INSIGHT: US greenhouse rules face crucial high court review

18 October 2013 15:09  [Source: ICIS news]

By Joe Kamalick

US high court may reverse some EPA GHG rulesWASHINGTON (ICIS)--The US Supreme Court this week agreed to consider multiple industry challenges to the Environmental Protection Agency’s (EPA) regulation of greenhouse gases, a move that ultimately could spare chemical makers, refiners and thousands of other manufacturers from what many see as over-reaching EPA rulemaking.

The court said that it will hear arguments early next year on whether EPA had authority under the Clean Air Act (CAA) to impose limits on greenhouse gas (GHG) emissions by manufacturers and a broad array of other industrial sites.

The high court said that it was granting certiorari - giving its consideration - for six of the nine petitions filed against the EPA greenhouse rules.

Significantly, the court denied certiorari to three petitions that were largely based on arguments that the EPA’s controversial 2009 “endangerment finding” was not legitimate.

In that finding, EPA ruled that carbon dioxide (CO2) and other greenhouse gases are causing global warming, which in turn poses risks to the nation’s environment and citizens and consequently falls within EPA’s regulatory authority under the CAA.

That endangerment finding is the basis for all subsequent regulatory moves by EPA to reach and limit greenhouse gas emissions from any source.

By declining to hear the three petitions challenging that endangerment finding, the high court indicated it will not consider revoking that fundamental ruling.

That was a major disappointment for those seeking to overturn the endangerment finding.

The Supreme Court’s refusal to hear a petition seeking to overturn that rule “is seriously bad news”, said Joseph Blast, president of the Heartland Institute, a major conservative think-tank.

“For energy consumers - and that is all of us - it means the court will stand by and do nothing while the Obama administration wages war on fossil fuels,” Blast said.

But other petitioners granted a hearing by the high court argue more narrowly that EPA, in seeking to impose GHG emissions limits on so-called stationary sources - factories, power plants and other industrial facilities - overstepped its authority.

In particular, the plaintiffs in the case - representing scores of industries, members of Congress and law foundations - are asking the nine justices to overturn the June 2012 ruling by the US Court of Appeals for the DC Circuit that upheld EPA's authority to regulate greenhouse gases.  That lower court ruling essentially affirmed EPA’s authority under the Clean Air Act and the agency’s endangerment finding.

The Supreme Court’s decision to hear the more narrowly focused appeal was welcomed by energy, refining and chemical interests among others.

“Today’s decision by the court brings us one step closer to correcting a very costly regulation that will put significant strain one every state’s resources,” said Rich Moskowitz, general counsel at the American Fuel & Petrochemical Manufacturers (AFPM).

“We are pleased that the court will review EPA’s greenhouse gas regulation” under the CAA, he added.

Moskowitz said that EPA’s interpretation of the Clean Air Act “would transform a permitting regime designed by Congress to address the largest industrial sources’ emissions of criteria pollutants to a far-reaching regulatory programme that potentially applies to thousands of small sources that Congress never intended to be subjected to onerous permitting requirements”.

Moskowitz said that he hopes for a win in the Supreme Court, a ruling that would stand as “a strong statement that EPA does not have the latitude to rewrite the Clean Air Act”.

If the high court rules in favour of AFPM and the multitude of other industry petitioners, “EPA would essentially have to go back and implement the CAA as Congress intended instead of trying to regulate greenhouse gases”, he said.

The American Chemistry Council (ACC) said that "We are pleased that the Supreme Court has agreed to hear our case".

"EPA's flawed regulations [of GHG emissions] would impose new requirements on potentially millions of stationary sources across the country," the council said.

"We hope that the court will correct EPA's egregious misreading of the Clean Air Act, which even the agency concedes leads to 'absurd results'", ACC added.

In expanding its reach to GHG emissions by stationary sources, the EPA was obliged to issue a “tailoring rule” because as defined in the CAA, any source that emits more than 250 tonnes annually of a regulated substance is subject to EPA limits.

But because that criteria would have required EPA to impose GHG regulations on possibly millions of facilities across the country - even a donut shop likely emits more than 250 tonnes of GHG annually - the agency redefined or “tailored” the CAA's major emitter criteria, raising the emissions threshold from 250 tonnes to 100,000 tonnes, to avoid what EPA itself called an “absurd result”.

Opponents of the EPA’s GHG rules contend that the agency has no authority to unilaterally alter provisions of the Clean Air Act as approved by Congress.

Roger Martella, a lawyer with the Washington, DC, law firm of Sidley & Austin, represents ACC in the court action, and he was pleased with the high court decision, especially as it opens that EPA tailoring rule to scrutiny.

“The tailoring rule is part of our argument, and that is part of what the court granted certiorari for,” Martella said.

“This is a good case,” he added, “and I don’t think the court would have granted certiorari unless they wanted to take a good look at the underlying rule.”

Martella noted that at least four of the nine Supreme Court justices must agree to hear a petition. If those four justices are already suspicious of EPA’s actions in extending its GHG rules so broadly, there is but a short distance to winning the case with one more justice joining.

Harry Ng, general counsel for the American Petroleum Institute (API), also welcomed the high court’s decision, saying “We’re pleased that the court has agreed to review our petition - alongside several others - and we look forward to presenting our case”.

“The EPA is seeking to regulate US manufacturing in a way that Congress never planned and never intended” Ng said, adding: “EPA’s rules overstep the authority granted by Congress in the Clean Air Act.”

Another successful petitioner, the conservative Competitive Enterprise Institute (CEI) said that it hoped the high court “ultimately will put the brakes on EPA’s unprecedented regulatory barrage of global warming rules”.

CEI general counsel Sam Kazman said that “I think this is an excellent development”.

“This agency has been acting as if it had a green light to destroy the American economy to prevent the alleged threat of catastrophic global warming,” Kazman said.

“But for 17 years, nature hasn’t cooperated with EPA’s climate models, and now the Supreme Court might not cooperate with EPA’s climate jurisprudence,” he said, referring to the lack of any global warming since the mid-1990s.

EPA’s climate models and those of the UN hold that as global emissions of CO2 increase, Earth’s atmosphere will continue to warm further. However, while worldwide CO2 emissions have continued to increase substantially since the mid-90s, there has been no measurable increase in the planet’s atmospheric temperature.

“We are cautiously optimistic that the court has opened the door to something, a decision that will at least delay if not entirely halt EPA’s damaging climate regulations on stationary sources,” Kazman said, adding: “It could be a very wide-ranging decision.”

The high court is likely to hear the petitioners’ arguments in the first quarter of the new year, and a court ruling on the matter would be expected no later than June next year.

($1 = €0.74)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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