June 27, 2012
In a searing and trenchant per curiam opinion (Coalition for
Responsible Regulation et al. v. EPA, No. 09-1322, June 26. 2012), the U.S.
Court of Appeals for the DC Circuit unequivocally denied all challenges to EPA’s
greenhouse gas (GHG) regulations, setting the stage for a potential rematch of
the parties before the Supreme Court.
Numerous companies, trade associations and states had filed challenges to
various aspects of the EPA’s actions and rulemakings. The opponents challenged
EPA’s finding that GHGs (including CO2, methane and four other compounds) were
collectively an “air pollutant” that potentially endangered human health and the
environment (“Endangerment Finding”) as well as, its regulation of GHG emissions
from the automotive sector through the “Tailpipe Rule” and its limitation of the
scope and impact of regulating GHG emissions from stationary sources through the
Timing and Tailoring Rules.
These challenges were consolidated into one matter and the court heard
numerous days of oral arguments. The DC Circuit drew on the plain language of
the Clean Air Act (CAA) and the Supreme Court’s application of that language to
GHG emissions in Massachusetts v. EPA, (2007) to thoroughly eviscerate
all challenges and leave the rules intact.
The opinion focused primarily on EPA’s actions to regulate GHGs under Section
202 because that issue led to the Supreme Court’s decision in Massachusetts.
The Court held that GHG could be considered “air pollutants” under Section 202
and that the CAA therefore required EPA to evaluate as a scientific matter
whether the emission of GHG caused or contributed to environmental endangerment.
As a result, the DC Circuit easily rejected claims that the Endangerment
Finding was improper for failing to consider the policy implications of
regulating GHG under the CAA. The court noted that the plain language of the CAA
and the Supreme Court’s interpretation of that language in Massachusetts
precluded consideration of policy issues in the context of the Endangerment
Finding.
The court also rejected claims that the scientific record used by the EPA in
support of its Endangerment Finding was inadequate. The court noted the
extensive range of climate science documents reviewed by EPA and rejected claims
that this material was somehow lacking, stating, “This is how science works.”
The court refused to second-guess EPA’s scientific findings or its ability to
make those findings in the face of scientific uncertainty. The court held that
the CAA’s requirement for EPA to act if the air pollutant “may reasonably be
anticipated to” cause an endangerment allowed the EPA to be proactive and
“precautionary.”
Turning to the Tailpipe Rule, the court noted that the state and industry
challengers did not challenge the rule for how it regulated mobile sources but
for the impact of that rule on subsequent requirements for stationary sources.
The court denied claims that EPA had the authority to avoid automatic
requirements to regulate stationary sources as a result of the issuance of the
Tailpipe Rule. The court also rejected challenges to the EPA’s scientific
findings in crafting these rules.
The court then turned to the larger issue for petitioners, which was the
impact of the adoption of the Tailpipe Rules on GHG requirements for stationary
sources. In its Timing Rule, EPA had determined that GHGs became “regulated air
pollutants” on January 2, 2011, when the Tailpipe Rule began to impose
requirements on car manufacturers. Consistent with longtime EPA interpretations,
EPA stated that when GHGs became regulated air pollutants, the CAA required
major stationary sources to consider GHG emissions in seeking preconstruction (“PSD”)
or operating (“Title V”) permits. In the Tailoring Rule, EPA sought to limit the
application of these permitting requirements to those emitting more than 100,000
tons of GHG per year.
Industry and state challengers attacked the longtime EPA interpretation of
the CAA, linking the identification of a regulated air pollutant and permit
requirements for major sources. Yet the court held that both the plain language
of the CAA and the Supreme Court’s finding in Massachusetts required the
determination that GHGs were subject to the CAA as “air pollutants.” The court
rejected attempts to interpret the CAA term “air pollutants” in different
contexts to exclude GHGs, finding that the attempts were not supported by the
CAA.
Finally, in what may prove to be the most controversial part of the opinion,
the court refused to hear challenges to the Tailoring Rule, holding that the
state and industry challengers were not injured by the rule and therefore had no
standing. The court pointed out that the Tailoring Rule was intended to limit
the impact of GHG regulation only to the largest emitting sources and as a
result no petitioner could identify any injury it might suffer as a result of
the rule. It specifically rejected Texas’ claim that it was injured, because any
reduction in impact from the rule would lessen the probability that Congress
would make changes to limit EPA’s authority to regulate GHGs, generously terming
the argument too speculative. As a result it did not address the key issue of
whether the CAA authorized the EPA to essentially modify the statutory
definition of “major sources” to limit the application of the permitting
requirements.
Despite the significance of the opinion, the court actually broke no new
legal ground. It consistently grounded its findings in the language of the CAA
and in Massachusetts. In contrast to Massachusetts, the court
included no sweeping declaration regarding the importance of GHG controls and
the need to address climate change. It affirmed EPA’s scientific determinations
on these issues, but did so on the very traditional grounds that Congress gave
EPA broad authority to make those decisions and the courts are not empowered to
second-guess EPA. While the finding that state and industrial petitioners lacked
standing to challenge EPA rules was completely consistent with Supreme Court
precedent requiring close scrutiny of standing of individuals and groups
claiming injury as a result of environmental rules, it was unusual in that this
scrutiny is more typically applied to environmental groups than to business
trade associations.
Of more lasting significance perhaps was the court’s willingness to clearly
state that EPA is authorized to act proactively and take steps that were
“precautionary” even in the face of scientific uncertainty. While the court’s
statement was tied to specific CAA language and court precedent, it also
appeared to be a veiled statement on the debate regarding the “precautionary
principle.” As asserted by the environmental community, this principle requires
government to curtail business activity unless it can be proven that the
activity is safe. This is generally not consistent with the current regulatory
framework, which allows and permits most activity even if the ultimate risks are
unknown. While the court’s decision evinced no effort to revolutionize the
current regulatory scheme, the court also sought to point out that Congress
clearly gave EPA the power to act even without complete certainty that its
actions would be useful or even necessary.
While the decision will certainly be appealed, Supreme Court review is far
from certain. The circuit court grounded much of the decision in
Massachusetts and it would be unusual, even for this Court, to take a case
for the purpose of reversing a relatively recent decision in which most of the
current members of the Court participated. This was also an absolute victory for
the EPA, and the Obama Administration would certainly and strongly oppose any
petition for certiorari. Yet the issue remains highly controversial and will not
be resolved until the Supreme Court announces its decision of whether to take
the case.
McGuireWoods LLP Clean Air Act Team
McGuireWoods LLP is a full service law firm with a focused practice in
climate change and Clean Air Act matters. For more information on the final
light duty vehicle rule or EPA's initiatives to regulate greenhouse gases,
please contact the authors, or any member of our
Clean Air Act team.