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D.C. Circuit Upholds EPA Greenhouse Gas Regulations

July 5, 2012

[1] 

On June 26, 2012, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit (the “Court”) unanimously upheld the U.S. Environmental Protection Agency’s (“EPA”) finding that greenhouse gas emissions endanger public health, and let stand the EPA’s so-called “Tailpipe Rule,” which applies greenhouse gas emissions standards to mobile sources. The court also dismissed, for lack of standing, challenges to the EPA’s regulation of major stationary sources. As a result, the EPA’s permit requirements for greenhouse gas emissions will continue to apply to those stationary sources that emit more than 100,000 tons per year (“tpy”) for newly-constructed sources, or 75,000 tpy for modified sources.[2]

In its April 2007 decision, Massachusetts v. EPA[3], the U.S. Supreme Court determined that greenhouse gases (“GHGs”) are air pollutants covered by the Clean Air Act (“CAA”), requiring the EPA to consider whether GHGs threaten public health and welfare. The EPA subsequently issued an “Endangerment Finding,” stating that GHGs “may reasonably be anticipated to endanger public health or welfare.” Based on this finding, the EPA established new emission standards (fuel economy of 35.5 miles per gallon by 2016) for light trucks and cars under the Tailpipe Rule. Next, the EPA determined that the CAA requires major stationary sources of GHGs to obtain construction and operating permits. However, because regulation of stationary sources would potentially subject more than 1.6 million facilities to permit requirements, the EPA decided to issue the so-called Timing and Tailoring Rules[4]. These rules initially limit permitting requirements to those stationary sources with greenhouse gas emissions exceeding 100,000 tpy for newly-constructed sources or 75,000 tpy for facility modifications.

Various state and industry groups, challenged the Endangerment Finding and each of the new rules before the Court. The Court concluded that the EPA’s Endangerment Finding was consistent with the U.S. Supreme Court’s decision in Massachusetts v. EPA and constituted a proper assessment of the available scientific evidence on GHG impacts. The Court rejected petitioners’ argument that the scientific evidence was not sufficiently clear to justify the EPA’s Endangerment Finding. In doing so, the Court noted that a precautionary statute such as the CAA cannot require a “rigorous step-by-step proof of cause and effect” without becoming more remedial than preventive in nature. The Court found that, although the EPA did not quantify a threshold at which greenhouse gas emissions threaten public health, the agency is not required to “set a precise numerical value as part of an endangerment finding.” As a result, the Court held that the EPA’s Endangerment Finding was not arbitrary and capricious.

In upholding the Tailpipe Rule, the Court rejected arguments that the EPA must show that the new standards would mitigate a threat to public health, and that the agency’s duty to regulate mobile emissions is only discretionary. Although the EPA could not demonstrate how the Tailpipe Rule mitigates the harm of mobile greenhouse gas emissions, the Court determined that the regulation need not be “premised upon factual proof of actual harm.” Rather, the Court required only evidence of a significant contribution to the harm, as demonstrated in its Endangerment Finding. The Court also pointed out that Massachusetts v. EPA clarified that the EPA’s duty to regulate under the CAA is not discretionary and cannot be deferred to another agency with similar authority to control emissions.

Finally, the Court dismissed petitioners’ challenges to the Timing and Tailoring Rules for lack of standing. The Court found that the Timing and Tailoring Rules not only failed to cause petitioners any injury, but that the rules actually mitigated potential injuries by placing more parties outside the scope of the permit requirements. Additionally, the Court found “speculative” the argument that Congress would take action to provide petitioners with relief if the rules were vacated.

Although petitioners are likely to appeal the decision, prospects for the U.S. Supreme Court granting certiorari are not considered good following the unanimous decision of the Court. In the meantime, the EPA’s current greenhouse gas emissions regulations for mobile and stationary sources will continue to apply and, on June 29, the EPA issued final regulations at 40 CFR Part 52 codifying its Tailoring and Timing Rules as part of its Prevention of Significant Deterioration (“PSD”) program. It is expected that efforts to amend the CAA so as to limit GHG regulation will continue in the House but thus far any such measures have been rejected by the Senate.

[1]The authors gratefully acknowledge the assistance of summer associate Dimijian Harout.
[2]The decision, Coalition for Responsible Regulation, Inc. v. EPA, is available at http://www.cadc.uscourts.gov/internet/opinions.nsf/52AC9DC9471D374685257A290052ACF6/$file/09-1322-1380690.pdf.
[3]549 U.S. 497 (2007).
[4]See our prior Alert: “EPA Tailoring Rule” (Oct. 8, 2009).