Major Decisions Take U.S. Air Regulation back to Go

Actually it's almost as if in a game of Monopoly, you somehow drew Community Chest and Chance cards simultaneously, and both told you to go back to Go. On Friday, July 11, Environmental Protection Agency head Stephen L. Johnson announced the agency would not try to impose restrictions on greenhouse gas emissions, despite findings of a staff report he was releasing. The same day, in another part of town, the U.S. Court of Appeals for the D.C. Circuit threw out a plan the EPA adopted several years ago to reduce soot and smog, saying it was so flawed in so many ways no amount of tinkering could fix it.

A Washington truism that's held true longer than anybody can remember is that if you have to announce something potentially controversial, the best time to do so is on a Friday afternoon, preferably on a mid-summer day. The EPA and Circuit Court decisions conform to that pattern. Though they were reported in the Saturday papers, of course hardly anybody reads those papers on a hot July morning, and even the reporters filing them, instead of following up are off to the beach. That's one reason why have followed up here, albeit with a six-day delay, and why we posted on a Thursday rather than a Friday.

Both decisions had somewhat startling, even perplexing, dimensions. The EPA climate report was a response to a Supreme Court decision telling the agency to evaluate the human impact of greenhouse gases. EPA Administrator Johnson, rejecting mandatory action on GHG emissions even as he was issuing a report detailing their adverse impacts, "in effect was simultaneously publishing the policy analysis of his scientific and legal experts and repudiating its conclusions," as The New York Times observed. Even stranger, it continued, along with his staff's work he also published "the comments of its critics, which had a definite tinge of hostility toward the EPA regulators."

However weird his modus operandi, Johnson's decision was not really a surprise. Nobody expected the Bush Administration in its waning months, despite the Supreme Court directive, to initiate carbon regulation, which it has always opposed. One way or another it was going to punt, leaving the difficult decisions to a next administration and one, presumably, that will have its heart in the matter.

The appeals court decision, on the other hand, was a shocker. EPA's Clean Air Interstate Rule (CAIR) "represented the Bush administration's most aggressive action to clean the air over the next two decades," as The Washington Post put it. CAIR's purpose was to reduce or eliminate impacts of upwind emissions on clean air attainment efforts in downwind states east of the Mississippi, an effort that EPA said would help prevent 17,000 premature deaths. Naturally, given its scope and complexity, CAIR faced a variety of detailed challenges: from a state and a municipality, several utility groups, and a national energy company with big nuclear holdings. But nobody had expected the court to toss out the whole next-phase plan for reducing SO2 and NOx--or, if anybody did, they're not admitting it.

Because of the decision's immense importance, it's worth lingering a little over some salient details. Again and again, considering various objections, the court found that EPA had adopted an overly regional approach, neglecting to assess the specific impact of one state's upwind emissions on another state's downwind attainment efforts; repeatedly, the decision takes EPA to task for adopting such a procedure merely because it was "logical" or "fair" rather than in strict compliance with statutes. With specific reference to CAIR's NOx trading program, the decision rebukes EPA for adopting a formula--evidently from the acid rain program--that favors coal-burning utilities over those relying mainly on gas and oil, working to the disfavor of a state like oil-rich Louisiana. With reference to SO2, it found that CAIR's proposed supplemental trading scheme would illegally devalue permits issued in the acid rain program.

"Unfortunately," the court concluded, "we cannot pick and choose portions of CAIR to preserve.â''Ã'¶CAIR is a single, regional program, as EPA has always maintained, and all its components must stand or fall together."

A number of the petitioners in the suit declared themselves dismayed by the outcome, including Duke Energy, based in Charlotte, N.C. Though one of the nation's top coal-burning utilities, Duke has been a leading industry advocate of carbon regulation; together with North Carolina, however, it was a major plaintiff in the CAIR suit. It appears now to be embarrassed and perhaps even damaged by the sweeping result. "It was not the intent of Duke Energy's participation in this litigation to overturn EPA's CAIR," a spokesman said. Though challenging just the SO2 portions of CAIR, now that the whole rule is overturned, Duke loses the benefits for coal-burning utilities contained in the NOx trading provisions.

Just how shocked--shocked!--should we be? Georgetown University law professor Lisa Heinzerling, who wrote the petitioners' brief in the 2007 Supreme Court climate decision, says it's quite unusual for a big rule like CAIR to be vacated in its entirety: generally courts will remand defective portions to the regulatory agency for revision. But in this case Heinzerling feels "the decision seems kind of right, assuming the court's accounting of EPA's reasoning is accurate."

John Walke, the top air lawyer at the Natural Resources Defense Council, sharply disagrees. In a blog he posted on July 15, he said that if Duke hadn't wanted to overturn CAIR then it shouldn't have brought suit in the first place, as "any decent attorney practicing in the D.C. Circuit would know that the frequent practice in that [quite conservative] court is to vacate unlawful rules in their entirety." Walke said this should have been particularly true of the able attorney who argued Duke's case in court, coincidentally a former classmate of his at Harvard Law School.

The immediate impact of the court's decision is that a previous NOx trading scheme, the so-called NOx SIP call, comes back into effect. But Walke, Heinzerling, and just about everybody else agree that in the longer run, stronger regulation of NOx and SO2 particulate will not be possible without new and revised statutory authority, which will have to await the next Congress and next Administration, along with a carbon mandate.

One final note: everybody considers the decision, as such, to be final. The D.C. Appeals Court, which is the one designated to deal with challenges to federal regulations, is after the Supreme Court the country's most prestigious and most powerful legal authority. The decision in the case of North Carolina versus EPA, written by the court's chief judge David B. Sentelle (coincidentally a native of North Carolina), can be readily found and downloaded at FindLaw, after a short log-in procedure.

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