Obama Legacy Gets Second Legal Test Over Climate Rule ‘Goof’

(Updates with EPA comment in sixth paragraph, Harvard

professor in second one under First Crack subheadline.)

By Mark Drajem and Andrew Zajac

(Bloomberg) — A congressional drafting error and clunky

phrase is putting a second of President Barack Obama’s signature

endeavors in jeopardy. This time it’s climate change.

Challengers to Obama’s policies are exploiting imprecise

amendments passed by Congress 25 years ago in a lawsuit to

derail Environmental Protection Agency rules designed to curb

carbon emissions. The case, using a line of attack similar to

one against his massive health-care overhaul, is set for a

hearing Thursday in federal court.

If coal-mine operator Murray Energy Corp. and states led by

West Virginia convince a panel of judges named by Republican

presidents to agree with their reading, the EPA rules could be

tossed before they are even made final.

“It’s a perfect storm of timing and congressional goofs

that leads to these interesting arguments,” said Thomas Lorenzen, a former government lawyer on clean-air cases and who

is now a partner at the law firm Dorsey & Whitney. “And Murray

Energy drew a good panel for themselves, so there will be some

conflicting tendencies there.”

Courts have rejected attempts to challenge rules before

they are completed, and the carbon rules won’t be done until

later this year. As a result, EPA Administrator Gina McCarthy

has said she’s confident Murray’s lawsuit will be dismissed.

“Since we have not issued a final rule, we believe that

lawsuits challenging the rule are premature,” Liz Purchia, a

spokeswoman for the EPA, said in a statement. “We will address

all comments concerning the legality of the rule when we issue

the final Clean Power Plan.”

Review Looms

Still, either now or later, a federal court will need to

rule on these issues, and they’ve taken on great political

importance as Obama has made fighting climate change a top

priority in the final years of his presidency.

For the administration, this case has similarities to the

challenge over the Affordable Care Act that is awaiting a

decision by the Supreme Court. In that case, the fight is over a

phrase that says people qualify for tax credits when they buy

insurance on an exchange “established by the state.”

Obama opponents say that phrase means subsidies aren’t

available in dozens of states that didn’t set up exchanges.

Residents of those states instead use the federal healthcare.gov

system, with an estimated 7.5 million getting taxpayer-subsidized discounts.

Health Benefits

The carbon rule’s effects are primarily on power utilities,

but will have broad impacts on citizens and the economy, both

supporters and critics say.

Meeting agency standards for reducing carbon dioxide would

produce $90 billion in climate and health benefits and cost

utilities as much as $8.8 billion, according to the EPA. Obama

has also pushed a broader climate plan that would make freezers,

microwaves and other appliances more efficient; curb methane

from landfills; and cut the use of climate-altering chemicals in

air conditioners.

Congressional Republicans are sparing no effort to fight

those initiatives. Senate Majority Leader Mitch McConnell wrote

state leaders this year, urging them not to implement the EPA

rule, much as many states refused to establish state insurance

exchanges for Obamacare.

To add legal heft, coal producer Peabody Energy Corp. hired

Laurence Tribe, Obama’s law professor and mentor at Harvard

University, to help. Tribe, a leading liberal constitutional

scholar, has argued 35 cases at the Supreme Court, including the

2000 election case for Democratic presidential candidate Al Gore

over Republican George W. Bush.

Tribe Role

Tribe, who says the EPA rule is akin to ripping up the

Constitution to address climate change, is scheduled to handle

part of the oral argument against the government at the U.S.

Court of Appeals in Washington. The judges set to hear the case

are Brett Kavanaugh and Thomas Griffith, appointed by George W.

Bush, and Karen Henderson, who was named by George H.W. Bush.

Murray Energy, the biggest closely held U.S. coal company,

challenged the law in June, and was joined in February by

Peabody, the largest publicly held coal company.

Fifteen states, all with Republican attorneys general

except coal-heavy Kentucky, have sided with coal producers,

along with business groups including the National Federation of

Independent Business and the U.S. Chamber of Commerce.

Dueling Sections

At issue is how the EPA used sections of the Clean Air Act

to regulate pollution. The companies argue the rules violate an

amendment to the Act in 1990, which they say limits regulation

of the facilities for pollutants to just one section of the law.

Since the EPA in 2011 mandated cuts in mercury and toxic

emissions from power plants under section 112, they can’t also

be regulated for carbon pollution under section 111(d), which is

what the EPA proposed last year.

“The plain text of section 111(d) flatly and unambiguously

prohibits EPA’s proposal,” Tribe told a congressional panel

last month. “The absence of EPA legal authority in this case

makes the Clean Power Plan, quite literally, a ‘power grab.’”

The EPA’s lawyers counter that a drafting error by

lawmakers actually created separate amendments for that part of

111(d); one passed the House and the other by the Senate. When

different versions of legislation are blended into a final

document, such conflicts are supposed to be resolved. Yet both

were in the bill passed by Congress and signed into law.

‘First Crack’

While the agency argues neither prohibits the carbon

regulation it’s pursuing, the Senate amendment doesn’t contain

any restrictions on double regulation. The House measure would

only prohibit double regulation of specific pollutants, and

doesn’t include a general prohibition on regulating power plants

in two different areas, the EPA’s supporters say.

“This is the classic case where there is ambiguity that

allows the agency to have a first crack at trying to resolve a

conflict,” said Jody Freeman, a Harvard University law

professor who supports the EPA’s position.

And the legal wranglings have one odd twist. Many of the

states questioning the carbon rules have also taken a case to

the Supreme Court arguing that the EPA failed to account for

costs before issuing its mercury rule under section 112. If that

rule gets tossed by the highest court, then it would remove the

double regulation argument against the carbon plan.

The Supreme Court case was argued last month, and a

decision will come in the next few months.

The case is In re: Murray Energy Corp., 14-1112, U.S. Court

of Appeals, District of Columbia (Washington). A separate case,

West Virginia v. EPA, 14-1146, was consolidated with it.

For Related News and Information:

Coal Provocateur Gorges on Mines, Defends a Dying Industry Obama

Harvard Law Professor Tribe Calls Key EPA Rule ‘Overreach’

Obama Seeks Power-Plant Emissions Cuts Republicans Oppose

Legal headlines: TLAW <GO>

Bloomberg legal resources: BLAW <GO>

To contact the reporters on this story:

Mark Drajem in Washington at +1-202-624-1964 or

mdrajem@bloomberg.net;

Andrew Zajac in Washington at +1-202-654-7317 or

azajac@bloomberg.net

To contact the editors responsible for this story:

Michael Hytha at +1-415-617-7137 or

mhytha@bloomberg.net;

Jon Morgan at +1-202-654-7370 or

jmorgan97@bloomberg.net

Steve Geimann, Jon Morgan, Michael Hytha

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