Am. Lung Ass'n v. Envtl. Prot. Agency

• Decision Date: 19 January 2021
• Docket Number: 19-1187, 19-1175,No. 19-1140, 19-1179, 19-1166, 19-1186, 19-1185, 19-1188, 19-1177, C/w 19-1165, 19-1173, 19-1176,19-1140
• Citation: 985 F.3d 914
• Parties: AMERICAN LUNG ASSOCIATION and American Public Health Association, Petitioners v. ENVIRONMENTAL PROTECTION AGENCY and Andrew Wheeler, Administrator, Respondents AEP Generating Company, et al., Intervenors
• Court: U.S. Court of Appeals — District of Columbia Circuit

985 F.3d 914

AMERICAN LUNG ASSOCIATION and American Public Health Association, Petitioners

v. ENVIRONMENTAL PROTECTION AGENCY and Andrew Wheeler, Administrator, RespondentsAEP Generating Company, et al., Intervenors

No. 19-1140

C/w 19-1165

19-1166

19-1173

19-1175

19-1176

19-1177

19-1179

19-1185

19-1186

19-1187

19-1188

United States Court of Appeals, District of Columbia Circuit.

Argued October 8, 2020

Decided January 19, 2021

TABLE OF CONTENTS

I. Background...––––

A. The Clean Air Act...––––

B. Electricity and Climate Change...––––

1. Electricity...––––

2. Climate Change and the Federal Government...––––

C. The Clean Power Plan...––––

D. The ACE Rule...––––

1. Repeal of the Clean Power Plan...––––

2. Best System of Emission Reduction....––––

3. Degree of Emission Limitation Achievable...––––

4. Implementing Regulations...––––

E. Petitions for Review...––––

F. Jurisdiction and Standard of Review...––––

II. Section 7411...––––

A. Statutory Context...––––

1. Text...––––

2. Statutory History, Structure, and Purpose....––––

3. Compliance Measures...––––

B. The Major Questions Doctrine...––––

1. The EPA's Regulatory Mandate...––––

2. Best System of Emission Reduction...––––

C. Federalism...––––

III. The EPA's Authority to Regulate Carbon Dioxide Emissions Under Section 7411...––––

A. The Coal Petitioners' Challenges...––––

1. Endangerment Finding...––––

2. Section 7411 and Section 7412's Parallel Operation...––––

B. The Robinson Petitioners' Challenges...––––

IV. Amendments to the Implementing Regulations...––––

V. Vacatur and Remand....––––

VI. Conclusion...––––

As the Supreme Court recognized nearly fourteen years ago, climate change has been called "the most pressing environmental challenge of our time." Massachusetts v. EPA , 549 U.S. 497, 505, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007) (formatting modified). Soon thereafter, the United States government determined that greenhouse gas emissions are polluting our atmosphere and causing significant and harmful effects on the human environment. Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act (2009 Endangerment Finding), 74 Fed. Reg. 66,496, 66,497–66,499 (Dec. 15, 2009). And both Republican and Democratic administrations have agreed: Power plants burning fossil fuels like coal "are far and away" the largest stationary source of greenhouse gases and, indeed, their role in greenhouse gas emissions "dwarf[s] other categories[.]" EPA Br. 169; see also Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units (New Source Rule), 80 Fed. Reg. 64,510, 64,522 (Oct. 23, 2015) (fossil-fuel-fired power plants are "by far the largest emitters" of greenhouse gases).

The question in this case is whether the Environmental Protection Agency (EPA) acted lawfully in adopting the 2019 Affordable Clean Energy Rule (ACE Rule), 84 Fed. Reg. 32,520 (July 8, 2019), as a means of regulating power plants' emissions of greenhouse gases. It did not. Although the EPA has the legal authority to adopt rules regulating those emissions, the central operative terms of the ACE Rule and the repeal of its predecessor rule, the Clean Power Plan, 80 Fed. Reg. 64,662 (Oct. 23, 2015), hinged on a fundamental misconstruction of Section 7411(d) of the Clean Air Act. In addition, the ACE Rule's amendment of the regulatory framework to slow the process for reduction of emissions is arbitrary and capricious. For those reasons, the ACE Rule is vacated, and the record is remanded to the EPA for further proceedings consistent with this opinion.

I. BACKGROUND

A. THE CLEAN AIR ACT

In 1963, Congress passed the Clean Air Act, 42 U.S.C. § 7401 et seq ., "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population[,]" id . § 7401(b)(1). Animating the Act was Congress' finding that "growth in the amount and complexity of air pollution brought about by urbanization, industrial development, and the increasing use of motor vehicles[ ] has resulted in mounting dangers to the public health and welfare[.]" Id . § 7401(a)(2).

Section 111 of the Clean Air Act, which was added in 1970 and codified at 42 U.S.C. § 7411, directs the EPA to regulate any new and existing stationary sources of air pollutants that "cause[ ], or contribute[ ] significantly to, air pollution" and that "may reasonably be anticipated to endanger public health or welfare." 42 U.S.C. § 7411(b)(1)(A) ; see id . § 7411(d), (f) (providing that the EPA Administrator "shall" regulate existing and new sources of air pollution). A "stationary source" is a source of air pollution that cannot move, such as a power plant. See id. § 7411(a)(3) (defining "stationary source" as "any building, structure, facility, or installation which emits or may emit any air pollutant[ ]"). An example of a common non-stationary source of air pollution is a gas-powered motor vehicle. See Utility Air Regulatory Group v. EPA (UARG ), 573 U.S. 302, 308, 134 S.Ct. 2427, 189 L.Ed.2d 372 (2014).

Within 90 days of the enactment of Section 7411, the EPA Administrator was to promulgate a list of stationary source categories that "cause[ ], or contribute[ ] significantly to, air pollution[.]" 42 U.S.C. § 7411(b)(1)(A). In 1971, the Administrator included fossil-fuel-fired steam-generating power plants on that list. Air Pollution Prevention and Control: List of Categories of Stationary Sources, 36 Fed. Reg. 5,931 (March 31, 1971) ; see also New Source Rule, 80 Fed. Reg. at 64,527–64,528. Today's power plants fall in that same category. ACE Rule, 84 Fed. Reg. at 32,557 n.250.

Once a stationary source category is listed, the Administrator must promulgate federal "standards of performance" for all newly constructed sources in the category. 42 U.S.C. § 7411(b)(1)(B). The Act defines a "standard of performance" as

a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.

Id . § 7411(a)(1).

Once such a new source regulation is promulgated, the Administrator also must issue emission guidelines for already-existing stationary sources within that same source category. 42 U.S.C. § 7411(d)(1)(A)(ii) ; see also American Elec. Power Co., Inc. v. Connecticut (AEP ), 564 U.S. 410, 424, 131 S.Ct. 2527, 180 L.Ed.2d 435 (2011).

While the new source standards are promulgated and enforced entirely by the EPA, the Clean Air Act prescribes a process of cooperative federalism for the regulation of existing sources. Under that structure, the statute delineates three distinct regulatory steps involving three sets of actors—the EPA, the States, and regulated industry—each of which has a flexible role in choosing how to comply. See 42 U.S.C. § 7411(a)(1), (d). This allows each State to work with the stationary sources within its jurisdiction to devise a plan for meeting the federally promulgated quantitative guideline for emissions. See id. § 7411(d).

The process starts with the EPA first applying its expertise to determine "the degree of emission limitation achievable through the application of the best system of emission reduction" that "has been adequately demonstrated." 42 U.S.C. § 7411(a)(1) ; see 40 C.F.R. § 60.22a. That system must "tak[e] into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements[.]" 42 U.S.C. § 7411(a)(1). Once the Administrator identifies the best system of emission reduction, she then determines the amount of emission reduction that existing sources should be able to achieve based on the application of that system and adopts corresponding emission guidelines. Id. ; see also, e.g. , ACE Rule, 84 Fed. Reg. at 32,523 ; Clean Power Plan, 80 Fed. Reg. at 64,719.

Each State then submits to the EPA a plan that (i) establishes standards of performance for that State's existing stationary sources' air pollutants (excepting pollutants already subject to separate federal emissions standards), and (ii) "provides for the implementation and enforcement of such standards of performance[ ]" by the State. 42 U.S.C. § 7411(d)(1) ; see 40 C.F.R. § 60.23a. The standards of performance must "reflect[ ]" the emission targets that the EPA has determined are achievable. 42 U.S.C. § 7411(a)(1). In this context, a state standard need not adopt the best system identified by the EPA to "reflect[ ]" it. Id . ; see 40 C.F.R. § 60.24a(c). Instead, the Clean Air Act affords States significant flexibility in designing and enforcing standards that employ other approaches so long as they meet the emission guidelines prescribed by the Agency.

If a State fails to submit a satisfactory plan, the EPA may prescribe a plan for that State. 42 U.S.C. § 7411(d)(2)(A) ; see 40 C.F.R. § 60.27a(c) - (e). Similarly, if the State submits a plan but fails to enforce it, the EPA itself may enforce the plan's terms. Id . § 7411(d)(2)(B).

The third and final set of relevant actors are the regulated entities themselves, to which, under the Act, the States may afford leeway in crafting compliance measures. See Clean Power Plan, 80 Fed. Reg. at 64,666 ; ACE Rule, 84 Fed. Reg. at 32,555.

The EPA has exercised its authority under Section 7411 over the years to set emission limitations for different types of air pollution from various categories of existing sources. See 42 Fed. Reg. 12,022 (March 1, 1977) (fluorides from phosphate fertilizer plants); 42 Fed. Reg. 55,796 (Oct. 18, 1977) (acid mist from sulfuric acid plants); 44 Fed. Reg. 29,828 (May 22, 1979) (total reduced sulfur from kraft pulp plants); 45 Fed. Reg. 26,294 (April 17, 1980) (fluorides from primary...