Texas using health care reform ruling to fight EPA

Texas may have new courtroom ammunition in its fight over federal regulation of greenhouse gases: the Supreme Court's recent ruling on health care reform.

The high court decision limited the power of Congress to force states to take certain actions by threatening to withhold federal money - in the Affordable Care Act case, existing Medicaid funds. Chief Justice John Roberts called the threat "a gun to the head" of states.

Now, Texas attorneys claim the Environmental Protection Agency has acted in a similar fashion by threatening states without plans to control emissions of gases linked to global warming with construction bans on power plants, refineries and other large industrial facilities.

The EPA's threat of "a construction moratorium is no less 'a gun to the head' than Congress's threat to terminate Medicaid funding," Mark DeLaquil, an attorney at the firm Baker Hostetler, which represents Texas, wrote in a letter to the U.S. Court of Appeals for the District of Columbia Circuit.

Texas, Wyoming and industry groups have sued the EPA over its decision to seize permitting authority for greenhouse gas emissions after finding the states' plans to be inadequate. The federal agency has said large industrial sources of carbon dioxide and other heat-trapping gases cannot be built or expanded without the permits.

The case, which has yet to be argued in the appeals court, is the first attempt to use the high court's health care ruling to weaken environmental law.

Distinction drawn

While legal scholars say the Supreme Court decision was sure to invite challenges of federal laws thought to be overly coercive of the states, there is skepticism over Texas' claim.

Victor Flatt, professor of environmental law at the University of North Carolina, said the health care overhaul and the EPA's actions are hardly the same thing because one is legislative and the other is administrative.

The agency always has the right to implement the federal Clean Air Act as long as it's not "arbitrary and capricious," he said.

Also, Flatt said the case could not be considered coercive because every other state was able to put together a permitting regime for emissions of greenhouse gases.

Tracy Hester, who leads the environmental program at the University of Houston Law Center, said he also expects the appeals court to reject claims of coercion.

"It doesn't seem like a slam dunk," Hester said.

Texas and Wyoming have said they should be given up to three years to develop a greenhouse gas permitting program under the Clean Air Act. Since seizing the state's permitting authority in January 2011, the EPA has granted two permits in Texas, with another 30 applications pending.

Bill Cobb, a former Texas deputy attorney general, said the EPA's "effective construction moratorium" for new power plants is "the height of coercion." The potential harm, he said, would be an insufficient energy supply for a growing population and businesses.

"While the threat and imposition of a construction moratorium may not be a 'gun to the head,' like the withholding of Medicaid funds, it is certainly a knife to the throat," said Cobb, now a partner at the Texas firm Jackson Walker.

The EPA has not filed a response to the states' claim.

The health care ruling also could be raised if the EPA, as expected, sets new, more stringent standards for ozone, or smog, in the next year, legal experts say.

Highway funds at issue

Federal law allows the agency to withhold all highway funds from states that do not adopt plans to meet limits for smog-forming pollution. The EPA rarely has had to take away funding raised from gasoline taxes.

Houston, a notorious smog-making machine, already is in violation of the current standards. State officials have warned that stricter limits may not be achievable.

Highway money is not as large as the Medicaid funding, but it is enough to raise questions about whether the practice is unconstitutional, said Jonathan Adler, a law professor at Case Western Reserve University.

"Many states are already chafing under the Clean Air Act's requirements," Adler wrote in a recent blog post. The health care decision "may give them a tool to relieve the burden."

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