Bloomberg News

EPA Greenhouse Gas Rules Under Scrutiny in Two-Day Hearing

February 28, 2012

The U.S. Environmental Protection Agency’s limits on vehicle and industrial emissions of greenhouse gases including carbon dioxide are being scrutinized by U.S. judges as a two-day court hearing began in Washington.

The three-judge panel of the U.S. Court of Appeals is considering challenges to the agency’s finding that greenhouse gases are pollutants that endanger human health, and to rules determining when states and industries must comply with regulations curtailing their use.

Companies such as Massey Energy Co., business groups including the U.S. Chamber of Commerce and states led by Texas and Virginia are seeking to stop the agency through more than 60 lawsuits. They argue that the agency relied on biased data from outside scientists, including some affiliated with the so-called climategate scandal.

“To win here you have to make an argument that the EPA’s decision was arbitrary and capricious,” U.S. Circuit Judge David Tatel told a lawyer for one of the opposing groups during the almost three-hour hearing.

Power Plants

In 2007, the Supreme Court ruled that the EPA had authority to regulate greenhouse gases such as carbon dioxide and methane under the Clean Air Act if the agency declared them a public danger. The EPA issued a so-called endangerment finding in December 2009, clearing the way for regulation of emissions from power plants, factories and other sources linked to global climate change.

“EPA made an inadequate endangerment finding,” Patrick Day, a lawyer for the Coalition for Responsible Regulation Inc., told the judges today. He said the agency “erroneously decided to completely divorce risk assessments from policy consequences.”

Harry MacDougal, a lawyer for the Southeastern Legal Foundation, told the judges that the agency took three studies “with uncertain premises” and blended them together to come out with a finding that six gases contribute to climate change that may endanger the welfare of humans, he said.

“There is evidence in the record that shows the existence of substantial uncertainty in each one,” MacDougal said.

“You’re asking us to determine that the EPA is incorrect and that’s not the standard,” U.S. Circuit Judge David Sentelle said.

Not Decided

Sentelle and Tatel asked opponents to cite specific language in the law or the high court’s 2007 Massachusetts v. EPA decision that supported arguments the agency had the ability to limit its approach to regulating greenhouse gases.

“Reading some of the briefs, I’d gotten the impression that Massachusetts was not decided or that it wasn’t binding,” Sentelle said.

Two of the judges hearing the case presided over the 2003 lawsuit that led to the Supreme Court decision in which 12 states tried to force the administration of then-President George W. Bush to regulate carbon dioxide and other greenhouse- gas emissions on new cars and trucks.

Sentelle, appointed to the court by President Ronald Reagan, a Republican, joined the majority in a 2-1 decision that found the EPA has broad discretion to determine whether to set limits on pollutants.

Public Health

Tatel, appointed by President Bill Clinton, a Democrat, issued a 38-page dissent saying the EPA not only has the authority to regulate gases that cause global warming, it has a responsibility to do so if the director finds they endanger public health or welfare.

The third person is U.S. Circuit Judge Judith Rogers, also appointed to the bench by Clinton. Rogers was part of a panel of judges that in December ordered the EPA’s interstate air pollution rule be put on hold while the court considers its legality.

The arguments have been split into three parts. The panel today heard arguments on the endangerment finding and challenges to a 2010 rule on emissions from motor vehicles that opponents said improperly sets greenhouse-gas standards for stationary sources, such as steel mills and power plants.

Tomorrow, the court will consider challenges to the EPA’s “tailoring rule,” which limits the businesses covered by carbon regulation and phases in controls.

Carbon Rules

The agency aims to phase in industrial polluters covered by the carbon rules through 2016. Imposing restrictions all at once and without exceptions would be “absurd,” EPA Administrator Lisa Jackson has said.

The EPA argued in court filings that the tailoring rule is acceptable under the Clean Air Act and necessary to avoid states being overrun with permit requests.

Jeffrey Bossert Clark, a lawyer for the Chamber of Commerce, told the judges that the EPA should have considered “human adaptation” to climate change while deciding whether greenhouse gases should be regulated. He mentioned “organic migration,” which he said involved humans moving to colder climates to avoid increased temperatures.

“How would the EPA account for that,” Tatel asked. “How can they predict that migration patterns would be sufficient to overcome danger.”

“It’s easier to predict these shifts than predicting weather or climate,” Clark said.

Under that theory, Tatel asked whether the EPA would be required to consider that in the future there might be a cure for cancer before determining whether to regulate a carcinogen.

Biggest Emitters

The regulations require only the biggest emitters, such as power plants and oil refiners, obtain state carbon permits before building or upgrading facilities. State officials will determine pollution controls case by case.

“A lot of the focus has been on endangerment, but that is going to be an uphill battle” for industry, said Jeffrey Holmstead, a lawyer at Bracewell & Giuliani LLP (1222L) in Washington who isn’t involved in the case. “The biggest vulnerability for EPA is on the tailoring rule.”

If the EPA loses on that it would create such chaos that “it forces Congress to act,” said Holmstead, who was an EPA official during the George W. Bush administration.

Virginia and Texas said the endangerment finding should be rejected because the EPA refused to reconsider its decision after learning that some of the data it relied on may have been “manipulated,” referring to findings by the United Nations Intergovernmental Panel on Climate Change.

Outside Groups

The states, citing an EPA inspector general’s report, claim the agency improperly used data from outside groups without testing its veracity.

Panels of the National Oceanic and Atmospheric Administration and National Science Foundation cleared U.S. scientists who had their e-mails pilfered from the server of the climate-research unit of University of East Anglia, based in Norwich, England.

The university’s work contributed to some of the key findings of the U.N. Intergovernmental Panel on Climate Change, which has issued reports that blame rising temperatures on human activity.

The e-mails, dating back as far as 1996, have been cited by skeptics of human contribution to global warming as evidence of a conspiracy to manipulate data to support research. One e-mail referred to a “nature trick” to hide signs of a decline in temperatures.

“The EPA looked at each and every one in context,” Angeline Purdy, a lawyer for the Justice Department, said today describing the climate research e-mails. She said Virginia’s petition for reconsideration was properly rejected.

The case is Coalition for Responsible Regulation Inc. v. Environmental Protection Agency, 09-1322, U.S. Court of Appeals, District of Columbia (Washington).

To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net; Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net


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