA, which later issued an entirely toothless “rule”  which “reconsidered” its predecessor’s interpretation?  The answer matters.  If it’s the Obama EPA that gets deference, its appropriate-and-necessary finding will be upheld so long as it is “reasonable.”  But if the Trump EPA gets deference, the D.C. Circuit will vacate the Obama finding so long as the Trump EPA’s interpretation of the statute is “reasonable.”

So, if the proposed rule is finalized, expect the Trump Administration to tell the D.C. Circuit that its interpretation, not the Obama EPA’s, is entitled to deference.  The D.C. Circuit should not fall for that gambit.  The D.C. Circuit is charged with reviewing the Obama EPA’s appropriate-and-necessary finding.  That is the only operative finding, and, under New Jersey, the only finding with legal consequence.[4]  The Trump Administration should not be able to seize Chevron deference away from its predecessor EPA by writing what amounts to an amicus brief about the Obama EPA’s interpretation, and packaging that brief as a legally toothless “rule.”  

***

A closing observation.  All of this is so, so ridiculous. Recall that it was during the George H.W. Bush Administration that Congress directed EPA to determine whether it’s “appropriate and necessary” to regulate power-plant mercury emissions.  Three decades later, we’re still fighting about that finding, and the battle seems likely to continue for several more years (at least).

In the meantime, the substantive regulations have gone into effect. Power plants have spent billions to install pollution-control equipment—and many electrical utilities now want the rules to remain in effect.  And the substantive regulations are saving up to 11,000 lives annually.  Yes, those lives are mostly being spared because of “co-benefits.”  But who cares?  If a rule keeps your daughter or grandpa or spouse alive, does it really matter if their lives are technically being spared because of co-benefits?

Given all of that, you’d think maybe—just maybe—we could give all this a rest.  But alas. At this rate, our hyper-intelligent, cybernetic descendants will still be fighting about whether power-plant mercury regulations are “appropriate and necessary” when the sun becomes a red giant and engulfs us all. 

Happy New Year.

@EliNSavit

 

[1] My previous post on this goes into the D.C. Circuit’s reasoning in further detail. 

[2] The factual premises behind that justification have been hotly disputed, and are belied by internal EPA emails.

[3] Let’s not talk about what happened in that case.

[4] Actually, this is only partially true. Even if the Obama Administration’s 2016 appropriate-and-necessary finding is vacated, the Clinton Administration’s finding would still (presumably) remain in place; a court would then have to deal with the procedural challenges to that finding.


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