Appeals court declines to rehear GHG-rule challenge, tees up case for Supreme Court

Posted: Dec 21, 2012

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Carbon emissions

A federal appeals court today rejected an industry-backed request that it reconsider its decision to uphold Obama administration greenhouse gas regulations.

But the U.S. Court of Appeals for the District of Columbia Circuit was split on the issue with two judges writing opinions saying that the court should have reheard the challenges to the four interlinked rules.

The arguments made in the opinions by Judges Brett Kavanaugh and Janice Rogers Brown -- both President George W. Bush appointees -- will no doubt be seized upon by industry groups and states that oppose the rules when they seek Supreme Court review on the matter.

As a result, today's decision brought some comfort to all sides involved in the litigation with environmentalists at least pleased that the court voted against rehearing on a 6-2 vote.

In June, a three-judge panel of the appeals court denied or dismissed challenges to the four rules that are key to U.S. EPA's effort to regulate greenhouse gas emissions (Greenwire, June 26).

The court denied two industry and state-backed petitions seeking invalidation of the so-called endangerment finding, the agency's original conclusion that greenhouse gases pose a health risk and should be regulated under the Clean Air Act, and the "tailpipe" rule that set greenhouse gas emissions standards for cars and light-duty trucks beginning with 2012 models.

The judges outright dismissed related petitions challenging two other regulations: the "timing" rule, which required that new controls of greenhouse gas emissions from stationary sources would be triggered Jan. 2, 2011, and the "tailoring" rule, which interprets the Clean Air Act in such a way that only major polluters are required to obtain permits for greenhouse gas emissions.

It was always going to be an uphill battle to persuade the court's eight active judges to rehear the case, a procedure known as rehearing en banc, in large part because all five of the judges who weren't on the panel would have to have voted for it.

Only Kavanaugh and Brown did so. Brown focused in her dissent from denial of rehearing on the underlying question of whether greenhouse gases should even be regulated under the Clean Air Act, a question that the Supreme Court already decided in its 2007 ruling in Massachusetts v. EPA.

Brown acknowledged the high court ruling in her brief but made it clear she disagrees with it and thinks the panel relied too much on it.

"I do not choose to go quietly," she wrote at the beginning of the 23-page opinion, which delves into the history of the Clean Air Act and questions the decisionmaking that underpinned the endangerment finding, among other things.

"At bottom, bad decisions make bad law," Brown added. "In denying rehearing en banc, this court has read Massachusetts to its illogical ends and it is American industry that will have to pay."

Kavanaugh's opinion, which industry lawyers are expected to give more attention to, addressed the argument that had appeared to be the challengers' best shot when the case was argued in February: that greenhouse gases could not be regulated via EPA's New Source Review/Prevention of Significant Deterioration program, known as PSD, because pollutants that can be regulated via the program are limited to the six covered by National Ambient Air Quality Standards, or NAAQS.

The appeals court found that the phrase "any air pollutant" in the Clean Air Act is not limited to the NAAQS and does include greenhouse gases.

Kavanaugh queried that finding, arguing that nothing the Supreme Court decided in Massachusetts v. EPA determines which pollutants are covered under the PSD program. The case only applied to motor vehicle emissions, he noted.

There is a "glaring problem" in how EPA interpreted the law in order to expand the definition of "any air pollutant," Kavanaugh said. That is because it leads to what lawyers call "absurd results," namely that many more facilities would require Clean Air Act permitting.

EPA addressed the issue by issuing the tailoring rule, which, Kavanaugh and other critics say, effectively involved rewriting the statute.

"This is a very strange way to interpret a statute," Kavanaugh wrote. The much easier route for EPA, he added, would have been to interpret the statute in a way that only applied to the original six pollutants.

To Kavanaugh, "it seems evident" that the PSD statute refers only to the NAAQS pollutants.

He concluded by observing that climate change is an "urgent and important" problem but one that Congress must take the lead on.

The three judges who were on the original panel -- Chief Judge David Sentelle, Judge David Tatel and Judge Judith Rogers -- signed onto a separate opinion defending the court's action.

They stressed that the panel was correct to rely as much as it did on Massachusetts v. EPA. The Supreme Court "expressly rejected many of the arguments" made by Brown in her dissent, the judges wrote.

They also took issue with Kavanaugh, saying that his alternative reading of the PSD statute was actually less plausible than EPA's.

Although the stakes are high, the legal issues are "straightforward, requiring no more than the application of clear statutes and binding Supreme Court precedent," the judges added.

Sean Donahue, an attorney who represents the Environmental Defense Fund in the litigation, said he was "really happy" that the rehearing was denied. Looking ahead, he agreed that Kavanaugh's opinion was more likely to be of use to challengers than Brown's. He described her approach as one that "wouldn't have any purchase" with the justices.

Eric Groten, an attorney at Vinson & Elkins representing the Coalition for Responsible Regulation, confirmed that a Supreme Court petition would be the next step "as surely as the climate has been changing since the Earth had an atmosphere."

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