Industry Asks Court to Rehear Case Upholding Greenhouse Gas Emissions Regulations by EPA

On August 10, several industry groups filed briefs asking the U.S. Court of Appeals for the District of Columbia to rehear a case decided in late June by the same court concerning the U.S. Environmental Protection Agency’s (EPA) regulations of greenhouse gas (GHG) emissions.  In the last Observer, AGC reported on this June 26 ruling that upheld the EPA “endangerment finding” for greenhouse gases and the Agency’s subsequent rules to control GHG emissions from mobile and stationary sources.  At the time of that article, it was unclear whether industry groups would appeal the D.C. Circuit ruling that denies key challenges to EPA's regulations of greenhouse gas emissions. On August 10, 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. The June 26 Ruling In-Brief The D.C. Circuit recently upheld EPA's endangerment finding and its regulation of GHG emissions for cars and light-duty trucks through the "tailpipe" rules, stating that neither was arbitrary nor capricious, and that EPA's interpretation of the relevant Clean Air Act (CAA) provisions were "unambiguously correct." As to EPA’s regulations that phase in the permitting requirements for new construction of and modifications to facilities emitting GHGs – called the “tailoring” rules – the court held that the petitioners were found to lack standing because they could not establish that the tailoring rules "cause them 'injury in fact.'"  The tailoring rules reduce the number of facilities that would otherwise need to obtain permits. Background AGC continues to track developments in policy related to greenhouse gases, write comments to the EPA on proposed rules and participate in ad hoc industry coalitions because of the potential impacts of these rules on the construction industry.  The use of the CAA to regulate greenhouse gas emissions opens the door to emission standards for new mobile sources (now in place for on-road vehicles) and eventually the off-road vehicles used in construction, which some policy experts see as a target for EPA in the future.  The CAA permitting programs for the new construction and major renovation of stationary sources and the operation of such facilities already have been triggered.  Whereas the Agency recently has announced that only large industrial sources will be required to obtain permits in the immediate future, the Agency at its discretion can expand that program to small- and medium-sized facilities. Below are summarizes of the endangerment finding and rules with links to additional resources. Endangerment Finding -- EPA's "endangerment finding," which was published by EPA on December 15, 2009 (74. Fed. Reg. 66496), determined that greenhouses gases may "reasonably be anticipated to endanger public health or welfare." The endangerment finding for greenhouse gases was a key step to begin regulating those emissions using the Clean Air Act.  To read AGC's comment letter to EPA on the proposed endangerment finding, click here.  More information is available on EPA’s website. Tailpipe Rule -- EPA's initial "tailpipe" rule regulates the greenhouse gas emissions from cars and light-duty trucks.  See 75 Fed. Reg. 25,324, May 7, 2010.  EPA worked with the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) on this program.  The rule took effect on January 2, 2011, and established standards for 2012-2016 model year vehicles.  In November 2011, the agencies released a proposal to expand the standards to model years 2017-2025.  In August 2011, EPA and NHTSA also unveiled a program to reduce GHG emissions and improve fuel efficiency of heavy-duty trucks.  To read an AGC article on the heavy-duty truck program, click here.  More information on EPA’s tailpipe rules is available on EPA’s website. Tailoring Rule -- Once the 2010 tailpipe rule was finalized, greenhouse gases became a regulated pollutant under the CAA.  As a result, the CAA permitting programs now apply to facilities that emit greenhouse gases.  See 42 U.S.C. §§ 7479(1), 7602(j).  Congress established the permitting thresholds in those programs to control criteria pollutants; and therefore, the thresholds are very low.  Applying those thresholds to GHGs would have caused a massive increase for new construction and major renovation permits that would have backed-up the permitting process for years.  In addition, more than six million newly-regulated facilities would have to obtain operating permits.  To avoid an administrative backlog, EPA “tailored” the permitting thresholds for GHGs to focus first on the largest sources of emissions and then phasing in smaller sources. The “tailoring” rule phases in permitting requirements for new and modified facilities as well as certain existing facilities emitting greenhouse gases regulated under the Clean Air Act.  See 70 Fed. Reg. 31,514, June 3, 2010.  Currently, 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 Prevention of Significant Deterioration (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.  To read AGC’s comment letter to EPA on the tailoring rule, click here.  More information is available on EPA’s website. For more information, contact Melinda Tomaino at (703) 837-5415 or tomainom@agc.org.