Tag Archives: Clean Power Plan

Trump Can Ax the Clean Power Plan by Executive Order

President Obama pledged to wield a pen and phone during his second term rather than engage with Congress. The slew of executive orders, enforcement memorandums, regulations and “Dear Colleague” letters comprised an unprecedented assertion of executive authority. Equally unparalleled is the ease with which the Obama agenda can be dismantled. Among the first actions on President Trump’s chopping block should be the Clean Power Plan.

In 2009 Congress rejected a cap-and-trade scheme to regulate greenhouse-gas emissions. The Environmental Protection Agency then devised a nearly identical scheme to mandate shifting electricity generation from disfavored facilities, like those powered by coal, to those the EPA prefers, like natural gas and renewables. No statute authorized the EPA to seize regulatory control of the nation’s energy sector. The agency instead discovered, in an all-but-forgotten 1970s-era provision of the Clean Air Act, that it had that power all along.

To support its preferred policy, the agency was compelled to “interpret” the statute in a way that contradicts what it acknowledges is the “literal” reading of the text and clashes with decades of its own regulations. It also nullifies language blocking regulation for power plants because they are already regulated under an alternative program. By mangling the Clean Air Act to intrude on areas it was never meant to, the regulation violates the constitutional bar on commandeering the states to carry out federal policy.

These defects are why the Supreme Court put the EPA’s plan on hold while an appeals court in Washington, D.C., considers challenges brought by the energy industry and 27 states. These legal challenges now appear to have been overtaken by events. President Trump can immediately issue an executive order to adopt a new energy policy that respects the states’ role in regulating energy markets and that prioritizes making electricity affordable and reliable. Such an order should direct the EPA to cease all efforts to enforce and implement the Clean Power Plan. The agency would then extend all of the regulation’s deadlines, enter an administrative stay and commence regulatory proceedings to rescind the previous order.

That would leave the D.C. appeals court—which some supporters of the plan are still counting on for a Hail Mary save—or the Supreme Court with little choice but to send the legal challenges back to the agency. While the Clean Power Plan could technically linger in the Code of Federal Regulations for a year or so, it would have no legal force.

When an agency changes course, it must provide a reasoned explanation to address factual findings supporting its prior policy. In certain instances that requirement may impose a real burden. For example, a rule rescinding the EPA’s “Endangerment Finding” regarding the effects of greenhouse gases would have to address the evidence underlying it. A failure to provide a satisfactory explanation of a change in policy may render a rule “arbitrary and capricious” and vulnerable to legal challenge.

Environmentalist groups have already vowed to bring suit to defend the Clean Power Plan, but a challenge would be toothless. The aggressive legal positions underlying the Obama administration’s most controversial rules—including the Clean Power Plan, the Waters of the United States rule, and the FCC’s Open Internet order—will make it easier to rescind them. That’s because rejecting the assertion of legal authority underlying such a rule is enough to justify a policy change. If the agency’s view is that it simply lacks the power to carry out a rule, then it follows that the rule must be withdrawn.

Even if a court were to find that the EPA’s interpretation of the Clean Air Act underlying the plan is permissible, that would still not compel the Trump EPA to accept that interpretation as the only permissible one. And even if a court were to rule—erroneously, in our view—that the Clean Power Plan does not violate the Constitution’s vertical separation of powers, that would still not absolve the executive branch of the responsibility to consider that constitutional issue for itself and then act accordingly.

President Obama may soon come to understand that the presidential pen and phone is a double-edged sword.

Messrs. Rivkin and Grossman, who practice appellate and constitutional law in Washington, D.C., represent the state of Oklahoma and the Oklahoma Department of Environmental Quality in their challenge to the Clean Power Plan.

Source: http://www.wsj.com/articles/trump-can-ax-the-clean-power-plan-by-executive-order-1479679923

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‘Clean Power’ Plays and the Last Stand for Federalism

By DAVID B. RIVKIN, JR. and ANDREW M. GROSSMAN

Sept. 25, 2016, in the Wall Street Journal

After Congress turned down President Obama ’s request to enact a law regulating power plants’ greenhouse-gas emissions, the Environmental Protection Agency turned to the states—not with a request, but with instructions to carry out the president’s energy policy. The EPA’s “Clean Power Plan” now faces the scrutiny of the nation’s chief regulatory review court, the U.S. Court of Appeals for the District of Columbia Circuit.

If the Constitution’s federalism is to endure, the Clean Power Plan must be struck down.

The Constitution establishes a federal government of limited and enumerated powers while the states retain a plenary “police power,” subject only to the specific limitations of federal law. This is what Justice Anthony Kennedy called the Constitution’s “genius”: It “split the atom of sovereignty” to ensure accountability when meeting both local and national concerns, while fostering rivalry between the two levels to curb excessive political ambition that might threaten liberty.

Only in recent decades did politicians learn how to realize their ambitions through collusion. The federal government now entices states with transfer payments to establish and administer social-welfare programs. And, in schemes that the courts describe as “cooperative federalism,” it offers states the choice to regulate their citizens according to federal dictates, as an alternative to the feds regulating directly and having states get out of the way.

Even these approaches were not enough for the Obama administration to cajole the states to carry out its energy agenda. So it resolved to obliterate one of the last vestiges of the Constitution’s vertical separation of powers: the bar on federal commandeering of the states and their officials to carry out federal policy.

The Clean Power Plan is enormously complicated, but its overall approach is straightforward. Previous emissions regulations have focused on reducing emissions from particular facilities, but this one relies on shifting electricity generation from disfavored facilities (coal-fired power plants) to those the EPA prefers (natural gas and renewables). The EPA then determined what, in its view, is the maximum amount of such shifting that each of the nation’s regional electric grids could possibly accommodate and calculated the emissions reductions.

Parcel those figures out by state, factor in additional reductions due to estimated efficiency improvements at older plants, and the result is state-specific reduction targets. The states can elect to achieve those targets themselves—or, if they decline, the EPA will do it for them. “Textbook cooperative federalism,” says the EPA.

Not quite. Whether or not the states choose to implement the plan directly, it leaves them no choice but to carry out the EPA’s federal climate policy. That’s because the EPA can destroy but not create. It can regulate emissions of existing facilities, but it lacks the legal authority to facilitate the construction and integration of new power sources, which is ultimately the only way to achieve the plan’s aggressive targets.

That duty falls to the states, which the plan depends upon to carry out what the EPA calls their “responsibility to maintain a reliable electric system.” Doing nothing, as in the cooperative federalism scenario, is not an option.

So this is how the plan works: The EPA pushes coal-fired plants off the grid, and then counts on the states to ensure that the resulting reductions in capacity are matched by increases in EPA-preferred forms of power generation. State agencies will have to be involved in decommissioning coal-fired plants, addressing replacement capacity—like wind turbines and solar arrays—addressing transmission and integration issues, and undertaking all manner of related regulatory proceedings. All this to carry out federal policy.

The Clean Power Plan implicates every evil associated with unconstitutional commandeering. It dragoons states into administering federal law, irrespective of their citizens’ views. It destroys accountability, by directing the brunt of public disapproval for increased electricity costs and lost jobs onto state officials, when the federal government deserves the blame. And it subverts the horizontal separation of powers, by allowing the executive branch to act where Congress has refused to legislate.

One can only wonder what will be left of our constitutional order if the plan passes judicial muster.

The federal government would no longer be a government of limited powers, but instead be able to compel the states to do its bidding in any area. The states, in turn, would be reduced to puppets of a federal ventriloquist, carrying out the dirty work for which federal actors wish to avoid accountability. And the federal executive, in many instances, could effectively create new law by working through the states, free of the need to win over Congress.

So it is difficult to imagine a U.S. where the Clean Power Plan is the law of the land. It would not be the same country, or the same Constitution, that Americans have enjoyed all these years.

Messrs. Rivkin and Grossman practice appellate and constitutional law in Washington, D.C., and represent the State of Oklahoma and the Oklahoma Department of Environmental Quality in their challenge to the Clean Power Plan.

Source: http://www.wsj.com/articles/clean-power-plays-and-the-last-stand-for-federalism-1474841482

Does EPA’s Clean Power Plan Proposal Violate the States’ Sovereign Rights?

By David B. Rivkin, Jr., Mark DeLaquil, Andrew Grossman, June 15 2015

Note from the Editor:

This article discusses the Environmental Protection Agency’s Clean Power Plan under the Clean Air Act. As always, The Federalist Society takes no position on particular legal or public policy initiatives. Any expressions of opinion are those of the author. The Federalist Society seeks to foster further discussion and debate about the issues involved. To this end, we offer links to other perspectives on the subject, and we invite responses from our audience. To join the debate, please e-mail us at info@fed-soc.org.

Congress’s statement of policy in the Clean Air Act that “air pollution control at its source is the primary responsibility of States and local governments” is not merely hortatory.1 It reflects both the practical reality of and constitutional limitations on federal regulation of air quality. The practical reality is that the federal government relies on the states both for the detailed policymaking necessary to achieve national goals on a state-by-state basis and for the implementation and enforcement of pollution-control programs with respect to particular sources. But, no matter its reliance, the federal government is forbidden from commandeering the states or their officials to carry out federal law, from coercing them to do so, and from invading the states’ own powers. The Clean Air Act resolves this tension through a system of “cooperative federalism” that gives states the opportunity to regulate in accordance with federal goals and provides for direct federal regulation as a backstop should they fail to do so. This accommodation allows the federal government to enlist the states’ assistance in achieving federal goals without exceeding its authority under the Constitution.

The Environmental Protection Agency’s “Clean Power Plan” (the “Proposed Rule”) abandons that careful accommodation and, in so doing, violates the Tenth Amendment and principles of federalism. The Proposed Rule requires each state to submit a plan to cut carbon-dioxide emissions by a nationwide average of 30 percent by 2030. Although ostensibly directed at emissions from fossil-fuel-fired power plants, the Proposed Rule sets targets for individual states that incorporate “beyond-the-fenceline” cuts to be achieved by increasing reliance on natural gas generation, adopting zero-emissions generation such as wind and solar, and reducing electricity demand. The goal is to phase out coal-fired power plants, which currently account for nearly 40 percent of electricity generation.

In the service of achieving EPA’s policy objectives, the Proposed Rule forces each state to overhaul its energy market. Just to keep the lights on, states will have to dramatically change their energy mix, to account for the loss of coal-fired generating capacity, and to rework their regulation of energy producers, power dispatch, and transmission. This will require changes to states’ legal and regulatory structures, as well as numerous regulatory actions directed at their own citizens—energy producers and consumers alike. In order to accomplish these objectives, even a state that declines to implement the Clean Power Plan will have to employ EPA’s “building blocks” to prevent the Plan from wrecking the state’s energy economy. And states that refuse to accede to EPA’s demand to implement this new program face the specter of financial sanctions. In short, EPA’s Proposed Rule forces the states to act to carry out federal policy. It is a gun to the head of the states: “Your sovereignty or your economy” is EPA’s ultimate demand.

But the federal government may not “require[] the States to enact or administer a federal regulatory program.” Printz v. United States, 521 U.S. 898, 926 (1997). Nor may it “command state or local officials to assist in the implementation of federal law.” Id. at 927. Nor may it employ penalties and threats to “coerce[] a State to adopt a federal regulatory system as its own.” NFIB v. Sebelius, 132 S. Ct. 2566, 2602 (2012) (Roberts, C.J.).

Because it violates those cardinal rules, the Proposed Rule’s directives to the states “are, in the words of The Federalist, ‘merely acts of usurpation’ which ‘deserve to be treated as such.’” Id. at 2592 (quotation marks omitted). The Proposed Rule should be withdrawn. If the rule is finalized, and if it is held to be within EPA’s statutory authority, the courts would be constrained to reject it as exceeding federal power under the Constitution.

I. Background

A. The Clean Air Act and Section 111(d)

The Clean Air Act “made the States and the Federal Government partners in the struggle against air pollution.”2 As to stationary sources of emissions, the Act contains several programs under which EPA sets standards, such as for the concentration of certain pollutants in ambient air, that are then implemented and administered by the states through State Implementation Plans (“SIPs”) prepared by the states.3 These implementation plans address, among other things, enforceable emission limitations for sources, monitoring systems, enforcement programs, adequacy of personnel and funding available to implement the plan, and consultation and participation by local political subdivisions affected by the plan.4

EPA, in turn, is required to approve state implementation plans that satisfy the requirements of the Act and applicable regulations, including standards set by EPA.5 Only if a state fails to submit an implementation plan, or submits one that is deficient, may EPA directly regulate sources itself through promulgation of a Federal Implementation Plan (“FIP”).

In this system, EPA is “charged by the Act with the responsibility for setting [national standards],” but “it is relegated by the Act to a secondary role in the process of determining and enforcing the specific, source-by-source emission limitations which are necessary if the national standards it has set are to be met” and “may devise and promulgate a specific plan of its own only if a State fails to submit an implementation plan which satisfies those standards.”6

Section 111(d) implements this cooperative approach for setting “standards of performance” for certain existing stationary sources of air pollutants.7 It provides for EPA to direct the states to submit plans that “establish[] standards of performance for any existing source for any air pollutant” which would be subject to an EPA-prescribed standard if emitted by a new source and that “provide[] for the implementation and enforcement of such standards of performance.”8 A “standard of performance” is defined 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) [EPA] determines has been adequately demonstrated.”9 State plans, however, may also “take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies.”10 Only in the event that a state “fails to submit a satisfactory plan,” or fails “to enforce the provisions of such plan,” may EPA step in and regulate itself by setting and enforcing standards.11

B. EPA’s Proposed Rule

EPA’s Proposed Rule relies on the agency’s Section 111(d) authority to set standards for existing fossil-fuel-fired power plants.12 It aims to reduce carbon dioxide emissions from the power sector by 30 percent by 2030, relative to 2005 levels, by requiring states to overhaul their “production, distribution and use of electricity.”13 States must submit state plans to achieve “emission rate-based CO2 goals” that EPA has specified for each state.14 These targets are based on projected emissions reductions that EPA believes can be achieved through the combination of four “building blocks”:

1. Reducing the carbon intensity of generation at individual affected [power plants] through heat rate improvements.

2. Reducing emissions from the most carbon-intensive affected [power plants] in the amount that results from substituting generation at those [power plants] with generation from less carbon-intensive affected [power plants]….

3. Reducing emissions from affected [power plants] in the amount that results from substituting generation at those [power plants] with expanded low- or zero-carbon generation.

4. Reducing emissions from affected [power plants] in the amount that results from the use of demand-side energy efficiency that reduces the amount of generation required.15

In plain English, EPA’s building blocks anticipate that, to meet EPA’s targets, states will have to: (1) require plants to make changes to increase their efficiency in converting fuel into energy; (2) replace coal-fired generation capacity with increased use of natural gas; (3) replace fossil-fuel-fired generation capacity with nuclear and renewable sources, such as wind and solar; and (4) mandate more efficient use of energy by consumers.16 These “building blocks,” in one combination or another, are effectively the only ways that a state could reorganize its electric generating capacity to achieve the targets set by EPA.

EPA describes this as a “plant to plug” approach that comprehensively addresses all aspects of energy production and consumption based on “the interconnected nature of the power sector.”17 In this respect, unlike other emissions-control programs, EPA’s Proposed Rule relies extensively on “beyond-the-fenceline” measures—that is, regulation of things other than the emissions of the sources it actually purports to regulate. This describes all but the first of EPA’s building blocks.

The Proposed Rule requires states to submit implementation plans, including all necessary statutory and regulatory changes, by June 30, 2016, absent special circumstances.18 Any state that does not submit an implementation plan consistent with the rule’s requirements will be subject to a federal plan devised by EPA that regulates fossil fuel-fired power plants in the state.19

C. The Proposed Rule Requires States To Overhaul Their Energy Sectors

Because EPA used “the combination of all four building blocks” to set state emissions targets,20 those targets cannot be achieved only by employing controls at the sources ostensibly subject to Section 111(d) regulation: fossil-fuel-fired power plants.21 Accordingly, compliance with the Proposed Rule will require states to take “beyond-the-fenceline” measures that involve fundamentally restructuring their regulation and use of electricity.22

First, states will have to eke out whatever efficiency gains can be accomplished in a cost-effective manner from their existing coal-fired generation fleet. While this step may be within the existing statutory authority of state environmental regulators, feasible improvements may be few and far between, due to upgrades already implemented to comply with other regulations.23 In general, states will be able to achieve improvements of only a few percentage points in emissions reduction, at most24—compared to the 30 percent, on average, that is required in total. Some upgrades could potentially trigger new source review obligations, making them economically infeasible.25

Second, states will have to revise the statutory and regulatory systems that govern dispatch among power plants to place coal-fired plants—which typically supply baseload power—at the rear of the pack.26 That change, in turn, will require additional state actions to ensure that customers in certain areas relying on affected plants are not left without power or forced to bear unreasonable costs.27 It will also require substantial changes to utility regulation as systems that put cost and reliability first in making dispatch determinations are reworked to consider other factors.28 And in states where dispatch is controlled by federally regulated multi-state regional transmission organizations, other regulatory or inter-governmental actions will be required.29

Third, states will have to develop or incentivize zero-emissions generation, which will require state authorizing legislation and expenditures.30 Developing sources such as wind and solar will inevitably implicate other environmental issues, such as endangered species protection, that states must also address, at considerable burden and expense.31 They must also address how increased renewable capacity, which may fluctuate, fits into the transmission system and dispatch, as well as how such capacity will be compensated.32 In states where it is not feasible to add renewable capacity, or that do not receive credit for such capacity that is exported, other measures will be required. For example, West Virginia anticipates that it “would be forced to participate in some form of interstate program that would include the states in which West Virginia-produced wind energy is sold. Such a program would require new statutory authority, significant groundwork in determining which states would participate, negotiations with those states, resources to develop interstate agreements to create an entity that would administer the interstate program, and time to create parallel regulations in each state to implement a program that would allow West Virginia to receive credit for the zero carbon emissions associated with current and future wind resources.”33

Fourth, states will have to enact programs to reduce electricity demand in an enforceable fashion, requiring legislative and regulatory action.34 States with deregulated electricity markets will face particular challenges, because power plants may be independent of power distribution companies.35 This may also require, in some instances, regulation of consumers of electricity, which will be a new mission for state environmental and utility regulators.36

Finally, to achieve EPA’s targets, states will inevitably have to require the idling or retirement of some coal-fired power plants and deal with the consequences of doing so.37 This includes maintaining electric reliability for all customers, ensuring that plant operators are appropriately compensated, and ensuring that the financial impact on electricity consumers is acceptable.38

In sum, the Proposed Rule, if adopted as proposed or in a substantially similar form, will require states to overhaul their regulation of electricity and public utilities and to take numerous regulatory and other actions to comply with and accommodate the Proposed Rule while maintaining electric affordability and reliability. And that will be the case regardless of whether states take direct action and adopt “state plans” or whether they decline to promulgate a state plan and become subject to a federal plan—which, even if it applied only to coal-fired plants, would presumably require their retirement—due to states’ pervasive regulation of the power sector, transmission, and utilities. For no state is doing nothing an option.

II. The Proposed Rule Commandeers the States in

Violation of the Tenth Amendment

The Tenth Amendment provides: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”39 It “states but a truism that all is retained which has not been surrendered.”40 But part of what has been retained is the states’ sovereign authority.41 Thus, “if a power is an attribute of state sovereignty reserved by the Tenth Amendment, it is necessarily a power the Constitution has not conferred on Congress.”42 Among the powers denied to the federal government is the power to “use the States as implements of regulation”—in other words, to commandeer them to carry out federal law.43 The Proposed Rule plainly does so and is therefore ultra vires.

While the Commerce Clause “authorizes Congress to regulate interstate commerce directly[,] it does not authorize Congress to regulate state governments’ regulation of interstate commerce.”44 Thus, in New York v. United States, the Supreme Court struck down a provision of the Low–Level Radioactive Waste Policy Amendments Act that required states either to legislate to provide for the disposal of radioactive waste according to the statute or to take title to such waste and assume responsibility for its storage and disposal.45

New York holds that such commandeering is incompatible with the clear lines of accountability embodied in the Constitution’s vertical separation of powers. The federal government may, the Court explained, encourage state action by “‘attach[ing] conditions on the receipt of federal funds.’”46 And it may “offer States the choice of regulating [an] activity according to federal standards or having state law pre-empted by federal regulation.”47 In both of these instances, the state is merely “encourage[ed]…to conform to federal policy choices,” and “the residents of the State retain the ultimate decision as to whether or not the State will comply” by holding state officials accountable for making such choices.48 But that accountability is undermined “where the Federal Government directs the States to regulate, [because] it may be state officials who will bear the brunt of public disapproval, while the federal officials who devised the regulatory program may remain insulated from the electoral ramifications of their decision.”49 In enacting the “take title” provision, the Court concluded, “Congress has crossed the line distinguishing encouragement from coercion.”50

It made no difference that the provision allowed “latitude” to the States in choosing how to carry out the federal directive. While a state could choose to contract with a regional disposal compact, build a disposal site itself, etc., each of these options “underscore[d] the critical alternative a State lacks: A State may not decline to administer the federal program. No matter which path the State chooses, it must follow the direction of Congress.”51 Also irrelevant was the importance of the federal interest at stake, as well as the states’ participation in the formulation of federal policy.52 After all, “State governments are neither regional offices nor administrative agencies of the Federal Government,” but sovereigns in their own right.53

Printz v. United States reaffirmed and extended these principles to the commandeering of state officials.54 At issue was a federal statute that, although it did not command states to regulate, directed certain state law enforcement officers to conduct background checks on gun buyers and perform related tasks.55 In other words, the statute directed state officials “to participate…in the administration of a federally enacted regulatory scheme.”56 And that was a step too far: “Preservation of the States as independent and autonomous political entities” is unacceptably “undermined…by ‘reducing them to puppets of a ventriloquist Congress.’”57 Thus, the states may not be “dragooned…into administering federal law.”58

Yet that is precisely what the Proposed Rule would do. While the Proposed Rule ostensibly applies to the industrial category of fossil-fuel-fired plants, EPA makes no pretense that compliance can be achieved through the application of a system of emission reduction, such as pollution control technology, at those sources. Instead, EPA determined that the “best system of emission reduction” is a building-block approach that includes such beyond-the-fenceline measures as dispatch, development and integration of renewable generation capacity, and regulation of power consumers.59 In this way, the Proposed Rule’s reach extends well beyond the fenceline of those sources, to the states’ regulation of their power sectors.

All of these things require EPA to enlist the states and their officers. While the agency has authority to directly regulate emissions by regulated sources in lieu of a state doing so—which regulation EPA anticipates will account for only a small fraction of total reductions60—the remainder of the actions required will have to be carried out by the states and their officials. Indeed, federal law expressly recognizes states’ exclusive jurisdiction “over facilities used for the generation of electric energy[,] over facilities used in location distribution or only for the transmission of electric energy in interstate commerce, [and] over facilities for the transmission of electric energy consumed wholly by the transmitter.”61 As the Supreme Court has recognized, the “economic aspects of electrical generation”—which lie at the very heart of the Proposed Rule—“have been regulated for many years and in great detail by the states.”62 That includes states’ “traditional authority over the need for additional generating capacity, the type of generating facilities to be licensed, land use, ratemaking, and the like.”63 And it is “state public utility commissions or similar bodies [that] are empowered to make the initial decision regarding the need for power.”64 EPA does not—and could not, under its governing statute—purport to exercise or preempt these traditional state powers.65 Instead, it expects that the states will exercise them to carry out its ends.

The agency is remarkably candid on this point. It acknowledges that states’ “utility regulatory structure” will affect precisely how each complies.66 It anticipates that administration of its rule will “extend federal presence into areas that, to date, largely have been the exclusive preserve of the state and, in particular, state public utility commissions and the electric utility companies they regulate,” but without entering those areas itself.67 It expects that a state plan will include “public utility commission orders.”68 It even recognizes that “affected entities” will include any “entity that is regulated by the state, such as an electric distribution utility, or a private or public third-party entity.”69 Indeed, each state must “demonstrate that it has sufficient legal authority to subject such affected entities other than affected [power plants] to the federally enforceable requirements specified in its state plan.”70 All of these things reflect EPA’s awareness that achieving its emissions targets will require far more than just emissions controls: compliance will require states to fundamentally revamp their regulation of their utility sectors and undertake a long series of regulatory actions, all at EPA’s direction.

The states have no choice in this matter. While EPA makes much of the “State Flexibilities” on offer,71 what states lack, as in New York, is the choice to “decline to administer the federal program.”72 Instead, the states are treated as “administrative agencies of the Federal Government.”73 For that reason, the Proposed Rule impinges on the states’ sovereign authority and therefore, like the actions under review in New York and Printz, exceeds the federal government’s power.74

The Proposed Rule is different in kind from the sort of actions that the Supreme Court has identified as permissible ways to encourage state action: offering states the first shot at regulation, backstopped by federal preemption, and attaching conditions to the receipt of federal funds.75 As to the former, EPA does not have the authority to preempt states’ regulation of their utility sectors and energy usage.76 Therefore states do not have the option of leaving compliance entirely in the hands of the federal government; they must take action to carry out federal policy.77

As to financial inducement,78 even states that refuse to submit implementation plans—thereby leaving the means of achieving CO2 goals to EPA in a federal plan—will still be forced to either carry out any beyond-the-fenceline measures identified by EPA or to account for the disruption and dislocation caused by the imposition of impossible-to-achieve emissions limits on power plants. If EPA effectively mandates the retirement of coal-fired plants, state utility and electricity regulators will have to respond in the same way as if the state itself had ordered the retirements. Likewise, if EPA mandates the installation of massively expensive control technologies or requires measures that disrupt the output of coal-fired plants, the states again will be left to pick up the regulatory slack. In other words, even if a state is willing to accept the consequences of declining to regulate it still does not remain free to decline to carry out aspects of the Proposed Rule—that is, to implement federal policy.79 In addition, as discussed below, to the limited extent that the Proposed Rule may be regarded as imposing conditions on the receipt of federal highway funds, it is unconstitutionally coercive.

This “heads EPA wins, tails the State loses” aspect of the Proposed Rule is particularly damaging to political accountability. It will be counterintuitive, to say the least, for citizens of a state that declines to directly implement the Clean Power Plan to understand that the higher electric rates that they suffer as a result of state measures to maintain reliability are actually the consequence of EPA’s actions. To the contrary, citizens are far more likely to draw the conclusion that these negative impacts are the result of the state’s actions, which would get the chain of causation backwards.

Finally, the Proposed Rule is not the kind of regulation of state activities that the Supreme Court upheld in South Carolina v. Baker80 and Reno v. Condon.81 Baker upheld a federal statute that effectively required states to issue registered bonds.82 And Reno upheld a federal statute restricting a state’s ability to sell drivers’ personal information without their consent.83 The Court found in both cases that the laws at issue “‘regulated state activities,’ rather than ‘seeking to control or influence the manner in which States regulate private parties.’”84 By contrast, the Proposed Rule does exactly what both opinions identified as impermissible: “require the [state] to enact any laws or regulations” and “require state officials to assist in the enforcement of federal statutes regulating private individuals.”85 That means, as the Court recognized in Reno, that New York and Printz control.

In sum, the Proposed Rule violates the Tenth Amendment’s anti-commandeering doctrine and therefore exceeds the federal government’s constitutional authority.86

III. The Proposed Rule Unlawfully Coerces the States

Just as the federal government may not commandeer states to carry out federal policy, it also may not coerce them to the same end by denying them “a legitimate choice whether to accept the federal conditions.”87 The Proposed Rule violates this anti-coercion doctrine in two respects: first, by potentially leveraging federal highway funds to coerce states into implementing a new federal regulatory program; second, by threatening to punish the citizens of states (as well as the states themselves) that do not carry out federal policy.

A. The Spending Clause

The Constitution empowers Congress to “lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.”88 “Incident to this power, Congress may attach conditions on the receipt of federal funds” and thereby encourage states to carry out federal policy.89 But the federal government exceeds its constitutional authority when “‘the financial inducement’” is “‘so coercive as to pass the point at which pressure turns into compulsion.’”90

Thus, in NFIB v. Sebelius, the Supreme Court severed a statutory provision that leveraged states’ existing Medicaid funding to coerce them to implement a fundamentally new program.91 The Chief Justice reasoned that, when new conditions imposed by Congress on funding “take the form of threats to terminate other significant independent grants, the conditions are properly viewed as a means of pressuring the States to accept policy changes.”92 That pressure becomes unconstitutional compulsion when the amount of funds at stake comprises a substantial portion of existing funding and the new conditions “accomplish[] a shift in kind, not merely degree” to the existing program93—that is, they “‘surpris[e] participating States with post-acceptance or ‘retroactive’ conditions.’”94 Thus, the Medicaid expansion constituted unconstitutional coercion because it amounted to an attempt to “‘conscript state agencies into the national bureaucratic army.’”95 The remedy was to give states the option of participating in the new program, without putting at risk their existing funding.96 The Court’s reasoning has been described as establishing an “anti-leveraging principle.”97

That principle calls into question, as a general matter, the constitutionality of the Clean Air Act’s threat to withhold federal highway funding from states that fail to implement and enforce certain regulatory requirements.98 The basic argument is straightforward: “Congress has told states that wish to continue participating in the entrenched and lucrative federal highway program that they can do so only if they also agree to participate in a separate and independent program for reducing air pollution.”99

Professor Jonathan Adler of Case Western Reserve University School of Law has spelled out the argument’s particulars:

First, the Clean Air Act conditions the receipt of money for one program (highway construction) on compliance with conditions tied to a separate program (air pollution control). This may be problematic because a majority of the Court [in NFIB] thought Congress was trying to leverage state reliance on funding for one program (traditional Medicaid) to induce participation in another program (the Medicaid expansion). While the money at stake under the Clean Air Act is far less—most states receive substantially less in highway funds than in Medicaid funds—highway funding is less directly related to air pollution control (particularly from stationary sources) than traditional Medicaid is to the Medicaid expansion.

Though highway funding is less than that for Medicaid, it still may be enough to raise constitutional concerns. Highway funds are raised from a dedicated revenue source in gasoline taxes and placed in the Highway Trust Fund. For many states, federal highway funds represent the lion’s share of their transportation budget. As a consequence, threatening to take highway funds may strike some courts as unduly coercive under NFIB….

The Court in NFIB also stressed that conditional grants of federal funds operate much like a contract, and that the parties are limited in their ability to unilaterally revise the terms. This could expose another vulnerability in the Clean Air Act because while the statutory requirements don’t regularly change, what states must actually do to comply with the Clean Air Act’s terms do. The requirements for state pollution control plans are constantly changing, as the EPA tightens or otherwise revises federal air quality standards and additional pollutants become subject to Clean Air Act regulation. Were this not enough, the recent inclusion of greenhouse gases as pollutants subject to regulation under the Act has radically altered states’ obligations, such that states will now have to do many things they could not have anticipated when the Clean Air Act was last revised in 1990.100

The Proposed Rule is particularly vulnerable under this analysis, for three reasons. First, the regulation of emissions by stationary sources—unlike, arguably, emissions by mobile sources—has absolutely nothing to do with the purposes of the highway funds program.101 Regulation of dispatch, development and integration of zero-emissions generation capacity, and demand-side energy efficiency regulation are even further removed. Second, the Proposed Rule surprises states with new conditions that they never could have imagined when they chose to accept highway funds or to regulate under the Clean Air Act. Whereas prior conditions concerned the control of emissions, the Proposed Rule requires states, for the first time ever, to exercise their previously independent regulatory authority over energy resources and utilities to carry out federal policy. Third, in addition to the substantial amount of money at stake,102 the Proposed Rule conditions states’ continued electric reliability on states’ regulatory actions to mitigate the impact of the steps necessary to achieve the rule’s targets. States, of course, depend on electric reliability to carry out their core police powers, such as public safety and the basic operation of government. EPA’s inducement is therefore “much more than relatively mild encouragement—it is a gun to the head.”103

NFIB suggests that the appropriate remedy would be to sever the penalty. While the federal government may offer conditional grants to encourage states to act, what it “is not free to do is to penalize States that choose not to participate in that new program by taking away their existing [programmatic] funding.”104 Like the statute at issue in NFIB, the Clean Air Act contains a severability clause.105

Alternatively, the preamble of the Proposed Rule states EPA’s view that its individual “building blocks” are severable, “such that in the event a court were to invalidate our finding with respect to any particular building block, we would find that the [standard of performance] consists of the remaining building blocks.”106 “Whether the offending portion of a regulation is severable depends upon the intent of the agency and upon whether the remainder of the regulation could function sensibly without the stricken provision.”107 Because the courts examine these two factors independently, an agency’s preference with respect to severability is not dispositive of the question.108 The D.C. Circuit has declined, over an agency’s entreaties, to sever a portion of a regulation where so doing would cause “loss of flexibility” (a key concern of the regulation) among regulated parties.109 Elsewhere in the Proposed Rule, EPA recognizes that “state flexibilities”—its way of referring to things other than source-level emissions controls—are essential to achieving the rule’s interim and final targets.110 As a result, despite EPA’s stated preference to the contrary, the individual building blocks are not severable in light of the Proposed Rule’s structure and requirements.111 Accordingly, the Act’s severability clause should govern with respect to any penalties.

Published reports of recent public remarks by the EPA Administrator suggest that EPA’s current position is that it lacks authority to withhold highway funds from states that do not submit Clean Power Plan SIPs or from states whose SIPs EPA disapproves, on the basis that the Act’s highway-funds penalty applies only to SIPs under the national ambient air quality standards program.112 While this position is the best reading of the Clean Air Act, and may well be the only permissible reading, EPA does not appear to have made any legally binding statements that this is how it interprets the Act. And if EPA were to do so, the Agency likely would be due deference on such jurisdictional determinations,113 raising the specter that not addressing the coercive aspects of the Clean Power Plan would simply do nothing more than delay the problem until the Plan is sufficiently entrenched throughout the country that the practical effects of its coercive regime would be impossible to reverse.

In sum, the Proposed Rule cannot be regarded as a proper exercise of the federal government’s Spending Clause power to encourage the states to act. It is, instead, an improper attempt to leverage the states’ receipt of highway funds to implement a new and surprising set of conditions and, therefore, violates the anti-coercion principle.

B. The Commerce Clause

The anti-coercion rationale of NFIB applies equally to attempts to employ the Commerce Clause power as a “‘weapon of coercion, destroying or impairing the autonomy of the states.’”114 Whether Congress is threatening to abuse its Spending Clause authority by curtailing existing funding to force states to implement a new and fundamentally different program, or threatening to impair states’ sovereign prerogatives and injure their citizens if they choose not to “opt in” to a cooperative federalism program promulgated under the auspices of the Commerce Clause, the Tenth Amendment operates to prevent the federal government from acting to “‘conscript state [agencies] into the national bureaucratic army.’”115

Applying the same factors as under the Spending Clause, a Commerce Clause regulation “has crossed the line distinguishing encouragement from coercion” when it leverages an existing and substantial entitlement of the citizens of a state or the state itself on a conditional basis in order to induce the state to implement federal policy.116 When, “‘not merely in theory but in fact,’” such threats amount to “economic dragooning that leaves the States with no real option but to acquiesce” to federal demands, they impermissibly “undermine the status of the States as independent sovereigns in our federal system.”117

That describes the Proposed Rule. EPA has stated that, if the states decline to implement its terms, the agency will impose a federal plan that does so.118 But the agency lacks authority to carry out the actions described in its second, third, and fourth building blocks.119 Thus, a federal plan would have to focus on heat-rate improvements at coal-fired facilities, and—to achieve anywhere near the 30 percent average reduction in CO2 emissions targeted by EPA—would have to impose controls so burdensome that they would force plant retirements and cripple the states’ electric power systems.120 The point, of course, would be to force states to pick up the slack necessary to maintain affordable and reliable electric service through “beyond-the-fenceline” measures that are beyond EPA’s authority, regardless of whether a state chooses to fix the problems that EPA has created through a state implementation plan or through other “voluntary” measures. In neither instance could it be said that the decision to adopt or reject EPA’s preferred policies “‘remained the prerogative of the States.’”121 Instead, EPA’s “inducement” “is a gun to the head,” in light of the disruption and dislocation to citizens and the state itself if EPA were to carry out its threat.122

In sum, while EPA has the authority pursuant to the Commerce Clause to directly regulate certain emissions by stationary sources, a federal plan to implement the Proposed Rule would be inevitably and inherently coercive to the states.123

IV. Constitutional Avoidance

A court reviewing final action that is materially similar to EPA’s Proposed Rule could apply the doctrine of constitutional avoidance to preclude EPA from interpreting Section 111 in a way that exceeds the limits of federal power. The statutory language is not only readily amenable to such an interpretation, but is best read that way.

Out of respect for Congress, which is also bound by and swears an oath to uphold the Constitution, federal courts must construe statutes, “if fairly possible, so as to avoid not only the conclusion that it is unconstitutional, but also grave doubts upon that score.”124 Thus, “where an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress.”125

Such an acceptable construction is available here. The key statutory term underlying EPA’s constitutionally suspect “building block” approach is “best system of emission reduction,” which the agency defines to include any possible “measures…to improve emission rates and to reduce or limit…emissions.”126 In effect, the agency views anything relating to a source—no matter how tenuously related or far removed—as fair game for regulations that nominally apply to the source alone. Among the problems with this approach is that it brooks no limiting principle; EPA claims authority to force states to regulate anything connected to the electric system and anyone using electricity, in any way that might reduce electricity consumption. As shown above, the Proposed Rule’s constitutional infirmities are the result of its attempted centralization of the energy economy through measures that occur beyond the fenceline, in addition to more typical source-level requirements.

But EPA’s unbounded definition of “best system of emission reduction” is not the only or the best reading of the term. The Supreme Court, viewing this language, easily recognized that it refers to “technologically feasible emission controls”—that is, emission-reduction technologies implemented at the source.127 Indeed, EPA has reached the same conclusion in the context of Section 111(b) standards, which rely on the same term, explaining that that provision “assur[es] cost-effective controls are installed on new, reconstructed, or modified sources.”128 This reading, limited to source-level measures, also avoids constitutional doubt, because it concerns only sources of emissions themselves, which Congress unquestionably has the authority to regulate.

Accordingly, to avoid the constitutional problems identified in this analysis, a federal court would be required to read the statutory term “best system of emission reduction” to encompass only source-level measures and would, on that basis, have to vacate EPA’s action as contrary to law.

V. Conclusion

What’s past is prologue, and this is not the first time that EPA has been oblivious to the constitutional limits on its authority to force the states to administer its own programs. In the mid-1970s, as the agency was still working out the terms of its relationship with the states under the Clean Air Act Amendments of 1970, it “order[ed] the states to enact statutes and to establish and administer programs to force their citizens to comply with [its] federal directive[s].”129 That effort was stopped in its tracks by three decisions, in quick succession, of the courts of appeals, astonished that a federal agency would attempt to arrogate such authority to itself.130 By the time the Supreme Court agreed to review the regulations, “the Government declined even to defend them, and instead rescinded some and conceded the invalidity of those that remained.”131

Since that time, the Supreme Court has been particularly attentive to overreaching by the federal government in its relationship with the states. Decisions like New York, Printz, and NFIB have recognized clear prohibitions on federal attempts to commandeer the states, to commandeer their officials, and to coerce them into action. The only constant in this changing field is that EPA has ignored these constitutional imperatives in its zeal to regulate. The best that can be said of the agency’s proposed Clean Power Plan is that, if finalized in anything like its current form, it will provide another valuable opportunity for the courts to advance the cause of federalism when they strike it down.

Endnotes

1  42 U.S.C. § 7401(a)(3).

2  Gen. Motors Corp. v. United States, 496 U.S. 530, 532 (1990).

3  See generally 42 U.S.C. § 7410.

4  See 42 U.S.C. § 7410(a)(2)(A)–(M).

5  Train v. NRDC, 421 U.S. 60, 71 n.11 (1975).

6  Id. at 79.

7  42 U.S.C. § 7411(d)(1).

8  Id.

9  42 U.S.C. § 7411(a)(1).

10  42 U.S.C. § 7411(d)(1)(B).

11  42 U.S.C. § 7411(d)(2).

12  79 Fed. Reg. 34,830, 34,832/2 (June 18, 2014).

13  Id. at 34,832/3.

14  Id. at 34,833/1.

15  Id. at 34,836/1.

16  Id. at 34,836, 34,859, 34,862–63, 34,866–68, 34,871.

17  EPA, Fact Sheet: Clean Power Plan Flexibility: Flexible Approach to Cutting Carbon Pollution, June 2, 2014, http://www2.epa.gov/carbon-pollution-standards/fact-sheet-clean-power-plan-flexibility.

18  79 Fed. Reg. at 34,954/1.

19  Id.

20  Id. at 34,836/2.

21  Id. at 34,926/2 (reciting EPA’s assumption that efficiency gains will reduce emissions by 6 percent, on average).

22  See, e.g., Decl. of Scott Deloney, Indiana Department of Environmental Management, at ¶ 3, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014); Decl. of Laura Crowder, West Virginia Department of Environmental Protection, at ¶¶ 4, 7, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014); Decl. of Thomas Gross, Kansas Department of Health and Environment, at ¶ 3, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014); Decl. of Brian Gustafson, South Dakota Department of Environment and Natural Resources, at ¶¶ 6, 8, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014); Decl. of Todd Parfitt, Wyoming Department of Environmental Quality, at ¶¶ 5–6, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

23  See, e.g., Decl. of Laura Crowder, West Virginia Department of Environmental Protection, at ¶ 4, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

24  79 Fed. Reg. at 34,926/2 (6 percent, on average, per EPA). And even that may not be achievable in many states. See, e.g., Decl. of Laura Crowder, West Virginia Department of Environmental Protection, at ¶ 4, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

25  See, e.g., Decl. of Laura Crowder, West Virginia Department of Environmental Protection, at ¶ 4, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014); Decl. of Thomas Gross, Kansas Department of Health and Environment, at ¶ 3, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

26  See Decl. of Brian Gustafson, South Dakota Department of Environment and Natural Resources, at ¶ 9, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

27  Id.

28  See, e.g., Decl. of Robert Hodanbosi, Ohio Environmental Protection Agency, at ¶ 5.B, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014) (current law and practices “require[] that the plants are dispatched in an economic manner with the most economic being used first”).

29  Decl. of Scott Deloney, Indiana Department of Environmental Management, at ¶ 3, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014); Decl. of Robert Hodanbosi, Ohio Environmental Protection Agency, at ¶ 5.B, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

30  Decl. of Brian Gustafson, South Dakota Department of Environment and Natural Resources, at ¶ 10, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

31  Decl. of Todd Parfitt, Wyoming Department of Environmental Quality, at ¶ 6, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

32  Decl. of Thomas Gross, Kansas Department of Health and Environment, at ¶ 3, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

33  Decl. of Laura Crowder, West Virginia Department of Environmental Protection, at ¶ 5, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014);

34  Decl. of Thomas Gross, Kansas Department of Health and Environment, at ¶ 3, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

35  Decl. of Robert Hodanbosi, Ohio Environmental Protection Agency, at ¶ 5.D, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

36  Id.

37  79 Fed. Reg. at 34,899/3, 34,901/3, 34,907/1, 34,933/1, 34,935/1 (acknowledging that the Proposed Rule will require retirements).

38  Decl. of Todd Parfitt, Wyoming Department of Environmental Quality, at ¶ 6, West Virginia v. EPA, No. 14-1146 (D.C. Cir. filed Nov. 26, 2014).

39  U.S. Const. amend. X.

40  United States v. Darby, 312 U.S. 100, 124 (1941).

41  New York v. United States, 505 U.S. 144, 156 (1992).

42  Id.

43  Id. at 161.

44  Id. at 166.

45  Id. at 153–54. If the state did not take possession of the waste, it would nonetheless be “liable for all damages directly or indirectly incurred” as a result of its failure to do so. Id.

46  Id. at 167 (quoting South Dakota v. Dole, 483 U.S. 203, 206 (1987)). Which is not to suggest that the Proposed Rule is a proper exercise of that power. See infra § III.A.

47  Id.

48  Id. at 168.

49  Id. at 169.

50  Id. at 175.

51  Id. at 176–77.

52  Id. at 178, 181.

53  Id. at 188.

54  521 U.S. 898 (1997).

55  Id. at 903–04.

56  Id. at 904.

57  Id. at 928 (alterations omitted) (quoting Brown v. EPA, 521 F.2d 827, 839 (9th Cir. 1975), vacated on other grounds, 431 U.S. 99 (1977)).

58  Id. (quotation marks omitted).

59  79 Fed. Reg. at 34,836/1.

60  Id. at 34,859/3 (“EPA believes that implementation of all identified best practices and equipment upgrades at a facility could provide total heat rate improvements in a range of approximately 4 to 12 percent.”).

61  16 U.S.C. § 824(b)(1). See also 42 U.S.C. § 2021(k) (recognizing presumptive role of states in power regulation).

62  Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 206 (1983).

63  Id. at 212.

64  Id. (quoting Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 550 (1977)).

65  Crucially, the statute says absolutely nothing about preempting states’ traditional regulation of utilities and generation. See Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947) (“[W]e start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.”); United States v. Bass, 404 U.S. 336, 349 (1971) (“[U]nless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federal-state balance.”); Will v. Michigan Dep’t of State Police, 491 U.S. 58, 65 (1989); Gregory v. Ashcroft, 501 U.S. 452, 460 (1991) (“Congress may legislate in areas traditionally regulated by the States. This is an extraordinary power in a federalist system. It is a power that we must assume Congress does not exercise lightly.”); Bond v. United States, 134 S. Ct. 2077, 2088–90 (2014). Moreover, the Proposed Rule and its preamble do not discuss or even mention preemption. Cf. Wyeth v. Levine, 555 U.S. 555, 576–77 (2009) (suggesting that an agency’s assertion of preemption may be a necessary, but not sufficient, condition for an ambiguous federal statute to preempt state law).

66  79 Fed. Reg. at 34,833/2, 34,900/3.

67  Id. at 34,902/1.

68  Id. at 34,914/3.

69  Id. at 34,917/3.

70  Id.

71  Id. at 34,897/1–98/1.

72  505 U.S. at 177. Although EPA may impose, administer, and enforce a federal plan that addresses the kind of efficiency improvements implicated by its first building block, 42 U.S.C. § 7411(d)(2), as described below, implementation of the other building blocks will require state action, which EPA does not claim the authority to preempt.

73  505 U.S. at 188.

74  FERC v. Mississippi, 456 U.S. 742 (1982), does not alter this conclusion, for two reasons. First, FERC upheld “only the ‘command’ that state agencies ‘consider’ federal standards, and again only as a precondition to continued state regulation of an otherwise pre-empted field.” Printz, 521 U.S. at 926. The Proposed Rule, by contrast, requires states to carry out federal policy and does not offer to relieve states of the burden of so doing. Second, to the extent that FERC could be read to approve an broader conception of permissible commandeering, that holding has been narrowed (if not entirely overruled) by New York, 505 U.S. at 161–62 (FERC “upheld the statute at issue because it did not view the statute as such a command”), and Printz, 521 U.S. at 926. See also New York, 505 U.S. at 204–05 (White, J., concurring in part and dissenting in part) (accusing the majority of overriding FERC).

75  Id. at 167.

76  In at least one instance, EPA has approved a SIP revision limiting utilization of a facility, which would be among the measures required to carry out the Proposed Rule’s second building block. Approval and Promulgation of Air Quality Implementation Plans; Oklahoma; Regional Haze and Interstate Transport Affecting Visibility; State Implementation Plan Revisions; Revised BART Determination for American Electric Power/Public Service Company of Oklahoma Northeastern Power Station Units 3 and 4, 79 Fed. Reg. 12,944, 12,945/1 (Mar. 7, 2014). EPA, however, never claimed authority to carry out such measures itself through a federal plan. See id. at 12,951/2 (noting that the preexisting FIP “does not restrict capacity utilization”). Such reductions would also have to be accompanied by other state regulatory action that is not within EPA’s purview, such as changes to dispatch and utility regulation.

77  Contrast with Hodel v. Va. Surface Mining & Reclamation Ass’n, Inc., 452 U.S. 264 (1981), which concluded that the Surface Mining Control and Reclamation Act of 1977 did not present a commandeering problem because it merely made compliance with federal standards a precondition to continued state regulation in an otherwise pre-empted field. See also Printz, 521 U.S. at 926.

78  The Clean Air Act provides EPA authority to withhold federal highway funding from states that fail to make certain approvable SIP submissions or fail to enforce their SIPs. 42 U.S.C. § 7509. This penalty is discussed further below.

79  Compare to New York, 505 U.S. at 176 (“Either way, ‘the Act commandeers the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program.’”) (quoting Hodel, 452 U.S. at 288).

80  485 U.S. 505 (1988)

81  528 U.S. 141 (2000)

82  485 U.S. at 514–15.

83  528 U.S. at 143–44, 151.

84  Id. at 150 (alterations omitted) (emphasis added) (quoting Baker, 485 U.S. at 514–15).

85  Id. at 151. See also Baker, 485 U.S. at 514 (explaining that statute “does not…seek to control or influence the manner in which States regulate private parties”).

86  The Proposed Rule asserts that each of its four building blocks is severable. 79 Fed. Reg. at 34,892/2. This claim is discussed and rejected in § III.A.

87  NFIB v. Sebelius, 132 S. Ct. 2566, 2602 (2012) (Roberts, C.J.). Chief Justice Roberts’s opinion, being the “position taken by those Members who concurred in the judgments on the narrowest grounds,” is controlling. Marks v. United States, 430 U.S. 188, 193–94 (1977) (quotation marks omitted). Subsequent citations to NFIB refer to the Chief Justice’s controlling opinion, unless otherwise noted.

88  U.S. Const. art. I, § 8, cl. 1.

89  Dole, 483 U.S. at 206.

90  NFIB, 132 S. Ct. at 2604 (quotation marks omitted) (quoting Dole, 483 U.S. at 211).

91  Id. at 2606–07.

92  Id. at 2604.

93  Id. at 2605.

94  Id. at 2606 (quoting Pennhurst State School & Hosp. v. Halderman, 451 U.S. 1, 25 (1981)).

95  Id. at 2607 (alteration omitted) (quoting FERC, 456 U.S. at 775 (O’Connor, J., concurring in judgment in part and dissenting in part)). The joint NFIB dissent of Justices Scalia, Kennedy, Thomas, and Alito reaches the same conclusion based on arguably broader reasoning. See id. at 2661, 2666 (Scalia, Kennedy, Thomas, and Alito, JJ., dissenting).

96  Id. at 2607.

97  Samuel Bagenstos, The Anti-leveraging Principle and the Spending Clause After NFIB, 101 Geo. L.J. 861, 871 (2013) [hereinafter Bagenstos].

98  42 U.S.C. § 7509.

99  Bagenstos, supra note 97, at 917.

100  Jonathan Adler, Could the Health Care Decision Hobble the Clean Air Act?, July 23, 2012, http://perc.org/blog/could-health-care-decision-hobble-clean-air-act. See also Jonathan Adler, Judicial Federalism and the Future of Federal Environmental Regulation, 90 Iowa L. Rev. 377, 449–52 (2005) (pre-NFIB analysis finding that “[i]t is not clear that threatening federal highway moneys falls squarely within Dole’s holding”).

101  Bagenstos, supra note 97, at 918–19 (“Insofar as they address stationary sources of pollution, the CAA’s requirements would appear, on the same analysis, to be separate and independent from the highway-grant program. Those requirements do not govern how states should construct and maintain highways. Nor do they govern the processes by which states should choose which highways to construct and maintain. And they do not even govern the use of the highways constructed or maintained with federal funds.”) (footnotes omitted).

102  See id. at 919 (“The average state receives more than three-quarters of a billion dollars a year in federal transportation funds,” accounting for nearly 8 percent of its budget.).

103  NFIB, 132 S. Ct. at 2604 (quotation marks omitted).

104  Id. at 2607.

105  42 U.S.C. § 7615.

106  79 Fed. Reg. at 34,892/2.

107  MD/DC/DE Broadcasters Ass’n v. FCC, 236 F.3d 13, 22 (D.C. Cir. 2001) (citing K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 294 (1988)).

108  Id.

109  Id.

110  E.g., 79 Fed. Reg. at 34,837/2 (explaining that interim goals depend on such flexibilities); id. at 34,864/2 (accomplishing “necessary” infrastructure improvements depends on “state flexibilities”); id. at 34,898/1 (flexibilities “ensure that states will be able to achieve their final CO2 emission performance goals”).

111  In addition, it is not apparent that the Proposed Rule’s “building blocks” are the appropriate subjects of severability analysis, given that EPA uses them to calculate overall emissions reductions and purports not to mandate that states achieve specific emissions reductions with respect to each building block. See id. at 34,837. In other words, the building blocks themselves are not requirements, but inputs to EPA’s state-specific target calculations, and it is the requirement to achieve the targets that causes the rule to be unconstitutional.

112  See Jean Chemnick, Agency won’t withhold highway funds for Clean Power Plan—McCarthy, E&E News PM, Mar. 30, 2015.

113  See City of Arlington v. FCC, 133 S. Ct. 1863 (2013).

114  NFIB, 132 S. Ct. at 2603 (alteration omitted) (quoting Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548, 586 (1937)).

115  Id. at 2606–07 (quoting FERC, 456 U.S. at 775 (O’Connor, J., concurring in judgment in part and dissenting in part)).

116  Id. at 2603 (quotation marks omitted).

117  Id. at 2602, 2604–05 (quoting Dole, 483 U.S. at 211–12).

118  79 Fed. Reg. at 34,951/2. See also Timothy Cama, EPA delays landmark climate rule, The Hill, Jan. 7, 2015, http://thehill.com/policy/energy-environment/228783-epa-delays-climate-rule (quoting EPA official’s statement that the agency intends “to have a federal plan available, should there be states that don’t submit plans”).

119  See supra § II; William Yeatman, What Would a Clean Power Plan FIP Look Like?, Jan. 14, 2015, http://www.globalwarming.org/2015/01/
14/what-would-a-clean-power-plan-fip-look-like/; Comments of Hon. Charles W. Pickering, Sr. & Hon. Thomas Scott, EPA-HQ-OAR-2013-0602-33150, Dec. 1, 2014 (“Pickering & Scott Comments”).

120  Pickering & Scott Comments at 43–44.

121  NFIB, 132 S. Ct. at 2604 (alteration omitted) (quoting Dole, 483 U.S. at 211).

122  Id.

123  The holding of New York v. United States, 505 U.S. 144, 173–74 (1992), regarding the “access incentive” of the Low–Level Radioactive Waste Policy Amendments Act of 1985, is not to the contrary. That provision provided that “[s]tates may either regulate the disposal of radioactive waste according to federal standards…, or their residents who produce radioactive waste will be subject to federal regulation authorizing sited States and regions to deny access to their disposal sites.” Id. at 174. The Court held that this was a permissible “conditional exercise of Congress’ commerce power” that “does not intrude on the sovereignty reserved to the States by the Tenth Amendment.” Id. First, by contrast, a federal plan implementing the Proposed Rule would invade state sovereignty by inhibiting states’ exercise of their traditional police powers, which depend on a reliable electric system. Second, the state would not have the “the choice of regulating that activity according to federal standards or having state law pre-empted by federal regulation,” id. at 173–74, in light of EPA’s inability to directly impose most of the regulatory activities targeted by the Proposed Rule. And third, it follows that a state would not be free to “continue to regulate…in any manner its citizens see fit,” id. at 174, given the necessity of state action to mitigate the impact of federal action in the absence of complete preemption. In this respect, the Proposed Rule is much more like the “take title” provision that the Court rejected. As it explained, “[a] choice between two unconstitutionally coercive regulatory techniques is no choice at all.” Id. at 176. Nevada v. Skinner, 884 F.2d 445, 453 (9th Cir. 1989), is inapt for the same reasons, fails to anticipate the anti-commandeering and anti-coercion doctrines of New York and NFIB, and has been (at least in part) abrogated by New York.

124  United States v. Jin Fuey Moy, 241 U.S. 394, 401 (1916).

125  DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988).

126  79 Fed. Reg. at 34,836/1. See also id. at 34,888/3–89/1 (discussing objections to this definition).

127  Hancock v. Train, 426 U.S. 167, 193 (1976). See also PPG Indus., Inc. v. Harrison, 660 F.2d 628, 636 (5th Cir. 1981) (“Setting standards which in effect require a use of a certain type of fuel, without regard to other types of emission control, appears to be a work practice or operation standard beyond the statutory authority of the EPA.”); Bethlehem Steel Corp. v. EPA, 651 F.2d 861, 869 (3d Cir. 1981) (“system” is something that a source can “install”).

128  73 Fed. Reg. 34,072, 34,073/2 (June 16, 2008).

129  District of Columbia v. Train, 521 F.2d 971, 990 (1975), vacated on other grounds by EPA v. Brown, 431 U.S. 99 (1977).

130  Id. at 994; Maryland v. EPA, 530 F.2d 215, 226 (4th Cir. 1975); Brown v. EPA, 521 F.2d 827, 838–42 (9th Cir. 1975).

131  Printz, 521 U.S. at 925.

Source: http://www.fed-soc.org/publications/detail/does-epas-clean-power-plan-proposal-violate-the-states-sovereign-rights

Obama Cynically Cut China Deal To Force Energy Price Hikes On U.S Consumers

Whiplash is an occupational risk for those keeping track of President Barack Obama’s muscular exertions of executive power. In just the few weeks since his party’s shellacking in the midterm elections, the president has made major moves on immigration, Internet regulation, and air pollution, just to name a few.

One problem with activist government is that too many actions that merit serious concern and skepticism fall by the wayside. Among them is the president’s announced climate deal with China, which hit front pages a week after the election before sliding into obscurity, overtaken by so many other events. But like the president’s immigration actions, this actually is something new, and more than a little sinister.

A Method to His Double-Dealing Madness

Taken at face value, the deal doesn’t make any sense—at least, not from the United States national-interest perspective. The United States agrees to costly massive cuts in greenhouse gas emissions: 26 to 28 percent below 2005 levels by 2025, far more than the 17-percent cut the president previously targeted. In return, China agrees to…do nothing for 16 years, until 2030. Its emissions won’t increase beyond their level that year, according to the agreement. While this might appear to be a concession, it really isn’t: although emissions are growing at a rapid clip in China today, most projections see them leveling off right around—you guessed it—2030. In other words, this may be the most one-sided deal since the Dutch purchased Manhattan.

But there is a method to what would otherwise seem to be pure madness. As the numbers suggest, the deal has just about nothing to do with China, which will go on its merry way building coal-fired plants to slake its thirst for cheap and secure energy. But it has everything to do with Americans’ continued reliance on coal-generated electricity.

Radically cutting U.S. greenhouse gas emissions has been a central goal for the president since taking office. The centerpiece of this drive was supposed to be a cap-and-trade system, but that was dead on arrival even when Democrats controlled Congress. So the Environmental Protection Agency (EPA) has been dutifully marching forward with a slew of politically-challenged and legally-questionable regulations, from its first wave of permitting requirements for new facilities emitting greenhouse gases (struck down in part by the Supreme Court) to its proposed “performance standards” for new power plants (withdrawn and then re-proposed following legal objections) to its recently-proposed “Clean Power Plan” to cap emissions from existing power plants (already the subject of litigation and withering criticism).

The China Deal Is Smoke and Mirrors

But unilateral action has its risks. If EPA stumbles at all in its roll-out of the Clean Power Plan, that could delay environmentalists’ goal of regulating existing plants for years, particularly if Obama’s successor doesn’t share his priorities. Even if the agency does meet its internal deadlines, there’s still no guarantee the next administration won’t roll back its plans.

This is where the China deal fits in. It provides political cover by creating the appearance—really, the false impression—that the United States isn’t alone in sacrificing economic growth to lower emissions and, in particular, that the president isn’t putting U.S. businesses at a competitive disadvantage to Chinese industry.

There’s also diplomatic cover, in that the next president will be at least hesitant to walk away from an international agreement, binding or not. Much diplomacy is conducted informally, and, all else being equal, nations and their leaders do well to keep their word.

And there’s a measure of legal cover. To be sure, an executive agreement like this one is not legally binding—a treaty, after all, has to be ratified by the Senate, which the president knows is politically impossible. But the courts are generally more deferential to policy decisions that have foreign-policy consequences, given the president’s unique competence and authority in that area. Expect our bilateral “obligations” to China to occupy a place of prominence in legal briefs defending the Clean Power Plan, which is conveniently referenced in the U.S.-China executive agreement, from the legal challenges that are sure to follow its introduction.

Will the Courts Care?

Savvy as it may be, the China deal is also remarkably cynical and has the air of being too-clever-by-half. Lacking the power to simply change domestic laws—well, at least until recently—President Obama is attempting a partial end-run through the exercise of his potent but carefully circumscribed foreign-policy powers. There’s absolutely no reason the deal had to be with China; the Seychelles or Tonga would have worked just as well.

This treads a bit too close to Justice Scalia’s concern, expressed in a treaty-power decision last year, that the Obama administration’s position was a recipe for circumventing the Constitution’s limitations on federal power. Under an unbounded treaty power, he explained, “negotiating a treaty with Latvia providing that neither sovereign would permit the carrying of guns near schools” would be sufficient to resuscitate the statute prohibiting the carrying of firearms near schools that the Courtpreviously struck down for exceeding Congress’s enumerated powers. Notably, at oral argument, Solicitor General Donald Verilli said it was simply “unimaginable” that the president or Congress would abuse foreign-policy powers to aggrandize their own authority in domestic affairs.

And yet. Remember when it was unimaginable that the president would act unilaterally to alter the legal status of millions of immigrants?

As with the president’s immigration actions, the creative repurposing of executive power that underlies the China deal will have unexpected consequences. If international agreements become just another tool of domestic policy, subject to reconsideration every four or eight years, will it diminish the standing of our word among nations? Or will it ossify U.S. domestic policy, as policy choices are taken off the table to comply with existing agreements?

The key question is whether Congress and the courts will recognize the China deal for what it is—a cynical exercise of bogus internationalism directed entirely at domestic affairs—and treat it accordingly.

Messers. Rivkin and Grossman practice law, with a particular focus on constitutional litigation, at BakerHostetler in Washington DC. Rivkin served at the Justice Department and the White House counsel’s office under presidents Reagan and George H.W. Bush.

Source: http://thefederalist.com/2014/12/03/obama-cynically-cut-china-deal-to-force-energy-price-hikes-on-u-s-consumers/