Gary E. Steinbauer of Babst Calland Clements & Zomnir.

Since taking office, President Donald Trump has launched an ambitious deregulatory effort targeting several federal environmental rulemakings completed during the Obama administration. Two of the most noteworthy deregulatory actions involve the scope of the federal government's authority to regulate greenhouse gas (GHG) emissions from existing sources under the Clean Air Act and discharges to surface water under the Clean Water Act. Lawsuits over these rules are pending or promised, with federal courts, and potentially the U.S. Supreme Court, poised to rule on whether the Trump administration's actions are appropriate course corrections or themselves illegal.

Clean Air Act

In 2015, the Obama administration promulgated the first-ever requirements for GHG emissions from power plants under the Clean Air Act. Known as the Clean Power Plan (CPP), this rule aimed to reduce GHG emissions from electricity generating units to approximately 32% less than 2005 levels by 2030. The CPP was challenged by numerous states and industry groups in the U.S. Court of Appeals for the District of Columbia Circuit. Challengers asserted that the Clean Air Act requirement to establish the "best system of emissions reduction" (BSER) prohibited the U.S. Environmental Protection Agency (EPA) from forcing fossil fuel plants to offset their emissions by constructing renewable energy sources or purchasing credits from such sources. In February 2016, the Supreme Court took the unprecedented step of staying the CPP before the D.C. Circuit ruled on the merits of the challenge. In September 2016, the entire D.C. Circuit heard oral arguments on the CPP, but effectively stayed the CPP lawsuit while the EPA moved forward with preparing a replacement.

On June 19, the EPA issued a final Affordable Clean Energy (ACE) rule establishing a much different set of requirements for BSER at existing power plants and formally repealing the CPP. Finalized after formal notice-and-comment rulemaking, the ACE rule adopts a series of thermal efficiency or heat rate improvements as BSER, but unlike the CPP, it does not set a formal limit on GHG emissions from existing coal-fired power plants. Effectively, the ACE rule requires coal-fired electricity generating units to reduce GHG emissions by employing operation and maintenance practices, using one of six listed "candidate technologies" each with its own pre-determined GHG emissions reductions, and evaluating other factors such as the source's remaining useful life. Under the ACE rule, states are required to submit plans to the EPA describing how each affected power generation unit within their jurisdiction meets the required "standards of performance."

On July 8, the same day the ACE rule was published in the Federal Register, public health interest groups filed a lawsuit challenging the rule, which was followed by challenges by more than 25 states (including Pennsylvania), environmental groups and a coal mining company. Industry groups, power generation, mining companies, states and others have moved to intervene in these lawsuits to defend the ACE rule. The EPA has asked the D.C. Circuit to fast-track the litigation, and challengers have opposed the EPA's request and asked the D.C. Circuit to hold the case in abeyance until the EPA completes a related rulemaking. The court has yet to rule on these competing motions.

The legal challenges to the ACE rule, as well as the ongoing litigation over the CPP, will determine the extent to which the EPA can regulate GHG emissions from existing power plants under the Clean Air Act. If the Supreme Court's unprecedented stay of the CPP is any indication, the ACE rule lawsuits and the ongoing challenges to the merits of the CPP have all the necessary ingredients for an environmental court battle for the ages, one that could ultimately reach the Supreme Court.

Clean Water Act

On the water side, a different campaign is being waged. In 2015, the same year that it promulgated the CPP, the Obama administration issued a rule re-defining "waters of the United States" (WOTUS) under the Clean Water Act, which arguably expanded the federal government's jurisdiction over surface water, including wetlands. The Obama-era definition of WOTUS, typically referred to as the Clean Water Rule (CWR), invoked intense opposition by many states and regulated parties. Opponents filed lawsuits challenging the CWR almost immediately, with the initial battle involving whether the federal appellate or district courts were responsible for deciding the matters. The CWR was stayed until 2018. In 2018, the Supreme Court issued a unanimous decision holding that challenges to the CWR must be filed in federal district courts.

The Supreme Court's 2018 decision requiring federal district courts to hear the CWR challenges led to the existing regulatory patchwork, where the CWR's WOTUS definition currently is in place in 22 states (including Pennsylvania) and the pre-2015 definition of WOTUS is in effect in 27 states. The Trump administration has used the existing regulatory patchwork to justify repealing the CWR and introducing a new definition of WOTUS. The EPA and the U.S. Army Corps of Engineers (Corps) (collectively, the agencies) have established a two-step process for repealing and potentially replacing the CWR. Step one is to repeal the CWR and recodify the pre-CWR definition and regulatory regime for defining and interpreting WOTUS. The agencies will soon complete step one. On Sept. 12, the agencies released a pre-publication version of the final rule repealing the CWR. The "repeal rule" becomes effective 60 days after publication in the Federal Register, which, as of Sept. 30, had not yet occurred. Once final, the "repeal rule" will recodify the pre-2015 definition of WOTUS consistently across the United States.

Major national environmental groups and states have already vowed to challenge the "repeal rule." These challenges, which could be filed in multiple federal district courts, will center on whether the agencies' repeal of the CWR was arbitrary and capricious under the federal Administrative Procedures Act and whether the agencies have marshaled an appropriate justification for limiting federal jurisdiction under the Clean Water Act four years after the CWR was finalized. The regulatory patchwork of WOTUS definitions may continue if any of these lawsuits are successful in staying the repeal rule.

Concurrently, the Trump administration and its opponents are gearing up for another clash involving step two of the CWR revocation process—finalizing a potential replacement definition of WOTUS. The agencies initiated step two on Feb. 14, when they published a proposed revised definition of WOTUS that would generally limit federal jurisdiction to relatively permanent, standing or continuously flowing surface waters and their adjacent wetlands. The agencies indicate that they are currently reviewing more than 621,000 public comments that they received on the February 2019 proposed WOTUS definition. They expect to take final action in early 2020. As with the "repeal rule," any new definition of WOTUS inevitably will lead to additional litigation.

As the Trump administration moves from delaying or suspending Obama-era environmental regulations to fashioning its own replacements, legal challenges are a near certainty. The scope of the EPA's authority to regulate GHG emissions under the Clean Air Act and discharges to surface water under the Clean Water Act will be determined initially by federal appellate and district court judges, with a strong possibility of the Supreme Court serving as the final arbiter.

Gary E. Steinbauer is an associate in the environmental group of Babst Calland Clements & Zomnir. He represents clients on a wide variety of matters arising under major federal and state environmental and regulatory programs and devotes a significant portion of his practice to water and air civil enforcement defense and permitting. Contact him at [email protected].