Despite the disappointing decision yesterday, it would be well to remember that the real damage was done in the Supreme Court’s 5-4 Massachusetts decision, where EPA was found to have authority to regulate GHGs under the CAA so long as it determined that GHGs endanger the public health and welfare. 

. . .the Massachusetts decision was a real travesty.  It is impossible to review the history of the public debate on GHG regulation in this country beginning in the 1980s, when potential climate change first came to prominence, and conclude that authority to regulate GHGs was always available, hiding in plain sight in the CAA as first enacted in 1970. The Supreme Court said in the 2001 American Trucking Associations decision, in language that is often cited, that Congress does not “hide elephants in mouseholes.”  Evidently, in the case of EPA GHG regulation, Congress did.

In the end, the most rational thing for the country to do on GHGs is for Congress to enact legislation that gets EPA out of the GHG regulatory business entirely.  — Peter Glaser

In Massachustts v. EPA, the 5-4 majority argued: (1) The Clean Air Act (CAA) defines “air pollutant” as any airborne substance whatsoever; (2) the EPA has a mandatory duty to regulate air pollutants emitted by automobiles if the associated “air pollution” “may reasonably be anticipated to endanger public health and welfare”; and (3) “welfare” effects include changes in “weather and climate.” Given these premises, the Court basically left the EPA one way to avoid regulating GHGs: Cancel its membership in the self-anointed “scientific consensus” — the climate alarm movement – that the agency had spent years promoting and leading. No chance of that happening.

For reasons discussed here and here, the lynchpin of the Massachusetts Court’s argument, premise (1), was a misreading of the CAA definition of “air pollutant.” At a minimum, respondent EPA’s opinion that carbon dioxide (CO2) is not an air pollutant was a “permissible construction” of the statute and thus should have been accorded deference under the Court’s Chevron Step 2 test. If the GHG regime EPA is building were proposed in legislation and put to a vote, Congress would reject it. Congress would surely have rejected the EPA’s GHG agenda in 1970, when it enacted the CAA and defined “air pollutant.” The terms “greenhouse gas” and “greenhouse effect” do not even occur in the CAA. Only as amended in 1990 does the CAA even obliquely address the issue of global climate change. Congress considered and rejected regulatory climate policies in the debates on the 1990 CAA Amendments. The very provisions tacitly addressing climate change – CAA Secs. 103(g) and 602(e) – admonish the EPA not to adopt “pollution control requirements” for CO2, and not to regulate substances based on their “global warming potential.”

With the case law on GHG regulation hopelessly botched by the Supreme Court, only Congress can rein in the EPA — and only if there is a change of management in the White House and the Senate in November.

Peter Glaser’s full commentary on the D.C. Circuit Court decision follows.

The Morning After:
Some Personal Thoughts on Yesterday’s D.C. Circuit Greenhouse Gas Decision
and the Future of EPA GHG Regulation

There’s no sugar-coating it.  Yesterday’s decision was an across-the-board smack-down for industry and the states that sought to overturn EPA’s first foray into GHG regulation following the Supreme Court’s 2007 Massachusetts v. EPA decision.  Not only did the Court reject every argument petitioners made, the tone of the decision suggested real hostility.

I had personally grown pessimistic about our chances when the panel was appointed, but had thought there were arguments we could win and that we might get a good dissent from Judge Sentelle at least on the authority of EPA to “tailor” the statutory PSD permitting thresholds.  Such a dissent would have enhanced the prospects of a motion for the full court to rehear the case en banc and a petition for certiorari to the Supreme Court.

In the end, we got nothing.  Known as a bear on standing, Judge Sentelle did not dissent from the panel decision that none of the petitioners had standing to challenge EPA’s tailoring of the statutory thresholds, since (in the panel’s view) none are injured by EPA narrowing the class of sources subject to GHG regulation.  Hence, petitioners’ strongest argument and the most glaring legal defect of the rules never got decided on the merits.  I don’t think the Court correctly characterized industry petitioners’ arguments as to standing and therefore never confronted those arguments head on, but by the time the opinion got around to that issue the overall direction the Court was going was clear.

Despite the disappointing decision yesterday, it would be well to remember that the real damage was done in the Supreme Court’s 5-4 Massachusetts decision, where EPA was found to have authority to regulate GHGs under the CAA so long as it determined that GHGs endanger the public health and welfare.  For someone like me, who has been involved in the issue of potential EPA regulation of GHGs under the CAA since the Clinton Administration (when then EPA Administrator Carol Browner casually mentioned in a House Committee hearing that the Senate didn’t need to ratify the Kyoto Protocol in order for the country to regulate GHGs; EPA could do so under the CAA), the Massachusetts decision was a real travesty.  It is impossible to review the history of the public debate on GHG regulation in this country beginning in the 1980s, when potential climate change first came to prominence, and conclude that authority to regulate GHGs was always available, hiding in plain sight in the CAA as first enacted in 1970.  The Supreme Court said in the 2001 American Trucking Associations decision, in language that is often cited, that Congress does not “hide elephants in mouseholes.”  Evidently, in the case of EPA GHG regulation, Congress did.

I had two reactions to the Massachusetts decision that are still pertinent today.  First, EPA regulation of GHGs is really concerning.  Carbon dioxide is the inevitable byproduct of combusting fossil fuels (of oxidizing carbon).  Fossil fuels constitute 85 percent of the energy Americans use.  Hence, EPA authority to regulate carbon dioxide is essentially the authority to regulate everything.

The danger in EPA’s authority to regulate GHGs is amplified by the fact that EPA’s source of regulatory authority is the CAA.  To trigger regulation under the CAA, EPA must make a finding that GHGs “may reasonably be anticipated to cause or contribute” to the endangerment of public health or welfare.  We learned again from yesterday’s decision what a permissive standard this is.  At oral argument, one of Judge Sentelle’s first statements to petitioners’ counsel was something to the effect of “I hope you’re not going to ask us to make a judgment on the science.”  Personally, I am a climate skeptic – I have read through the climategate emails and have been appalled.  But the courts continue to show reluctance to truly engage EPA’s science findings (or even to allocate sufficient words to adequately brief these highly technical issues).

And the concern about EPA GHG regulation does not just stem from the CAA’s very permissive “endangerment” standard.  The CAA programs under which EPA can regulate also grant EPA great discretionary authority in setting standards.  Some CAA programs (the NAAQS, for instance) do not authorize consideration of costs; others do authorize consideration of costs but give EPA authority to weigh cost and environmental factors in its judgment.

To make matters worse, no matter what regulation EPA adopts, it will make no meaningful difference to overall global atmospheric GHG concentrations, as the developing world continues to develop and take advantage of fossil fuels.  So the benefits of EPA GHG regulation will be all symbolic, while the costs may be immense as the country risks losing its ability to take advantage of what should be one of its great competitive strengths – abundant domestic supplies of fossil fuels.

Having said all that, my second reaction to Massachusetts, which I still have today, is that it is like being back in 1970, when Congress first enacted the CAA, all over again.  Reflecting the mentality of that time (and the significant pollution problems this country had), the 1970 CAA mandated clean air in five years.  It didn’t happen, because the goal was unrealistic.  What followed since 1970 has been a long hard continuing fight to balance the desire for clean air and the need to maintain the economy.  There have been countless EPA rulemakings over the decades since 1970, most of which were appealed, many of which were upheld, and some of which were not.

That’s where we are now with GHGs.  We are going to get more or less GHG regulation over time depending on who is in the White House and whether the particular GHG regulations that EPA issues are legally defensible.  Thus, each regulation is going to have to be attacked (or defended) on the merits.  My own view is that EPA’s latest GHG proposal, for new source performance standards for coal-based electric generation, is not legally defensible and will be overturned in Court.  But there will be many more GHG regulations to come, and we are in for another long, hard rule-by-rule slog under the CAA, in this case to shape the timing and stringency of GHG regulation in this country.

Of course, as we move forward with more EPA GHG rulemaking, it matters critically who the President is.  But even if Mitt Romney is elected President, he will find it very difficult to eliminate EPA GHG regulation completely.  To do so, he would have to pull the endangerment finding, which would be difficult to accomplish both legally and politically.  However, the discretion that the CAA gives EPA to fashion GHG regulations, while dangerous in the wrong hands, also presents an opportunity to an EPA Administrator who wishes to have a moderate approach to GHG regulation.

In the end, the most rational thing for the country to do on GHGs is for Congress to enact legislation that gets EPA out of the GHG regulatory business entirely.  Even proponents of GHG regulation don’t believe that the CAA is suited to that purpose.  We must therefore keep pushing on the legislative front, since new legislation is the right thing to do.  Still, the alignment of political forces is such at this time that comprehensive GHG legislation seems out of reach, although more targeted legislative approaches may be possible.  Without some intercession from Congress, we are left with possibly decades of hand-to-hand combat on GHG regulation.

In sum, it would have been good if we had won yesterday and even better if we had gotten that fifth vote in Massachusetts (that is also likely to be the decisive vote in the health care decision tomorrow).  We didn’t.  Petitioners will now at least ask the Supreme Court to take the case and may also seek rehearing en banc from the full panel.  Absent the Supreme Court granting certiorari and reversing the panel decision, we will have broad EPA authority over GHG emissions under the CAA.  If that is the case, there is nothing we can do but to continue fighting on a rule-by-rule basis with all the ammunition we have, political, legal, technical and scientific.

Peter Glaser
June 26, 2012

Did EPA exercise independent judgment, as required by Sec. 202 of the Clean Air Act (CAA), when it determined that greenhouse gas (GHG) emissions endanger public health and welfare? Or did the agency improperly outsource its judgment to third-party assessment reports, such as those produced by the UN Intergovernmental Panel on Climate Change (IPCC)?

This is a key bone of contention in Coalition for Responsible Regulation v. EPA, a case before the D.C. Circuit Court of Appeals, in which petitioners seek to overturn EPA’s GHG regulations.

Tonight (September 30), the Coalition for Responsible Regulation filed a motion asking the Court to “take judicial notice” of the EPA Inspector General’s (IG’s) recent report, Procedural Review of EPA’s Greenhouse Gas Endangerment Finding Data Quality Processes, and EPA’s comments thereon (Appendix G). Those comments appear to contradict EPA’s legal position that, in developing the Technical Support Document (TSD) for its Endangerment Rule, EPA conducted an independent review of the science, as required by the statute. 

In its brief to the Court and elsewhere, EPA unequivocally rejects the criticism that the only judgment it exercised was to trust the judgment of non-agency scientific “authorities.” For example, in denying petitions for reconsideration of the Endangerment Rule, EPA asserted (p. 49581):

EPA did not passively and uncritically accept a scientific judgment and finding of endangerment supplied to it by outsiders. Instead, EPA evaluated all the scientific information before it, determined the current state of the science of greenhouse gases, the extent to which they cause climate change, how climate change can impact public health and welfare, and the degree of the scientific consensus on this science. . . .EPA properly and carefully exercised its own judgment in all matters related to the Endangerment Finding.

Similarly, in its brief before the Court, EPA stated (p. 54):

Although the scientific assesments reviewed by EPA provided the principal source materials for the Endangerment Finding, the Administrator exercised her own judgment in making that finding.

However, EPA’s comments to the IG put the TSD is a different light. The IG faulted EPA for not following the strictest standards of peer review in developing the TSD. Specifically, EPA failed to publicly report the views of the agency’s 12-member peer review panel. More critically, one member of the panel was an EPA employee, compromising the panel’s independence. EPA argued that publication of panelists’ views and full independence were unnecessary, because the TSD was not a “highly influential scientific asssessment.” Indeed, according to EPA, the TSD was not even an assessment. From the IG report (p. 23):

EPA stated that the TSD is not a scientific assessment, but rather a document that summerized in a straightforward manner the key findings of NRC [National Research Council], USGCRP [United States Global Change Research Program], and IPCC [Intergovernment Panel on Climate Change].

The IG concluded, on the contrary, that the TSD was not only a scientific assessment, it was also ”highly influential.” The Office of Management and Budget’s (OMB’s) Peer Review Bulletin defines “scientific assessment” as “an evaluation of a body of scientific or technical knowledge that typically synthesizes multiple factual inputs, data, models, assumptions, and/or applies best professional judgment to bridge uncertainties in the available information” (p. 2). The TSD synthesizes the findings, conclusions, and other information in the IPCC, USGCRP, and NRC assessments. So is a synthesis of other organizations’ assessments an assessment or not?

The IG asked OMB “whether a document summarizing existing findings or conclusions of other peer-reviewed scientific assessments, but not offering any new analysis or conclusions, would meet OMB’s definition of scientific assessment. . .” OMB replied (p. 17):

An annotated bibliography would generally not be considered a scientific assessment; however, a document summarizing the “state of the science” would be, as it implicitly or explicitly weighs the strength of the available evidence.

OMB’s Peer Review Bulletin states that a scientific assessment is ”highly influential” if it ”could have a potential impact of more than $500 million in any one year on either the public or private sector,” or ”is novel, controversial, or precedent setting, or has significant interagency interest.” Greenhouse gas regulations based on the TSD could easily exceed $500 million in annual costs. The associated Endangerment Rule is among the most novel, controversial, and precedent setting rules in recent history. It has significant interagency interest, since the Endangerment Rule positions EPA to regulate fuel economy, a responsiblity Congress delegated to the Department of Transportation.

Yet EPA maintains that the TSD is not an assessment. EPA told the IG (p. 54):

No weighing of information, data, or studies occurred in the TSD. That had already occurred in the underlying assessments, where the scientific synthesis occurred and where the state of the science was assessed. The TSD is not a scientific assessment, but rather summarized in a straightforward manner the key findings of the NRC, the USGCRP, and IPCC. [Emphasis added].

It seems that EPA, to avoid fessing up to a procedural foible, has unwittingly acknowledged a serious statutory breach, leaping from the frying pan into the fire. EPA cannot reasonably tell the Court that the Endangerment Rule is based on a genuinely independent scientific review if, as petitioners put it, the agency ”had not weighed and sifted the science, but simply assembled a literature review compiled by others wherein such weighing and sifting had ‘already occurred.’”

What EPA told the IG inadvertently casts doubt on the Endangerment Rule’s scientific and legal bona fides. Indeed, petitioners ask:

But if EPA is correct that it did not weigh and sift data, as the Act requires, since that work had already been performed outside EPA, then what position is the Agency in to assert that the underlying science is substantively or procedurally sound? How could it know?

EPA, it would seem, has flouted both OMB’s information quality standards, which require rigorous peer review for “highly influential scientific assessments,” and the CAA, which requires independent judgment in producing such assessments.

Petitioners comment:

Depending on whether it is communicating with the Court or the IG, EPA has taken diametrically opposing positions on whether weighing and sifting the science was performed inside or outside the Agency and by the Administrator or by unaccountable domestic and foreign officials.

It will be interesting to see how EPA tries to reconcile its claim to the IG that it did not weigh the information, data, or studies summarized in the TSD with its claim to the Court that the Administrator exercised her own judgment in making the endangerment finding.

* Full disclosure: The Competitive Enterprise Institute is a petitioner in Coalition for Responsible Regulation, Inc. et. al. v EPA.