February 13, 2013
The D.C. Circuit Court of Appeals recently denied rehearing en banc in cases involving two major Clean Air Act issues: the Cross-State Air Pollution Rule (“CSAPR” or the “Transport Rule”) and a suite of four rules regulating greenhouse gas (“GHG”) emissions from vehicles and stationary sources. The denials set the stage for petitions for Supreme Court review in one or both of the cases, with significant implications for federal regulation of GHGs and conventional air pollutants.
On January 24, 2013, in EME Homer Generation v. EPA, the D.C. Circuit denied EPA’s requests for reconsideration and rehearing en banc of the panel decision striking down CSAPR. As previously discussed on this blog, EPA issued CSAPR in 2011 as its latest effort to address interstate transport of sulfur dioxide (“SO2”) and nitrogen oxides (“NOx”). CSAPR was intended as a replacement for the Clean Air Interstate Rule (“CAIR”), EPA’s previous attempt to implement the “good neighbor” provisions of the Clean Air Act, which prohibit upwind states from causing or contributing to noncompliance in downwind states. Both programs established an emissions trading program for covered states.
CAIR was issued in 2004 and struck down by the D.C. Circuit in 2008, but in a twist on the usual course of events, the Court left CAIR in place while directing EPA to promulgate a new rule that complied with the Clean Air Act. On August 21, 2012, however, the D.C. Circuit vacated CSAPR and the Federal Implementation Plans (“FIPs”) that EPA issued along with it, and directed EPA to continue to enforce CAIR while it promulgates a replacement rule. As a result, CAIR remains in place despite the 2008 ruling that it, too, does not comply with the Clean Air Act. It remains to be seen whether EPA will petition for review by the Supreme Court, or craft another regulation on the interstate transport of air pollution.
On December 20, 2012, the D.C. Circuit also denied rehearing en banc of the Court’s June 26, 2012 decision upholding four rules regulating GHGs: (1) a threshold finding that GHG emissions endanger public health and welfare and are thus subject to regulation under the Clean Air Act (the “Endangerment Finding”); (2) a rule limiting GHG emissions from cars and light trucks (the “Tailpipe Rule”); (3) a rule governing the trigger of GHG emission limits for stationary sources, such as power plants (the “Timing Rule”); and (4) a rule increasing the regulatory threshold for GHGs above the threshold in the Clean Air Act itself, so that only the largest new and significantly modified emitters of would initially be required to seek Clean Air Act permits for their GHG emissions (the “Tailoring Rule”).
Because the thresholds in the Tailoring Rule depart from the regulatory floor contained in the Clean Air Act itself, it was widely viewed as the most vulnerable to challenge of EPA’s GHG regulations. In June, the D.C. Circuit sidestepped the issue by ruling that none of the petitioners had standing to challenge the Tailoring Rule, since, by increasing regulatory flexibility and decreasing regulatory burdens, that rule actually mitigated any potential injury stemming from EPA regulation of GHG emissions.
While the panel opinion upholding the four GHG rules was unanimous, the denial of rehearing en banc drew two separate dissenting opinions – one taking issue with all four rules and another aimed more specifically at the Tailoring Rule – as well as a concurrence supporting the denial from the three judges that initially decided the case. Counsel for one of the trade associations that challenged the rule confirmed that a petition for Supreme Court review would follow “as surely as the climate has been changing since the Earth had an atmosphere.”
For more information on the Court’s rulings, contact Jeffrey Gracer, Jonathan Kalmuss-Katz or Ed Roggenkamp.
August 23, 2012
Four years after overturning a major Environmental Protection Agency (“EPA”) air pollution rule as inconsistent with the Clean Air Act, this week the D.C. Circuit Court of Appeals vacated the program that EPA had tailored to take its place, ruling that the replacement rule “exceeds the agency’s statutory authority” and imposes “impossible” burdens upon covered states. As a result, hundreds of power plants in 28 states are once again subject to the very rule the same court rejected in 2008.
The regulations in question implement the Clean Air Act’s “good neighbor” provisions, which prohibit states from significantly contributing to unsafe levels of air pollution, or interfering with Clean Air Act compliance, in downwind states. In 2005, EPA finalized the Clean Air Interstate Rule (“CAIR”), establishing an emissions trading program for Eastern and Midwestern power plants aimed at reducing interstate air pollution transport. However, in North Carolina v. EPA, the D.C. Circuit identified “more than several fatal flaws” in CAIR, including EPA’s failure to ensure emissions reductions from all covered upwind states. Instead of striking the rule immediately, the Court granted a rare remand without vacatur, leaving CAIR in place while the agency developed a replacement.
In 2011, EPA issued the Cross-State Air Pollution Rule (“CSAPR”) as a substitute for CAIR. In response to the Court’s concerns, EPA provided more details on what portion of upwind states’ emissions “significantly contribute” to cross-state air pollution problems and set state-specific emissions budgets. To implement the rule, EPA issued Federal Implementation Plans (“FIPs”) for all of the covered states, which were to be subject to revision by the states as early as 2013.
In its recent 2-1 decision, however, the D.C. Circuit held that CSAPR too overstepped EPA’s Clean Air Act authority. Specifically, the majority opinion faulted EPA for authorizing emissions limits in upwind states that were more stringent than the state’s contribution to specific downwind non-attainment. The Court also disapproved of EPA’s issuance of FIPs, holding that the agency was required to first alert states of their new regulatory requirements and give them the chance to issue or revise their own State Implementation Plans. Finding these deficiencies “too fundamental to permit us to ‘pick and choose portions’ of the rule to preserve,” EPA vacated the rule in its entirely, instructing EPA to “continue administering CAIR pending the promulgation of a valid replacement.”
In a 40-page dissent, Judge Judith Rogers wrote that the majority “disregards limits Congress placed on [the Court’s] jurisdiction, the plain text of the Clean Air Act, and this court’s settled precedent interpreting the same statutory provisions at issue today.” In additional to disputing the claim that EPA could not set emissions limits more stringent than a state’s contribution to downwind nonattainment, Rogers argued that since none of the Petitioners had raised the complaint in their public comments on CSAPR, the Court did not have jurisdiction to even decide the issue.
EPA has said that it is “reviewing the court decision” on CSAPR, and it may seek leave to appeal the panel’s decision either to the entire D.C. Circuit or to the Supreme Court. In the interim, the CAIR program remains in place. For more information on the Court’s decision or Clean Air Act compliance, contact Jeffrey Gracer or Jonathan Kalmuss-Katz.
June 27, 2012
The nation’s first limits on greenhouse gas (“GHG”) emissions survived a major legal challenge yesterday, as the District of Columbia Circuit Court of Appeals upheld two Environmental Protection Agency (“EPA”) climate change regulations on the merits and dismissed challenges to two others for lack of standing. The unanimous ruling from a three-judge panel (which included one of the Court’s most conservative members) resolved consolidated lawsuits filed by states, industry trade associations, and other opponents of the embattled climate regulations.
The litigation challenged four separate, but inter-related, rules: (1) EPA’s threshold finding that GHG emissions endanger public health or welfare, and are thus properly subject to regulation under the Clean Air Act (the “endangerment finding”); (2) a rule limiting car and light truck GHG emissions (the “tailpipe rule”); (3) a rule governing the timing of implementation for stationary source GHG limits (the “timing rule”); and (4) a rule increasing the initial regulatory thresholds for stationary source GHG controls, so only the largest emitters are covered first (the “tailoring rule”).
The Court decisively rejected scientific and legal challenges to the endangerment finding and tailpipe rule, relying heavily upon the Supreme Court’s 2007 Massachusetts v. EPA decision affirming EPA’s authority to regulate GHGs under the Clean Air Act. The Court brushed away claims that EPA had improperly relied upon prior studies and surveys by non-EPA scientists in defending its endangerment finding – with a robust endorsement of EPA’s reliance on the scientific method: “This is how science works. EPA is not required to re-prove the existence of the atom every time it approaches a scientific question.” The Court also observed that EPA could properly make its endangerment finding as a precautionary measure, to protect public health and the environment, despite alleged uncertainty about the predictive accuracy of climate change models.
The Court proceeded to find that, in light of the endangerment finding, the tailpipe rule was compelled by Massachusetts v. EPA, and that implementation of vehicle emission limits required EPA to control stationary source GHG emissions as well under the Clean Air Act. Rejecting three alternate statutory interpretations advanced by the various Petitioners – which would have limited regulation to mobile sources only – the Court held that “EPA’s interpretation of the governing CAA provisions is unambiguously correct.”
Finally, the Court ruled that because the timing and tailoring rules increase flexibility and relieve regulatory burdens, they actually serve to “mitigate Petitioners’ purported injuries.” As a result, none of the Petitioners had standing to challenge these rules. Although the Petitioners invited the Court to create regulatory chaos by subjecting even small businesses to immediate regulation, thereby inviting Congressional reform of the Clean Air Act, the mere possibility that Congress might enact corrective legislation were the tailoring rule to be overturned was considered too speculative to confer standing. This holding may have been the Court’s most significant, as the tailoring rule – which departed from the Clean Air Act’s express regulatory thresholds – was widely viewed as the most vulnerable on the merits.
The challengers could still seek to appeal the panel’s decision to the full D.C. Circuit or the Supreme Court. They are also expected to pursue legislation curtailing or eliminating EPA’s climate change authority. The ruling may also reignite discussions of comprehensive climate legislation, which has languished since the House approved a broad-reaching global warming bill on June 26, 2009 – three years to the day before the Court’s recent climate change decision.
For more information on the Court’s ruling or U.S. climate regulation, contact Jeffrey Gracer or Jonathan Kalmuss-Katz.
June 5, 2012
On May 31, a federal judge in the District of Columbia issued an order giving the EPA one final week to issue its proposed rule updating standards for particulate matter air pollution. The American Lung Association, the National Parks Conservation Association, and 11 states, including New York and California, had asked the court to compel EPA to review the standards and to propose any revisions based upon the latest scientific data. (American Lung Ass’n v. EPA, D.D.C., No. 1:12-cv-243, 5/31/12). The proposed regulations are more than six months overdue according to the October 2011 statutory deadline, and they must meet requirements set by a federal appeals court in 2009.
Particulate matter is a form of air pollution consisting of small particles suspended in air, such as dust or soot. It is a common byproduct of combustion processes, like those conducted in power plants and factories. Diesel truck exhaust is also a notable source of airborne particulate matter. Inhalation of particulate matter can cause asthma, lung cancer, cardiovascular issues, birth defects, and premature deaths in humans.
The Clean Air Act requires EPA to review and consider revising air quality standards every five years. EPA last revised the particulate matter standards in 2006, which means the new standards were due in 2011. Additionally, in 2009, EPA had been ordered to revisit its 2006 particulate matter standards to provide a better explanation of why particular standards were sufficient to protect the public health while providing an adequate margin of safety for children and other vulnerable subpopulations. Since that court’s finding, the EPA has not produced new standards and has allowed the 2011 statutory deadline to pass by without publication of a proposed rule.
Last week’s order states that EPA must sign a proposed rule by Thursday, June 7, 2012. It also requires that EPA seek expedited publication of the rule in the Federal Register, and that the agency hold a public hearing within two weeks of such publication. This hearing has already been scheduled for June 11. Following the hearing, the agency will accept comments for seven weeks. The court order did not set a deadline for the final rule; the EPA has said it needs until August 2013, while the ALA, Earthjustice, and NPCA are vying for its publication this December. The federal judge who issued the order has encouraged both sides to reach an agreement on a deadline before the June 11 hearing.
Priya Murthy is a Summer Associate at Sive, Paget & Riesel.
May 2, 2012
Last month, the U.S. Environmental Protection Agency (“EPA”) issued its first-ever regulations governing emissions of air pollutants from hydraulically fractured natural gas wells, requiring natural gas producers to install new equipment to capture wellhead emissions on new or re-drilled wells no later than January 2015.
In addition to releasing natural gas (methane) that is recovered and sold as the main product of the hydraulic fracturing (or “fracking”) process, fracking also releases excess methane, benzene, hexane, volatile organic compounds (“VOCs”) and other pollutants that escape from the wellhead into the air, particularly during the stage of well “completion”, when newly drilled wells transition from the drilling phase to production phase. Each of these gases has environmental impacts. Methane is a greenhouse gas twenty times more powerful than carbon dioxide. Benzene (a human carcinogen) and hexane are toxics with known human health impacts, while VOCs contribute to the formation of smog. EPA’s regulations will require natural gas producers to capture these emissions at the wellhead using add-on equipment known in the industry as “green completions” or “reduced emissions completions.” Such equipment is already required by state regulations in Wyoming and Colorado.
While EPA initially proposed that the regulations would go into effect immediately, the final regulations only require natural gas producers to have green completions equipment installed on new or re-drilled wells by January 2015. The natural gas industry had lobbied for the delay in implementation, and EPA cited the lack of sufficient supplies of green completions equipment as the reason for the delay until 2015. Well operators will be required to flare their emissions until the new technology is installed.
The EPA estimates that green completions technology will be cost effective for the industry because the captured methane gas can be sold, and because natural gas companies currently using the technology have reported that green completions can be a profitable addition to their wellhead operations.
The full text of the regulations is available here.
April 5, 2012
On March 27, the U.S. Environmental Protection Agency (“EPA”) proposed a rule limiting carbon dioxide (“CO2”) emissions from new power plants fired by fossil fuels such as coal or natural gas.
- The rule applies to new fossil fuel-fired electric utility generating units in the continental United States; it does not apply to existing units or new “transitional” units that already have received preconstruction air emission permits and that start construction within 12 months of the proposed rule’s publication in the Federal Register.
- Covered power plants would be required to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour.
- This standard is expected to favor natural gas over coal. EPA states that “[n]ew natural gas combined cycle power plant units should be able to meet the proposed standard without add-on controls.” By contrast, coal-fired power plants would not be able to meet this standard without carbon capture and storage technology, which is still under development and is expected to be quite costly.
The proposed rules (New Source Performance Standards under Section 111 of the Clean Air Act) result from a settlement between EPA and a group of states and environmental organizations. These plaintiffs sued EPA in opposition to the agency’s refusal, in 2006, to establish greenhouse gas emission standards for new and modified power plants. EPA was required to revisit this decision in the aftermath of the U.S. Supreme Court’s landmark decision in Massachusetts v. EPA, which affirmed EPA’s statutory authority under the Clean Air Act to regulate greenhouse gas emissions.
Under the settlement giving rise to the standards proposed last week, EPA had also agreed to establish CO2 emissions guidelines for existing fossil fuel power plants. EPA has yet to propose such standards, and the time frame for its doing so is uncertain; EPA Administrator Lisa Jackson recently stated, “[w]e don’t have plans to address existing plants.”
The full text of the proposed rule is available here. Public comments are being accepted under Docket ID No. EPA‐HQ‐OAR‐2011‐0660 at www.regulations.gov for 60 days after the proposed rule’s publication in the Federal Register.
March 5, 2012
On February 28 and 29, the D.C. Circuit Court of Appeals heard oral arguments in a series of challenges to the Environmental Protection Agency’s (“EPA’s”) regulation of greenhouse gasses (“GHGs”) under the Clean Air Act, far-reaching litigation spanning dozens of parties and at least four separate rules. Decisions from the panel of Judges David Sentelle, David Tatel and Janice Rogers Brown are expected later this year.
The rare, two-day argument began with a challenge to EPA’s December 7, 2009 finding that emissions of six GHGs, including carbon dioxide, “may reasonably be anticipated both to endanger public health and to endanger public welfare.” This “endangerment finding” is the cornerstone of all subsequent action by EPA to regulate GHGs. The Court appeared reluctant to second-guess the science behind EPA’s determination or to consider non-scientific factors as a basis for overturning it, noting that the Supreme Court had already rejected such lines of argument in its 2007 Massachusetts v. EPA decision. As Judge Sentelle remarked: “Reading some of the briefs, I’d gotten the impression that Massachusetts was not decided.”
Arguments then turned to EPA’s April 1, 2010 “tailpipe rule,” which limits GHG emissions from cars and light trucks. Notably, the auto industry was not among the challengers , as it had participated with EPA in a negotiated rulemaking; instead, it intervened in support of EPA’s regulation. The challenge from some states and trade associations was motivated less by the substance of the tailpipe rule than its role in triggering GHG permitting requirements for power plants and other stationary sources, which took effect once GHGs became “subject to regulation” under the Clean Air Act.
Some of the petitioners contested whether the tailpipe regulations governing mobile sources of GHGs necessarily triggers GHG regulation of stationary sources, arguing that EPA’s historic interpretation of the Clean Air Act to that effect, dating back to 1978, was flawed. Because the 60-day period for challenging EPA’s 1978 regulation had long passed, the petitioners characterized the new GHG rules as “grounds arising after” that prior rule, which raised issues that could not have been previously litigated. At oral argument, the judges focused heavily on this claim and other jurisdictional issues relating to this challenge.
Finally, the arguments closed with a discussion of EPA’s “tailoring rule,” which increased the regulatory threshold for new and modified stationary sources from 250 tons to 75,000 tons of GHGs per year. This is generally considered to be the most vulnerable of EPA’s rules, because the lower thresholds are expressly set forth in the Clean Air Act itself, while EPA’s tailoring rests upon its authority to interpret the statute in a way that avoids the “absurd” result of regulating thousands of smaller emitters. Judge Sentelle, however, questioned the petitioners’ standing to challenge the tailoring rule, stating to industry counsel: “The harm you allege is a regulatory burden. The remedy you seek is a heavier regulatory burden.”
Since the D.C. Circuit previously declined to stay the rules, they will remain in effect while the Court deliberates, with a widely anticipated decision expected later this year. For more information on EPA’s GHG rules and the pending litigation, contact Jeffrey Gracer
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