U.S. Climate Change Regulation and Litigation: Selected Legal Issues
Released: 2017-04-13T00:00:00

I n 2013, President Obama released a Climate Action Plan (CAP) to reduce greenhouse gases (GHG) emissions and to encourage adaptation to expected climate change. Subsequently, the Obama Administration implemented the CAP pursuant to presidential powers and existing statutory authority. The President, the U.S. Environmental Protection Agency (EPA), and other agencies issued various executive orders, guidance, and regulations to reduce GHG emissions from motor vehicles, new and existing power plants, facilities in the oil-and-gas sector, and other GHG-emitting sources and federal facilities.

On March 28, 2017, President Trump signed Executive Order 13783, which rescinds the CAP and requires agencies to review their existing regulations and "appropriately suspend, revise, or rescind those that unduly burden" domestic energy production and use. The executive order, entitled Promoting Energy Independence and Economic Growth , rescinds or withdraws various Obama Administration orders and directions that were intended to address climate change and regulate GHG emissions, including the following:

Presidential Orders/Reports Executive Order 13653, Preparing the United States for the Impacts of Climate Change (Nov. 1, 2013) Power Sector Carbon Pollution Standards, Pres. Memo. (June 25, 2013) Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment, Pres. Memo. (Nov. 3, 2015) Climate Change and National Security, Pres. Memo. (Sept. 21, 2016) The President's Climate Action Plan (June, 2013) Climate Action Plan Strategy to Reduce Methane Emissions (March 2014) Agency Guidance Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews, 81 Fed. Reg. 51,866 (Aug. 5, 2016) All technical documents related to the Social Cost of Carbon Agency Orders All moratoria on federal land coal leasing activities related to Order 3338, Discretionary Programmatic Environmental Impact Statement (PEIS) to Modernize the Federal Coal Program (Jan. 15, 2016)

The executive order also directs EPA to review GHG regulations for power plants and methane regulations for existing oil and gas sources, and "as soon as practicable, suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules."

Because the evolution and scope of U.S. climate change regulation and litigation are extensive, this report will focus on existing federal laws and regulations and will not address international agreements or legislation related to climate change. This report will provide a brief history of U.S. climate change regulation; review the different types of regulation and legal actions that have been pursued in the national debate over GHGs; examine selected legal issues and related litigation; and address what these legal and regulatory developments mean for Congress.

Background

History of U.S. Climate Change Regulation and Litigation

Since the late 1970s, Congress has provided authority and funds for federal agencies to research and better understand climate science. In 1978, Congress passed the National Climate Program Act (NCPA) that created the National Climate Program in the Department of Commerce. The NCPA required the program it established to assess climate change effects, improve understanding of climate change science, and collect global and domestic climate data. Congress subsequently passed additional legislation authorizing federal climate change research, interagency collaboration, and collection of GHG emissions data. These statutes authorized federal agencies to investigate climate change and its potential impacts, but did not direct agencies to reduce GHG emissions.

Various executive orders and environmental, energy, and natural resources statutes address climate change in different ways. For example, under the Clean Air Act (CAA), EPA has sought to reduce GHG emissions from stationary and mobile sources. Similarly, the Department of Energy has established efficiency standards for certain consumer products to reduce energy consumption, while the Council on Environmental Quality has issued guidance on how agencies should consider potential GHG impacts resulting from proposed federal actions under the National Environmental Policy Act.

Federal authority to regulate GHGs under existing law and policies has been challenged in court. Many of these challenges have focused on EPA's authority to regulate GHGs under the CAA. In 1998, EPA General Counsel Jonathan Cannon concluded in a memorandum that GHGs were air pollutants within the CAA definition of the term, and therefore could be regulated under the CAA. On October 20, 1999, relying on the Cannon memorandum as well as on the CAA, a group of 19 organizations petitioned EPA to regulate GHG emissions from new motor vehicles under CAA Section 202, which directs EPA to develop emission standards for "any air pollutant" from new motor vehicles "which, in his judgment cause[s], or contribute[s] to air pollution which may reasonably be anticipated to endanger public health or welfare."

On August 28, 2003, EPA denied the petition based on a new General Counsel memorandum that concluded that the CAA does not grant EPA authority to regulate carbon dioxide (CO 2 ) and other GHG emissions based on their climate change impacts. Massachusetts, 11 other states, and various other petitioners challenged EPA's denial of the petition in a case that ultimately reached the Supreme Court.

Massachusetts v. EPA and Its Effects

In 2007, the Supreme Court defined the contours of EPA's authority to regulate GHGs under the Clean Air Act in Massachusetts v. EPA . In its 5-4 decision, the Supreme Court held that EPA has authority to regulate GHGs as "air pollutants" under the CAA. The Court determined that the CAA authorized EPA to regulate GHG emissions from new motor vehicles because CO 2 and other GHGs "fit well within the CAA's capacious [and unambiguous] definition of 'air pollutant.'" Rejecting EPA's argument that the agency could not regulate vehicle GHG emissions because to do so would conflict with the Department of Transportation's (DOT's) fuel economy standards, the Court explained that EPA's statutory obligation to protect public health and welfare under the CAA is "wholly independent of DOT's mandate to promote energy efficiency." In addition, the Court held that CAA Section 202 does not allow EPA to refuse to regulate GHG emissions from new motor vehicles based on policy considerations, but that EPA must regulate GHG emissions if EPA finds that GHGs "cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare."

Based on this reasoning, the Court identified three ways EPA could respond to the rulemaking petition: (1) make a finding that motor vehicle GHG emissions may "endanger public health or welfare" and issue emissions standards; (2) make a finding that there is no endangerment from these emissions; (3) or provide a "reasonable explanation" as to why the Agency cannot or will not make an endangerment finding. Because EPA "offered no reasoned explanation for its refusal to decide whether greenhouse gases cause or contribute to climate change," the Court held that EPA's denial of the petition for rulemaking was arbitrary and capricious, reversed the D.C. Circuit opinion, and remanded the case to that court for further proceedings.

Following the Supreme Court's decision in Massachusetts v. EPA , EPA found that GHG emissions from motor vehicles endanger public health and welfare and subsequently issued a series of regulations under the CAA to reduce GHG emissions from both mobile and stationary sources. EPA has consequently regulated GHG emissions from new motor vehicles under CAA Section 202. EPA has also regulated GHG emissions from various stationary sources, including new and existing fossil fuel-fired power plants and GHG-emitting sources from municipal landfills, and the oil and gas sector under other CAA sections.

Most of EPA's GHG regulatory actions have been challenged in court. These challenges generally concern the scope of EPA's authority and its methods for regulating GHG emissions—not whether EPA has authority to regulate GHG emissions under the CAA, which the Supreme Court held in Massachusetts v. EPA . Although the Supreme Court has clarified EPA's authority to regulate GHGs under specific CAA programs in subsequent cases, Massachusetts v. EPA remains the governing law.

Types of GHG Regulation and Related Litigation

This report will focus on two types of GHG regulations: (1) laws that seek to reduce GHG emissions from stationary and mobile sources, and (2) laws that require that climate change effects be considered when the federal government takes certain actions. This section will review examples of these types of regulations and related legal challenges.

Reducing GHG Emissions

The majority of regulations addressing GHG emissions from stationary and mobile sources have been promulgated under the CAA. Following the Massachusetts decision, EPA began to explore "whether and how greenhouse gases could be effectively controlled under the Clean Air Act" in an advanced notice of proposed rulemaking (ANPR). In 2009, EPA made two findings under CAA Section 202: (1) that GHGs currently in the atmosphere potentially endanger public health and welfare, and (2) that new motor vehicle emissions cause or contribute to that pollution (collectively these findings are known as the "endangerment finding"). The endangerment finding triggered EPA's duty under CAA Section 202(a) to promulgate emission standards for new motor vehicles.

Mobile Sources under the Clean Air Act

In general, the CAA divides mobile sources into three broad categories: on-road vehicles (cars, trucks, and buses); aircraft; and nonroad vehicles and engines. Following the Massachusetts v. EPA decision, EPA has exercised its authority under Title II of the CAA to address GHG emissions from some mobile sources. This section will focus on EPA's regulation of motor vehicles, and briefly discuss EPA's ability to regulate GHG emissions from aircrafts and other nonroad mobile sources and engines.

Light-Duty Motor Vehicles

While EPA's endangerment finding was pending, President Obama announced that EPA would develop its GHG emission standards in coordination with the National Highway Traffic Safety Administration's (NHTSA) development of corporate average fuel economy (CAFE) standards, which NHTSA administers for new cars and light trucks. By developing these standards jointly, the Obama Administration sought to create a national program to reduce GHG levels to levels similar to those the California Air Resources Board (CARB) had adopted earlier. CARB further agreed to harmonize its motor vehicle GHG emissions standards with EPA's standards.

EPA and NHTSA subsequently promulgated GHG emission and fuel economy standards in two phases for specific model years of light-duty motor vehicles. On May 7, 2010, EPA and NHTSA issued Phase 1 standards, which applied to Model Year (MY) 2012-2016 light-duty vehicles (cars, sport-utility vehicles, crossovers, minivans, and most pickups), setting a combined average emissions standard of 250 grams/mile of CO 2 and a combined average fuel economy level of 34.1 mpg in MY2016. On October 15, 2012, EPA and NHTSA issued Phase 2 standards, which applied to MY2017-2025 light-duty vehicles, to reduce further the combined average emissions to 163 grams/mile of CO 2 by MY2025 and combined average fuel economy to a range of 40.3 to 41 mpg by MY2021 .

To allow EPA and NHTSA to modify the GHG standards, the Phase 2 MY2017-2025 light-duty vehicle regulations provided for a Midterm Evaluation (MTE) of the MY2022-2025 standards. Under the regulations, EPA had to determine by April 1, 2018, whether the GHG standards for MY2022-2025 would still be appropriate given the latest available data and information, and could strengthen, weaken, or retain the promulgated standards. On January 12, 2017, EPA issued a final decision finding that the standards remained appropriate and should be maintained for the model years. EPA based its findings on a technical support document; a previously released Draft Technical Assessment Report (which was issued jointly by EPA, NHTSA, and CARB); and input from the auto industry and other stakeholders.

EPA has been criticized for finalizing the MTE determination prior to the April 1, 2018, deadline and separate from NHTSA's rulemaking on CAFE standards for MY2022-2025. On March 13, 2017, the Alliance of Automobile Manufacturers filed a petition for review of EPA's final MTE determination in the D.C. Circuit, claiming that EPA's determination is "in excess of EPA's statutory authority, contrary to the CAA, arbitrary and capricious, and otherwise contrary to law." Supporters of EPA's MTE determination have urged EPA not to reopen or withdraw the determination, arguing that the GHG standards are "economically feasible and technological achievable." On March 24, 2017, CARB voted unanimously to retain California's vehicle GHG standards for MY2022-2025 for light-duty vehicles based on its own mid-term evaluation.

On March 15, 2017, EPA and DOT announced that EPA would reconsider its MTE determination and would coordinate with NHTSA in order to harmonize NHTSA's CAFE standards with EPA's GHG emission standards. EPA intends to issue a new MTE determination by April 1, 2018. Given that EPA is reconsidering its MTE determination, the Alliance of Automobile Manufacturers has moved to dismiss its lawsuit.

Medium and Heavy-Duty Trucks

Section 202(a) of the CAA requires EPA to set "standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines , which in the agency's judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare." In the endangerment finding, EPA specifically identified medium- and heavy-duty trucks as contributing to endangerment caused by GHG emissions. Similar to the light-duty vehicles standards, EPA and NHTSA issued GHG emissions and fuel economy standards for medium- and heavy-duty trucks in two phases. On September 15, 2011, EPA and NHTSA issued Phase 1 standards for MY2014-2018 medium- and heavy-duty trucks. On October 25, 2016, EPA and NHTSA issued Phase 2 standards for MY2021-2027 medium- and heavy-duty trucks and engines and MY2018-MY2027 trailers.

In December 2016, a truck trailer group and racing vehicle coalition filed separate petitions for review of the Phase 2 GHG emission and fuel economy standards for medium- and heavy-duty engines and vehicles with the D.C. Circuit. The Truck Trailer Manufacturers Association argued that EPA and NHTSA do not have authority to regulate GHG emissions and fuel economy of trailers because trailers are not "vehicles" under the CAA or the Energy Independence and Security Act. The Racing Enthusiasts & Suppliers Coalition challenged EPA's prohibition on tampering and defeat devices, arguing that modifying vehicles for off-road racing or competition vehicles is beyond the scope of the CAA. The court has granted motions to intervene from five environmental groups (Natural Resources Defense Council, the Environmental Defense Fund, Sierra Club, Center for Biological Diversity, and the Union of Concerned Scientists) and eight states (Connecticut, Washington, Massachusetts, Rhode Island, Vermont, Oregon, Iowa, and California, through its state Air Resources Board).

California Preemption Waiver

In 1966, the California Motor Vehicle Pollution Control Board adopted auto emission standards for hydrocarbons and carbon monoxide, making California the first state to do so. Decades later, in 2004, California adopted regulations requiring new motor vehicles to reduce GHG emissions, beginning in model year 2009. While the CAA generally preempts states from adopting their own emission standards for mobile sources, the CAA allows states with standards adopted prior to March 30, 1966, to obtain a waiver of preemption from EPA. This waiver provision applies exclusively to California because it is the only state that had adopted standards within the prescribed timeframe. Other states, however, can adopt the California standards, provided that (1) the state has an EPA-approved State Implementation Plan; (2) the standards are identical to standards for which California has been granted a waiver; and (3) California and such state have adopted the standards at least two years before the commencement of the model year to which the standards apply. Based on EPA's records, 14 states and the District of Columbia have adopted California standards.

CAA Section 209(b) directs EPA to grant waivers unless certain factors warrant denial, providing that EPA "shall ... waive" the prohibition on state emission standards "if the State determines that the State standards will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards." If California determines that its standards will be at least as protective as applicable federal standards, EPA can deny the waiver request only if EPA finds that California's determination is arbitrary and capricious (California is not required to show that its standards meet compelling and extraordinary conditions) or the California standards and accompanying enforcement procedures are inconsistent with CAA Section 202(a). Legislative history indicates that when Congress amended the waiver provision in 1977, at least some Members of Congress intended for the provision to "afford California the broadest discretion possible in selecting the best means to protect the health of its citizens and the public welfare."

EPA has granted in whole or in part numerous California waiver requests under Section 209(b). According to EPA records, California has submitted over 100 waiver requests for new or amended standards or "within the scope" determinations (i.e., a request that EPA rule on whether a new regulation is within the scope of a waiver that the agency has already issued). In 2013, EPA granted a waiver to California to regulate GHG emissions from light-duty vehicles through MY2025. Most recently, in January 2017, the Obama Administration granted a series of waiver requests related to non-GHG emission standards for different types of mobile sources and engines. If EPA revises its MTE determination and reduces the GHG standards for MY2022-2025 light-duty vehicles, California, and those states that have adopted California's standards, may potentially have standards different from the federal standards, resulting in a national patchwork of standards.

Aircraft

On August 15, 2016, and in response to various petitions, EPA issued a finding that GHG emissions from commercial aircraft (1) contribute to the pollution that causes climate change, and (2) endanger the health and welfare of Americans. The finding, under Section 231 of the CAA, is the precondition for setting GHG emission standards for commercial aircraft. Aircraft manufacturers and airlines have not challenged EPA's finding. It should be noted that the aircraft manufacturing and aviation industries have participated in international negotiations that resulted in an agreement on emission standards for new aircraft and a voluntary system to offset what might otherwise be a growth in emissions from air travel.

Under the CAA, the EPA Administrator must consult with the Administrator of the Federal Aviation Administration and the Secretary of Transportation when developing emission standards, and may not impose new standards if doing so would significantly increase noise or adversely affect safety. The President may also disapprove any such standards if the Secretary of Transportation finds that they would create a hazard to aircraft safety.

Other Mobile Sources

CAA Section 213(a)(4), provides for EPA to promulgate emission standards for pollutants other than carbon monoxide (CO), oxides of nitrogen (NOx), and volatile organic compounds (VOCs) from "nonroad engines and vehicles" (other than locomotives or their engines) if it makes an endangerment finding. The endangerment language of Section 213 is similar to that for new motor vehicles in Section 202. While CAA Section 213 does not set a deadline by which EPA must set standards for nonroad engines and vehicles, it provides for petitioners seeking GHG regulation of these mobile sources to file a suit against EPA for unreasonable delay in responding to rulemaking petitions.

Following the Massachusetts v. EPA decision, EPA received petitions requesting EPA to regulate GHGs from mobile source categories. These petitions covered aircraft, ocean-going ships and their fuels, motor fuels in general, locomotives, and nonroad vehicles and engines (construction equipment, farm equipment, logging equipment, outdoor power equipment, forklifts, marine vessels, recreational vehicles, and lawn and garden equipment). In 2010, petitioners filed an "unreasonable delay" suit against EPA for failing to respond to three separate petitions submitted in 2007 for GHG emissions rulemaking to cover marine vessels, nonroad vehicles, and aircraft engines. In 2011, the federal district court ruled that EPA has discretion under Section 213 as to whether to issue endangerment findings for GHG emissions from marine vessels and nonroad vehicles. The court explained that Section 213(a)(4) is "simply silent as to when—or whether—EPA must make endangerment findings; it merely says what EPA 'may' do 'if' an affirmative finding is made." (The court ruled, however, that EPA does not have discretion under Section 231 over whether to make determinations regarding endangerment from aircraft GHG emissions.) In 2012, EPA denied the petitions to regulate GHG and black carbon emissions from nonroad engines and vehicles, including marine vessels and engines.

Executive Order Implications for GHG Regulation of Mobile Sources

The March 28, 2017, executive order did not specifically address mobile source GHG emission regulations or EPA's aircraft endangerment finding. While EPA and NHTSA could potentially identify these regulations or findings as rules that burden the "development or use" of energy resources that should be revised or rescinded, EPA and NHTSA would have to initiate a rulemaking to change the rules.

Stationary Sources under Clean Air Act

While mobile sources emit approximately 26% of total U.S. GHG emissions, stationary sources account for about 73% of the nation's GHG emissions. According to EPA, electricity production generates the largest share of GHG emissions from stationary sources, producing 30% of 2014 domestic GHG emissions.

Regulation of GHG Emissions Under CAA Section 111

The Supreme Court's second decision on GHG emissions, American Electric Power Co. v. Connecticut ( AEP ), unanimously held that EPA had authority to regulate GHGs under CAA Section 111(b) with respect to stationary sources. In AEP , the Court also held that the CAA displaced federal common law public nuisance claims related to GHG emissions from power plants because Congress had delegated to EPA the decision as to whether and how to regulate GHG emissions from power plants under CAA Section 111.

New Source Performance Standards under Section 111(b)

CAA Section 111(b) directs EPA to establish standards of performance for listed categories of new, modified, or reconstructed stationary sources that "cause[], or contribute[] significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare." These standards are commonly referred to as new source performance standards or NSPSs. CAA Section 111 defines a "standard of performance" as an air pollution emission standard that reflects the "best system of emission reduction" (BSER) that has been "adequately demonstrated." In determining the BSER, EPA must take into account the cost of achieving the emission reductions; non-air quality health and environmental impacts; and the energy requirements of the regulated sources.

Emission Guidelines under Section 111(d)

Coincident or after EPA issues CAA Section 111(b) standards for new, modified, and reconstructed sources, CAA Section 111(d) requires EPA to establish, under certain circumstances, standards of performance for existing sources in that category. Because Congress established a single definition for standards of performance promulgated pursuant to Sections 111(b) and 111(d), EPA must consider the same factors when establishing standards of performance for new, modified, reconstructed, and existing sources.

CAA Section 111(d) directs EPA to establish state plan "procedures," which are similar to the CAA Section 110 guidelines, which EPA adopts to guide states in developing and revising implementation plans to achieve national ambient air quality standards (NAAQS). EPA's Section 111(d) emission guidelines establish binding requirements that states must address when they develop plans to implement standards of performance for existing sources in their jurisdictions.

Power Plants

In 2011, EPA finalized a settlement agreement with states and others to promulgate NSPSs for GHG emissions from new, modified, and reconstructed fossil fuel-fired power plants under Section 111(b), and emission guidelines covering existing power plants under CAA Section 111(d). In October 2015, EPA finalized the Section 111(b) NSPSs for GHGs from new power plants and Section 111(d) emission guidelines for GHGs from existing power plants.

Both rules have been challenged in the D.C. Circuit; EPA's Section 111(d) emission guidelines rule, known as the Clean Power Plan (CPP), is stayed during the litigation. On September 27, 2016, the en banc court heard oral arguments for the CPP, but has not issued a decision yet. To resolve litigation challenging the Section 111(b) NSPSs for new power plants, a separate the three-judge panel has scheduled oral argument for April 17, 2017.

In the March 28, 2017, executive order, President Trump directed EPA to take "immediate steps" to review the CPP and the GHG standards for new power plants, and, if the rules were inconsistent with the Administration's policy to promote coal, oil, natural gas, and nuclear energy production and use, to initiate a rulemaking to suspend, revise, or rescind the rules. The executive order also requires EPA to review its proposed plan for states that choose not to develop their own plans to implement the CPP. Under the executive order, EPA must notify the Attorney General of actions affecting the rules so that the Attorney General can take "appropriate" action in related litigation. On March 28, 2017, the Department of Justice filed motions in both power plant cases, seeking to hold the cases in abeyance until 30 days after EPA completes its review of the rules and subsequent rulemakings resulting from its review.

The executive order also directs EPA to review and potentially revise or rescind the legal memorandum that EPA released with the final rule. It is possible that EPA could revise its interpretation of two different versions of a 1990 amendment to CAA Section 111(d) to accord with the view that regulation of hazardous air pollutant from power plants under CAA Section 112 bars EPA's regulation of CO 2 emissions from power plants under CAA Section 111(d). It is also possible that, through a new rulemaking, EPA could rescind the NSPS for new power plants, which is a prerequisite for EPA's authority under Section 111(d) to regulate existing power plants. Administrator Pruitt has also mentioned that EPA may reconsider its 2009 endangerment finding that underlies almost all CAA GHG regulation. All of these options would effectively remove EPA's authority to implement the CPP or issue any Section 111(d) emission guidelines for existing power plants.

EPA could also revise the stringency of the GHG standards and emissions guidelines for new power plants and focus the emission guidelines on what GHG reductions for existing power plants can achieve "inside the fenceline." Exercising these options would affect issues central to litigation over the rules. Petitioners have argued that EPA exceeded its authority in basing the best system for emission reduction for new power plants on carbon capture and sequestration technology and going beyond the fenceline of existing power plants to achieve greater GHG reductions. Further, retaining some version of the GHG power plant rules would support that EPA has fulfilled its duty to promulgate GHG regulations for power plants pursuant to the judicial settlement agreement that initiated, in part, the promulgation of these rules.

As discussed above, for EPA to pursue any of these actions, the agency would have to go through a new rulemaking and would be required to provide a "reasonable justification" for reversing course on the legal theories that supported the rules or reducing the stringency of the GHG standards.

Refineries

Petroleum refineries have been subject to NSPSs for a variety of pollutants since the CAA was passed in 1970. In 2010, EPA entered into a judicial settlement that required EPA to issue regulations addressing GHGs from petroleum refineries. The deadline for a final refinery rule identified in the settlement was originally November 10, 2012. At EPA's request, this deadline was extended four times.

During these delays, EPA was working to finalize the NSPSs and emission guidelines to address CO 2 emissions from power plants, and methane emissions from oil and gas sources. In the most recent status report filed with the court, EPA stated that it is "working diligently" on a rule and will continue to assess how best to resolve the remaining obligations (including the promulgation of a GHG rule for refineries) from the settlement agreement. As part of the agreement, the environmental groups and states have retained the right to sue the EPA if the agency does not meet its obligations.

Regulation of Methane Emissions from Stationary Sources

One of the initiatives in the Obama Administration's CAP focused on controlling methane emissions, a short-lived climate pollutant with a potential Global Warming Potential of more than 25 times that of CO 2 . EPA and other federal agencies developed an interagency "Strategy to Reduce Methane Emissions" (Methane Strategy) that outlined voluntary actions and potential agency rulemakings to cut methane emissions. To implement the strategy, EPA focused on updating and revising NSPSs and emissions guidelines to reduce methane emissions from new and existing municipal landfills and sources in the oil and gas sector. The Department of the Interior's Bureau of Land Management (BLM) released a rule to address the venting and flaring of methane gas on federal and Indian lands. This section will review these rules and related legal challenges and pending congressional actions.

Municipal Landfills

In response to a consent decree resolving a lawsuit and the Obama Administration's goal to reduce methane under the CAP, EPA proposed updates to the 1996 municipal solid waste (MSW) landfill NSPSs and emission guidelines in 2014. Over 20 years after the original NSPSs and emission guidelines were issued, EPA published on August 29, 2016, its updated NSPSs to reduce landfill gas emissions from MSW landfills built, modified, or reconstructed after July 17, 2014. EPA also revised emission guidelines for existing landfills operating prior to that date. Both rules became effective on October 28, 2016. While the March 28, 2017, executive order did not address specifically the MSW landfill rules, EPA could potentially identify these regulations as burdening the "development or use" of energy resources and recommend their revision or rescission. EPA would then have to initiate a rulemaking to do so.

Industry trade associations and waste management and recycling companies have challenged EPA's 2016 revised emission guidelines for existing MSW landfills in the D.C. Circuit. The court has not set a briefing schedule yet. Petitioners challenging the landfill emissions guidelines question whether EPA has the authority to revise the 1996 emission guidelines for existing MSW landfills under CAA Section 111(d). Pursuant to CAA Section 111(b), EPA is required "at least every 8 years [to] review and, if appropriate, revise" NSPSs for new, modified, and reconstructed sources. However, Section 111(d) does not include a similar mandated review period for emission guidelines for existing sources. EPA's implementing regulations for Section 111(d) emission guidelines only address revisions to the agency's determination regarding adverse public health effects that may alter compliance times under the guidelines and require states to make corresponding revisions to their state plans.

A ruling upholding EPA's implicit authority to review and revise Section 111(d) guidelines would support future EPA review and revision of other Section 111(d) emissions guidelines to require additional emission reductions based on a new analysis of the "best system of emission reduction." For example, if EPA follows the Section 111(b) eight-year review cycle, EPA could consider revisions of the CPP (if upheld) in 2023—one year after the CPP's first mandatory emission reduction period starts.

Sources from the Oil & Gas Sector

In 2012, EPA issued a final rule setting standards of performance to limit emissions of VOCs from new, reconstructed, and modified sources in the oil and gas industry pursuant to CAA Section 111(b) (2012 NSPSs). In response to the Methane Strategy and petitions for reconsideration of the 2012 NSPSs to address methane emissions, EPA issued a rule revising and updating the 2012 NSPSs on June 3, 2016. EPA's final rule amends the 2012 NSPS, expanding the emission sources covered by the rule, and establishes performance standards for GHGs (in the form of methane limitations) from a number of oil and gas emission sources. The March 28, 2017, executive order requires EPA to review this rule, and if inconsistent with the Administration's policy to promote coal, oil, natural gas, and nuclear energy production and use, initiate a rulemaking to suspend, revise, or rescind the rule.

North Dakota, Texas (including the Railroad Commission of Texas and the Texas Commission on Environmental Quality as named parties), a coalition of 14 states (including several state agencies), and various gas associations filed petitions for review of the final rule. Nine states and the city of Chicago moved to intervene on behalf of EPA to support the final rule. In addition, environmental advocacy groups filed their own motion to intervene in the case. All petitions have been consolidated with the lead case, North Dakota v. EPA .

Based on the preliminary statements of issues filed, the petitioners claim, among other things, that EPA exceeded its statutory authority; failed to make the required "endangerment finding" for methane from the oil and gas sector under CAA Section 111; and "unlawfully" expanded the listed oil and natural gas sector source category to additional types of emission sources not previously regulated. The final litigated issues will be presented in the petitioners' briefs, which have not been filed yet. On April 7, 2017, the Department of Justice filed a motion, seeking to hold the cases in abeyance until 30 days after EPA completes its review of the rules and subsequent rulemakings resulting from its review.

In 2016, EPA sent an Information Collection Request (ICR) to oil and natural gas companies seeking information on their existing oil and gas sources as a first step to regulating their methane emissions. Effective March 2, 2017, EPA withdrew the ICR to assess the need for this information and to reduce the burden to businesses during this assessment. The ICR withdrawal was issued shortly after nine state attorneys general and two governors submitted a letter to EPA, asking that the ICR be suspended and withdrawn.

Venting and Flaring of Methane Gas

On November 18, 2016, BLM promulgated new regulations to reduce the loss of natural gas (and methane which is a primary component of natural gas) from venting, flaring, and leaks during oil and natural gas production activities on onshore federal and Indian leases. These regulations replace the existing provisions related to venting, flaring, and royalty-free use of gas issued 30 years prior under the Mineral Leasing Act of 1920. The rule requires owners and operators of both new and existing federal and Indian oil and gas leases to implement comprehensive methane leak detection and repair (LDAR) programs throughout their extraction, storage and transmission infrastructures, and will also place new restrictions on the venting and flaring of methane during drilling and storage operations on those leases by establishing stringent new methane emissions reduction and capture targets. By January 17, 2018, lessees will be required to recover or flare 85% of all methane produced on federal and Indian oil and gas leases. That number increases to 95% in 2020, and to 98% beginning in 2026.

The rule was immediately challenged. On November 28, 2016, the Western Energy Alliance, Independent Petroleum Association of America, and the States of Wyoming, Montana, and North Dakota filed petitions for review with the U.S. District Court in the District of Wyoming. The petitioners claim, among other things, that BLM exceeded its statutory authority by attempting to regulate atmospheric emissions of methane—an authority the petitioners argue that Congress explicitly delegated to the states and the EPA. On March 21, 2017, Texas filed a motion to intervene as a petitioner in the lawsuit. Since the court has denied the petitioners' motion for a preliminary injunction, the rule took effect on January 27, 2017.

Since the initial petition was filed, 15 environmental advocacy groups and NGOs, in addition to the States of California and New Mexico, have intervened on behalf of BLM in support of the new rule. Supporters of the rule and BLM argue that Congress delegated authority to BLM to consider environmental impacts in the promulgation of rules and regulations regarding the use of federal lands.

As the litigation continues, Congress is taking action to repeal the BLM venting and flaring rule. On February 3, 2017, the House voted 221-191 to approve H.J.Res. 36 , a Congressional Review Act (CRA) resolution to disapprove the rule. The resolution is now being considered in the Senate, where Environment and Public Works Chairman John Barrasso has introduced a separate CRA resolution of disapproval, S.J.Res. 11 . Supporters of the rule claim that it will reduce methane pollution, and put more natural gas into the energy market by capturing the gas. Opponents of the rule argue that it restricts the industry, affects employment, and potentially raises natural gas prices. Industry groups claim the rule will "further impede oil and natural gas production on federal land, which already has been declining" and is redundant of voluntary efforts and existing state regulations to reduce methane gas releases.

The March 28, 2017, executive order requires BLM to review this rule, and if inconsistent with the Administration's policy to promote coal, oil, natural gas, and nuclear energy production and use, initiate a rulemaking to suspend, revise, or rescind the rule.

Regulation of GHG Emissions from Stationary Sources through Permits

EPA interpreted the mobile source GHG regulations under CAA Section 202 as triggering regulations under the Prevention of Significant Deterioration (PSD) program and Title V permitting program. The PSD program imposes requirements in addition to those in Section 111 for new or modified stationary emission sources in areas that have met or exceeded the national ambient air quality standards (NAAQSs). This program requires preconstruction permits for new major emitting facilities and new major modifications. PSD permits contain emission limits based on the best available control technology (BACT) for each regulated pollutant emitted from that source.

The Title V program requires major sources of air pollutants and certain other sources to obtain and operate in compliance with an operating permit, commonly referred to as Title V operating permits. These permits include pollution control requirements from federal or state regulations that apply to the source, as well as other applicable air permits such as a PSD permit. Sources with these Title V permits are required by the act to certify compliance with the applicable requirements of their permits at least annually.

The Supreme Court's third major decision on GHG emissions, Utility Air Regulatory Group v. EPA ( UARG ), rejected EPA's argument that its regulation of motor vehicle GHG emissions required it to regulate GHG emissions from stationary sources under the PSD and Title V programs. The Court held that EPA's regulation of vehicle GHG emissions does not give EPA unqualified authority to require PSD and Title V permitting programs to stationary source GHG emissions.

As the Court explained, just because the phrase "air pollutant" encompasses GHGs in some provisions of the CAA, which it had held in Massachusetts v. EPA , the phrase "air pollutants" does not necessarily include GHGs in all the CAA provisions, such as in the PSD and Title V sections. Reading "air pollutant" to include GHG emissions in these permit programs, the Court reasoned, creates a staggering administrative workload because of the low emission thresholds that trigger those programs, and the huge number of sources that satisfy those thresholds for CO 2 , the primary GHG. The administrative unwieldiness of demanding PSD and Title V permits for so many sources argued strongly, in the Court's view, against a GHG-inclusive reading of those programs. Nor did the Court allow EPA, through its "Tailoring Rule," to raise the low statutory emission thresholds to 75,000 tons per year (tpy) CO 2 -equivalents (CO 2 -e) in an effort to ease the permit-issuing workload, since the CAA states the thresholds in absolute numerical terms.

The Court allowed, however, that EPA could impose one aspect of the PSD program with respect to GHGs. When PSD permitting is required because a new (or modified) source emits a "conventional" non-GHG pollutant at or above threshold quantities, the Court concluded that EPA also may impose the BACT requirement of the PSD program on these "anyway" sources that emitted more than a de minimis amount of GHG emissions.

The narrowness of the question that the Court answered in UARG is significant, since it leaves intact the D.C. Circuit's approval of EPA's endangerment finding for GHG emissions from new motor vehicles and the Massachusetts v. EPA holding. Nor did UARG directly touch on the validity of EPA's current use of CAA Section 111 in its effort to control GHG emissions from new and existing fossil-fuel-fired power plants.

In response to the UARG decision, EPA proposed revisions to existing PSD and title V regulations to ensure that neither the PSD nor title V rules require a source to obtain a permit solely because the source emits or has the potential to emit GHGs above the applicable thresholds. This proposal also set a significant emissions rate for GHGs under the PSD program that would establish a de minimis threshold level of 75,000 tpy CO 2 -e (the same as the threshold in the Tailoring Rule) below which BACT is not required for a source's GHG emissions.

It is unclear whether the Trump Administration will finalize the rule. The comment period on the proposed rule closed on December 16, 2016. In the interim, EPA will continue applying 75,000 tpy CO 2 -e threshold that was originally finalized in the Tailoring Rule to determine if BACT is required for "anyway" sources.

Considering Climate Change in Agency Determinations/Actions

In addition to reducing GHG emissions, various environmental statutes and regulations require federal agencies to consider climate change in their actions and decisions. Lawsuits have challenged the extent to which agencies consider climate change impacts and rely on predictive models, studies, and assumptions. This section will examine these issues in the context of the Endangered Species Act and the National Environmental Policy Act.

Endangered Species Act (ESA)

The ESA provides legal protection to identified species and their critical habitat. It is administered primarily by the Fish and Wildlife Service (FWS) for terrestrial and freshwater species, but also by the National Marine Fisheries Service (NMFS) for certain marine species. Under the ESA, FWS and NFMS can list individual species of plants and animals as either "endangered" or "threatened" based on risk assessments of their extinction.

Lawsuits connecting the ESA to climate change typically are based on how an agency considered climate change when making determinations related to listing a species; designating critical habitat; or issuing a biological opinion on a federal agency action. The ESA requires that the agency consider the effects on habitat, at least in part, for all of those determinations. Accordingly, climate change evaluations long have been part of ESA decision making, but only to the extent that the climate's effects on habitat are linked to a species.

Federal agencies have relied on climate change projections to list a species as endangered or threatened, or to designate critical habitat under the ESA. When listing a species, the agency must make its decision "solely on the basis of the best scientific and commercial data available." A similar standard applies when an agency designates a critical habitat under the ESA. The agency designates critical habitat "on the basis of the best scientific data available" after taking into consideration the probable economic, national security, and other relevant impacts.

Various groups have challenged the listing of species and the designation of critical habitat in the Arctic region, questioning whether model-based climate predictions constitute the "best scientific and commercial data available" on which to base ESA listing decisions. Most often, the suits relate to the listing of a species as threatened or endangered based on long-term climate models when its present population is stable. When challenged in court, an agency's ESA listing or and designation of its critical habit is often upheld because the court's review of the agency decision is narrow and highly deferential; the court will not set aside an agency ESA listing or designation decision so long as it is rational and reasonably based on supporting evidence. However, courts have faulted agencies for inadequately considering climate change.

Polar Bear Listing

The legal challenges to FWS's listing of the polar bear and designation of its critical habitat illustrate how courts have applied this narrow and deferential standard of review and interpreted the ESA standards for the best available data in the climate change context. In 2013, in Safari Club Internationa l v. Salazar (In re Polar Bear Endangered Species Act Listing and Section 4(d) Rule Litigation) (hereinafter In re Polar Bear ), the D.C. Circuit upheld FWS's listing of polar bears as a threatened species under the ESA based in part on projected climate change impacts to the species and its habitat. FWS's decision was based on three main conclusions: (1) that the polar bear is dependent on sea ice for its survival; (2) that sea ice is declining; and (3) that climate change will continue to reduce the extent and quality of arctic sea ice gravely enough to endanger the polar bear population.

The court held that the challenges to FWS's scientific assessment and conclusions "'amount to nothing more than competing views about policy and science,' on which we defer to the agency." The court also rejected arguments that climate science was too uncertain to support listing the polar bear as a species that is likely to become endangered in the "foreseeable future." The court concluded that FWS's reliance on climate projections was "justifiable[,] clearly articulated [,] ... sufficient to support their definition of foreseeability." The Supreme Court declined to review the case.

Polar Bear Critical Habitat Designation

Once it listed the polar bear as a threatened species, FWS moved forwarded with designating its critical habitat. The ESA defines critical habitat as the specific areas "within the geographical area occupied by the species" that the species needs for recovery and that therefore should be protected. Critical habitat includes areas containing the physical and biological features (1) essential for the species' success, such as space for growth and normal behavior, food, breeding sites, and habitats protected from disturbance, and (2) which may require special management or protection.

In a 2016 decision, Alaska Oil & Gas Association v. Jewel l , the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) upheld FWS's designation of 187,000 square miles as critical habitat for the polar bear. FWS's critical habitat designation was based in part on long-term projections of habitat destruction from climate change. The FWS designated three areas on Alaska's coast and in its waters that contain "primary constituent elements" (PCEs) essential to the polar bear: a sea ice habitat, a terrestrial denning habitat, and a barrier island habitat. The court, in large part, grounded its decision to uphold the FWS's habitat designation on the D.C. Circuit decision in In re Polar Bear .

The Ninth Circuit disagreed with the lower court's narrow interpretation of the ESA critical habitat requirements. The court rejected the lower court's finding that the ESA required FWS to limit the critical habitat designation to specific areas that are currently used by polar bears, explaining that "[n]o such limitation to existing use appears in the ESA, and such a narrow construction of critical habitat runs directly counter to the Act's conservation purposes. The Act is concerned with protecting the future of the species, not merely the preservation of existing bears. And it requires use of the best available technology, not perfection." The court concluded that the FWS properly relied on climate science and sea ice data in designating habitat that may become critical in the future because of climate change and other factors.

The State of Alaska, oil and gas groups, regional organizations, and Alaska Native groups are seeking review by the Supreme Court, arguing that the Ninth Circuit's "lax" and "exceptionally overbroad" standards allow FWS to draw impermissibly expansive boundaries in designating critical habitat. Conservation groups have opposed the petition, arguing that the Ninth Circuit applied the appropriate statutory standards and that the facts support the need for a large area to be designated as critical for the polar bears. The Court has not issued a decision on whether it will review the case.

Other Ninth Circuit ESA Cases

The Ninth Circuit had another opportunity in 2016 to review the use of climate change projections in ESA listing decisions. On October 24, 2016, the Ninth Circuit upheld ESA protections for two populations of Arctic bearded seals in Alaska Oil & Gas Association v. Pritzker . NMFS listed the seals as threatened in 2012 based on climate change models that predicted that sea ice the seals depend on for birthing and mating would mostly disappear by 2095. Plaintiffs argued that the models used in the listing decision could not reliably predict climate change effects on the seals beyond 2050. A district court ruling agreed and vacated the rule; NMFS and the Center for Biological Diversity then appealed the decision.

In upholding the bearded seal listing, the Ninth Circuit concluded that NMFS may base its listing decision on climate change models and long-term projections, provided that the record includes a reasonable explanation for its decision and acknowledges any limitations. Similar to its reasoning set forth in Alaska Oil & Gas Association v. Jewel l , the court explained that the

ESA does not require NMFS to base its decision on ironclad evidence when it determines that a species is likely to become endangered in the foreseeable future; it simply requires the agency to consider the best and most reliable scientific and commercial data and to identify the limits of that data when making a listing determination.

The U.S. District Court of Alaska, however, appears to question listing decisions based on long-term climate projections. In the past two years, the Alaska district court rejected the listing determination for the Beringia seal discussed above and, most recently, the ringed seal, finding in both cases that the FWS's climate change predictions were too speculative to support a listing. The district court was not able to consider the Ninth Circuit's bearded seal decision because Alaska Oil & Gas Association v. Jewel l was issued after the lower court issued its decision on the ringed seal. The FWS and environmental groups have appealed the ringed seal decision to the Ninth Circuit. The environmental groups are asking the Ninth Circuit to reverse the lower court's holding for the ringed seal based on the reasoning applied in the bearded seal appellate decision.

Other Recent ESA Cases Involving Climate Change Projections

Other courts have concluded that climate change projections are sufficient to satisfy the statutory requirement that listings and biological opinions under the ESA be based on the best available data. Two federal districts courts have faulted federal agencies for failing to credit and account for the best data available on climate change impacts in their ESA decisions.

In Defenders of Wildlife v. Jewell , a federal district court in Montana held that the FWS's decision to withdraw the proposed listing of the wolverine as threatened was arbitrary and capricious. In reversing its position on the proposed listing, the FWS attempted to discredit certain scientific studies on climate change effects that it had relied on previously to propose listing the wolverine as threatened, claiming that the FWS needed greater certainty and refinement in the climate change data before listing the wolverine. The court concluded that the FWS "cannot demand a greater level of scientific certainty than has been achieved in the field to date—the 'best scientific data available' ... standard does not require that the [FWS] act only when it can justify its decision with absolute confidence,' and 'the ESA accepts agency decisions in the face of uncertainty.'" The court vacated the withdrawal of the proposed listing and remanded the proposal to the FWS for further consideration.

In another ESA case, NMFS issued a biological opinion that concluded that changes to the operation of the Leavenworth National Fish Hatchery were not likely to jeopardize the existence of critical habitat for Upper Columbia River spring Chinook salmon or steelhead. Section 7 of the ESA requires federal agencies to "insure that any action authorized, funded, or carried out by such agency ... is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [the critical] habitat of such species." Any federal agency planning any action that may affect ESA-listed species must consult with NMFS or FWS. After the consultation, the consulting agency must issue a biological opinion based on "the best scientific and commercial data available" that determines whether the proposed action is likely to jeopardize the ESA-listed species or adversely modify critical habitat.

Environmental groups challenged NMFS's biological opinion on several grounds, and in November 2016, a federal district court in Washington ruled that NMFS's biological opinion was arbitrary and capricious because NMFS failed to consider adequately climate change effects in the opinion's analysis of hatchery's modified operations and water use. The court explained that "[t]he best available science indicates that climate change will affect stream flow and water conditions throughout the Northwest" and that the lack of a model or study specifically addressing local climate change effects did not permit the NMFS to ignore this factor. The court found that NMFS had included "no discussion whatsoever" of the potential effects of climate change on the hatchery's future operations and water use, and that it was not sufficient for NMFS to say that the local area at issue was less prone to climate change effects than other areas in the region. The judge remanded the matter for further consultation.

Potential Implications

It is uncertain whether these decisions upholding listing and critical habitat decisions will affect decisions related to species outside of the Artic region. While relying on climate change projections may lead to the listing of some species with stable populations, for species outside of the Arctic region, there may be fewer studies and models that can reliably predict impacts of climate change on their habitats and their potential to adapt to justify an ESA listing.

The extent to which debate over climate change may determine the ESA's application may be limited by judicial decisions that require agencies to consider climate change in their ESA analyses, such as the biological opinions discussed above. Recently, on January 17, 2017, 13 state attorneys general sent a letter to the President Trump transition team requesting repeal of the critical habitat rules. The March 28, 2017, executive order did not specifically address the ESA. However, the agencies may identify these regulations as burdening the "development or use" of energy resources and recommend to the President that they should be revised or rescinded. The agency would then have to initiate a rulemaking to do so.

Furthermore, the series of Ninth Circuit cases may prompt some Members of Congress to seek to amend the ESA. On February 15, 2017, the Senate Committee on Environment and Public Works held a hearing entitled "Oversight: Modernization of the Endangered Species Act" that explored the possibility of amending the ESA to raise the threshold standard to list a species under the ESA.

National Environmental Policy Act

The National Environmental Policy Act (NEPA) requires federal agencies to consider, document, and disclose the potential effects of their actions and decisions on the environment. In general, courts have held that federal agencies are required to consider climate change impacts in their NEPA analyses where these impacts are sufficiently serious and causally connected to the project. While most federal agencies already have procedures in place to ensure that they identify GHG emissions associated with their proposed actions, as well as future impacts to those proposed projects that may relate to climate change, agencies have lacked clear direction on when and how to consider climate change impacts. This lack of guidance resulted in inconsistent environmental reviews across federal agencies, prompting stakeholders to file lawsuits challenging whether the agency NEPA reviews adequately considered potential effects from GHG emissions and climate change from their proposed actions.

In order to provide guidance and improve consistency, the White House Council on Environmental Quality (CEQ) issued in August, 2016, its final guidance for federal agencies to assess the impact of their decisions on GHG emissions and also how such decisions may be impacted by a changing climate when conducting NEPA reviews. In the Guidance, CEQ states that "when addressing climate change agencies should consider: (1) The potential effects of a proposed action on climate change as indicated by assessing [direct and indirect] GHG emissions…; and, (2) The effects of climate change on a proposed action and its environmental impacts." The Guidance also recommends that "agencies review their NEPA procedures and propose any updates they deem necessary or appropriate to facilitate their consideration of GHG emissions and climate change."

After the CEQ GHG Guidance was released, agencies began working to update and align their NEPA procedures with the CEQ recommendations. For example, in February 2017, the Federal Energy Regulatory Commission (FERC) issued two volumes of guidance for how its officials should consider direct GHG and climate change impacts in NEPA reviews of proposed gas infrastructure projects. The court may consider the new guidance in pending NEPA GHG litigation over FERC's approval of a proposed $683 million natural gas pipeline. To date, the court has not issued a decision in the case.

For natural gas exports, the D.C. Circuit determined that DOE, and not FERC, is responsible for considering the broader upstream and downstream climate impacts related to allegedly higher domestic natural gas prices and increased use of coal in its NEPA review in approving the gas export. The court explained that FERC, in approving a terminal's construction, is not responsible for a NEPA environmental review concerning the actual export of the gas. Environmental groups are currently challenging DOE's NEPA review for its gas export approvals in the D.C. Circuit.

President Trump's March 28, 2017, executive order rescinds the CEQ's NEPA GHG guidance. Federal agencies, however, appear to still be required to consider the GHG and climate change impacts of their proposed actions. Even prior to the issuance of CEQ's GHG guidance, courts had faulted federal agencies for insufficiently taking into account climate change in NEPA reviews. For example, in Center for Biological Diversity v. National Highway Traffic Safety Administration , the U.S. Court of Appeals for the Ninth Circuit held that "the impact of greenhouse gas emissions on climate change is precisely the kind of cumulative impacts analysis that NEPA requires agencies to conduct," and remanded an agency action for further NEPA analysis.

Social Cost of Carbon

The Social Cost of Carbon (SCC) is a monetary estimate of economic damages associated with an incremental increase in carbon dioxide (CO 2 ) emissions. The net present value of these damages is calculated by multiplying future costs by an appropriate discount factor and summing across all affected years. The estimate is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change. Federal agencies have used the SCC in numerous final rulemakings and environmental reviews .

There are a few court decisions that address the specific use of the SCC in federal agency rulemakings and environmental reviews. In general, courts have focused on an agency's justification (or lack thereof) regarding the use of the SCC values in its rulemaking or environmental review. Most recently, in August 2016, a federal court for the first time in Zero Zone, Inc. v. Department of Energy (DOE) upheld the use of the (SCC) in a cost-benefit analysis by a federal agency with regard to energy efficiency standards.

The Energy Policy and Conservation Act of 1975 (EPCA) directs DOE to develop mandatory energy conservation standards for specific types of equipment and appliances. EPCA requires, among other things, that these standards must be designed to "increase[] the maximum improvement in energy efficiency" and be "technologically feasible and economically justified." In 2014, DOE established new energy efficiency standards for 49 classes of commercial refrigeration equipment (CRE) and clarified the testing procedures that DOE uses to implement those standards.

In Zero Zone, Inc., petitioners claimed that DOE abused its discretion by considering environmental factors when determining whether these new energy efficiency standards were "economically justified" and, in the alternative, that the use of the SCC was arbitrary and capricious. In rejecting the petitioners' claims, the U.S. Court of Appeals for the Seventh Circuit held that "the expected reduction of environmental costs needs to be taken into account" in DOE's cost-benefit analysis, and that it had "no doubt that Congress intended that DOE have the authority under the [EPCA] to consider the reduction in SCC." In addition, the court concluded that the use of the SCC was not arbitrary and capricious because DOE had addressed concerns regarding the SCC in the final rule by acknowledging the limitation of the SCC, referencing multiple entities that support that SCC values, and clarifying that despite those concerns, DOE could use the SCC in its cost-benefit analysis.

Previous judicial decisions have faulted agencies for failing to use the SCC or other types of tools to account for costs related to carbon emissions in their cost-benefits analysis. For example, in 2008, the Ninth Circuit addressed the National Highway Traffic Safety Administration's (NHTSA's) refusal to include the SCC in setting average fuel economy standards for light trucks, model years 2008 through 2011. In Center for Biological Diversity v. NHTSA , the Ninth Circuit held that it was arbitrary and capricious for an agency to fail to assess the impacts of GHG emissions in its cost-benefit analysis, even when there is uncertainty about those impacts, stating that "while the record shows there is a range of values [for the SCC], the value of carbon emissions reduction is certainly not zero." The court concluded that the scientifically supported values presented by the petitioners show that "it is possible to monetize the benefit of carbon emission reduction."

A few courts have also reviewed the use of the SCC in environmental reviews of proposed agency actions under the NEPA. Agencies have used the SCC to evaluate potential GHG impacts associated with federal actions in order to comply with NEPA's environmental review requirements. A 2014 district court decision, High Country Conservation Advocates v. U.S. Forest Service , vacated the BLM's approval of a coal exploration plan for failure to justify why the SCC was not used to quantify the costs associated with the mining exploration. The court held that it was arbitrary and capricious to quantify the benefits of the mining exploration but fail to quantify the costs when the SCC factor was available and used in the draft EIS; the agencies might have been able to offer "non-arbitrary reasons" why the protocol was not included in the final EIS, but did not. And as in Center for Biological Diversity , above, the court held that it was unacceptable to treat the cost of carbon as zero when the SCC estimates, though covering a wide range, did not include the possibility that the cost was zero.

BLM's environmental reviews continue to be challenged in court. On August 25, 2016, WildEarth Guardians and Physicians for Social Responsibility filed a complaint asking the U.S. District Court for the District of Columbia to vacate authorizations for 397 oil and gas leases on public lands in three states on the grounds that the BLM violated NEPA by failing to use the SCC or any other economic or scientific tools to assess the climate impacts of these leases. The plaintiffs contend that BLM did not use the SCC protocol, or any other economic or scientific tools, to assess the potential impacts of challenged BLM lease authorizations on the climate. The parties have not filed their briefs with the court yet.

In contrast, the D.C. Circuit upheld an agency's environmental review under NEPA that did not use the SCC to quantify potential GHG impacts from a project in EarthReports, Inc. v. Federal Energy Regulatory Commission (FERC) . Unlike High Country Conservation Advocates , where BLM provided no explanation on why it did not use the SCC, FERC acknowledged the availability of the SCC tool but explained that it would not be "appropriate" or "informative" because of significant variation in output and lack of incremental impact measurement—criteria related to NEPA environmental reviews. The court concluded that FERC acted reasonably in finding that the SCC was "inadequately accurate" to use in its environmental review of a liquid natural gas facility conversion project.

These judicial opinions illustrate how these courts focused on an agency's justification (or lack thereof) to determine whether the agency acted reasonably in using or not using the SCC in its rulemaking or environmental review. Although each of the agencies was faced with the same uncertainties inherent in the SCC tool, the courts faulted those agencies that failed to articulate why the SCC was not an appropriate tool to quantify the potential impacts of GHG emissions associated with the agencies' actions.

The D.C. Circuit may have another opportunity to address the use of the SCC in the CPP litigation, if it moves forward. One of the issues raised in the petitions for review of the CPP is whether EPA's regulatory impact analysis is flawed because it "assesses domestic costs against global benefits" and relies on the SCC. In a letter to the court, EPA cites Zero Zone, Inc. v. DOE , arguing that similar to DOE in Zero Zone, Inc. , EPA reasonably explained why its monetized benefit-cost analysis accounted for global benefits. In response, petitioners distinguish Zero Zone, Inc. , claiming that the EPCA specifically allows DOE to consider other relevant factors, including international factors, unlike Section 111 of the CAA, which they argue does not contain an analogous provision and does not authorize EPA to consider foreign benefits.

Similar to the CEQ NEPA GHG guidance discussed above, the Trump Administration has withdrawn "as no longer representative of governmental policy" all SCC guidance and documents and disbanded the Interagency Workgroup on Social Cost of Greenhouse Gases that developed the SCC metric. Nevertheless, as the cases discussed above illustrate, it appears that federal agencies may potentially still be required to take into account costs of carbon in their rulemakings and environmental reviews. The executive order directs agencies to follow the guidance contained in OMB Circular A-4, dated September 17, 2003, when monetizing the value of changes in GHG emissions resulting from regulations. Although the OMB Circular A-4 provides guidance on how to conduct cost-benefit analysis, it mentions climate change costs only once, with respect to addressing "uncertain knowledge of how some economic activities might affect future climate change."

Threshold Barriers to Litigation

Federal courts often do not reach the merits of a climate change suit due to threshold procedural barriers, such as whether a plaintiff or petitioner has the right to bring a lawsuit in the first place or whether the court has jurisdiction over a type of claim. To proceed to the merits of a case, a plaintiff must establish standing, a procedural threshold that has, at times, posed a difficult hurdle to overcome.

Standing Doctrine

The standing doctrine is derived from Article III of the Constitution, which limits the jurisdiction of federal courts to "cases" or "controversies." To satisfy the constitutional standing requirements in Article III, the Supreme Court imposes three requirements: (1) the plaintiff must allege a personal injury-in-fact, which is actual or imminent, concrete, and particularized; (2) injury must be "fairly traceable to the defendant's allegedly unlawful conduct; and (3) the injury must be "likely to be redressed by the requested relief." A plaintiff or petitioner that fails to satisfy any of these elements lacks standing, and the court will dismiss the suit.

The issue of a state's standing to bring a climate change suit was central to two landmark climate change decisions, Massachusetts v. EPA in the Supreme Court and American Electric Power Co. v. Connecticut ( AEP ) in the U.S. Court of Appeals for the Second Circuit (Second Circuit). Both decisions noted that Article III standing is satisfied when a state brings suit as parens patriae (literally, father of the country) on behalf of its citizens. Parens patriae doctrine allows a state to sue in its sovereign capacity to protect its citizenry, rather than being limited, as Article III would normally require, to asserting traditional particularized injuries to state interests.

Most of the Supreme Court's decision in Massachusetts v. EPA is devoted to whether plaintiffs had standing to sue. At the outset, the Court asserted that states are entitled to "special solicitude" when seeking to establish standing. The Court found that the state met all three factors to establish standing—injury-in-fact, causation, and redressability of the injury. For the first factor, the Court determined that the current and potential future loss of Massachusetts shore land from sea level rise was an injury-in-fact. That this injury may be widely shared with other coastal states does not disqualify this injury, said the Court; it is nonetheless particular and concrete.

The second prong of the standing test is causation, requiring that the alleged injury be fairly traceable to the defendant. EPA did not dispute the existence of a causal relationship between GHG emissions and climate change. It did argue, however, that any reduction in GHG emissions achieved through the current litigation would be too tiny a fraction of worldwide GHG emissions to make a cognizable difference in climate change. In an important ruling that may benefit environmental plaintiffs in other contexts, the Court held that even an agency's refusal to take a "small incremental step" that would result in only a modest reduction in worldwide GHG emissions, is enough for standing purposes.

The third and final factor is whether the remedy sought by the plaintiff is likely to redress the injury. In this case, Massachusetts sought as a remedy a regulation of GHG emissions from new motor vehicles. The Court found that this remedy satisfied redressability because while it would not by itself reverse climate change, it would nonetheless slow or reduce it.

After its Massachusetts v. EPA decision, the Supreme Court considered the question of the standing of state and non-state parties in climate change suits in American Electric Power Co. v. Connecticut (AEP). As discussed above, the Second Circuit held that both state and non-state plaintiffs had standing in a tort suit seeking GHG reductions from five large electric utilities. The Court, by an equally divided vote of four-to-four, affirmed a Second Circuit standing decision but avoided directly addressing the standing of non-state parties in climate change suits. The Court stated that "[f]our members of the Court would hold that at least some plaintiffs have Article III standing under Massachusetts , which permitted a State to challenge EPA's refusal to regulate [GHG] emissions … and, further, that no other threshold obstacle bars review." Without further explanation, the AEP decision leaves the question of whether non-state petitioners have standing under Article III in climate change suits unresolved.

A related issue to state standing is whether Indian tribes, by virtue of their inherent sovereignty, may establish standing through parens patriae status. The argument for tribal parens patriae standing was rejected by the district court in Native Village of Kivalina v. ExxonMobil Corp . In this case, an Alaskan native village sought damages from energy companies and electric utilities for coastal erosion, alleging that GHG emissions from their operations contribute to climate change, and thus to the village's erosion problem. The court explained that unlike Massachusetts v. EPA , the village was not entitled to "special solitude" because they were seeking damages directed against private entities and not enforcing any procedural rights concerning an agency's rulemaking authority. In dismissing the suit, the court held that the village lacked standing because it had not satisfied the "causation" component of standing doctrine—that is, the village had not connected their coastal erosion problem to the specific GHG emissions of the defendants. In addition, the court concluded that the claim was nonjusticiable under the political question doctrine, under which lawsuits based on policy questions must be left to the political branches of government.

Standing for Non-State Plaintiffs

In general, non-state plaintiffs have encountered difficulties in establishing standing in climate change-related litigation. The finding of standing in Massachusetts generally did not extend to non-state plaintiffs seeking to establish standing in nonstatutory causes of action (such as common law nuisance), and the split decision in AEP failed to provide any further guidance. Courts have largely rejected extending the "special solicitude" standard for standing set forth in Massachusetts v. EPA to any non-state. Non-state plaintiffs have had some success in establishing standing in cases challenging an agency's failure to consider climate change impacts in their regulatory actions.

Barriers to Common Law Claims

Other threshold barriers to litigation often involve whether federal courts have jurisdiction over the claim brought to the court. While most of the climate change litigation discussed above has focused on government regulation of GHG emissions, private plaintiffs also have tried to force emitting sources to reduce GHG emissions or to claim damages from emitters for their alleged contributions to climate change. These efforts, however, have been largely unsuccessful.

The few cases that have brought common law nuisance claims seeking injunction or damages have failed based on the court's lack of jurisdiction to hear the claims. This section will review jurisdictional barriers involved in these common law nuisance suits.

Common Law Nuisance and Political Question Doctrine

Several common law nuisance claims have been dismissed at the trial court level because they raised nonjusticiable questions according to the political question doctrine. While standing asks whether there is a proper plaintiff before the court, the political question doctrine asks whether there is a justiciable claim . The doctrine is rooted in the separation of powers principles, and acts to restrain courts from interfering in policy questions and decisions made by the political branches of government. The Supreme Court in Baker v. Carr in 1962 held that some cases are nonjusticiable because they are constitutionally committed to other branches of the government, impossible to decide without an initial policy determination, or otherwise imprudent for judicial review.

The doctrine has been the focal point in several nuisance-based climate change litigation matters, with courts rejecting such claims on that ground. For example, in Comer v. Murphy Oil USA , property owners sought money damages, claiming that GHG emissions from oil and energy companies were a "nuisance" that added to the severity of Hurricane Katrina, which damaged their property. The court held, among other things that "the claims presented by the plaintiffs constitute nonjusticiable political questions, because there are no judicially discoverable and manageable standards for resolving the issues presented, and because the case would require the Court to make initial policy determinations that have been entrusted to the EPA by Congress." Similarly, in California v. General Motors Corp ., the State of California brought a nuisance suit against automakers for money damages for their alleged contribution to climate change that was dismissed as a nonjusticiable political question. in Native Village of Kivalina v. ExxonMobil Corp ., in addition to dismissing the case for lack of standing, the district court also held, among other things, that "the allocation of fault—and cost—of global warming is a matter appropriately left for determination by the executive or legislative branch in the first instance." Some of these cases were also dismissed because the claims were displaced by the CAA.

Displacement of Federal Common Law

Federal common law may be displaced where "Congress addresses a question previously governed by a decision rested on federal common law." The test of displacement is whether the federal statute speaks directly to the question raised in the lawsuit. In 2011, the Supreme Court's decision in AEP (discussed above) barred federal common law claims (such as nuisance) against entities for alleged injuries from GHG emissions. In a unanimous decision, the Court held that under Section 111 of the CAA, EPA's authority to regulate GHG emissions displaces federal common law rights to seek abatement of GHG emissions from power plants.

Though the 2011 AEP ruling involved plaintiffs seeking injunctive relief (requiring the GHG-emitting defendants to cap and reduce their CO 2 emissions over time), a court has held the ruling to mean the CAA displaces federal common law actions seeking monetary damages as well. The availability of state common law claims for reducing GHG emissions remains an open question although one court has held that state law nuisance claims may also be displaced.

If Congress amends the CAA to remove EPA's authority to regulate GHG emissions under the CAA, which would effectively overturn the Supreme Court's decisions in AEP and Massachusetts v. EPA , it would appear that common law nuisance claims would possibly no longer be displaced by federal actions, which would potentially open the door to a resurgence of these claims. Currently, the House is considering H.R. 637 , the Stopping EPA Overreach Act of 2017, which would exclude GHGs from regulation under the Clean Air Act.

Barring any congressional action removing EPA's authority, the AEP decision will continue to displace common-law-based climate change claims, making it unnecessary for courts to reach the standing and political question issues in such cases. However, a recent case in the context of the public trust doctrine is raising those jurisdictional issues anew.

The Public Trust Doctrine

In November 2016, an Oregon federal district court judge denied the U.S. government's motion to dismiss a lawsuit brought by a group of 21 individuals, all age 20 or younger, and other plaintiffs seeking to compel the federal government to reduce CO 2 emissions. The case, Juliana v. United States , is part of a campaign of state and federal lawsuits and rulemaking petitions related to climate change coordinated by an Oregon nonprofit, Our Children's Trust. While only a preliminary ruling, the opinion has prompted some media outlets to speculate whether the "kids'" lawsuit may potentially force actions to address climate change further through litigation.

The plaintiffs allege that federal officials promoted policies that contribute to climate change, while knowing of the alleged dangers of those policies. The plaintiffs ask the court to order the federal government to "implement an enforceable national remedial plan to phase out fossil fuel emission" and "stabilize the climate system," among other requests for relief. There are multiple causes of action in the complaint, which the district court organized into two categories: (i) alleged violations of plaintiffs' substantive due process rights to life, and liberty, and property in the Constitution and (ii) common law violations of the public trust doctrine. The district court did not rule on the merits of these claims, nor did it issue a finding that the government bears legal or factual responsibility for increased carbon dioxide emissions. But the court did conclude that it has subject matter jurisdiction over the case and that the plaintiffs' alleged facts that, if proven to be true, could entitle them to relief.

In addition to raising standing and political question issues similar to those discussed above, the court's treatment of the plaintiffs' public trust claim may also represent a unique ruling in the context of climate change litigation. The public trust doctrine is a common law principle with ancient origins whereby the government has a duty to safeguard certain natural resources for the benefit of the public. The public trust doctrine is traditionally associated with tidelands and the beds of navigable waterways, and the government argued that the doctrine should not be extended to create a duty to preserve the earth's atmosphere. While the Juliana court stopped short of deciding that the atmosphere is part of the public trust, instead focusing on alleged rising sea levels and harm to the territorial sea, it left open the possibility of a future ruling that the public trust doctrine creates a federal government duty to protect the atmosphere. Thus far, no court has ruled on the merits of an "atmospheric public trust" claim against the federal government, and state courts have taken divergent views on the viability such a claim against state governments under their respective state constitutions and laws.

The litigation is now moving forward starting with discovery over the coming months. On January 31, 2017, the court denied the plaintiffs' efforts to depose Secretary of State Rex Tillerson regarding his work related to climate change while at ExxonMobil and the American Petroleum Institute, among other issues. The Trump Administration is seeking a late appeal of the denial of the motion to dismiss and to delay trial with the Ninth Circuit. Industry groups, including the American Fuel & Petrochemical Manufacturers and the American Petroleum Institute, joined the Trump Administration and filed a similar motion for appeal on March 10, 2017.

Conclusion

Congress faces a number of questions regarding climate change regulation, policy, and litigation. Some early actions by the Administration indicate it may seek additional time during the litigation process to consider how best to move forward in court. Agency actions resulting from compliance with the March 28, 2017, executive order, including delaying the effective date of rules or withdrawing previous determinations, will directly affect ongoing litigation. Resolution of the climate change lawsuits and legislation from Congress have the potential to reshape GHG regulation in the United States and, with it, American environmental law.