Supreme Court Global Warming Case: Does EPA Permitting of Greenhouse Gases ‘Deform’ the Statute?

In Utility Air Regulatory Group v. EPA, seven parties are petitioning the Supreme Court to overturn the EPA’s regulation of greenhouse gas emissions from stationary sources through the Clean Air Act’s prevention of significant deterioration (PSD) preconstruction permit program and Title V operating permit program.

The sole question before the Court is:

Whether EPA permissibly determined [in its April 2010 Timing Rule] that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.

UARG v. EPA is a very big deal. Congress has never enacted a bill to regulate greenhouse gases from stationary sources, and it’s far from certain courts will uphold the EPA’s proposed “carbon pollution rule” to regulate just one type of stationary source — electric power plants. Yet the Timing Rule extends regulatory requirements to potentially all “major” greenhouse gas emitters of whatever type or description, throughout the entire economy, in one fell swoop.

The Timing Rule codifies the EPA’s legal theory that regulation of any air pollutant under any part of the Clean Air Act automatically makes major sources of that pollutant “subject to regulation” under PSD and Title V. Thus, according to the Timing Rule, major sources of carbon dioxide (CO2), the chief anthropogenic greenhouse gas, became subject to regulation on Jan. 2, 2011, the day the EPA’s greenhouse gas Tailpipe Rule took effect.

As even the EPA acknowledges, however, the Timing Rule leads straight to absurd results, because CO2 is emitted in much greater quantities and by many more sources than any pollutant that can cause “significant deterioration” of air quality.

The Clean Air Act defines “major” source as one with the potential to emit 250 tons per year of an air pollutant (PSD) or 100 tons per year (Title V). Only large industrial facilities emit air quality contaminants in those quantities. In contrast, upwards of 1 million small entities, including office buildings, churches, hospitals, schools, and commercial restaurants, combust enough heating oil or natural gas to emit 250 tons of CO2 annually. An estimated 6.1 million small entities, including some large single-family residences, emit 100 tons of CO2 annually.

The regulatory results of the Timing Rule are absurd in two main ways:

Regulation of myriad small “major” sources conflicts with Congress’s intent to exclude non-industrial facilities from PSD and Title V regulation. Expanding by orders of magnitude the number of PSD/Title V-regulated sources would overwhelm permitting agencies’ administrative resources, causing ever-growing bottlenecks and delays that cripple environmental enforcement and economic development alike.

Rather than draw the obvious conclusion that Congress never intended for the EPA to apply PSD and Title V to greenhouse gases, the agency in June 2010 issued a Tailoring Rule, which effectively rewrites the statutory definitions of “major” source so that only facilities emitting 100,000 tons of greenhouse gases will be subject to regulation. The Tailoring Rule is itself an absurd solution, however, because agencies have no power under the U.S. Constitution to amend statutes.

All seven petitioner groups in UARG v. EPA argue that the Timing Rule conflicts with congressional intent. However, the brief submitted by the Energy Intensive Manufacturers Working Group on Greenhouse Gas Regulation and the Glass Packaging Institute catalogues several ways in which the Timing Rule ‘deforms’ the permitting provisions. I found much of this discussion new and compelling.

Excerpts from the brief follow.

The EPA discards PSD requirements for monitoring and analysis of ambient air quality.

On this point, the brief cites the PSD permitting provisions (42 U.S.C. §§ 7475), the Tailoring Rule, and the EPA’s PSD and Title V Permitting Guidance for Greenhouse Gases.

1 & 2. The statutory scheme features provisions, as part of the PSD permitting process, requiring monitoring and analysis of the ambient air quality around the facility to be regulated and, similarly, of local impacts as to “climate, meteorology, terrain, soils, vegetation and visibility.” 42 U.S.C. §§ 7475(a)(6), 7475(a)(7), 7475(e)(1), 7475(e)(3)(B). These requirements are expressed in “shall” terms by the statute, and pertain to “each pollutant subject to regulation under the Act.” The required actions and information are preconditions for issuing a permit. 42 U.S.C. §§ 7475(a), 7475(a)(1), 7475(a)(2), 7475(e)(1). And the information is to be available for the required local hearing. 42 U.S.C. §§ 7475(a)(2), 7475(e)(3)(C); Guidance, 44. The information is an essential part of a reasonable case-by-case permitting decision, as required by the Act, and is an essential part of the showing that an applicant must make, and the burden it must carry, to obtain its permit. Guidance, 20, 38, 44, 45. Yet, because these requirements make no sense for GHGs [which, being well-mixed in the global atmosphere, do not pose health or air quality issues due to their local concentrations], EPA declared as an aside in the Tailoring Rule that permitting officials and applicants may ignore them. 75 Fed. Reg. at 31,500 (J.A. 300-01). It elaborates on the point at length in the Guidance. Guidance, 47-48, see also 39, 41-42. In other words, these statutory provisions, as EPA effectively concedes, are contradicted, rendered ineffective or nullified, or alternatively, rendered absurd, by the GHG application.

To avoid the appearance of unconstitutionally rewriting the statute, the EPA proposes to regulate as many minor sources as soon as possible — flouting congressional intent.

3 & 4. By limiting the program to objectively defined “major emitters,” Congress blocked EPA from regulating minor emitters — because they could not afford it and because they were a minor part of the problem of local conventional pollution [citation omitted]. . . .Hence, in selecting both the 100- and 250-tpy [tons per year] definitions of “major” facilities, Congress was taking advantage of the a common quality of all conventional pollutants: the fact that they are emitted in small, even if harmful, amounts. It did so to remove EPA discretion to determine how major was major, but to accomplish that in a way that did not try to name all of the kinds of excluded facilities. However, as EPA explains, it is the marked difference of CO2 in the relevant dimension — its relative ubiquity and abundance in human productive activity — that causes the statutory terms [i.e., “major” source] to take on an import that is opposite that of the enacted provision and the Congressional intent that accompanied it [citation omitted]. The agency, nonetheless, promises to regulate as many of these minor emitters as possible, as soon as possible, through streamlining the permitting process. See 75 Fed. Reg. at 31,523, 31,548, 31,573, 31,577 [rest of citation omitted]. The comparable dynamic respecting the Title V 100-tpy threshold makes the fourth statutory contravention.

Because there is no ‘bolt-on’ technology to control industrial CO2 emissions, PSD-required “best available control technology” (BACT) determinations become a license for bureaucratic intrusion.

5. BACT — Production Processes, methods, Systems, Techniques, etc. The sweeping definition of BACT includes “production processes and available methods, systems, and techniques . . ..” 42 U.S.C. § 7479(3). Again, the effect of this provision when it is applied to GHGs transforms the program from one of limited intrusion to a comprehensive scheme of regulation of industrial operations. * * * At one extreme, the microscopic, the Agency confirms that control options could reach the selection of light bulbs in a factory cafeteria, yet it assures that is unlikely “since the burden of this level of review would likely outweigh any gain in emission reductions achieved.” Guidance, 31. However, regulation of “induced draft fans and electric water pumps,” for example, is likely to be worth the effort. Id. At the other extreme, with respect to the most fundamental matters, EPA states that permitting authorities can demand changes that would “fundamentally redefine the source,” as otherwise defined by the facility owner’s “goal, objectives, purpose or basic design of the facility.” Guidance, 26. However, the Agency cautions, this should be ordered only after a “hard look.” Id.

In the statute, energy cost constrains BACT regulation, but BACT for CO2 imposes energy-related cost by mandating investment in energy efficiency.

6. BACT — Energy. The definition of BACT incorporates the following qualification: “which the permitting authority, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such facility. . . .” 42 U.S.C. § 7479(3). The statute contemplated “energy” as one of the potential costs of regulating conventional pollutants — as is almost always the case because devices such as catalytic converters and particle precipitators consume energy, and low-contaminant fuels likelwise are often less energy-efficient. See e.g., Guidance, 39, 41. Applied to carbon dioxide, the role of energy is turned on its head. PSD regulation becomes mostly a scheme for the mandating of energy efficiency in all its manifestations. It converts a limitation on regulation — i.e., the weighing of increases in energy consumption required to control pollutants — into an object of regulation, a regulated first-party cost, one that opens the factory door or the farm gate to unlimited regulatory access.

The EPA dispenses with BACT case-by-case and local hearing requirements.

7 & 8. BACT — Case-by-case Requirement and Local Hearing Requirement. In the language quoted above, the BACT definition incorporates the statute’s requirement of case-by-case analysis, hearing, and decision. A companion of the BACT-definition case-by-case requirement is the PSD public hearing requirement, found in 42 U.S.C. § 7475(a)(2), requiring as a pre-condition of a permit that “a public hearing has been held with opportunity for interested persons including representatives of the Administrator to appear and submit written or oral presentations on the air quality impact of such source, alternatives thereto, control technology requirements, and other appropriate considerations.” See also, 42 U.S.C. § 7475(e)(3). . . .Both of these provisions are rendered ineffective or nullified both by the elmination of local-impacts information and analysis and the proposed streamlining of the permitting process through “general permits” and “presumptive BACT.”

The brief concludes with a constitutional argument. The legislative power vested in Congress by Article I cannot be delegated to another branch of government. “Accordingly, to retain the legislative power but leave some important decision-making to others, Congress must lay down in the delegating legislation ‘intelligible principles’ to govern its exercise.” Congress did so when it enacted the PSD program. The EPA is to regulate major sources to prevent significant deterioration of air quality from conventional pollutants. “In addition to this and other general principles, there are specific terms, provisions, rules and standards to govern the delegation.”

The EPA’s application of PSD to greenhouse gases ‘deforms’ those statutory elements (see excerpts above). That is not surprising, because the EPA’s application of PSD and Title V to greenhouse gases “does not in any real sense represent an ‘act’ of Congress.”

The PSD-enacting Congress did not address the issue of greenhouse gases, so it provided no intelligible principle to “guide and restrict” how the EPA applies PSD to CO2.

The EPA interprets this silence as permission to do anything from changing light bulbs to fundamentally redefining the source. That would be an overly-broad (standardless) delegation even if it were authorized by statute. Congress did not authorize it. The EPA has “misperceived” the PSD program as a “command” to regulate greenhouse gases.