July 2014

Utility Air Regulatory Group v. EPA, the Supreme Court global warming case decided on June 23, 2014, gave EPA a slap on the wrist and then sent the agency on its merry way to dictate national policy on climate change. As a check on EPA’s ambition, it has all the weight of a feather pillow. As a defense of the separation of powers, it is unbearably light.

Justice Antonin Scalia assembled a bare majority in favor of a face-saving political compromise. Two sharply opposed views vied for the Court’s approval:

1. The Clean Air Act (CAA or Act) authorizes EPA to regulate greenhouse gases from stationary sources through the Act’s Prevention of Significant Deterioration (PSD) preconstruction permit program and Title V operating permit program, as Justice Breyer (joined by Justices Ginsburg, Sotomayor, and Kagan) argued in dissent.
2. The CAA does not authorize PSD and Title V permitting for greenhouse gases, as Justice Alito (joined by Justice Thomas) argued in dissent.

Instead of endorsing one of those alternatives, the Court opined, 5-4, that PSD and Title V permitting do apply to greenhouse gases — but only for sources already subject to the permitting programs as “major” emitters of other (“conventional”) air pollutants.

Winner: EPA

This half-way house ruling, authored by Justice Scalia, allows both sides to claim victory. “In Utility Air Regulatory Group v. EPA, the Justices feed several major climate regulations into the wood chipper,” the Wall Street Journal crowed. “Today’s ruling upholds the heart of EPA’s program for regulating carbon pollution from large new industrial facilities under the [PSD] provisions of the Clean Air Act,” stated Rep. Henry Waxman (D-Calif.).

Alas, Rep. Waxman is correct. UARG v. EPA is a big win for the agency. As the Court states on p. 10, EPA sought to regulate carbon dioxide (CO2) from facilities accounting for 86% of U.S. stationary-source greenhouse gas emissions. The Court trimmed back EPA’s reach to facilities accounting for 83% of stationary-source emissions.

More importantly, the Court’s ruling allows EPA to impose greenhouse gas controls on many diverse sources (power plants, industrial/commercial boilers, pulp and paper mills, cement production facilities, iron and steel mills, refineries, nitric acid plants, and landfills), all in one fell swoop.

In contrast, had the Court nixxed PSD for greenhouse gases, EPA could regulate CO2 from stationary sources only one industry at a time by establishing new source performance standards (NSPS), such as its proposed carbon “pollution” rule for new fossil-fuel power plants. The expansion of EPA’s greenhouse gas regulatory program would have slowed to a crawl. Now, thanks to UARG v. EPA, the program will continue to grow at breakneck speed.

Consider that the carbon “pollution” rule has been more than three years in the making and is still not final. Litigation might put it and other planned greenhouse gas NSPS on hold for several more years.

UARG authorizes EPA to impose CO2 controls on multiple industries between now and President Obama’s departure. This will affect the politics of energy policy. After spending millions on regulatory compliance, industries subject to PSD for greenhouse gases may not want to see their investments go for naught. Worse, some may want EPA to impose CO2 controls on other industries to ‘level the playing field.’ UARG v. EPA will make it harder for future Congresses and the next president to re-limit EPA and roll back Obama’s anti-carbon agenda.

What the Court decided

In UARG, the Court came to the following conclusions: [click to continue…]

Last Friday, EPA issued a pre-publication version of the agency’s 51^st regulatory takeover of a state Clean Air Act program, also known as a Federal Implementation Plan (“FIP”). This time, the victim was Arizona. To be precise, the agency imposed visibility improvement requirements, known as Regional Haze, on at a number of stationary sources in Arizona, including: Tucson Electric Power’s Sundt Generating Station Unit 4, Lhoist North America’s Nelson Lime Plant Kilns 1 and 2, ASARCO Inc.’s Hayden Smelter, Freeport-McMoran Inc.’s Miami Smelter, Phoenix Cement Co.’s Clarkdale Plant Kiln 4 and CalPortland Cement’s Rillito Plant Kiln 4. Compliance will cost the affected entities millions of dollars; the “benefits,” alas, are apparitional. The regulation won’t engender a discernible improvement in visibility.

Below, I’ve provided an ongoing analysis compiled by globalwarming.org, of Clean Air Act FIPs rendered by each of the last four Presidents. As is rendered clear by the chart, President Obama has taken a very different view of Clean Air Act cooperative federalism than has his predecessors. Evidently, Obama’s is the age of uncooperative federalism.

Today, CEI submitted comments on EPA’s Proposed Consent Decree in Sierra Club et al. v. McCarthy, Civil Action No 3:13-cv-3953-SI (N.D. Cal.) Docket ID: EPA-HQ-OGC-2014-0421. I explained the underlying matter in a previous post for Document Dump Fridays. I’ve reposted the comment below.

Background: Three Types of Laws

There are three types of “official” laws, and their differences figure prominently in the fate of EPA’s recently proposed Clean Power Plan.

• Slip Laws: These are the individual acts and resolutions passed by Congress & signed into law by the President.

• Statutes at Large: All slip laws during a given Congress are bundled into session laws, which are compiled into the Statutes at Large.

• United States Code: Statutes at Large are terrible for searching purposes; since 1926, the Statutes at Large have been organized in the United States Code so as to make easier legal research.

The United States Code establishes “prima facie” the laws of the United States (1 U.S.C. § 54 (a)), but the text of the Statutes at Large is “legal evidence” of the laws enacted by Congress (1 U.S.C. §112).. It follows that the Code controls, unless it is “inconsistent” with the Statutes at Large, the ultimate authority. (Stephan v. U.S., 319 US 423, 426).

Background: A Brief Legislative History of 111(d)

EPA’s  recently proposed climate rule for existing power plants is based on Clean Air Act §111(d). This provision authorizes the agency to prescribe “regulations” for “any air pollutant” from “any existing source.” These regulations, in turn, guide the States formulation of “standards of performance” to control pollution from the source in question.

In what turns out to be a common happenstance (more on that below), Clean Air Act §111(d)’s legislative history resulted in an inadvertent textual discrepancy between the United States Code and the Statutes at Large.

As originally enacted in 1970, §111(d) included an exclusion that prohibited EPA from prescribing §111(d) regulations for any hazardous air pollutant already regulated under §112 of the Clean Air Act. The idea behind this “§112 Exclusion” was to avoid duplicative regulation.

In 1990, Congress amended the Clean Air Act. If you’ll recall the ‘how a bill becomes a law’ jingle, the House and Senate each pass a version of the bill. Often, the texts of these bills are different. Any differences between the House and Senate versions are then reconciled in a Conference Committee.

The House of Representatives passed a bill that fundamentally changed the nature of the §112 exclusion. Before the 1990 Clean Air Act Amendments, the exclusion from 111(d) applied to hazardous air pollutants regulated under §112; under the House bill, this exclusion applied to §112 source categories (rather than §112 pollutants).

Unlike the House, the Senate bill left unchanged the pre-1990 §112 Exclusion. That is, the Senate version maintained a prohibition on EPA’s issuance of 111(d) regulations for §112 hazardous air pollutants. However, in order to harmonize the pre-1990 §112 Exclusion with the language of the 1990 Clean Air Act Amendments, the Senate passed a “conforming” amendment to 111(d). Thus, the Senate’s amendment was a ministerial change.

The Conference Committee adopted the House’s substantive amendment. Logically, the adoption of the House language rendered moot the Senate clerical language. However, the Conference Committee failed to remove the Senate’s conforming amendment. As a result, the Statutes at Large contain both the House’s substantive amendment and the Senate’s conforming amendment.

The United States Code, on the other hand, contains only the House version of the §112 Exclusion (which, again, applies to categories rather than pollutants). Notably, in omitting the Senate language, the codifier stated that the Senate’s conforming amendment “could not be executed.”

Taken at face value, the House language—as codified in the U.S. Code—would outlaw EPA’s climate change rules for existing power plants. This is due to the fact that the agency, in February, 2012, published a regulation (the ridiculous Utility MACT) that subjected power plants to §112 requirements. Therefore, pursuant to the House version of the 1990 Clean Air Amendments/U.S. Code, power plants are a “source category” excluded from §111(d) regulations.

Dueling Legal Theories: EPA v. State AGs (led by West Virginia AG Morrisey)

EPA, of course, has an interpretation of the Clean Air Act that differs from a plain reading of the U.S. Code. After all, the agency did propose major climate regulations based on its 111(d) authority; this regulation would be illegal at face value pursuant to a strict reading of the U.S. Code.

Recall from the first section of this post that the U.S. Code establishes “prima facie” the laws of the U.S., unless it conflicts with the Statutes at Large, which are the ultimate authority. In a legal memo issued concomitantly with the proposed rule, EPA argues that the Statutes at Large are inconsistent with the U.S. Code on §111(d), due to the presence of the Senate’s ministerial language in the former but not the latter. Due to this “inconsistency,” EPA claims that the Statutes at Large, rather than the U.S. Code, are the controlling text.

Turning to the [putatively controlling] Statutes at Large, the agency reads the House’s substantive amendment as conflicting with the Senate’s conforming amendment. Under EPA’s interpretation, this incompatibility creates a statutory ambiguity. Due to this statutory ambiguity, the agency claims it possess the discretion to render a reasonable interpretation. Not surprisingly, EPA’s interpretation ignores the House’s substantive amendment that would have prohibited the agency’s Clean Power Plan.

West Virginia Attorney General Patrick Morrisey’s office has been leading the charge against EPA’s interpretation of the “§112 Exclusion.” In a June 7 letter, AG Morrisey first presented his case; new evidence was added in a June 26th amicus brief, to which AGs from Ohio, Oklahoma, Kentucky, Alaska, South Carolina, Wyoming, and Nebraska were cosignatories. Both documents are reposted at the bottom of this blog.

In a nutshell (explained further below), the AGs argue that EPA is willfully mistaking the distinction between a “conforming” amendment and a “substantive” amendment. They present compelling evidence that the 111(d) “conforming” amendment in the Statutes at Large is, in fact, a “drafting error” that cannot be given any force. As a result, the AGs argue, there is no “inconsistency” between the States at Large and the U.S. Code, and the latter must control. And, again, pursuant to the U.S. Code, the agency has no authority to prescribe §111(d) regulations for power plants.

[click to continue…]