By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme Court's unexpected move to block President Barack Obama's policy to cut pollution from coal plants highlights what both sides in the legal fight agree is a key weakness in the rules -- a provision that expands the scope of regulation far beyond curbing emissions from individual smoke stacks.
Tuesday’s order, in which the court put a halt to the administration's Clean Power Plan while a legal challenge goes forward in a federal appeals court, did not detail why the court’s five conservatives believed a stay was warranted.
The challengers, including 27 states, the coal industry, and business groups like the U.S. Chamber of Commerce, have unleashed a broad array of legal arguments against the policy, which has been in effect since August and is the centerpiece of Obama's strategy to combat climate change.
But lawyers involved in the litigation said on Wednesday that one in particular has the best chance of gaining traction when the high court likely takes a case that decides the overall legality of the rules.
It focuses on a section of the plan set out by the Environmental Protection Agency (EPA) that allows states to measure emissions cuts from a variety of sources "beyond the fence line" of power plants, including gains from renewable energy sources and energy efficiency measures.
The challengers say the EPA has no authority under the 1970 Clean Air Act to expand its regulation of power plants outside the facilities themselves.
Jeff Holmstead, a lawyer representing the coal industry in the legal challenge, said that the provision of the Clean Air Act the EPA is focusing on has only been used previously to set air pollution standards for individual plants.
“EPA took that and said we don’t think we are limited to that … we can order that billions of dollars of business be taken away from coal plants. That's a pretty remarkable assertion of authority,” he said.
Lawyers for the challengers argue the EPA is seeking to go beyond the scope of the law because it cannot obtain the emissions goals it wants under its existing authority.
Lawyers who support the Obama administration’s efforts agreed on Wednesday that the “beyond the fence line” provision is most vulnerable to legal attack, although they believe the government has strong arguments in its favor. They say the Clean Air Act does not preclude EPA’s plan and that the agency has used a similar approach when issuing previous regulations.
The challengers' line of attack is a targeted argument that could undercut the plan without requiring it to be struck down altogether.
If the court ruled against the administration on that part while upholding the agency’s broad authority to regulate emissions, the Clean Power Plan could survive in a modified form. It would need to be revised and reissued, with the EPA given another chance to find ways of curbing emissions within individual plants, lawyers involved in the litigation said.
Timing is a factor, however, as a Supreme Court ruling is not likely before Obama leaves office in January 2017. While a Democratic administration would likely seek to revive the plan if the Supreme Court struck part of it down, a Republican president is less likely to do so.
Sean Donahue, a lawyer for environmental groups, said a victory for his industry opponents on that argument could backfire. He said the EPA specifically used the “beyond the fence line” approach to give utility firms flexibility to meet state targets.
A revised rule could force even more costly regulation on individual plants, Donahue and other environmental lawyers say, including demands that they switch from coal to natural gas, which does not produce as many carbon emissions.
“EPA designed this rule the way that industry has advocated EPA should regulate,” Donahue said.
Opponents of the plan had reason to be buoyed by the Supreme Court's unusual intervention in part because of increasing evidence the conservative majority are skeptical of the Obama administration's environmental regulations.
Some of the conservative justices have signaled hostility to the EPA in three other Obama administration air pollution regulations in the past three years, including one on climate change.
One of the most outspoken critics of the EPA has been conservative Justice Antonin Scalia. In a 2014 climate change case, he made a comment about the limits of Clean Air Act authority that the Clean Power Plan challengers have since seized upon by citing in court papers.
He noted that when an agency “claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism.”
(Reporting by Lawrence Hurley; editing by Stuart Grudgings)