April 21, 2019

Tenth Circuit: No Arbitrariness or Caprice in EPA’s Adoption of Better-Than-BART Emission Regulations

The Tenth Circuit Court of Appeals issued its opinion in WildEarth Guardians v. United States Environmental Protection Agency on Tuesday, October 21, 2014.

In an attempt to comply with the Clean Air Act, New Mexico, Wyoming, Utah, the City of Albuquerque, and Bernalillo County, NM (collectively, states), adopted a regional cap-and-trade program to regulate sulfur-dioxide emissions over the Colorado Plateau. In this program, the states had to comply with ceilings on sulfur-dioxide emissions. If their emissions were above the ceiling, they were fined, but if they fell below the ceiling, the states could trade the difference to other entities. The states chose this program over the alternative Best Available Retrofit Technology (BART) program to reduce emissions. The cap-and-trade program had to be better than BART to be acceptable.

WildEarth Guardians and other environmental groups (collectively, WildEarth) protested the adoption of the cap-and-trade program, arguing the EPA should not have approved the cap-and-trade program for various reasons. The Tenth Circuit reviewed the appeal, but its review was bound by the Administrative Procedure Act, and the EPA’s decision could only be overturned by a showing that its action was arbitrary or capricious.

WildEarth argued that the cap-and-trade program, also known as the 309 program, does not achieve greater reasonable progress than implementation of BART. WildEarth contended the EPA acted arbitrarily and capriciously because the BART benchmark improperly adopted the permissive emission cap instead of actual emissions, the states misapplied the “clear weight of the evidence” standard, and the states overstated the effectiveness of the 309 program by applying qualitative instead of quantitative standards. The Tenth Circuit rejected these arguments.

First addressing the argument about the EPA’s reliance on permissive emission caps instead of actual data, the Tenth Circuit noted that the EPA’s own rules allowed reliance on the cap, and also the data concerning actual emissions was not available until the end of the period in which the emissions were studied. The source-by-source study was not required under the 309 program’s better-than-BART standard. Although there was potential for the states to trade emission amounts that they were not actually using, this was permissible under the 309 program.

Next, the Tenth Circuit addressed WildEarth’s argument that the EPA should have compared the 309 program’s milestones to the effectiveness of BART. The Tenth Circuit refused to address this argument because it was not raised in WildEarth’s opening brief, and was raised for the first time on appeal.

The Tenth Circuit then turned its attention to the qualitative versus quantitative argument, and found no caprice or arbitrariness in the EPA’s actions. The EPA determined the 309 program as a whole was more effective than BART because it included non-BART sources of sulfur-dioxide emissions, included new sources of emissions, created a “mass based” cap covering emissions in the aggregate, and encouraged early reductions in emissions. WildEarth argued that the actual pollution would not be reduced, and could even be increased, by the failure of key polluters to agree to the 309 program, the ability of the states to trade their unused emission allotments, and the failure to consider quantitative standards. Although the Tenth Circuit was sympathetic to WildEarth’s arguments, it could find no reason to overturn the EPA’s decision.

The Tenth Circuit denied the petitions for review because it could find no arbitrariness or caprice in the decisions of the EPA.

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