EPA Climate Regulations Survive The Courts And Face The Elections

Michael B Gerrard of Arnold & Porter LLP explains how political and economic factors have led to legislative paralysis concerning climate change regulation, and the impact of resulting litigation on future legislative developments.

Michael Gerrard

The United States Congress has not passed a major piece of new environmental legislation since 1990. The stark political divisions in the country, coupled with fears that new rules would harm a fragile economy, have led to legislative paralysis. This has meant that the US Environmental Protection Agency (EPA) has had to make do with statutory authorities that were designed decades ago, with entirely different problems in mind.

Climate change is a prime example. During the presidency of George W Bush, the environmental community became so frustrated at the failure of both the administration and Congress to take action that they resorted to the courts. This led to the seminal judgment of Massachusetts v EPA, issued in 2007 by the United States Supreme Court, which ruled that greenhouse gases (GHGs) fall within the definition of “air pollutant” in the Clean Air Act of 1990, and that the EPA has the authority to regulate them. Not much happened as a result of this ruling for the balance of the Bush presidency, but when Barack Obama took office in January 2009, things swiftly changed.

On 7 December 2009, EPA administrator Lisa Jackson issued a landmark determination that six key GHGs constitute a threat to public health and welfare, and that the combined emissions from motor vehicles cause and contribute to climate change. This “Endangerment Finding” paved the way for climate regulation without further action from Congress. Then the EPA quickly issued new regulations on GHG emissions from both stationary sources (such as power plants and factories) and mobile sources (such as motor vehicles).

This led to a barrage of litigation brought by several industries, individual companies and those states that are opposed to GHG regulation. More than 100 petitions in all were filed. All were combined for argument before the US Court of Appeals for the District of Columbia Circuit under the rubric Center for Responsible Regulation v EPA. The court held a highly unusual two days of argument on 28 and 29 February 2012, before a packed courtroom.

On 26 June 2012, the court ruled. It unanimously upheld all of the EPA’s challenged actions:

• the Endangerment Finding that GHG emissions endanger public health or welfare;

• the Tailoring Rule, which narrows permitting requirements to the heaviest emitters, and not the many millions that exceed the extremely low thresholds that would ordinarily apply to stationary sources;

• the Tailpipe Rule, which allows the development of carbon standards for light duty vehicles (in addition to fuel efficiency standards); and

• the Timing Rule, which provided that GHG standards for stationary sources did not take effect until the light duty vehicle standards took effect (1 January 2011).

The judges found that the Endangerment Finding was amply supported by the scientific evidence, and that the Tailpipe Rule necessarily followed because the Clean Air Act requires the regulation of motor vehicle emissions that cause endangerment. The court stated that the EPA’s interpretation of the Clean Air Act was “unambiguously correct”. The court then concluded that industry petitioners had no standing to challenge the Tailoring and Timing Rules. The Tailoring Rule reduced rather than increased the number of facilities whose GHG emissions are regulated, and thus no company would be hurt by its rescission. The Timing Rule delayed the effective date of the rules, and thus it also hurt no company.

The case clears the way for the EPA to proceed with its proposed rules to regulate CO2 emissions from new power plants, to issue draft rules for CO2 emissions from existing power plants and from other new and existing stationary sources, and to press ahead with new vehicle emission standards for model years after 2016, when the rules that have just been upheld expire. Still further challenges are likely to be made, but their odds of success have dimmed considerably, though some state-specific challenges may be plausible. The challenges with the greatest chance of broad-ranging success are in the political arena, not the courts. At the most extreme, a change of administration combined with a Republican House and 60 votes in the Senate could see the Clean Air Act itself at risk. But if the Democrats have as much power after the November 2012 election as before, the EPA is likely to continue with its programme of GHG regulation. Facilities that are covered by the new rules must install best available technology (BACT) for GHGs. BACT is determined – mostly by the states – on a case-by-case basis, based on a process that considers available technologies, technical feasibility, cost-effectiveness and other factors. Most of the permits that have been issued so far under this programme have focused on energy efficiency as the way to reduce facilities’ GHG emissions. The EPA is issuing guidance to the states to help them make BACT determinations.

One of the rules that is likely to go forward is the EPA’s proposed air-pollution emission standards for new fossil fuel-fired power plants. The proposal cannot be met by coal-fired power plants unless they have carbon capture and sequestration, a technology that is not yet in commercial application. Natural gas-fired power plants can readily meet these standards, however. New coal-fired power plants were already under siege as a result of low natural gas prices and a variety of other environmental regulations, and this new rule would further help ensure that no new ones are built in the US until carbon capture and sequestration becomes commercially available.

The Court of Appeals’ decision has additional significance. The plaintiffs mounted the strongest attack they could on the climate science underlying the Endangerment Finding and all of GHG regulation. For example, they complained about the very small number of errors that have been found in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), and they claimed that the EPA had blindly followed the IPCC’s findings, wrongfully delegating their authority. The EPA vigorously rejected this argument, saying that they critically reviewed the IPCC’s reports and voluminous additional studies. The Court of Appeals was not persuaded by the industry arguments, and instead praised the EPA for the thoroughness of its studies of GHGs and their impact.

This decision continues an unbroken streak for climate science in the courts. Hundreds of lawsuits on climate change have been filed in US courts. Not a single judge, in a written opinion or dissent, has expressed scepticism about the existence and dangers of anthropogenic climate change. Many courts have refused to engage with the issue, finding various legal doctrines that prevent them from doing so. A few have acknowledged the existence of controversy, but none have embraced the sceptics’ arguments. There has been one fully fledged trial on climate science, with sworn expert witnesses on both sides (in a case on Vermont’s adoption of motor vehicle emission standards); the court sided with the environmentalists’ experts. The Court of Appeals decision will make it even more difficult for climate sceptics to gain a foothold in their efforts to acquire the courts as allies.

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