BEFORE THE UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA

Petitioner EPA Docket #:

EPA-HQ-OAR-2009-0171

PETITION FOR RECONSIDERATION

AND FOR STAY PENDING RECONSIDERATION

Robin S. Conrad

Amar D. Sarwal

NATIONAL CHAMBER

LITIGATION CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20063

Telephone: (202) 463-5337

Facsimile: (202) 463 – 5346

Robert R. Gasaway

William H. Burgess

KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W.

Washington, D.C. 20005

Telephone: (202) 879-5000

Facsimile: (202) 879-5200

Counsel for the Chamber of Commerce of the United States of America

Dated: March 15, 2010
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TABLE OF CONTENTS

Page

BACKGROUND............................................................................................................. 1

ARGUMENT .................................................................................................................. 5

I. THE AGENCY SHOULD RECONSIDER ITS

ENDANGERMENT FINDING.................................................................. 5

A. The Agency Has A Duty To Grant Reconsideration

Where, As Here, The Grounds For Reconsideration Are

Weighty And Have Arisen After A Rule Has Been

Promulgated. ................................................................................... 5

B. The Tailoring Rule Preamble And NHTSA Letter Have

Combined To Undermine EPA’s Rationale For The

Endangerment Finding. ................................................................... 9

1. Massachusetts Does Not Preclude EPA From

Declining To Regulate. ....................................................... 10

2. The Tailoring Rule Preamble Correctly Concludes

That A Chevron Step One Analysis Establishes

That Regulating Greenhouse Gas Emissions From

Statutory Sources Would Produce Absurd Results. ............. 12

3. The Recent NHTSA Letter Confirms That Clean

Air Act Regulation Of New Motor Vehicle GHG

Emission Is Not Necessary. ................................................ 19

C. EPA Should Reconsider Its Endangerment Finding Based

On The EPA’s And NHTSA’s Legal Conclusions. ........................ 22

II. THE AGENCY SHOULD STAY THE ENDANGERMENT

FINDING PENDING THE RECONSIDERATION. ................................ 23

A. EPA Should Grant A Stay Pending Reconsideration

Because “Justice So Requires.” ..................................................... 23

B. The Four Factors Courts Often Use To Analyze Stay

Requests Also Weigh In Favor Of A Stay...................................... 26

1. The Chamber Has Made A Strong Showing On

The Merits. ......................................................................... 27
TABLE OF CONTENTS (Cont’d.)

Page

ii

2. Business Will Be Irreparably Harmed If The

Endangerment Finding Is Not Stayed.................................. 28

3. No Party Will Be Appreciably Harmed If

Automobile GHG Emissions Are Tackled

Exclusively By NHTSA...................................................... 31

4. The Public Interest Favors A Stay....................................... 34

CONCLUSION ............................................................................................................. 35
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Pursuant to Clean Air Act Section 307(d)(7)(B); 42 U.S.C. § 7607(d)(7)(B);

5 U.S.C. § 553(e); 5 U.S.C. § 705; and Fed. R. App. P. 18(a)(1), the Chamber of

Commerce of the United States of America (“Chamber”) respectfully petitions the

United States Environmental Protection Agency to grant reconsideration, and a

stay pending the completion of its reconsideration proceeding, in the following

matter: Endangerment and Cause or Contribute Findings for Greenhouse Gases

Under Section 202(a) of the Clean Air Act, Docket Number EPA-HQ-OAR-2009-

0171, 74 Fed. Reg. 66,496 (Dec. 15, 2009) (“Endangerment Finding”). Given the

important issues raised by this petition, the Chamber is willing to discuss with EPA

an appropriate schedule and process for reconsideration with an EPA-ordered stay

of the Endangerment Finding in place. EPA should contact the Chamber to initiate

such a discussion. In the event the EPA has neither granted the petition nor

contacted the Chamber to establish a mutually agreeable schedule for

reconsideration by April 14, 2010, such inaction will be deemed a denial of the

petition.

BACKGROUND

The Chamber is a not-for-profit entity that constitutes the world’s largest

business federation. The Chamber represents 300,000 direct members, and

indirectly represents more than 3,000,000 businesses and professional
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organizations, drawn from every size category, economic sector, and geographic

region of the country. An important part of the Chamber’s mission is to advocate

the interests of its members in matters pending before the Executive Branch of

government, including before the Environmental Protection Agency.

In furtherance of that mission, the Chamber has been closely monitoring the

EPA proceedings leading to the Endangerment Finding, and filed comments with

EPA in response to, among other proposals, EPA’s proposed Endangerment

Finding; its proposed “Tailoring Rule,” see Prevention of Significant Deterioration

and Title V Greenhouse Gas Tailoring Rule, 74 Fed. Reg. 55,292 (Oct. 27, 2009);

and the joint rulemaking setting new fuel economy/GHG emission standards for

new motor vehicles EPA is conducting with the Department of Transportation’s

National Highway Traffic Safety Administration (“NHTSA”), see Proposed

Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission Standards

and Corporate Average Fuel Economy Standards, 74 Fed. Reg. 49,454 (Sept. 28,

2009) (Docket Number EPA-HQ-OAR-2009-0472) (“Auto Rule”). The Chamber

has maintained an on-going dialogue with the Agency regarding these important

issues that affect businesses throughout our nation.

The Endangerment Finding, Tailoring Rule, and Auto Rule proceedings are

extraordinarily unusual and important. These proceedings seek to impose

expensive controls on greenhouse gas emissions, using preexisting Clean Air Act
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authority. But this preexisting statutory authority was neither designed, nor

intended, nor “tailored” to regulate “pollutants” such as greenhouse gases that,

because of rapid dispersion, are found in essentially equal concentrations

throughout the globe and, to the extent they cause harms, cause them on a global

scale. This ill-fit between pollution problem and Clean Air Act solution prompted

EPA, in its proposed Tailoring Rule, to invoke the canon of construction directing

that statutes be read to avoid absurd results. EPA should be commended for

candidly focusing on the potential absurdity of applying all or part of the Act to

GHG emissions. This petition identifies a ready escape hatch from the underlying

problem, which EPA can and should employ to make a graceful exit from the

looming prospect of triggering an absurd regulatory regime.

The petition takes as its point of departure two significant, authoritative legal

interpretations put forward by Executive Branch agencies long after the comment

period for the Endangerment Finding had closed on June 23, 2009. First, as noted

above, the absurdity of seeking to regulate greenhouse gas emissions from

stationary sources under the existing Clean Air Act was formally recognized and

emphasized by EPA in the preamble to its Tailoring Rule proposal. That proposal

was first published in the Federal Register on October 27, 2009, more than four

months after the June 23, 2009, deadline for submitting comments in the

Endangerment Docket.
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Second, NHTSA recently proclaimed that it enjoys authority to regulate

emissions from new motor vehicles, regardless of whether or not EPA enjoys

similar authority under Title II of the Clean Air Act. EPA had worried that it

might be best to regulate greenhouse gas emissions from new motor vehicles under

the Clean Air Act because, in the absence of such action, some or all of those

emissions might escape regulation. See Letter from Lisa Jackson, EPA, to Senator

Jay Rockefeller IV, at 2 (Feb. 22, 2010) (“The impacts of [passage of a resolution

disapproving the Endangerment Finding by Congress] would be significant. In

particular, it would undo an historic agreement among states, automakers, the

federal government, and other stakeholders [permitting GHG standards for new

motor vehicles].”). Now, however, a February 19, 2010 letter to Senator Diane

Feinstein from O. Kevin Vincent, Chief Counsel of the National Highway Traffic

Safety Administration (“NHTSA”) within the U.S. Department of Transportation

(“DOT”), has defused this concern. This NHTSA letter acknowledges that as a

“legal matter” Congress disapproving the Endangerment Finding, thus preventing

it from becoming effective, would “not directly impact NHTSA’s independent

statutory authority to set fuel economy standards under the Energy Policy and

Conservation Act (EPCA), as amended by the Energy Independence and Security

Act of 2007 (EISA).” See Letter from O. Kevin Vincent, NHTSA, to Matthew B.
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Nelson, Office of Senator Diane Feinstein, at 1 (Feb. 19, 2010). In other words

NHTSA is able to go it alone without EPA employing its Clean Air Act authority.

The controls on greenhouse gas emissions now under consideration by the

EPA would, if promulgated, constitute the most expensive regulatory program ever

adopted in the United States. Against that backdrop, the recent authoritative

acknowledgements from EPA and NHTSA — combined with the reality that new

controls on greenhouse gas emissions threaten a still-recovering economy —

provide ample grounds for EPA to reconsider its Endangerment Finding and stay

that Finding pending completion of its reconsideration process.

ARGUMENT

I. THE AGENCY SHOULD RECONSIDER ITS ENDANGERMENT

FINDING.

The new EPA and NHTSA legal interpretations are of central relevance to

EPA’s Endangerment Finding and constitute grounds for reconsideration arising

after the close of the Endangerment Finding’s public comment period on June 23,

2009. These twin developments negate the legal basis EPA had relied on to justify

the Endangerment Finding.

A. The Agency Has A Duty To Grant Reconsideration Where, As

Here, The Grounds For Reconsideration Are Weighty And Have

Arisen After A Rule Has Been Promulgated.

Clean Air Act Section 307(d)(7)(B) sets out an approach for EPA to use in

adjudicating reconsideration petitions, and states as follows:
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If the person raising an objection can demonstrate to the

Administrator that it was impracticable to raise such objection within

such time or if the grounds for such objection arose after the period

for public comment (but within the time specified for judicial review)

and if such objection is of central relevance to the outcome of the rule,

the Administrator shall convene a proceeding for reconsideration of

the rule and provide the same procedural rights as would have been

afforded had the information been available at the time the rule was

proposed.

See 42 U.S.C. § 7607(d)(7)(B).

In implementing this provision, the Agency may look to the court’s decision

in Oljato Chapter of the Navajo Tribe v. Train, 515 F.2d 654 (D.C. Cir. 1975),

which is endorsed in the Act’s legislative history. See H.R. Rep. 95-294, at 323

(May 12, 1977) (stating “the committee bill confirms the court’s decision in Oljato

Chapter of the Navajo Tribe v. Train, 515 F.2d 654 (D.C. Cir. 1975).”).

Oljato Tribe sets forth a straightforward three-step process for EPA to

follow in situations where petitions to reconsider Clean Air Act rules are filed:

(1) The person seeking revision of a standard of performance, or any

other standard reviewable under Section 307, should petition EPA to

revise the standard in question. The petition should be submitted

together with supporting materials, or references to supporting

materials. (2) EPA should respond to the petition and, if it denies the

petition, set forth its reasons. (3) If the petition is denied, the

petitioner may seek review of the denial in this court pursuant to

Section 307.

Id. at 666.

This petition satisfies or sets the stage for each of the three Oljato Tribe

steps in a reconsideration process. It satisfies the first step because it seeks the
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withdrawal of the Endangerment Finding on specified legal grounds. EPA thus has

a duty to respond under the second Oljato Tribe step, mindful that judicial review

of any explanations it gives for denying the relief the Chamber requests may occur,

under the third Oljato Tribe step, in the D.C. Circuit.

Oljato Tribe reemphasized a key point, first emphasized in the legislative

history to the 1970 Clean Air Act Amendments; namely, that “new information”

may “dictate a revision or modification of any promulgated standard or regulation

established under the act.” Id. at 660 (quoting S. Rep. No. 91-1196, at 41-42

(1970)). Because critical new information may become available, as here, after a

“regulation” has been “promulgated,” legal argument should be directed in the first

instance on reconsideration to EPA, in order to build a record for later D.C. Circuit

review. See id. at n.20.

Also notable is Section 307(d)(7)(B)’s treatment of petitions submitted

“within the time specified for judicial review.” The function of that provision is to

require that EPA seek public comment on reconsideration requests received by the

Agency within the 60-day judicial-review window specified by the Act’s Section

307(b)(1). See Kennecott Corp. v. EPA, 684 F.2d 1007, 1019-20 (D.C. Cir. 1982).

But Section 307(d)(7)(B)’s mandatory notice-and-comment obligation does not

mean that other reconsideration and stay petitions, like this one, can be ignored. If

that were true, Congress would not have looked to Oljato Tribe as a model, for in
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that case the relevant reconsideration petition was filed long outside the review

window. Instead, where, as here, the grounds for reconsideration arise after the

close of the review period, the petition must still be considered, albeit with a

discretionary (as opposed to mandatory) opportunity for further public comment.

The D.C. Circuit thus explained in Oljato Tribe that “the public’s right to

petition the Administrator for revision of a standard of performance and the

Administrator’s duty to respond substantively to such requests exist completely

independently of Section 307 and this court’s appellate jurisdiction.” 515 F.2d at

667 (emphasis added); see also, e.g., PPG Indus., Inc. v. Costle, 659 F.2d 1239,

1250 (D.C. Cir. 1981) (counseling that amendment or repeal of a Clean Air Act

regulation could be sought under APA Section 553(e) in conjunction with Section

307(d)(7)(B) even well outside the 60-day review window); Lead Indus. Ass’n,

Inc. v. EPA, 647 F.2d 1130, 1143, 1145 (D.C. Cir.) (petition for reconsideration

filed outside 60-day review window resolved on merits by EPA and not deemed

untimely by D.C. Circuit), cert. denied, 449 U.S. 1042 (1980); see also, e.g., 63

Fed. Reg. 24,749 (May 5, 1998) (granting three-month EPA stay of emissions

standard promulgated nearly four years earlier). Unless Clean Air Act Section

307(d)(7)(B)’s rulemaking reconsideration procedures are newly read wholly to

displace the APA’s ordinary processes for repealing or amending rules, Clean Air

Act reconsideration requests based on grounds newly arising after close of the
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review window must still be entertained by the Agency — albeit under the

appropriate standard of review and with greater discretion as to further public

comment.

In sum, EPA enjoys legal discretion to consider and grant this petition for

reconsideration, under both Section 307 and general administrative law principles.

Of course, as Oljato Tribe recognized, the depth of EPA’s analysis may vary with

the significance of the arguments presented to the Agency: “We are by no means

demanding comprehensive responses to frivolous petitions, but nor are we

sanctioning summary dismissals of meritorious claims.” Id. at 666 n.19. Where,

as here, the issues on reconsideration are substantial, a summary denial of the

petition would constitute an abuse of EPA’s discretion. Likewise, a claim that

EPA lacks authority to entertain the petition at all would run afoul of Prill v.

NLRB, 755 F.2d 941, 947-48 (D.C. Cir. 1985), and its progeny, because, by

definition, EPA would have misread its statutory mandate. EPA may and must

exercise the statutory reconsideration discretion it has been delegated.

B. The Tailoring Rule Preamble And NHTSA Letter Have

Combined To Undermine EPA’s Rationale For The

Endangerment Finding.

As demonstrated below, the Tailoring Rule and NHTSA legal

interpretations, taken together, establish that the public health and welfare benefits

EPA had expected will be either legally unavailable (in the case of stationary
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source emissions) and/or legally duplicative and superfluous (in the case of

reductions from new motor vehicles). Moreover, both events occurred months

after the June 23, 2009, close of the Endangerment Finding comment period: the

Tailoring Rule was proposed in the Federal Register on October 27, 2009 (signed

September 30, 2009), and the NHTSA letter is dated February 19, 2010. Given the

dictates of Massachusetts v EPA, 549 U.S. 497 (2007), combined with these

post-comment-period legal interpretations, the reasons EPA gave for supporting

the Endangerment Finding are no longer cogent.

1. Massachusetts Does Not Preclude EPA From Declining To

Regulate.

As emphasized in the Chamber’s Tailoring Rule comments, the agency is at

risk of misperceiving its options in the wake of Massachusetts v. EPA, 549 U.S.

497 (2007). According to the Agency, EPA must be prepared to say, either “yes,”

“no,” or “the science is too uncertain” in answering the question whether public

health and welfare are subject to endangerment from greenhouse gas emissions.

See Auto Rule, 74 Fed. Reg. at 49,507 (“The Court held that the Administrator

must determine whether or not emissions from new motor vehicles cause or

contribute to air pollution which may reasonably be anticipated to endanger public

health or welfare, or whether the science is too uncertain to make a reasoned

decision.”); see also Speech of EPA Administrator Lisa P. Jackson to the National

Press Club, available at http://yosemite.epa.gov/opa/admpress.nsf/8d49f7
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ad4bbcf4ef852573590040b7f6/70ba33a218b8f22f852576e0006b2a53!OpenDocu

ment (Mar. 8, 2010) (referring incorrectly to “the Supreme Court’s 2007 decision

that EPA must use the Clean Air Act to reduce the proven threat of greenhouse

gases.”) (emphasis added).

In fact, other answers fitting within the Massachusetts holding are both

possible, and preferable to these three alternatives. Massachusetts’s precise

holding is that EPA’s reasons for denying a rulemaking petition submitted by the

International Center for Technology Assessment were legally defective because the

arguments advanced by the agency supporting that denial were not adequate.

Massachusetts did not decide that the regulation of GHGs under the Act was

legally required. Massachusetts did not address, much less decide, whether

controls on greenhouse gases could be imposed throughout the Act, consistent with

Congress’s intent, and without triggering absurd results. In particular,

Massachusetts did not address whether Clean Air Act controls could lawfully be

imposed on the small, stationary GHG emissions sources assertedly subject to the

Act’s PSD and Title V programs. Massachusetts merely rejected the Agency

rationale for inaction under review — a rationale that generally contended that

GHGs are not “pollutants” for purposes of regulations promulgated under the Act’s

section 202.
12

The Massachusetts Court made clear that, on remand, “EPA must ground its

reasons for action or inaction in the statute.” 549 U.S. at 535 (emphasis supplied).

Contrary to what the EPA has sometimes thought, Massachusetts does not paint

the Agency into the confining corner of a false trilemma, or demand that the

Agency shoehorn greenhouse gas emissions controls into the existing Clean Air

Act. Massachusetts requires, not pre-ordained results, but the Agency’s

conscientious adherence to the customary mode of interpretation required by

Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). See Massachusetts, 549 U.S.

at 527. In other words, the agency should consider all relevant statutory

interpretive considerations, including relevant legislative history and any

absurdities that result from applying the Act as written to small stationary sources.

2. The Tailoring Rule Preamble Correctly Concludes That A

Chevron Step One Analysis Establishes That Regulating

Greenhouse Gas Emissions From Statutory Sources Would

Produce Absurd Results.

Massachusetts envisions that the Clean Air Act’s application to GHGs

should be determined according to Chevron’s familiar two-step analytical

framework. Under this framework, administrative agencies (and reviewing courts)

must first assess the plain meaning of statutes using traditional tools of

construction, including the canon that presumes Congress would not intend for its

enactments to be carried to absurd extremes. Nonetheless, EPA thus far has
13

omitted consideration of the implications for its Endangerment Finding of its

invocation of the absurdity canon in the Tailoring Rule.

A Chevron analysis begins with an application of “traditional tools” of

statutory interpretation. See Chevron, 467 U.S. at 843 n.9 (“If a court, employing

traditional tools of statutory construction, ascertains that Congress had an intention

on the precise question at issue, that intention is the law and must be given

effect.”); Pharmaceutical Research & Mfrs. of Am. v. Thompson, 251 F.3d 219,

224 (D.C. Cir. 2001) (at Chevron step one reviewing courts should employ all

“traditional tools of statutory interpretation,” including “text, structure, purpose,

and legislative history”); Arizona Pub. Serv. Co. v. EPA, 211 F.3d 1280, 1287

(D.C. Cir. 2000) (at Chevron step one, reviewing courts must “exhaust[] traditional

tools of statutory construction”).

Because the absurdity canon is a traditional, though comparatively

infrequently used, tool of construction, see, e.g., Rector, Etc., of Holy Trinity

Church v. United States, 143 U.S. 457, 459 (1892); Shotz v. City of Plantation,

Fla., 344 F.3d 1161, 1167 (11th Cir. 2003), Massachusetts requires EPA to

carefully consider its implications for the Agency’s overall statutory interpretation.

Employed to help ascertain the plain meaning of statutes, the absurdity canon is

grounded in courts’ recognition that a Congress or other legislative body would not

intend their enactments to be taken in application to literal but absurd extremes.
14

The absurdity canon thus provides that, in interpreting the words of a statute,

courts have “some ‘scope for adopting a restricted rather than a literal or usual

meaning of its words where acceptance of that meaning would lead to absurd

results . . . or would thwart the obvious purpose of the statute’ . . . .” In re Trans

Alaska Pipeline Rate Cases, 436 U.S. 631, 643 (1978) (quoting Commissioner v.

Brown, 380 U.S. 563, 571 (1965) (alteration in original)).

EPA’s Tailoring Rule preamble emphasizes rightly that “[a]pplying the PSD

thresholds to sources of GHG emissions literally results in a PSD program that is

so contrary to what Congress had in mind — and that in fact so undermines what

Congress attempted to accomplish with the PSD requirements — that it should be

avoided under the ‘absurd results’ doctrine.” 74 Fed. Reg. at 55,310. The

preamble also states that for “Title V, the application of the absurd results doctrine

parallels that of PSD.” The Tailoring Rule preamble thus explains that applying

PSD and Title V to controls on GHG emissions would produce an absurd situation

in which Clean Air Act permitting processes seize up and break down:

If PSD and title V requirements apply at the applicability levels

provided under the CAA, State permitting authorities would be

paralyzed by permit applications in numbers that are orders of

magnitude greater than their current administrative resources could

accommodate . . . .

Without this tailoring rule, permitting authorities would receive

approximately 40,000 PSD permit applications each year — currently,

they receive approximately 300 — and they would be required to

issue title V permits for approximately some six million sources —
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currently, their title V inventory is some 15,000 sources. These

increases are measured in orders of magnitude . . . .

It is also worth noting here that, under a scenario where State or local

permitting authorities do not have the resources to implement the title

V or PSD programs for GHG sources at current CAA permitting

applicability thresholds, EPA may withdraw its approval, in which

case, EPA would become the permitting authority and the enormous

resource requirements would shift to EPA to implement these

programs.

See id. at 55,292, 55,295, 55,300-01 (emphasis added).

Although EPA itself has candidly catalogued some of the ways in which

application of the PSD program to GHG emissions would be absurd, the case for

the absurdity of applying the Act to GHG emissions goes even beyond the

arguments appearing in the Tailoring Rule’s preamble. Consider the following

analysis.

1. Applying the Act’s PSD requirements to GHG emissions would

absurdly draw into the PSD program emissions of pollutants whose asserted harm

to human health and welfare is not concentrated near particular emissions sources,

but dispersed throughout the globe. The PSD program is designed to maintain

compliance and prevent specific geographic areas from experiencing air-quality

deterioration that produces non-compliance with the National Ambient Air Quality

Standards (“NAAQS”), whereas Title V is designed to streamline compliance with

the PSD program and other Clean Air Act requirements by stationary sources. The

PSD program is based on the setting of localized PSD “increments.” These
16

localized increments define the maximum increase in concentrations of a pollutant

over a baseline that will be allowed in a given geographically defined, air-quality

control area. See Clean Air Act Section 164(b)-(c), 42 U.S.C. § 7474(b)-(c). Both

EPA and courts have acknowledged the centrality of these geographically defined

air-quality increments to the PSD program:

We continue to believe that the PSD program is intended to allow the

air quality in each area of the country attaining the NAAQS, and with

the same area classification, to “deteriorate” by the same amount for

each subject pollutant, regardless of the existing air quality when the

increment is initially triggered in a particular area, as long as such

growth allowed within the constraints of the increment does not cause

adverse impacts on site-specific AQRVs [air quality related values] or

other important values. In this way, the PSD increments avoid having

a disproportionate impact on growth that might disadvantage some

communities . . . .

Environmental Def. v. EPA, 489 F.3d 1320, 1331 (D.C. Cir. 2007) (emphasis

added). Self-evidently, a regulatory regime focused on ambient concentrations on

the basis of geographically defined increments cannot be applied without absurdity

to pollutants having essentially the same global concentration no matter where

within our nation’s states or counties a given measurement might be taken. See 74

Fed. Reg. at 55,298.

2. Applying the Act’s PSD requirements to GHG emissions would

absurdly require hundreds of thousands of small emissions sources to put in place

burdensome, expensive, individualized emissions controls, see 74 Fed. Reg. at

55,294, 55,321-22, contrary to the express intentions of Congress. For example,
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Senator Muskie, one architect of the 1977 Clean Air Act Amendments, made clear

that he believed that “houses, dairies, farms, highways, hospitals, schools, grocery

stores, and other such sources” would be excluded from the operation of PSD

program. 123 Cong. Rec. 18,021 (June 8, 1977). Legislative history, the

consultation of which is another traditional tool of construction, thus confirms that

the PSD program was intended to apply exclusively to larger sources, not smaller

ones.

3. Applying the Act’s PSD requirements to GHG emissions would

absurdly jeopardize economic growth. The Clean Air Act declares that one

purpose of PSD program is “to insure that economic growth will occur in a manner

consistent with the preservation of existing clean air resources.” Clean Air Act

Section 160, 42 U.S.C. § 7470(3). But over-burdening state permitting processes

to the point where permitting the machinery seizes up and breaks down will

necessarily force proposed new and modified sources to wait months or years for

the permits they need before they can proceed with growth-enhancing construction.

See Tailoring Rule 74 Fed. Reg. at 55,304 (contending that application of the PSD

program to GHG emissions would make it “impossible” for permitting authorities

to review and dispose of permit applications within 12 months). The resulting

impact on economic growth will be especially severe in the short run — that is, in
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the midst of the most severe economic downturn in recent history — when the new

GHG program is in its infancy and administrative bottleneck will be tight.

In short, EPA is on solid ground in recognizing the “absurdity” of applying

the PSD program to GHG emissions. But the Agency is mistaken in pursing the

remedy proposed in the Tailoring Rule preamble; namely, EPA’s erasure of the

statutorily prescribed emissions thresholds and the replacement of them with EPAprescribed thresholds. As noted above, the Supreme Court’s decision in Trans

Alaska Pipeline holds that absurd applications of statutes should be avoided by

“adopting a restricted rather than a literal or usual meaning” of relevant statutory

terms. 436 U.S. at 643 (emphasis added); see also, e.g, Green v. Bock Laundry

Mach. Co., 490 U.S. 504, 510 (1989) (construing a Federal Rule of Evidence to

avoid an absurdity by entirely excluding from the term “any defendant” all

criminal defendants). The Supreme Court’s remedy for potential absurd

applications of statutes is thus one of narrowly, permanently, and categorically

construing a statutory term to avoid the problem.

In this instance, having recognized the potential for an absurd application of

the Clean Air Act, EPA should have considered resolving the absurdity by giving a

permanent, categorical, restrictive interpretation to one or more statutory terms.

For example, EPA might have adopted a categorical, narrowing construction of

“emissions” or “major emitting facility,” by construing those terms to exclude all
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GHG emissions or emitting facilities. See, e.g., 42 U.S.C. § 7475(a) (referring to

“major emitting facility”); id. § 7475(a)(i) (referring to “emission limitations”).

EPA also should have considered a resolution that determines that the Act simply

cannot apply at all to GHG emissions without triggering one or more absurdities in

its application. But what EPA should not have done is what it did here — overlook

this important aspect of the issue and finalize an Endangerment Finding with no

mention of the problem. The Tailoring Rule preamble, issued months after the

close of the Endangerment Docket comment period, makes clear a critical

omission in the Agency’s justification for the Endangerment Finding.

3. The Recent NHTSA Letter Confirms That Clean Air Act

Regulation Of New Motor Vehicle GHG Emission Is Not

Necessary.

The Chamber’s comments to the Agency respecting EPA’s proposed Auto

Rule emphasized that the federal government must choose between two alternative

regulatory approaches: seeking to regulate GHG emissions using NHTSA’s

authority under the Energy Policy Conservation Act (“EPCA”) and the Energy

Independence and Security Act of 2007 (“EISA”) or, alternatively, seeking to

regulate such emissions on authority of Title II of the Clean Air Act. See Clean

Air Act Sections 202-250, 42 U.S.C. § 7521-7590; see also Chamber Comments

on the Auto Rule at 1-2 (Nov. 27, 2009) (incorporated herein by reference). The

Chamber advised strongly against regulation under the Clean Air Act’s Title II on
20

grounds that such regulation would “provide an unparalleled set of new tools to

NIMBY (Not In My Back Yard) activists bent on stopping construction and

development.” Id. at 1. The Chamber’s comments also recognized the mutual

interconnections between the Auto Rule, the Tailoring Rule, and the Endangerment

Finding. Id. at 7 and n.28.

Now, significantly, the DOT and NHTSA have concluded in their February

19, 2010, letter that Section 202(a) standards are not necessary to regulating

automotive GHG emissions. NHTSA, EPA’s sister agency, instead enjoys

adequate legal authority under EPCA and EISA to regulate such emissions,

independent from EPA’s authority under Clean Air Act Section 202(a). See O.

Kevin Vincent Letter at 1. The Endangerment Finding cannot claim to generate

the public health benefits asserted to flow from mobile source GHG emissions

reductions.

This NHTSA legal conclusion is critical in light of EPA’s own conclusion

that the Endangerment Finding, as such, does not impose requirements on

regulated entities: “The endangerment finding itself does not exercise jurisdiction

over any source, domestic or foreign. It is a judgment that is a precondition for

exercising regulatory authority.” 74 Fed. Reg. at 66,521. According to this logic,

the Endangerment Finding, standing alone, produces no current public health or

welfare benefits. It will instead produce such benefits in the future, according to
21

EPA, but only if it effectively serves as a precondition for the regulation of GHG

emissions from new motor vehicles, stationary emissions sources, or some other

category of emission sources.

Based on this understanding of the Endangerment Finding, EPA has actually

described the Tailoring Rule as a deregulatory measure — one that seeks to scale

back absurd and unavoidable regulatory implications that flow as unintended

consequences from EPA’s independent decision to regulate GHG emissions from

automobiles. See 74 Fed. Reg. at 55,349. See also id. at 55,294 (“This proposal is

necessary because EPA expects soon to promulgate regulations under the CAA to

control GHG emissions from light-duty motor vehicles and, as a result, trigger

PSD and title V applicability requirements for GHG emissions.”) (emphasis

added); id. at 55,295 (“Under EPA’s current interpretation of PSD and title V

applicability requirements, promulgation of this motor vehicle rule will trigger the

applicability of PSD and title V requirements for stationary sources that emit

GHGs.”).

With the release of the February 19, 2010, NHTSA letter, however, this

rationale for EPA’s regulatory program can no longer bear scrutiny. If EPA

affirmatively wishes to pursue an Endangerment Finding to regulate emissions

from new motor vehicles, it must explain what it can add to a NHTSA-only

rulemaking. If EPA affirmatively wishes to pursue an Endangerment Finding to
22

lay the necessary groundwork to regulate GHG emissions from stationary sources,

or other emissions sources, then the Agency must clearly say so and explain how

such regulation can occur without absurdity. What the Agency may not do is

maintain its current stance — where it assures the public that it has no choice but

to risk the imposition of absurd stationary source regulations, based on a presumed

need for motor vehicle regulations that could be accomplished through NHTSA

regulations alone.

C. EPA Should Reconsider Its Endangerment Finding Based On The

EPA’s And NHTSA’s Legal Conclusions.

The Oljato Tribe decision discussed above notes that the asserted grounds

for reconsideration must be grounds EPA has power to address. See 515 F.2d at

664 n.17. Here, the grounds counseling reconsideration fall squarely within EPA’s

statutory authority and either call into question the core rationale EPA has offered

for the Endangerment Finding (in the case of the new NHTSA letter), or establish

that EPA has failed to consider an important aspect of the problem before the

Agency (in the case of EPA’s Tailoring Rule absurdity conclusion). To be sure,

some type of an Endangerment Finding might potentially remain a prerequisite to

EPA regulation, if any were needed, of GHG emissions from certain types of

emission sources. But up to this point EPA has not viewed the Endangerment

Finding as an end in itself, EPA has instead justified it as a means to the end of

new motor vehicle regulation.
23

As matters stand, serious questions of central relevance to the legality of the

Endangerment Finding have been raised. EPA’s and NHTSA’s own conclusions

establish that, while the Endangerment Finding might well be unnecessary to

achieving any significant public health or welfare advantages, it also might lead

directly to absurd consequences. With the Endangerment Finding poised to set in

motion a cascade of costly regulatory impositions on thousands of businesses

across the nation — and on the people they employ — EPA simply cannot ignore

these legal questions. EPA should use this petition, as it must, as a vehicle to

confront these issues and resolve them by reconsidering its Endangerment Finding.

II. THE AGENCY SHOULD STAY THE ENDANGERMENT FINDING

PENDING THE RECONSIDERATION.

Considering the relevant legal and factual developments that have occurred

since EPA closed the comment period on the Endangerment Finding on June 23,

2009, justice demands that EPA grant a stay of the legal effectiveness of its

Endangerment Finding. Granting such a stay will facilitate review with all

deliberate speed of this petition for reconsideration, as well as any other

reconsideration petitions pending before the Agency.

A. EPA Should Grant A Stay Pending Reconsideration Because

“Justice So Requires.”

The Administrative Procedure Act controls how EPA should consider and

decide requests for administrative stays pending reconsideration: “When an
24

agency finds that justice so requires, it may postpone the effective date of action

taken by it, pending judicial review.” 5 U.S.C. § 705. Nothing in Clean Air Act

Section 307(d)(7)(B) sets aside this APA standard. Accordingly, it would be an

abuse of discretion for EPA not to postpone the effectiveness of its Clean Air Act

rulemakings, including the Endangerment Finding, where, as here, the interests of

justice require a stay. EPA has long recognized as much. See Ohio: Approval and

Promulgation of Implementation Plans, 46 Fed. Reg. 8,581, 8,582 n.1 (Jan. 27,

1981) (signed Jan. 19, 1981 by Administrator Costle) (noting that EPA was

applying APA Section 705 to petitions for reconsideration and a stay submitted

pursuant to Clean Air Act Section 307(d)(7)(B)).

The only respect in which the Clean Air Act modifies the usual APA rules is

that stays of rulemakings under the Clean Air Act can last no longer than three

months. See Section 307(d)(7)(B). In considering and disapproving three

additional EPA stays of a particular rulemaking granted after an initial three-month

stay had expired, the D.C. Circuit concluded: “EPA had no authority to stay the

effectiveness of a promulgated standard except for a single, three-month period

authorized by section 307(d)(7)(B) of the CAA . . . .” NRDC v. Reilly, 976 F.2d

36, 41 (D.C. Cir. 1992). The outcome in Reilly is a reflection of the speed

Congress sought to impose on Clean Air Act judicial review and reconsideration

processes, including the fundamental principle that the pendency of a petition for
25

reconsideration does not affect a party’s ability to simultaneously pursue judicial

review. See H.R. Rep. 101-490, pt. 1 (May 17, 1990), (stating that “the filing of

petitions for agency reconsideration does not render agency action nonfinal for

purposes of judicial review”).

Critically, APA Section 705 grants agencies authority to issue stays even

absent showings of irreparable harm. Proving irreparable harm becomes an

relevant consideration, if at all, only when a stay of an agency rule is requested

from a court, as the full text of Section 705 makes clear:

When an agency finds that justice so requires, it may postpone the

effective date of action taken by it, pending judicial review. On such

conditions as may be required and to the extent necessary to prevent

irreparable injury, the reviewing court . . . . may issue all necessary

and appropriate process to postpone the effective date of an agency

action or to preserve status or rights pending conclusion of the review

proceedings.

5 U.S.C. § 705 (emphasis added).

To date, EPA has not directed its attention in the context of the

Endangerment Finding to either of the two centrally relevant legal interpretations

discussed above. Justice thus requires that a stay be put in place while the Agency

grapples with the important questions raised by these EPA and NHTSA

interpretations and by this petition: Why does the final Endangerment Finding not

acknowledge that it may well produce absurd results? Why does the

Endangerment Finding not conclude that this looming absurdity constitutes
26

evidence that Congress did not intend for the Clean Air Act to be used to regulate

GHG emissions? Moreover, if NHTSA’s legal conclusion is correct, why does

EPA’s participation in a joint automobile rulemaking remain necessary? What

precisely are the incremental public health or welfare benefits that will flow from

that participation? Are those benefits worth the price of the absurdities that the

finding will or may entail by triggering regulation elsewhere under the Clean Air

Act? In order to answer these questions, and meet the demands of fairness and

justice, a stay of the Endangerment Finding is in order.

B. The Four Factors Courts Often Use To Analyze Stay Requests

Also Weigh In Favor Of A Stay.

Although the test not applicable to this request for an administrative stay, the

Chamber notes that courts asked to stay agency decisions on direct review often

employ the same four-factor test as is used to adjudicate requests for preliminary

injunctions or stays pending appeal. See Ohio v. NRC, 812 F.2d 288, 290 (6th Cir.

1987) (holding that a motion for a § 705 stay should be judged by the same

standard as a motion for a preliminary injunction); Cuomo v. NRC, 772 F.2d 972,

974 (D.C. Cir. 1985) (per curiam). The leading D.C. Circuit cases in this line of

judicial authority are Washington Metropolitan Transit Comm’n v. Holiday Tours,

Inc., 559 F.2d 841, 843 (D.C. Cir. 1977); and Virginia Petroleum Jobbers Ass’n v.

FPC, 259 F.2d 921 (D.C. Cir. 1958). As stated in WMATA v. Holiday Tours, the

four parts of the relevant test are as follows:
27

(1) Has the petitioner made a strong showing that it is likely to prevail

on the merits of its appeal? Without such a substantial indication of

probable success, there would be no justification for the court’s

intrusion into the ordinary processes of administration and judicial

review. (2) Has the petitioner shown that without such relief, it will

be irreparably injured? . . . (3) Would the issuance of a stay

substantially harm other parties interested in the proceedings? . . . (4)

Where lies the public interest?

559 F.2d 843 (quoting Virginia Petroleum Jobbers Ass’n, 259 F.2d at 925)

(alteration in original). Again, this judicial test is not applicable to this request for

an administrative stay, under APA Section 705. Nonetheless, it is instructive to

note that each of the four WMATA factors militates strongly in favor of granting a

stay pending reconsideration of the Chamber’s petition.

1. The Chamber Has Made A Strong Showing On The Merits.

On the merits, and as discussed above, EPA has simply failed to square its

Endangerment Finding with its Tailoring Rule preamble and NHTSA’s legal

authority letter. EPA’s Endangerment Finding remains at present entirely divorced

from (1) EPA’s conclusion in the proposed Tailoring Rule that application of the

PSD program could lead to absurd results; (2) EPA’s conclusion that those absurd

results are necessarily triggered by its decision to issue a Section 202(a)

Endangerment Finding; and (3) the NHTSA letter’s conclusion that an

Endangerment Finding is not necessary for regulating GHG emissions from

automobiles. See Appalachian Power Co. v. EPA, 249 F.3d 1032, 1063 (D.C. Cir.

2001) (vacating EPA rule because the Agency “failed to explain” regulatory
28

classifications and left the reviewing court “to guess whether its decision was

based on a consideration of the relevant factors”). This failure of explanation on

foundational aspects of the Agency’s legal justification constitutes reversible error.

2. Business Will Be Irreparably Harmed If The

Endangerment Finding Is Not Stayed.

The Chamber has already submitted a study that, standing alone, proves that

the legal effect of the Endangerment Finding will cause irreparable harm to the

Nation’s businesses, States, and local governments. See Portia M. E. Mills and

Mark P. Mills, A Regulatory Burden: The Compliance Dimension of Regulating

CO2 as a Pollutant, U.S. Chamber of Commerce, at 3 (Sept. 2008), (Appendix A).

This study estimates that the PSD thresholds written into the statute would be

reached, for example, by one-fifth of all food service facilities, one-third of health

care facilities, half of those employed in the lodging industry, and even 10 percent

of buildings used for religious worship. See Ben Lieberman, Small Business

Impact of the Endangerment Finding (Jan. 20, 2010), available at

http://www.heritage.org/Research/Reports/2010/01/Small-Business-Impact-of-theEPA-Endangerment-Finding (last visited Mar. 15, 2010). All told, the Chamber

estimates that over 1.2 million buildings in the U.S. would potentially become

subject to PSD as a direct result of the Endangerment Finding.

This vast number of newly-regulated entities will have to wait six to twelve

months, and will spend, on average, $125,120 and 866 hours on paperwork for
29

PSD permits so that new construction or modifications to their buildings can begin.

See EPA, Information Collection Request for Prevention of Significant

Deterioration and Nonattainment New Source Review (40 C.F.R. pts. 51, 52)

(Aug. 2008). Even if only 40,000 of the 1.2 million affected building owners

choose to make modifications or seek permits for new construction, PSD

compliance alone would cost over $5 billion and would require diverting untold

employee hours toward drafting, submitting, and otherwise obtaining permits.

Moreover, the state and local agencies responsible for processing those 40,000

permits would be on the receiving end of this paperwork avalanche and be forced

to spend an estimated $931.2 million additional dollars. This near-$1 billion in

administrative costs would, by itself, overwhelm the federal government’s current

appropriations to aid States in implementing the Clean Air Act. In 2008, Congress

appropriated less than one-quarter of that amount — some $227.5 million — for

state, local and tribal assistance grants for air quality management. In fact, in

2008, EPA spent only $971.7 million on all of its clean air and global climate

programs combined.

These economic threats are confirmed by, among other commenters, an

Office of Management and Budget memorandum that states, candidly, that

“[m]aking the decision to regulate CO2 under the CAA for the first time is likely to

have serious economic consequences for regulated entities throughout the U.S.
30

economy, including small businesses and small communities. Should EPA later

extend this finding to stationary sources, small businesses and institutions would

be subject to costly regulatory programs such as New Source Review.” Undated

OMB Memorandum, posted to regulations.gov docket folder for the Endangerment

Finding Rulemaking as Document Number EPA–HQ–OAR–2009–0171-0124, at 2

(posted Apr. 22, 2009) available at http://www.regulations.gov/search/regs/

home.html/#documentdetail?R=0900006480965abd.

In response to these and similar projections, EPA has often contended that

its Tailoring Rule will help ameliorate the dire economic consequences its actions

would otherwise entail. But even assuming the Tailoring Rule provides some

relief, this contention rests on assumptions that EPA has not adequately

substantiated or explained, including that the Tailoring Rule can and will withstand

judicial scrutiny in its current form; and that the Tailoring Rule is broad enough to

protect businesses from misguided litigation brought by activist groups during the

unavoidable, years-long interim periods in which the legal regime is being tested

and sorted out. The Endangerment Finding will have multiple consequences —

only some of which, at best, will be mitigated by the Tailoring Rule. Given the

fundamental fact that, very few (if any) of the costs incurred by businesses because

of assertions of unmeritorious environmental law claims are recoverable, the

likelihood of irreparable harm is clear.
31

3. No Party Will Be Appreciably Harmed If Automobile GHG

Emissions Are Tackled Exclusively By NHTSA.

Temporarily staying the legal effectiveness of the Endangerment Finding

will have absolutely no impact on the public health or welfare and would not

appreciably harm other parties to this or other litigation. Indeed, by EPA’s

reasoning, the Endangerment Finding in and of itself will have no regulatory force.

Moreover, after NHTSA’s letter, the Endangerment Finding also has little or no

beneficial regulatory effect as an indispensable building block for other regulation.

To be sure, very recent press accounts have reported a public statement by

one EPA official, asserting that the Endangerment Finding retains some

independent advantages even in the wake of the NHTSA letter. These reports

indicate that at a March 4, 2010, continuing legal education conference, Assistant

EPA Administrator for Air and Radiation Gina McCarthy asserted at that, if mobile

source GHG regulation were tackled solely by NHTSA, 40 percent of the

emissions benefits would be lost as compared to those available from a joint

NHTSA/EPA rulemaking. See Steven D. Cook, CAFE Increase Without

Greenhouse Gas Limits Would Forgo 40 Percent of Emission Cuts, BNA DAILY

REPORT FOR EXECUTIVES, 1 (Mar. 5, 2010). One report quoted Assistant

Administrator McCarthy as saying that “reducing greenhouse gas emissions from

vehicles is a matter of more than fuel efficiency,” and that “[r]eductions also can

be achieved through improvements to other systems in a vehicle, particularly air
32

conditioning.” Id. These statements, if accurately reported, are interesting and

significant, but they do not militate in favor of continuing the effectiveness of the

Endangerment Finding, pending reconsideration.

First, Ms. McCarthy’s statements appear to contradict joint pronouncements

made by EPA and NHTSA in proposing GHG emissions rule. Those previous

statements suggest that a NHTSA-only proceeding would be able to achieve a

much greater share than 60 percent of the emissions benefits produced by a joint

NHTSA/EPA proceeding. See, e.g., 74 Fed. Reg. at 49,458, 49,459; see also id. at

49,461, 49,465.

Second, to the extent EPA maintains that it enjoys a significant advantage

over a NHTSA proceeding because NHTSA cannot by law test cars for compliance

with their air conditioners running, see 49 U.S.C. § 32904(c), that advantage

cannot be large and, in any event, can be neutralized without discharging the

blunderbuss of an Endangerment Finding. For instance, NHTSA and EPA could,

without an Endangerment Finding, establish a voluntary program permitting

manufacturers to opt into a voluntary GHG emissions regime of slightly increased

stringency in return for the ability to use air-conditioning credits. EPA and

NHTSA could readily model such a program on the Voluntary National Low

Emissions Vehicle (“NLEV”) program cooperatively developed by EPA and car

manufacturers in the 1990s. See, e.g., 62 Fed. Reg. 31,192 (June 6, 1997).
33

In sum, given EPA’s previous statements, together with the alternative

options for regulation, it appears that only a miniscule sliver of GHG benefits (if

any) might be lost if all non-voluntary controls on automobile GHG emissions are

issued by NHTSA alone. But even if this assumption were incorrect, and even if

some significant emissions benefit were at stake, the case for a stay would be all

the stronger. In that event, the potential validity of Assistant Administrator

McCarthy’s statements would show just how far from the official agency record

and explanation and legal justification EPA’s true thinking has wandered. See

FCC v. Fox Telev. Stations, Inc., 129 S. Ct. 1800 (2009) (reaffirming the

requirement that agencies must adequately explain changes in course); see also

Winter v. NRDC, 129 S. Ct. 365, 374-76 (2008) (court errs if it grants an injunction

where irreparable harm is merely a “possibility,” but not where the party has

shown that it is likely to succeed on the merits and likely to experience irreparable

harm, and the balance of equities tips in its favor); Davis v. PBGC, 571 F.3d 1288,

1291-92 (D.C. Cir. 2009) (four traditional equitable factors must be balanced

against one another). EPA must give the public notice and an opportunity to

comment on its current rationale for regulation, or reversal of EPA’s action

remains likely. And EPA must share with the public any evidence supporting a

significant shift from previous federal government positions. Until such

explanation is given and such evidence is shared, EPA cannot rely in the equitable
34

balancing on unofficial accounts of harms to third parties, as a reason not to stay

the effectiveness of its Endangerment Finding.

4. The Public Interest Favors A Stay.

A final, and in this case decisive, factor to be considered in passing on a

court-ordered stay of an administrative order is whether public interest favors such

a stay. See Hamlin Testing Labs., Inc. v. Atomic Energy Comm’n, 337 F.2d 221

(6th Cir. 1964); Associated Secs. Corp. v. SEC, 283 F.2d 773 (10th Cir. 1960).

Here a stay would greatly promote EPA’s deliberate, logically consistent,

consideration of regulations across its interrelated front of GHG regulatory

proposals. Even more important, a stay would avoid the economic harms the

Endangerment Finding would otherwise inflict on persons not directly before the

Agency in these proceedings.

As to practically each and every American citizen, the public interest

militates strongly in favor of a stay.
35

CONCLUSION

EPA should grant reconsideration of its Endangerment Finding and a stay

pending completion of its reconsideration proceeding.

Date: March 15, 2010 Respectfully submitted,

___________________________

Robin S. Conrad

Amar D. Sarwal

NATIONAL CHAMBER

LITIGATION CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20063

Telephone: (202) 463-5337

Facsimile: (202) 463 – 5346

Robert R. Gasaway

William H. Burgess

KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W.

Washington, D.C. 20005

Telephone: (202) 879-5000

Facsimile: (202) 879-5200

Counsel for the Chamber of Commerce of the United States of America