Pro-industry groups once again look to a policy fix to climate change regulation in light of a June 26 Federal appeals court ruling that upheld the U.S. Environmental Protection Agency’s (EPA) endangerment finding and subsequent rules using the Clean Air Act (CAA) to control greenhouse gas (GHG) emissions from mobile and stationary sources. A few days later, EPA finalized the third step of its GHG “tailoring rule,” which phases-in the control of emissions starting with the largest stationary sources, and decided not to lower the regulatory thresholds in the near future. It remains unclear whether pro-industry groups will appeal the ruling as well as whether there is sufficient appetite to address climate change on Capitol Hill.
UPDATE: On August 10, 2012, the U.S. Chamber of Commerce, the National Association of Manufacturers, Peabody Energy Co. and the states of Texas, Virginia and Alaska filed briefs asking for a new hearing on the same case in the court in which it was originally heard. They are seeking either a rehearing of the case by the three original judges or for the entire panel of eight judges to hear the case. The groups question the court’s decisions to uphold the endangerment finding and to dismiss industry challenges to the tailoring rule based on a lack of standing (i.e., failure to establish a sufficient connection to and harm from the law or action challenged). The court could take more than a month to answer the briefs; and it could accept or deny the rehearing, or request a response from EPA.
On the Hill
In the weeks following the ruling, there has been speculation as to what, if anything, Congress would do to address greenhouse gas regulation in the months leading up to the elections or should there be a change in Administration. The House almost immediately added riders to block upcoming GHG regulations during a committee markup of EPA’s fiscal year 2013 spending bill. Urging similar action in the Senate, Sen. James Inhofe (R-OK) reportedly said the ruling should be a “wake-up call.” Early discussions about instituting a “carbon tax” garnered some support from conservatives and liberals alike; however, details are few and agreement is unlikely on timing, how the tax would be structured, who would benefit, and whether it should be part of an overhaul of the tax code. In the Courts: The June 26 Ruling On June 26, the U.S. Court of Appeals for the District of Columbia Circuit upheld EPA’s 2009 endangerment finding and subsequent rules to address GHG emissions—namely the 2010 “tailpipe” rule for new vehicle emissions and the 2010 “tailoring rule” for the permitting of stationary sources. The court did not re-weigh the scientific evidence before EPA and instead relied on EPA’s discretion and expertise. The court also did not address the merits of the “tailoring rule,” deciding instead that the petitioners did not have standing to challenge the rule. “Simply put, petitioners have failed to establish that the… tailoring rules caused them ‘injury in fact,’ much less injury that could be redressed by the rules’ vacatur.” The court also called attention to the fact that “[i]f anything, vacatur of the tailoring rule would significantly exacerbate petitioners’ injuries.” The tailoring rule significantly reduced the number of stationary sources that would have been required to obtain new construction and/or operating permits under the CAA. Click here to read the U.S. Court of Appeals for the District of Columbia Circuit unsigned per curiam June 26 opinion (82 pages) in Coalition for Responsible Regulation, et al. v. EPA, et al. At the Agency: Step Three of the Tailoring Rule On July 3, EPA finalized the third step in its “tailoring rule” and confirmed that it would not lower the threshold to regulate the small and medium sources of greenhouse gas emissions at this time. EPA chose not to revise the permitting thresholds that were established in the first two steps (or phases) associated with the tailoring rule and will remain focused in the near future on the largest emitters. These emissions thresholds determine when CAA permits under the New Source Review Prevention of Significant Deterioration (PSD) and title V Operating Permit programs are required for new and existing industrial facilities. According to EPA, new facilities with GHG emissions of at least 100,000 tons per year (tpy) carbon dioxide equivalent (CO2e) and existing facilities with at least 100,000 tpy CO2e making changes that would increase GHG emissions by at least 75,000 tpy CO2e are required to obtain PSD permits. Facilities that must obtain a PSD permit anyway, to cover other regulated pollutants, must also address GHG emissions increases of 75,000 tpy CO2e or more. New and existing sources with GHG emissions above 100,000 tpy CO2e must also obtain operating (title V) permits. For more information on the tailoring rule, visit EPA’s website at http://www.epa.gov/nsr/actions.html. For more information, contact Melinda Tomaino at (703) 837-5415 or tomainom@agc.org.