A Festivus Review of UARG v. EPA

by William Yeatman on June 27, 2014

in Blog

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Infused with the Festivus spirit, I’m airing the following grievances regarding the Supreme Court’s ruling in UARG v. EPA, which was rendered Monday:

Grievance #1, to the Supreme Court: Why Didn’t You Heed Your Own Words!?!

The first part of Justice Scalia’s opinion of the Court presents a cogent case that statutory provisions must be read in context. Alas, this first part was completely ignored by the second part of the opinion, which effectively gave EPA everything it wanted.

In Section A of the ruling, the Court rejected EPA’s claim that greenhouse gases triggered PSD and Title V requirements under the unambiguous terms of the Clean Air Act. Moreover, the court in this first part found that the agency’s interpretation was unworthy of deference because it was “inconsistent with the design and structure of the Act as a whole.” So, a fundamental takeaway from Section A of the UARG ruling is that the courts and EPA must bear in mind the “fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.”

However, in the very next Section (B), the Court reverses itself. To be precise, the Court found that EPA could proceed with “Best Available Control Technology” requirements for greenhouse gases, even though the statutory context makes plain the fact that Congress never intended to authorize such a regulatory regime.

For starters, BACT is the primary regulatory requirement of the PSD program, and it’s pretty strange that the trigger for PSD is narrower than the trigger for the primary regulatory requirement pursuant to the PSD program. This is counter intuitive: If GHGs don’t trigger PSD, then why would they trigger PSD’s primary requirement (i.e., BACT)? That’s one strange Venn Diagram, no? Given this statutory context, it seems obvious that GHGs don’t belong in the PSD program, including any of its constituent provisions.

Second, under the terms of the Clean Air Act, BACT is a site-specific determination. In rendering a BACT determination, the permitting authority must weigh the costs versus the environmental benefits of implementing pollution controls at the proposed facility. But you can’t do that for greenhouse gases, because there are no environmental benefits attendant to the technology. Indeed, EPA administrator McCarthy has conceded to Congress that the agency’s rules won’t actually impact the climate. Thus, when you read the statute in context—that is, if you do what the court prescribes in the first part of the ruling—then it is obvious that BACT and GHGs are “fundamentally incompatible.”

Grievance #2, to the Petitioners: Stop Pretending That You Won!!!

As reported, UARG must seem like an amazing ruling: The stakes were huge, and no one thinks they lost. For example, here’s EPA’s claim that it won, and here’s the Wall Street Journal saying that EPA lost. The Journal’s sentiment was backed by virtually all the petitioners, including Attorneys General and the U.S. Chamber of Commerce. EPA’s position was backed by all the respondents.

My organization, CEI, was among the petitioners, and, much as it pains me, I agree with EPA and the environmental special interests. In my humble opinion, we just got our asses whipped. Allow me to elaborate.

According to the Wall Street Journal, the ruling was “a constitutional tutorial for Obama.” Indeed, the Court ruled that EPA doesn’t have the discretion to re-write statutes. To which I reply: Whoop-tee-doo! When has the Court ever allowed as much? As noted by Scalia’s opinion of the court, EPA couldn’t point to a single viable precedent for what it had done.

In practice, “EPA is getting almost everything it wanted in this case,” as Scalia noted from the bench. In the wake of this “constitutional tutorial,” EPA will proceed with regulations covering 83% of greenhouse gases from stationary sources, instead of 86%. To me, that’s a loss.

A ruling with actual ramifications would have addressed the underlying problem: runaway deference to federal agencies when the statute isn’t crystal clear, a.k.a. “Chevron step-two deference.” A substantive victory would’ve entailed the court heeding its own wisdom, along the lines that I present in the previous grievance, and proscribing the agency’s discretion to read a statutory provision out of context.

Below, I briefly rebut a number of supposed UARG “victories” enjoyed by the petitioners:

Petitioner Claim #1: An anonymous industry lawyer told InsideEPA’s Dawn Reeves ($) that the ruling “signals that Justice Kennedy, the swing vote in Massachusetts, has changed sides, granting conservatives the majority in their opposition to broad EPA authority.”

Rebuttal #1: This makes no sense to me. For starters, EPA’s proposed climate regulations for new and existing power plants are based on authority derived from either (allegedly) clear or (purportedly) ambiguous statutory language. As such, there is no ready parallel to the UARG decision, which rejected EPA’s re-writing of unambiguous statutory text.

More importantly, the Court this term facilitated a gross expansion of EPA’s Clean Air Act authority, by acts of commission and omission, which belies the claim that there’s been some sort of fundamental shift in the Court’s thinking. Kennedy, for example, sided with the agency in EME Homer v. EPA, which is widely acknowledged to have expanded the agency’s “broad authority.”

Petitioner Claim #2: Rachel Brand, the US Chamber of Commerce’s chief counsel for regulatory litigation, told E&E GreenWire ($) that, “The language [pertaining to the impermissibility of an expansion of federal power absent a clear congressional mandate] is very helpful to potential challengers to other EPA greenhouse gas regulations.”

Rebuttal #2: Again, this makes no sense to me. Language reining in executive overreach—in a more substantive fashion—already existed in FDA v. Brown & Willamson, 529 US 120 (2000), MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 US 218 (1994), and many other cases. Indeed, about a month ago, I cited similar language from Whitman v. American Trucking Association, 531 US 457 (2001), when I called EPA’s 111(d) climate regulations “an elephant [hiding] in a mousehole.”

Petitioner Claim #3: That the ruling takes a GHG NAAQS off the table. As articulated by one lawyer whose talents I admire,

The Court accepted industry’s argument that not every CAA program applies to GHGs, even though Mass. v. EPA defined the term “air pollutant” in the Act’s general definitional section to include GHGs.  According to the Court, it depends on context.  Where regulating GHGs would lead to an unexpected and unwarranted expansion of EPA authority, as by regulating tens of thousands and even millions of new sources in the PSD and Title V programs, the Court reads the term “air pollutant” as not including GHGs.  Under this theory, it does not appear there can be any way in which the NAAQS program could be applied to GHGs.

Rebuttal #3: I respectfully submit that this claim depends on a one-sided reading of the ruling. The opinion of the court did indeed suggest that statutory interpretations resulting in expansions of federal authority warrant extra attention during judicial review; however, this wasn’t the sole, or even primary, reason the Court rejected the tailoring rule. As I read the opinion, the most important rationale for the court in rejecting the tailoring rule was the fact that the agency re-wrote statutory text.

Secondly, no administration would want a GHG NAAQS to begin with, for the very sorts of reasons that the Obama administration didn’t want the full burden of regulating GHGs under the PSD program. Even if a court compelled EPA to promulgate a GHG NAAQS, the administration in charge would almost certainly approach Congress for relief.

Grievance #3, to EPA & Environmental Special Interests: Stop Being So Cunning!!!

Given that the agency’s attempt to re-write the text of the Clean Air Act didn’t materially affect the regulation at hand, I wonder: Why did EPA promulgate the tailoring rule?

Pardon my descent into conspiracy paranoia, but I’m about 62% convinced that the agency, abetted by bright legal minds at environmental special interests, intentionally overreached, in order to achieve its desired result.

Think about it: By overreaching with the tailoring rule, EPA gives any court of review a compromise option, one that allows the agency to “lose” without affecting the underlying regulatory regime. Had the agency not occupied the Court’s inquiry with a plainly unreasonably statutory re-write, the Court’s focus would instead have been concentrated on poorly GHGs comport with all components of the PSD regime.

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