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Federal Appeals Court Upholds EPA's Greenhouse Gas Regulations

06.27.12

Federal Appeals Court Upholds EPA’s Greenhouse Gas Regulations

by: Michael Stagg and Lauran Sturm

The D.C. Circuit Court of Appeals has rejected the petitions of numerous states and industry groups that challenged several rules EPA issued to control greenhouse gas emissions from stationary and mobile sources.1

Following the United States Supreme Court’s decision in Massachusetts v. EPA,2  in which the Court held that EPA had authority to regulate greenhouse gases as an “air pollutant” under the Clean Air Act (“CAA”), EPA promulgated several rules relating to greenhouse gas emissions.  First, EPA issued its Endangerment Finding, in which it determined that greenhouse gases may “reasonably be anticipated to endanger public health or welfare.”  Next, EPA set emission standards for cars and light trucks in the Tailpipe Rule.  Finally, EPA issued the Timing and Tailoring Rules after determining that the CAA requires major stationary sources that emit greenhouse gases to obtain construction and operating permits.  To reduce the immediate burden of the new regulations on stationary sources, the Timing and Tailoring Rules initially subjected only the largest stationary sources to the new permitting requirements.

Petitioners argued that EPA improperly interpreted the CAA and acted arbitrarily and capriciously in issuing the Endangerment Finding, Tailpipe Rule, and Timing and Tailoring Rules.  In a consolidated appeal, the court held for EPA on all counts.  It found that neither the Endangerment Finding nor the Tailpipe Rule is arbitrary and capricious; that EPA had correctly construed the CAA; and that Petitioners lacked standing to challenge the Timing and Tailoring Rules.

Endangerment Finding

Petitioners challenged the Endangerment Finding on several grounds: (1) EPA’s interpretation of the endangerment-finding standard of the CAA (found in Section 202(a)(1)); (2) the adequacy of the scientific record supporting the rule; (3) EPA’s decision not to “quantify” the risk of endangerment to public health or welfare created by climate change; (4) EPA’s choice to define the “air pollutant” at issue as an aggregate of six greenhouse gases; (5) EPA’s failure to consult its Science Advisory Board before issuing the Endangerment Finding; and (6) EPA’s denial of all petitions for reconsideration of the Endangerment Finding.  Op. 22.

On the first point, Petitioners argued that EPA erroneously eschewed all policy considerations in making its determination finding.  The court disagreed, noting that the Massachusetts Court had interpreted Section 202(a)(1) to require “a ‘scientific judgment’ about the potential risk greenhouse gases pose to public health or welfare--not policy discussions.”  Op. 23.

With respect to the adequacy of the scientific record, Petitioners alleged that EPA had relied only on “major assessments” with “overarching conclusions,” such as reports by the U.S. Global Climate Research and the National Resource Council, and by doing so effectively had delegated its judgment to these outside organizations.  Op. 26-27.  The court found that EPA had not delegated its decision-making authority and that it could rely on such assessments: “EPA is not required to re-prove the existence of the atom every time it approaches a scientific question.”  Op. 27.  It further found that the scientific evidence relied upon adequately supported the Endangerment Finding.

Petitioners also argued that EPA should have “quantified” the effects of greenhouse gas emissions or the risks of climate change.  While the court agreed that EPA had not provided a quantitative threshold for endangerment, it relied on an earlier D.C. Circuit case3 for the holding that “EPA need not establish a minimum threshold of risk or harm before determining whether an air pollutant endangers.”  Op. 33.

The court found that Petitioners did not have standing to make their argument that EPA had arbitrarily and capriciously included perfluorocarbons (“PFCs”) and sulfur hexafluoride (“SF6”) in the aggregate group comprising “air pollution” and “air pollutant” in the Endangerment Finding.  Petitioners argued that EPA should not have included PFCs and SF6 because motor vehicles generally do not emit these gases.  The court held that Petitioners could not bring this claim because none of them had shown they would be injured by the inclusion of these two gases.

The court also found that EPA may not have erred by not consulting the Science Advisory Board because such consultation was required only if EPA submitted its Endangerment Finding to another Federal Agency for formal review, and the parties did not demonstrate that EPA had made such submittal.  Further, the court held that even if EPA had erred, the error was likely not of such “central relevance to the rule that there is a substantial likelihood that the rule would have been significantly changed if such errors had not been made.”  Op. 36.

Finally, the court found that EPA’s denial of petitions for reconsideration of the rule was not arbitrary and capricious, because any errors in the original agency record were not substantial enough to require reconsideration.

Tailpipe Rule

Petitioners alleged that, in issuing the Tailpipe Rule, EPA relied on an improper interpretation of CAA § 202(a)(1) and was arbitrary and capricious in failing to consider the cost impacts of stationary-source permitting requirements triggered by the Rule.  Op. 39.  The court found that Section 202(a)(1) gave EPA a non-discretionary duty to promulgate standards for vehicle emissions contributing to “air pollution which may reasonably be anticipated to endanger public health or welfare.”  Op. 40.  The court also rejected Petitioners’ cost-impacts argument because Section 202(a)(2) allows consideration of only those costs related to compliance by the motor-vehicle industry, not stationary sources.


Timing and Tailoring Rules

Petitioners first challenged EPA’s interpretation of the permitting requirements for construction and modification of major emitters under CAA Sections 165(a) and 169(l).  Op. 45.  EPA argued that it established its interpretation in rules promulgated in 1978, 1980, and 2002, and that petitioners’ claim was therefore untimely.  The court disagreed with EPA on this point because at least two Petitioners had newly ripened challenges after the Tailpipe Rule extended PSD application to previously unrelated sources (residential/commercial construction and vegetable meal/soybean oil production).  However, the court found that EPA’s interpretation of the scope of permitting requirements survived challenge because the clear language of Section 169(l) “requires PSD permits for stationary sources emitting major amounts of ‘any air pollutant,’” and EPA’s conclusion that this meant “any regulated pollutant” was a “plausible reading.”  Op. 54, 56.  Further, the Massachusetts Court previously found that “any pollutant” includes greenhouse gases.  Op. 55.  The court therefore rejected Petitioners’ arguments regarding PSD permitting triggers.

Finally, the court found that Petitioners lacked standing to challenge either the Timing Rule or the Tailoring Rule because they failed to show any “injury in fact” caused by the Rules.  Petitioners alleged that the Rules subjected them to additional regulations and imposed a greater administrative burden due to increased permitting requirements.  The court disagreed: “[Because] the CAA mandates PSD and Title V coverage for major emitters of greenhouse gases[,] . . . Industry Petitioners were regulated and State Petitioners required to issue permits not because of anything EPA did in the Timing and Tailoring Rules, but by automatic operation of the [CAA].”  Op. 77.  The court also found that because the two Rules delayed and limited the initial application of additional permitting requirements, the Timing and Tailoring Rules in fact mitigated injuries claimed by Petitioners.

Should you have any questions about the EPA’s greenhouse gas regulations or any other issues discussed herein, please do not hesitate to contact Michael Stagg (615.850.8876) or Lauran Sturm (615.850.8856), members of Waller’s Environmental group.


 


1.  Coalition for Responsible Regulation v. EPA, No. 09-1322 and American Chemistry Council v. EPA, No. 10-1167  (D.C. Cir. June 26, 2012).
2.  549 U.S. 497 (2007).
3.  Ethyl Corp. v. EPA, 541 F.2d 1 (D.C. Cir. 1976).
 

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