On June 9th, the U.S. Court of Appeals for the District of Columbia Circuit rejected two petitions seeking to block EPA’s proposed Clean Power Plan to reduce carbon dioxide emissions from existing electric generating plants. A three judge panel of the court held that since EPA’s plan is currently only proposed it cannot be reviewed by the court until it is finalized by the agency.

The petitions were filed by a group of States led by West Virginia that includes Alabama, Alaska, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, Wisconsin, and Wyoming, and separately by Murray Energy Corporation.

Under the Clean Power Plan, States would be required to cut carbon dioxide emissions to an overall 30 percent below 2005 levels by 2030, ranging from 10.6% for North Dakota to 71.6% for Washington, primarily from coal-fired power plants.

The fundamental legal position in the petitions was that the Plan is based on an improper interpretation of Section 111(d) of the Clean Air Act, that EPA does not have authority to regulate existing power plants as it proposed to do so. In amending the Act in 1990, the House and Senate each put forward different language for exclusions in Section 111(d), one that precluded regulation under that section for a pollutant previously regulated under Section 112 and the second that preclude regulation of a source category previously regulated. EPA’s legal position is that the two versions create a statutory “ambiguity” that it can interpret, and the agency interprets the language to authorize its proposed Plan.

At oral argument in April, the panel expressed skepticism that the plan was reviewable by the court due to its status as a proposal. The court characterized the petitions as requests for review of the legality of a proposed EPA rule in order to prevent EPA from issuing a final rule. But the court reiterated it does “not have authority to review proposed agency rules.”

While conceding that a proposed agency rule cannot ordinarily be reviewed, petitioners argued that EPA’s improper legal interpretation could be addressed under the All Writs Act which authorizes courts to issues all writs necessary to necessary for their jurisdiction. The court said that anyone with standing will be able to challenge the final rule as well as to seek a stay of the final rule pending judicial review.

Petitioners also argued that EPA’s public statements that it has legal authority to regulate carbon dioxide emissions as it proposed constitute final agency action and thereby subject to judicial review. However the court concluded that the agency’s position on its legal authority is not final agency actions. The court stated that “even if EPA’s position on its legal authority is set in stone [those] statements . . . do not impose any legal obligations or prohibitions on petitioners . . . such legal obligations or prohibitions will be established . . . only after EPA finalizes a rule.”

Finally, Petitioners argued that a 2011 settlement between EPA and several other States and environmental groups was improperly used by EPA to justify the proposed Plan. The court held that the settlement agreement did not obligate the agency to issue final rules restricting carbon dioxide emissions but merely established a timeline for EPA to determine whether or not to do so. Under the court’s precedents a settlement agreement that merely sets a timeline for agency action “without dictating the content of that action, does not impose an injury” on the petitioners. Consequently, petitioners cannot challenge EPA’s proposed Plan even though the States and Murray argued that the proposed Plan subjects Americans to immediate and irreparable harm including people on fixed incomes and manufacturers of products that competing in global markets, especially the coal industry.

The result of the decision is that EPA can proceed to finalize the Plan, likely by the end of August. Once the Plan is finalized, it will certainly be challenged in the D.C. Circuit with the same and additional arguments put forward by these and other petitioners.

The cases are Murray Energy Corp. v. U.S. Environmental Protection Agency et al., case number 14-1112 (consolidated with 14-1151), and State Of West Virginia, et al, v. EPA (No. 14-1146) in the U.S. Court of Appeals for the District of Columbia Circuit.