Indiana and 11 other states have launched a preemptive strike on the EPA’s proposed Clean Power Plan. The EPA proposed the Clean Power Plan on June 18, 2014, as part of a trio of proposed rules to limited carbon emissions from power plants. See 79 Fed. Reg. 34,830. The EPA’s Clean Power Plan would require states to propose plans under § 111(d) of the Clean Air Act, 42 U.S.C. § 7411(d), to limit carbon emissions from existing power plants within the state. If implemented, the Clean Power Plan will create significant obstacles and disincentives for the continued use of coal-fired generation. Indiana gets approximately 80% of its electricity from coal, and approximately 3,500 Hoosiers are employed in the coal sector, so Indiana has sought to block the proposed rule in the United States Court of Appeals for the D.C. Circuit.

The Clean Power Plan has its genesis in a lawsuit filed by 12 other states and two citizens' groups to compel the EPA to regulate greenhouse gas emissions from power plants. That suit was resolved in December 2010 by a settlement agreement that requires the EPA to promulgate: (1) a greenhouse gas rule for new and modified power plants under § 111(b) of the Clean Air Act, and (2) a greenhouse gas rule for existing power plants under § 111(d). That settlement agreement was subject to public comment.  

On Feb. 16, 2012, the EPA finalized the Mercury and Air Toxics Standards, see 77 Fed. Reg. 9,304, which regulate mercury and other hazardous air pollutants from power plants under § 112 of the Clean Air Act, 42 U.S.C. § 7412. The EPA’s regulation of power plant emissions under § 112 poses a legal problem for the EPA because under the plain language of § 111(d)(1), the EPA cannot promulgate a rule requiring the states to regulate a category of existing sources if the EPA already regulates that source category under § 112. In addition, the Supreme Court has stated that the “EPA may not employ § 7411(d) if existing stationary sources of the pollutant in question are regulated under . . . the ‘hazardous air pollutants’ program, § 7412.”  Am. Elec. Power Co., Inc. v. Connecticut, 131 S.Ct. 2527, 2537 n.7 (2011). When the plain language of a statute is clear, the EPA is bound by Congress’s unambiguous intent and cannot interpret the statute. Chevron U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837 (1984).  

Thus, when the EPA proposed the Clean Power Plan, it published a 104 page legal memorandum explaining why it believes it has the authority to regulate greenhouse gases under § 111(d) despite the plain language of the statute. According to the EPA, there were two amendments to § 111(d) in the 1990 Clean Air Act amendments. Only one amendment made it into the United States Code, but both amendments are present in the Statutes at Large. Compare 104 Stat. 2467, with 104 Stat. 2574. In its legal memorandum, the EPA asserts, without citation to legal authority, that “the enacted law signed by the President (as recorded in the U.S. Statutes at Large), not the U.S. Code, is controlling.” EPA Legal Memo. at 21–22. The EPA believes that reading both amendments into the statute makes § 111(d) ambiguous; therefore, it is permitted to interpret the statute.

Indiana and its sister states have decided to put the EPA’s legal theory to the test. Indiana’s petition for review challenges not only the proposed Clean Power Plan, but also the December 2010 settlement agreement requiring the EPA to regulate greenhouse gas emissions from existing power plants. The time for challenging the settlement agreement expired long ago, but the states seek review under the Clean Air Act’s statutory after-arising-ripeness exception. 42 U.S.C. § 7607(b)(1). Indiana argues that the states could not have timely challenged the settlement agreement because the Mercury and Air Toxics Standards had not yet been promulgated in 2010 and the EPA retained the authority to regulate existing power plants under § 111(d) at that time. The states could not have predicted in 2010 that the EPA would violate the law in 2014. By challenging the settlement agreement, the states may be able to circumvent the general rule that courts do not review proposed agency action. If the states’ challenge is successful, it will deal a blow to the Obama Administration’s climate change agenda because the EPA’s only statutory authority to regulate carbon emissions from existing power plants is § 111(d).