EPA's Endangerment Rule

Originally published in the The Federalist Society for Law and Public Policy Studies

Brought to you by the Environmental Law & Property Rights Practice Group

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On December 7, 2010, the U.S. Environmental Protection Agency ("EPA") promulgated a final rule commonly known as the "Endangerment Rule." i In that finding, EPA determined that greenhouse gas ("GHG") emissions endanger the public health and welfare, and that motor vehicle emissions in particular are contributing to such harmful effects. The Endangerment Rule was issued pursuant to EPA's authority under Clean Air Act Section 202(a), ii which itself deals exclusively with the regulation of emissions from new motor vehicles and new motor vehicle engines (often known collectively in Clean Air Act parlance as "mobile sources").

The implications of the Endangerment Rule are likely to be much more far-reaching than simply initiating the regulation of GHG emissions from mobile sources alone. Importantly, EPA's final rule has been challenged in the D.C. Circuit under Clean Air Act Section 307(b)(1)'s iii judicial review provision. But if it withstands review, the Endangerment Rule will not only mandate the regulation of GHG emissions from mobile sources, it will potentially trigger the regulation of such emissions from stationary sources as well, and could well then be asserted as support by States, environmental groups, and a federal Indian tribe in several pending tort suits they have already brought against industrial emissions sources.

EPA argues that this rule is purely a scientific finding that "do[es] not impose any requirements," and on that basis found that the rule "will not have a significant economic impact on a substantial number of small entities." iv But the statutory consequences of the Endangerment Rule could well make this the most costly rule in regulatory history, penetrating more deeply into the national economy than the Clean Air Act ever has before.

Background

The story of the Endangerment Rule could be opened at a number of different points, including by recounting the history of the Kyoto Protocol, v or by setting forth the origin of the theories advanced several decades ago that the man-made emissions of certain gases were causing global warming. vi In the interests of brevity, however, familiarity with the basic issue of climate change and with the fact that the United States has not signed the Kyoto Protocol is assumed.

For present purposes, the best place to begin to understand the Endangerment Rule is with the filing of a rulemaking petition at EPA by the International Center for Technology Assessment ("ICTA") and 18 other environmental and renewable energy industry organizations in 1999. vii For the purpose of averting climate change, the ICTA Petition called for EPA to set new motor vehicle emissions standards for four gases - carbon dioxide, methane, nitrous oxide, and hydrofluorocarbon. Before leaving office, the Clinton Administration raised the profile of the ICTA Petition by putting it out for public comment. The Bush Administration reviewed the comments filed upon assuming office, and later denied the ICTA Petition in the Fall of 2003. viii After an initial affirmance by the D.C. Circuit, 2-1, and the denial of en banc review, the Supreme Court took the case and ultimately reversed (5-4) the denial of this rulemaking petition in Massachusetts v. EPA.ix

The Supreme Court held that EPA had provided legally deficient reasons for denying the petition that were not wholly rooted in the Clean Air Act: "[O]nce EPA has responded to a petition for rulemaking, its reasons for action or inaction must conform to the authorizing statute."x For instance, the reasons EPA cited for denying the ICTA petition included protecting the President's foreign policy prerogatives. To this the Supreme Court said: "Although we have neither the expertise nor the authority to evaluate these policy judgments, it is evident they have nothing to do with whether greenhouse gas emissions contribute to climate change."xi

The Bush Administration responded to the remand in Massachusetts v. EPA, by issuing an advance notice of proposed rulemaking ("ANPRM").xii The ANPRM was criticized as simply "punting" the questions involved in the remand to the next Administration. Others maintained that the ANPRM attempted to explore on a comprehensive basis all of the complexities and consequences that would result if GHG emissions, especially from stationary sources, were regulated under the Clean Air Act. Proposals from EPA officials to mesh GHG regulations with the machinery of the Act appeared alongside the views of both Cabinet and other key White officials that such GHG regulation would seriously damage the national economy and overwhelm the administrative machinery of the Act. Summarizing the Executive Branch materials before him, the Administrator of the EPA offered the following preliminary view:

I believe [this notice] demonstrates the Clean Air Act, an outdated law originally enacted to control regional pollutants that cause direct health effects, is ill-suited for the task of regulating global greenhouse gases. Based on the analysis to date, pursuing this course of action would inevitably result in a very complicated, time-consuming and, likely, convoluted set of regulations. These rules would largely pre-empt or overlay existing programs that help control greenhouse gas emissions and would be relatively ineffective at reducing greenhouse gas concentrations given the potentially damaging effect on jobs and the U.S. economy.xiii No action was taken in response to the public comments received on the ANPRM before the Bush Administration left office.

When the Obama Administration came into office, it shifted course. President Obama had campaigned on establishing a vigorous new regulatory regime to control carbon emissions, and he and his appointees also took important steps to make use of the existing framework of the Clean Air Act to regulate GHG emissions. In President Obama's first year in office, the new EPA announced three key interrelated initiatives:

First, beginning in February 2009 EPA reconsidered and reversed a Bush-era decision to deny California a preemption waiver, thereby allowing the Golden State to operate its own program setting tailpipe standards for GHG emissions from new vehicles.xiv EPA's grant of the waiver has been challenged in the D.C. Circuit. That case remains pending.xv

Second, in May 2009, the President announced in a Rose Garden ceremony an agreement between several major automobile manufacturers and the State of California, as brokered by the Administration.xvi Pursuant to the commitment letters signed by the manufacturers and California, the...