September 19, 2011 Articles

Overview of Litigation Challenging EPA's Greenhouse Gas Regulations

The author provides an in-depth review of the ongoing trial and appellate litigation challenging the EPA's widening regulatory authority over greenhouse gas emitters.

By Jeremy C. Marwell – September 19, 2011

In the last two years, the U.S. Environmental Protection Agency (EPA) has issued a series of regulations targeting greenhouse gas (GHG) emissions under the Clean Air Act. SeePaulina Williams & Jenifer Sutter, “2010: EPA Completes its First Major Greenhouse Gas Rulemaking Initiatives,” Vinson & Elkins Climate Change Report (Feb. 21, 2011). Just as those regulations have been broad in scope, so are the legal challenges they now face. Business enterprises, trade associations, public policy groups, states, and local governments—joined by dozens of interveners and amici curiae—have filed a flood of petitions for judicial review, principally in the U.S. Court of Appeals for the D.C. Circuit. The litigation remains at an early stage, with the challengers’ initial merits briefs filed in March 2011, and the D.C. Circuit not likely to hear argument in the main body of challenges before the end of this year. But even a brief survey of the filings to date demonstrates the exceptional importance and complexity of these cases that bring before the courts what is among the most expensive and far-reaching environmental regulatory programs in U.S. history.

EPA’s principal GHG regulations have filled hundreds of pages in the Federal Register. A simplified version is below.

  • The October 2009 "Mandatory Reporting" rule requires that GHG sources in specified categories, and above certain thresholds, monitor and report their emissions. Mandatory Reporting of Greenhouse Gases, Fed. Reg. 56,260 (Oct. 30, 2009) (requiring reporting from 32 source categories). EPA subsequently added other source categories to the reporting program. See, e.g., Mandatory Reporting of Greenhouse Gases: Petroleum and Natural Gas Systems, 75 Fed. Reg. 74,458 (Nov. 30, 2010).
  • The December 2009 “Endangerment Rule” determines that air pollution from six GHGs endangers public health and welfare and that mobile sources cause or contribute to that air pollution. Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009). In August 2010, EPA denied petitions for reconsideration of this finding, which were largely based on the so-called “Climategate” disclosures involving the University of East Anglia’s Climatic Research Unit. See Denial of the Petitions to Reconsider the Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, 75 Fed. Reg. 49,556 (Aug. 13, 2010).
  • The May 2010 “Tailpipe Rule,” issued jointly with the National Highway Traffic Safety Administration (NHTSA), sets GHG emission and fuel economy standards for new light-duty vehicles. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. 25,324 (May 7, 2010). In November 2010, EPA and NHTSA proposed parallel emission and fuel economy standards for medium- and heavy-duty engines and vehicles.See Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles, 75 Fed. Reg. 74,152 (Nov. 30, 2010).
  • The April 2010 “Timing Rule” concludes that stationary source permitting programs under Titles I and V of the Clean Air Act (involving Prevention of Significant Deterioration (PSD) and operating permits, respectively) must apply to GHG emissions beginning when such emissions became subject to controls under the mobile source provisions of the Act on January 2, 2011. Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004 (Apr. 2, 2010).
  • The June 2010 “Tailoring Rule” modifies the annual emission levels established in the act to define the “major sources” that are subject to stationary source permitting and establishes a sequence of declining emission thresholds designed to bring more sources and modifications into those permitting programs over time. Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31,514 (June 3, 2010).
  • The December 2010 “SIP Call” rule finds 13 State Implementation Plans (SIPs) inadequate for not regulating GHGs from stationary sources and directs those states to do so or face federalization of their permitting programs. On December 30, 2010, EPA issued an emergency follow-up rule revoking its decades-old approval of Texas’ SIP and imposing a federal permitting program in that state. Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call, 75 Fed. Reg. 77,698 (Dec. 13, 2010); Determinations Concerning Need for Error Correction, Partial Approval and Partial Disapproval, and Federal Implementation Plan Regarding Texas Prevention of Significant Deterioration Program, Interim Final Rule, 75 Fed. Reg. 82,430 (Dec. 30, 2010). In May 2011, EPA issued a final rule rendering permanent its interim disapproval of Texas’s SIP. Determinations Concerning Need for Error Correction, Partial Approval and Partial Disapproval, and Federal Implementation Plan Regarding Texas’s Prevention of Significant Deterioration Program, Final Rule, 76 Fed. Reg. 25,178 (May 3, 2011). EPA separately imposed federal permitting programs in seven other states that had not updated their SIPs to address stationary source GHG emissions: Arizona, Arkansas, Florida, Idaho, Kansas, Oregon, and Wyoming. Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Failure to Submit State Implementation Plan Revisions Required for Greenhouse Gases, 75 Fed. Reg. 81,874 (Dec. 29, 2010); Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan, 75 Fed. Reg. 82,246 (Dec. 30, 2010).

Mandatory Reporting Rule
Seven industry petitioners and one environmental group filed petitions for review of the Mandatory Reporting Rule in the D.C. Circuit, raising a range of procedural and substantive challenges. After the court held the consolidated petitions in abeyance pending EPA’s action on petitions for administrative reconsideration, EPA finalized amendments to the rule that resolved seven of the eight petitions for review in whole or part (six by industry groups and one by the Environmental Defense Fund). Mandatory Reporting of Greenhouse Gases, 75 Fed. Reg. 79,092 (Dec. 17, 2010). Among other things, the amendments provided additional information and clarity on existing requirements, greater flexibility or simplified calculation methods for certain sources, additional guidance on when different types of emissions need to be calculated and reported, and expanded reporting requirements to additional sectors. Separately, in March 2011, EPA extended the reporting deadline for year 2010 data until September 30, 2011. Final Regulation Extending the Reporting Deadline for Year 2010 Data Elements Required Under the Mandatory Reporting of Greenhouse Gases Rule, 76 Fed. Reg. 14,812 (Mar. 18, 2011). The final petition for review, and one specific issue from a petition dismissed in part, have been held in abeyance pending ongoing settlement negotiations.

Endangerment, Tailpipe, Timing, and Tailoring Rules
In September 2010, three groups of petitioners—the Coalition for Responsible Regulation (CRR), a nonprofit corporation whose members include energy, mining, and agricultural companies and trade associations; a coalition of industry groups formed around the National Association of Manufacturers; and several states—asked the D.C. Circuit to stay implementation, in whole or in part, of the Endangerment, Tailpipe, Timing, and Tailoring Rules pending resolution of the petitions for judicial review. (Vinson & Elkins LLP, together with Holland & Hart LLP, represent CRR in these cases.) In December 2010, the D.C. Circuit declined to issue a stay without addressing the merits of the challenges. As of this writing, merits briefing is ongoing with oral argument unlikely to take place before the end of 2011.

Endangerment Rule and Denial of Reconsideration
State, nonprofit, and industry groups have filed 16 petitions for review of the Endangerment Rule, which the D.C. Circuit consolidated under the caption Coalition for Responsible Regulation v. EPA, No. 09-1322. The court initially held the cases in abeyance pending EPA’s action on petitions for administrative reconsideration. When EPA denied reconsideration, challengers filed 10 more petitions for review of that denial, which have been consolidated with the original group.

Following the D.C. Circuit’s denial of a stay, petitioners and supporting interveners filed three opening merits briefs in the D.C. Circuit in May 2011. The first, on behalf of non-state petitioners and supporting interveners (the stay petitioners were joined by the U.S. Chamber of Commerce, numerous other industry groups, and the State of Alaska), advances several principal contentions: (1) that, in promulgating the Endangerment Rule, EPA failed to account for the concededly absurd effects of regulating the emission of GHGs from stationary sources; (2) that EPA erred by refusing to define its public health and regulatory objectives and by refusing to connect those objectives to its regulatory response; (3) that EPA erred by amalgamating six pollutants (including two gases not emitted by automobiles) into a single pollutant for purposes of the Endangerment Rule, thus evading its responsibility to determine that emission of each contributed to endangerment of human health and welfare; (4) that the Endangerment Rule improperly failed to consider the benefits of energy use, efforts to mitigate or adapt to any climate change that occurs, and the effects of emission reductions under NHTSA fuel economy rules; and (5) that EPA’s finding of a 90–99 percent likelihood of severe harm is unsupported (and even contradicted) by the record evidence it cited.

The second merits brief, filed by Texas and 14 other states, argues in addition that the Endangerment Rule is arbitrary and capricious because EPA refused to define or apply criteria for assessing whether GHGs endanger public health or welfare. The last brief, filed by Texas and Virginia, challenges EPA’s denial of petitions for administrative reconsideration, arguing that EPA (1) misapplied the standard for granting reconsideration; (2) improperly delegated its statutory authority to outside entities such as the Intergovernmental Panel on Climate Change; and (3) erred in concluding the so-called “Climategate” disclosures involving the University of East Anglia’s Climatic Research Unit had not undermined its reliance on those outside groups’ scientific procedures and findings. Kansas submitted an amicus brief also challenging EPA’s denial of reconsideration in light of the “Climategate” disclosures, and a group of other amici, including public interest and advocacy groups, filed a joint brief focusing on EPA’s circumvention of statutory requirements that it analyze the costs of the Endangerment Rule.

EPA’s brief is due in mid-August 2011, followed by briefs for amici and supporting interveners in mid-September. Based on arguments presented in the stay briefing, EPA can be expected to respond to the opening briefs by arguing that the agency (1) did account for the “absurd” results of regulating GHG emissions under the Clean Air Act by promulgating the Tailoring Rule that adjusts regulatory thresholds; (2) properly interpreted the Act to allow consideration of amalgamated pollutants, including those from non-mobile sources, and to create a precautionary standard that does not require any specific quantification of risk; (3) reasonably declined to consider mitigation or adaptation; and (4) had adequate support in the administrative record for a finding of high likelihood of serious harm. With respect to petitions for reconsideration, EPA will likely argue that it did not delegate its judgment by relying on scientific assessments prepared by outside groups, that it applied the correct legal standard in denying petitions for reconsideration, and that it properly concluded that the “Climategate” disclosures did not provide a basis for administrative reconsideration.

Merits briefing in the Endangerment and reconsideration challenges will likely be complete by mid-November 2011.

Tailpipe Rule
State, nonprofit, and industry groups have filed 17 petitions for review of the Tailpipe Rule in the D.C. Circuit, consolidated under the caption Coalition for Responsible Regulation v. EPA, No. 10-1092.

Following the D.C. Circuit’s order declining to issue a stay, petitioners filed opening merits briefs in June 2011. The brief for the non-state petitions (again, consisting of the stay petitioners joined by the U.S. Chamber of Commerce and additional industry groups), raises three principal challenges. First, non-state petitioners argue that the Tailpipe Rule rests on a flawed reading of the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which EPA mistakenly understood as requiring promulgation of automobile emissions standards. Second, petitioners challenge EPA’s conclusion that, under the Clean Air Act, the Tailpipe Rule automatically triggers stationary source regulation. Petitioners note that EPA acknowledges that this interpretation produces “absurd” results, and yet refused to consider the costs of stationary source regulation. Third, the non-state petitioners argue that EPA failed to show the Tailpipe Rule would meaningfully avert any of the harms predicted in its Endangerment Rule, as EPA predicts only vanishingly small effects on public health or welfare, which in any event will be achieved independently by NHSTA’s parallel fuel efficiency standards. The second brief, filed by Texas and eight other states, asserts that the Tailpipe Rule is predicated on an invalid Endangerment Rule and that EPA improperly failed to consider the costs of stationary source regulation. In late June, the American Chemistry Council filed an amicus brief supporting petitioners, arguing that applying the Tailpipe Rule as a trigger for stationary sources would impose significant economic burdens beyond the automobile industry, and that EPA erred in failing to consider those burdens.

EPA’s brief is due September 1, 2011, with briefs for supporting amici curiae and interveners expected later that month. Again, based on the stay briefing, EPA can be expected to argue in response (1) that the Tailpipe Rule implements a non-discretionary statutory command that follows from the Endangerment Rule; (2) that the rule will measurably reduce global warming and will provide significant GHG reductions even beyond what will be achieved by NHTSA’s standards because EPA’s rule, not NHTSA’s, regulates mobile source air-conditioning systems, and because manufacturers can opt out of the NHTSA rules, but not EPA’s, by paying a fine; and (3) that while the Act does not require consideration of stationary source costs in setting mobile source standards, EPA in any case did consider those costs in promulgating the Tailoring Rule adjusting stationary source regulatory thresholds.

Briefing on the Tailpipe Rule challenges is expected to be complete by the end of November 2011.

Timing and Tailoring Rules
State, nonprofit, and industry groups have filed 17 petitions for review of the Timing Rule and 25 additional petitions for review of the Tailoring Rule, which the D.C. Circuit consolidated under Coalition for Responsible Regulation v. EPA, No. 10-1073.

The petitioners filed two opening merits briefs on June 20, 2011. The brief for the non-state petitioners and supporting interveners advanced several principal arguments. First, petitioners argue that EPA lacked a valid doctrinal basis to revise the Act’s numerical thresholds, because the agency was required to choose—or could have reasonably chosen—other constructions that would have avoided “absurd” results. The Act’s stationary source PSD provisions, for instance, should and could be construed to apply only to sources that emit threshold amounts of pollutants in areas designated attainment for those pollutants. (EPA has traditionally applied PSD to any facility emitting threshold amounts of a pollutant so long as the facility is located in an area designated as attainment for any pollutant—for practical purposes, everywhere in the United States.) Similarly, EPA should, and could, define GHGs as not constituting an “air pollutant” for purposes of stationary source regulation (even if they are for mobile sources), because doing so distorts the structure of the program and Congress’ purpose of addressing localized air pollution. Petitioners separately argue that regulating stationary sources beginning on January 2, 2011, is inconsistent with the Act’s procedures for adding new pollutants to the PSD program, including specific timelines for states to revise their SIPs. Petitioners also contend that the Act prohibits EPA from regulating GHGs under the Title V operating permit program. And finally, petitioners argue that EPA erred in imposing staggered thresholds for applying PSD to an increasing number of sources, because EPA lacked authority to impose a construction moratorium as a sanction for a state not revising its SIP and failed to provide a transition period before implementing the second stage.

Texas, on behalf of eight other states, filed an opening brief challenging the Tailoring Rule on similar grounds and asserting additionally that (1) EPA lacked authority to override the Act’s specific numerical, mass-based thresholds for regulating stationary sources, and (2) the Tailoring Rule is unconstitutional because it asserts authority to exercise discretion unbounded by any intelligible principle from Congress. The states’ brief also contends that the Timing Rule is invalid because Congress did not delegate to EPA the authority to decide whether to extend the Act’s numerical permitting thresholds to GHG emissions, and because the rule is inconsistent with FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000). Kentucky and the American Chemistry Council filed an amicus brief supporting petitioners, arguing that EPA’s expansive interpretations of the PSD program had effectively removed all statutory constraints on its actions and violated states’ sovereign rights by disregarding statutory procedures for revisions to SIPs. The Municipal Gas Corporation of Missouri also filed an amicus brief, arguing that EPA erred in failing to consider the economic impact of GHG regulation on low-income populations.

Based on last year’s stay briefing, EPA can be expected to respond by arguing that (1) the plain text of the Clean Air Act requires it to regulate GHG emissions from stationary sources once it regulates such emissions from mobile sources; (2) in any event, the agency’s position that regulation of a pollutant under one title makes that substance “subject to regulation” for purposes of all the other titles of the Act has been codified in an EPA regulation since 1980 and is entitled to deference; (3) the Tailoring Rule has a valid doctrinal basis under the “administrative necessity,” “absurd results,” and “one-step-at-a-time” doctrines; (4) Massachusetts considered and rejected the application of Brown & Williamsonin the GHG context; and (5) the rule does not conflict with the Act’s provisions governing new PSD pollutants or SIP revision.

Significant Decisions
As of this writing, the merits briefing in the consolidated cases is ongoing. However, the D.C. Circuit has made three important preliminary rulings. First, as noted above, on December 10, 2010, the court declined to stay implementation of the rules pending adjudication of the petitions for review. The petitioners had alleged that various harms would result from implementation of the rules, including a de facto construction ban given the time needed to process permits, other economic harms, and the burden of establishing permit programs. Rather than addressing the merits of petitioners’ legal challenges, the court concluded that petitioners “ha[d] not shown that the harms they allege are ‘certain,’ rather than speculative, or that the alleged harm[s] will directly result from the action[s] which [they] see[k] to enjoin.” Thus, although the court allowed implementation of the rules to move forward on January 2, 2011, it offered little hint about a future ruling on the merits.

Second, several petitioners moved to coordinate the three groups of consolidated petitions so that a single panel of the D.C. Circuit would hear argument on all the cases on the same day. The government opposed coordination, contending that the rules present different issues with independent administrative records and that coordination would not help briefing or argument. The D.C. Circuit granted the petitioners’ motion and invited the parties to propose a briefing schedule that addressed “common briefing across cases.” The court’s action on the coordination order may suggest it views the four rules as more closely related—and thus perhaps more likely to stand or fall as a group—than the government would prefer.

Third, and conversely, the D.C. Circuit issued a briefing order in late March 2011 that declined to adopt the non-state petitioners’ (invited) proposal for a cross-cutting briefing format that would reflect the interrelated nature of the five rulemakings under review. The non-state petitioners, for instance, proposed a unified statement of the facts describing the evolution of, and relationship between, the five rules under review, as well as a “common issues” brief addressing cross-cutting concerns such as EPA’s failure to consider the “absurd” results of its rulemakings. The D.C. Circuit instead issued a more traditional briefing format, with three groups of briefs addressing the Endangerment Rule and denial of reconsideration, Tailpipe Rule, and Timing and Tailoring Rules. Due to the coordination order, however, the cases will still be set for briefing and argument before a single panel.

Stationary Source PSD Regulations
Predicated on the Timing and Tailoring Rules as “grounds arising after” the initial statutory period for judicial review, a group of business interests petitioned for review of EPA rules promulgated in 1978, 1980, and 2002, which define the types of pollutants covered by the Act’s stationary source PSD provisions. These petitions have been consolidated in the D.C. Circuit under American Chemistry Council v. EPA, No. 10-1167. The petitioners challenge EPA’s legal position that stationary source PSD permitting requirements apply to any source that emits any pollutant in major amounts and is located in an area designated attainment for any pollutant for which EPA has established national ambient air quality standards. The petitioners contend that the plain language of the Act requires that preconstruction requirements for GHGs should apply only when a source emits major amounts of the particular pollutant as to which the area where the source is located has been designated attainment. (EPA has not issued a national ambient air quality standard for GHGs.) In any event, petitioners contend, EPA’s reading of the statute is unreasonable because it leads to absurd results. Finally, petitioners contend that their challenges to the rules are timely, because the Tailpipe Rule created new grounds for challenging the rule by triggering regulation of GHGs from new groups of stationary sources; because challenges to the regulation of GHGs would not previously have been ripe; and because EPA effectively reopened its interpretation in recent rulemakings, including the Tailoring Rule.

EPA initially moved to dismiss the petitions for lack of jurisdiction, but after briefing, the D.C. Circuit deferred the motion for consideration by a merits panel. EPA contends that the petitions are untimely under the Act’s 60-day limit for challenging EPA rules, because (1) the implications of EPA’s reading were clear from the 1978, 1980, and 2002 rules; (2) the “new grounds” doctrine does not apply because petitioners principally advance legal arguments that were available at the time the rules were promulgated; (3) the challenges were ripe at the time the rules were promulgated; and (4) EPA did not reopen its interpretation. On the merits, EPA argues that the plain text and context of the Clean Air Act compels its interpretation of the scope of the PSD program; and that if the court concludes the statute is ambiguous, it should remand to allow the agency to construe that ambiguity in the first instance. In early July 2011, several environmental groups filed an intervenor’s brief in support of EPA, arguing that the challenges were not properly before the court and that on the merits, the plain statutory language refuted the petitioners’ pollutant-specific reading. The Center for Biological Diversity submitted an amicus brief, arguing that EPA’s reading of the statute was not absurd and that the petitioners’ interpretation itself did not avoid absurd results.

Briefing was expected to conclude in early August 2011, and the consolidated petitions will be scheduled for briefing and argument before the same D.C. Circuit panel considering the challenges to the Endangerment, Tailpipe, Timing, and Tailoring Rules.

State Implementation Plans
Beginning in late 2010, Texas, Wyoming, and several industry groups opened yet another front of litigation focusing on State Implementation Plans, seeking review of the December 13, 2010, “SIP Call” rule, the December 30, 2010 interim final rule and May 3, 2011 final rule revoking EPA’s approval of Texas’s SIP, and the December 29 and 30 rules imposing a Federal Implementation Plan in other states.

SIP Call Rule
Following EPA’s issuance of the SIP Call rule, Texas sought immediate review and a stay in the Fifth Circuit. Texas contended that the rule violated requirements in the Act and its regulations giving states three years to revise their SIPs to reflect EPA’s new standards, that the regulatory scheme underlying the SIP Call was unlawful, and that Texas had no obligation to revise its SIP because the PSD program does not require regulating GHGs. EPA opposed the stay and urged the court to dismiss the petition or transfer it to the D.C. Circuit under the Clean Air Act’s venue provisions. In late December, the Fifth Circuit denied a stay, holding without further discussion that Texas “ha[d] not met [its] burden to satisfy the legal standards required to allow a stay pending appeal”; two months later that court transferred the petition to the D.C. Circuit.

The D.C. Circuit consolidated Texas’s petition with those of numerous industry groups, including the Utility Air Regulatory Group and an industry coalition whose members include the National Association of Manufacturers. Utility Air Regulatory Group v. EPA, No. 11-1037. The petitioners’ preliminary filings articulate a number of grounds for relief, including that the SIP Call Rule (1) is contrary to the Clean Air Act’s mandatory procedures for SIP revision; (2) is based on the erroneous principle that states cannot issue valid permits to GHG sources absent SIP revisions; and (3) is unlawful because EPA failed to give states a reasonable time to amend their own SIPs. In April 2011, EPA filed a motion to hold the consolidated petitions in abeyance, which the state and industry petitioners opposed. In early July, the court denied EPA’s petition and ordered the parties to propose a briefing schedule by September 13, 2011.

In February 2011, Wyoming, the National Mining Association, the Utility Air Regulatory Group, and other industry groups filed petitions for review of the SIP Call Rule in the Tenth Circuit, which have been consolidated under Wyoming v. EPA, 11-9504. As with Texas’ petition, EPA promptly moved to dismiss or transfer the petitions to the D.C. Circuit. On April 18, the court deferred consideration of EPA’s motions to the merits panel and issued a briefing order. With briefing underway, EPA filed a motion in early May to hold the case in abeyance pending the D.C. Circuit’s resolution of the petitions in that court challenging the principal GHG rules (i.e., the Endangerment, Tailpipe, Timing, and Tailoring Rules), and the SIP Call Rule. On June 3, the Tenth Circuit denied EPA’s petition to hold the cases in abeyance.

Wyoming’s opening merits brief contends that EPA (1) violated the Clean Air Act’s mandatory timeframes for SIP revisions; (2) provided inadequate notice and opportunity to comment in promulgating the rule, because the proposed rule did not suggest that Wyoming’s SIP was inadequate; and (3) contravened the Tenth Amendment by coercing Wyoming to accept a Federal Implementation Plan by threatening to impose a construction moratorium. The industry petitioners’ opening brief further argues that (1) the Act’s PSD requirements were not “self-executing” upon issuance of the Tailpipe Rule (and thus that EPA lacked authority to impose a construction moratorium and that the states’ existing SIPs should remain in force absent amendment) and (2) that the Rules violated the Act’s provisions and EPA’s binding rules governing SIP revisions, which establish a three-year schedule.

On July 8, EPA sought reconsideration of the Tenth Circuit’s orders in light of an intervening Tenth Circuit case and the D.C. Circuit’s decision to move forward with briefing in the parallelUtility Air Regulatory Group challenges, asking the court immediately to dismiss or transfer the Wyoming petitions. On July 11, the court issued an order tolling merits briefing and directing the parties to respond to EPA’s motion. On July 21, Wyoming and the industry petitioners filed responses in opposition to EPA’s motion. As of this writing, those motions remain pending.

Disapproval of Texas’s SIP
After EPA issued its December 30, 2010 interim final rule partially disapproving Texas’s SIP and promulgating a Federal Implementation Plan for the state, Texas immediately sought review and a stay in the D.C. Circuit (because EPA had declared the rule to be of national scope), under the caption Texas v. EPA, No. 10-1425. Texas contended that EPA had failed to demonstrate “good cause” to bypass the Act’s normal administrative procedures by issuing an interim final rule that took effect immediately. The D.C. Circuit took the unusual step of issuing an interim stay of the rule on December 30 “to give the court sufficient opportunity to consider the merits of the emergency motion for a stay,” while emphasizing that its decision “should not be construed in any way as a ruling on the merits of that motion.” After receiving EPA’s expedited response to the stay petition, the court dissolved its administrative stay on January 12 and denied the stay motion, concluding without further discussion that Texas “ha[d] not satisfied the stringent standards required for a stay pending court review.” In March 2011, the D.C. Circuit directed Texas (and the petitioner in a consolidated case brought by a Texas business interest) to show cause why the challenges should not be held in abeyance pending resolution of the challenges to the Endangerment, Tailpipe, Timing, and Tailoring Rules. In early May, EPA moved to dismiss the petitions as moot on the ground that the Interim Final Rule had been replaced by the May 3 final rule on the same subject. As of this writing, the show cause order and EPA’s motion remain pending.

Texas, in turn, petitioned for review of the May 3 final rule in the D.C. Circuit, under the caption Texas v. EPA, No. 11-1128. Texas’ preliminary submissions raise both procedural and substantive challenges, arguing that EPA (1) exceeded its inherent power and authority under the Clean Air Act to correct errors in its prior SIP approvals; (2) relied on material from outside the administrative record and failed adequately to respond to comments; and (3) improperly engaged in retroactive rulemaking to revise its decades-old approval of Texas’s SIP. In early June 2011, EPA moved to hold the petitions in abeyance pending resolution of the principal cases and to consolidate the challenges to the interim and final rules. As of this writing, the court had not yet ruled on those motions.

Looking Forward
With the likelihood of new legislation addressing greenhouse gases significantly diminished, if not eliminated, in the wake of the 2010 mid-term elections, EPA’s efforts to use existing statutory authorities—and the litigation challenging those efforts—has taken center stage for the foreseeable future. Notwithstanding the Supreme Court’s 2007 holding in Massachusetts v. EPA that EPA has statutory authority to regulate GHG emissions from new motor vehicles, the current round of litigation could have far-reaching implications for EPA’s regulatory authority. Petitioners have challenged the validity of the Endangerment Rule, which serves as the legal predicate for numerous subsequent regulations. Petitioners also seek to sever the statutory link between regulation of mobile and stationary sources and contest EPA’s authority to tailor statutory source regulation to avoid the regulatory gridlock and immense costs all agree would result from applying the Act to stationary source GHGs according to its plain terms. The petitions also challenge EPA’s ability to direct states to revise their SIPs to implement EPA’s GHG rules and contest EPA’s authority to assume federal control of state permitting if, as with Texas, a state refuses to comply.

The significance of the current petitions is also heightened by the Supreme Court’s June 20, 2011, decision in American Electric Power Co. v. Connecticut (AEP), which held that the Clean Air Act and the EPA actions authorized there under “displace” federal common-law public nuisance claims against carbon dioxide emitters. The plaintiffs in AEP had sued five electric power companies under federal- and state-law public nuisance theories and sought a court order capping emissions and establishing year-by-year reductions. Taking pains to “caution” that it “endorses no particular view of the complicated issues related to carbon dioxide emissions and climate change,” the Supreme Court held that the plaintiffs had failed to state a claim, because “the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants.” Am. Elec. Power Co. v. Connecticut, 131 S. Ct. 2527, 2533 n.2, 2537 (2011). The Court specifically rejected the argument that federal common law is not displaced until EPA “actually exercises its regulatory authority,” reasoning that the relevant question is “whether the field has been occupied, not whether it has been occupied in a particular manner.”

Significantly, the Court in AEP explained that even if EPA “decline[d] to regulate carbon-dioxide emissions [from power plants] altogether at the conclusion of its [now-ongoing New Source Performance Standards] rulemaking [under 42 U.S.C. § 7411], the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency’s expert determination.” While the Court did not have occasion to address whether common-law claims would be displaced if EPA was subsequently held to lack authority over some aspect of greenhouse gas emissions (e.g., stationary source emissions under the PSD program), the Court’s logic strongly suggests federal common-law claims would still be displaced. By foreclosing the possibility of federal common-law nuisance suits (albeit while declining to address whether the Act preempts state-law tort suits), AEP thus further shifts the focus onto the pending petitions for review, each of which challenges the scope and extent of EPA’s authority to regulate GHG emissions.


Jeremy C. Marwell is an associate in the appellate practice group of the Washington, D.C., office of Vinson & Elkins LLP.


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