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 area” to 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.

 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

* 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. 

Powerful dissenting opinions can sometimes persuade a higher court to review a lower court’s ruling. Massachusetts v. EPA (2007), the Supreme Court decision empowering the EPA to act as a super legislature and ‘enact’ climate policy, is a prime example.

In 2005, the D.C. Circuit Court of Appeals held that the Bush administration EPA properly exercised its discretion when it denied a petition by eco-litigation groups to regulate greenhouse gas (GHG) emissions from new motor vehicles under §202 of the Clean Air Act (CAA). I remember feeling relieved but disappointed. The 2-1 majority ducked the central issue, namely, whether the CAA authorizes the EPA to regulate GHGs as climate change agents. In contrast, Judge David Tatel’s dissent made a strong argument that the EPA does have the power to regulate GHGs and, consequently, has a duty to determine whether GHG emissions endanger public health or welfare. Tatel’s opinion was a key factor persuading the Supreme Court to hear the case.

The Court in Massachusetts ruled in favor of petitioners, setting the stage for the EPA’s ongoing, ever-expanding regulation of GHG emissions from both mobile and stationary sources.

The EPA’s greenhouse regulatory surge, however, is not yet ‘settled law.’ Recent strong dissenting opinions by two D.C. Circuit Court of Appeals judges may persuade the Supreme Court to review one or more of the agency’s GHG rules — or even reassess its ruling in Mass. v. EPA.

Mass. v. EPA and its Aftermath: A Refresher

In Mass. v. EPA, the Supreme Court ruled that: (1) GHGs are “air pollutants” for regulatory purposes under the CAA; (2) the EPA must determine whether GHG emissions endanger public health and welfare (unless the agency provides statutory reasons why it cannot or will not undertake such an analysis); and (3) the agency must regulate GHG emissions from new motor vehicles if it determines such emissions endanger public health or welfare.

The rest, as they say, is history. The EPA issued its endangerment determination in December 2009, compelling itself to regulate GHG emissions from new cars, and in May 2010, issued its GHG tailpipe rule. The EPA has long held that once any air pollutant from any source is regulated under any part of the CAA, major stationary sources become “subject to regulation” under the Act’s Title I Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. The EPA reaffirmed that interpretation in its April 2010 triggering rule.

Those rules, however, threatened to create a politically-explosive administrative quagmire. Literally millions of non-industrial facilities emit enough carbon dioxide (CO2) to qualify as “major” sources under the Act’s statutory definitions (250 tons per year for PSD, 100 tons per year for Title V). The EPA estimated that applying the Act’s permitting programs to GHGs under the statutory definitions of “major” source would require the EPA and its state counterparts to process an estimated 81,000 PSD permits annually (instead of 280) and 6.1 million Title V permits annually (instead of 15,000). To handle this workload, agencies would have to hire an additional 320,000 full-time employees at a cost of $21 billion per year. Otherwise, ever-growing bottlenecks and delays would paralyze environmental enforcement and economic development alike.

To avoid such “absurd results,” the EPA in July 2010 issued a tailoring rule exempting small CO2 emitters from the permitting programs. The rule decrees that for GHGs, a “major” source is one that emits 100,000 tons per year, not 100/250 tons per year, as specified for “air pollutants” in the statute. Although agencies should have some interpretative discretion when statutory language is ambiguous, there is nothing unclear about “100 tons” or “250 tons”. Tailoring is bureauspeak for amending. The irony, of which the EPA seems unaware, is that tailoring is itself an “absurd result,” because agencies have no power under the U.S. Constitution to amend statutes.

In 2011 a coalition of industry groups, states, and non-profits petitioned the D.C. Circuit Court of Appeals to overturn all four GHG rules: endangerment, tailpipe, triggering, and tailoring. In June 2012, a 3-judge panel decided the case, Coalition for Responsible Regulation v. EPA, in favor of the agency, upholding all four GHG rules. In August, coalition members petitioned for an en banc (full court) rehearing. On December 20, the court voted 5-2 to deny the petitions. However, the dissenting opinions of Judges Janice Rogers Brown and Brett Kavanaugh are so cogently argued that the Supreme Court may decide to review the case. The Court might even reassess its ruling in Mass. v. EPA.

In a future post, I will discuss Judge Kavanaugh’s dissent. For now, let’s look at Judge Brown’s opinion.

Judge Brown’s Opinion

Judge Brown begins her dissent by noting that, although bound by the Supreme Court’s ruling, she is skeptical of its reasoning:

Bound as I am by Massachusetts, I reluctantly concur with the Panel’s determination that EPA may regulate GHGs in tailpipe emissions. But I do not choose to go quietly. Because the most significant regulations of recent memory rest on the shakiest of foundations, Part I of this statement engages Massachusetts’s interpretive shortcomings in the hope that either Court or Congress will restore order to the CAA.

Congress never intended the CAA to be an “environmental cure-all.” The Act’s actual statutory purposes are much more limited:

It was targeted legislation designed to remedy a particular wrong: the harmful direct effects of poisoned air on human beings and their local environs. This is what Congress understood as “air pollution which may reasonably be anticipated to endanger public health” in the tailpipe emissions provision, 42 U.S.C. § 7521(a)(1). The Supreme Court in Massachusetts v. EPA, 549 U.S. 497 (2007), however, concluded otherwise.

Congress’s intent is visible in the very title of the statute:

It was no happy accident that congressional draftsmen titled the legislation the “Clean Air Act.” Ambient air quality was the point, purpose, and focus of the CAA. Congress had set its sights on the “dirty, visible ‘smokestack’ emissions” [citation omitted].

The CAA Amendments of 1990 “expanded the Act beyond its singular emphasis on urban air quality to address hazardous — i.e., toxic — air pollutants, acid rain, and stratospheric ozone,” Brown acknowledges. However, “the very particular way in which Congress handled these exceptions goes a long way toward proving the rule: Congress only expands the CAA through considered legislative acts.” Congressional intent is discernible in Congress’s consistent practice:

Simply put, when Congress became aware of new dangers, it acted judiciously in crafting workable remedies that, when they obtained the necessary political support, were worked into their own discrete provisions under the Act. Neither Congress nor the EPA attempted to force these distinct problems into existing, ill-suited regulatory schemes.

From which Judge Brown draws the common-sense conclusion:

Where our Representatives have acted with such caution, any suggestion that Congress has — through a single word — conferred upon EPA the authority to steamroll through Congressional gridlock, upend the Senate’s rejection of the Kyoto Protocol, and regulate GHGs for the whole of American industry must necessarily fail. The legislature, recall, does not “hide elephants in mouseholes.” Whitman v. Am. Trucking Assocs., 531 U.S. 457, 468 (2001).

Specific legislative history also argues against the cure-all interpretation of the CAA:

In drafting the 1990 Amendments, Congress considered — and expressly rejected — proposals authorizing EPA to regulate GHGs under the CAA. . . . The Executive’s critique noted that “unilateral action aimed at addressing a global problem” through a standard limiting tailpipe emissions would not be an effective means of safeguarding the global environment and would “necessarily punish national interests.”

Brown goes on to note that in all the years since the 1990 amendments, Congress has “never deviated from its decision not to regulate GHGs under the CAA” — and “not for lack of opportunity.” Indeed, “By one estimate, Congressmen have proposed more than 400 bills pertaining to GHGs between 1990 and 2009.”

None of this is to suggest, in the words of the Massachusetts Court, that “post-enactment congressional actions and deliberations” repeal powers previously delegated to the EPA by the CAA. The point, rather, is that more than a selective and dubious reading of the CAA definition of “air pollutant” is needed to establish that, in 1970, Congress did in fact delegate the truly awesome power to de-carbonize the U.S. economy to an administrative agency. Or, as Judge Brown more delicately puts it:

Congress’s inability to break this nearly quarter-century long deadlock is incredibly suggestive: this is not an area of policymaking where the legislature has acted rashly or unthinkingly in delegating authority to agencies.

Judge Brown also questions whether, per CAA §202, the EPA can actually show that “air pollution” from GHG emissions ”may reasonably be anticipated to endanger public health or welfare.” It is one thing to establish a nexus between traditional air pollutants and the harm done to people who inhale them. It is quite another to demonstrate endangerment from GHGs, because “any harm to human health and welfare flowing from climate change comes at the end of a long speculative chain.”

The EPA had to make assumptions about future emissions, future emission concentrations, climate sensitivity, the impact of warming on weather patterns, the impact of those on agriculture and other economic activities, and, finally, the impact of those on human health and welfare. Brown worries that if the EPA can find endangerment where ”there can be this much logical daylight between the pollutant and the anticipated harm, there is nothing EPA is not authorized to do.”

Next, Brown takes up the tailoring rule. She seems to suggest that the litany of absurd results arising under the PSD and Title V programs is itself reason to doubt that GHG regulation falls within “the literal meaning” of the CAA. In any event, she views the tailoring rule as a clear case of administrative overreach: ”Faced with the choice of reconsidering the legitimacy of an endangerment finding that sets in motion such a cluster of chaos or rewriting the statute, the agency has blithely done the latter. This is an abuse of the absurdity and administrative necessity doctrines as neither can be invoked to preempt legislative prerogatives.”

Determining climate policy, she suggests, is above any administrative agency’s pay grade: ”Congress should not be presumed to have deferred to agencies on questions of great significance more properly resolved by the legislature. If there was ever a regulation in recent memory more befitting [more guilty of?] such a presumption than the present, I confess I do not know of it.”

Next, Brown examines the relevance of FDA v. Brown & Williamson (1999), in which the Supreme Court struck down the FDA’s attempt to assert regulatory control beyond its statutory authority by classifying cigarettes as drug delivery devices. The Court distinguished the issues in Massachusetts from those in Brown & Williamson, but Brown shows how with “only slight modifications” one could rework the text of Brown & Williamson to apply to GHGs.

The Court argued that whereas FDA regulation of tobacco products under the Food, Drug, and Cosmetic Act (FDCA) logically entails an outright ban on the sale of cigarettes, an endangerment finding would “lead to no such extreme measures,” only a cost-constrained regulation of emissions from vehicles already regulated under §202 of the Act. “But,” observes Brown, “the Court spoke too soon.” The Court never considered whether or how motor vehicle GHG regulation would trigger regulation of stationary sources. It did not consider how regulation of GHGs as air pollutants would “radically expand the universe of covered entities far beyond Congress’s intentions.”

I would put the point as follows. Expanding the PSD and Title V programs to affect millions of non-industrial facilities — at an estimated compliance cost of up to $60,000 per facility — is the very definition of an extreme measure. Fixing the problem by amending the statute via administrative action is another extreme measure. Brown concludes: “The Supreme Court in Massachusetts simply did not have occasion to consider this absurd and ‘counterintuitive’ outcome, but we do — and we must.”

Another extreme measure waiting in the wings (although not an issue in Coalition for Responsible Regulation and so fittingly not a topic of Judge Brown’s dissent) is GHG regulation via the national ambient air quality standards (NAAQS) program. As discussed previously on this blog, because the EPA finds endangerment in the “elevated concentrations” of GHGs in the atmosphere, the agency has implicitly committed itself to establish NAAQS for GHGs set below current atmospheric concentrations. Two eco-litigation groups, the Center for Biological Diversity and 350.0rg, petitioned the EPA more than three years ago to establish NAAQS for CO2 at 350 parts per million (~40 ppm below current concentrations) and for other GHGs at pre-industrial levels. Given the premises established by Massachusetts and the EPA’s endangerment rule, it is difficult to find fault with petitioners’ reasoning.

CAA §108 requires the EPA to initiate a NAAQS rulemaking for “air pollution” from “numerous or diverse mobile or stationary sources” if such pollution “may reasonably be anticipated to endanger public health and welfare.” Carbon dioxide obviously comes from numerous and diverse mobile and stationary sources, and the EPA has already determined that the associated “air pollution” – the “elevated concentrations” of atmospheric GHGs – endangers public health and welfare.

To my knowledge, the Obama administration has addressed the NAAQS issue only once — in a brief submitted to the Supreme Court in American Electric Power v. Connecticut (2010). The Obama Justice Department described §108 as one of the provisions making the CAA a “comprehensive regulatory framework” for climate change policy.

This is worrisome because not even a worldwide depression that permanently lowers global economic output and emissions to, say, 1970 levels, would stop CO2 concentrations from rising over the remainder of the century. Yet the CAA requires States to adopt implementation plans adequate to attain primary (health-based) NAAQS within five or at most 10 years. The level of economic sacrifice required to implement a CO2 NAAQS set at 350 parts per million would far exceed anything contemplated by the Waxman-Markey cap-and-trade bill or the Copenhagen climate treaty, which seek to stabilize CO2-equivalent GHG concentrations at 450 parts per million by 2050.

Congress did not pass the Waxman-Markey bill and the Senate did not ratify the Copenhagen treaty. They did not do so despite more than 20 years of global warming advocacy. So it would be the height of absurdity to suggest that when Congress enacted the CAA in 1970, years before global warming was even a gleam in Al Gore’s eye, Congress authorized the EPA to establish NAAQS for GHGs. Yet the ‘logic’ of Massachusetts and the EPA’s endangerment rule would appear to demand the agency do just that.

How could the Massachusetts Court overlook the possibility that its decision would tee up the Mother of All Extreme Measures? Perhaps because petitioners gave the Court a bum steer.

Petitioners argued that the EPA’s authority to regulate GHGs under Title II is “separate” from Title I and “entirely separate” from the EPA’s Title I authority to promulgate NAAQS. As is now evident to all, Title II regulation of GHG mobile sources triggered Title I PSD permitting requirements for major stationary sources. The EPA touts its Title II endangerment finding as the scientific basis for the proposed GHG new source performance standards (NSPS) for fossil-fuel power plants under §111, also a Title I authority. Finally, as argued above, the EPA’s Title II endangerment finding creates a precedent for a §108 NAAQS rulemaking. Title I and Title II may be “separate” but they are not “entirely separate”; they are linked.

Near the conclusion of her opinion Brown writes: ”Congress simply did not intend for EPA to convert the ‘Clean Air Act’ to the ‘Warm Air Act’ writ large. But that is exactly what the federal courts have done.” Yes, exactly. In both Mass. v. EPA and Coalition for Responsible Regulation v. EPA, federal judges facilitated and protected the EPA’s climate coup.

Is it reasonable then to seek redress from those very judges?

Perhaps so if the EPA’s many critics begin to hold courts responsible for agency’s greenhouse power grab and the associated damages to our economy and constitutional self-government.

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.