Article: June 2017: Energy Litigation Update

New Administration Leads to Pause of Major Energy-Related Litigation. In March, President Trump signed an executive order directing the Environmental Protection Agency (“EPA”) to “suspend, rescind, or revise” several Obama-era environmental regulations, including the Clean Power Plan and other greenhouse gas regulations for the power sector. Exec. Order No. 13,783, 82 Fed. Reg. 16,093 (Mar. 28, 2017). The order also directed the review of the government’s use of the social cost of carbon, lifted the moratorium on federal land coal leasing activities, and rescinded six Obama-era climate-related presidential actions (including executive orders, memoranda, and reports). Id.

This change in climate policy has slowed litigation in four significant areas:. In April alone, the D.C. Circuit delayed challenges to; (1) smog standards; (2) emissions exemptions related to startup, shutdown, and malfunction events at power plants and other facilities; (3) regulations on mercury and other emissions from coal power plants; and (4) the Clean Power Plan. While existing litigation stalls as the Trump administration reconsiders Obama-era regulations, states may take a greater role in climate-related policies and litigation.

First, in late 2015, the EPA revised the national ambient air quality standards (“NAAQS”) for ozone, reducing the limits on ozone—an ingredient in smog—from 75 to 70 parts per billion. See Fed. Reg. 65,291 (Oct. 26, 2015). Industry groups petitioned for review of the regulation. See Murray Energy Corp. v. EPA, No. 15-1385 (D.C. Cir.).

On April 7, 2017, “[i]n light of the recent change in administration,” the EPA asked the court to delay oral arguments, which were scheduled for April 19, so it could “fully review the 2015 ozone NAAQS.” The EPA noted that “the prior positions taken by the Agency with respect to the 2015 Rule may not necessarily reflect its ultimate conclusions after that review is complete.” The D.C. Circuit granted the EPA’s request on April 11, allowing the Trump administration more time to review the regulations, and directing the government to file status reports on its review process every 90 days.

Second, a few weeks later, the D.C. Circuit granted another request by the EPA to postpone oral arguments—this time, in Walter Coke Inc. v. EPA, No. 15-1166 (D.C. Cir.), which challenged an EPA regulation requiring 36 states to reconsider how their state implementation plans treat excess emissions during periods of startup, shutdown, or malfunction (“SSM”) at power plants and other facilities. See 80 Fed. Reg. 33,840 (June 12, 2015).

The EPA requested “continuance of the oral argument to give the appropriate officials adequate time to fully review the SSM Action” on April 18, 2017, again “[i]n light of the recent change in administration.” The D.C. Circuit granted the EPA’s request on April 24, and—just as above—directed the government to file status reports on its review process every 90 days.

Third, three days later, on April 27, the D.C. Circuit delayed oral arguments over Obama-era regulations on mercury and other emissions from coal power plants. In 2016 Murray Energy Corporation petitioned for review of the EPA’s findings regarding the cost of its Mercury and Air Toxics Standards (“MATS”). See Murray Energy Corp. v. EPA, No. 16-1127 (D.C. Cir.).

The EPA had prepared these findings in response to the Supreme Court’s decision in Michigan v. EPA, 135 S. Ct. 2699 (2015), concluding that costs did not change their initial determination. See 81 Fed. Reg. 24,420 (Apr. 25, 2016).

On April 18, 2017, the EPA asked to delay oral arguments scheduled for May 18, and on April 27, the D.C. Circuit granted the request, again directing the EPA to file status reports on its review of the supplemental findings every 90 days.

Finally, the day after it delayed oral arguments over MATS, the D.C. Circuit granted the EPA’s request for a pause in litigation on the Clean Power Plan. In August 2015, the EPA finalized a new set of standards, now known as the Clean Power Plan, aimed at cutting emissions from existing power plants 32% by 2030. Over two dozen states (and other affected parties, including several electric utilities) challenged the rule in West Virginia v. EPA, No. 15-1363 (D.C. Cir.), while eighteen states, including California and New York, intervened in support of the EPA. In January 2016, the Supreme Court, by a 5-4 vote, granted a stay, which immediately halted implementation of the Plan. See West Virginia v. EPA, 136 S. Ct. 1000 (2016).

On the same day President Trump issued his executive order, the EPA filed a motion with the D.C. Circuit to postpone proceedings in that court to allow for the review to take place, arguing that it “should be afforded the opportunity to fully review the Clean Power Plan and respond to the president’s direction in a manner that is consistent with the terms of the executive order, the Clean Air Act, and the agency’s inherent authority to reconsider past decisions.” The state intervenors asked the court to deny the EPA’s request, arguing that “nothing that EPA has proposed to do obviates the need for this Court’s review,” and in fact, “a decision from this Court will resolve critical live disputes over the scope of the Clean Air Act that will not only determine the enforcement of the Clean Power Plan, but also affect any reconsideration or revision of the Rule that EPA may undertake.”

On April 28, the D.C. Circuit granted the EPA’s motion, holding the case in abeyance for 60 days and ordering the parties to the litigation to file supplemental briefs “addressing whether the consolidated cases should be remanded to the agency rather than held in abeyance.”

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With existing litigation stalled as the Trump administration reconsiders Obama-era regulations, states may become increasingly active in climate-related policy and litigation, with New York and California at the forefront. For example, after the D.C. Circuit paused the Clean Power Plan challenge, New York’s Attorney General said in a statement that the “temporary pause in the litigation does not relieve EPA of its legal obligation to limit carbon pollution from its largest source: fossil-fueled power plants.” And he vowed to “continue to fight in court to ensure EPA fulfills its legal responsibility to New Yorkers’ public health and environment.” California’s Attorney General likewise is preparing to oppose President Trump’s climate-change policies to ensure, as he put it, that Californians can continue to “drink clean water and breathe clean air.” It remains to be seen whether such litigation will have any effect on the new administration’s policies.

New Administration Leads to Pause of Major Energy-Related Litigation. In March, President Trump signed an executive order directing the Environmental Protection Agency (“EPA”) to “suspend, rescind, or revise” several Obama-era environmental regulations, including the Clean Power Plan and other greenhouse gas regulations for the power sector. Exec. Order No. 13,783, 82 Fed. Reg. 16,093 (Mar. 28, 2017). The order also directed the review of the government’s use of the social cost of carbon, lifted the moratorium on federal land coal leasing activities, and rescinded six Obama-era climate-related presidential actions (including executive orders, memoranda, and reports). Id.This change in climate policy has slowed litigation in four significant areas:. In April alone, the D.C. Circuit delayed challenges to; (1) smog standards; (2) emissions exemptions related to startup, shutdown, and malfunction events at power plants and other facilities; (3) regulations on mercury and other emissions from coal power plants; and (4) the Clean Power Plan. While existing litigation stalls as the Trump administration reconsiders Obama-era regulations, states may take a greater role in climate-related policies and litigation.First, in late 2015, the EPA revised the national ambient air quality standards (“NAAQS”) for ozone, reducing the limits on ozone—an ingredient in smog—from 75 to 70 parts per billion. See Fed. Reg. 65,291 (Oct. 26, 2015). Industry groups petitioned for review of the regulation. See Murray Energy Corp. v. EPA, No. 15-1385 (D.C. Cir.).On April 7, 2017, “[i]n light of the recent change in administration,” the EPA asked the court to delay oral arguments, which were scheduled for April 19, so it could “fully review the 2015 ozone NAAQS.” The EPA noted that “the prior positions taken by the Agency with respect to the 2015 Rule may not necessarily reflect its ultimate conclusions after that review is complete.” The D.C. Circuit granted the EPA’s request on April 11, allowing the Trump administration more time to review the regulations, and directing the government to file status reports on its review process every 90 days.Second, a few weeks later, the D.C. Circuit granted another request by the EPA to postpone oral arguments—this time, in Walter Coke Inc. v. EPA, No. 15-1166 (D.C. Cir.), which challenged an EPA regulation requiring 36 states to reconsider how their state implementation plans treat excess emissions during periods of startup, shutdown, or malfunction (“SSM”) at power plants and other facilities. See 80 Fed. Reg. 33,840 (June 12, 2015).The EPA requested “continuance of the oral argument to give the appropriate officials adequate time to fully review the SSM Action” on April 18, 2017, again “[i]n light of the recent change in administration.” The D.C. Circuit granted the EPA’s request on April 24, and—just as above—directed the government to file status reports on its review process every 90 days.Third, three days later, on April 27, the D.C. Circuit delayed oral arguments over Obama-era regulations on mercury and other emissions from coal power plants. In 2016 Murray Energy Corporation petitioned for review of the EPA’s findings regarding the cost of its Mercury and Air Toxics Standards (“MATS”). See Murray Energy Corp. v. EPA, No. 16-1127 (D.C. Cir.).