Taking a “Hard Look” at the Repeal of the Clean Power Plan

Posted by on January 3, 2018

By Timothy Featherston*

Scott Pruitt, the current Head of the EPA, recently announced his intent to repeal the Obama era Clean Power Plan, which sought to limit the carbon emissions of power plants.[1] This announcement received fierce backlash. The Trump Administration not only received the expected resistance from the administration’s democratic opponents in Congress, but the administration has also faced signification criticism from the scientific community at large with regards to the factual findings used to justify the repeal of the Obama Era rule.[2]  This perceived factual deficiency in the justification for the rule change could potentially lead to policy goals of the Trump Administration being undermined by the “hard look” doctrine.

The centerpiece of this criticism is the alterations made by Pruitt’s EPA to the estimation of the social cost of carbon (“SCC”) that Pruitt’s EPA used in its cost-benefit analysis of the proposed rule change.[3] The SCC refers to the damaging effects that carbon emissions have on society as a whole, including the effects of both pollutants and climate change in its estimation.[4] When the Obama administration promulgated the rule in 2015, the EPA estimated the SCC at $42 per ton of carbon.[5] The revised estimate under the Trump administration places that figure at somewhere from $1 to $6 per ton.[6] This alteration was referred to by Senate Democrats as “mathematical sleight of hand.”[7] In addition to this underestimation of the benefits that the Clean Power Plan could provide, the Senators also accuse the EPA of overestimating the damage that the rule would have on industry.[8] In addition, Cass Sunstein leveled the criticism that the Trump Administration has changed this estimation with “hardly any reasons” to back it up.[9]

This estimation runs counter to much of the scientific community’s view of SCC. The Obama Administrations estimation had the support of many members in the scientific community.[10] The numbers are not without controversy, and there is some debate over the way that we formulate them.[11] But, there has been a stronger push to actually raise those estimates in recent years, as oppose to reduce them.[12] The drastic shift downward in estimation by the Trump administration certainly raised some eyebrows.

The EPA came to its conclusion by only calculating the domestic effect of carbon, ignoring conventional wisdom that dictates looking at the problem globally to accurately calculate SCC.[13] As Sunstein points out in a recent article for Bloomberg, the Trump administration is entitled to make the policy determination that American regulators should focus on the cost incurred by Americans, not based on potential costs to the world as a whole.[14] He also stresses the fact, however, that the administration should be required “by sound policy and also by law” to produce a “substantive justification” for the policy shift.[15] This lack of substantive justification will lead to trouble for the Trump Administration when the rule change is challenged in court.

Under the Administrative Procedures Act, all informal agency actions (be they the promulgation of new rules or the repeal of old ones) will be upheld unless they are “arbitrary and capricious.”[16] There are several judicial doctrines that have been created to help courts define what is meant by arbitrary and capricious. For example, there is the Chevron doctrine, which tells courts to defer to agency interpretations of ambiguous statutes when the interpretation is “reasonable.”[17] More relevant to this case is the so called “hard look” doctrine, which requires a more in depth examination of the factual findings of the agency in order pass arbitrary and capricious review.[18]

The irony that courts defer to agency interpretation of law but closely examine their findings of fact has been noted by several individuals, including Justice Breyer.[19] The doctrine was best laid out in Motor Vehicle Manufacturers Association v State Farm Auto Mutual Insurance Co (commonly referred to as “State Farm”) where the Supreme Court stated that an agency action is arbitrary and capricious where: (1) the agency has “relied on factors that Congress has not intended it consider,” (2) “entirely failed to consider an important aspect of the problem,” (3) offered an explanation that “runs counter to the evidence before the agency,” or (4) is “so implausible” that it could not be ascribed to a difference in view between the agency and the court or to “agency expertise.”[20] Then, in Massachusetts v. EPA, the Court went on to say that the EPA can only avoid taking action with respect to air pollution if it either (1) determines that greenhouse gases do not contribute to climate change or (2) “provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.”[21] Hard look doctrine has the effect of limiting an agency’s ability to implement the policy preferences of a president without reasonable substantive justification.[22]

The EPA’s proposed repeal of the Obama era rule arguably falls under at least one of the categories that State Farm gives us to find arbitrary agency action. By removing the consideration of the global effects of climate change from their analysis of the SCC, the EPA has “entirely failed to consider” the effect that pollutants from fossil fuel powered power plants have on the world at large. The problem, as Sunstein points out, is not that the EPA chose to disregard the global effects of carbon emissions but that it did so without providing “some kind of explanation.”[23] The hard look doctrine under State Farm and Massachusetts v. EPA requires an agency to provide some “reasonable substantive justification” for its actions, and in this case, the EPA failed to do so.[24]

The ‘hard look’ doctrine helps to ensure that agencies are using their technical expertise to make scientifically determined policy decisions and help prevent policy preferences from determining the science. The proposed repeal of the Clean Power Plan presents a clear instance that calls for the application of that doctrine.

* Timothy Featherston is an Associated Editor on MJEAL. He can be reached at tefeath@umich.edu.

The views and opinions expressed in this blog post are those of the authors and do not necessarily reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[1] Chelsea Harvey, Trump Team’s Wonky C02 Calculation is a Big Deal, ClimateWire (October 25, 2017), https://libproxy.law.umich.edu:2532/climatewire/stories/1060064593.

[2] See Harvey, supra note 1; see also Frances C. Moore & Delevine B. Diaz, Temperature Impacts on Economic Growth Warrant Stringent Mitigation Policy, 5 Nature Climate Change, 127–131 (2015).

[3] Harvey, supra note 1.

[4] Id.

[5] Id.

[6] Id.

[7] Letter from Sen. Tom Carper et al. to Administrator Pruitt (October 26, 2017) (on file with the United States Senate).

[8] Nikki Heikinnen, Senate Dems Say Pruitt Used ‘Mathematical Sleights of Hand’, ClimateWire (October 27, 2015), https://libproxy.law.umich.edu:2532/climatewire/stories/1060064843 (the EPA proposal reduces the estimated benefits from $20 billion to around $500 million and increases the estimated costs from $8.4 billion to $33 billion).

[9] Cass. R. Sunstein, The EPA Owes Us a Reason for Killing Clean Power Plan, Bloomberg (October 12, 2017), https://www.bloomberg.com/view/articles/2017-10-12/the-epa-owes-us-a-reason-for-killing-clean-power-plan.

[10] Harvey, supra note 1.

[11] Id.

[12] Moore & Delevine, supra note 2.

[13] See Sunstein, supra note 9.

[14] See id.

[15] Id.

[16] Administrative Procedure Act § 706(2)(A), 5 U.S.C §706(2)(A) (1966).

[17] Chevron, U.S.A, Inc. v. National Resources Defense Council, Inc., 467 U.S. 837, 844 (1984).

[18] See Motor Vehicle Mfrs. Ass’n v State Farm Auto Mut. Ins. Co., 563 U.S. 29, 43 (1983).

[19] See, e.g. Thomas J. Miles & Cass R. Sunstein, The Real World of Arbitrariness Review, 75 U. Chi. L. Rev. 761, 765 (2008).

[20] State Farm Auto Mut. Ins. Co., 563 U.S. at 43.

[21] Massachusetts v. EPA, 569 U.S. 497, 535 (2007).

[22] See id.

[23] Sunstein, supra note 9.

[24] Massachusetts, 569 U.S. at 535; see also Miles & Sunstein, supra note 19.

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