Will Supreme Court Review Of Greenhouse Rule Take Air Out Of EPA Regulatory Overreach?

Marlo, first of all, what potential significance does this Supreme Court decision to review the case have? Does it indicate evidence of a shift within the Court with regard to statutory boundaries of the EPA’s regulatory authority?

Larry, only time will tell. The Court’s grant of “certiorari” to reassess the lower court’s ruling could simply mean that some of the Justices want to end litigation attempting to roll back or limit the regulatory consequences of the Supreme Court’s earlier finding in Massachusetts v. EPA that the agency could determine that CO₂ was a pollutant subject to regulation under the Clean Air Act. Accordingly, the EPA then claimed regulatory authority premised upon claimed climate impacts asserted in its Endangerment Rule.

My hunch, though, is that the Court agreed to review the case because some Judges do have serious concerns about the legality of EPA’s regulation of greenhouse gas emissions from stationary sources. 

Bear in mind that this reassessment explicitly won’t address EPA’s May 2010 “Tailpipe Rule” which established first-ever greenhouse gas emission standards for motor vehicles, much less the December 2009 Endangerment Rule which represents the fountainhead of all greenhouse gas regulations. Still, a determination that nullifies EPA’s authority to regulate stationary sources can represent a major political and policy setback for EPA.

Overturning the Timing Rule would limit the EPA’s greenhouse regulations to mobile sources. EPA would have to mothball its big plans to impose greenhouse permitting requirements on new and modified power plants, steel mills, cement production facilities, paper and pulp factories and other large industrial installations. That would validate criticism that the agency is bent on expanding its power regardless of the law.

I’m not sure how much overturning the rule would help the economy, but it certainly would not hurt! It would avert regulatory burdens that hinder job creation and make U.S. firms less competitive. It would avoid at least some higher energy and production costs that regulated entities would pass on to consumers.

If the Court decision goes against the plaintiffs, does this mean “game over” insofar as future challenges to EPA’s greenhouse gas regulatory binge?

No, I don’t believe that is necessarily true. While many global warming crisis skeptics and limited government advocates continue to be terribly disappointed that the Court has declined to review either the Endangerment Rule or subsequent Tailpipe Rule, the case could still rekindle public and policymaker support for legislative action to rein in the agency and contain fallout from Mass v. EPA.

Even if the Court upholds the Timing Rule, petitioners and their allies can extract some political capital from the case.  A decision favorable to the EPA would confirm the urgency of ending “regulation without representation.” As you know, many constitutionalists and free-marketers view the EPA’s takeover of climate policy as a breach of the separation of powers. If the President submitted EPA’s greenhouse gas regulations to Congress as a legislative package, it would be dead on arrival.  Congress should have to approve major regulatory actions before they can become binding on the public.

Marlo, will overturning the Timing Rule have other legal consequences?

Maybe. If the Court overturns the Rule, several other EPA rules compelling States to include greenhouse gases in their permitting programs would become unenforceable or vulnerable to legal challenges. The decision might then create momentum for other litigation to roll back the EPA’s takeover of State environmental programs.

If the Court upholds the Timing Rule it will have lots of explaining to do. The Timing Rule is what triggers the “absurd results” and “administrative impossibility” that the EPA attempts to “tailor” away by playing lawmaker and amending the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction and Title V operating permits programs. If the Court upholds the Rule, it will have to explain how the Clean Air Act can be the statutory scheme Congress intended to regulate greenhouse gases – its conclusion in Mass. v. EPA –  and yet lead to extreme measures and absurd results when used for that purpose. Logically, the Court has to choose between Mass. v. EPA and the Timing Rule, unless it wants to take ownership of the bizarre notion that the Clean Air Act was wired from the start to self-destruct four decades later.

In your view, will the case re-open any issues in Mass. v. EPA even though the Court’s review narrowly focuses on the Timing Rule?

Maybe. It’s hard to imagine how the Court can review a rule that leads to “absurd results” and “administrative impossibility” without examining its opinion in Mass v. EPA opinion that an Endangerment Finding under Section 202 of the Clean Air Act won’t lead to “extreme” or “counterintuitive” measures, but only to a cost-constrained modification of the motor vehicle emission standards.

It’s not at all surprising that the Court drew that conclusion after petitioners assured them that mobile source provisions of the Clean Air Act (Title II) are separate from stationary source provisions (Title I).What the petitioners didn’t tell the Court is that, although separate, Title I and Title II are linked – especially as EPA reads the statute.

Marlo, please explain how they are “linked”.

Here’s where some more of that background history comes into the picture. Under EPA’s long-standing interpretation of the statute, reaffirmed in the Timing Rule, once any “air pollutant” is regulated under any part of the Act, “major” stationary sources are automatically “subject to regulation” under the Title I PSD preconstruction permit program and Title V operating permit program. Thus, when EPA’s Tailpipe Rule took effect on January 2, 2011, “major” greenhouse emitters became subject to PSD and Title V regulation. This leads straight to the extreme and counter-intuitive measures the Court assumed would not occur. Here’s why.

A source is defined as “major” under PSD if it has a potential to emit 250 tons per year of an air pollutant, and also “major” under Title V if it has a potential to emit 100 tons per year. Whereas only large industrial facilities emit 100-250 tons per year of smog-producing chemicals or particulate matter, literally millions of small non-industrial facilities – office buildings, hospitals, schools, restaurants, heated agricultural facilities, etc. – emit enough CO₂ to qualify as “major” sources.

EPA estimates that applying permit programs as written to greenhouse gases would increase the number of PSD applications from 280 to 81,000 (a 300 fold increase), and Title V permit applications from 14,700 to 6.1 million per year (a 400-fold increase). In order to process these applications, permitting agencies would have to spend an extra $21 billion annually to hire an additional 230,000 full-time employees. Otherwise, ever-growing bottlenecks would paralyze environmental enforcement and freeze economic development.  

Apparently that seemed to be a bit of an expansionary stretch even for EPA. And then what did they do?

To avert administrative disaster and a political firestorm, the EPA adopted its June 2010 Tailoring Rule which exempts all but the largest greenhouse emitters from PSD and Title V permitting. It does so by revising the “major” source applicability thresholds from 100-250 tons per year to 75,000-100,000 tons per year. In other words, to avoid a debacle of its own making, the agency effectively re-wrote the statute.

So, contrary to the Court’s expectation, the Endangerment Rule teed up several “extreme measures”: 1) an orders-of-magnitude increase in the number of firms subject to Clean Air Act permitting programs; 2) the application of complex and costly permitting requirements to small non-industrial facilities, contrary to congressional intent; 3) an overloaded permitting system that blocks construction activity throughout he land; 4) a multi-billion dollar expansion of environmental agencies that State governments can ill-afford, or alternatively, 5) EPA amendment (“tailoring”) of ambiguous statutory language –  a blatant exercise of legislative power.

So what’s the legal solution to this dilemma if the Court is not going to disavow its opinion that Congress authorized the EPA to regulate greenhouse gases?

Petitioners in Utility Air Regulation Group v. EPA argue that the PSD and Title V programs apply only to pollutants that affect public health and welfare by virtue of their local concentration, toxicity, or air quality impact. Since the harm allegedly posed by greenhouse gas emissions has nothing to do with local concentration or exposure, the permitting programs do not apply to them.

Whether petitioners win or lose, the review should occasion debate not only about the specific legal issues in the case, but also about the larger constitutional issue of whether an administrative agency should be dictating national policy on a legislatively-unsettled issue like climate change. The Court would not even be hearing this case if we had an accountable regulatory system in which the people’s representatives, not non-elected bureaucrats or activist judges appointed for life, make policy decisions.

Thanks Marlo. This ultimately puts the ball in the court of informed voters who will determine who those representatives are, and will expose them to some true human-caused heat.