D.C. Circuit Court Upholds EPA GHG Regulations

Posted Friday, June 29th, 2012

Contact:  Joseph Brown

On June 26, 2012, the D.C. Circuit Court dismissed or denied numerous challenges to a series of U.S. Environmental Protection Agency (EPA)  greenhouse gas (GHG) related rulemakings: the “Endangerment Finding,” “Tailpipe Rule,” “Timing Rule,” and “Tailoring Rule.”  See Coalition for Responsible Regulations, Inc., et al., v. EPA, Case No. 09-1322 (lead case in consolidated action).

The Challenged GHG Regulations

This series of rulemakings originated out of the U.S. Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which held that GHGs may be regulated as an air pollutant under the Clean Air Act (Act) and directed EPA to determine whether GHGs could reasonably be anticipated to endanger public health and welfare.  Pursuant to the Supreme Court’s direction, EPA promulgated its Endangerment Finding, ultimately concluding that GHGs were reasonably anticipated to endanger public health or welfare under section 202(a) of the Act.  74 Fed. Reg. 66496 (Dec. 15, 2009).

As a result of the Endangerment Finding, and as required by section 202(a)(1) of the Act, EPA promulgated its Tailpipe Rule setting GHG emission standards for cars and light trucks.  75 Fed. Reg. 25324 (May 7, 2010).  In turn, EPA’s Tailpipe Rule triggered regulation of GHGs from stationary sources under the Prevention of Significant Deterioration (PSD) and Title V provisions of the Act, which led to EPA’s Timing and Tailoring Rules.  EPA’s Timing Rule established January 2, 2011, as the effective date for regulation of GHG’s for PSD and Title V.  75 Fed. Reg. 17004 (Apr. 2, 2010).  The Tailoring Rule, in a departure from the 100/250 ton per year (tpy) thresholds in the Act, provided that only sources emitting more than 75,000 or 100,000 tpy of carbon dioxide equivalent (CO2e) – depending on the program and project –  would be subject to PSD or Title V regulation for GHGs.  75 Fed. Reg. 31514 (June 3, 2010).

Numerous petitions were filed challenging each of these related GHG regulations and consolidated into a single appeal by the D.C. Circuit Court.

The D.C. Circuit Court’s Opinion

            The Endangerment Finding

Petitioners challenged EPA’s Endangerment Finding on several grounds, all of which were rejected by the Court.  The Court held that: 1) contrary to Petitioners’ assertions, under the plain language of the Act, and the Supreme Court’s ruling in Massachusetts, policy and regulatory considerations are irrelevant to the endangerment-finding standard, i.e., whether GHGs may reasonably be anticipated to endanger public health or welfare by contributing to climate change; 2) Petitioners’ allegations of reliance on improper or uncertain scientific evidence were unfounded; 3) EPA is not required, as asserted by Petitioners, to quantify or “set a precise numerical value as part of [the Endangerment Finding]”; 4) Petitioners lacked standing to challenge EPA’s allegedly improper aggregation of six different GHGs in the Endangerment Finding; 5) it was unclear if EPA had violated any mandate by allegedly failing to properly provide its Endangerment Finding to the Science Advisory Board (SAB) for review, and, regardless, Petitioners had not shown a substantial likelihood that the Endangerment Finding would have significantly changed if the SAB had reviewed it; 6) Petitioners allegations regarding improper internal emails from the University of East Anglia’s Climate Research Unit and certain inaccuracies in the climate change assessment issued by the Intergovernmental Panel on Climate Change failed to provide substantial support for reconsideration.

The Tailpipe Rule

With respect to EPA’s Tailpipe Rule, Petitioners challenged EPA’s statutory interpretation of section 202(a)(1) of the Act and alleged that EPA failed to properly consider and justify the cost of the stationary-source permitting requirements triggered by the Tailpipe Rule.  Contrary to Petitioners’ assertions, the Court held that having made the Endangerment Finding, EPA lacked discretion to defer promulgation of the Tailpipe Rule, regardless of the resulting costs and ramifications for stationary sources.  The Court also rejected arguments that EPA was required to demonstrate that the Tailpipe Rule would result in any particular level of mitigation; rather, EPA need only demonstrate that motor-vehicle emissions are a “significant contributor” to GHG emissions, a showing the Court concluded EPA made in its Endangerment Finding.  The Court also rejected other challenges to the Tailpipe Rule, including miscellaneous claims asserting that EPA failed to properly consider the stationary-source costs triggered by the rule and failed to sufficiently respond to comments regarding stationary-source costs during the rulemaking.

GHGs Under the Act’s PSD Provisions and the Tailoring and Timing Rules

Petitioners challenged EPA’s regulation of GHGs under the Act’s PSD and Title V provisions on two fronts: 1) by challenging EPA’s statutory authority for the Tailoring Rule’s departure from the statutorily prescribed 100/250 tpy thresholds for PSD and Title V applicability; and 2) by advancing statutory interpretations of the Act’s PSD provisions that would exclude GHGs.

The Court, however, never reached the merits of Petitioners’ challenges to the Tailoring or Timing Rules.  Instead, the Court found that as a threshold matter Petitioners failed to demonstrate injury sufficient to support standing to challenge the rules.  Petitioners asserted injuries in support of standing based on being subject to GHG regulation.  The Court, however, noted that GHG regulation was not a result of the Tailoring or Timing Rules, but, instead, was a result of “automatic operation of the statute.”  Thus, the Court concluded that the Tailoring Rule was not the source of the injury alleged by Petitioners, and, in fact, actually mitigated Petitioners’ asserted injuries.  The Court also rejected (as inherently speculative) Petitioners’ assertion that while vacatur of the Tailoring Rule would actually increase costs and other impacts, Congress would be forced to enact “corrective legislation,” thus mitigating Petitioners’ asserted injuries.

While the Court reached the merits on Petitioners’ statutory interpretation arguments, they were nonetheless denied.  Petitioners’ arguments focused on EPA’s interpretation of “any air pollutant” in the definition of “major emitting facilities” subject to regulation, i.e., a stationary source that meets the 100/250 tpy statutory threshold for “any air pollutant.”   In particular, Petitioners argued that a more restrictive interpretation of “any air pollutant” was possible that would avoid the alleged absurd consequences resulting from extension of the PSD program to GHGs.

These arguments included that the term “any air pollutant” should be interpreted to: 1) apply only to air pollutants that “pollute locally,” unlike GHGs, based on the purpose and intent of the Act (wholly exempting GHGs from PSD regulation); or 2) include a NAAQS-criteria-pollutant requirement that would prevent a source from being subject to PSD permitting solely because of its GHG emissions (significantly limiting the number of sources subject to PSD permitting for GHGs).  The Court rejected both of Petitioners’ arguments, concluding that EPA’s interpretation that “any air pollutant” means any regulated air pollutant “is statutorily compelled” and requires a source to obtain a PSD permit “if it emits major amounts of any regulated pollutant [, including GHGs,] and is located in an area that is in attainment or unclassifiable for any NAAQS pollutant.”

With the Court ruling in favor of EPA across the board, Petitioners’ only options are to petition for rehearing before the full D.C. Circuit Court or seek review by the U.S. Supreme Court.  The decision to pursue either option will need to be reached in the coming weeks.

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