• March 2, 2016

    For Whom the EPA Tolls

    Dan Byers


New White Paper Explores Effect of Supreme Court Stay on Clean Power Plan Deadlines

On the evening of February 9th, 2016, a collective sigh of relief was heard in state capitals across the country.  In response to requests from 27 states, the U.S. Chamber, and numerous other business and labor organizations, the U.S. Supreme Court issued an order that blocked EPA from implementing the “Clean Power Plan,” (CPP) the agency’s unprecedented takeover of America’s electricity sector, until after the courts have a chance to review its lawfulness.

The legal effect of such a court order – a “stay” – is to press pause, effectively resetting the world to the day before a rule was finalized so that states and regulated parties are not forced to sink extraordinary resources into complying with a rule that might not even be lawful.  Or at least, that’s what it is supposed to be, as explained in a new legal white paper released today.

In response to the Supreme Court’s stay of the CPP, EPA Administrator Gina McCarthy has engaged in an escalating pattern of defiant rhetoric, culminating in her outrageous statement earlier this week that “[l]ife is continuing [in] the exact same direction it was before the stay,” that the stay “didn't mean that anything on the ground really had changed,” and that the stay “is not going to slow us down.”.  Her most recent claims follow on the heels of the agency’s equally outrageous suggestion that the stay won’t push back the CPP’s compliance deadlines.

EPA’s claims that the stay hasn’t really changed anything seem calculated to goad utilities and state air regulators into continuing to work towards compliance with the CPP during the period of judicial review, despite the stay. Whether the CPP deadlines are extended by the length of the stay – or “tolled,” to use the legalese – matters tremendously, because it has the potential to put states in a serious pickle. If the deadlines are not “tolled” by the stay, as EPA claims, then EPA could jam states with truncated compliance deadlines in the unlikely event that the courts uphold the Rule.

Notwithstanding EPA’s blustery claims to the contrary, the law is crisp and clear that a court stay of a regulation delays (or tolls)  all of the deadlines included in a rule for at least as long as the amount of time that a rule is stayed.  What’s more, EPA itself already admitted to this in its own filings with the U.S. Supreme Court and the D.C. Circuit.

A new legal white paper by the Chamber coalition's law firm, Sidley Austin LLP, spells it out:  

 “As described below, we believe the proper interpretation of the Court’s order is that the Stay tolls all the Rule’s deadlines—not just those that actually fall during the Stay—for at least the period of time the Stay is in place. In the hypothetical scenario in which the courts might eventually uphold the Rule, EPA is required to move all the Rule’s deadlines into the future by at least the amount of time between the Stay’s issuance and its expiration. Tolling of the deadlines is required by straightforward operation of the Stay; indeed, EPA itself represented to the Supreme Court that the Stay would toll all of the Rule’s deadlines if granted. This conclusion is also consistent with Supreme Court and D.C. Circuit case law, which holds that a stay preserves the status quo and that deadlines must therefore be tolled, and with EPA’s own past statements regarding the impact of a stay on deadlines. It is further necessary to toll all of the Rule’s deadlines in this case to avoid the concerns expressed by EPA in the Rule itself that the states and industry must be given sufficient time to prepare for compliance in order to avoid “compromising electricity system reliability” and other adverse impacts.”

In other words: (1) requesters of the stay asked for tolling; (2) In opposing the stay request, EPA itself warned that granting the stay would force tolling; (3) existing court precedent requires tolling; and (4) upon finalizing the Rule, EPA itself stated that it had given states and utilities the bare minimum amount of time possible to comply with the rules without threatening grid reliability, inherently acknowledging that shortening such timelines could in fact cause reliability problems.

So what’s in it for EPA to engage in this public relations campaign dismissing the effect of the stay on the CPP and its deadlines? Well, EPA has already learned from experience that if it can enforce compliance while the courts are reviewing a rule (judicial review often takes years), then it can achieve its goals regardless of the legality of its rules.  Under this scenario, it doesn’t really matter whether the courts ultimately hold that a regulation is unlawful: the irreversible damage from a rule has already been done by the time the courts catch up.

The most recent example of EPA’s “Catch Me If You Can” regulatory strategy was on full display just last year, when the Supreme Court invalidated EPA’s MATS regulation, but not until the Rule contributed to the shutdown of up to 20% of the country’s coal-fired power plants.  

On the eve before the Court held that the MATS rule was unlawful, HBO’s Bill Maher asked Administrator McCarthy what EPA would do if the Court invalidated the rule.  McCarthy seemed nonplussed by the possibility, explaining that the rule was finalized “three years ago” and that “[m]ost of [the utilities] are already in compliance, investments have been made…”

In other words, EPA already forced the irreversible compliance investments and power plant retirements it wanted out of the rule – so what did it matter if the Court now found the rule to be unlawful?

That’s why the U.S. Supreme Court’s stay of the CPP is important—it keeps EPA from relying on its “Catch Me If You Can” regulatory strategy yet again.  States deserve to have the complete picture about the real legal effect of the Supreme Court’s stay before they fall for EPA’s misinformation campaign. EPA should have admitted to the states directly that the Agency had already told the courts that the deadlines must be tolled by a stay.

In the interest of transparency the EPA must tell states, utilities, and electricity users that it will honor the tolling requirements inherent in the stay decision.