Pennsylvania administrative law has a quirk: when the Commonwealth adopts a regulation, disappointed parties typically cannot challenge it until the regulators apply the rule in a specific case. Only rarely can a party in Pennsylvania get to court prior to enforcement. The Pennsylvania Supreme Court recently seemed to expand the set of cases in which pre-enforcement judicial review of regulations can be available in the Commonwealth. PPL Generation, LLC v. Department of Environmental Protection, No. 7 MAP 2009 (Pa. Dec. 23, 2009).

The conventional assumption about administrative practice is that when an agency adopts a regulation, disappointed parties can challenge that regulation immediately. That is the practice under most federal statutes. For example, regulations adopted to implement most of the major federal environmental programs not only may be challenged promptly after the Environmental Protection Agency (EPA) adopts them, they must be challenged at that time. So, for instance, when EPA makes most rulemaking decisions under the Clean Air Act, disappointed parties may seek review in an appropriate court of appeals, but only for 60 days following promulgation of the regulation. 42 U.S.C. § 7607(b)(1). “Action of the Administrator with respect to which review could have been obtained under paragraph (1) shall not be subject to judicial review in civil or criminal proceedings for enforcement.” Id. § 7607(b)(2). One will find similar provisions in most other federal environmental statutes.

Pennsylvania has precisely the opposite practice. When the Environmental Quality Board (EQB) adopts a regulation or the Department of Environmental Protection adopts a policy, one must await enforcement to challenge that regulation or policy. The Supreme Court has been fairly consistent on this point. For example, when the EQB adopts a water quality standard — a determination of how much of a pollutant may be in a water body — it effectively determines the maximum concentration and amount of the pollutant that individual dischargers’ permits may allow. However, those permittees may not pursue judicial review until after the permit issues. Neshaminy Water Resource Authority v. Department of Environmental Resources, 513 A.2d 979 (Pa. 1986). The court has only recognized a narrow set of circumstances in which the regulation itself imposes costly self-executing obligations that allow a regulated entity to seek judicial review prior to enforcement. For example, a coal company may seek review of the designation of its property as unsuitable for mining prior to enforcement. Arsenal Coal Co. v. Department of Environmental Resources, 477 A.2d 1333 (Pa. 1984).

The federal rule requiring prompt review of regulations can have advantages and disadvantages over the Pennsylvania rule. Early review forces trade associations and environmental advocates to marshal their policy arguments early and in one forum. If the regulation has problems, they will come to light in one court early on, and after that all of the parties can have regulatory certainty. On the other hand, under the federal rule, the time to seek judicial review can come and go before one even knows that one is regulated. The Pennsylvania rule allows the Environmental Hearing Board and the reviewing courts to have real facts to consider.

Uncertainty over which rule applies can be the worst of both worlds. One cannot know whether one has to organize a law suit in the Commonwealth Court immediately after the EQB adopts a rule or whether one should await issuance or denial of a permit or an enforcement action.

The Supreme Court’s PPL Generating opinion considered a case meshing federal and state regulatory programs, and therefore seemed to expand the narrow set of cases in which one must seek pre-enforcement review in Pennsylvania. The specific issue in that case involved Pennsylvania’s regulations governing emissions to the air of mercury from coal- and oil-fired power plants. The federal Clean Air Act requires adoption of technology-based standards to be imposed by permits for sources of hazardous air pollutants included on a list prepared by EPA. EPA in the last federal administration sought to relieve power plants from stringent technology-based standards. EPA removed mercury from the list of hazardous air pollutants, and in place of regulation under section 112, EPA set up a trading system called the Clean Air Mercury Rule under which each state would receive an allocation of a certain number of pounds of mercury that sources within the state could discharge each year. Sources could then buy and sell allowances. Environmental advocates challenged the de-listing of mercury and the Clean Air Mercury Rule in federal court. Ultimately, they prevailed. New Jersey v. Environmental Protection Agency, 517 F.3d 574 (D.C. Cir. 2008).

Meanwhile, Pennsylvania exercised its option not to participate in the Clean Air Mercury Rule, and instead adopted its own regulatory program. State law would only permit adoption of that regulation if mercury were not on the federal list of hazardous air pollutants. Power plant operators challenged adoption of the state rule in state court. When the petitioners in New Jersey v. EPA prevailed, mercury was reinstated on the federal list. Therefore, the state petitioners sought summary judgment in the Commonwealth Court: mercury was on the federal list, so Pennsylvania could not regulate it differently from whatever federal scheme EPA adopted.

In defending its rule, the Commonwealth argued that judicial review was premature. None of the petitioners in PP&L Generating had received either a permit to construct a power plant (known in Pennsylvania as a “plan approval”) or a permit to operate a power plant that contained an enforceable mercury limitation. Therefore, the Commonwealth argued, review was not ripe.

The Supreme Court accepted the power plant operators’ argument that they must have review because the capital requirements of achieving large mercury reductions beginning in 2010 precluded the operators from waiting to place their equipment orders. They would either have had to take very costly steps now or to put themselves in a position from which they could not expect to comply with the Pennsylvania rules later. Accordingly, the court found this case to be like Arsenal Coal.

By using that rationale, the Supreme Court effectively made reviewability turn on an estimate of the costs of complying with a regulation before the Department of Environmental Protection (or other regulator) has decided on the steps that the regulated entity must take and the schedule on which it must take them. Costs can be relevant to establishing those steps and that schedule.

While the court took relatively prompt action to regularize regulation of coal- and oil-fired power plants in Pennsylvania, and saved the state from large dislocations caused by the mercury rule, it also may have created a long-run problem for regulated entities and environmental advocates. Failure to seek review of regulations in the Commonwealth Court immediately after promulgation can end up precluding parties from later challenges when they receive unacceptable permits. Until the implications of this decision play out, prudent parties may wish to be somewhat more aggressive about filing protective appeals early when the Commonwealth adopts environmental and other rules.