D.C. Circuit Dismisses Challenges to Clean Power Plan

As previously reported in the Summer 2014Fall 2014, and Spring 2015 issues of The Climate Report, Murray Energy and a group of states challenged EPA's legal authority to promulgate the Clean Power Plan, arguing that EPA is precluded from regulating existing coal-fired power plants under Clean Air Act § 111(d). In re: Murray Energy Corp., No. 14-1112;State of West Virginia v. EPA, No. 14-1146. On June 9, 2015, a panel of the United States Court of Appeals for the District of Columbia Circuit dismissed those challenges, holding that that they were premature and that any challenge would have to wait until EPA promulgated its final agency rule.

The panel concluded that EPA's proposed Clean Power Plan rule did not constitute "final agency action" subject to review by the D.C. Circuit. Writing for the panel, Judge Kavanaugh noted that proposed rules are not entitled to challenge because "[t]hey are not the 'consummation of the agency's decisionmaking process' and … they do not determine 'rights or obligations,' or impose 'legal consequences.'"

In dismissing the petitioners' challenges, the D.C. Circuit rejected all three of the petitioners' arguments in favor of review of the proposed agency rule. The panel, first, rebuffed the petitioners' assertion that the All Writs Act, 28 U.S.C. § 1651(a), authorized the court to address the proposed rule. The court explained that a writ of prohibition was not necessary or appropriate to aid the court's jurisdiction because after EPA issues its final rule, parties with standing will be able to challenge the rule. The court also rejected the petitioners' contention that incurring costs in preparation for the anticipated final rule should allow the court to consider the challenge, reasoning that an organization altering its behavior based on what it thinks is likely to come in the form of new regulations has never been a justification for allowing courts to review proposed agency rules.

The court similarly rejected the petitioners' argument that EPA's public statements regarding its legal authority to regulate greenhouse gas emissions constituted final agency action. The court observed that an agency's public statements about its legal authority to adopt a proposed rule is not the consummation of the agency's decision-making process. Furthermore, EPA's statements regarding its legal authority did not impose any legal obligations or prohibitions on the petitioners because any such legal obligations or prohibitions would be imposed only after EPA finalized the Clean Power Plan.

Lastly, the court rejected the petitioners' effort to challenge a 2011 settlement agreement between EPA and several states and environmental groups. According to the panel, the settlement did not obligate EPA to issue a final rule restricting carbon dioxide emissions from power plants but simply set a timeline for EPA to decide whether to promulgate such rules. By setting a timeline for agency action, without dictating the content of that action, the settlement did not impose an injury on the petitioners.

Judge Henderson authored a concurring opinion in which she agreed that the petitioners' challenge should be dismissed but wrote separately to note that, contrary to the panel's opinion, the court had jurisdiction to issue a writ of prohibition pursuant to the All Writs Act but should decline to do so because "the passage of time has rendered the issuance all but academic."

On July 24, 2015, the petitioners moved for panel rehearing or rehearing en banc, arguing that the D.C. Circuit's decision violated circuit and U.S. Supreme Court precedent. The petitioners, alternatively, requested that the court stay the mandate until the final Power Plan rule is published in the Federal Register.

D.C. Circuit Dismisses Environmental Groups' Petition to Stop Cove Point LNG Terminal Construction 

In April 2013, an energy company requested authorization from the Federal Energy Regulatory Commission ("FERC") to site, construct upon, and operate an already existing liquefied natural gas ("LNG") terminal in Calvert County, Maryland. Although the facility began operations in 1972, originally as an import site for LNG, the company sought to repurpose the facility to allow for the export of close to one billion cubic feet of natural gas per day to customers in India and Japan. After conducting a lengthy environmental assessment, FERC green-lit the project in September 2014, concluding that the construction and operation of the terminal would have no significant impacts on the environment.

On October 15, 2014, a group of environmental organizations requested a rehearing on FERC's approval of the project and a halt to the planned construction. Seven months passed before FERC eventually denied the requests, during which time the company began building on the site.

On May 7, 2015, the environmental groups filed suit in the United States Court of Appeals for the District of Columbia Circuit. EarthReports Inc. v. FERC, No. 15-1127. The environmental groups petitioned for expedited review of FERC's previous authorization and for an emergency stay on construction pending the court's decision.

The groups argued that FERC failed to take a "hard look" at the indirect effects of exporting natural gas from Cove Point. In addition to issues arising from pre-construction activities, petitioners cited to potential upstream and downstream consequences of the multibillion-dollar project. They argued that the terminal would lead to heightened production of LNG from the Marcellus Shale region, which would result in emissions of climate-disrupting pollutants from the increased drilling and pipeline transportation. Moreover, customers in India and Japan would likely burn the LNG, releasing greenhouse gases that contribute to climate change.

In response, FERC and the company disputed the petitioners' conclusions as overly speculative and lacking the requisite causation to warrant a halt to construction. FERC explained that the source of the gas to be exported from Cove Point is relatively unknown and will likely change throughout the operation of the terminal. Therefore, an increase in the production of LNG from the Marcellus Shale region and the resulting greenhouse gas emissions are not reasonably foreseeable impacts of the project. Likewise, FERC and the company argued that the release of climate-disrupting pollutants associated with the consumption of exported LNG by foreign countries is too speculative to quantify and would occur regardless of the terminal's operations.

On June 15, 2015, the D.C. Circuit rejected the petition in a one-page order. The court held that the petitioners fell short of satisfying the requirements for an emergency stay on the construction. The court further noted that the groups failed to articulate any "strongly compelling" reasons why their request for expedited review should be granted.

This litigation may foreshadow additional challenges by environmental groups to the domestic LNG export industry. Although Cove Point will be the first export terminal on the east coast, four others are currently being constructed throughout the United States. Three more export terminals have already been approved and await construction, highlighting the expansion of the industry within the last few years.

D.C. Circuit Holds that Petitioners Lack Standing to Challenge Carbon Sequestration Rule 

As previously reported in the Spring 2015 issue of The Climate Report, the Carbon Sequestration Council, its member Southern Company Services, and the American Petroleum Institute ("API") filed a petition for review of EPA's final rule promulgated under the Resource Conversation and Recovery Act ("RCRA") that conditionally excluded from the definition of "hazardous waste" hazardous carbon dioxide streams that are injected into Class IV wells for purposes of geologic sequestration and that meet other criteria. Carbon Sequestration Council & S. Co. Servs. Inc. v. EPA, No. 14-1046.

The petitioners argued that the carbon dioxide emissions used in geologic sequestration are not "solid waste" and, therefore, not subject to RCRA, negating the need for the conditional exclusion.

On June 2, 2015, the D.C. Circuit dismissed the petition, holding that the petitioners lacked standing to challenge EPA's determination that supercritical carbon dioxide stream at issue are not RCRA solid waste. In their petition, the Carbon Sequestration Council and API asserted representational standing on behalf of Southern Company Services, Inc. and Occidental Oil and Gas, respectively. With respect to the Carbon Sequestration Council and Southern, the panel concluded that Southern had failed to allege that it uses or intends to use any Class VI wells and, therefore, failed to establish that it would be injured by the rule. The court rejected Southern's argument that it is harmed by EPA's decision to include captured supercritical carbon dioxide stream in the definition of "solid waste" because Southern would have to incur costs determining if any carbon dioxide stream it captures is a RCRA hazardous waste. The court found persuasive EPA's unequivocal statements in the final rule, its briefing, and oral argument that the solid waste determination applied only to supercritical carbon dioxide stream injected into Class VI wells for the purpose of geologic sequestration, and not to any of the applications and services in which Southern used supercritical carbon dioxide stream.

For its part, Occidental acknowledged that it was not directly regulated by the rule and conceded that EPA explicitly declined to assert jurisdiction over the activities engaged in by Occidental. The affidavits submitted by Occidental, instead, asserted that the rule "will influence Occidental's business decisions," forcing it to incur costs in anticipation of future regulation. The court held that Occidental's "speculative concern that EPA may choose to regulate its business at some point in the indefinite future" is not enough to demonstrate injury sufficient to meet the threshold Article III standing requirements.