Symposium: Soft landings and strategic choices

Jody Freeman is the Archibald Cox Professor of Law at Harvard Law School, and director of the law school’s Environmental Law Program. She served as Counselor for Energy and Climate Change in the White House in 2009-10.

In this comment I make two claims about the greenhouse gas cases that may seem controversial but should not be.  First, from a practical perspective, the cases are, at this point, of limited significance.  This is not to say the outcome is not politically important – it is.  Or that the cases are not legally interesting, because, due to the real tensions in the statutory provisions at issue and the vagaries of Chevron review, they are that too.  But given the narrowness of the question presented (and assuming the Court does not stray beyond it), even if the government loses, the impact on the EPA’s regulatory agenda for greenhouse gases, and thus on the president’s climate action plan, is fairly small and entirely manageable.   Most saliently, the outcome of this litigation should not impede the agency’s plan to set standards for greenhouse gas emissions from the major industrial stationary source categories, including new and existing power plants.

Second, the EPA might have averted this particular legal challenge had it been somewhat more risk averse initially.  The agency could have opted to interpret the PSD program in a more limited fashion, treating the program’s permitting requirements and technology controls as triggered only by the emission of NAAQS pollutants in amounts over the statutory threshold (just as Judge Kavanaugh proposed in his dissent from the D.C. Circuit’s denial of rehearing en banc), arguably without losing anything too precious.  Yet it did not do so, instead pursuing the most aggressive interpretation of PSD applicability available.  At this stage, however, the government’s merits brief signals quite clearly that the more limited “NAAQS-only” reading of the trigger would be an acceptable place to land.  It thus seems reasonable to wonder: why was this not the agency’s approach from the get-go?

On the first claim, the reason the cases can be fairly characterized as of limited import is that a restrictive interpretation of the PSD program’s applicability to GHGs would not deprive the agency of the other and far more important CAA programs for regulating GHGs, such as Section 111 New Source Performance Standards.  NSPS are set by the EPA, and apply uniformly to entire industrial categories nationally.  (In the rare instance when these standards apply to existing sources, the EPA issues guidelines under which the states set standards.) In addition, based on the EPA’s past practice, NSPS may be at least somewhat forward-looking and technology-forcing.  The PSD program, by contrast, is managed largely by the states. Its central requirement – that sources use “best available control technology” – applies to individual sources only when they propose to “construct” in attainment areas. Determinations under this program thus vary in stringency across both sources and states.  Moreover, the PSD program is fairly small, with permits numbering in the low hundreds each year.  One can see, then, why the EPA’s main goal in adapting the PSD program to GHGs has been simply to survive legal challenge in a way that would not impair its ability to implement the more important New Source program.

Indeed, the real risk presented by the petition for cert. in the greenhouse gas cases, which did not materialize, was that the Court would grant review of EPA’s endangerment finding, the invalidation of which would have jeopardized the entire GHG program by demolishing its essential legal pillar.  That risk was truly grave, because the endangerment finding is necessary to support every rule the EPA has issued to control GHGs thus far, including its mobile source rules for light-duty vehicles (the “tailpipe” rule); subsequent rules for heavy-duty trucks; and regulation of stationary sources in the PSD program (the program at issue in this litigation). In addition, the endangerment finding at least indirectly underpins the EPA’s proposed NSPS for power plants. The key takeaway is that because the Supreme Court did not grant review of the linchpin endangerment finding, the Obama administration’s sector-by-sector approach to regulating greenhouse gases will continue apace.

Nevertheless, the government would surely prefer not to lose, since any loss will be portrayed as a significant legal setback and will stoke the narrative that the EPA is out of control, even if neither notion is true.  And naturally, no one, especially the Solicitor General’s office, much less a highly invested EPA, likes to lose in the Supreme Court.  Moreover, any loss could invite more litigation.  In particular, additional lawsuits would certainly follow were the Court to embrace the view, advanced in the industry’s brief, that the CAA’s broad definition of “pollutant” in Section 302 (interpreted by the Court to include GHGs in Massachusetts v. EPA) merely sets the outer bounds of substances eligible for regulation, and that whether GHGs can be regulated under any particular program must be determined on a case-by-case basis.  Finally, losing in at least one way would be catastrophic.  If the Court were to take up petitioners’ Hail Mary invitation to roam beyond the narrowly cabined question presented in the cert. grant, and reconsider Massachusetts v. EPA, it could do real damage.   (Of course, having denied cert. on this very issue, it could only do so by asking for further briefing.)

In any event, this possibility is extremely unlikely because the Court need not go nearly that far to dispose pragmatically of the central question before it.  And this brings me to my second claim, which is that­­ the EPA could have avoided this challenge.  There are two key interpretive questions at issue here. First, can the PSD program, a preconstruction review and permitting program for individual sources located in areas of the country that are in attainment with at least one air quality standard, be triggered by GHG emissions over a threshold amount – that is, does the phrase “any air pollutant” in the definition of the “major” facilities covered by the program, mean both criteria and non-criteria pollutants, including GHGs?  Second, even if GHGs cannot trigger the program’s applicability, must they be controlled once a facility triggers in otherwise, because it emits above-threshold amounts of conventional pollutants? The program requires covered facilities, once in, to apply Best Available Control Technology (BACT) to “each pollutant subject to regulation under the Act”. And GHGs are of course regulated now by virtue of EPA’s “tailpipe” rule.

The EPA’s interpretive position is that the answer to both questions is yes, which is why the agency was compelled to administratively raise the statutory threshold levels from 100/250 to 100,000 tons per year for GHGs, at least for the foreseeable future.  Otherwise, the low statutory thresholds, if applied to GHG emissions, would result in more than 80,000 sources triggering PSD review, an unmanageable sum according to the agency.  The EPA described this result (and the corollary consequence that six million sources would be triggered into Title V’s permitting program) as “absurd” and contrary to congressional intent.  Thus it temporarily “tailored” the program.

Yet on the matter of PSD applicability, the agency apparently rejected what might turn out to be a practical, if inelegant, compromise.  Whether or not it occurred to the EPA initially, the NAAQS-only reading of “any air pollutant” in the definition of major facilities covered by the program was suggested in the industry comments on the tailoring rule.  The agency’s response was that such an interpretation would not be a “logical outgrowth” of the original proposal, and would need to be re-proposed for comment, which the EPA declined to do.  Later, the NAAQS-only option re-appeared as one of three proposed constructions by the industry petitioners in their briefs in the D.C. Circuit. It was emphasized by Peter Keisler at oral argument, and although decisively rejected by the panel, was later embraced by Judge Kavanaugh in his dissent from the court’s denial of rehearing.

Notably, this is the one instance during the EPA’s multi-step and multi-year implementation of the CAA to address greenhouse gases that the agency did not choose the more cautious route.  For example, EPA sought the auto industry’s support for its historic tailpipe rule and went out of its way to design a flexible compliance program; reconsidered and revised its initial proposed standard for new power plants to address concerns about its legal vulnerability; and has signaled repeatedly that its forthcoming guidelines to govern state standards for existing power plants will afford the states maximum flexibility.  Moreover, the EPA has assiduously avoided deploying both the NAAQS program and the Act’s Section 115 program (which concerns pollution harmful to foreign countries) to address GHGs, despite petitions that it do so.  These decisions are the sign of a deliberate agency and a watchful White House engaged in careful risk calibration.

Of course, there are often very good reasons why an agency adopts what seems to outsiders like a forward-leaning interpretation of its regulatory authority.  Yet even after the prodigious briefing in this case, it remains somewhat unclear what the EPA would have lost had it opted for the NAAQS-only view of the PSD program’s trigger.  First, according to the EPA’s own calculations, a NAAQS-only trigger would still enable the EPA to control approximately eighty-three percent of the GHG emissions it would otherwise have regulated. This is because large GHG emitters also tend to emit high levels of criteria pollutants. As noted above, once triggered into the PSD program, facilities must apply BACT to each pollutant regulated under the Act, including GHGs.

Second, a NAAQS-only test should not significantly compromise the agency’s ability to regulate other pollutants. Since 1980, when it addressed PSD applicability as part of its post-Alabama Power rulemaking, the EPA has relied on an interpretation of the PSD provisions as triggered by non-criteria pollutants. This broad applicability test may have been motivated initially by a wish to use the PSD permitting process to control “bad” pollutants that might otherwise have escaped regulation under one or another of the Act’s other programs.  As it stands, however, the EPA and the states regulate what appear to be fairly low amounts of non-criteria pollutant emissions (such as sulfuric acid mist, hydrogen sulfide, fluorides and landfill emissions) under the PSD program.  It is hard to know the extent of the public health benefits that would be forgone if these pollutants could no longer trigger PSD review.  Many, perhaps most, of the facilities that emit these pollutants also emit NAAQS over the statutory threshold levels, and so would be subject to BACT for all such pollutants anyway.  Third, the PSD program is not necessary to control toxic pollutants, at least not anymore.  Since 1990, when Congress added Section 112 to the CAA, that program has been the exclusive mechanism for regulating these especially dangerous substances. Thus, at least arguably, a NAAQS-only trigger may not compromise too much.

Understandably, the EPA does not wish to abandon lightly a decades-old interpretation on which it claims there has been substantial reliance.  But agencies can and do change their minds when circumstances demand it, and they are usually entitled to deference if they do so for non-arbitrary reasons. The EPA also argues that there would be numerous undesirable spillover effects were it to now jettison the original interpretation. Yet it is not entirely clear what these might be and how serious they are. In sum, the benefits to the agency of a NAAQS-only approach may have justified overcoming these hurdles.

There may be very good reasons why such a view is wrong, and why the NAAQS-only approach would do more violence to the Act’s scheme than the EPA’s “tailoring” solution.  A NAAQS-only reading is the more strained interpretation of words that on their face seem capacious, and adopting it would create an awkward asymmetry between narrower applicability of PSD on the front end (conventional pollutants only), and broader coverage of PSD on the back end (BACT would still apply to all regulated pollutants).  No doubt the government will make all of these points at oral argument.

It is entirely possible that the Court will read the phrase “any air pollutant” literally, as the D.C. Circuit did, or at least allow that the phrase is ambiguous, and defer at Step Two to the agency’s preferred resolution.  Still, given the hard-to-reconcile tensions in the language of the PSD program, it will be tempting for at least some members of the Court to choose the practical and lawyerly solution presented by the Keisler-Kavanaugh NAAQS-only option.  Indeed, the government’s brief seems to acknowledge this possibility in both its structure and emphasis.  While spending relatively little time bolstering the agency’s interpretation of PSD applicability, the brief prominently and adamantly defends as crystal clear that once triggered into the program, facilities must apply BACT to “each pollutant subject to regulation” under the Act, including, necessarily, GHGs.  The government knows what it cannot give up. If the mantra while waiting for the Court’s decision on whether it would grant certiorari in this case was, “it’s all about endangerment,” the catchphrase now might be, “it’s all about BACT.”