On Tuesday, June 26, 2012, in a per curiam opinion, a panel of three judges for the U.S. Court of Appeals for the District of Columbia Circuit denied two petitions challenging EPA's "Endangerment Finding" for greenhouse gases and its regulation of greenhouse gas emissions for cars and light-duty trucks through the "Tailpipe" Rule; and the panel dismissed all petitions challenging the Timing and Tailoring Rules for lack of jurisdiction, finding that Petitioners did not have standing.  See Coalition for Responsible Regulation, Inc. v. EPA, No. 09-1322 (June 26, 2012).  This opinion, among other things, solidifies EPA's position that the "CAA requires PSD and Title V permits for major emitters of greenhouse gases..."  Id. at pg 73. The full opinion may be found here.

A.  Background:

I.  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 was issued as a direct result of the U.S. Supreme Court decision in Massachusetts v. EPA, 549 U.S. 497 (2007) where greenhouse gases were held to be an "air pollutant" subject to regulation under the Clean Air Act, and the Court found that "EPA can avoid taking further action [to regulate greenhouse gases] only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do."  549 U.S. at 533. 

II. Tailpipe Rule

EPA's "Tailpipe" rule was promulgated on May 7, 2010, and regulated the greenhouse gas emissions for light-duty vehicles.  See 75 Fed. Reg. 25,324.  The rule became effective on January 2, 2011.  Once the tailpipe rule was established, greenhouse gases became a regulated pollutant under the Clean Air Act.  As a result, the PSD and Title V permitting programs applied to facilities that emitted greenhouse gases.  See 42 U.S.C. §§ 7479(1), 7602(j).  .

III. Timing Rule

On April 2, 2010, EPA promulgated the "Timing" Rule which concluded that major stationary sources of greenhouse gases would be subject to air permitting programs such as PSD and Title V on the same date that the Tailpipe Rule became effective, January 2, 2011.  See Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004. 

IV. Tailoring Rule

The Tailoring Rule, promulgated by EPA on June 3, 2010, phased in permitting requirements, beginning January 2, 2011, for new and modified facilities emitting greenhouse gases regulated under the Clean Air Act.  See Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 70 Fed. Reg. 31,514.  EPA announced that to reduce its regulatory burden, it was only going to initially require best available control technology (BACT) for greenhouse gas emissions for those sources "subject to PSD requirements for their conventional pollutants anyway."  Id. at 31,567.  After July 1, 2011, only those facility that emitted over 75,000 or 100,000 tons per year of CO2 equivalent (CO2e) depending on the regulatory project, would become subject to PSD and Title V regulation.  Id. at 31,516, and 31,523.  EPA stated that thresholds would be lowered with time but no facility that emitted less than 50,000 tons per year of CO2e would be regulated prior to April 30, 2016.  Id. at 31,516.

B.  Court's Holdings:

I.  Endangerment Finding and Tailpipe Rule are Not Arbitrary and Capricious.

The D.C. Circuit upheld EPA's Endangerment Finding and the Tailpipe Rule stating that neither was arbitrary nor capricious, and that EPA's interpretation of the relevant Clean Air Act provisions were "unambiguously correct." Coalition for Responsible Regulation , No. 09-1322 at 16.  Petitioners challenged the validity of the Endangerment Finding based on EPA's failure to consider policy and regulatory concerns and also challenged the validity of the evidence that was the basis for EPA's Endangerment Finding.  The D.C. Circuit held that the Clean Air Act did not allow EPA to consider policy or regulatory consequences when making the Endangerment Finding.  Id. at 24-26.  As to the challenge on the underlying evidence, the Court said, "[w]hen EPA evaluates scientific evidence in its bailiwick, we ask only that it take the scientific record into account in a rational manner. Industry Petitioners have not shown that EPA failed to do so here."  Id. at 32 (internal quotations omitted).  As for the Tailpipe Rule, the Court was not persuaded by Petitioners' argument that the Rule would not "meaningfully mitigate the alleged endangerment" of greenhouse cases.  The Court concluded that since automobiles do contribute to greenhouse gas emissions, the reduction of those emissions, small as they may be, was enough to uphold the rule.  Id. at 43.

II. Timing and Tailoring Rules Dismissed for Petitioners' Lack of Standing and Therefore Lack of Jurisdiction

As to the Timing and Tailoring Rules the Court held that "no petitioner has standing to challenge . . . We thus dismiss for lack of jurisdiction all petitions for review of the Timing and Tailoring Rules . . . ." Id. at 16.  Petitioners were found to lack standing because they could not establish that the timing or tailoring rules "cause them 'injury in fact.'"  The Court went on to say:

the Timing and Tailoring Rules actually mitigate Petitioners' purported injuries.  Without the Timing Rule, Petitioners may well have been subject to PSD and Title V for greenhouse gases before January 2, 2011. Without the Tailoring Rule, an even greater number of industry and state-owned sources would be subject to PSD and Title V, and state authorities would be overwhelmed with millions of additional permit applications.

Id. at 77. It is somewhat surprising, however, that the Court declined to reach the issue of whether the EPA's "tailoring" rule could administratively override the Clean Air Act's emission thresholds on which facilities are regulated.

Although we expect there to be an appeal to the Supreme Court to review the D.C. Circuit's decision, the applicability of the PSD and Title V programs to facilities with greenhouse gas emissions will continue to advance.