States Sue EPA (Again) Over Regulation of Carbon Dioxide Emissions

The battle over the Environmental Protection Agency’s (“EPA”) authority to regulate carbon dioxide emissions has once again found its way to the courts. This time, a group of states, cities and environmental groups have filed suit against EPA seeking to require the agency to impose limits on carbon dioxide emissions from new electric power plants and industrial facilities. The case, New York v. Environmental Protection Agency, No. 06-1148 was filed on April 27, 2006 in the U.S. Court of Appeals for the District of Columbia Circuit. See the Petition for Review.

Under the Clean Air Act (“CAA”), section 111(b), EPA is required to adopt new source performance standards (“NSPS”) for categories of emission sources which cause, or contribute significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare. EPA is also required to review, and if appropriate, revise, the NSPS every eight years to ensure that the standards continue to protect public health and the environment. CAA Section 111(b). On February 27, 2006, EPA revised the NSPS for electric utility steam generating units (electric power plants) and industrial-commercial steam generating units. 71 Fed. Reg. 9866 (Feb. 27, 2006). The new rules amended the emission limits for sulfur dioxide (SO2), nitrous oxides (NOx), and particulate matter (PM) for electric utility and industrial steam generating units that began construction or were modified after February 28, 2005. See the Federal Register notice for the new rules.

The new lawsuit alleges that EPA should have adopted NSPS emission limits for carbon dioxide (CO2), the primary greenhouse gas responsible for global warming. The Plaintiffs contend that that there is overwhelming evidence that carbon dioxide contributes to global warming and thus harms public health and welfare, and that therefore, EPA’s refusal to issue NSPS for CO2 emission from power plants is contrary to the plain language of the CAA. Plaintiffs further allege that power plants are the largest source of CO2 emissions in the United States, accounting for over a third of all greenhouse gas emissions in the U.S. and that under the current NSPS rules these plants would face no emission limitation requirements. See statement from New York Attorney General Elliot Spitzer.

EPA has not yet responded to the lawsuit. In the Federal Register notice accompanying the new rules, however, EPA stated that it “has concluded that it does not presently have the authority to set NSPS to regulate CO2 or other greenhouse gases that contribute to global warming.” 71 Fed. Reg. at 9869.

This is not the first lawsuit seeking to require the EPA to regulate CO2 and other greenhouse gas emissions under the CAA. In July 2005, the U.S. Court of Appeals for the District of Columbia (the same court that the current lawsuit was filed in) held that the EPA properly exercised its discretion in denying petitions for rulemaking to regulate carbon dioxide and other greenhouse gas emissions from new automobiles. Massachusetts v. EPA, 415 F.3d 50 (D.C. Cir. 2005). Significantly however, the two judges in the majority in the Massachusetts case decided the matter without reaching the central issue of whether EPA has the authority to regulate CO2 under the CAA. Judge Randolph, writing for the majority decided that EPA properly denied the petition for rulemaking based upon policy judgments. Judge Sentelle denied the petition outright on the theory that the petitioners lacked standing. The opinion in the Massachusetts case was the subject of a previous Environmental News article. See, D.C. Circuit Upholds EPA Decision Not to Regulate Greenhouse Gases from Automobiles. Because the majority did not reach the central issue of the case, petitioners sought a rehearing en banc, which was denied. Massachusetts v. EPA, 433 F.3d 66 (D.C. Cir.2005) (rehearing en banc denied). On March 2, 2006 a petition for certiorari was filed requesting the Supreme Court to overturn the lower court’s decision and decide the case on the merits of whether the CAA authorizes the regulation of greenhouse gases. See, Petition for Certiorari 74 USLW 3517 (March 2, 2006). (No.051120)

At the heart of both the current lawsuit and the Petitioners’ claims in the Massachusetts case is whether the EPA has authority under the CAA to regulate greenhouse gases such as carbon dioxide. The CAA defines “air pollution” as any physical, chemical, biological, [or] radioactive … substance or matter which is emitted into or otherwise enters the ambient air. …” CAA at Section 302(g). In order for EPA to regulate an air pollutant, the Administrator must make a finding that the pollutant “… may reasonably be anticipated to endanger public health or welfare” CAA at Section 108(a)(1)(A). The Act defines the term “welfare” to include the effects on “weather” and “climate”. CAA at Section 302(h). Adding fuel to the legal debate is the fact that the EPA had previously concluded, under the Clinton Administration, that CO2 is a pollutant under the CAA. EPA reversed its position under the Bush Administration.

 EPA did not offer any policy justification for not requiring emission controls for CO2 in its NSPS rulemaking. Rather, it simply stated that it lacked the necessary authority under the CAA. The new lawsuit will necessarily require the court to address the central question of whether the CAA authorizes the regulation of CO2 and other greenhouse gases that contribute to global warming. Whether and when the D.C. Circuit will hear the States’ Petition in the current lawsuit will likely turn on whether the U.S. Supreme Court grants the petition for certiorari in Massachusetts v. EPA. If the Supreme Court decides to hear the Massachusetts case, expect the current lawsuit to be stayed pending a decision from the high court.

In filing the lawsuit, New York Attorney General Elliot Spitzer stated that “EPA’s newly adopted rule represents an abdication of leadership and foresight in favor of the unacceptable status quo.” EPA officials responded to the suit by stating that they will “review all options and make an informed decision on how to proceed.” Interestingly, the reaction of the power industry has been relatively guarded. In fact, several large power companies, including Exelon and Duke Energy have suggested recently that some form of federal carbon regulation is necessary. Testifying before a Senate workshop on global warming solutions, Elizabeth Moler, Executive vice president at Exelon stated that “[W]e need the economic and regulatory certainty to invest in a low-carbon energy future. It is critical that we start now.” Ruth Shaw of Duke Energy testified with respect to CO2 regulation that “[C]ustomers and shareholders need greater certainty … [W]e cannot delay and cannot count on a strictly voluntary approach.” See, NRDC press release.

The states and cities that filed the lawsuit are New York, California, Connecticut, Maine, Massachusetts, New Mexico, Oregon, Rhode Island, Vermont, Wisconsin, the District of Columbia, and New York City. Environmental groups filing a similar petition include Environmental Defense, Natural Resources Defense Council, and the Sierra Club.