Coal Age

DEC 2012

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l e g a l ly s p e a k i n g Climate Change Litigation: Federal Court Opens Door to EPA Regulation of Greenhouse Gases BY SCOTT D. DEATHERAGE Federal courts have issued opinions that have assisted certain industries and business groups that are opposed to the courts stepping in to address climate change and greenhouse gas emissions. These cases have taken quite a bit of steam out of the individuals or entities that want to address climate change through the courts. However, another federal court decision opened the door to the U.S. Environmental Protection Agency's (EPA) regulation of greenhouse gases under the federal Clean Air Act (CAA). This case has in general freed the EPA to issue regulation under what is known as the Prevention of Significant Deterioration program of the CAA. The EPA's ability to regulate greenhouse gases was addressed by the U.S. Supreme Court in 2007, when the court considered a challenge to the EPA's decision during the Bush administration not to grant a private petition to regulate greenhouse gases emitted from automobiles. The decision in that case opened the door and made it hard for the EPA not to regulate greenhouse gases under the CAA. Once the Obama administration came into power, the EPA moved forward with decisions and regulations to limit greenhouse gas emissions from automobiles, largely through increased fuel efficiency standards negotiated with the automobile manufacturer. This decision led to regulation of greenhouse gas emissions from larger industrial emitters, including coal-fired and natural-gas fired power plants, refineries, among others. Of course, litigation followed challenging those regulations. The EPA's regulations focused on only the largest emitters, over 75,000 or 100,000 tons of greenhouse gases, depending on timing and other criteria—even though a reading of the act would suggest any emitter over 250 tons per year would be regulated. This limitation resulted in a nickname of the regulation as the "Tailoring Rule," because it was "tailored" to the largest emitters. The EPA said it would look at smaller emitters over time and determine whether to address those sources. The litigation challenging the EPA rules was brought by various industry and non-governmental groups, states and companies. The case, Coalition for Responsible Regulation v. EPA, was decided by the D.C. Circuit Court of Appeals and a decision was handed down in June 2012. The decision upheld the EPA rules unanimously, by both Democratic and Republican appointed judges. The court decided the case largely on three grounds. The first relates to the EPA's decision that the emission of greenhouse gases causes or contributes to air pollution that may be reasonably anticipated to endanger public health or welfare of human health—known as the "Endangerment Finding." This was decision made with respect to mobile sources, such as cars, trucks or trains. The court concluded that it would defer to the EPA's scientific decision. The court stated that the EPA "is not required to re-prove the existence of the atom every time it approaches a scientific question." The decision was not surprising based on the historical Supreme Court precedent that directs courts to defer to administrative agencies on sci- 72 entific and technical issues. Whatever one's view of climate change and its occurrence or cause, the challenge to climate science itself was not a likely winner based on the conclusions of the scientific academies in the U.S. and other developed and major developing countries and the United Nations' Intergovernmental Panel on Climate Change. Future challenges along these lines are not likely to succeed. The second ground was that the EPA then moved forward with regulating mobile sources. The court upheld the EPA's decision because it concluded that the EPA did not have any discretion to not issue such rules once the agency made the Endangerment Finding. This is why the challengers first went after the basic scientific conclusions underpinning the EPA greenhouse gas mobile rules. Again, this decision was not surprising. The third ground was more surprising. The challengers had asserted that the decision not to regulate smaller sources was inconsistent with the clear language of the CAA. However, the court did not consider this argument. Instead, the court ruled that the challengers lacked standing to challenge the decision not to regulate the smaller sources. Standing here means the ability to bring a court action because the party is injured or harmed by a particular act or, here, regulation. This is a basic tenet of federal litigation under Article III of the U.S. Constitution. The court concluded that regulating fewer industries than more does not harm the plaintiffs (one would think this would be a decision supported by many of the groups challenging the rules) so that the plaintiffs had no standing to challenge the decision. While one would think there could be some basis for such an argument of economic harm where larger industries are regulated but smaller ones are not, but the parties had not addressed this issue, at least in the court's opinion. Ironically, industry had been attempting in litigation to limit environmental groups' and other plaintiffs' ability to bring environmental suits under federal statutes or tort claims as one means of limiting those cases. In this case, the federal courts tightening of standing requirements resulted in the courts refusing to hear the complaint that the EPA failed to follow the CAA. The case may ultimately be heard by the Supreme Court, but it would not be surprising if the case were upheld by that court. If the issue of standing were reversed, the issue of the Tailoring Rule itself could be remanded to the D.C. Circuit for review. At this point, the litigation from an overall perspective in the federal courts appears to have moved out of the tort realm. What may happen to cases filed in state courts remains to be seen. The federal litigation may now be focused on challenges of EPA regulations. So far those cases have favored the EPA's ability to regulate greenhouse gases. With the re-election of President Obama, it appears likely that the EPA will continue to pursue greenhouse gas regulation. The question is will the regulations issued beyond the Tailoring Rule present better opportunities for legal challenge than the Coalition for Responsible Regulation case. Deatherage is a partner with Patton Boggs LLP. He can be reached at 214-758-1539 or at December 2012

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