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Climate Change, Part I: Catastrophe

Tomorrow and the day after, a panel of the U.S. Court of Appeals for the D.C. Circuit (Judges Rogers, Sentelle, and Tatel) will hear oral arguments in a raft of cases challenging the Environmental Protection Agency’s rules on the regulation of carbon dioxide (CO2) and other greenhouse gases (GHG). In its scope and consequences, the EPA’s climate change program exceeds even ObamaCare and Dodd-Frank: it threatens to engulf any firm, facility, and product that emits CO2 above minimal threshold amounts. However, the EPA’s program in this case does not rest on a 2,000-page enactment by a temporarily deranged Congress, nor even on a unilateral bureaucratic power grab. Rather, it proceeds, with seeming and depressing inexorability, from a series of crabbed and tendentious judicial and administrative interpretations of a few stray provisions in the Clean Air Act (CAA)—a statute that long pre-dates the climate change crisis or obsession (take your pick) and, by uniform consensus, is designed to tackle local air pollution, not a global calamity.

What the D.C. Circuit is looking at is a fantastically expensive and convoluted regulatory program that is uniformly acknowledged to produce no discernible climate change benefit whatsoever. Yet that exercise in pointless social mortification—a kind of permanent socio-economic Lent without Easter—threatens to elude any of the ordinary checks and controls: cost-benefit comparisons; judicial arbitrary and capricious review and statutory limitations; congressional or presidential intervention.

Today’s post discusses the trajectory of the climate change train wreck and its principal legal questions. Tomorrow’s post will address the broader institutional questions.

Greenhouse Gasbags

Any attempt to prompt governments to command planet Earth to leave the climate where it is (or perhaps to spin westward for a change) confronts, among other difficulties, problems of government inertia and global coordination. Among environmentalists’ countless efforts to overcome those impediments was an EPA rulemaking petition, initially filed by a small environmental group but soon joined by the eco-stablishment and several states, that aimed to force the agency to make an “endangerment finding” with respect to GHGs. Such a finding would in turn force the agency to regulate GHG emissions from automobiles (“mobile sources,” in the terms of the trade). The EPA denied the petition, arguing (1) that it lacked statutory authority under the CAA to regulate GHGs as a pollutant and that (2) even if it had that authority, it would decline to exercise it for powerful reasons, such as the futility of regulating global emissions on a unilateral basis and the absurdity of adapting the Clean Air Act to a problem for which it wasn’t designed. The petitioners challenged the denial in court. The Bush administration, embarrassed by its “Halliburton” image and dominated by administrators eager to protect their post-bureaucratic employment opportunities as consultants and lawyers for regulated industries, mounted only a half-hearted defense. When the case reached the Supreme Court, the hopelessly compromised EPA got hammered.

 Supreme Error

Massachusetts v. EPA (2007) interpreted Section 202(a)(1) of the Clean Air Act, which provides in relevant part (emphases added):

The [EPA] Administrator shall by regulation prescribe … standards          applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.

In a 5-4 decision, the Court held, first, that CO2 is an “air pollutant.” It held, second, that the EPA administrator’s discretion (“judgment”) in making an “endangerment finding” extends to scientific matters but, contrary to the EPA’s position, not to questions of sound policy, international climate diplomacy, or regulatory feasibility. On remand, the Court said, the administrator did not have to find endangerment (and it certainly did not have to regulate GHGs). However, she would either have to make such a finding with respect to GHGs or else, explain a contrary decision without resort to “external” considerations.

Mass v. EPA is a deeply disingenuous decision. The majority clearly anticipated that its ostensibly modest “just answer the question (and append a scientific essay)” holding would inevitably produce an endangerment finding: the EPA could avoid that result only by joining the disreputable band of “climate change deniers.” The finding, in turn, would compel the EPA to regulate automobile CO2 emissions: the operative word in Section 202(a)(1) is “shall.”

Nor is this all. Once a mobile source standard is in effect for a pollutant, Section 165 of the CAA—as historically interpreted by EPA—requires the agency EPA to regulate stationary sources. Title I of the CAA applies to facilities that (potentially) emit in excess of 250 tons per year (tpy) of a regulated pollutant; Title V covers facilities above 100tpy. Such “major stationary sources” (such as factories and power plants) require elaborate pre-construction permits, and they are tightly regulated. For conventional pollutants, the 250/100tpy thresholds require permits for a few hundred truly “major” sources per year. For CO2, the thresholds would cover tens of thousands and potentially millions of facilities each year, all of which would then be subject to stringent GHG control technology requirements. We are talking about a wholesale, bureaucratically engineered re-invention of the entire American economy.

After Mass v. EPA

Nobody—not the EPA, not the environmental groups and states that cranked up Mass v. EPA, not the Supreme Court that decided the case—believed then or believes now that GHG regulation under the CAA makes much sense. The absurdity is most palpable with respect to stationary source regulation. Putting aside the vast expansion of covered facilities (more in a moment), the CAA is calculated to govern local air pollution. The EPA sets national ambient air quality standards (“NAAQS”) and timetables for their attainment; states submit implementation plans (“SIPs”) in conformity with federal requirements. The entire scheme presupposes that jurisdictions can actually do something to reduce local air pollution. That is manifestly not so with respect to global CO2 levels. What would it mean to set a national CO2 air quality standard? Where would one set it—and would it make sense to find Peoria out of compliance because the planet won’t behave?

The reason why the plaintiffs nonetheless pushed, and the Supreme Court embraced, the endangerment theory and its ensuing chain reaction was to provoke congressional intervention. Congress had consistently failed to enact “cap and trade” and other schemes of climate legislation. Surely, though, the prospect of an EPA-engineered “reinvent America” campaign would prompt action. ‘Twas not to be, though. In the midst of the financial crisis and the 2008 election, Congress did nothing of consequence at the GHG front. Post-election, the Obama administration and Congress busied themselves with re-making the economy at the health care front. Thus, the problem ended up with the EPA. Here, the change in administration produced a major shift in policy.

The Bush EPA proposed to handle the GHG problem in a single, unified rulemaking, on the sensible theory that an endangerment finding should take into consideration the downstream, potentially insane but statutorily mandated consequences. The Obama EPA (staffed with some of the enviro architects of the Mass v. EPA challenge) would have none of it. The first fateful step was the President’s intervention in a closely related environmental controversy.

The federal Energy Policy and Conservation Act (“EPCA”) preempts states from issuing any standard “relating to” automobile fuel efficiency: those standards are the exclusive business of the National Highway Traffic Safety Administration (“NHTSA”). However, California may apply for a waiver to impose more stringent requirements, which other states may then adopt. Having repeatedly failed to obtain a waiver, California seized on the clever idea of imposing a GHG emission standard for automobiles. That purported “pollution” standard does not simply “relate to” fuel efficiency: because increased fuel efficiency is the only conceivable way of reducing CO2 emissions, a GHG standard is a fuel efficiency standard by a different name. Nonetheless, in the wake of Mass v. EPA, federal courts rejected automakers’ challenges to California’s maneuver, reasoning that the Supreme Court’s decision had established a GHG exemption to well-established preemption rules (as for many other principles of American administrative law).

The President diffused the controversy by means of a grand compromise: EPA/NHTSA would impose a national GHG mobile source program that would satisfy California and its tag-along states; California would surrender its go-it-alone aspirations for the 2012-1016 model years; automakers would comply and dismiss their lawsuits. (Recall that GM and Chrysler were wards of the state and committed to producing “clean” cars that nobody wants. To that extent, the administration was negotiating with itself.) But there was no national GHG program, and the EPA had no legal authority to impose one unless it first made an endangerment finding. A pre-ordained result had become an entirely foregone conclusion.

EPA Rules

The EPA proceeded by breaking the formerly integrated GHG rulemaking into several separate rules, issued within a six-month span but carefully calculated to evade judicial review of the enterprise as a whole:

  • An “Endangerment Rule” (December 7, 2009), based on a review of the international and national climate change “literature” but divorced from any consideration of the regulatory consequences that would follow in its wake.
  • An “Auto Rule” (May 7, 2010), issued jointly with NHTSA, governing mobile sources in conformity with the President’s “historic” bargain with California et al. By the year 2100, EPA calculates, this rule will reduce global mean temperature by 0.006-0.015 degrees Celsius and reduce global sea level rise by about 0.06-0.14 centimeters. Disaster averted.
  • A ”Timing Rule” (April 2, 2010) and a “Tailoring Rule” (June 3, 2010), governing the CAA’s expansion to stationary sources of GHGs. To evade the admittedly insane consequence of applying the 250/100tpy thresholds to stationary sources of GHG’s, the EPA invoked a canon of  “absurdity avoidance” and creatively re-wrote the statute: with respect to CO2 and other GHGs, 250/100tpy means 100,000tpy. After a phase-in of the GHG requirements for these (current and prospective) major emitters, the EPA will issue GHG requirements for additional, smaller sources.

This row of regulatory dominoes is now before the D.C. Circuit (along with industry challenges to several earlier EPA rules that, according to the petitioners, now require revocation and revision). The petitioners mobilize a vast number of powerful, nuanced legal arguments against each of the rules. Those arguments and the EPA’s responses are good fun for AdLaw mavens. For purposes at hand, though, let’s make do with the basic structure of the litigants’ respective case.

Arguments

The petitioners start at the tail end: an administrative agency can’t simply re-write a federal statute. Whatever the bounds of permissible statutory construction, the revision of numerical thresholds contained in legislation has got to be beyond the pale. If an agency feels compelled to take that step to avoid confessed absurdity, chances are that something has gone wrong along the way; and that “something” was the decision to write the Endangerment Rule in a deliberately myopic fashion, in exclusive reliance on second-hand climate science and without any regard to the mobile source/stationary source cascade that would ensue. Given the structure of the CAA, an endangerment finding requires a coherent, integrated consideration of risks and regulatory response. Nothing in Mass v. EPA, say petitioners, requires an endangerment finding divorced from the statutory structure.

Not so, says the EPA. Mass v. EPA instructed the agency to base an endangerment finding on science alone. Petitioners’ statutory-structure arguments is a belated effort to lard up the finding with just the sort of “external” considerations that Mass v. EPA explicitly forbids. There is nothing “absurd” about a science-based endangerment finding—or, for that matter, about regulating GHG emissions from mobile sources. (Editorial comment: the EPA does not really care about that rule or its ludicrously small predicted effects a century hence. The point of the rule is to get the EPA from endangerment to stationary source regulation.) The “absurdity,” if any, arises only at the very end of the regulatory cascade. It affects only the administration of permitting requirements, not the regulatory project as such; and timing and tailoring (see above) take care of that awkwardness.

The D.C. Circuit

What’s the D.C. Circuit supposed to do? Accepting the petitioners’ claim that the endangerment finding was fatally flawed would likely block the long train of abuse for the time being. But it would also entail a return trip to the Supreme Court, whose Mass v. EPA majority (should it hold) might well view the petitioners’ theory, and any appellate ruling embracing it, as an endrun around its landmark ruling. Conversely, upholding the EPA’s rules across the board would allow the agency to move ahead for now—but only at the price of endorsing the as-yet unheard-of practice of agency re-writes of federal statutes. The Supreme Court might not look kindly on that proposition, either. Or, the judges could uphold the EPA’s “science only” endangerment position; let the Auto Rule (a done deal in any event) slide through; and mow down the stationary source rules as flagrantly inconsistent with the Clean Air Act.

For the petitioners (and for states that must administer permitting requirements), that looks like the worst possible outcome. However, it would mimic and in a way double down on the Mass v. EPA gambit of forcing congressional action.  If the EPA can’t re-write the Clean Air Act but must instead administer it on its terms and as applied to GHGs, the permitting process will collapse and the de-industrialization of America will begin in earnest. No permit, no new construction; and everyone will be out of GHG compliance.

Surely, that can’t happen: Congress won’t stand for it. Or will it?

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