Coalition for Responsible Regulation, Inc., et al. v. EPA (Coordinated Endangerment Rule, Auto Rule, Timing Rule, Triggering Rule, and Grounds Arising After Lawsuits)

U.S. Court of Appeals for the District of Columbia Circuit

Tab Group

U.S. Chamber's Position

On August 10, 2012, the U.S. Chamber of Commerce appealed to the full U.S. Court of Appeals for the D.C. Circuit a June 26, 2012 ruling of a three-judge panel  that ruled that the EPA had authority to regulate greenhouse gases ("GHGs") under the Clean Air Act. The suite of EPA rules challenged in these coordinated cases are the most burdensome, costly, far-reaching regulations ever adopted by a United States regulatory agency — a point the Environmental Protection Agency has never contested.

Overview of Chamber's Legal Challenges

The Chamber's legal challenges focus specifically on the inadequacies of the process that EPA followed in triggering Clean Air Act regulation of GHGs, and not on scientific issues related to climate change or endangerment. Because of the huge potential impact on jobs and local economies, this is an issue that requires careful analysis of all available data and options. Unfortunately, the agency failed to do that and instead overreached. The Chamber argues that the Clean Air Act was never intended to regulate greenhouse gas emissions.

Among the important legal questions addressed by the Chamber's petition for rehearing is whether the three-judge D.C. Circuit panel erred by upholding EPA’s decision to rewrite statutory requirements to avoid the absurd consequences EPA acknowledged were entailed by its rules, and whether the panel erred by allowing EPA to shield its unprecedented claim of statutory-rewrite authority from meaningful review through use of an administrative ‘shell game.’

On Whether Massachusetts v. EPA Obligated the EPA to Regulate GHGs under the Clean Air Act, and Whether Policy Concerns Can Inform the EPA's Decisions

In Massachusetts v. EPA, (2007), the U.S. Supreme Court established a limited but significant proposition the Chamber does not challenge here: Greenhouse gases (“GHGs”) are defined as “air pollutants” within the meaning of Clean Air Act (“CAA”) Section 202(a)(1), which allows EPA to regulate emissions from new motor vehicles. In Massachusetts, the Supreme Court expressly recognized that it had no need to “reach the question whether on remand EPA must make an endangerment finding, or whether policy concerns can inform EPA’s actions in the event that it makes such a finding.” Critically, Massachusetts never held that EPA was obligated to regulate GHGs — not from motor vehicles, and certainly not from stationary sources, which were not even at issue in the case. 

On the EPA's "Shell Game" to Insulate Its GHG Rules from Meaningful Judicial Review

The Chamber's petition for rehearing explains that in the wake of Massachusetts, the EPA opened a single regulatory docket to address GHG emissions matters in comprehensive fashion, issuing a unified Advance Notice of Proposed Rulemaking (“ANPRM”). The seeds for the errors committed by EPA — all left unremedied by the three-judge panel — were sown by EPA abandoning, without explanation, this entirely natural approach to the Massachusetts decision and remand. The EPA’s ultimate approach to implementing Massachusetts involves a series of four closely interconnected rulemakings that the Agency carefully split up and thereby crafted to evade judicial review of the most critical step in the cascade of regulation — the point at which EPA decided to rewrite (and thus violate) the Clean Air Act.

The Four GHG Rules Promulgated Under the EPA's Piecemeal Approach

First, EPA issued a freestanding “Endangerment Rule,” concluding that greenhouse gases may reasonably be anticipated to endanger public health or welfare. The Chamber argues that in promulgating the Endangerment Rule, the EPA ignored its statutory obligations to address how, whether, or to what extent regulation of GHGs from motor vehicles under Section 202(a)(1) would redress the risks EPA purported to identify. 

Second, having issued its Endangerment Rule, EPA concluded that it was obligated under the statute to regulate emissions from new cars and light trucks. EPA therefore issued its "Auto Rule."

Third, EPA concluded that having issued the Auto Rule, it was further obligated to regulate stationary sources of greenhouse gases - such as office buildings, farms, manufacturing plants, power utilities, etc. - under two separate programs: (i) the Prevention of Significant Deterioration of Air Quality (“PSD”) Title I program, which requires state-issued construction permits for certain types of stationary sources if they have the potential to emit more than either 100 tons per year or 250 tons per year of any pollutant, varying by type; and (ii) Title V, which requires state-issued operating permits for stationary sources with the potential to emit at least 100 tons per year of any air pollutant.

Because GHGs are emitted in far greater quantities than other pollutants, EPA recognized that its Endangerment Rule set in motion a regulatory cascade that Congress never intended, including (as just one example) $22.5 billion of permit paperwork costs alone (compared to the prior $74 million). Indeed, EPA recognized that the number of facilities subject to PSD and Title V would jump from 15 thousand to 6.1 million. EPA recognized that these unintended effects were so severe that they were “absurd.” But rather than considering the obvious possibility that arriving at an absurd endpoint meant that EPA had misconstrued the statute, failed to exercise proper interpretive discretion, or perhaps taken some other wrong turn, EPA claimed license to handle the absurdity by violating the statute through a wholesale rewriting of the PSD and Title V numerical thresholds.

Fourth, to implement this statutory rewrite, EPA built upon the Endangerment and Auto Rules by issuing two more rules, the "Timing and Tailoring Rules." The Timing Rule delayed regulation of major stationary emitters of greenhouse gases until January 2, 2011, the date the Auto Rule took effect. The Tailoring Rule was more significant. Whereas Congress directed that the PSD and Title V programs would apply to facilities discharging more than either 100 or 250 tons per year of regulated pollutants, the Tailoring Rule reconstructed the statute to provide that only sources emitting more than 75,000 or 100,000 tons per year of GHGs will be subject to permitting requirements, while at the same time leaving EPA discretion to reduce the threshold over time as it sees fit. These new thresholds, wholly invented by EPA, are several orders of magnitude higher than the thresholds mandated by Congress.

The Chamber argues that as a result of EPA’s approach, none of its four purportedly separate rules tries to construe the Clean Air Act as a coherent whole. None sets forth an analysis of the rules’ total costs or other impacts on private businesses. And nowhere did EPA provide the necessary “rational connection between the facts found [in the Endangerment Rule] and the choice made” in the ensuing rules. The Chamber's contends that once the EPA recognized that regulating GHGs under the Clean Air Act would lead to "absurd results," the EPA should have concluded that the Act was never designed to regulate GHGs, rather than take a red pen to the statute. The Chamber also argues that there is nothing in Massachusetts v. EPA that purports to allow EPA to rewrite the Clean Air Act.

Procedural History

Petition for review filed 2/12/10. Coordination motion filed 8/26/10. Motion for leave to file stay filed 10/29/10. Motion for stay denied 12/10/10. Motion for coordination granted 12/10/10. Briefing schedule issued 3/22/11. Co-petitioners joint opening brief filed 5/20/11. EPA reply brief filed 8/18/11. Motion for judicial notice of EPA Inspector General report filed 9/30/11. Three-judge panel decision issued 6/26/12. Petitions for rehearing en banc filed 8/10/12.  EPA brief in opposition to rehearing en banc filed 10/12/12.  Rehearing en banc denied 12/20/12.  Amended judgement issued 4/10/15.

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