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.

I keep coming back to this topic because fuel economy zealots are trashing our constitutional system of separated powers and democratic accountability. Only Congress can make them stop. Leading the counter-offensive is House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.), who has been watch-dogging the Obama administration’s fuel economy agenda since 2009.

The Energy Policy Conservation Act (EPCA) delegates the responsibility to prescribe fuel economy standards solely to the National Highway Traffic Safety Administration (NHTSA); the Clean Air Act (CAA) provides EPA no authority to regulate fuel economy; and EPCA specifically preempts state laws or regulations  “related to” fuel economy. Yet ever since May 2009, when Obama environment czar Carol Browner brokered the so-called Historic Agreement between EPA, auto makers, and the California Air Resources Board (CARB), EPA and CARB have effectively determined the stringency of the fuel economy standards NHTSA prescribes.

How so? EPA and CARB impose greenhouse gas emission standards on auto makers. Carbon dioxide (CO2) constitutes almost 95% of motor vehicle greenhouse gas emissions, and there being no commercial technologies to capture or filter out CO2 emissions, the only way to reduce CO2 emissions per mile is to reduce fuel consumption per mile — that is, increase fuel economy (EPA/NHTSA Tailpipe Rule, pp. 25424, 25327).

So under the Obama administration, instead of one agency regulating fuel economy through one set of rules pursuant to one statute, as Congress intended, three agencies regulate fuel economy through three sets of rules pursuant to three statutes (EPCA, CAA, and California Assembly Bill 1493). EPA is implicitly regulating fuel economy outside the scope of its statutory authority and CARB is implicitly regulating fuel economy in defiance EPCA’s express preemption.

As my colleague David Bier noted earlier this week, Browner negotiated the Historic Agreement in “put nothing in writing, ever” closed-door meetings that flouted Presidential Records Act and Federal Advisory Committee Act transparency provisions. And as I explain in a recent column, auto makers agreed to the ‘triplification’ of fuel economy regulation to escape an even worse regulatory fate – a market-balkanizing fuel-economy patchwork that EPA teed up when, defying EPCA, it authorized California and other states to adopt greenhouse gas emission standards, which are highly “related to” fuel economy.

The Alliance of Automobile Manufacturers once argued forthrightly that EPCA preempts California’s greenhouse gas emission standards. But that was before the Historic Agreement — and before the auto industry bailout and GM and Chrysler evolved into “Government Motors.”

If Congress ever overturns or merely limits EPA and CARB’s power grabs, it will largely be due to Chairman Issa’s unrelenting investigation of the administration’s fuel economy policies and related actions. On Monday, Issa sent a strongly-worded oversight letter to CARB Chairman Mary Nichols.

Issa’s letter faults Nichols for refusing to turn over documents relating to CARB’s role in negotiating model year (MY) 2012-2016 fuel economy standards, for “intentionally misleading” the Committee by erroneously suggesting there is a ”single national program” rather than at least two different standards (NHTSA’s and EPA/CARB’s), and for disingenuously denying CARB’s involvement in negotiating fuel economy standards despite the Committee’s possession of evidence that Nichols or her staff met with NHTSA officials on 116 separate occasions.

Issa’s letter also effectively rebuts Nichols’s assertion that CARB’s greenhouse gas emission standards are not “related to” fuel economy and, thus, are not preempted by EPCA. In her response to an earlier letter from Issa, Nichols asserted that regulation of fuel economy and greenhouse gases are “separate and independent” from each other, that the phrase “related to” in the EPCA preemption should be construed narrowly to prohibit states from adopting fuel economy standards, that a broader reading that would prohibit CARB from regulating greenhouse gases is a “legalistic contortion that defies common sense,” and that two district court decisions have “definitively rejected” such notions. Issa responds as follows (footnotes omitted):

I would respectfully suggest that CARB’s view of its regulatory authority of greenhouse gases not only overstates its legal certainty in this area and conflicts with the facts at issue here, but is itself a “legalistic contortion that defies common sense.” As you know, CARB has required automobile manufacturers to drop all litigation challenging CARB’s actions on the basis of the EPCA preemption indefinitely as a condition for CARB’s agreement to adhere to EPA’s greenhouse emission standards [thereby averting the market-balkanizing patchwork]. By insisting on this condition, CARB has deprived automobile manufacturers of the full protection of law. Insofar as CARB’s legal authority rests on two non-precedential decisions and CARB has obstructed further development of the law, CARB should not in good faith boldly proclaim the definitiveness of its legal authority.

Moreover, the facts here suggest that the overlap between greenhouse gas regulations and fuel economy regulations is so great that they are nearly indistinguishable. As you are aware, 95 percent of the reductions in greenhouse gases obtained through EPA’s greenhouse gas standards, which CARB has accepted as an adequate substitute for its own standard, are obtained through reductions in carbon dioxide. Fuel economy and carbon dioxide emissions are so closely related that tests for fuel economy are performed by measuring carbon dioxide emissions. Accordingly, the same control technology used to increase fuel economy is used to decrease 95 percent of all greenhouse gas emissions from vehicles. Nitrous oxide and methane emissions comprise less than one percent of total greenhouse gas emissions, and hydroflourocarbons, a refrigerant used in air conditioners, makes up the remainder of emissions. In fact, the relationship between greenhouse gas emissions and fuel economy is so close that in California’s commitment letter for MY 2012-2016, California agreed to allow manufacturers “to use data generated by [corporate average fuel economy] test procedures . . . to demonstrate compliance.” In light of these facts, your response that the regulation of fuel economy and greenhouse gases are not related lacks completeness and candor. These facts suggest that CARB — whether intentionally or not — is indeed regulating fuel economy.

In addition to these facts, in your own response to the Committee, you boast about the fuel savings that would result from CARB’s regulatory activities, stating: “Under this program, the U.S. will reduce its consumption of oil by 12 billion barrels . . .” The reduction in fuel consumption is not an accidental or indirect benefit of CARB’s regulatory activities. It is the expected outcome that results from increased fuel economy standards. Accordingly, it is abundantly clear that CARB’s regulation of greenhouse gases is “related to” the regulation of fuel economy within the meaning of EPCA. CARB cannot escape this conclusion simply by calling its fuel economy regulations by another name.

And if that is not enough to persuade you, dear reader, take a gander at CARB official Michael Kenny’s deposition in Central Valley Chrysler-Plymouth v. CARB, one of the two cases Mary Nichols cited as having “definitively rejected” the proposition that greenhouse gas emission standards are “related to” fuel economy standards:

In a sharply worded letter (August 11, 2011) to White House Counsel Kathryn Ruemmler, House Oversight and Government Reform Committee Chairman Darrel Issa (R-Calif.) contends that “the new Corporate Average Fuel Economy (CAFE) and EPA vehicle greenhouse gas (GHG) standards announced by President Obama and select automobile manufacturers on July 29, 2011, were negotiated in secret, outside the scope of law, and could generate significant negative impacts for consumers.”

Issa is also concerned “that the government’s ownership interest in General Motors and Chrysler at the time these negotiations were conducted creates a troublesome conflict-of-interest.”

Accordingly, Issa is launching ”an investigation into the activities of the Administration leading up to the agreement for new CAFE standards for model years (MY) 2017-2025.”

I won’t try to summarize Issa’s 8-page letter, which among other things developes a detailed case that the 54.5 mpg fuel-economy deal will adversely affect vehicle prices, consumer choice, vehicle safety, and, hence, automotive sales and auto industry jobs. This post will only discuss the legal issues that Issa spotlights. My concern here — as in numerous previous columns — is with bureaucratic ‘lawmaking’: the trashing of the separation of powers and democratic accountability in the illusory pursuit of climate stability and energy independence.

The first legal problem on which Issa focuses is the backroom, special-interest character of the fuel-economy deal itself. Citing Jeremy Anwyl, CEO of Edmunds.com, and Jack Nerad of Kelley Blue Book, Issa notes that although the Administration conferred with environmentalists, automakers, and union labor, there was no one at the table representing “the very consumers who will be asked to buy a new generation” of higher-priced vehicles. The 54.5 mpg standard was the product of an off-the-record political negotiation. From this point on, the rulemaking process will be a “mere formality” – a criticism also voiced by Amy Siden of the left-leaning, pro-regulatory Center for Progressive Reform.

The Administrative Procedure Act “does provide agencies with the option of conducting a negotiated rulemaking,” Issa observes, “however, such a process is subject to additional transparency requirements, such as those required under FACA [Federal Advisory Committee Act].” Team Obama did not avail itself of that option, which requires an agency head to: (i) determine that a negotiated rulemaking committee serves the public interest (5.U.S.C. § 563); (ii) publish in the Federal Register a notice listing the persons proposed to represent the affected interests, describing the agenda of the negotiation, and soliciting public comment on the foregoing (5.U.S.C. § 564); and (iii) keep minutes and records as required by FACA Sec. 10(b) and (c) (5.U.S.C. § 566). Needless to say, EPA and NHTSA, the lead agencies in the negotiation, took none of those steps.

Next we come to the elephant in the room. EPA and National Highway Traffic Safety Administration (NHTSA) are promulgating greenhouse gas (GHG)/fuel economy standards for model years (MYs) 2017-2025. This is “outside the scope” of NHTSA’s authority. The Energy Policy Conservation Act (EPCA) as amended [49 U.S.C. § 32902(b)(3)(B)] states that the Secretary of Transportation “shall . . . issue regulations under this title prescribing average fuel economy standards for at least 1, but not more than 5 model years.” The deal Team Obama brokered sets fuel economy standards over a nine-year period. There’s no fudging the discrepancy. No matter how hard or long the lawyers squint at the page, 5 does not mean 9.

In addition, 49 U.S.C. § 32902(f) obligates the Secretary to consider ”economic practicability” when setting fuel economy standards. “At this time,” notes Issa, “it is impossible for NHTSA to adequately consider economic practicality for fuel standards in MYs 2022-25, primarily because car manufacturers themselves do not have product plans for that year, and market conditions are unknown 14 years into the future.”

Well, then, is it in the scope of EPA’s authority to promulgate GHG standards for MYs 2017-2025? Issa’s letter doesn’t address this question. The 5-4 Massachusetts v. EPA Supreme Court majority would likely say yes. My answer is no. GHG standards are essentially de-facto fuel economy standards, because 94.9% of GHG emissions from motor vehicles is carbon dioxide (CO2) from the combustion of motor fuel (EPA/NHTSA Tailpipe Rule, p. 25424), and “there is a single pool of technologies for addressing these twin problems [climate change, oil dependence], i.e., those that reduce fuel consumption and thereby reduce CO2 emissions as well” (p. 25327).  The Clean Air Act provides no statutory authority to any agency to establish fuel economy standards. EPCA vests that authority solely in the Secretary of Transportation (i.e. NHTSA).

Finally, Issa asks for information about the California Air Resource Board’s (CARB’s) role in the negotiations. Some background here may be helpful.

In 2009, EPA worked hand-in-glove with CARB to break the auto industry’s will to resist the imposition of new federal GHG/fuel economy standards. EPA agreed to reconsider CARB’s request for a Clean Air Act waiver to establish its own GHG standards program. A baker’s dozen other states were poised to follow suit if California got the okay. As noted above, GHG standards chiefly function as fuel-economy standards. The waiver thus threatened to create a “patchwork” of state-by-state fuel-economy regimes, balkanizing the U.S. auto market. As originally designed, the CARB program would have ruined what remained of the financially distressed auto industry.

So in backroom negotiations honchoed by White House environment czar Carol Browner, auto companies agreed to support EPA and NHTSA’s “national” GHG/fuel economy program as the lesser regulatory evil, with  CARB and the other ‘California’ states agreeing to consider compliance with the EPA/NHTSA program as compliance with their own.

In his letter to the White House counsel, Issa challenges the legality of state-level fuel economy standards:

Do you believe that when Congress enacted Section 209 of the Clean Air Act [the provision under which EPA granted CARB a waiver], Congress intended California regulators to establish fuel economy standards for the national fleet, despite the express language contained in EPCA [49. U.S.C. 32919(a)], which declares that states “may not adopt or enforce a law or regulation related to fuel economy”?

And again:

Federal law explicitly preempts States from “adopt[ing] or enforce[ing] a law or regulation related to fuel economy standards . . .Since CARB is currently enforcing its own fuel economy/greenhouse gas (GHG) regulation (CA LEV [Low Emission Vehicle program]), please state your reason(s) why 49 U.S.C. 32919(a) is not being enforced?

Issa also inquires whether in 2011, Team Obama again used the threat of a CARB-spawned fuel-economy patchwork as political leverage:

California needs a Clean Air Act preemption waiver to enforce its fuel economy/GHG vehicle program for MY 2017-2025. Since CARB has predicated not enforcing its “patchwork” fuel economy regulation upon EPA’s future decision to grant a CAA waiver, has the Administration already privately committed to grant California such a waiver even before California has submitted a waiver request? Please explain the precise nature of any agreement beween the Administration and the State of California and/or CARB as it relates to the development and or administration of CAFE and EPA light-duty vehicle greenhouse gas standards for MYs 2017-2025.

Finally, Issa asks whether, besides possible regulatory intimidation by CARB, the Administration deployed selective financial inducements to line up auto industry support for the 54.5 mpg standard – in effect, making auto companies an offer they could not refuse:

Did the Administration commit to provide any auto manufacturer with federal assistance, either in the form of grants or loans, in consideration for their cooperation on the development of the CAFE and EPA light duty vehicle greenhouse gas standards for MYs 2017-2025?

In November 2009 and again in March 2010, Issa asked similar questions about the May 2009 Browner-led, backroom, “put nothing in writing, ever“ fuel-economy/GHG negotiations. Back then, Issa was committee ranking member. Today, he’s the chairman. Does that cut any ice with an administration steeped in Chicago-style politics?

This much seems likely. Issa’s investigation will build support for legislation, like the appropriations language sponsored by Rep. Steve Austria (R-Ohio), to deny EPA funds to develop GHG emission standards for MYs 2017-2025, or to consider granting CARB a waiver to do likewise.

The investigation might also lay the groundwork for litigation to challenge the 54.5 mpg standard. After all, when the authorizing statute says “not more than 5 model years,” how can NHTSA lawfully issue fuel-economy standards for nine years?

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.”

This post updates my June 14 post on the mantra intoned by EPA, the California Air Resources Board (CARB), and the National Highway Traffic Safety Administration (NHTSA) that EPA/CARB’s greenhouse gas (GHG) motor vehicle emission standards are “harmonized and consistent” with NHTSA’s fuel economy standards.

EPA Associate Administrator David McIntosh recently sent written responses to questions from House Energy and Commerce Committee members following up on a May 5, 2011 hearing entitled “The American Energy Initiative.”

In a nutshell, EPA defines “harmonized and consistent” as “whatever we say it is.”

The 2007 Energy Independence and Security Act (EISA) extended the Corporate Average Fuel Economy (CAFE) credit granted to manfacturers of flexible-fueled vehicles (FFVs), phasing it out in 2020. 

In his question to EPA, Rep. John Shimkus (R-Ill.) notes that EISA extended the FFV credit “specifically because Congress wanted to encourage the production of vehicles that can run on E-85 [motor fuel blended with 85% ethanol].” He further notes that EPA’s GHG emission standards program allows FFV credits “only during the period from model years 2012 to 2015.” After model year 2015, “EPA will only allow FFV credits based on a manufacturer’s demonstration that the alternative fuel is actually being used in the vehicles.” Congress included no such limitation in EISA.

Shimkus asks:

How can this rule be characterized as “harmonized and consistent” if the way EPA treats FFV [credits] is markedly different than the way Congress mandated FFV credits be treated under CAFE?

EPA’s response:

EPA treats FFVs for model years 2012-2016 the same as under EPCA [Energy Policy Conservation Act of 1975, which EISA amended]. Starting with model year 2016, EPA believes the appropriate approach is to ensure that FFV emissions are based on demonstrated emissions performance, which will correlate to actual usage of alternative fuels. This approach was supported by several public comments.”

Starting in 2016, EPA will not give an automaker a CAFE credit for building FFV vehicles unless the automaker can demonstrate that its customers actually use alternative fuels — a requirement not only not included in EISA but inconsistent with it. Several people submitting comments on EPA’s GHG standards supported this approach. And that, apparently, is all the justification EPA needs to override the policy set forth in law.

As discussed in my previous post, EPA’s deviation from EISA partly explains how it is possible for EPA’s GHG standards to reduce fuel consumption more than NHTSA’s CAFE standards, even though EPA, CARB, and NHTSA all profess to believe that GHG standards are not sub-rosa fuel economy standards.

So…

In 2016-2020, NHTSA gives credits for building FFVs.

In 2016-2020, EPA doesn’t give credits for building FFVs.

EPA defines the above two policies as harmonized and consistent.

And 2 + 2 = 5. 

As also discussed in the previous post, since automakers cannot comply with EPA’s GHG standards and also offset their CAFE standards with FFV credits, the two sets of standards are “harmonized and consistent” only in the sense that EPA’s rules trump both NHTSA’s rules and the CAFE program Congress authorized in 2007.

But this is getting into the weeds. The big picture is this. Motor vehicle GHG standards are almost 95% fuel economy standards by another name (because 94.9% of all motor vehicle GHGs are carbon dioxide from the combustion of motor fuel). This means that EPA can effectively tighten NHTSA’s fuel economy standards just by tightening its GHG standards. Yet the Clean Air Act provides no authority to EPA (or any other agency) to regulate fuel economy. And although EPCA/EISA authorize EPA to test automakers’ compliance with CAFE standards, those statutes reserve the authority to prescribe CAFE standards to NHTSA.

Among other questions, Shimkus asked: “Could the logical reason for Congress’s silence on FFVs in section 202(a) [of the Clean Air Act] be that Congress never envisioned the Clean Air Act would be used to regulate fuel economy?”

A rather straightforward question, yes? Unsurprisingly, it’s the one question from Rep. Shimkus that EPA Associate Administrator McIntosh chose not to address.

The California Air Resources Board (CARB) boasts that its greenhouse gas (GHG) emission standards save more fuel than the National Highway Traffic Safety Administration’s (NHTSA) Corporate Average Fuel Economy (CAFE) standards – but denies that GHG standards are fuel economy standards. Huh?

Well, of course, CARB denies it, because the Energy Policy Conservation Act (EPCA) prohibits states from adopting laws or regulations “related to” fuel economy.

But CARB has to trumpet the fuel savings from its GHG standards to attack H.R. 910, the Energy Tax Prevention Act. H.R. 910, says CARB, would make America more dependent on foreign oil by prohibiting CARB and EPA from adopting tougher GHG standards.

H.R. 910 opponents talk as if policymaking were a game in which the regulatory option with the biggest fuel savings wins. By that criterion, why not just let EPA and CARB impose a de facto 100 mpg CAFE standard and declare America to be “energy independent”?

If Congress thinks NHTSA’s standards don’t go far enough, there is a simple fix. Pass a law! What H.R. 910 opponents want is for EPA and CARB to legislate in lieu of Congress. That is neither lawful nor constitutional.

EPA, NHTSA, and CARB claim that EPA’s GHG standards for model year (MY) 2012-2016 passenger cars and NHTSA’s CAFE standards for those same vehicles are “harmonized and consistent.” Yet they also contend that NHTSA’s standards de-coupled from EPA’s standards would result in 25% more oil consumption over the lifetimes of those vehicles. How is that possible?

That’s the question House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) asked California Air Resource Board (CARB) Executive Director James Goldstene regarding the latter’s testimony at a hearing on H.R. 910, the Energy Tax Prevention Act. (The House passed H.R. 910 by 255-172. Although the bill failed in the Senate, where it fell 10 votes shy of the 60 needed to overcome a filibuster, sponsors say they’ll try to force additional votes in the future.)

H.R. 910 would stop EPA from ‘legislating’ climate policy under the guise of implementing the Clean Air Act (CAA), a statute enacted in 1970, years before global warming was a gleam in Al Gore’s eye. H.R. 910 would overturn all of EPA’s GHG rules except for the agency’s current GHG standards for MY 2012-2016 passenger cars and the agency’s proposed GHG standards for MY 2014-2018 heavy trucks. However, H.R. 910 would preclude EPA from setting new, tougher GHG motor vehicle standards in later years. Similarly, it would prohibit EPA from granting waivers to CARB to set tougher standards. But that means, opponents argue, that H.R. 910 would have the effect of making America more dependent on foreign oil.

Are the opponents correct? And even if so, is that a valid reason for allowing CARB to determine the stringency of national fuel economy regulation or for allowing EPA to dictate climate policy?

As noted, H.R. 910 would not repeal EPA’s MY 2012-2016 GHG emission standards (a.k.a. Tailpipe Rule) nor EPA’s proposed GHG standards for MY 2014-2018 medium- and heavy-duty trucks (a.k.a. Heavy Truck Rule). It’s not that the bill’s sponsors — Rep. Upton and Sen. James Inhofe (R-Okla.) — have any great fondness for those rules. Nor is it the case that Congress would have adopted those standards anyway via legislation. H.R. 910 would leave EPA’s current and proposed GHG motor vehicle standards in place because automakers and engine manufacturers have already made plans and investments to comply with them.

But that just means EPA is using the regulatory process to preempt congressional deliberation and narrow Congress’s policy options. Congress must act soon before stationary sources (power plants, steel mills, pulp and paper factories, refineries, cement production facilities) also spend big bucks complying with GHG-related “best available control technology” (BACT) standards and New Source Performance Standards (NSPS).

A common argument by opponents of H.R. 910 is that, even though it would leave intact NHTSA’s Energy Policy Conservation Act (EPCA) authority to establish Coporate Average Fuel Economy (CAFE) standards for new motor vehicles, NHTSA-only regulation would do less than joint EPA-NHTSA regulation to reduce U.S. oil consumption. Typically, opponents cite CARB’s estimate that stripping EPA’s portion out of the Tailpipe Rule would reduce fuel savings by 25% over the lifetimes of MY 2012-2016 vehicles.

CARB is by no means a disinterested bystander. EPA’s GHG standards are none other than the GHG standards CARB developed and EPA approved (in May 2009) via a waiver from federal preemption of state emission standards.

Here’s the puzzle for which Upton sought clarification. EPA, NHTSA, and CARB claim that EPA and NHTSA’s portions of the Tailpipe Rule are “harmonized and consistent.” Yet the agencies also contend that NHTSA’s portion of the Tailpipe Rule would reduce oil consumption by 58.6 billion barrels over the lifetimes of MY 2012-2016 vehicles whereas the complete rule including CARB/EPA’s GHG standards would reduce oil consumption by 77.7 billion barrels. How can this be?

In a letter dated March 11, 2011, but just now making the email rounds, CARB executive director Goldstene offers this explanation:

That the National Program [NHTSA + EPA] achieves greater emissions reductions and fuel savings than the CAFE standards alone is a result of the different underlying statutory authority that results in different program components. The four key differences are: 1) unlike the Energy Policy Conservation Act (EPCA), the CAA allows for the crediting of direct emission reductions and indirect fuel economy benefits from improved air conditioners, allowing for greater compliance flexibility and lower costs; 2) EPCA allows Flexible Fuel Vehicle (FFV) credits through model year 2019, whereas the EPA standard requires demonstration of actual use of a low carbon fuel after model year 2015; 3) EPCA allows for the payment of fines in lieu of compliance but the CAA does not; and 4) treatment of intra firm trading of compliance credits between cars and light trucks categories. 

Difference 1) doesn’t get us anywhere near the additional 19.1 billion gallons in projected fuel savings. According to the Tailpipe Rule, (i) carbon dioxide (CO2) emissions related to air conditioner-related loads on automobile engines account for only 3.9% of total passenger car GHG emissions (p. 25427), and (ii) various technologies could reduce air conditioner CO2 emissions by 10% to 30% (p. 24528). Even a 30% reduction of the 3.9% of motor vehicle emissions associated with air conditioner engine load would reduce oil consumption by only 1.1% — nowhere near the additional 25% fuel savings that supposedly depend on EPA’s GHG standards.

Differences 2) and 3) are likely the big factors. Per difference 2), automakers cannot comply with EPA’s GHG standards by manufacturing flexible-fueled vehicles. And per difference 3), automakers cannot pay fines in lieu of compliance with EPA’s GHG standards. 

Why do those differences have the effect of tighening fuel economy standards? Because EPA’s GHG emission standards are basically fuel economy regulation by another name! As EPA acknowledges, 94-95% of motor vehicle GHG emissions are carbon dioxide from motor fuel combustion. And as both EPA and NHTSA acknowledge, “there is a single pool of technologies for addressing these twin problems [climate change, oil dependence], i.e., those that reduce fuel consumption and thereby reduce CO2 emissions as well” (Tailpipe Rule, p. 25327). 

Because of differences 2) and 3), EPA will always be able to make NHTSA’s fuel economy standards more stringent than they would be if administered under the statutory scheme Congress created.

What this means, of course, is that the Tailpipe Rule is “harmonized and consistent” only in the sense that EPA and CARB are now calling the shots. The consistency and harmony is that of the first mate saying “aye aye, sir” to the captain. That should trouble a Congress jealous of its constitutional prerogatives, because Congress delegated the power to prescribe fuel economy standards to NHTSA, not EPA — and certainly not CARB.

EPA’s authority to set motor vehicle emission standards, and to grant CARB waivers to regulate motor vehicle emissions, comes from the CAA. The CAA confers no authority on any agency to regulate fuel economy. EPCA authorizes EPA to monitor automakers’ compliance with CAFE standards, but it delegates to NHTSA only the authority to prescribe CAFE standards.

Moreover, EPCA prohibits states from adopting laws or regulations that are even “related to” fuel economy standards. CARB’s GHG standards are massively “related to” fuel economy standards.

EPCA Sec. 32919 states:

a) General. – When an average fuel economy standard prescribed under this chapter is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under this chapter.

In his letter to Upton, Goldstene tries to explain why EPCA does not preempt CARB’s GHG standards:

CARB has never claimed that there is no relation between the pollution [CO2] emitted by burning fossil fuels and the rate at which they are burned [gallons of fuel consumed per distance traveled, i.e. fuel economy].  CARB merely maintains the fact that pollution control and fuel economy are not identical — fuel economy and pollution control regulations have different policy objectives, utilize different incentive and flexibility features, and there are technologies that reduce pollution that are not counted under fuel economy measures, and some fuel economy improvements do not reduce emissions commensurately.

That doesn’t cut it. Let me count the ways.

1. A GHG standard does not have to be “identical” to a fuel economy standard to be “related to” it.
2. CARB is hardly one to maintain that fuel economy and GHG standards “have different policy objectives” when CARB’s big selling point for GHG regulation is that it saves more fuel than CAFE standards do! 
3. The fact that CARB/EPA’s GHG standards utilitize “different incentives and flexibility features” is irrelevant. Neither GHG regulation nor fuel economy regulation is defined by those features and incentives. The CAFE program, for example, would still be a fuel economy program even if it did not allow for payments of fines in lieu of compliance or award credits for flex-fuel vehicle sales. 
4. Just because some technologies — e.g., improved sealants for automobile air conditioning systems — “are not counted under fuel economy measures” does not mean that the Tailpipe Rule does not chiefly regulate fuel economy. Only 5.1% of motor vehicle GHG emissions are due to leakage of air conditioner refrigerants (Tailpipe Rule, p. 25424), which means CO2 from motor fuel combustion makes up 94.9% of all motor vehicle GHG emissions. To repeat, there is a “single pool of technologies . . . that reduce fuel consumption and thereby reduce CO2 emissions as well.” Almost 95% of EPA and CARB’s GHG reductions come from fuel economy enhancements.
5. Because 5.1% of motor vehicle GHGs are leaked air conditioner refrigerants, ”some fuel economy improvements do not reduce emissions commensurately.” But fuel economy improvements do reduce emissions commensurately for 94.9% of all motor vehicle GHG emissions.

H.R. 910 opponents talk as if policymaking were a game in which the regulatory option with the biggest fuel savings wins. By that criterion, why not just let EPA and CARB impose a de facto 100 mpg CAFE standard and declare America to be “energy independent”?

If Congress thinks NHTSA’s standards don’t go far enough, there is a simple fix. Pass a law! What H.R. 910 opponents want is for EPA and CARB to legislate in lieu of Congress. That is neither lawful nor constitutional.

What should drive fuel efficiency? Select the answer you think is correct: 

(a) Government;

(b) Markets; or

(c) Please pass the sweet and sour shrimp.

If you chose (a), then go straight to www.allsp.com (Season 10) and watch my favorite South Park episode, “Smug Alert.”

If you chose (c), then you’re on your way to a promising career as a diplomat.

Today, on National Journal’s energy blog, I explain why the correct answer is (b).

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.