Reprinted from Bloomberg BNA
Key Holding: D.C. Circuit upholds EPA’s greenhouse gas regulations, rejecting all challenges brought by states and industry groups.
Impact: EPA calls the decision a validation of its approach to regulating greenhouse gas emissions.
What’s Next: Petitioners are reviewing the decision and considering whether to seek a full hearing before D.C. Circuit or appeal to the U.S. Supreme Court.
A federal appeals court June 26 dismissed all challenges to the Environmental Protection Agency’s greenhouse gas regulations in an unsigned opinion that reaffirmed the rules in their entirety (Coalition for Responsible Regulation v. EPA, D.C. Cir., No. 09-1322, 6/26/12).
A three-judge panel with the U.S. Court of Appeals for the District of Columbia Circuit dismissed challenges from industry groups and some states to EPA’s tailoring rule, which limits greenhouse gas permitting to the largest industrial sources.
The court found the petitioners lacked standing to challenge the regulation because it was intended to ease their permitting burden by limiting the number of sources that need to have permits. Additionally, the court denied challenges to EPA’s endangerment finding for greenhouse gases and subsequent emissions standards for cars and light-duty trucks.
“Today’s ruling is a strong validation of, in the court’s own words, the ‘unambiguously correct’ approach we have taken in responding to the 2007 Supreme Court decision,” EPA Administrator Lisa Jackson said in a statement.
The U.S. Supreme Court ruled in 2007 that EPA had the authority under the Clean Air Act to regulate greenhouse gases as a pollutant (Massachusetts v. EPA, 549 U.S. 497, 63 ERC 2057) (2007).
The D.C. Circuit heard challenges to the greenhouse gas regulations in four separate cases during two days of oral argument Feb. 28-29 (40 DER A-20, 3/1/12; 39 DER A-29, 2/29/12).
Chief Judge David Sentelle and Judges Judith Rogers and David Tatel heard the cases. The other three cases being decided were Coalition for Responsible Regulation v. EPA, D.C. Cir., No. 10-1073, 6/26/12; Coalition for Responsible Regulation v. EPA, D.C. Cir., No. 10-1092, 6/26/12; andAmerican Chemistry Council v. EPA, D.C. Cir., No. 10-1167, 6/26/12.
Ruling Clears Way for EPA to Move Forward.
The court’s decision, which upheld EPA’s regulations in their entirety, was “a resounding affirmation” of the agency’s greenhouse gas program, Michael Gerrard, director of the Center for Climate Change Law at Columbia Law School, told BNA June 26.
Environmental groups called the decision a sweeping victory for EPA.
“These rulings clear the way for EPA to keep moving forward under the Clean Air Act to limit carbon pollution from motor vehicles, new power plants, and other big industrial sources,” David Doniger, senior attorney for the Climate and Clean Air Program at the Natural Resources Defense Council, said in a statement.
“It’s hard to get an opinion that’s more of a resounding victory than this one,” Megan Ceronsky, an attorney for the Environmental Defense Fund, which participated in the lawsuit on behalf of EPA, told BNA June 25.
D.C. Circuit Greenhouse Gas Ruling
•?The court ruled EPA’s endangerment finding for greenhouse gas emissions from vehicles is supported by “substantial record evidence.”
•?Judges also affirmed EPA’s greenhouse gas emissions standards for cars and light-duty trucks, finding the agency was obligated to issue the rule once it made the endangerment finding.
•?The court did not address the merits of states and industry groups’ arguments challenging the tailoring rule. Instead, the court ruled the petitioners did not have standing to challenge the rule because it was intended to ease their permitting burden.
•?The judges also upheld EPA’s interpretation of the Clean Air Act requiring facilities to obtain permits for all regulated pollutants, not just those with national ambient air quality standards.
Industry Considers Appeals.
Attorneys for the various industry groups involved in the lawsuits said June 26 that they were still reviewing the decision and considering their options.
Patrick Day, a partner at Holland & Hart LLP representing the Coalition for Responsible Regulation, told BNA industry groups are likely to either seek a rehearing before the full D.C. Circuit or possibly file for review by the U.S. Supreme Court.
“It seems likely to me that there will be additional proceedings undertaken, but I don’t know where or when quite yet,” he said. “It all depends on where people end up after reading the opinion.”
Day said the Supreme Court could take the cases because the D.C. Circuit opinion “is based in significant part in how the Circuit Court interprets the Supreme Court’s decision in Massachusetts v. EPA.”
“We disagree that Massachusetts v. EPA means what the circuit court thinks it means,” he said.
Shannon Goessling, executive director and chief legal counsel for the Southeastern Legal Foundation, which had challenged the rules, also said D.C. Circuit judges were misinterpreting the Supreme Court decision inMassachusetts v. EPA.
“We strongly disagree with the three-judge panel’s interpretation of the Supreme Court decision,” she said in a statement. “We do not believe the U.S. Supreme Court decision restrains this court from rendering a decision on the merits of the unprecedented EPA regulatory juggernaut. We are confident that the record established in court and administrative proceedings over the past two years will provide sufficient basis for reconsideration and appeal.”
Supreme Court ‘Very Clear’ About Authority.
Gerrard said industry groups were heavily invested in the legal challenges, and the D.C. Circuit opinion “didn’t leave too much room for them to maneuver.” He said it is unlikely that the Supreme Court would entertain the appeals because it has previously ruled that EPA has the Clean Air Act authority to regulate greenhouse gases in Massachusetts v. EPA and American Electric Power Co. v. Connecticut.
In American Electric Power, the Supreme Court held that EPA’s Clean Air Act authority to regulate greenhouse gas emissions preempts states’ ability to bring nuisance lawsuits against power plants and other sources of greenhouse gases (American Electric Power Co. v. Connecticut, 131 S. Ct. 2527, 72 ERC 1609 (2011); 119 DER AA-1, 6/21/11, 119 DER AA-2, 6/21/11).
The Supreme Court was “very clear they thought the Clean Air Act made it EPA’s job to regulate greenhouse gases,” Gerrard said. “EPA is carrying out that job.”
Industry ‘Far Short’ of Standing.
The court ruled that the petitioners challenging EPA’s tailoring rule were “far short” of demonstrating how they were harmed by the rule and thus lacked standing to bring their lawsuits.
“Indeed, the timing and tailoring rules actually mitigate petitioners’ purported injuries,” the court said. “Without the timing rule, petitioners may well have been subject to [prevention of significant deterioration] and Title V for greenhouse gases before January 2, 2011. Without the tailoring rule, an even greater number of industry and state-owned sources would be subject to PSD and Title V, and state authorities would be overwhelmed with millions of additional permit applications.”
The tailoring rule limits prevention of significant deterioration and Title V greenhouse gas permitting to new sources that emit more than 100,000 tons per year of carbon dioxide-equivalent and modified sources that increase their emissions by more than 75,000 tons per year (75 Fed. Reg. 31,514; 92 DER AA-1, 5/14/10).
Clean Air Act Section 169(1) requires stationary sources with emissions greater than 250 tons per year to obtain prevention of significant deterioration permits. Sources with emissions greater than 100 tons per year are required to obtain Title V operating permits.
Without the tailoring rule, EPA contends that state regulators would be overwhelmed by the need to issue more than 6 million greenhouse gas permits, many of them for smaller sources that have not previously been subject to permitting requirements.
“If anything, vacature of the tailoring rule would significantly exacerbate petitioners’ injuries,” the court said.
Court Reaffirms Permitting Program.
Though the court did not address the merits of industry groups’ argument for striking down the tailoring rule, it did uphold EPA’s application of its prevention of significant deterioration program.
In the American Chemistry Council v. EPA lawsuit, several industry groups that had not been subject to the permitting requirements prior to EPA’s decision to regulate greenhouse gases challenged the application of Section 165(a) of the Clean Air Act. The industry groups had argued that the section only applies to pollutants with national ambient air quality standards. EPA has not issued air quality standards for greenhouse gases.
EPA has historically interpreted that section to mean prevention of significant deterioration permitting applies to all pollutants, not just those subject to national ambient air quality standards.
The court upheld EPA’s application of the permitting requirements, finding that the statute’s reference to “any air pollutant” refers to all air pollutants subject to regulation not just those with applicable air quality standards.
“We thus conclude that EPA’s 34-year-old interpretation of the PSD permitting triggers is statutorily compelled: a source must obtain a permit if it emits major amounts of any regulated pollutant and is located in an area that is in attainment or unclassifiable for any NAAQS pollutant,” the court said.
Support for Endangerment Finding ‘Substantial.’
The court also upheld EPA’s 2009 determination that six greenhouse gases pose a threat to human health and the environment and should be regulated. EPA’s decision to regulate emissions of six greenhouse gases is supported by “substantial record evidence,” the judges said. The court also said EPA is not required to “establish a minimum threshold of risk or harm before determining whether an air pollutant endangers.”
The six greenhouse gases are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
EPA issued the endangerment finding in 2009 (74 Fed. Reg. 66,496; 233 DER AA-1, 12/8/09).
Industry groups had argued EPA’s findings were flawed and that it had relied too heavily on outside sources such as the Intergovernmental Panel on Climate Change rather than conducting its own analyses–arguments that the judges rejected.
“EPA simply did here what it and other decisionmakers often must do to make a science-based judgment: it sought out and reviewed existing scientific evidence to determine whether a particular finding was warranted,” the court said. “It makes no difference that much of the scientific evidence in large part consisted of ‘syntheses’ of individual studies and research. Even individual studies and research papers often synthesize past work in an area and then build upon it. This is how science works. EPA is not required to re-prove the existence of the atom every time it approaches a scientific question.”
Petitioners had also challenged EPA’s decision to regulate the six greenhouse gases. The endangerment finding was based on emissions from vehicles, but cars and trucks do not emit either perfluorocarbons or sulfur hexafluoride. However, the court said none of the petitioners could demonstrate they had standing to raise the argument. Automotive industry groups had intervened on behalf of EPA in the lawsuits.
EPA Compelled to Issue Vehicle Rule.
EPA was not obligated to consider the impact on stationary emissions sources when it issued greenhouse gas standards for cars and trucks, the court said.
Petitioners had argued EPA should have considered the economic impact on stationary sources because regulating vehicle emissions triggered a requirement to issue rules for stationary facilities as well.
“This court, however, has held that the Section 202(a)(2) reference to compliance costs encompasses only the cost to the motor-vehicle industry to come into compliance with the new emission standards, and does not mandate consideration of costs to other entities not directly subject to the proposed standards,” the judges said.
After making its endangerment finding, EPA worked with the National Highway Traffic Safety Administration to issue joint greenhouse gas emissions limits and fuel economy standards that would require cars and light trucks to achieve 35.5 miles per gallon by model year 2016 (75 Fed. Reg. 25,324; 62 DER A-19, 4/2/10).
None of the lawsuits directly challenged the emissions limits on vehicles.
The court ruled EPA was obligated by Section 202 of the Clean Air Act to issue the vehicle standards once it had made the endangerment finding.
The opinion by the U.S. Court of Appeals for the District of Columbia Circuit in Coalition for Responsible Regulation v. EPA is available athttp://op.bna.com/env.nsf/r?Open=fwhe-8vmmn7.