Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: Boeing is under fire, facing investigations by the Federal Aviation Administration,
Speaker 1: the Justice Department, and the National Transportation Safety Board. What's more,
Speaker 1: Justice could tear up a controversial twenty twenty one deferred
Speaker 1: prosecution agreement that allowed Boeing to escape criminal charges over
Speaker 1: crashes in twenty eighteen and twenty nineteen that killed three
Speaker 1: hundred and forty six people. And the testimony before Congress
Speaker 1: two weeks ago of whistleblower Sam Salapor, a Boeing engineer,
Speaker 1: could illustrate a reason for the Justice Department to tear
Speaker 1: up that deferred prosecution agreement.
Speaker 2: The NTSB chair reiterated Congress last week that Boeing has
Speaker 2: said there are no records documenting the removal of the
Speaker 2: last airline store. I'm not going to sugarcoat this. This
Speaker 2: is a criminal cover up. Records do in fact exist.
Speaker 2: I know this because I've personally passed them to the FBI.
Speaker 1: Joining me, is Bloomberg Legal reporter Greg Farrell. Greg tell
Speaker 1: us about the deferred prosecution agreement with Boeing.
Speaker 3: This deferred prosecution agreement has turned out to be controversial
Speaker 3: insofar as it was struck in the winning days of
Speaker 3: the Trump administration, and in fact it was signed on
Speaker 3: January sixth, twenty twenty one. You know, most news covers
Speaker 3: that day focused on other events in Washington, DC rather
Speaker 3: than on the Boeing TPA. It got almost no coverage
Speaker 3: at the time, but essentially following two horrific crashes that
Speaker 3: took the lives of three hundred and forty six people
Speaker 3: and a two year Justice Department investigation, ended up with
Speaker 3: a fine at the low end of two hundred and
Speaker 3: forty three million dollars and acknowledgment that Boeing didn't cooperate
Speaker 3: with the investigation for several months at the beginning. So
Speaker 3: they got a good deal despite not cooperating very much.
Speaker 3: They got a deferred prosecution agreement instead of an actual
Speaker 3: criminal charge.
Speaker 1: The families of the people that are killed, were they
Speaker 1: not happy about that Boeing agreement.
Speaker 3: Absolutely. First of all, they were blindsided by this settlement.
Speaker 3: They suddenly just announced, you know, on January seventh. They
Speaker 3: had asked the Justice Department on several occasions, you know,
Speaker 3: throughout twenty nineteen and twenty twenty. You know, if they're
Speaker 3: investigating Boeing and how's the criminal investigation going. And we're
Speaker 3: told in twenty twenty that there was no criminal investigation,
Speaker 3: so you know, they were not happy with that, but
Speaker 3: they sort of had to deal with that and move on.
Speaker 3: And then suddenly to find out that there was a
Speaker 3: criminal investigation that they weren't informed of that it ended
Speaker 3: up being very favorable to Boeing, and they weren't even consulted.
Speaker 3: They were just shocked and blindsided by that. That really
Speaker 3: like there was sault in the wound. And then the
Speaker 3: charge that to which Boeing acknowledged its misconduct but didn't
Speaker 3: have to plead guilty too as of then was defrauding
Speaker 3: the US government by being dishonest with the FAA over
Speaker 3: the need for extra training because of this this new
Speaker 3: software program that would be an automated steering system under
Speaker 3: certain circumstances, and eventually, you know, it was blamed for
Speaker 3: you know, both of these failed crashes. The government focused
Speaker 3: only on misleading the FAA, But what they did not
Speaker 3: pay any attention to was the fact that boeinghead insisted
Speaker 3: that the plane was safe even after the first crash.
Speaker 3: The material has emerged in various congressional investigations that the
Speaker 3: top executives were aware and trying to fix you a
Speaker 3: possible problem with the steering during a period of time,
Speaker 3: but the Justice Department did not bring any action against
Speaker 3: senior executives at all. Instead, the only criminal charge for
Speaker 3: an individual was this mid level technical pilot, a guy
Speaker 3: named Mark Folkner, who was tried and acquitted in like
Speaker 3: two hours. It was clearly viewed as a scapegoat by
Speaker 3: the jury and even the FAA witnesses who were called
Speaker 3: to testify, the ones who were deceived that felt the
Speaker 3: same thing, even though this guy is just being set
Speaker 3: up by the company. That's the sign of a weak
Speaker 3: DPA is that you're blaming the death of three forty
Speaker 3: six people, two horrific crashes on this controversial system that
Speaker 3: was not disclosed through the FA, all on one guy,
Speaker 3: as if no one above him knew about this.
Speaker 1: So, you know, we all know about that recent Boeing
Speaker 1: mid air blowout of the door plug, so bad luck
Speaker 1: for Boeing. That was just days before this deferred prosecution agreement,
Speaker 1: and we.
Speaker 3: Were the first to report that that it came just
Speaker 3: two days before the three year term expired and shortly thereafter,
Speaker 3: the Justice Department did start looking into that two parts
Speaker 3: of criminal investigation into any whether any laws were broken
Speaker 3: in terms of how this door plug came off, did
Speaker 3: going again hide records or not disclosed things they should
Speaker 3: have disclosed, And you know, concurrently with that, part of
Speaker 3: the terms of the DPA is that you've got to
Speaker 3: be good for three years, improve your disclosure system so
Speaker 3: that you never deceive regulators again and don't commit any ponies.
Speaker 3: And if it turns out that there was a felony
Speaker 3: associated some evidence of criminal activity in either hiding or concealing,
Speaker 3: are not doing the proper work or disclosing it about
Speaker 3: the door plug? And that would be adequate grounds for
Speaker 3: the government to tear up the DPA.
Speaker 1: And there was congressional testimony that Boeing was not cooperating
Speaker 1: and wouldn't give over the list of people who'd worked
Speaker 1: on the door and said records had apparently disappeared, and
Speaker 1: all this was hampering the government's investigation into the incident.
Speaker 3: There should be like, you know, some kind of a
Speaker 3: work review exactly over who did what and who would
Speaker 3: the last people to look at the door plug, And
Speaker 3: there was a there was a gap or at least
Speaker 3: Boeing didn't have anything. And there was a whistleblower who
Speaker 3: testified in Congress, you know, like two weeks ago, saying
Speaker 3: that he was aware of paperwork and he had handed
Speaker 3: it over to the FBI. So, yes, we have whistleblowers,
Speaker 3: current and former who stay pluggedn't no pun intended to
Speaker 3: what's going on at Boeing, you know, also calling attention
Speaker 3: to this stuff.
Speaker 1: So the victims' families have certain rights under the crime victims'
Speaker 1: rights laws, and tell us about the attorney who's working
Speaker 1: for them on this deferred prosecution agreement.
Speaker 3: Hey, former federal judge a laury named Paul Cassel, based
Speaker 3: in Utah took up the cause of trying to attack
Speaker 3: the DPA intervene in the district in Texas where this
Speaker 3: case was brought, and he was shot out Initially. The
Speaker 3: judge eventually recognized that the families were victims and that
Speaker 3: they were improperly shut out by the Just Department from
Speaker 3: proper consultation before reaching this determination in the DPA. It
Speaker 3: doesn't mean that the victims get a veal power over
Speaker 3: what the prosecutors are going to decide, but it does
Speaker 3: force the government to make sure they keep victims' families
Speaker 3: surprised of what they're doing.
Speaker 1: And the families of the victims had a meeting with
Speaker 1: the Justice Department last week.
Speaker 3: Just from this time wants to do right by the
Speaker 3: victims in so far as to make sure they do
Speaker 3: not repeat the mistakes of three years ago. So the
Speaker 3: government they have six months to determine whether or not
Speaker 3: the company complied with the elements of the DPA, and
Speaker 3: six months from January seventh to July seventh. So as
Speaker 3: that date is approaching, the family's gotten more concerned. The
Speaker 3: government decided to bring them in to let them know
Speaker 3: what was going on, also give them an opportunity if
Speaker 3: they had any evidence to indicate that Boeing had violated
Speaker 3: the terms of the DPA, they should bring it there.
Speaker 3: Although that's unrealistic. It's not up to the families to
Speaker 3: do an investigation. It's actually the Justice Department's job. But
Speaker 3: they did at least do what they did not do
Speaker 3: four years ago and keep them apprized. They went a
Speaker 3: little further and gave them some information about how this
Speaker 3: is going to go down. They told the victims' families
Speaker 3: and their lawyers if they hadn't made a decision yet
Speaker 3: on what to do, whether not to tear up the
Speaker 3: DPA or withdraw the true charge that was lodged three
Speaker 3: years ago. Because they haven't made that decision, they expect
Speaker 3: and hope to make it by the end of May
Speaker 3: early June, in other words, and they said that if
Speaker 3: they decide to withdraw the charge, the families will be
Speaker 3: the first to know. They won't have to learn about
Speaker 3: in the media the way they did three years ago. However,
Speaker 3: if they do decide to tare up the DPA, they
Speaker 3: want to give Boeing at least thirty days noticed so
Speaker 3: they can appeal or argue against it, et cetera. So
Speaker 3: that was the message from the Justice Department to the families.
Speaker 1: Last week you mentioned Paul Cassell. He said, we have
Speaker 1: no idea what the Justice Department will do, which leads
Speaker 1: us to believe they're still in bed with Boeing, and
Speaker 1: if they move to dismiss, we'll fight that motion vigorously.
Speaker 1: Do you really think they'll dismiss when there's this criminal
Speaker 1: investigation and other investigations into the Alaska air incident. I mean,
Speaker 1: it would be controversial if they let Boeing off the hook.
Speaker 3: Right, So politically, the optics of this for the Justice
Speaker 3: Partment would not be good. If they determined that Boeing
Speaker 3: as in fact not violated any term of it, they
Speaker 3: would draw the charge. They might be able to justify
Speaker 3: that legally, but it will look bad. It'll just be
Speaker 3: another set of news cycles. At the same time, you
Speaker 3: should not bring a charge because you don't want to
Speaker 3: look bad. And clearly there's enough here because of this
Speaker 3: Alaska Air incident. The Alaska Air incident really did trigger
Speaker 3: this investigation. I think if it weren't for that incident,
Speaker 3: that would be well on our way to a withdrawal.
Speaker 3: But I think it's clear that the government is taking
Speaker 3: this seriously. Paul. I think that's a default position because
Speaker 3: of what happened a few years ago and that the
Speaker 3: Justice Department has been unhelpful to the families. But at
Speaker 3: the same time, it's not up to the Justice Department
Speaker 3: to show their cards, you know, and if we take
Speaker 3: them at their word that they haven't decided yet, right,
Speaker 3: it would be improper for them to show their card.
Speaker 3: So if the just Go Barnment does move to withdraw
Speaker 3: this charge, then Paul Cassell does plan to litigate it
Speaker 3: in the in Fort Worth. And this is far more
Speaker 3: legal detail than you know, most people want to know,
Speaker 3: but there's precedent. There have been several decisions going up
Speaker 3: to the Supreme Court in recent years about judicial challenges
Speaker 3: to defer prosecution agreements. When just a deferred prosecution agreement,
Speaker 3: it's not legal until it comes in and then you know,
Speaker 3: you get a judge to sign off on it. And
Speaker 3: most of the time judges are fine with it. But
Speaker 3: there have been a few cases, particularly in Washington, d C.
Speaker 3: Federal judges where they've challenged the government on why you
Speaker 3: give them, you know, these guys such a good deal.
Speaker 3: In other cases and one of them, the judge you know,
Speaker 3: didn't want to approve the DPA because he felt that
Speaker 3: the prosecutors were too lenient on this foreign company that
Speaker 3: had you know, facilitated weapons transferred to Iran. And then
Speaker 3: it went to the Supreme Court and the Supreme Court
Speaker 3: decided that in a different prosecution agreement, is beyond the
Speaker 3: purview of the judicial branch of the government to question
Speaker 3: prosecutorial decisions by the executive branch unless there's some evidence
Speaker 3: of corruption or some wrongful conduct. But it's not up
Speaker 3: to the juici branch to decide, you know, this is
Speaker 3: a bad deal, you should go redo it. So the default,
Speaker 3: particularly for this judge until now in Fort Worth, has
Speaker 3: been like, you know, even if I want to, my
Speaker 3: hands are tired. It can't do anything. However, the Fifth
Speaker 3: Circuit last year, you know, ruled on the Crime Victims
Speaker 3: Rights Act, et cetera, and allowed, in a message directly
Speaker 3: to the judge it's involved in this case, said that
Speaker 3: you only need to approve this if you think it's
Speaker 3: in the public interest. In other words, if the government
Speaker 3: decides to withdraw the charge, then the Fifth Circuit gave
Speaker 3: the federal judge and Fort Worth the elbow room to
Speaker 3: decide whether or not that would be in the public interest.
Speaker 1: So Fifth Circuit once again out on a limb.
Speaker 3: Yes exactly. That's component of this. If the government does
Speaker 3: decide to basically withdraw the charge and bowen, can you
Speaker 3: go in peace after the events of five years ago,
Speaker 3: that needs to be approved by the judge and there'll
Speaker 3: be vigorous argument about it.
Speaker 1: So we may find out by the first week of June,
Speaker 1: but certainly by July. Thanks so much, Greg. That's Bloomberg
Speaker 1: Legal Reporter Greg Ferrell coming up next on the Bloomberg
Speaker 1: Law Show. The EPA has some tough new power plant rules,
Speaker 1: and there's sure to be litigation. This is Bloomberg. The
Speaker 1: Environmental Protection Agency has proposed new regulations that would force
Speaker 1: coal fired power plants to capture smoke stack emissions or
Speaker 1: shut down, the Biden administration's most ambitious effort yet to
Speaker 1: roll back planet warming pollution from the power sector, the
Speaker 1: nation's second largest contributor to climate change, environmental legal experts
Speaker 1: and advocates so the administration checked all the right boxes
Speaker 1: to avoid the pitfalls that characterize the EPA's twenty twenty
Speaker 1: two defeat in the Supreme Court. But West Virginia's attorney
Speaker 1: general has already promised a lawsuit, and other Republican leaning
Speaker 1: states and industry groups are likely to follow, joining Me's
Speaker 1: environmental law expert Pat Parento, a professor at the Vermont
Speaker 1: Law and Graduate School. What do these new EPA rules do?
Speaker 4: So, there are four of them, and they're all aimed
Speaker 4: at coal fired power plants, although one of them also
Speaker 4: includes gas fire plants. But three of the rules deal
Speaker 4: with conventional what I would call conventional regulation of coal plants.
Speaker 4: One of them deals with mercury emissions. It's closing a
Speaker 4: loophole for plants that burn lignite, which is the lowest
Speaker 4: grade of coal and the dirtiest three times more mercury emissions,
Speaker 4: which of course are neurotoxins dangerous to children and fish
Speaker 4: and other things. And so the first rule just closes
Speaker 4: this loophole that exempted these lignite plants from regulation under
Speaker 4: the Clean Air Act. That's rule number one. Rule number
Speaker 4: two deals with toxic discharges from coal plants, which also
Speaker 4: include mercury, but in addition arsenic and some other toxic pollutants.
Speaker 4: And that rule is under the Clean Water Act, and
Speaker 4: it simply updates rules that should have been updated many
Speaker 4: years ago. In fact, they were updated by Obama, but
Speaker 4: of course then they were repealed by Trump, and so
Speaker 4: now they're being reinstated by Biden. So the second rule
Speaker 4: toxic discharges from coal fired power plants. The third rule
Speaker 4: deals with the disposal of coal ash, which is also
Speaker 4: hazardous and contains heavy metals again, mercury, cadmium, selenium, lots
Speaker 4: of nasty stuff. So the third rule is frankly just
Speaker 4: closing another loophole that didn't require cleanup of abandoned coal
Speaker 4: ash pits and ponds, and these are the things that
Speaker 4: sometimes fail and overflow. We had a huge disaster in
Speaker 4: two thousand and eight at the Kingston coal plant run
Speaker 4: by TVA in Tennessee. We had a more recent one
Speaker 4: in two thousand and eighteen where there was a spill
Speaker 4: of coal ash into the Dan River in North Carolina.
Speaker 4: So the third rule is just another closing of a
Speaker 4: loophole requiring cleanup of these abandoned ash pits. The fourth
Speaker 4: rule is the big one and the one that's most controversial,
Speaker 4: and that's the rule that replaces the Clean Power Plan
Speaker 4: that Obama had adopted and the Supreme Court of course killed. First,
Speaker 4: the Supreme Court put a stay on the Clean Power
Speaker 4: Plan so it never took effect. And secondly, it issued
Speaker 4: this infamous decision West Virginia versus EPA, which not only
Speaker 4: invalidated the Clean Power Plan, which, by the way, EPA
Speaker 4: had said it had no intention of reinstituting, it was
Speaker 4: moving on to a different approach. But nevertheless, the Supreme
Speaker 4: Court struck it down and adopted what we now know
Speaker 4: as the Major Question Doctrine. The fourth rule is called
Speaker 4: greenhouse Gas regulation of existing coal fired power plants and
Speaker 4: new gas fired power plants. EPA's original proposal was to
Speaker 4: regulate both new and existing gas plants, but in the
Speaker 4: final rule, EPA opted not to regulate existing power plants.
Speaker 4: That's through an awful lot of criticism from the environmental
Speaker 4: community and from people concerned about climate change. But EPA
Speaker 4: is counting on dealing with existing gas plants. Should President
Speaker 4: Biden get a second term A big question mark, of course,
Speaker 4: but that's what EPA decided. They're going to postpone dealing
Speaker 4: with existing gas plants to the future.
Speaker 1: And pat Most people who listen to the show have
Speaker 1: heard about the Major Questions doctrine, but explain it for us.
Speaker 4: It's a new way of interpreting agencies authority under statutes
Speaker 4: that aren't crystal clear, and that doctrine says, if a
Speaker 4: rule would have quote vast political and economic consequences, then
Speaker 4: Congress must have explicitly in the text of the law
Speaker 4: authorize EPA or any other agency to undertake that kind
Speaker 4: of regulation. It means no deference to the agency's interpretation,
Speaker 4: regardless of policy considerations, regardless of the agency's expertise, regardless
Speaker 4: of the fact that Congress oftentimes delegates broad authority the
Speaker 4: agencies to implement incredibly complex laws like the Clean Air Act,
Speaker 4: dealing with incredibly difficult problems like the climate crisis climate disruption.
Speaker 4: Regardless of all of that that the Supreme Court in
Speaker 4: the West Virginia case, the Court will decide, which means
Speaker 4: five members of the Court will decide what the law
Speaker 4: means and what the agency's authority is.
Speaker 1: I've read that this new rule could require the power
Speaker 1: industry to install billions of dollars worth of emissions control technologies.
Speaker 4: It's a complicated rule. It's staggered. Okay, So what the
Speaker 4: rule says. If you plan to close your coal plant
Speaker 4: by twenty thirty two, you don't have to do anything.
Speaker 4: If you plan to operate your coal plant beyond twenty
Speaker 4: thirty nine, you have to install carbon capture and sequestration
Speaker 4: technology CCS that will achieve ninety percent removal of the
Speaker 4: carbon by twenty thirty two. So you can see how
Speaker 4: complicated this is. It's designed, you could say, to encourage
Speaker 4: owners of coal plants to retire them early, or if
Speaker 4: you want to take the pejorative, you can say it's
Speaker 4: forcing premature closure of coal plants. You see what I mean.
Speaker 1: So it's not just future coal plants, then it's affecting
Speaker 1: coal plants today.
Speaker 4: Oh yeah, it's existing. There will be no new coal plants.
Speaker 4: There haven't been for ten years. There won't ever be
Speaker 4: another new coal plant. That's not my prediction. That's the
Speaker 4: Energy and Information Agency of does as that there isn't
Speaker 4: going to be any more new coal plants. So this
Speaker 4: is all about and there are two hundred coal plants
Speaker 4: in the country, so this is all about existing coal plants.
Speaker 1: So what's West Virginia and other Republican leaning states going
Speaker 1: to argue to get this rule shut down.
Speaker 4: They're worried about closing the coal plants that exist now,
Speaker 4: and they have three arguments. One, they think that this
Speaker 4: is just a repeat of what happened in the West
Speaker 4: Virginia versus EPA case. And they're arguing that the major
Speaker 4: question doctrine means EPA doesn't have the authority to impose
Speaker 4: these kinds of high costs with the clear intent to
Speaker 4: put coal out of business. That's number one. So they're
Speaker 4: going to try to get this case back before the
Speaker 4: Supreme Court and get the Supreme Court to rules that, oh,
Speaker 4: this is just like what we struck down before in
Speaker 4: West Virginia versus EPA. That's not true, and I can
Speaker 4: come back to that, but that's going to be their argument.
Speaker 4: The second argument they're going to make is that this
Speaker 4: technology you're talking about, this CCS carbon capture and sequestrations.
Speaker 4: While it's true it has been demonstrated at a pilot
Speaker 4: level or a small scale level, it's not adequately demonstrated
Speaker 4: to scale up to a ninety percent removal rate in
Speaker 4: the timeframe. You're talking about complicated system. It requires capturing
Speaker 4: the emissions at the plant, liquefying them, putting them into
Speaker 4: a pipeline, and taking them to an area where you
Speaker 4: can inject the carbon into a formation that will hold
Speaker 4: it basically forever. So it's this big, complex, very expensive system,
Speaker 4: and it's not been demonstrated to the point where coal
Speaker 4: plant operators can achieve it in the timeframe you've provided,
Speaker 4: even though the timeframe is lengthy. I mean, they have
Speaker 4: at least eight years to install these systems. But they're
Speaker 4: making an argument, we can't do it, we won't be
Speaker 4: able to do it, and your rule is simply going
Speaker 4: to shut us down. You can't do that, and then
Speaker 4: the third thing they're arguing is that as you begin
Speaker 4: to force the closure of these coal plants, which are
Speaker 4: baseload plants that can operate even when the sun isn't
Speaker 4: shining and the wind isn't blowing to make up for
Speaker 4: the intermittency of renewable energy systems which are coming online
Speaker 4: more and more. If you take these base load plants
Speaker 4: out of the system, you're going to have reliability problems
Speaker 4: big time. So the third big argument is you're going
Speaker 4: to destabilize our grid and you're going to cause people
Speaker 4: to have blackouts and interruptions in power service in many
Speaker 4: areas of the country. So those are their three big arguments.
Speaker 1: So tell me why this Supreme Court and that West
Speaker 1: Virginia decision was six to three down ideological lines. Why
Speaker 1: wouldn't this Supreme Court agree with them? I mean, this
Speaker 1: is not the most environmentally friendly Supreme Court.
Speaker 4: Oh that's true. And we won't know, of course, and
Speaker 4: listen until we see what the Supreme Court does with this.
Speaker 4: But here's how the rule differs. The thing that troubled
Speaker 4: the Supreme Court and Chief Justice Roberts, who wrote the
Speaker 4: opinion in West Virginia, was that EPA was taking a
Speaker 4: system wide approach to regulating the power plant sector, and
Speaker 4: that it was forcing what it called generation shifting from
Speaker 4: fossil fuel based plants gas and coal to renewable sources
Speaker 4: wind and solar, and Justice Roberts felt that went too far.
Speaker 4: That was an overreach Congress could not possibly have intended
Speaker 4: in the nineteen seventy Clean Air Act, which is what
Speaker 4: was being interpreted to give EPA that kind of broad
Speaker 4: energy policy authority. That's what bothered Justice Roberts. He thought
Speaker 4: the rule was unlike any rule EPA had ever adopted.
Speaker 4: That's arguable, but that's what he thought. Thought it was novel.
Speaker 4: He thought it was based on an obscure provision of
Speaker 4: the Clean Air Act Section one eleven, which isn't obscure
Speaker 4: at all. It's been there from the beginning, and it
Speaker 4: was there for a very specific purpose. But nevertheless, he
Speaker 4: thought it was an obscure provision, and so he characterized
Speaker 4: this as Congress wouldn't hide an elephant in a mousehole.
Speaker 4: So that's the metaphor.
Speaker 1: I remembered that hard you forget, right.
Speaker 4: How could you forget? So that's the idea of this great,
Speaker 4: big authority with vast economic consequences hidden in this little
Speaker 4: mousehole of a provision. That's the way he viewed it.
Speaker 4: This time around, EPA has gone to great legs. I mean,
Speaker 4: there's one hundred pages, by the way in EPA's justification
Speaker 4: and explanation for this new rule talking about West Virginia,
Speaker 4: talking about how this rule differs from the Clean power Plant,
Speaker 4: et cetera. And it really is different. This rule is
Speaker 4: a very traditional use of EPA authority to require technology
Speaker 4: based requirements to reduce emissions pausing public health and environmental damage.
Speaker 4: That's what CCS is. It's a technology, it's a system
Speaker 4: of technologies because it's capturing the emissions and it's putting
Speaker 4: them in this pipeline and taking them for disposal in
Speaker 4: a safe underground location. So it is a system in
Speaker 4: that sense, but it's source specific. It isn't looking at
Speaker 4: the entire energy system as a whole, looking at the grid,
Speaker 4: the integrated grid as a whole, which EPA did do
Speaker 4: in the Clean Power Plant. So it's very much tailored
Speaker 4: to individual sources and it's telling them, if you install
Speaker 4: this technology, which we believe is commercially available. EPA is
Speaker 4: pointing the two plants that are currently operating and capturing
Speaker 4: emissions at ninety percent rate. One of them, the Petra
Speaker 4: Nova plant in Texas, was out of operation for a
Speaker 4: few years, but it's back in operation and it is
Speaker 4: shown that it can capture ninety two percent actually of emissions.
Speaker 4: There's another one being built in North Dakota and so on.
Speaker 4: So EPA is saying, all we're doing here is what
Speaker 4: we've always done in implementing the Clean Air Act, requiring
Speaker 4: proven technology that will make your plants run cleaner and
Speaker 4: protect public health and the environment. They've also built in
Speaker 4: safeguards for reliability. They've given these coal plant operators eight
Speaker 4: years to install ccs. That I mean eight years is
Speaker 4: a long time, right, So they've given them adequate time.
Speaker 4: EPA believes to install technology as I say, is being
Speaker 4: installed and operated even now. Secondly, they've said, if there
Speaker 4: really is a problem with retiring a particular coal plant
Speaker 4: in a particular area of the country that threatens reliability,
Speaker 4: they're going to give that coal plant an extra year
Speaker 4: to meet its requirement. Plus, the Biden administration is investing
Speaker 4: billions of dollars in upgrading the grid and these two
Speaker 4: there are two integrated grids in the United States. Texas
Speaker 4: has its own, but there are two grids that connect
Speaker 4: the United States together, and it is improving the operation
Speaker 4: of the grid system that we have, and it's adopting
Speaker 4: streamline procedures to expand the grid faster than it's been
Speaker 4: able to do. So my point is EPA is addressing
Speaker 4: each and every one of the contentions against the rule,
Speaker 4: and it's specifically addressing why this rule is not the
Speaker 4: same as the rule that the Supreme Court struck down
Speaker 4: in West Virginia. Of course, we're going to have to
Speaker 4: wait to see how this all plays out in the
Speaker 4: litigation that will start very soon as soon as these
Speaker 4: rules are published in the Federal Register, which could occur
Speaker 4: later in May or perhaps June. Then the fund begins,
Speaker 4: Then the lawsuits get filed, and we'll see what happens
Speaker 4: after that.
Speaker 1: Stay with me, Pat, coming up, We're going to continue
Speaker 1: this conversation, and this is Bloomberg. I've been talking to
Speaker 1: Professor Pat Parento of the Vermont Lawn Graduate School about
Speaker 1: the Environmental Protection Agencies proposed new rules for coal fired
Speaker 1: power plants. The major questions doctrine. They just sort of
Speaker 1: made that up out of whole cloth. And now it
Speaker 1: hangs over everything we talk about.
Speaker 4: Yeah, it's based on some earlier cases that did acknowledge
Speaker 4: that where you have a rule, the source of this idea,
Speaker 4: people call it a doctrine. I would just call it
Speaker 4: an idea. But the source of this major question idea
Speaker 4: was an opinion by Justice O'Connor in Brown and Williamson
Speaker 4: Tobacco versus FDA. This is when FDA, for the first
Speaker 4: time in its history, decided to regulate cigarettes and even
Speaker 4: to suggest a band on cigarettes. And the Supreme Court
Speaker 4: in that case said, wait a minute. You know cigarettes
Speaker 4: aren't identified in the Drug and Cosmetic Act, and FDA
Speaker 4: has never regulated cigarettes, and all of a sudden, now,
Speaker 4: out of the blue, you've decided to do that. Well,
Speaker 4: this is going to have tremendous implications, probably both good
Speaker 4: and bad, as we know, but certainly tremendous implications. So
Speaker 4: we don't think Congress have that in mind. All right,
Speaker 4: So I wouldn't go so far as to say the
Speaker 4: major Question doctrine is made out of whole cloth, But
Speaker 4: certainly the way it was fashioned in the West Virginia
Speaker 4: case is unlike anything that had been done by the
Speaker 4: Supreme Court before this whole idea that you can completely
Speaker 4: disregard Congress's ability to delegate broad authority to an expert
Speaker 4: agency like EPA to deal with problems that Congress could
Speaker 4: not have foreseen, and that Congress could not have had
Speaker 4: the expertise even to legislate about. That's new, And you're right.
Speaker 4: The doctrine, I mean, Justice Robertson in the West Virginia
Speaker 4: case said, this is an extraordinary doctrine or idea, meaning
Speaker 4: this shouldn't be a routine reason to reject an agency's interpretation.
Speaker 4: But what has happened, of course, in the lower courts
Speaker 4: is there's been an explosion of cases being brought based
Speaker 4: on the major question doctrine, many of which are succeeding.
Speaker 4: And guess where the most successful cases are. They're in
Speaker 4: the Fifth Circuit Court of Appeals, which is the most
Speaker 4: conservative court in the land.
Speaker 1: What a surprise, What a surprise.
Speaker 4: And it's the court the industry and the Republican Attorneys
Speaker 4: General run to all the time to try to get
Speaker 4: decisions in their favor, and they've been successful in many cases.
Speaker 4: The trick with the rule regulating power plant emissions is
Speaker 4: they have to go to the DC Circuit the law
Speaker 4: is clear that the DC Circuit has exclusive jurisdiction over
Speaker 4: all of the major rules under the Clean Air Act,
Speaker 4: and the DC Circuit I won't say they rubber stamp
Speaker 4: EPA because they don't, but the DC Circuit is very
Speaker 4: expert at evaluating these really high complex rules, and they
Speaker 4: have been more favorable to EPA's interpretation over the years
Speaker 4: than any other circuit. That doesn't mean that the Supreme
Speaker 4: Court is going to adopt the DC circuits decision, No,
Speaker 4: far from it. But it does mean that at least
Speaker 4: at this first level of litigation, EPA is in the
Speaker 4: right court. If it's going to win this argument, it's
Speaker 4: in the right court to do so.
Speaker 1: The EPA's enforcement activity has been accelerating. In December, the
Speaker 1: agency said it opened one hundred and ninety nine criminal
Speaker 1: investigations in twenty twenty three, a seventy percent increase over
Speaker 1: the previous year, and it concluded settlements in one thy
Speaker 1: seven hundred and eighty nine, which is one hundred and
Speaker 1: fifty over fiscal twenty twenty two. I mean, is there
Speaker 1: a reason why these are stepping up?
Speaker 4: Well, several reasons. They're getting an awful lot of pressure
Speaker 4: to step them up. Number two, the Biden administration has
Speaker 4: put a lot more resources into EPA's environmental justice program
Speaker 4: to increase the level of attention on in four horsemen
Speaker 4: in communities that are disproportionately affected. And I guess number
Speaker 4: three would be the election and the need for the
Speaker 4: Biden administration to show that it's really responding to what
Speaker 4: communities are demanding, not only in terms of environmental justice issues,
Speaker 4: but climate issues, environmental quality issues writ large. And obviously
Speaker 4: the president is involved in an incredible battle for re election.
Speaker 4: This is a game of inches where thousands of votes
Speaker 4: are going to make the difference in these battleground states
Speaker 4: literally in terms of the electoral College, and Biden needs
Speaker 4: to turn out every single Democrat and certainly every single
Speaker 4: environmentalist in the country the win. So he's one of
Speaker 4: the reasons I think we're seeing all these rules coming
Speaker 4: out and all this activity around enforcement and cleanup is
Speaker 4: partly because the administration has been committed to that from
Speaker 4: the beginning, but also because they realize they're in the
Speaker 4: fight of their life for re election. That's my best
Speaker 4: guess at.
Speaker 1: It sounds like a good guest to me. Thanks so much, Pat.
Speaker 1: That's Professor Pat Parento of the Vermont Law and Graduate School.
Speaker 1: And that's it for this edition of the Bloomberg Law Podcast.
Speaker 1: Remember you can always get the latest legal news by
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Speaker 1: and at Bloomberg dot com, slash podcast, slash Law. I'm
Speaker 1: June Grosso and this is Bloomberg