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July 22, 2013
EPA fails in defense of GHG deferral rule

In a case that addressed whether the EPA may issue a rule deferring regulation of carbon dioxide (CO2) emissions from biogenic sources under the Clean Air Act’s (CAA) Prevention of Significant Deterioration (PSD) program, a three-judge panel of the U.S. Court of Appeals for the DC Circuit ruled 2–1 that the Agency has no authority to do so.  The deferral rule, which was issued in July 2011 in response to a petition for reconsideration from a forestry organization, was challenged in the DC Circuit by a group of environmental organizations.

The three circuit judges wrote three separate opinions, with two concurring for different reasons that the rule was illegal while the third stated that the deferral was “eminently reasonable.” 

Absent an attempt by the EPA to rewrite the deferral rule in a way that withstands the scrutiny of the two judges, the DC Circuit’s vacatur will compel the Agency to issue PSD regulations and require Title V permitting for sources that may not be currently subject to PSD permitting for greenhouse gases (GHGs).

Industry request

The EPA defines “biogenic emissions” as those from biologically based materials other than fossil fuels.  In the deferral rule, the EPA postponed for 3 years any obligation under the CAA to apply the PSD and Title V permitting requirements to biogenic CO2 emissions from bioenergy and other biogenic stationary sources. 

While the EPA had issued PSD regulations for other major sources that generated CO2 emissions from the combustion of fossil fuel, the Agency said there were too many uncertainties regarding how to account for biogenic CO2 emissions in the PSD program.  The Agency said it would use the 3 years to conduct a detailed examination of the science associated with biogenic CO2 emissions from stationary sources.  The deferral rule does not block states from requiring PSD permitting for biogenic CO2 emissions, and at least one state, Massachusetts, is doing so.

Three doctrines

To justify the deferral, the EPA invoked three principles of administrative law: the de minimis, one-step-at-a-time, and administrative-necessity doctrines.  In its brief to the court, the Agency withdrew its use of the de minimis doctrine since it would have required a permanent exemption rather than a 3-year deferral. 

In the lead opinion, Justice Tatel found EPA’s one-step-at-a-time justification in the deferral rule inadequate because the Agency did not explain which steps would follow the first step (i.e., the deferral). 

“Specifically, although the deferral rule spends pages explaining the scientific uncertainty about biogenic carbon dioxide sources, the additional research EPA plans to undertake, and why three more years of study are warranted, the rule—as opposed to EPA’s brief here—nowhere offers an interpretation of the Clean Air Act that would allow the agency to treat biogenic carbon dioxide sources differently,” writes Tatel.

Regarding the administrative necessity doctrine, Judge Tatel said the EPA failed to meet the “narrowest feasible exemption” provision contained in that doctrine because it did not propose a middle-ground option—specifically, requiring biogenic CO2 sources to obtain permits, but only if they fail to make any effort to take into account net carbon cycle impacts.

Concurrence and dissent

In a concurring opinion, Justice Kavanaugh asserts that the EPA has no discretion under the CAA to distinguish biogenic CO2 from other forms of CO2 for purposes of the PSD and Title V permitting programs.  Kavanaugh made this assertion despite his belief that CAA’s PSD program does not cover CO2, whether biogenic or not.

“What we are left with now is a statute that is a far cry from what Congress intended or enacted,” wrote Kavanaugh.  “So EPA is necessarily making it up as it goes along.  That is not how the administrative process is supposed to work.”

In her dissenting opinion, Justice Henderson says the EPA has made correct use of the long-recognized step-at-a-time regulatory procedure.  “In sum, EPA’s decision to stop and think before regulating in a complex—and changing—area is eminently reasonable,” wrote Henderson.

Click here for the DC Circuit’s opinion in Center for Biological Diversity et al. v. EPA.

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