A Green Light for Regulating GHGs under the Clean Air Act

In a resounding victory for sound science and policy, the US Court of Appeals decided unanimously this week to uphold both EPA’s finding that greenhouse gases endanger public health and welfare and the agency’s initial set of regulations limiting emissions from vehicles and major new and modified industrial sources.

Given the choice, we’d much prefer to see a new law establishing a comprehensive market-based program to reduce greenhouse gas emissions. But until Congress gets its act together, regulating emissions under the Clean Air Act is really the only option.

The four cases covered by the opinion are the culmination of an aggressively waged battle over EPA’s efforts to move forward under the Act as interpreted by the Supreme Court in Mass v. EPA. Indeed, a list of the petitioners (including many states and industry trade associations), respondents and interveners in these cases takes up the first 15 pages of an 82-page decision.

Drawing heavily on the Supreme Court’s landmark 2007 decision in Mass v EPA, the Court of Appeals swept aside both substantive and procedural attacks on EPA’s treatment of the climate science in its endangerment finding. For example, the court concluded that the leaked “Climategate” e-mails from East Anglia’s Climate Research Unit and two mistakes in the IPCC’s multivolume international assessment report were inconsequential. The court concluded that the petitioners have “failed to show that isolated ‘errors’ provide substantial support for their argument to overturn the endangerment finding.”

Among the other rules upheld by the court, those with the greatest direct impact – in terms of both emissions and costs savings – are the new emission standards for vehicles. The standards for cars and light trucks for model years 2012-2016 are expected to reduce GHG emissions by 950 million metric tons and save 1.8 billion barrels of oil. For a model year 2016 vehicle, greater fuel economy would save an owner more than $3,000 over the car’s lifetime.

EPA’s “tailoring rule” presented the most interesting legal issues for the court. The Clean Air Act requires that once a pollutant becomes regulated – which, in the case of greenhouse gases, occurred when the new standards for cars and light trucks took effect – “new source review” requirements automatically apply to all new or major modified “stationary” sources (factories and power plants). Under the Act, these requirements would ordinarily apply to any source with emissions of more than 100 or 250 tons per year depending on the source category. In the case of greenhouse gases, these thresholds would be exceeded by over 80,000 new sources annually, so EPA faced the dilemma of how to comply with the law but avoid the untenable requirements it seemed to impose.

In its tailoring rule, the agency made the case that administrative necessity required that it scale back its implementation and require that only the largest sources be subject to new source review. The court sidestepped a ruling on EPA’s reasoning by rejecting the standing of the plaintiffs on this issue. Essentially the judges held that the petitioners cannot prove “injury in fact” and therefore do not have standing to argue this point before the court. The court concluded that the tailoring rule effectively reduces the compliance burden on the petitioners, stating that if anything, tossing out the tailoring rule “would significantly exacerbate Petitioner’s injuries.”

Petitioners also argued that the Clean Air Act requires that only “criteria” pollutants (traditional air pollutants such as smog) be subject to the new source review requirements, and that EPA erred many years ago when it first applied these requirements to non-criteria pollutants like greenhouse gases. Based on its reading of the statute, the court upheld EPA’s application of new source review to “any air pollutant.”

With this decision, EPA is free to continue down the path of regulating greenhouses required of it under the existing Clean Air Act. The agency’s initial efforts will help reduce the risks and costs of climate impacts that we are already beginning to experience. But much more needs to be done. EPA must expand on its efforts, focusing on the many cost-effective opportunities that remain and working closely with states in implementation.

The court recognized, as we have argued before, that “the CAA is a regulatory scheme less-than-perfectly tailored to dealing with greenhouse gases.” While we can remain hopeful that Congress will one day act comprehensively to deal with this issue, the Court of Appeals got it right in fully supporting EPA’s efforts to begin this critical effort now under the existing law.