Massachusetts v. EPA

TCEQ to EPA: Don’t Mess with Texas

by Marlo Lewis on August 6, 2010

in Global Warming, Legal

In a blistering letter published earlier in the week, the head of Texas’s environmental agency and the State’s attorney general told the U.S. Environmental Protection Agency (EPA): ”Texas has neither the authority nor the intention of interpreting, ignoring, or amending its laws in order to compel the permitting of greenhouse gas regulations.”

The letter, by Texas Commission on Environmental Quality (TCEQ) Chairman Bryan Shaw and Attorney General Gregg Abbott, comes hard on heels of EPA’s denial of 10 petitions (including one from the State of Texas) to reconsider EPA’s endangerment rule. That rule — the agency’s response to the Supreme Court’s 5-4 decision in Massachusetts v. EPA – is both trigger and precedent for potentially dramatic and far-reaching Clean Air Act restrictions on fossil energy production and use.

More pertinently, Shaw and Abbott sent their letter on August 2, 2010, the deadline EPA had set in its Final Tailoring Rule (p. 31582) for States to explain how they plan to apply Clean Air Act permitting programs to stationary sources of greenhouse gases. Instead, the Texas officials all but told EPA to go jump in the lake. 

Tailoring Absurdity

EPA adopted the Tailoring Rule to fix a problem of its own making. By adopting the endangerment rule, EPA obligated itself to establish greenhouse gas emission standards for new motor vehicles. The standards make carbon dioxide (CO2) a “regulated air pollutant,” which in turn makes any “major stationary source” of CO2 “subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. 

The problem is that literally millions of  hitherto unregulated entities qualify as “major” sources of CO2 under those programs. The “major” source “applicability threshold” for PSD is a potential to emit 250 tons per year (tpy) of a regulated air pollutant. The threshold for Title V is even lower — a potential to emit 100 tpy. Whereas only large industrial facilities emit bona fide air pollutants in those quantities, millions of small entities never before subject to Clean Air Act permitting requirements — big box stores, office buildings, apartment complexes, restaurants, hospitals, schools — emit CO2 in the threshold amounts.

Applying the Clean Air Act to greenhouse gases thus produces what EPA itself describes as “absurd results.” For example, EPA and its State counterparts would have to process an estimated 41,000 PSD permits per year (up from 280) and 6.1 million Title V operating permits per year (up from 15,000). The ensuing “permit gridlock” would clog up environmental enforcement, stifle new construction, and force millions of firms to either operate illegally or close down. All on President Obama’s watch; all in the midst of a deep recession.

Rather than draw the reasonable conclusion that Congress did not intend to regulate greenhouse gases via the Clean Air Act, EPA decided that Congress must have intended for the agency to ”tailor” — that is, amend — the Act so the agency can regulate greenhouse gases without wrecking the economy. So, while the law specifies 100/250 tpy as the applicability thresholds for the permitting programs, the Tailoring Rule sets the cutoff at 100,000 tpy over the next two years and at not less than 50,000 over the next six years.

In addition, under the Tailoring Rule, modifications to an existing source won’t be considered “significant” — that is, won’t trigger the PSD process — unless the changes increase emissions by 75,000 tpy.

The Texas environmental chairman and AG aren’t buying it:

You have declared that EPA’s decision to enact automobile tailpipe emission limits for greenhouse gases pursuant to Title II of the federal Clean Air Act renders such gases immediately ”subject to regulation” for all purposes under the Act, including Title I Prevention of Significant Deterioration (PSD) pre-construction permitting program  and the Title V operating permit program. Simultaneously, however, you recognize that permitting greenhouse gases under the Act is “absurd.” . . . We agree.

They continue:

In order to avoid the absurd results of EPA’s own creation, you have developed a “tailoring rule” in which you have substituted your own judgment for Congress’s as to how deep and wide to spread the permitting burden.

And a bit later:

Instead of acknowledging that congressionally set emission limits [applicability thresholds] preclude the regulation of greenhouse gases, you instead re-write those statutorily-established limits . . . .

Problem Unsolved

Okay, now we get to the meat of the matter. PSD and Title V are mostly administered by States, not by EPA, and most State Implementation Plans (SIPs) define “major” emitting facility exactly as the Clean Air Act does. This means that even if the Tailoring Rule shields small entities from PSD and Title V regulation by EPA, it would not shield them from regulation by State agencies. EPA discussed this problem in its Proposed Tailoring Rule (p. 33542). ”Virtually all of [the EPA-approved SIPs] establish the PSD permitting threshold at the 100/250-tpy level,” EPA noted. Indeed, ”a few States have adopted lower permitting threshold levels.” In addition, “virtually all EPA-approved SIPs establish the significance level” for modifications triggering PSD “at zero” emissions in the case of previously unregulated air pollutants — not at 10,000 tpy, as EPA initially proposed, much less at 75,000 tpy, as the Final Rule stipulates.

Initially, EPA proposed to withdraw federal approval from those portions of SIPS incorporating the older thresholds and significance levels. This would mean, however, that the lower thresholds would “remain on the books under State law, and sources therefore remain subject to them as a matter of State law” (Proposed Tailoring Rule, p. 55343). In short, the regulatory nightmare would continue. For further discussion, see Peabody Energy’s comment on the Proposed Tailoring Rule.

Of course, States have the option to revise their SIPs and amend their clean air laws. But that could take years. Thus, notwithstanding EPA’s “tailoring,” small entities would find themselves “subject to regulation” under State PSD and Title V requirements on January 1, 2011, when the agency’s greenhouse gas tailpipe emission standards go into effect. As the Final Tailoring Rule observes, “Commenters stated that States would need to undertake a regulatory and/or legislative process to change the threshold in their state laws which they could not complete before the laws would otherwise require issuance of operating permits to GHG sources” (p. 31583).

Semantics Rule?

So what is EPA’s solution? Instead of changing the definition of “major stationary source,” EPA is changing the definition of “subject to regulation.” The agency, “by interpretation,” now defines “subject to regulation” as not including a “major source” of greenhouse gases unless the source has a potential to emit 100,000 tpy on a CO2-equivalent basis. EPA crows that “we find no substantive difference” between how the initially-proposed rule and how the final rule “tailors” the permitting requirements. EPA says that States similarly, “by interpretation,” can redefine “subject to regulation,” allowing them to exempt small sources from PSD and Title V without changing their SIPs or laws: 

Whether we add [higher] GHG thresholds directly to the definition of “major source” (as we proposed), or alternatively, expressly add and define the term “subject to regulation” [so that it only applies to sources emitting at least 100,000 tpy], both approaches revise the definition of “major source” to implement the Tailoring Rule. Accordingly, we adopt the later approach to facilitate state implementation of the final rule through an interpretation of existing state part 70 programs.

If you are confused as to how redefining “subject to regulation” can produce the same substantive result as redefining “major source” yet not similarly require States to change their SIPs or laws, you are not alone. It’s this attempt to turn law into a semantic game that the Texas officials refuse to play.

They write:

In the Tailoring Rule you have asked TCEQ to report to you by August 2, 2010 whether it would “interpret” the undefined phrase “subject to regulation” in TCEQ Rule 116.12 consistent with the newly promulgated definition of EPA Rule 51.166 in all its specifics and particulars. . . .In other words, you have asked Texas to agree that when it promulgated its air quality permitting program rules for pollutants “subject to regulation” in 1993, that Texas really meant to define the term “subject to regulation” as set forth in the dozens of paragraphs and sub-paragraphs of EPA Rule 51.166, first promulgated in 2010.

TCEQ Rule 116.12 was last amended in 2006. It “adopts” the Clean Air Act “by reference” — but only as the Act existed at the time of adoption. To adopt subsequent changes made by EPA, TCEQ would have to amend Rule 116.2 through a formal rulemaking process. Adopting such changes by mere act of “interpretation” would delegate more authority to EPA than the Texas Constitution allows.  

In addition, the Texas officials argue, “TCEQ is also precluded from adopting EPA’s newly-minted definition of “subject to regulation” by the “express terms of the Texas Government Code, which requires public notice of agency rulemaking.” They explain:

When the TECQ promulgated Rule 116.12 in 1993, or even when it last amended the rule in 2006, it had no intention of enacting a permitting program for greenhouse gases. Consequently, TCEQ had no reason to (nor did it) give public notice of any such intent. Obviously, Texans concerned with greenhouse gas permitting could not have known to participate and comment on the decision to require permits for pollutants “subject to regulation” in 2006, when the EPA first discovered greenhouse gases were “subject to regulation” in 2010. It should go without saying that the nearly infinite expansion of Texas’ permitting programs to include greenhouse gases with no state-level rulemaking at all would not satisfy Texas or federal law requiring notice and an opportunity to be heard.

Of course, one could say that the whole point of the Supreme Court’s decision in Massachusetts v. EPA, which pushed the agency to issue an endangerment rule, and the ensuing cascade of CO2 controls was to bypass the democratic process and confront the public with regulatory fait accompli.

Another Bite at the Apple?

It will be interesting to see how all this plays out. If Texas sticks to its guns, EPA may simply take over the Texas PSD program, in whole or in part, through a federally-imposed Federal Implementation Plan (FIP). Florida, for example, told EPA it could not make the regulatory changes in time, so EPA would just have to take over the Florida program. EPA reportedly is working on a “backstop rule” authorizing the agency to take over State permitting of greenhouse gases on a temporary basis (Environmental NewsStand, August 5, 2010, subscription required).

However, what if Texas still refuses to cooperate? Would EPA sue? Such a case might work its way up to the Supremes. The Court might then have to face the core issue it ducked in Mass. v. EPA – whether Congress intended for EPA to regulate greenhouse gases under the Clean Air Act as a whole, including PSD, Title V, and the national ambient air quality standards (NAAQS) program. The Court would have an opportunity to reconsider Mass. v. EPA in light of the absurd results to which it has led. A long shot — but a consummation devoutly to be wished.

Another Oldie But Goodie: Mark Mills 1998 CO2 Compliance Burden Study

by Marlo Lewis on May 4, 2010

in Global Warming

In the interest of ensuring public access to climate-related documents that may be hard to find, I am posting here the original, June 1998 study by technology analyst Mark P. Mills of the sprawling compliance burdens of EPA regulating carbon dioxide (CO2) as an air pollutant under the Clean Air Act (CAA).

The study, entitled A Stunning Regulatory Burden: EPA Designating CO2 As A Pollutant, estimated that applying CAA permitting requirements to CO2 would compel EPA to regulate over 1 million small- and mid-size businesses.

In September 2008, Mills and his daughter Portia updated the study for the Chamber of Commerce in a report entitled A Regulatory Burden: The Compliance Dimension of Regulating CO2 as a Pollutant.

Although superceded by the later report, the June 1998 report remains highly relevant to the climate policy debate.

A Stunning Regulatory Burden was a direct response to the April 1998 Memorandum by then EPA General Counsel Jonathan Z. Cannon asserting EPA’s authority under the Clean Air Act to regulate CO2 and other greenhouse gases (GHGs). Petitioners in Massachusetts v. EPA partly relied on the Cannon memorandum to press their claim that EPA had a statutory obligation to issue an endangerment finding and regulate GHG emissions from new motor vehicles under Sec. 202 of the Act.

Most importantly, the June 1998 Mills study reminds us that EPA had to know all along that a victory for petitioners in Massachusetts v. EPA would dramatically expand its regulatory reach beyond any plausible delegation of regulatory authority from Congress.

Yet during all the years when the case was being litigated (Sep. 2004 – April 2007), EPA never pointed out the regulatory ramifications of a victory for petitioners. Only long after losing case, in its Advanced Notice of Proposed Rulemaking (July 2008) and Tailoring Rule (October 2009), did EPA acknowledge that the endangerment finding tees up the very sorts of regulatory excesses Mills warned about a decade earlier. 

The 5-4 majority in Mass v. EPA decided in favor of petitioners partly in the belief that an endangerment finding would not lead to ”extreme measures” (p. 531). But according to the Tailoring Rule, unless EPA “tailors” — that is, amends — the CAA, the endangerment finding will lead inexorably to a host of “absurd results” that conflict with and undermine congressional intent.  

The question arises: Why didn’t EPA explain this when it really mattered? Why did EPA pull its punches in Mass. v. EPA? Why didn’t EPA make the case that the endangerment finding sought by petitioners would lead a regulatory cascade that Congress never intended and would not approve?

I think the answer is obvious. For EPA, losing the Massachusetts case meant gaining the power to regulate fuel economy for the auto industry and, more importantly, the power to determine climate and energy policy for the nation. Strong circumstantial evidence suggests that EPA wanted to be thrown into the greenhouse briar patch all along.

Politics is Conflict

by Fred Smith on May 3, 2010 · 1 comment

in Energy, Environment

In Massachusetts vs. EPA, the Supreme Court sided with a group of Green States seeking to impose draconian energy rationing schemes on America.  A few states have access to non-carbon energy sources (hydro-power or older nuclear power) and, thus, can reward their ideological majorities at lower cost.  But most Americans will become poorer as energy prices sky rocket.   With EPA moving aggressively toward mandating this new power, restricting energy use throughout the nation, conflict will surely erupt among the states of the union.

One of the most creative features of our Constitution was its concept of competitive federalism.  States were to be the laboratories of democracy.  The goal was not to impose national uniformity but to allow states to try different ideas – as long as those policies did not harm interstate voluntary exchanges. 

The Massachusetts decision harmed that arrangement as did the 1857 Dred Scott decision, which forced northern states to enforce southern slavery rules.  The concept of ensuring voluntary interstate commerce had little to do with the coercive institution of slavery but the recognition that slaves were “property” was stretched to force non-slave states into policies that they viewed as harmful and immoral.  Non-slave states responded by enacting laws nullifying that decision, refusing to allocate funds for its implementation and eventually to the Civil War.

The impact of Massachusetts is different but perhaps as significant.  Religious Malthusians are determined to enforce their Puritanical vision on America.  They are most powerful in a handful of coastal states and seem very willing to use federal coercion to force their beliefs on middle America.  States are already moving to enact laws and resolutions to oppose this push.  And as the lights go out and plants are shuttered throughout America, we may find ourselves moving toward greater conflict here too.  The prospect is worrisome.

Murkowski Resolution — A Constitutional Imperative

by Marlo Lewis on March 30, 2010

in Global Warming

Today on MasterResource.org, the free-market energy blog, I explain how EPA, by granting the California waiver, finding endangerment, and perhaps even by pulling its punches in the Massachusetts v. EPA Supreme Court case, has positioned itself to regulate fuel economy, set climate and energy policy for the nation, and amend the Clean Air Act – powers never delegated to the agency by Congress. 

It is time to rein in this rogue agency. The Congressional Review Act Resolution of Disapproval introduced by Sen. Lisa Murkowski (R-AK) is the way to do it.

What Happens If Congress Blocks EPA?

by Marlo Lewis on March 9, 2010 · 2 comments

in Global Warming

That’s the topic of this week’s National Journal energy blog. In my contribution, I argue that EPA has been playing a mischievous game that endangers democracy, and that Sen. Lisa Murkowski’s legislation to veto the agency’s endangerment finding would remove this threat. 

In a Feb. 22 letter to Sen. Jay Rockefeller (D-WV), EPA Administrator Lisa Jackson warns that enactment of the Murkowski legislation would scuttle the joint EPA/National Highway Traffic Safety Administration (NHTSA) greenhouse gas/fuel economy rulemaking, which in turn would compel the struggling auto industry to operate under a “patchwork quilt” of state-level fuel-economy regulations.

Ms. Jackson neglects to mention that the patchwork threat exists only because she, reversing Bush EPA Administrator Stephen Johnson’s decision, granted California a waiverto implement its own GHG/fuel economy program. Had Jackson reaffirmed Johnson’s denial, there would be no danger of a patchwork, hence no ostensible need for the joint EPA/NHTSA rulemaking to avert it.

As my blog post explains, EPA should not have approved the waiver in the first place. The California GHG/fuel economy program violates the Energy Policy and Conservation Act, which prohibits states from adopting laws or regulations “related to” fuel economy. Worse, the waiver creates a reverse right of preemption whereby states may nullify federal law within their borders — an affront to the Supremacy Clause. 

Specifically, the waiver would allow California, and other states opting into the California program, to nullify within their boundaries the reformed national fuel economy program that Congress enacted in the 2007 Energy Independence and Security Act (EISA). That leads straight to a patchwork of state-by-state compliance regimes inimical to a healthy auto industry.

The game EPA is playing is a classic case of bureaucratic self-dealing.

First, EPA endangers the U.S. auto industry by authorizing states to flout federal law and the Constitution. Then, EPA proposes to avert disaster via a rulemaking that just happens to put EPA in the driver’s seat in regulating fuel economy – a power Congress never delegated to EPA when it enacted and amended the Clean Air Act.

Nor is that all. The joint GHG/fuel economy regulation will compel EPA to regulate CO2 from stationary sources – another power Congress never delegated to EPA. By expanding its control over the transport sector, EPA will then have to expand its control over manufacturing, power generation, and much of the commercial and residential sectors, too, because all emit CO2.

In addition, the motor vehicle GHG rule sets the stage for EPA to “tailor,” that is amend, the Clean Air Act so that the agency can delay imposing pre-construction and operating permit requirements on small business, which would surely ignite a political backlash.

So thanks to the endangerment finding, EPA not only gets to play in NHTSA’s fuel-economy sandbox, and extend its tentacles throughout the economy, it also gets to play lawmaker, violating the separation of powers.

In light of all the new powers EPA now expects to wield, it is hardly surprising that EPA never made the strong case against Clean Air Act regulation of CO2 in Massachusetts v. EPA. Here’s what EPA should have argued:

  • EPA cannot regulate GHG emissions from new motor vehicles under Sec. 202 of the Clean Air Act without regulating CO2 under the Act as a whole. 
  • Aplying the Act as a whole to CO2 leads ineluctably to “absurd results” that contravene congressional intent.
  • Therefore, Congress could not have intended for EPA to regulate GHG emissions under Sec. 202.

Did EPA throw the fight in the 11th round? I dunno, but losing the Massachusetts case was surely sweet victory to those in the agency who long to regulate America into a ”clean energy future.” The Massachusetts decision laid the groundwork for EPA to deal itself into a position to bypass the people’s elected representatives, impose its will on the auto industry, and, in time, dictate national climate and energy policy.

What happens if Congress enacts Sen. Murkowski’s resolution, nixes the endangerment finding, and mothballs the GHG/fuel economy rule? The authority to make law and national policy returns to where the framers of the Constitution intended — the people’s elected representatives.

Will Congress protect the economy and the Constitution from Mass. v. EPA?

by Marlo Lewis on January 8, 2010

in Global Warming, Legal

In this two-part post on MasterResource.Org, the free-market energy blog, I argue that the EPA’s proposed Tailoring Rule is a temporary, legally questionable, and incomplete antidote to Massachusetts v. EPA’s legacy of “absurd results.”
 
Here is the gist of the column:
 
Congress did not intend to apply the Clean Air Act’s preconstruction permitting (PSD) and Title V operating permits programs to small entities, did not intend for those programs to implode under their own weight, did not intend for PSD to stop development, and did not intend for Title V to undermine Clean Air Act compliance.
 
However, those are the inexorable consequences of the greenhouse gas endangerment finding and motor vehicle emission standards that the Court authorized and indeed pushed EPA to make. To avoid this mess, which would likely produce a fierce political backlash against EPA and the Obama administration, the Agency now proposes via the Tailoring Rule to amend the PSD and Title V programs.
 
This breach of the separation of powers only compounds the constitutional crisis inherent in the Court’s attempt to legislate global warming policy from the bench.

Even if the Tailoring Rule survives judicial scrutiny despite its flouting of clear statutory language, it will provide no defense against Mass. v. EPA’s most absurd result: regulation of carbon dioxide under the National Ambient Air Quality Standards (NAAQS) program.

Congress must step up to the plate and either overturn Mass. v. EPA, overturn the endangerment finding, or, at a minimum, prohibit EPA from regulating carbon dioxide from stationary sources.

EPA’s Tailoring Rule: A Temporary, Legally Dubious, and Incomplete Antidote to Massachusetts v. EPA’s Legacy of Absurd Results

by Marlo Lewis on December 28, 2009 · 1 comment

in Global Warming, Legal

Today, I submitted a comment on EPA’s proposed Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule.  The gist of my argument is as follows:

In Massachusetts v. EPA, the Supreme Court legislated from the bench, authorizing and indeed pushing EPA to control emissions of greenhouse gases (GHGs) for climate change purposes. This is a policy decision of immense economic and political magnitude that Congress never intended or approved when it enacted and amended the Clean Air Act (CAA or Act).

Regulating GHGs under the CAA leads inexorably to “absurd results,” including an economically-chilling administrative quagmire. To prevent GHG regulation from overwhelming agency administrative resources and stifling economic development, EPA proposes to suspend, for six years, the “major” source applicability thresholds for the CAA pre-construction and operating permits programs. That is, EPA proposes to amend the Act. This violation of the separation of powers compounds the constitutional crisis inherent in the Court’s substitution of its will for that of the people’s elected representatives.

The small-business protections proposed in the Tailoring Rule are temporary, legally dubious, and incomplete. Even if courts uphold the Tailoring Rule, despite its flouting of clear statutory language, it will not avert the most absurd result of the Court’s misreading of the CAA:  regulation of carbon dioxide (CO2) and other greenhouse gases under the National Ambient Air Quality Standards (NAAQS) program.

EPA runs enormous political risks leading the charge for GHG regulations not approved by Congress. It is in the Agency’s best interest not to oppose legislative action to overturn the endangerment finding and Mass. v. EPA.

The full text of my comment is available here.

Barton Or Bust! How to Stop Mass. v. EPA from Wrecking the Economy

by Marlo Lewis on December 17, 2009 · 1 comment

in Global Warming, Legal

Rep. Joe Barton (R-TX), ranking member of the House Energy and Commerce Committee, announced today that he plans to introduce a “resolution of disapproval” to overturn the Environmental Protection Agency’s (EPA’s) recently finalized endangerment finding on greenhouse gases.

This is  huge. It means that Republicans are going to insist that climate and energy policy be made by the people’s elected representatives rather than by non-elected judges, litigators, and bureaucrats. It means that EPA regulation of carbon dioxide (CO2) under the Clean Air Act (CAA or Act) will be an issue in the 2010 elections. It means that citizens will be able to hold accountable — and punish at the ballot box — any Member of Congress who votes against Barton’s resolution of disapproval and in favor of the compliance burdens, rising energy costs, and litigation risks to the economy that EPA regulation of CO2 unavoidably entails.

In a press release issued today, Barton stated:

“I want to announce that I and others on the Republican side will ask the House of Representatives to consider and pass a resolution strongly disapproving the discreditable decision by the Obama administration to outlaw carbon dioxide and with it, millions of jobs in America.

“The Environmental Protection Agency’s endangerment finding plainly was intended to make the president’s policies look good in advance of his visit to the Copenhagen global warming conference, not to advance any public good in America, but it also has policy implications that threaten serious damage to the economy for generations to come.

“The EPA’s finding accurately reflects the thousands of candid, outrageous e-mails that EPA’s allies in the global warming community sent to each other by demonstrating that public relations priorities rather than straightforward science are driving U.S. policymaking on global warming, and no where did anyone demonstrate a whiff of concern for who pays the bill or how they earn their living.

“Everybody also understands that the endangerment finding is supposed to prod Congress into resuscitating cap-and-trade legislation that is dying from overexposure to public scrutiny. The social cost of this public relations effort, however, will dwarf the hundreds of billions of dollars already spent by the most profligate administration in history.

“Worst of all, the policy envisioned by the Obama administration will treat the recession by committing the country to living with fewer jobs instead of more, and to taking even more money out of the pockets of those lucky enough to have jobs so that radical environmentalists can wage a war against nature.

“Congress has the right and the responsibility to nullify the decisions of the bureaucracy when they run counter to the people’s interests, and a formal Resolution of Disapproval is fully warranted in this instance.”

Why is EPA inaugurating a regime of global warming regulations that Congress never voted for or approved?  Because the Supreme Court, in Massachusetts v. EPA (April 2007), decided to legislate global warming policy from the bench.

In Mass. v. EPA, eco-litigation groups, led by a baker’s dozen state attorneys general, attempted to do an end run around Congress and impose Kyoto-like policies on the U.S. economy through judicial fiat. They found five willing accomplices on the Court, who essentially ruled that Congress authorized EPA to regulate GHGs for climate change purposes when it enacted the CAA in 1970 — decades before global warming became a public concern. The Court’s decision — an affront to common sense — all but ensured that EPA would issue an endangerment finding for greenhouse gases. That, in turn, would compel EPA, under CAA Sec. 202, to establish first-ever GHG emission standards for new motor vehicles.

However, what none of the principals in the case bothered to mention, is that once EPA adopts the GHG motor vehicle standards sought by plaintiffs, CO2 automatically becomes a pollutant “subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. Under the CAA, firms must obtain a PSD permit in order to construct or modify a “major emitting facility,” and a Title V permit in order to operate such a facility. A facility is major under PSD if it is in one of 28 categories and has a potential to emit 100 tons per year (TPY) of a regulated pollutant, or 250 TPY if it is any other type of establishment. A facility is major under Title V if it has the potential to emit 100 TPY of a regulated pollutant. As it happens, millions of previously unregulated buildings and facilities — office buildings, apartment complexes, big box stores, enclosed malls, heated agricultural facilities, small manufacturing firms, even commercial kitchens — emit enough CO2 to meet these thresholds.

EPA estimates that if PSD and Title V are applied as written to CO2 sources, the number of PSD permit applications per year would jump from 280 to 41,000, and the number of Title V permit applications would jump from 14,700 to 6.1 million! The CAA permitting programs would crash under their own weight, putting a freeze on new construction, and thrusting millions of firms into legal limbo. Thanks to Mass. v. EPA, the CAA is about to become an economic wrecking ball aimed straight at small business.

EPA’s October 2009 proposed Tailoring Rule attempts to avoid these “absurd results” by suspending the PSD and Title V requirements for any source emitting less than 25,000 tons per year (TPY) of CO2-equivalent GHGs. EPA hopes in this way to have its cake (the power to regulate CO2) and eat it (avoid an uncontrollable regulatory cascade that would provoke a backlash against the Obama administration, the eco-litigation fraternity, and the Court). But in order to pull off this trick, EPA must play lawmaker, effectively amend the Act, and violate the separation of powers.

Rep. Barton is right not to put his trust in the efficacy of this solution to the regulatory nightmare the Court conjured up in Mass. v. EPA. For one thing, it is unclear whether the Tailoring Rule will survive judicial challenge, because it flouts clear statutory language. Secondly, to preserve the fiction that EPA is not amending the Act, the Agency claims in the Tailoring Rule that its goal is to apply PSD and Title V to smaller and smaller CO2 sources over time, eventually including sources emitting 250 TPY and 100 TPY. EPA proposes to spend five years developing “streamlined” permitting procedures for smaller sources, but the legality of such contrivances is dubious as well, and at best streamlining would reduce irrational regulatory burdens on small business, not avoid them.

Finally, and most importantly, the Tailoring Rule, even if upheld by courts, would provide no protection from the most “absurd result” of the endangerment finding: Imposition of national ambient air quality standards (NAAQS) for CO2 that essentially require the de-industrialization of the United States.

The endangerment finding that EPA has just finalized substantively satisfies the endangerment test in CAA Sec. 108 that governs the first phase of a NAAQS rulemaking. The endangerment finding asserts that current atmospheric CO2 concentrations endanger public health and welfare, so logically, a NAAQS for CO2 would have to be set below current levels. Two eco-litigation groups, the Center for Biological Diversity (CBD) and 350.org, have already petitioned EPA to establish NAAQS for CO2 set at 350 parts per million (PPM). Their motto is “350 or Bust!”

The present atmospheric CO2 level is 390 PPM. Even if the entire world met the emissions reduction target of the Waxman-Markey bill — 83% below 2005 levels by 2050 — this would only “stabilize” CO2 concentrations at 450 PPM. Not even a global depression lasting many decades would be enough to reduce CO2 concentrations to 350 PPM. Yet under established legal interpretation, EPA is prohibited from considering compliance costs when establishing NAAQS.

Clearly, the only solid protection against Mass. v EPA’s “absurd results” is to nip the regulatory mischief in the bud. Barton’s resolution of disapproval would do just that. CBD and its allies have their slogan, and now the friends of liberty have one too: Barton or Bust!

NAAQS Petition Confirms Mass v. EPA Is Bottomless Well of Absurd Results

by Marlo Lewis on December 3, 2009

in Global Warming, Legal

Yesterday, the Center for Biological Diversity (CBD) and 350.org petitioned the Environmental Protection Agency (EPA) to establish National Ambient Air Quality Standards (NAAQS) for carbon dioxide (CO2) pegged at 350 parts per million (ppm). CO2 concentrations are currently about 387 ppm. The CBD is the eco-litigation group that successfully sued the Fish and Wildlife Service to list the polar bear as a threatened species under the Endangered Species Act.

I’ll have more to say about the specifics of the CBD-350.org petition (available here) in a later post. For now, I just want to note that the petition is additional confirmation that Massachusetts v. EPA, the April 2007 Supreme Court global warming case, is a bottomless well of absurd results that imperil both our economy and the U.S. Constitution.

CEI has been saying from day one – in our comment on EPA’s July 2008 Advanced Notice of Proposed Rulemaking, our comment on EPA’s April 2009 Endangerment Proposal, our comment on EPA’s September 2009 Motor Vehicle Greenhouse Gas Emissions Standards Proposal, and in columns about Mass. v. EPA when the case was still pending – that an endangerment finding under Sec. 202 of the Clean Air Act (CAA) would satisfy the endangerment test in CAA Sec. 108 and, thus, trigger a NAAQS rulemaking.

Not even a global economic depression sustained over many decades would be enough to stabilize atmospheric CO2 levels at 350 ppm — the goal of the CBD-350.org petition. For example, even if the world’s governments could somehow dial back global CO2 emissions to 1957 levels, when the global economy was smaller than one-third its present size, and then hold CO2 emissions constant for the next nine decades, global concentrations would still increase to 455 ppm by 2100.

Obviously, when Congress enacted the Clean Air Act, it did not authorize EPA to squash the U.S. economy. Indeed, one of the Act’s main purposes is to protect the “productive capacity” of the American people (CAA Sec. 101).

Nonetheless, by misreading the Act to include authority to regulate CO2 as an “air pollutant,” the Supreme Court set the stage for a regulatory chain reaction, including establishment of NAAQS for CO2 set below current atmospheric levels, which would effectively turn the CAA into a national economic suicide pact. 

This is not the only ”absurd result” that follows from the Court’s misreading of the Act in Mass. v. EPA. According to EPA’s proposed Tailoring Rule, “literal” (i.e. lawful) application of the CAA to greenhouse gases would annually require 41,000 small firms to apply for Prevention of Significant Deterioration (PSD) pre-construction permits and 6.1 million firms to apply for Title V operating permits. In other words, EPA and its state counterparts would have to process 140 times as many PSD permits and 400 times as many Title V permits per year as they do now. The permitting programs would crash under their own weight, construction activity would grind to a screeching halt, and millions of firms would suddenly find themselves operating in legal limbo. A more potent Anti-Stimulus Package would be hard to imagine.

To avoid these problems, EPA’s Tailoring Rule proposes, over the next six years, to exempt firms emitting less than 25,000 tons per year (TPY) of CO2-equivalent greenhouse gases, even though the statute specifies that PSD and Title V shall apply to sources with potential to emit 250 TPY and 100 TPY of any regulated pollutant, respectively. The Tailoring Rule is actually an Amending Rule. To prevent Mass. v. EPA from turning the CAA into an economic wrecking ball, EPA proposes to play lawmaker and suspend provisions it doesn’t like, violating the separation of powers.

Even if the Tailoring Rule survives judicial challenge, which is doubtful, because it flouts clear statutory language, it would in no way lessen the threat of economy-crushing NAAQS regulation of CO2.

There is only one sensible course for policymakers to take: Overturn Mass. v. EPA. Congress should enact legislation, such as H.R. 391 introduced by Rep. Marsha Blackburn (R-TN), clarifying that CO2 is not subject to regulation under the CAA for climate change purposes.

Mass v. EPA’s legacy of “absurd results”

by Marlo Lewis on October 9, 2009 · 1 comment

in Global Warming, Legal

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.

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