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.

Pretty darn near the height of absurdity. That’s not just my opinion. It’s a key premise of EPA’s “Tailoring Rule,” which exempts small greenhouse gas (GHG) emitters from regulation under the Clean Air Act’s (CAA) Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program.

As EPA explains in a brief filed last week with the D.C. Circuit Court of Appeals, once the agency’s GHG emission standards for new motor vehicles took effect on January 2, 2011, “major stationary sources” of GHG emissions became “automatically subject” to PSD and Title V permitting requirements. A facility with a potential to emit 250 tons per year (tpy) of a regulated air pollutant is a “major source” under PSD. A facility with a potential to emit 100 tpy is a “major source” under Title V. Whereas only large industrial facilities emit 100-250 tpy of smog- and soot-forming air pollutants, literally millions of small entities — big box stores, apartment and office buildings, hospitals, schools, large houses of worship, Dunkin’ Donut shops – use enough natural gas or oil for heating or cooking to emit 100-250 tpy of carbon dioxide (CO2).

EPA and its state counterparts lack the administrative resources to process millions of PSD and Title V permit applications. Thus, applying the CAA as written to GHGs leads to “absurd results” — an ever-growing backlog of permit applications that would cripple both environmental enforcement and economic development. Massive increases in the budgets and staff of environmental agencies would be required to handle the mountains of paperwork. From EPA’s brief:

EPA studied and considered the breadth and depth of the projected administrative burdens in the Tailoring Rule. There, EPA explained that immediately applying the literal PSD statutory threshold of 100/250 tpy [tons per year] to greenhouse gas emissions, when coupled with the “any increase” trigger for modifications under 42 U.S.C. §§7479, 7411(a)(4), would result in annual PSD permit applications submitted to State and local permitting agencies to increase nationwide from 280 to over 81,000 per year, a 300-fold increase. 75 Fed. Reg. at 31,535-40, 31,554. Following a comprehensive analysis, EPA estimated that these additional PSD permit applications would require State permitting authorities to add 10,000 full-time employees and incur additional costs of $1.5 billion per year just to process these applications, a 130-fold increase in the costs to States of administering the PSD program. Id. at 31,539/3. Sources needing operating permits would jump from 14,700 to 6.1 million as a result of application of Title V to greenhouse gases, a 400-fold increase. When EPA [in an earlier asssessment] assumed a mere 40-fold increase in applications – one-tenth of the actual increase – and no increase in employees to process them, the processing time for Title V permits would jump from 6-10 months to ten years. Hiring the 230,000 full-time employees necessary to produce the 1.4 billion work hours required to address the actual increase in permitting functions would result in an increase in Title V administration costs of $21 billion per year. Id. at 31,535-40, 31,577 [emphasis added].

For perspective, EPA’s budget request for FY 2012 is $8.973 billion. Hiring the 230,000 bureaucrats needed to process Title V applications from GHG emitters under the statutory definition of “major source” would cost more than twice as much as EPA’s total budget.

As expected, EPA fails to draw the obvious conclusion from its own analysis, namely: Regulating GHGs via the CAA leads to absurd results because Congress never designed or intended for the Act to regulate GHGs.

EPA seeks to avoid absurd results — and an angry, political backlash — by “tailoring” the CAA’s clear, unambiguous, numerical definitions of “major source” to exempt all but the largest GHG emitters from PSD and Title V. But “tailoring” is just bureaucrat-speak for amending. Under the U.S. Constitution, an administrative agency has no power to amend statutes. Certainly the CAA nowhere authorizes EPA to revise statutory provisions to avoid administrative debacles of its own making. The Tailoring Rule just substitutes one absurdity for another.

EPA claims it had no choice but to regulate GHGs once it made an endangerment finding, because the Supreme Court in Massachusetts v. EPA ruled that GHGs “fit well within the Clean Air Act’s capacious definition of air pollutant.” True, but to reach that conclusion, the Court’s 5-4 majority had to play fast and loose with the statutory definition of “air pollutant” in CAA Sec. 302(g). As I explain elsewhere:

The Court argued that, under CAA Section 302(g), CO2 and other greenhouse gases are “air pollutants” because they are “emitted into” or “otherwise enter” the air. The CAA exists, of course, to control and prevent “air pollution.” Therefore, the Court concluded, EPA has authority to regulate such substances if the agency determines that greenhouse gases endanger public health or welfare.

But 302(g) does not define “air pollutant” as anything “emitted.” It says that “air pollution agents” – substances that damage air quality – are “air pollutants” when emitted. The Court decoupled the term “air pollutant” from its plain English meaning – as if any “emitted” substance is an “air pollutant” whether or not it actually damages air quality. Carbon dioxide – like water vapor, the atmosphere’s main greenhouse gas – is a necessary constituent of clean air.

As Justice Antonin Scalia quipped in dissent, as defined by the Court, “everything airborne, from Frisbees to flatulence, qualifies as an ‘air pollutant.’” Indeed, even absolutely clean, pollution-free air qualifies as an “air pollutant” the moment it moves or circulates, which is plainly absurd.

Section 302(g) is only two sentences long. The Court not only ignored a key term (“air pollution agent”) of the first sentence, it also ignored the entire second sentence, which holds that a “precursor” of a previously designated air pollutant is also an “air pollutant.” Congress would not have needed to say that if, as the Court opined, anything emitted per se is an “air pollutant,” because precursors form air pollutants only by being emitted.

Courts are not supposed to assume that Congress pads statutes with surplus verbiage. For a court to ignore a key term and an entire sentence of a two-sentence definition, in a case where the provision’s meaning is critical to the outcome, is not kosher. The entire greenhouse of cards EPA is now putting in place, with all its enormous economic and political ramifications, rests on the Court’s tortured reading of the CAA definition of “air pollutant.”

In addition, the Court would have been less likely to rule that GHGs “fit well within the Clean Air Act’s capacious definition of air pollutant” if counsel for EPA had made clear that such a ruling would set the stage for “absurd results,” and that EPA would have to play lawmaker and amend the CAA to avoid an administrative meltdown. However, not once in the four years when Mass. v. EPA was litigated before the D.C. Circuit Court of Appeals and the U.S. Supreme Court did counsel for EPA mention these ramifications.

Nor did EPA’s counsel make the fundamental point that EPA could not issue an endangerment rule without eventually regulating GHGs from numerous categories of mobile and stationary sources under the CAA as a whole, effectively ‘legislating’ climate policy for the nation. That is obviously not an authority Congress meant to confer on EPA when it enacted the CAA in 1970.

Indeed, even after almost two decades of global warming advocacy, if Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), instead of introducing a cap-and-trade bill, had introduced legislation authorizing EPA to regulate GHGs via the CAA as it sees fit – i.e. do exactly what the agency is doing now — the bill would have been dead on arrival. How absurd, then, to suppose that Congress authorized EPA to legislate climate policy in 1970, years before global warming became a policy issue!

Why did EPA’s counsel pull its punches in Mass. v. EPA? Not being privy to the inter-agency discussions that shaped the Justice Department’s brief, we can only speculate. This much however is clear: By losing the case, EPA gained the truly awesome, economy-restructuring power to regulate CO2, the most ubiquitous byproduct of industrial civilization.

* The Institute for Energy Research posted an excellent commentary on EPA’s brief last Friday. It is available here.

Yesterday, the House Appropriations Committee approved an amendment to the Fiscal Year 2012 Interior, Environment, and Related Agencies appropriations bill that would block EPA from using any funds to:

• Develop greenhouse gas (GHG) emission standards for new motor vehicles and vehicle engines manufactured after the 2016 model year; and
• Consider or grant a Clean Air Act waiver allowing the California Air Resources Board (CARB) to establish GHG emission standards for new motor vehicles and vehicle engines manufactured after the 2016 model year. 

Capital Alpha Partners, LLC, a firm providing political and policy risk analysis to institutional investors, rightly notes that the amendment, sponsored by Rep. Steve Austria (R-Ohio), could ”shift the debate over fuel economy standards and pressure the administration to soften its 56.2 mpg target floated two weeks ago.” In addition, the measure “would slice two of the three currently-involved agencies [EPA and CARB] out of the rule-making loop,” leaving fuel economy regulation to the National Highway Traffic Safety Administration (NHTSA), ”the one agency seen as ‘most reasonable’ by industry and other observers.” 

Capital Alpha reckons the measure “has a 25% chance of enactment into law this year.” If enacted as part of the one-year EPA funding bill, the measure would expire on September 30, 2012. “However,” says Capital Alpha, ”should it make it into law, opponents would be hard-pressed to strip it out in future years.” An exciting prospect for liberty-loving Americans!

As explained previously (here, here, and here), EPA is ’legislating’ climate policy under the guise of implementing the Clean Air Act (CAA), a statute enacted in 1970, years before global warming became an issue. Al Gore’s “planetary emergency” is bogus, but America’s constitutional crisis is real. Under the U.S. Constitution, only the people’s representatives get to make the big decisions concerning the content and direction of national policy. When agencies legislate, the separation of powers is breached, and the people have no one to hold accountable at the ballot box for the burdens government places upon them. 

EPA’s power grab is breathtaking. EPA is not only making climate policy through the regulatory backdoor, it has also hijacked federal fuel economy regulation by establishing GHG standards for new motor vehicles.

As explained here, here, and here, motor vehicle GHG standards are almost 95% fuel economy regulation (because 94-95% of all motor vehicle GHGs are carbon dioxide from the combustion of motor fuel, and because there is a single pool of technologies that reduces motor fuel consumption and thereby CO2 emissions as well). This means EPA can effectively tighten federal Corporate Average Fuel Economy (CAFE) standards just by tightening its GHG standards. Yet the CAA provides no authority to EPA (or any other agency) to regulate fuel economy. And although 1975 Energy Policy Conservation Act (EPCA) and 2007 Energy Independence and Security Act (2007) authorize EPA to test automakers’ compliance with CAFE standards, those statutes reserve the authority to prescribe CAFE standards to NHTSA.

The auto industry supported EPA’s GHG standards, but only to escape a worse regulatory fate. EPA threatened to inflict a patchwork quilt of GHG/fuel economy standards on the U.S. auto market by granting CARB’s request for a waiver to establish GHG emission standards for new cars sold in California. A baker’s dozen other states were poised to opt into the CARB GHG/fuel economy regime. “Are you gonna come along quietly, or do we have to let the California Air Resources Board muss ya up?” That was the gist of the deal EPA offered in 2009 to obtain auto industry support for a “national” GHG/fuel economy standards program.

To run this greenhouse protection racket, however, EPA had to flout EPCA Sec. 32919, which prohibits states from adopting laws or regulations “related to” fuel economy standards. To repeat, GHG motor vehicle standards are largely fuel economy standards by another name.

Rep. Austria’s amendment would put the kibosh on further mischief of this sort during FY 2012. And, as Capital Alpha opines, if the amendment is enacted into law, “opponents would be hard-pressed to strip it out in future years.”

Okay, maybe I was wrong. Just because the Supreme Court in Massachusetts v. EPA legislated from the bench in order to empower EPA to legislate from the bureau does not necessarily mean that lower courts will tolerate similar breaches of the separation of powers.

Yesterday (May 26, 2011), in Avenal Power Center v. EPA, District of Columbia Judge Richard Leon mockingly rejected EPA’s arguments for attempting to amend the Clean Air Act to suit the agency’s administrative convenience. Although not mentioned by him, Judge Leon’s reasoning may strengthen legal challenges to EPA’s greenhouse gas Tailoring Rule.

A quick overview of the case.

A company called Avenal Power Center seeks to build a state of the art 600 megawatt natural gas-fired power plant in California’s San Joaquin Valley. In February 2008, Avenal submitted to EPA an application for a Prevention of Significant Deterioration (PSD) preconstruction permit. Section 165(c) of the Clean Air Act (CAA) requires EPA to grant or deny a PSD permit application within one year. Almost two years later, EPA “still had no final or foreseeable resolution to its application.” On March 9, 2010, Avenal petitioned the District Court “seeking judicial relief to deal with EPA’s continued violation of Congress’s one-year deadline under Section 165(c) of the CAA.”

On February 4, 2011, the head of EPA’s Air Office announced that the agency would issue a final permit decision by May 27, 2011. “Unfortunately,” writes Judge Leon, “that was not to be!” He continues: “As plaintiff appropriately points out, EPA’s promise of a ‘final permit decision’ under 40 C.F.R. § 124.15 was inherently disingenuous.” In reality, all EPA was promising to do was render an “interim decision” that can be appealed to EPA’s Environmental Appeal’s Board (EAB) — and then overturned. As EPA concedes, EAB review ”could take anywhere from six to eight months, or longer, to complete.”

Here’s where the fun starts.

EPA contends that its appealable interim decision ”is sufficient to satisfy the CAA’s one year deadline” (even though already two years overdue), and that, in any event, the District Court “lacks jurisdiction” to require a final determination. Why? Because EPA has authority to delegate decisions to the EAB, and EAB reviews take, well, as long as they take.

“For the following reasons,” writes Judge Leon, “I disagree with defendants’ oh so clever, but unsupportable, position.”

The EAB exists to serve EPA’s administrative convenience. However, Congress did not create the EAB via the CAA. Rather, EPA created the EAB via a 1992 rulemaking. “Unfortunately,” the Judge observes, ”when the Administrator created that process she failed to build into it the temporal requirement that the EAB’s decision must be completed within the CAA’s statutorily mandated one-year period. . . .As a result, the EPA put in place a review process that can be and has, in this case rendered meaningless this Congressional one-year mandate.”

Judge Leon continues:

Unfazed, the EPA argues, in effect, that this regulatory process trumps Congress’s mandate and relieves the Administrator of complying with it until the EAB renders the Agency’s final decision. . . .In essence, the EPA contends that Congress’s statutory mandate is subservient to EPA’s regulatory process, and as such this Court has no authority to require the Administrator to comply with this statutory requirement. How absurd!

The Judge gets constitutional:

It is axiomatic that an act of Congress that is patently clear and unambiguous — such as this requirement in the CAA — cannot be overriden by a regulatory process created for the convenience of an Administrator, no matter how much notice and comment preceded the creation. . . .Administrators of regulatory agencies derive their power from Congress’s statutory enactments — not from their own discretionary regulatory pronouncements that are drafted for their assistance and convenience. . . .To the extent that a regulatory process frustrates or renders meaningless a Congressional statutory mandate, it must yield to Congress’s will.

Even tarter and tastier are comments Judge Leon imparts in a footnote:

The EPA has labored mightily to convince this Court that the temporal requirement enacted by Congress is somehow ambiguous and, therefore, this Court should defer to its interpretation under Chevron. . . .Horsefeathers! The EPA’s self-serving misinterpretation of Congress’s mandate is too clever by half and an obvious effort to protect its regulatory process at the expense of Congress’s clear intention. Put simply, that dog won’t hunt.

The decision may have implications for ongoing litigation on EPA’s greenhouse gas (GHG) regulations, particularly its Tailoring Rule.

When EPA’s GHG motor vehicle emission standards took effect on Jan. 2, 2011, ”major” stationary sources of carbon dioxide (CO2) became “subject to regulation” under the PSD preconstruction permitting program and the Title V operating permits program. The problem, as is well known, is that literally millions of non-industrial facilities — office buildings, apartment complexes, big box stores, hospitals, schools, large houses of worship, Dunkin’ Donut shops – emit enough CO2 (25o tons per year, 100 tons per year) to qualify as major sources under PSD and Title V.

As EPA admits, regulating GHGs via the CAA leads to “absurd results” – policies that conflict with congressional intent. EPA and its state counterparts would have to process an estimated 81,000 PSD preconstruction permit applications per year (instead of 280) and 6.1 million Title V operating permits per year (instead of 15,000). The permitting programs would crash under their own weight, crippling both environmental enforcement and economic development. 

EPA’s solution is to “tailor” the PSD and Title V programs to exempt all but the largest industrial CO2 emitters (power plants, refineries, cement kilns, steel plants, pulp and paper mills). “Tailoring,” however, is just bureaucrat-speak for “amending.” The Tailoring Rule substitutes one absurd result for another, because administrative agencies have no power to amend statutes.

To borrow Judge Leon’s words, the PSD and Title V numerical definitions of major source are ”patently clear and unambiguous.” If EPA’s claim that it may regulate around the statute’s one-year review deadline is “absurd,” why not its claim that it may regulate around the PSD and Title V major source thresholds?

Today at Pajamas Media.Com, I discuss the latest stratagem of the greenhouse lobby to protect EPA’s purloined power to dictate national climate and energy policy: Sen. Max Baucus’s (D-Mont.) amendment to the small business reauthorization bill.
 
The Baucus amendment would essentially codify EPA’s Tailoring Rule, which exempts small greenhouse gas (GHG) emitters from Clean Air Act (CAA) permitting requirements.
 
That may seem innocent enough. However, if enacted, the Baucus amendment would also codify the ever-growing ensemble of EPA climate initiatives of which the Tailoring Rule is only a small piece.
 
EPA’s current and probable future climate regulations include GHG/fuel-economy standards for all categories of mobile sources (cars, trucks, marine vessels, aircraft, non-road vehicles and engines) and GHG/energy-efficiency standards for dozens of industrial source categories. 
 
Congress, however, never authorized EPA to determine fuel economy standards for motor vehicles, much less dictate national policy on climate change. The Baucus amendment would put Congress’s legislative stamp of approval on EPA’s end-run around the legislative process.
 
The amendment has almost no chance of passing in the GOP-led House of Representatives. However, it does not need to pass to perpetuate EPA’s shocking power grab. All it has to do is peel off enough votes in the Senate to prevent passage of the Inhofe-Upton Energy Tax Prevention Act. That bill, which is almost certain to pass in the House, would overturn most of EPA’s current GHG regulations and stop the agency permanently from promulgating climate change policies Congress never approved.
 
Whether the Baucus amendment is adopted or just blocks passage of Inhofe-Upton, the U.S. economy will be exposed to the risk that EPA will be litigated into establishing national ambient air quality standards (NAAQS) for GHGs, and to the risk that EPA will use BACT (“best available control technology”) determinations and NSPS (New Source Performance Standards) to restrict America’s access to affordable, carbon-based energy.
 
With the possible exception of Michigan Rep. John Dingell, who chaired the House-Senate conference committee on the CAA Amendments of 1990, nobody on Capitol Hill should know better than Sen. Baucus that Congress never authoried EPA to regulate GHGs for climate change purposes. During congressional debate on the CAA Amendments, Baucus tried and failed to persuade the Senate to adopt language requiring EPA to set CO2 emission standards for motor vehicles. He also tried and failed to persuade House-Senate conferees to adopt language establishing GHG emission reduction as a national goal and requiring EPA to regulate manufactured substances based on their “global warming potential.”
 
EPA today is exercising the very powers that Baucus tried and failed to persuade Congress to grant the agency in 1989. Hence the title of my column on the Senator’s amendment: “EPA’s Greenhouse Power Grab: Baucus’s Revenge, Democracy’s Peril.”
 
Sadly, more than a few Members of Congress today seem to believe that the greenhouse agenda is more important than any constitutional principle that might interfere with it. How Senators vote on the Baucus amendment will be a test of their respect for the Constitution.

Can environmental agencies use BACT determinations to require major emitting facilities to switch fuels?

This arcane-sounding question is of great practical importance to energy consumers and the economy. It is a question addressed in EPA’s long-awaited PSD and Title V Permitting Guidance for Greenhouse Gases, posted online yesterday in Politico.

EPA’s guidance document is intended to assist permit writers and permit applicants determine what constitutes “best available control technology” (BACT) for greenhouse gas (GHG) emitting facilities. On January 2, 2011, EPA’s motor vehicle GHG emission standards will go into effect, making GHGs air pollutants “subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. Any firm planning to build or modify a large GHG-emitting facility (e.g. a coal-fired power plant, an oil refinery, a cement production facility) will first have to obtain a PSD permit from EPA or a State environmental agency.  To obtain a PSD permit, the applicant will have to demonstrate that the new or modified facility incorporates BACT by virtue of its combustion processes, work practices, technology controls, or some combination thereof.

A question that has come up time and again in discussions of EPA regulation of GHGs is whether BACT can be interpreted to require facilities to change the fuels they use. For example, could a permitting agency decide that an electric generating unit is not BACT-compliant unless the facility switches fuels from coal to natural gas, or from natural gas to a mixture of gas and wind?

Waxman-Markey died in the Senate when the public realized that cap-and-trade is a stealth energy tax.  Cap-and-trade functions as an energy tax in large part because it is designed to suppress and, ultimately, eliminate electricity production from coal, America’s most abundant and affordable electricity fuel.

If BACT can be interpreted to require fuel switching, then it can empower activist bureaucrats to implement the anti-coal agenda that the American people rejected on November 2.

Where does EPA’s guidance document stand on this critical issue? Here’s what it says:

While Step 1 [of the BACT determination process] is intended to capture a broad array of potential options for pollution control, this step of the process is not without limits. EPA has recognized that a Step 1 list of options need not necessarily include inherently lower polluting processes that would fundamentally redefine the nature of the source proposed by the permit applicant.* [p. 25]

* In re Prairie State Generating Company, 13 E.A.D. 1, 23 (EAB 2006).

EPA does not interpret the CAA to prohibit fundamentally redefining the source and has recognized that permitting authorities have the discretion to conduct a broader BACT analysis if they desire.**  The “redefining the source” issue is ultimately a question of degree that is within the discretion of the permitting authority. [p. 28]

** In re Knauf Fiber Glass, 8 E.A.D. at 136; In re Old Dominion Cooperative, 3 E.A.D. at 793.

So, although BACT options ”need not necessarily include inherently lower polluting processes that would fundamentally redefine the nature of the source,” EPA “does not interpret” BACT “to prohibit fundamentally redefining the source,” leaving such decisions to the “discretion of the permitting authority.”

It would be prudent to suppose that anti-coal bureaucrats at EPA and State agencies will do whatever they think they can get away with.