Will the Supreme Court Review EPA’s Greenhouse Gas Regulations? Part II

by Marlo Lewis on January 8, 2013

in Features

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In Coalition for Responsible Regulation v. EPA, petitioners — a coalition of industry groups, states, and non-profit organizations — sought to overturn the EPA’s endangerment, tailpipe, triggering, and tailoring rules for greenhouse gases (GHGs). In June of last year, a three-judge panel of the D.C. Circuit Court of Appeals ruled in favor of the EPA, upholding the four GHG rules. In August, coalition members petitioned for an en banc (full court) rehearing of the case. On Dec. 20, 2012 the D.C. Circuit Court of Appeals rejected the petitions by 5-2.

However, given the importance of the issues and the strength of the two dissenting opinions, the case may go to the Supreme Court. Last week, I reviewed Judge Janice Rogers Brown’s dissenting opinion. Today, I review Judge Brett Kavanaugh’s dissent.

Judge Brown chiefly addresses the “interpretative shortcomings” of the Mass. v. EPA Supreme Court decision, which authorized the EPA to regulate GHGs via the Clean Air Act (CAA). Kavanaugh directs his fire at the opinion, shared by the EPA and the five-judge majority, that the CAA’s Prevention of Significant Deterioration (PSD) preconstruction permitting program applies to GHGs, and at the agency’s attempt to “tailor” away the consequent “absurd results” by rewriting the statute.

According to the EPA’s longstanding opinion, reaffirmed in the agency’s April 2010 triggering rule, once any air pollutant is regulated under any part of the CAA, “major” sources become “subject to regulation” under the PSD program. Under this reading of the Act, a firm must obtain a PSD permit before it can build a major source of any regulated air pollutant, or modify a major source in such a way as to increase emissions of said pollutant. This is a complicated process in which the owner or operator must first conduct a best available control technology (BACT) analysis evaluating, selecting, and proposing a facility-specific emission control strategy. Carbon dioxide (CO2) became a regulated pollutant on Jan. 2, 2011, when the EPA’s tailpipe rule took effect.

The problem is that upwards of one million non-industrial facilities – office buildings, fast food restaurants, schools, hospitals, large houses of worship, heated agricultural facilities – have the potential to emit enough CO2 annually (250 tons) to qualify as “major” stationary sources. Apply PSD to CO2, and permitting agencies would have to process an estimated 81,000 PSD permits annually instead of about 280. Without massive expansions in agency budgets and staff, ever-growing bottlenecks and delays would obstruct environmental enforcement and freeze economic development, contravening congressional intent.

To avoid such “absurd results,” the EPA in July 2010 issued a “tailoring rule“ exempting GHG emitters from PSD unless they have a potential to emit 100,000 tons per year of CO2-equivalent emissions — a 400-fold increase over the statutory definition of “major” source. In effect, the EPA’s solution was to amend the statute. 

Judge Kavanaugh argues that rewriting the CAA not only exceeds the EPA’s statutory authority, it is also unnecessary because the PSD provisions can and should be read as applying only to pollutants regulated under the national ambient air quality standards (NAAQS) program. There are no NAAQS for GHGs.

Kavanaugh acknowledges that the EPA’s broad interpretation of PSD as applying to ”any” air pollutant is plausible. But, he contends, the EPA should have adopted the ”narrower and more sensible interpretation” limiting PSD to NAAQS air pollutants. By opting for the broader interpretation, the EPA then had to try to deal with the absurd ramifications and rewrite clear statutory language. “This is a very strange way to interpret a statute.” He explains:

When an agency is faced with two initially plausible readings of a statutory term, but it turns out that one reading would cause absurd results, I am aware of no precedent that suggests the agency can still choose the absurd reading and then start rewriting other perfectly clear portions of the statute to try to make it all work out. And just recently, the Supreme Court reminded the Executive Branch and the lower courts that this is not the proper way to interpret a statute: Instead of “reading new words into the statute” to avoid absurd results, as the Government had urged in that case, the Court said that the statute should be interpreted so that “no absurdity arises in the first place.” Kloeckner v. Solis, No. 11-184, slip op. at 13 (U.S. 2012).

If allowed to stand, Kavanaugh cautions, the tailoring rule could set a mischievous precedent:

Agencies presumably could adopt absurd or otherwise unreasonable interpretations of statutory provisions and then edit other statutory provisions to mitigate the unreasonableness. Allowing agencies to exercise that kind of statutory re-writing authority could significantly enhance the Executive Branch’s power at the expense of Congress’s and thereby alter the relative balance of powers in the administrative process. I would not go down that road.

The five-judge majority, however, deny that Judge Kavanaugh’s narrow reading of the PSD statute is a “plausible interpretation.” Congress said “any air pollutant, and it meant it.” The EPA’s broad interpretation “is the only plausible one.” Let us see.

Kavanaugh cites several provisions that clearly link PSD permitting to NAAQS pollutants:

The Prevention of Significant Deterioration program is codified in Sections 7470 to 7479 of Title 42 [CAA §§ 160-169] . Of relevance here, Section 7473 sets guidelines for areas designated as in attainment of the NAAQS and requires that the “concentration of any air pollutant” in those areas not exceed certain concentrations permitted by the NAAQS. 42 U.S.C. § 7473(b)(4). The term “air pollutant” in Section 7473(b)(4) necessarily refers to the NAAQS air pollutants. In addition, several other provisions in the Prevention of Significant Deterioration statute similarly refer to Section 7473(b)(4)’s maximum concentrations for NAAQS pollutants. Each of those references thus also necessarily employs a NAAQS-specific use of the term “air pollutant.” See, e.g., 42 U.S.C. § 7473(c)(1) (listing exclusions from “the maximum allowable increases in ambient concentrations of an air pollutant”); § 7474(a)(B) (redesignations cannot cause “concentrations of any air pollutant” to exceed the maximum); see also § 7475(a)(3)(A) (facility may not cause air pollution in excess of “maximum allowable concentration for any pollutant”).

The five-judge majority offer this rebuttal:

And although certain aspects of the program are specifically directed at NAAQS pollutants, see, e.g., id. § 7473(b)(4), the program as a whole plainly has a more expansive scope. For instance, covered sources are required to (1) install the best available control technology for “each pollutant subject to regulation under [the Act],” id. § 7475(a)(4) (emphasis added), and (2) demonstrate that they will not cause or contribute to “any . . . applicable emission standard” under the Act, id. § 7475(a)(3) (emphasis added).

This is unpersuasive. The majority base their interpretation on CAA § 165(a)(4) [§ 7475(a)(4)], which states that no major source may be constructed unless ”the proposed facility is subject to the best available control technology for each pollutant subject to regulation under this chapter.” They conveniently drop the qualifier that appears at the beginning of the quoted sentence. The full text reads:

No major emitting facility on which construction is commenced after August 7, 1977, may be constructed in any area to which this part applies . . . . unless the proposed facility is subject to the best available control technology for each pollutant subject to regulation under this chapter [emphasis added].

No major source may be constructed unless subject to BACT in ”any areato which the PSD program applies. The term “any area” can only refer to one thing: a NAAQS attainment area. The NAAQS program is clearly the context for the directive specified in CAA § 165(a)(4). The most sensible reading of the sentence is that each major facility built or modified in a NAAQS attainment area must comply with BACT standards for pollutants subject to regulation under the NAAQS program. Why? Because the distinction between attainment and non-attainment areas has relevance only to NAAQS-regulated air pollutants.  

CAA § 165(a)(3) [§ 7475(a)(3)], also cited by the majority, provides additional contextual evidence that BACT does not encompass GHGs. The provision stipulates that the owner or operator of a major source may not cause, or contribute to, air pollution in excess of any “(A) maximum allowable increase or maximum allowable concentration for any pollutant in any area to which this part applies more than one time per year, (B) national ambient air quality standard in any air quality control region, or (C) any other applicable emission standard or standard of performance under this chapter.” There are no area-specific allowable GHG increases or concentrations. There are no GHG air quality standards or control regions. The EPA’s GHG tailpipe standards are not “applicable” to stationary sources, which in turn cannot cause or contribute to exceedences of mobile emission standards.

Interpreting the PSD provisions to encompass GHGs makes no logical sense, Kavanaugh argues:

If the purpose of this statute were in part to address global warming by requiring preconstruction permits for facilities that emit greenhouse gases, as EPA’s reading suggests, why would the statute target the construction of facilities only in areas that are in compliance with the NAAQS – and not elsewhere in the United States?

Moreover, as its name indicates, the Prevention of Significant Deterioration statute is designed primarily to prevent “deterioration” of an attainment area’s air quality. The relevant air quality standards that define whether an area is in attainment are the NAAQS. In a statute expressly linked to the NAAQS and designed to ensure that air quality does not “deteriorate” with respect to the NAAQS, it is somewhat illogical to read the statute as requiring pre-construction permits simply because a facility may emit substances that will not affect attainment of the NAAQS. Under EPA’s approach, a facility could be covered by the permitting requirement even if it emits no NAAQS air pollutants at all. That, too, makes little sense and suggests that EPA has misread the statute.

The five-judge majority notes that 42 USC § 7479 [CAA § 169] defines major source as a facility with the potential to emit 250 tons per year of “any air pollutant” (emphasis added). But Congress did not employ that language in the provision at issue in the case, CAA § 165 — the provision specifying what facilities must do to obtain a PSD permit.*   

Massachusetts v. EPA held that the general term “air pollutant” includes greenhouse gases, but that doesn’t mean it can never be used in a narrower sense in specific statutory contexts. In a law as complex as the CAA, identical words can be employed differently in different programs. For example, Kavanaugh observes, in Environmental Defense v. Duke Energy Corp., 549 U.S. 561, 574 (2007), the Supreme Court ruled that the EPA could interpret the term “modification” differently for the New Source Review (NSR) and New Source Performance Standards (NSPS) programs, even though “the terms share a common statutory definition.”

Context clearly narrows the meaning of “pollutant” in the CAA regional haze and NAAQS non-attainment provisions:

For example, the visibility program applies to facilities based on their emissions of “any pollutant.” 42 U.S.C. § 7491(g)(7). In the context of that program, EPA has interpreted the term “any pollutant” to mean “any visibility-impairing pollutant,” which obviously does not include greenhouse gases. 40 C.F.R. pt. 51, App. Y, § II.A. Similarly, the nonattainment program applies to areas that have been designated as nonattainment “for any air pollutant.” 42 U.S.C. § 7501(2). In the context of that program, the term “air pollutant” is logically limited to the NAAQS air pollutants, which are the only pollutants for which an area can be designated as nonattainment. Id. § 7407(d)(1)(A).

Finally, even the EPA rejects the proposition that PSD/BACT automatically applies to “any” air pollutant emitted in quantities meeting the “major” source thresholds.

EPA understood that it would be absurd to require pre-construction permits because of emissions of any airborne compound, including emissions of airborne compounds that have not been deemed harmful and regulated under the Clean Air Act. To avoid rendering the Prevention of Significant Deterioration statute an absurdity, EPA construed “air pollutant” to mean certain air pollutants – in particular, “any regulated air pollutant.”

Similarly, to avoid making the PSD statute an absurdity, the EPA must construe “air pollutant” in CAA § 165(a)(4) to mean any NAAQS-regulated air pollutant.

Kavanaugh sums up his argument:

For all of those reasons – the statutory text, the absurdity principle, the statutory context as demonstrated by related statutory provisions, the overarching objectives of the statute, the major unintended consequences of a broader interpretation – the Prevention of Significant Deterioration statute as a whole overwhelmingly indicates that the permitting requirement is based on emissions of the NAAQS air pollutants.

A final observation. If Judge Kavanaugh is wrong and PSD applies to all regulated air pollutants, not just NAAQS-regulated pollutants, then absurd results arise not from the EPA’s misreading of the statute but from Massachusetts v. EPA, which authorized the EPA to regulate GHGs. If so, however, then the permitting nightmare that EPA seeks to “tailor” away by acting as a super legislature and rewriting clear statutory language is itself evidence that the Court misread the CAA.

As I argued in a rebuttal to former EPA Administrator Russell Train:

When a court decision leads to “absurd results,” there are only two possibilities. One is that the court brought to light a flaw previously hidden in the statute. The other is that the court misread the statute.

To maintain the correctness of the Court’s decision in Mass. v. EPA, one must suppose that when Congress enacted the Clean Air Act in 1970, it somehow inserted the statutory equivalent of malicious code into the text, the bug lay dormant for 40 years, and then suddenly the malware became active, causing programs that had worked reasonably well since their inception to go haywire, work at cross purposes with themselves and each other, undermine congressional intent, and jeopardize America’s economic future. And if the EPA Administrator, former or present, really believes that, then I have a bridge I’d like to sell him or her.

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* Kavavaugh seems to make this point but says that the language “each pollutant subject to regulation under this Chapter” does not occur in the section on PSD permitting [CAA § 165(a)(4)]. It does. Thus, I think he meant that the “any air pollutant” language of CAA § 169 does not occur in the PSD permitting section. 

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