No matter how one measures it — the number of suits filed, lawyers involved, pages of briefs, hours of oral argument, dollars at stake — the legal challenges to the U.S. Environmental Protection Agency’s greenhouse-gas rules are about as big as they come.
To business groups, the EPA’s efforts to regulate emissions of six greenhouse gases are nothing short of “the most significant and far-reaching regulatory program ever devised by a federal agency,” according to court papers. The groups call the rules an abuse of discretion, undertaken without regard for costs or benefits.
As for the EPA, it says it was persuaded by scientific data showing the gases trap heat in the atmosphere and contribute to global warming, including rising sea levels and more extreme weather. Once the EPA found the gases were a danger to human health and welfare, the agency said it had little choice but to issue a domino-like series of regulations covering emissions from motor vehicles, then “stationary sources” like power plants and factories.
The parties squared off last week in a grueling two-day hearing before the U.S. Court of Appeals for the D.C. Circuit. Eighteen lawyers — 10 for the EPA and eight for petitioners — faced uniformly tough, even withering, questions from the panel — Chief Judge David Sentelle (“What the devil are you getting at?”; “That doesn’t even make good nonsense!”) and judges David Tatel and Judith Rogers.
The court appeared inclined to uphold the EPA’s basic finding that greenhouse gases endanger human health and welfare — the linchpin for subsequent regulations. “The court made it clear they are not going to re-decide climate science for themselves,” said Dina Kruger, former head of the EPA’s climate change division, speaking on an Environmental Law Institute panel after the argument. Indeed, moderator David Hunter of the International Emissions Trading Association said he doubted any of the 100-plus audience members gathered at Jones Day for the discussion expects that finding to be vacated.
MOST DIFFICULT ISSUE
Perhaps the most difficult issue before the court — the one that the EPA had the hardest time defending — is how much the agency can change the plain language of the Clean Air Act to avoid an absurd result.
The act requires permits for entities that emit 100 to 250 tons of pollutants per year. Currently, several hundred facilities have such permits, which compel them to use the best available technology to reduce pollution. But if that standard were applied to greenhouse gases, about six million entities would need permits, from restaurants to apartment buildings to small farms.
The EPA concluded that was an absurd result. Thousands of new workers would have to be hired to process permits, and the backlog of applications would stretch for years. So it raised the threshold for greenhouse gases to 100,000 tons per year.
To some extent, Sentelle sounded sympathetic to the EPA’s predicament. “Do they just have to throw up their hands and do nothing if they don’t have enough assets to regulate?” he asked Jonathan Mitchell, solicitor general of Texas, one of 15 states challenging the rules. Mitchell argued that the EPA “can’t depart from the specific, unambiguous language of numerical thresholds” and that the rules should be struck down.
The court seemed more intrigued by a suggestion from Sidley Austin partner Peter Keisler, who represents the National Association of Manufacturers, that the EPA could have interpreted the law in a way that didn’t require rewriting it — even if the result was that no new entities would have to get permits.
“EPA crossed the line from statutory interpretation to statutory revision,” Keisler said. “I think the agency is obliged to look at whether the prior interpretation that drove it to the precipice really was compelled.”
Tatel ran the notion by EPA counsel Perry Rosen. “What if there are two equally plausible interpretations of an ambiguous statute, and one interpretation does not require the agency to invoke the absurd-results doctrine,” Tatel asked. “Are you free to take the absurd-results one?”
Rosen, a lawyer with the Justice Department, resisted answering the hypothetical, instead insisting, “You have to adopt the EPA doctrine.…The alternative interpretation offered by petitioners subverts congressional purpose.”
But Rogers stressed — and her colleagues agreed — that invoking the absurd-results and administrative-necessity doctrines should only be “a last resort” for any agency.
The 94 suits challenging the regulations were consolidated into four cases, Coalition for Responsible Regulation Inc. v. EPA. The dispute has its roots in 1999, when 12 states along with environmental groups petitioned the EPA to regulate greenhouse gases from motor vehicles under Section 202(a)(1) of the Clean Air Act.
The EPA under George W. Bush declined to do so, arguing it did not have the authority and, even if it did, it would be unwise to exercise it. The groups sued, and in 2005, the D.C. Circuit sided with the EPA.
The 2005 panel included Sentelle and Tatel, with Sentelle concluding that the petitioners lacked standing to sue. Tatel, however, dissented, and found that the EPA had the authority under the Clean Air Act to take action.
The case, Massachusetts v. EPA, went to the U.S. Supreme Court, which in 2007 reversed the D.C. Circuit. The high court determined that greenhouse gases fit within the Clean Air Act’s definition of air pollutants, and that the EPA has the authority to regulate them. The court then ordered the EPA to determine if greenhouse gases presented a danger.
The specter of the Massachusetts decision loomed large over the proceedings last week. “For the court, it’s back to the future,” said Environmental Law Institute President John Cruden at the panel discussion. “The Supreme Court decision is the 11th commandment.”
On Dec. 15, 2009, the EPA, now headed by Barack Obama appointee Lisa Jackson, found that six gases — carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride — endangered health and welfare.
The endangerment finding imposed no burdens; it’s simply a finding. But it led directly to the EPA’s next regulation, limiting emissions of greenhouse gases for new cars and trucks beginning with model year 2012.
Sentelle said he was “frankly disturbed” that two of the gases in the endangerment finding — perfluorocarbons and sulfur hexafluoride — aren’t actually emitted by cars and trucks. He repeatedly questioned how the agency could use the tailpipe rule to “include something that doesn’t come out of a tailpipe.” He said, “Where do you get the power…to include gases not emitted by motor vehicles?”
The EPA argued that all six gases combine in the atmosphere and have the same effect. EPA lawyers also stressed that no real-world entity would be subject to regulation because it emitted those gases but not the others.
Overall, the “tailpipe rule” is something of the odd man out in the proceedings. Reached after painstaking negotiations, the rule is supported by the auto industry, which favors it because it creates a uniform national standard for emissions instead of a patchwork of federal and state requirements.
Indeed, Ray Ludwiszewski, a partner at Gibson, Dunn & Crutcher who represents a coalition of automakers, argued in court as an intervenor on behalf of the EPA. “None of the petitioners are directly regulated by the tailpipe rule they challenge,” he said. “The industries that are regulated — my clients — are here supporting the EPA.”
A RIPE CLAIM?
Even those suing to overturn the tailpipe rule don’t focus on its merits, but rather on what it triggers. Under the EPA’s reading of the Clean Air Act, once greenhouse gases are regulated via the tailpipe rule, that automatically makes emissions from stationary sources subject to regulation as well. It’s those entities — power plants, factories and heavy industries such as mining, cement and petrochemical refining — that are keen to avoid new EPA regulations.
The EPA, in essence, says it has no choice. The Clean Air Act “requires the automatic application” of the permitting requirement (known as “prevention of significant deterioration”) for “any pollutant that is regulated under any provision” of the act, according to court papers. The EPA stresses that it has used this interpretation for 30 years.
EPA counsel Amanda Berman told the court that it’s too late for petitioners to challenge that interpretation now. “The argument should have been raised at the time the rule was promulgated,” she said.
The court was skeptical. “They didn’t have a ripe claim until they were injured,” Sentelle said. Added Tatel, “Not until now do we have a petitioner before us who a) challenges the historic interpretation and b) is injured by it.”
Sidley’s Keisler argued that the EPA “took a critical wrong turn 30 years ago,” and that the agency doesn’t actually have to require new permits just because it’s regulating greenhouse gases from cars.
Stationary sources that already have permits because they release other pollutants would have to comply with greenhouse-gas controls, he said. Doing so would cut emissions by 83 percent, compared with an 86 percent reduction under the EPA’s scheme. “It isn’t a whole lot of difference in a concrete, practical sense, but it’s a huge difference in separation of powers,” he said.
EPA counsel Rosen protested this was no solution. “Not a single extra permit would be issued,” he said. “Your job is to determine if the EPA came up with a rational interpretation of the statute.…The most important thing is implementing congressional intent.”
Jenna Greene can be contacted at firstname.lastname@example.org.