The NAM and 16 other business associations filed 4 petitions for review in the U.S. Court of Appeals for the D.C. Circuit, challenging EPA regulations from 1978, 1980 and 2002 that are a part of EPA's effort to regulate greenhouse gases from stationary sources of emissions. No one anticipated that these previously issued rules would be used to mandate greenhouse gas permit requirements, but that is the interpretation EPA has adopted. Our legal challenge was consolidated under the case captioned American Chemistry Council v. EPA.
We also filed an administrative petition for reconsideration with EPA on the same rules. Our lawsuits and the administrative petition challenged each of the four older rules to the extent that EPA considers them to allow the regulation of pollutants such as greenhouse gases that are not subject to a National Ambient Air Quality Standard (NAAQS). Our administrative petition went into great detail regarding the grounds for our request (see Related Documents below). The petitions below also contain the text of the regulations that were challenged.
Our main brief on the merits was filed May 10, 2011, focusing primarily on the timeliness of the lawsuits and on the fact that EPA’s interpretation of the Clean Air Act is unreasonable and creates absurd results.
Oral arguments were held Feb. 29, 2012.
We argued that Congress intended for EPA to require PSD permits only for facilities that can financially bear the substantial regulatory costs and which, as a group, are primarily responsible for deleterious emissions. The number of permits needed by facilities that meet these criteria was about 280 per year, a number consistent with congressional intent to limit the permit program to a manageable number. The greenhouse gas regulations, however, would require more than 81,000 PSD permits per year, according to the EPA, crushing EPA, state agencies and the economy.
EPA’s reading of the Clean Air Act is unlawful because it severs the link between the PSD permit program and the attainment of national ambient air quality standards (NAAQS). We argued that PSD permits are only required for emissions of a “criteria” pollutant, such as sulfur dioxide, nitrogen oxides or lead, and then only if the emissions occur in an area that has attained compliance with national standards.
EPA’s interpretation also is flawed because it leads to requiring an absurd number of permits. Its interpretation was announced three decades ago, and this is the first time a court has been asked to scrutinize its lawfulness. Only now do sources emitting major amounts of GHGs have to get PSD permits, and now their complaints about EPA’s interpretation are ripe for judicial review.
The purpose of the PSD permitting program is to maintain air quality in areas of the country that have attained satisfactory levels of quality, hence the name "Prevention of Significant Deterioration". EPA sets ceilings for each of a number of specific pollutants, and requires permits for new facilities that might emit more of those pollutants into areas in attainment. Our brief argued that EPA is now forcibly making the PSD permit program an all-purpose regulatory program. However, to do so, we argued that EPA must first define greenhouse gases as criteria pollutants, and specify the maximum levels at which they may be present in attainment areas. It has not done so, and it is arguably impossible to set meaningful NAAQS levels for greenhouse gases.
On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.
On August 10, 2012, the NAM coalition filed a petition for rehearing en banc, asking that all the judges on the D.C. Circuit review the 3-judge panel's ruling. We argued that the panel relied on an unreasonable interpretation of the Clean Air Act to approve "the most sweeping expansion of EPA authority in the agency's history, for the first time covering a broad swatch of mobile and stationary sources of greenhouse gases and granting itself discretion to determine and revise the scope of the statute’s coverage, previously fixed by the statute’s explicit terms, for the indefinite future." The panel's ruling conflicts with Supreme Court decisions, produces absurd results, and could lead to annual cost increases of more than $20 billion upon full implementation.
On December 20, 2012, the D.C. Circuit denied our petition. Judges Brown and Kavanaugh filed separate dissenting opinions that supported our arguments. Such dissents are rare, sending a clear signal that significant legal issues remain to be addressed.
On April 18, 2013, the NAM filed a Petition for Writ of Certiorari wth the U.S. Supreme Court and awaiting the Court's determination whether to hear the case. The NAM's involvement in thisw case is critical because no other petitioners have been found to have standing to challeng the PSD regulations and NAM members are adversely affected by EPA's overly burdensome requirements.