Appeals Court Forcefully Validates EPA's Emerging Program for Controlling Emissions of Greenhouse Gases

A unanimous panel of the U.S. Court of Appeals for the D.C. Circuit in Coalition for Responsible Regulation, Inc. v. EPA decisively affirmed against industry and state challenges EPA’s developing programs for regulating emissions of greenhouse gases. Those programs respond to the U.S. Supreme Court ruling in Massachusetts v. EPA, 549 U.S. 497 (2007) that greenhouse gases are an air pollutant subject to regulation under the U.S. Clean Air Act (CAA). As EPA moves ahead to implement the new programs, natural gas-fired and renewable generation will increasingly if not completely, displace new investment in coal-fired generation.

In direct response to the Massachusetts decision, EPA issued an Endangerment Finding for a single air pollutant defined as comprising an aggregate group of six long-lived and directly emitted greenhouse gases that are “well mixed” in the atmosphere and cause global climate change: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydroflourocarbons (HFC), perflourocarbons (PFC), and sulfur hexafluoride (SF₆). Affirming EPA,the panel explained that the CAA requires EPA to answer only two questions in connection with endangerment: whether greenhouse gas may reasonably be anticipated to endanger the public health and welfare and whether motor-vehicle emissions cause or contribute to that endangerment. These are scientific determinations, the court explained, that are not informed by “performing cost-benefit analyses, gauging the effectiveness of whatever emission standards EPA would enact, [or] predicting society’s adaptive response to the dangers or harms caused by climate change.”

The panel dismissed as “little more than a semantic trick” the petitioners’ complaint that EPA improperly “delegated” its scientific determinations to the Intergovernmental Panel on Climate Change (IPCC), the U.S. Global Climate Research Program and the National Research Council by relying on the research compiled and synthesized by those research bodies. The panel ruled that EPA “reviewed existing scientific evidence” that included syntheses of individual studies and research,” including 18,000 peer-reviewed scientific studies in the case of the IPCC. The panel rejected the petitioners’ argument that EPA itself was required to perform those studies: “EPA is not required to re-prove the existence of the atom every time it approaches a scientific question.” As to Texas’ complaint that EPA did not identify the atmospheric concentration that endanger public health or welfare, the panel held that such a threshold is not required by the CAA. The opposite is what is required: a case-by-case “sliding scale” that sounds the alarm as danger is approached.

Challenges to the Tailpipe Rule and the panel’s discussion of those challenges were brief, but consequential. The petitioners did not challenge the substance of the Tailpipe Rule, but instead argued that EPA arbitrarily and capriciously ignored the automatic consequence of setting this standard for new motor vehicle emissions of greenhouse gases: Once a standard is set for regulating the emissions of greenhouse gases from new motor vehicles, then EPA becomes obligated to also set a New Source Review performance standard and operating permits for major stationary sources of greenhouse gas emissions. EPA consideration of collateral costs associated with triggering standards for major stationary sources is not permitted, the panel ruled.

Industry petitioners challenged the scope of EPA’s authority to regulate stationary sources of the six “well-mixed” greenhouse gases. Major stationary sources of regulated pollutants — sources that emit over 100 or 250 tons per year (typ) of a regulated pollutant —must comply with performance standards under the New Source Review Prevention of Significant Deterioration of Air Quality (PSD) program and obtain operating permits under Title V of the CAA. To obtain a PSD permit, a covered source must install the best available control technology (BACT) to limit emissions of pollutants, which in the case of greenhouse gases will likely entail carbon capture and sequestration.

Industry petitioners challenge revolved around the fact that the major greenhouse gases, unlike most air pollutants regulated under the CAA, have much longer atmospheric lifetimes and can remain in the atmosphere for decades or even centuries. Greenhouse gases are thus a global, but not a regional or local pollution problem. While that is true, the panel rejected industry petitioner argument that the PSD program applied only to local or regional pollutants and not global atmospheric pollutants. It also rejected the related challenge that would have narrowed the applicability of the PSD program by imposing what the industry petitioners called a “pollutant-specific situs requirement,” which in translation meant that PSD requirements would not apply to greenhouse gases because EPA elected to regulate them under the motor vehicle provisions of the CAA (Title II) and not as criteria pollutants under the National Ambient Air Quality Standards (NAAQS, Title I). The principal reason for that choice was that the NAAQS control regional concentrations of criteria pollutants to protect health, which is a regional structure that does not lend itself to a pollutant that endangers human health or welfare because of its global atmospheric concentration. Noting these distinctions, the panel held that pollutants subject to the PSD program are not limited by the NAAQS.

Lastly, the panel determined that the petitioner— particularly the state petitioner — sustained no injury from the Timing and Tailoring Rules and consequently did not have Constitutional standing to challenge them. EPA adopted the Timing and Tailoring Rules to avert the administrative train wreck that would have resulted from immediate application to greenhouse gas emitters of the PSD and Title V permitting programs based on their respective 100/250 tpy and 100 tpy triggers. The Timing Rule defers the application of the PSD and Title V permitting programs for all but the largest emitters. And, in the Tailoring Rule EPA departed from the PSD 100/25 tpy thresholds. Instead, it will extend PSD and Title V permitting to new construction projects that emit at least 100,00 tpy of greenhouse gases and to modifications of existing facilities that increase emissions by at least 75,00 tpy. The two rules thus alleviate the burden flowing from the Endangerment Finding and petitioner are benefitted, not injured. The panel scoffed at the state petitioners convoluted contention that the Timing and Tailoring Rules, by preventing an administrative train wreck, preempted any Congressional response to amend the CAA to bar EPA from regulating greenhouse gases.