This week, a DC Circuit panel held two days of oral argument on the multitude of challenges to EPA’s December 2009 Greenhouse Gas Endangerment Finding and the “Tailoring Rule.”  Very few reports of the argument seem to have made it into the mainstream press, but Bloomberg has a report here, and the Wall Street Journal has a report here (paywalled).

As expected, the endangerment finding itself does not seem to be in much trouble, as the industry challengers are making the climate denialist’s attack on the legitimacy of the climate science that underpins EPA finding.  Industry even stooped to relying on the “climate gate” purloined e-mails to attack the endangerment finding.  According to a Bloomberg report of the argument, the panel was having none of it — Judge Tatel reminded industry counsel that the standard of review of the endangerment finding is the “arbitrary and capricious” standard, while Judge Sentelle pointed out that industry was asking the Court to make its own finding about endangerment.

More troubling for EPA is the so-called “Tailoring Rule,” which initially exempts sources under 100,000 tons per year of CO2e GHGs from permitting and review for “new sources” and “prevention of significant deterioration” (PSD) review.  The problem is that the CAA section 302 specifically defined a “major source” (subject to permitting requirements) based on a 100 ton per year threshhold — one thousand times smaller than the initial review and permit threshold under the “Tailoring Rule.”  In essence, EPA wants to limit application of GHG new (and modified) source emissions restrictions to the largest fossil fuel facilities, and not every industrial boiler.  Industry has challenged the tailoring rule not because it wants to see smaller dischargers subject to regulation, but because it believes that broad application of GHG rules would prompt Congressional action throwing GHG regulation out the window entirely.

According to an account of the argument by American University Law Professor Amanda Leiter, the DC Circuit Panel raised the possibility that the Tailoring Rule might be sustainable as an exercise of EPA’s prosecutorial discretion, unreviewable under Heckler v. Chaney.  This issue was neither briefed nor argued, and apparently the DOJ attorneys did not take the bait.   One can see why — prosecutorial discretion is an extremely problematic argument for a regulatory exemption in a statutory scheme that provides for citizen enforcement (as  CAA Section 304 does).  In essence, by including a citizen suit in the Clean Air Act, Congress precluded prosecutorial discretion as a means of exempting classes of emitters from enforcement.  In fact, over thirty years ago, EPA attempted (and lost) in a similar effort to exempt thousands of small Clean Water Act regulated “point sources” under the Clean Water Act (including stormwater discharges and many small Concentrated Animal Feeding Operations).  EPA defended its regulatory exemption on the same administrative infeasibility grounds that it is attempting to defend the tailoring rule with.  The DC Circuit (yes, the very same court) struck that argument down in NRDC v Costle, holding that EPA lacked authority under the Clean Water Act to amend the clear scope of the statutory permitting requirement by regulation.