Case Analysis: Texas Moves to Block EPA Climate Regulations

Gregory E. Wannier
Deputy Director and Fellow

In the absence of major climate legislation in the U.S. Senate, parties in the United States seeking meaningful action on climate change mitigation have turned to the Environmental Protection Agency (EPA) for action.  However, despite authorization from the Supreme Court’s seminal Massachusetts v. EPA ruling in 2007 to regulate greenhouse gases, EPA’s greenhouse gas regulations have been heavily contested.  The most recent challenge comes from the State of Texas, whose Attorney General, Greg Abbott, filed a legal challenge on September 16 in the US Court of Appeals for the District of Columbia, seeking to prevent implementation of certain EPA regulations.[1]

The complaint challenges four EPA actions: (1) the initial endangerment finding, which says that carbon emissions from motor vehicles are reasonably likely to threaten public health and welfare; (2) the “Timing Rule,” which reads the Clean Air Act’s (CAA’s) language to allow regulation of carbon emissions from stationary sources (any source of pollution that cannot move, unlike all vehicles); (3) the “Tailpipe Rule,” which sets greenhouse gas emission standards for Light Duty Vehicles; and (4) the “Tailoring Rule,” which exempts small emitters from regulation.[2]

Texas’ challenge to the endangerment finding rests primarily on the assertion that EPA relied on “uncontrollable” outside bodies (a reference to the UN Intergovernmental Panel on Climate Change, or IPCC) in making its decision.  Indeed, Texas raises similar claims to those raised by climate skeptics during the height of the “Climate-Gate” controversy, labeling EPA’s referencing of these sources as a violation of agencies’ constitutional obligation not to delegate certain duties.[3] This challenge faces an uphill climb; EPA has a long history of relying on outside peer-reviewed scientific reports, and in any case courts generally defer to federal agencies on scientific and technical matters.[4] Texas’ other major challenge is that EPA, in failing to specify an exact level of carbon emissions that constitute endangerment, was impermissibly vague.  Here, again, EPA has a strong argument for judicial deference.  Legal precedent, notably in Ethyl Corp. v. EPA, has allowed endangerment findings to be made at the discretion of the Administrator, even without specific numerical determinations.[5]

Texas next challenges EPA’s interpretation of its authority to regulate stationary sources under the Prevention of Significant Deterioration (PSD) guidelines in the CAA.  This part of the complaint asserts that PSD regulation is only valid in conjunction with a determination that a given area “satisfies”[6] an EPA-determined Natural Ambient Air Quality Standard (NAAQS).  Given that no NAAQS has been issued for greenhouse gases, Texas argues that it is impossible to comply, and so any regulation using PSD is invalid.  EPA rejects this interpretation, concluding instead that PSD tools are available to regulate any pollutants “subject to regulation” under the Clean Air Act.[7] Under this reading, the NAAQS is simply one of many possible regulatory activities that could activate PSD requirements, with other tools notably including regulation of moving sources, as in EPA’s subsequent Tailpipe Rule.[8]

The ambiguity between Texas’ and EPA’s interpretations centers on §161 and §165 in the PSD Chapter of the Clean Air Act.  §161 applies PSD to each region that satisfies a NAAQS, while §165 bans construction of a facility “in any area to which [PSD] applies” unless, among other requirements, the facility meets Best Available Control Technology (BACT) standards “for each pollutant subject to regulation” under the CAA.  Texas argues that §165 cannot apply unless §161 applies, and §161 requires a NAAQS.  EPA, by contrast, appears to view §161 as irrelevant to the issue,[9] and instead focuses on the “subject to regulation” language in §165 as being the true indicator of when BACT requirements may be applied.  This issue is probably the strongest part of the complaint: Texas’ interpretation of the two sections’ interaction (that §161 says when PSD applies, and §165 says how it applies) is logical.  However, EPA’s interpretation also has merit, and EPA is empowered under Chevron to pick any reasonable interpretation of an ambiguous statutory provision.[10] The fate of Texas’ challenge here will depend on how ambiguous the DC Circuit reads the CAA to be in this case.

Texas’ next challenge, to the Tailpipe Rule, primarily alleges that it fails to properly account for its costs and benefits.  Specifically, Texas argues that EPA should have considered the impact on stationary source regulation because, based on the Timing Rule’s interpretation, this rule would “automatically trigger stationary-source regulation of GHG emissions.”  However, this assertion misstates EPA’s finding in its Timing Rule: while a stationary source may be regulated no sooner than when the first “control requirement” takes place (in this case, the Tailpipe Rule), it only allows for, and explicitly does not mandate, stationary source regulations thereafter.[11] Other challenges to this rule, which focus on its alleged redundancy and ineffectiveness in mitigating climate change, are lacking in legal support; carbon emissions are not redundant to the emissions of various ozone-causing gases, and there is no mandate in the CAA that regulations meet any minimum effectiveness threshold so long as the benefits exceed the costs.

Finally, Texas challenges the EPA Tailoring Rule for directly violating clear and unambiguous requirements in the CAA.  The provisions in question are essentially mandates saying that EPA must regulate any emitter of 100 tons per year of any listed pollutant.[12] For practical reasons, EPA raised these thresholds to 75,000 or more tons per year, to avoid being put in the position of regulating minor carbon emitters, which on its face appears to deviate from the plain text of the CAA.[13] EPA justifies its action through the application of three sets of legal precedent: first, it says literal application of CAA would lead to “absurd” results; next it argues that it is administratively necessary to exclude small emitters or the agency will be swamped trying to regulate; and finally it claims to want to implement carbon regulation only “one step at a time,” and to start with major emitters. [14] This part of Texas’ challenge has some statutory basis, though the precedent raised by EPA points in the direction of allowing modification in this case.

Elements of the case merit attention. Undeniably, the Clean Air Act is imperfectly tailored to the problem of regulating carbon emissions.  However, EPA’s interpretations of the four regulations at issue in this case do stand a reasonable chance of surviving DC Circuit review.

The resolution of this and other similar cases will be important to watch, because EPA’s regulations here present the strongest source of national greenhouse gas mitigation activity in today’s political climate.  Furthermore, successful regulation may also catalyze legislative action: because such regulations would likely be preempted by Congressional action, regulated entities may see a market mechanism as superior to the command-and-control type of regulation that has characterized EPA’s efforts to-date.

[1] “Texas Files Legal Action to Block Imposition of EPA Regulations that Threaten Texas Jobs,”

[2] Id.; see also Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009); Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004 (Apr. 2, 2010); Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. 25,324 (May 7, 2010); Prevention of Significant Deterioration and Title VI Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31,514, (June 3, 2010).

[3]“Texas Leads Resistance to EPA Climate Action,”

[4] This principle is most famously codified in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).

[5] 74 Fed. Reg. 66,496, 66,507.

[6] An area may satisfy a NAAQS either by being in actual compliance with, or if, for outside reasons, it is impossible to say whether or not it is in compliance with, the NAAQS air quality requirements for any given pollutant.

[7] 75 Fed. Reg. 17,004, 17,004-05.

[8] In making this interpretation, EPA relied on a December 18, 2008 memorandum where EPA interpreted the phrase “subject to regulation” as including any regulation promulgated by EPA “that requires actual control of emissions of that pollutant.”  75 Fed. Reg. 17,004 , 17,004-05, 19-20.

[9] §161 is not cited once in EPA’s Timing Ruling.  75 Fed. Reg. 17,004.  EPA interprets §165 as applying to all new emitters, provided of course that the requirements of that section are met (explaining its focus on the “subject to regulation” language in §165).

[10] Chevron v. NRDC, 467 U.S. at 837.

[11] 75 Fed. Reg. 17,004 , 17,019.

[12] 42 U.S.C. §§ 7479(1), 7602(j), 7661(2)(B).

[13] 75 Fed. Reg. 31,514, 31,567.

[14] 75 FR 31,514, 31,542-45; see also United States v. Ron Pair Enterprises, 489 U.S. 235, 242 (1989) (discussing absurd results doctrine); Logan v. United States, 552 U.S. 23, 36–37 (2007) (discussing absurd results doctrine); New York v. EPA, 443 F.3d 880, 884, 888 (DC Cir. 2006) (discussing administrative necessity doctrine); National Association of Broadcasters v. FCC, 740 F.2d 1190, 1209-14 (DC Cir. 1984) (discussing one step at a time theory).

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