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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Greenhouse Gases – Statutory Construction & the Length of Regulatory Logic

Posted in Agency Authority, Judicial Review & Remedies

The United States Supreme Court (SCOTUS) yesterday granted review in six greenhouse gas cases, consolidated them all into one, and posited its own question for argument:  “Whether [the Environmental Protection Agency (EPA)] permissibly determined 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.”  This deceptively simple question is actually quite complicated:  the Court will be looking at whether EPA, having deciding to limit greenhouse gas emissions from vehicles, could then follow a regulatory logic train across multiple titles of the Clean Air Act (CAA) to impose construction and operating permit requirements on stationary facilities – like power plants – that emit the same gases.  The fate of this question, in the complex enactment of the CAA, portends the limits of legal logic for all agencies.

Cold, Hard Facts & Law:  Carbon dioxide is most ubiquitous and the largest by volume of the six pollutants that are en-compassed by EPA’s definition of greenhouse gases. Carbon is the 15th most abundant element on earth.  Carbon dioxide (CO2) is a trace gas in the earth’s atmosphere at 0.039% by volume (or so), humans exhale 4% CO2.  The “carbon cycle” is completed as plants absorb CO2 and release oxygen.  All combustion creates some CO2.  Some level of CO2 can inhibit heat from radiating away from earth, or to be trapped, and, therefore, the term “greenhouse” gas.  The amount and sources have led to the most vociferous debate about the regulation of combustion sources, whether vehicles or coal fired electricity generators.  Whatever the scientific result, the question here is one of law and only law – how far can EPA regulate under the CAA, not about “global warming.”

The Massachusetts PetitionMassachusetts v. EPA held that greenhouse gases may be regulated as an “air pollutant” under the CAA.  Massachusetts arose out of a petitioned for rulemaking asking the EPA to regulate greenhouse gases, but EPA claimed that it had no jurisdiction under its interpretation of the CAA.  SCOTUS found that EPA erred – and set off the train of regulations leading to today’s grant of certiorari.

EPA Regulations:  In light of Massachusetts v. EPA, and a change in Administration, the EPA took a series of regulatory steps to expand its regulation of greenhouse gases:

  1. EPA determined in the Endangerment Finding that greenhouse gases may “reasonably be anticipated to endanger public health or welfare” under the CAA.
  2. EPA issued the Tailpipe Rule setting emission standards for cars and light trucks.
  3. EPA required new major stationary sources of greenhouse gases to obtain construction and operating permits.
  4. EPA found that immediate regulation of all sources would result in overwhelming permitting burdens on permitting authorities and industry, and, therefore, EPA issued the Timing and Tailoring Rules to provide that only the largest stationary sources would initially be subject to permitting requirements.

D.C. Circuit:  The United States Court of Appeals for the District of Columbia Circuit on multiple petitions for review, concluded that:

  1. the Endangerment Finding and Tailpipe Rule were not arbitrary or capricious;
  2. EPA’s interpretation of the governing CAA provisions was “unambiguously correct” (which may say more than necessary for its decision); and
  3. none of the petitioners had standing to challenge the Timing and Tailoring Rules.

From this per curiam decision, multiple petitions to SCOTUS for certiorari were filed.

SCOTUS Review:  SCOTUS will review only the middle aspect of the D.C. Circuit ruling – application of the permitting requirements – leaving intact EPA’s basic finding (step 1) that greenhouse gases pose a danger to human health and not touching upon EPA’s attempt to mitigate its own application of the permitting requirements.  In granting six petitions (and denying three others) and consolidating the cases for only one hour of argument, SCOTUS may have signaled that it wishes to review a limited statutory interpretation issue.  Whether the CAA’s “new motor vehicles” authority triggered the CAA requirements for permitting stationary sources raises many subtleties.  SCOTUS’s declination, for example, to review EPA’s Endangerment Finding could be small solace if SCOTUS parses narrowly the CAA’s consistent or inconsistent use of language.  SCOTUS has actually drawn a complicated issue of statutory interpretation that affects all agencies because underlying that question are two equally important issues:  (1) the length of a logic train that an agency may use in interpretation a statute, and (2) who decides when that logic chain becomes “absurd.”

Petitioners, at bottom, argue that EPA’s expansion application is contrary to explicit congressional intent to cover only a limited number of large industrial facilities in the permitting programs.  EPA appears to have acknowledged that regulating CO2 emissions under the CAA’s permitting schemes would encompass far more sources for the first time – and thus adopted the Timing and Tailoring rules to mitigate that overwhelming burden.  Whether Congress intended regulations to go so far as EPA has taken them implicates a host of canons of statutory construction or statutory interpretation.  The same canons form the foundation of the Administrative Procedure Act (APA)’s standards of review to determine whether any regulation is “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.”

At the end of the day, SCOTUS may guide judicial review of the viability of any final rule that the Administration may promulgate from the highly contentious proposed rule that would limit emissions from conversion of energy from fossil fuels to electricity in new power plants.  On a broader scale, SCOTUS may guide Congress and many other agencies on the limits of statutory construction and interpretation – and the scope of judicial Chevron deference to an agency’s interpretation of broad, complex, or convoluted Congressional enactments.

SCOTUS can look at the question that it will review in many different ways, and the first indication of individual Justice’s views of that question may (or may not) come from oral argument next Spring.