January 2012

Last week I posted several excerpts from EPA’s “Tailoring Rule,” which confirm that the Supreme Court, in Massachusetts v. EPA (April 2007), set the stage for an economically ruinous administrative quagmire.

To reiterate:

• EPA, in response to Mass v. EPA, proposes to establish greenhouse gas (GHG) emission standards for new motor vehicles.
• Once those standards are adopted, carbon dioxide (CO2) automatically becomes a “pollutant subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program.
• A firm must obtain a PSD permit in order to build or modify a “major emitting facility” defined as a source with a potential to emit 100 tons per year (tpy) of a regulated pollutant (if the facility is in one of 28 listed industrial categories) or 250 tpy (if the facility is any other type of establishment).
• A firm must obtain a Title V permit in order to operate a “major emitting facility” defined as a source with the potential to emit 100 tpy of a regulated pollutant.
• An estimated 1.2 million buildings and facilities — big box stores, office buildings, enclosed malls, even commercial kitchens — actually emit 250 tpy of CO2. Millions more have a potential to emit 100 tpy of CO2.
• EPA and state environmental agencies currently process approximately 280 PSD permits and 14,700 Title V permits annually.
• EPA estimates that permitting agencies would have to process 41,000 PSD permits and 6.1 million Title V permits annually for CO2 sources meeting the statutory definitions of “major emitting facility.”
• The enormous volume of permit applications would “immediately and completely overwhelm” EPA and its state counterparts, bringing the permitting process — and much economic activity along with it — to a screeching halt. 

In the Tailoring Rule, EPA proposes to suspend, over a six-year period, the PSD and Title V requirements for GHG sources emitting less than 25,000 tpy, on a CO2-equivalent basis. During the next five-years EPA will develop “streamlining” options enabling smaller and smaller sources to comply without going broke (we hope — currently the average PSD permit costs $125,120 and 866 burden-hours for a source to obtain). Oh yes, let me guess, EPA will also lobby Congress for exponential increases in staff and other “administrative resources.”

Although EPA does not put it this way, the Agency is proposing to amend the Clean Air Act. EPA invokes the judicial doctrines of  ”absurd results” and “administrative necessity” to justify this assertion (usurpation?) of legislative power.

In a later post, I may analyze the cases EPA cites to defend its proposal to flout clear and unambiguous statutory language. In today’s post, I simply want to excerpt passages from the Tailoring Rule showing how regulation of CO2 under the Clean Air Act as written, rather than as re-imagined, leads to absurd results — that is, produces insoluble conflicts between provisions of the Clean Air Act and generates outcomes contrary to congressional intent.

The gist of these excerpts is as follows. When Congress enacted the PSD and Title V provisions, it did not intend to create a paralyzing administrative quagmire. That, however, is what we’ll get if permitting agencies apply the PSD and Title V provisions as written to CO2. Sources that Congress never wanted EPA to regulate would be regulated, while others that Congress did want EPA to regulate would not be, due to the immense backlogs. The administrative morass would also create an enormous roadblock to economic development. Yet Congress wanted the Clean Air Act to enhance the nation’s productivity.

PSD

• CAA section 165(c) is particularly important in this regard. It requires that the permitting authority grant or deny “[a]ny completed permit application for a major emitting facility . . . not later than one year after the date of filing of such application.” A literal interpretation of CAA sections 165(a)(1) and 169(1) to apply at the 100/250 tpy levels would render compliance with this provision impossible by requiring far more permit applications than permitting authorities could process under the 12-month deadline … [p. 88]
• A literal interpretation of CAA sections 165(a)(1) and 169(1) to apply at the 100/250 tpy level would also be directly inconsistent with the PSD-purpose in CAA section 160, in particular, section 160(3), which is “to insure that economic growth will occur in a manner consistent with the preservation of existing clean air resources” . . . Because PSD is a preconstruction requirement, increasing permitting authorities’ workload from 300 to 41,000 permits would severely undermine this purpose of facilitating economic growth . . . Each year, many thousands of sources would face multi-year delays in receiving their permits, and as a result, for all practical purposes, they would be forced to place on hold their plans to construct or modify. [p. 89]
• . . . a literal application of the applicability provisions would lead to results that are diametrically inconsistent with Congress’s expressed intent . . . Congress was focused on sources of criteria pollutants — primarily sulfur dioxide (SO2), particulate matter, nitrogen oxides (NOx), and carbon monoxide (CO) — and not GHG emissions. This focus stems from the basic purpose of the PSD program, which is to safeguard maintenance of the NAAQS [national ambient air quality standards], combined with the limited awareness at the time of the problem of climate change. [p. 90]
• Congress designed the PSD provisions to impose significant regulatory requirements, on a source-by-source basis, to identify and implement BACT [best available control technologies] . . . Congress was well aware that because these requirements are individualized to the source, they are expensive. Accordingly, Congress designed the applicability provisions to apply these requirements to industrial sources of a certain type and size . . . Congress’s limitation of PSD to larger sources was quite deliberate, and was based on its determination to limit the costs that PSD permitting entails to larger sources in certain industries . . . ”facilities, which due to their size, are financially able to bear the substantial regulatory costs imposed by the PSD provisions and which, as a group, are primarily responsible for emissions of the deleterious pollutants that befoul the nation’s air” [quoting Alabama Power v. Costle; pp. 90-91]
• However, applying the 100/250 tpy threshold literally to CO2 emissions would frustrate congressional intent by subjecting to PSD sources that Congress specifically intended not to include. [p. 95]
• . . . the extraordinary number of sources subject to PSD would preclude the permitting authorities from processing permit applications for all sources, including those Congress intended to subject to PSD. Because PSD is a preconstruction program, those sources would face many years of delay before they could construct or modify, which would undermine congressional [intent] to allow economic growth in PSD areas. [p. 100]

Title V

• . . .a literal application of the 100 tpy threshold requirement in CAA sections 502(a), 501(2)(B), and 302(j) would be in tensions with a specific CAA requirement, that of CAA section 503(c), which imposes a time limit of 18 months from the date of receipt of the completed permit application for the permitting authority to issue or deny the permit. It would be flatly impossible for permitting authorities to meet this statutory requirement if their workload increases from 14,000 permits to 6.1 million. [p. 101]
• As noted elsewhere, Congress intended through Title V to facilitate compliance [with other Clean Air Act requirements] by establishing an operating permit program that requires the source to combine in a single permit all of its CAA requirements. [p. 101] [However] . . . the great majority of these [6.1 million] sources will not be subject to any CAA requirements, so that although they would need to apply for and receive a permit, there would be no applicable requirements to include in the permit and the exercise would not improve compliance. [p. 103]
• Thus, as with PSD, a literal interpretation of the Title V threshold provisions would apply Title V to millions of sources that Congress did not intend be covered, and the ensuing administrative burdens — at least initially — would impede the issuance of permits to the thousands of sources that Congress did intend be covered. [p. 104]

What would be funny about all of this, if the threat to our economic and constitutional system of separation of powers did not loom so large, is the spectacle of EPA carefully tip-toeing around the real source of the absurd results: Mass. v. EPA.

It’s not only the case that Congress did not intend to apply PSD and Title V to small entities. Congress never intended for EPA to control CO2 emissions under the Clean Air Act!

The one limited exception (which occurred after Mass v. EPA was decided) is the renewable fuel standard (RFS) established by the 2007 Energy Independence and Security Act (EISA). The RFS mandates the sale of renewable fuels, which must achieve specified percentage reductions in GHG emissions, based on a life-cycle analysis, compared to petroleum-based fuels. However, section 210(b)(12) of EISA makes clear that the RFS does not establish precedent for any additional regulation of CO2 under any other provision of the Clean Air Act:

Nothing in this subsection, or regulations issued pursuant to this subsection, shall affect or be construed to affect the regulatory status of carbon dioxide or any other greenhouse gas, for purposes of other provisions (including section 165 [i.e., the PSD program] of this Act [i.e., the Clean Air Act].  

Conclusion

EPA writes as if Congress, when it enacted or amended the Clean Air Act, somehow inserted malicious code — the regulatory equivalent of a computer virus — into the text of the statute. This self-destruct program, we are to suppose, was lurking in there all this time. Then all of a sudden, the dormant bug became active, and now the Clean Air Act is going haywire, working at cross purposes with itself, subverting congressional intent, and imperiling the nation’s economic future. Therefore, EPA must step in, play lawmaker, and amend the Act.

And if you believe any of that, dear reader, I’ve got a bridge to sell you!

As I said in my earlier post, when a court decision leads to absurd results, there are only two possibilities. Either (1) the absurdity was embedded in the statute from the beginning, and the court just brought it to light. Or (2) the court manufactured the absurdity by mis-reading of the statute.

The absurdities EPA’s Tailoring Rule describes exists only by virtue of the Massachusetts Court’s agenda-driven decision. The real issue in Mass. v. EPA, which the Court never addressed, was whether Congress, when it enacted and amended the provision in dispute — section 202 of the Clean Air Act — in 1970 and 1977, intended for EPA to apply the Act as a whole, including PSD and Title V and the NAAQS program, to carbon dioxide for global warming purposes. To ask this question is to answer it.

Moreover, as I explain in my comment (pp. 28-23) on EPA’s endangerment proposal, the Court’s entire argument rests on a tortured reading of the Clean Air Act definition of ”air pollutant,” in section 302(g).

Here’s the semantic game the Court majority employed to empower EPA to Kyotoize the U.S. economy: (i) The EPA has authority to regulate air pollutants; (ii) an “air pollutant” is anything “emitted” into or otherwise entering the air; (iii) carbon dioxide is emitted; ergo (iv), EPA has authority to implement regulatory climate policy.

The lynchpin of the argument is step (ii). Justice Scalia quipped that under the majority’s reading of 302(g), anything airborne, “from Frisbees to flatulence,” qualifies as an air pollutant. It’s actually worse than that. On the majority’s reading, even totally clean air, air that is 100% pollution-free, is an “air pollutant” if it is “emitted” into or otherwise enters the ambient air. That is absurd. From absurd premises come absurd results.