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The D.C. Circuit’s Greenhouse Gas Decision

Today’s decision by the U.S. Court of Appeals for the D.C. Circuit in Coalition for Responsible Regulation v. EPA is quite significant for environmental law. The court turned away the state and industry challenges to the EPA’s decision to begin regulating greenhouse gases under the Clean Air Act. The only element of the decision that is at all surprising is the court’s dismissal of the challenges to the EPA’s “tailoring rule” due to a lack of standing.

On the merits, the court rejected challenges to the EPA’s determination that the emission of greenhouse gases causes or contributes to air pollution that which may be reasonably anticipated to endanger public health or welfare (the “endangerment finding”) and rejected claims that the EPA’s new standards for GHG emissions from mobile sources were arbitrary and capricious. This was to be expected. As I’ve noted before, judicial review of these sorts of decisions is highly deferential, and the EPA did not have to do much to support its decision. Even if the industry challengers had been able to convince the court that climate change is not that big of a deal, this would not have been enough to overturn the endangerment finding, provided the EPA gave a sufficient explanation of its conclusions — which it did.

The more interesting parts of the opinion concern whether the petitioners could challenge the EPA’s decision to regulate stationary source GHG emissions generally, and the EPA’s adoption of the tailoring rule in particular. On the former question, the court concluded that industry petitioners could challenge a decades-old EPA determination that the regulation of a pollutant from mobile sources under Section 202 of the Act triggers stationary source regulations. This was because there were some plaintiffs who had never-before been subject to stationary source regulation under the Clean Air Act because it was not until carbon dioxide was treated as a pollutant that these plantiffs emitted enough of a regulated substance to fall within the Act’s controls.

This small victory on ripeness was but a prelude to a loss on a larger question: Whether large emitters of greenhouse gases could challenge the EPA’s decision to forego regulation of smaller sources. No, the court concluded, because the industry petitioners did not satisfy the requirements for Article III standing to challenge the EPA’s failure to regulate someone else. However great the injury some industry groups may suffer from GHG regulation, the court reasoned, forcing the EPA to regulate additional sources would provide no meaningful redress. It does not matter that the EPA’s tailoring rule flatly contradicts the plain text of the Clean Air Act and represents a dramatic assertion of agency discretion over a detailed, legislatively crafted scheme. If there’s no standing, the suit cannot proceed.

This decision will be the last stop for most, if not all, of the industry challenges to the GHG rules. En banc and cert petitions may get filed, but I can’t see either the full D.C. Circuit or the Supreme Court having much interest in the endangerment finding or the EPA’s mobile source rules. If any claim has a chance to go on, it would be the standing argument. If there’s an issue in this case that could catch the Supreme Court’s attention, this would be it. Among other things, it could giver the Supreme Court the opportunity to address how recent standing decisions affect standing claims based upon alleged competitive harm (i.e. the harm suffered by company A due to the government’s favorable treatment of company B). Still, I would not bet on it. In all likelihood those who oppose GHG regulation under the Clean Air Act will have to direct their attention to Congress. They’re done in the courts.

Cross-posted at the Volokh Conspiracy.

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Why The Sackett Case Is Far From Over

Mike and Chantell Sackett were stuck. Complying with EPA demands meant paying to throw away their property. If they ignored the EPA they would be liable for massive fines that would obviously bankrupt them and they could be subject to criminal liability.

The Sacketts bought a lot near Priest Lake in northern Idaho in 2005 for $23,000. They planned to build a home on the site pictured above in an area with many houses already. Homes and a road existed between their lot and the lake, which is 500 feet away. They rounded up needed permits and began work in the subdivision.

The EPA uncovered this assault on a bit of dirt and in 2007 declared their lot was a wetland. The Sacketts were ordered to cease construction on the half-acre parcel. EPA told them the area was a wetland that could not be changed without its permission. It ordered them to remove the gravel that had been dumped on the lot (at a cost of $27,000), to restore the vegetation to what existed previously, to fence off the property, and to file annual reports about the condition of the property. The Sacketts were threatened with fines up to $32,500 per day until they were in compliance and ceased the wanton environmental destruction. (EPA also claims the right to double the fine to $75,000 per day when it prevails—and it declared that it had prevailed because it said it had prevailed.)

The Sacketts sued, seeking a declaration that the property was not a wetland. It is not on the lakeshore and has no creek running through it. It gets wet only when it rains. The federal district court and Ninth Circuit Court of Appeals held that the Sacketts could not go to court until the EPA requested a federal court to enforce their order. The courts held that courts could not review compliance orders of the EPA and that there was no violation of the Sacketts’ due process rights.

The Pacific Legal Foundation took the case to the Supreme Court for them, arguing that they had the right to have the matter heard in federal court. Reversing another decision from the Ninth Circuit, the Court held unanimously for the Sacketts. The Court did not address the wetland issue. The point of the case is one of administrative procedure.

The Court held that the Sacketts had the right to contest the EPA order as “arbitrary” and “capricious” under the Administrative Procedure Act. The EPA deprived them of their due process right. Since the EPA order was a “final agency action” the Sacketts had the right to go to court to challenge the agency. There was no other remedy. Courts can review the actions of agencies under the Administrative Procedure Act to ensure that its requirements have been followed properly by the agency. The agency cannot simply declare victory, impose fines, and the party subject to the ruling have no chance to appeal to the courts.

While the Sacketts gained satisfaction and a bit of fame from a Supreme Court win, don’t bet they ever get to build their house. Unless EPA rolls over, the Sacketts have merely won an administrative point. It may be back to the same agency and courts that spit on them before.

Some years ago beachfront property owners in California and South Carolina won noteworthy victories against state agencies that basically took their property via the regulatory process. The agencies were not pleased that mere citizens embarrassed them before the high court and then drug the parties through the administrative mud for years after the high court decisions. The final results were not the “victories” for the abused citizens that we tend to presume. Agencies have the taxpayer purse to finance their proceedings and more litigation. Homeowners such as the Sacketts have pockets a bit less deep.

As Justice Alito noted in this case [PDF], “real relief” must come from Congress. The Clean Water Act does not contain clear rules regarding procedure. No one really knows what is a wetland. The EPA takes advantage of the lack of clarity and, like any bureaucracy, grabs power. This is the 40th anniversary of the Clean Water Act. As Congress has not seen fit to clean it up over the decades, it is unlikely to do so now.

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Thoughts on Sackett v. EPA

The regulators lost to the regulated yesterday in Sackett v. Environmental Protection Agency. As Ilya Somin notes, the Supreme Court’s unanimous opinion held that property owners and other regulated parties may challenge administrative compliance orders issued by the Environmental Protection Agency under the Clean Water Act. This is a small, yet significant, victory guaranteeing a modicum of procedural protection for those subject to regulation under the CWA.

In this case, the EPA issued an ACO to the Sacketts alleging they had filled wetlands without a federal permit and directing them to take remedial action or face civil penalties. The Sacketts had sought an agency hearing on the matter, but the EPA declined. So the Sacketts went to court. The federal government maintained that judicial review of the ACO was unavailable unless and until the EPA filed a civil enforcement action against them. The U.S. Court of Appeals for the Ninth Circuit concurred, only to be reversed by the Supreme Court.

Writing for the Court, Justice Antonin Scalia explained that an ACO can be challenged as a final agency action under the Administrative Procedure Act, as the order represents the conclusion of the agency’s consideration of the question and is, itself, the source of a binding obligation on the regulated party. The order “has all of the hallmarks of APA finality” and is thus presumptively subject to judicial review. As the CWA does not expressly or impliedly preclude judicial review, and there is no other adequate remedy in court, the Sacketts can have their day in court.

Justice Scalia’s opinion for the Court is quite narrow, and lacks the rhetorical flourishes we’ve come to expect in his environmental opinions. The Court had no occasion to reach the due process issues lurking below the surface of the case – specifically whether the Sacketts would be entitled to some opportunity to be heard, if not in court then before the agency, before they could be subject to fines for violating the administrative compliance order. Although Justice Scalia noted the continuing uncertainty over the scope of federal regulatory jurisdiction under the CWA, particularly with regard to wetlands, his opinion made clear the Court was expressing no opinion as to whether the EPA properly asserted jurisdiction over the Sacketts’ land. Solely at issue was whether the Sackett’s could challenge the EPA’s assertion of jurisdiction and claim that the Sacketts had violated federal law by filling jurisdictional wetlands on their property without first obtaining a federal permit. Justice Ginsburg wrote a brief concurring opinion stressing this point.

Justice Alito’s concurring opinion stressed the continuing regulatory uncertainty to which private landowners are subject under the Clean Water Act. The statute’s reach is “notoriously unclear,” and yet landowners can face substantial fines if they fail to obtain the requisite federal permits before modifying wetlands on their land. According to Alito, the Court’s decision in Sackett offers landowners “ a modest measure of relief” in that it now ensures that landowners may seek judicial review of an agency order directing them to cure CWA violations or face additional fines. Yet according to Alito, the burden on landowners remains substantial.

the combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA’s tune.

According to Alito, real relief will only come when Congress or the agencies provide a “reasonably clear” jurisdictional rule defining what constitute “waters” subject to federal regulatory control.

For 40 years, Congress has done nothing to resolve this critical ambiguity, and the EPA has not seen fit to promulgate a rule providing a clear and sufficiently limited definition of the phrase. Instead, the agency has relied on informal guidance. But far from providing clarity and predictability, the agency’s latest informal guidance advises property owners that many jurisdictional determinations concerning wetlands can only be made on a case-by-case basis by EPA field staff.

Despite repeated losses in the Supreme Court, the EPA and U.S. Army Corps of Engineers have yet to make any serious effort to delineate the scope of their regulatory jurisdiction. The latest guidance, issued in response to Rapanos, is no exception. This virtually assures the question of CWA regulatory jurisdiction will come before the Supreme Court yet again, and the ability of the Sacketts and other regulated landowners to challenge ACOs should only accelerate the process.

Here are my prior posts on the Sackett case:

UPDATE: At Legal Planet, Richard Frank assesses the case.  His conclusion:

Some will argue that the availability of judicial review to contest administrative orders issued by EPA under the Clean Water Act will hamper federal enforcement efforts in the future.  That’s due in significant part to the fact that the vast majority of federal actions to enforce the CWA take the form of such orders, rather than formal administrative hearings or federal litigation that are more costly, resource-intensive and time-consuming for EPA.

Be that as it may, my own opinion is that Scalia and the Court got this one right.  The Sackett decision’s statutory analysis seems compelling, and the equities of this particular David-and-Goliath saga fall rather strikingly in favor of the Sacketts.  I don’t often find myself in agreement with Justice Scalia, but I confess that I do here.  One of Scalia’s closing observations in Sackett particularly resonated with me: “there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into `voluntary compliance’ without the opportunity for judicial review–even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.”

Originally posted at The Volokh Conspiracy.

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Climate Change in the D.C. Circuit

Today the U.S. Court of Appeals for the D.C. Circuit will begin two days of oral arguments in a set of challenges to the EPA’s various rules applying the Clean Air Act to greenhouse gas regulations. These rules are the inevitable outgrowth of the Supreme Court’s decision in Massachusetts v. EPA, as I explain here and here. For this reason, most of the industry challenges face tough sledding. For instance, given Mass v. EPA, it is difficult to argue that the EPA Administrator was wrong to conclude that the emission of greenhouse gases cause or contribute to air pollution that could be reasonably anticipated to threaten health or welfare. Yet this is one of the claims the industry groups have to make if they are to succeed. Similarly, it will be difficult to challenge the substance of the EPA’s rules governing GHG emissions from motor vehicles.

The more serious challenge to the EPA comes from the challenges to the so-called “tailoring rule” which is the EPA’s effort to apply some of the Clean Air Act’s stationary source provisions to greenhouse gases. The reason this challenge is more serious is because the EPA looked at the statutory requirements of these provisions and realized that implementation of the Act, as written, was impossible. The statutory thresholds that determine what facilities are covered are low enough that, when applied to GHGs, they increase the number of regulated facilities over 140-fold, according to EPA. The administrative costs of trying to process this many permits threatens to grind the EPA’s air office – and state air permitting authorities — to a halt. So, the EPA is trying to rewrite the relevant Clean Air Act provisions by administrative fiat. In the alternative, the EPA has argued, regulatory agencies would have to hire hundreds of thousands of new regulators to handle the permit applications. The problem for EPA is that the relevant emission thresholds are expressly written into the Clean Air Act, and there is no provision giving the EPA authority to modify these limits. So, what the EPA is asking for authority to do, is rewrite the law by administrative fiat — something no federal agency has the authority to do. This puts the D.C. Circuit in a tough place: either let EPA rewrite the law, or enforce a statutory provision that threatens to shut down the agency. Further evidence the Supreme Court was wrong in Mass. v. EPA, particularly when it suggested that applying the Clean Air Act to GHGs would pose no problems.

Here are additional previews of the litigation from Richard Frank and Brad Plumer.

UPDATE: Here’s an additional preview from Greenwire noting the magnitude of this litigation.

Originally posted on The Volokh Conspiracy.