PSD

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.

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!

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.

EPA “Tailoring Rule” confirms Mass v. EPA set the stage for administrative quagmire and economic disaster

by Marlo Lewis on October 1, 2009 · 1 comment

in Features, Global Warming, Legal, Zeitgeist

Updated at 10/1/09 4:47 PM

I’ve just begun reading EPA’s proposed Tailoring Rule to establish a new 25,000 tons per year (TPY) ”major stationary source” applicability threshold for greenhouse gas (GHG) emissions under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. I’ll blog about this again later on, but for now I just want to say, “We told ya so!”

Attorney Peter Glaser, the U.S. Chamber of Commerce, CEI and a host of other free market groups warned repeatedly that regulating GHG emissions from new motor vehicles — the immediate policy objective of plaintiffs in the Supreme Court global warming case, Massachusetts v. EPA – would have the following consequences:

  1. CO2 would automatically become an air pollutant “subject to regulation” under the PSD and Title V programs.
  2. Millions of previously unregulated entities — big box stores, enclosed malls, hotels, apartment complexes, mid-sized office buildings, even commercial kitchens — would be vulnerable to new controls, paperwork, penalties, and litigation.
  3. The volume of permit applications would create an administrative quagmire for EPA and state environmental permitting agencies.
  4. The new costs, uncertainties, and delays would create an unprecedented roadblock to new construction and economic development, turning the Clean Air Act into a gigantic Anti-Stimulus program.

Predictably, global warming activists, such as Sierra Club climate council David Bookbinder, a plaintiff in Massachusetts v. EPA, derided these concerns as a “bugaboo,” a “red herring,” and a “pure scare tactic” by industry foes of regulatory climate policy. (See segments 1:47 – 1:48 and 2:03 – 2:05 of the Senate Environment and Public Works Committee’s Archived Webcast).

EPA’s July 30, 2008 Advanced Notice of Proposed Rulemaking: Regulating Greenhouse Gas Emissions under the Clean Air Act (ANPR) acknowledged that applying PSD to CO2 might increase the volume of permit applications by an “order of magnitude” (p. 44499), might “overwhelm” the administrative resources of permitting authorities (p. 44507), and might subject sources to new costs, uncertainties, and delays (p. 44502). However, the ANPR considerably understated the risks, Glaser, the Chamber, and CEI argued.

Well, you can now get the lowdown straight from the horse’s mouth.  Here’s what EPA’s Tailoring Rule says:

If PSD and Title V requirements apply at the applicability levels provided under the CAA, state permitting authorities would be paralyzed by permit applications in numbers that are orders of magnitude [not a mere "order of magnitude," as in the ANPR] greater than their current administrative resources could accomodate [p. 1].

* * *

If PSD and Title V requirements apply at the applicability levels provided under the CAA, many small sources would be burdened by the costs of individualized PSD control technology requirements and permit applications. In addition, state permitting authorities would be paralyzed by enormous numbers of these permit applications; the numbers are orders of magnitude greater than the current inventory of permits and would vastly exceed the current administrative resources of the permitting authorities [pp. 15-16]

* * *

In short, without this tailoring rule, the administrative burdens would be immense, and they would immediately and completely overwhelm the permitting authorities. Without this tailoring rule, permitting authorities would receive approximately 40,000 PSD permit applications each year — currently, they receive approximately 300 — and they would be required to issue Title V permits for approximately some six million sources — currently, their Title V inventory is some 15,000 sources [p. 19].

* * *

Based on our GHG threshold data analyis, we estimate that almost 41,000 new and modified facilities per year would be subject to PSD review, based on the current rate of modifications at major sources, if a GHG major sourcee threshold of 250 TPY CO2e [carbon dioxide equivalent] were applied. Compared to the 280 PSD permits currently issued last year, this would be an increase in permits of more than 140-fold [p. 50].

* * *

Based on these assumptions [permitting agency costs in time and money to process a PSD permit for a commercial or residential GHG source would be only 20% of the time and money required to process a permit for an industrial GHG source], the additional annual permitting burden for permitting authorities, on a national basis, is estimated to be 3.3 million hours at a cost of $257 million to include all GHG emitters above the 250-TPY threshold [pp. 51-52].

* * *

Most significant [of new Title V obligations triggered by GHG regulation of new motor vehicles] are the more than six million sources of GHGs that would become newly subject to Title V requirements because they exceed the 100-TPY threshold for GHG but did not for previously regulated pollutants. Although there are generally not applicable requirements for GHGs that apply to such sources [a gross understatement -- although there are generally no Clean Air Act requirements, period, that apply to such sources], these six million sources would be required to submit a Title V permit application within 1 year [pp. 56-57].

* * *

Obviously, this massive influx of permit applications would overwhelm permitting authorities’ administrative resources. Indeed, permitting authorities report that they currently are having difficulty keeping up with their existing permit workloads. The Tite V Operating Permits System database, which tracks permit issuance, confirms that issuance of many permits is already delayed. By increasing the volume of permits by over 400 times, the administrative burden would be unmanageable [p. 58].

* * *

We estimate that for permitting authorities, the average new commercial or residential [Title V] permit would require 43 hours to process, which is 10 percent of the time needed for the average industrial permit . . . We estimate that the total nationwide additional burden for permitting authorities for Title V permits from adding GHG emissions at the 100-TPY threshold would be 340 imllion hours, which would cost over $15 billion [p. 59].

These burdens are “absurd,” EPA argues, because they are “inconsistent” with “congressional intent,” indeed would “undermine congressional purposes” (p. 19). Hence, EPA concludes, it is justified in effectively amending the statute, upping the PSD and Title V applicability thresholds for major sources from 100/250 TPY to 25,000 TPY.

Well, somebody needs to point out the obvious. The looming threat of an economy-chilling administrative quagmire didn’t just happen. The absurdity of agencies spending 340 million hours and $15 billion to process hollow operating permits didn’t suddenly spring forth from the text of Title V. Nothing in the Clean Air Act has changed since it was amended in 1977 and 1990 to turn it into an economic wrecking ball. Congress is still debating cap-and-trade, and never signed off on EPA using the Clean Air Act to control CO2 emissions from stationary sources. No, the absurd results are entirely a product of Mass. v. EPA. So is the necessity for EPA now to amend clear and unambiguous statutory language, violating the separation of powers.

When a court decision leads to absurd results, there are only two possibilities. (1) The absurdity was lurking in the statute all along and the court simply brought it to light; or (2) the court messed up, manufacturing absurdity in an otherwise sane and reasonably coherent law. My comment on EPA’s proposed endangerment finding (especially pp. 28-33) argues the blame lies with the Court, not those who drafted and enacted the Clean Air Act.

EPA proposes illegal rule

by Marlo Lewis on September 2, 2009 · 2 comments

in Global Warming

Yesterday, the U.S. Environmental Protection Agency (EPA) sent a draft proposed rule to the Office of Management and Budget (OMB) that would exempt small emitters of carbon dioxide (CO2) from Clean Air Act (CAA) pre-construction permitting requirement, Greenwire reports.

The proposed rule, as described in Greenwire, is blatantly illegal. It is a tacit admission that the Supreme Court decision in Massachusetts v. EPA set the stage for an economic disaster. It is additional evidence that Mass v. EPA was wrongly decided. It confirms CEI’s warning that the Court’s ruling imperils a core constitutional principle — the separation of powers.

In Mass. v. EPA, the Supreme Court, by a narrow 5-4 majority, decided that CO2 and other greenhouse gases (GHG) are “air pollutants” within the meaning of CAA, and gave EPA three options: (1) issue a finding that GHG-related “air pollution” “may reasonably be anticipated to endanger public health or welfare,” (2) issue a finding of no endangerment, or (3) provide a “reasonable explanation” why the agency cannot or will not exercise its discretion to make such a determination.

The Court further held that if EPA makes a finding of endangerment, then it has a duty, under CAA Sec. 202, to develop and adopt GHG emission standards for new motor vehicles.

EPA picked option (1), and last month, it sent OMB a draft proposed rule to establish GHG emission standards for new motor vehicles.

Although the Court majority asserted that an endangerment finding could not lead to “extreme measures” and would only require a cost-constrained adjustment of existing federal fuel-economy standards (see. p. 28 of the decision), in fact the endangerment finding will trigger a chain reaction throughout the CAA — a regulatory cascade potentially exceeding in cost, scope, and intrusiveness the Kyoto Protocol and many other GHG-control schemes Congress has never seen fit to pass.

For starters, establishing GHG emission standards for new motor vehicles will by definition make CO2 a CAA-regulated air pollutant. As such, CO2 would automatically be ”subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program (CAA Sec. 165). Under the CAA, any firm that plans to build a new “major” stationary source, or modify an existing major source in a way that would significantly increase emissions, must first obtain a PSD permit from EPA or a state environmental agency.

A PSD source is “major” if it is in one of 28 listed categories and has a potential to emit 100 tons per year (TPY) of an air pollutant, or if it is any other type of establishment and has a potential to emit 250 TPY (CAA Sec. 169). 

And there’s the rub. Whereas only large industrial facilities have a potential to emit 250 TPY of air contaminants such as sulfur dioxide or particulate matter, an immense number and variety of entities – office buildings, hotels, big box stores, enclosed malls, small manufacturing firms, even commercial kitchens – have a potential to emit 250 TPY of CO2. A September 2008 report commissioned by the U.S. Chamber of Commerce  estimates that 1.2 million buildings and facilities – most of them currently unregulated under the CAA – actually emit 250 TPY of CO2. All would be vulnerable to new PSD regulation, controls, paperwork, penalties, and litigation.

To obtain a PSD permit, firms must document their compliance with ”best available control technology” (BACT) standards. Even apart from any technology investments needed to comply with BACT, the PSD permitting process is costly and time-consuming.  In a recent year, each permit on average cost $125,120 and 866 burden hours for a source to obtain,  EPA estimates. No small business could operate subject to the PSD administrative burden.

The costs, uncertainties, and delays from applying PSD and BACT to CO2 would have a chilling effect on economic development and construction activity. It would turn the CAA into a gigantic Anti-Stimulus Package in a period of financial crisis and high unemployment. Definitely not something the Obama administration wants on its record in the 2010 election season.

EPA’s July 2008 Advanced Notice of Proposed Rulemaking (ANPR) outlined several administrative remedies to shield small entities from PSD requirements, all of doubtful legality. But if the Greenwire article is accurate, EPA is opting for the most brazenly illegal option of all. It proposes to revise, on its own authority, the PSD threshold from 250 TPY to 25,000 TPY.

Now friends, under the 1984 Supreme Court case of Chevron v. NRDC, EPA has considerable discretionary authority in interpreting the CAA where the statute is “silent or ambiguous with respect to the specific issue.” But there is nothing ambiguous about the number 250. No matter how you squint at the page, 250 is 100 times smaller than the threshold EPA proposes to put in its place.

According to Greenwire, Sierra Club’s David Bookbinder, a counsel for petitioners in Mass. v. EPA, “said the rule would also deflect claims from Republican lawmakers and industry groups that the Obama administration is seeking to regulate small emission sources such as doughnut shops, schools, and nursing homes.” But the Obama administration’s intent is not the issue. The issue is whether EPA, as a matter of law, must apply PSD requirements to doughnut shops, etc. once it starts regulating CO2 under Sec. 202.

Greenwire then quotes Bookbinder: “Putting this rule in place deflates a lot of political rhetoric about regulating CO2.” Well, I hope industry and the GOP are not so naive as to put their trust in an illegal rule. A rule that flouts clear statutory language of the CAA can provide no durable protection from the regulatory cascade that an endangerment finding and EPA adoption of motor vehicle GHG emission standards would unleash.

EPA’s proposed draft rule is a tacit admission of what CEI has said all along: EPA cannot regulate CO2 under the CAA without endangering the U.S. economy — unless EPA plays lawmaker, amends the Act, and violates the separation of powers. When the Supreme Court handed down the Mass. v. EPA decision, it set the stage for a constitutional crisis.

Of course, the bigger constitutional crisis stemming from Mass. v. EPA is that we could end up with an energy suppression regime far more costly than Kyoto or Waxman-Markey, yet without the people’s elected representatives ever voting on it.

For the gory details, see my blog post on MasterResource.Org and my comment (pp. 28-56) on EPA’s proposed endangerment finding.

Will Lisa Jackson turn the Clean Air Act into a gigantic de-stimulus package?

by Marlo Lewis on February 19, 2009

in Deregulate to Stimulate, Energy, Global Warming, Legal

Earlier this week, in a letter to Sierra Club climate council David Bookbinder, EPA Administrator Lisa Jackson said the Agency would reconsider, via a notice-and-comment rulemaking, a Bush-EPA memorandum interpreting regulations that determine whether carbon dioxide (CO2) is currently subject to emission controls under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. [click to continue…]