Scalia vacancy boosts prospects for Obama’s carbon-cutting plan

The U.S. Supreme Court vacancy created by Justice Antonin Scalia’s death improves the outlook for President Barack Obama’s controversial plan to cut carbon emissions from U.S. power plants, just a week after the court raised doubts about its viability.

“The math changes completely,” said FBR Capital Markets analyst Benjamin Salisbury.

Scalia, one of the fiercest critics of the Environmental Protection Agency’s air-pollution regulations, voted Feb. 9 to halt enforcement of the Clean Power Plan program while it was being challenged in a lower court. The 5-4 decision signaled that a majority of the justices had “real problems” with the plan and could overturn it, Salisbury said.

The Feb. 13 death of Scalia opens the possibility of the lower court upholding the power-plant regulation and the rule surviving on a 4-4 vote of the remaining Supreme Court justices. In such ties, the ruling of the lower court prevails though no legal precedent is established.

It could take months before the fight over the Clean Power Plan gets to the Supreme Court – potentially after a successor to Scalia is seated. The battle over a replacement may last months, with many Republican lawmakers saying they wouldn’t confirm a nominee put forth by Obama.

Surviving review

“After last week’s stay decision, I would have given the rule a less than 10 percent chance of surviving legal review unscathed,” Brian Potts, an environmental lawyer and Clean Air Act expert with Foley & Lardner LLP, said. “Now I put those odds at better than 75 percent.”

The U.S. Court of Appeals in Washington put the case on a fast track, with arguments scheduled before a three-judge panel on June 2. The judges – two Democratic nominees and one Republican – previously refused to issue a stay halting the Clean Power Plan’s implementation, the decision overruled by the high court.

Ann Carlson, a law professor who heads the Emmett Institute on Climate Change and the Environment at the University of California, Los Angeles School of Law, said the appeals court is likely to uphold the Clean Power Plan. She noted that the Republican-appointed judge, Karen LeCraft Henderson, has voted with the Environmental Protection Agency on several occasions.

‘Default position’

“The odds seem high not just because the judges are more liberal than the conservatives on the high court but also because the default position for courts in reviewing agency regulations is to be deferential,” Carlson said in a blog post. “As long as the regulations are a ‘reasonable’ interpretation of the statutory language the agency is interpreting, a court should uphold the regulation.”

Even with a swift decision by the three-judge panel, the losers could ask the entire appeals court to rehear the case. Petitions for review filed with the Supreme Court might not be considered by the justices until next year, potentially delaying oral arguments on the case until the term beginning October 2017.

One wild card is if Obama nominates Judge Sri Srinivasan, who has had a role in the Clean Power Plan challenge as a member of the appeals court. That could prevent Srinivasan from taking part in the case if he is confirmed to the high court. That sets up the possibility of another 4-4 tie.

‘Shaky foundation’

The Clean Power Plan, written and enforced by the EPA, is designed to slash carbon dioxide emissions from power plants 32 percent below 2005 levels by 2030. The program encourages states and utilities to use less coal and more wind power, solar power or natural gas, by giving broad targets for each state to meet – rather than focusing on individual power plants.

Significant legal problems with the Clean Power Plan persist with or without Scalia on the court, said Scott Segal, director of the Electric Reliability Coordinating Council and a partner at Bracewell LLP.

Those shortcomings “would raise questions with any composition of the Supreme Court,” Segal said by email. “While Justice Scalia’s untimely passing creates more uncertainty, the Clean Power Plan is still predicated on an extraordinarily shaky legal foundation.”

Other cases

Although some significant environmental disputes are pending in lower federal district and appeals courts, few – if any – of the marquee cases are likely to be primed for Supreme Court review during the current term or the one beginning October 2016.

One exception – set to be argued March 30 – could streamline the federal approval process for landowners seeking to develop wetlands. The case, Army Corps of Engineers v. Hawkes Co., involves a dispute over a proposed peat-mining operation in Minnesota and could dictate when government decisions involving wetlands can be challenged in court.

The property owners and a mining company are fighting the U.S. Army Corps of Engineers’ decision that the land is subject to federal regulation; the Obama administration says a landowner can’t sue until permit application is rejected or the owner faces enforcement actions for proceeding without a permit.

Scalia’s absence from the high court is “potentially huge” for the environmental cases working their way up, UCLA law professor James Salzman said Tuesday in a phone interview. “All of these cases likely would have been 5-4,” he said.

“It’s pretty remarkable how the fate of the Clean Power Plan has been so topsy turvy over the past two weeks,” Salzman said. Within a week after a Supreme Court majority indicated the challengers’ arguments had merit, “now all of the sudden there’s life.”