Low-Energy Fridays: What Is the Future of the Endangerment Finding?

The “endangerment finding” is back in the news again. This is policy wonk shorthand for the 2009 determination by the Environmental Protection Agency (EPA) that greenhouse gases (GHGs) endanger the public and must be regulated. The reason for resurgent interest in the endangerment finding is that the Department of Energy (DOE) produced a report that would have given the EPA justification for its repeal. However, a court recently ruled that the DOE failed to comply with the strict requirements that regulate how the government can recruit outside experts to form a policy advisory group. Consequently, the DOE’s report cannot support the EPA’s intent to repeal the endangerment finding.

Practically speaking, this means the Trump administration’s favored strategy of repealing the endangerment finding in order to undo climate regulation is now tenuous. This makes it a good time for policymakers to understand the advantages of setting a higher bar for regulators over attacking the legal basis for regulation itself when attempting to reduce climate regulation burdens.

Given these circumstances, a quick refresher on the endangerment finding is in order. The EPA is responsible for identifying which pollutants pose a risk to public health, and the Clean Air Act (CAA) tasks the agency with regulating them. A U.S. Supreme Court (SCOTUS) decision in 2007’s Massachusetts v. EPA case formed the legal basis for the endangerment finding, ruling that carbon dioxide (CO2) was indeed a pollutant of public concern and that the EPA must regulate it.

All climate regulation—and any estimated climate benefits used to support regulations—flow from the endangerment finding. Consequently, overturning the endangerment finding is a priority for some critics, while climate hawks prioritize preserving it. Policymakers must keep two things in mind amid these debates:

• Improving regulatory design to reduce climate regulation burdens is a better strategy than repealing the endangerment finding.
• Successful repeal of the endangerment finding hinges upon untested legal theories; therefore, advocates of repeal should not assume success in court.

Regarding the first point, it is worth understanding how the first Trump administration unwound the Clean Power Plan (CPP), which SCOTUS had already stayed at that time. The EPA simply updated its projected baseline of emissions to better account for the reduction in natural gas costs that occurred following the first CPP proposal. Combined with updated guidance for calculating climate benefits in a manner consistent with other pollutants, the CPP’s estimated benefits fell, requiring a more efficient regulation. In its repeal of the CPP, the Trump administration complied with the endangerment finding and Massachusetts v. EPA by creating a new power plant regulation: the Affordable Clean Energy rule (ACE). This rule shifted away from requiring more low-carbon electricity, focusing instead on efficiency improvements from existing power plants.

If still in place, the CPP would have made little difference in reducing CO2 emissions because its assumptions about the future of the power sector were incorrect. However, ACE may have resulted in some modest emission reduction via its required efficiency improvements. It would have been problematic for industry had the administration argued against legal justification for the CPP instead of replacing it with its own regulation, as the uncertainty around compliance would likely deter investment. And if the administration had lost in court, it could have established a legal basis for even more stringent climate regulation. Eventually, the CPP was shot down in court due to the Obama administration’s overly broad interpretation of CAA authority—not its status as a climate regulation.

Regarding the legal aspects of the endangerment finding, there are three big reasons why SCOTUS may not agree with the Trump administration’s position that CO2 is not a pollutant.

The first is that the CAA’s definition of a pollutant is extraordinarily broad and can be applied to any physical, chemical, biological, or radioactive substance emitted into the atmosphere—which CO2 undoubtedly is. The language specifically applies to any emission, offering little wiggle room for pollutant classifications to change from administration to administration.

Second, by questioning the criteria of CO2 as a pollutant, the EPA has inadvertently brought up a broader legal question about what counts as a pollutant under the CAA. In the Trump administration’s proposed repeal of the Biden administration’s carbon capture mandate for power plants, the EPA argued that CO2 from power plants is insignificant “…because GHG emissions from these sources are a small and decreasing part of global emissions.”

As R Street’s comments on the proposed repeal noted, asserting a pollutant’s insignificance due to its global impacts or because the regulation addresses only a small fraction of total pollution is problematic because other pollutants—notably, ozone-depleting substances (ODSs)—also have global impacts to which regulated entities contribute only minutely. Arguing that CO2’s global nature exempts it from regulation is problematic because such an argument could also apply to ODSs (which the CAA explicitly note as pollutants).

Third, the dissent in Massachusetts v. EPA did not imply that CO2 was not a pollutant. Chief Justice John Roberts, who penned the dissent, said whether CO2 was a pollutant was not the real issue at all. Rather, Roberts and the other dissenting justices disagreed on whether Massachusetts had the legal standing to sue federal regulators for inaction. Similarly, Justice Antonin Scalia did not challenge the idea that CO2 is a pollutant; instead, he argued that there may be legitimate policy reasons for the EPA to defer the creation of an endangerment finding (e.g., interference with other policy being promulgated). Essentially, the dissenting opinions centered on the fact that merely wishing the federal government regulated more isn’t a sufficient reason for a state to sue them.

While it’s a safe bet that the majority of today’s SCOTUS would side with 2007’s dissenters and disagree with the Massachusetts v. EPA decision, it’s a stretch to assume they would say no if presented with the question of whether CO2 is a pollutant under CAA definitions.

Ultimately, the path toward achieving regulatory quality is to focus on proper formulation. Regulators must estimate costs and benefits accurately and avoid regulations that are likely to carry more cost than benefit. Setting a higher bar for regulators is a more fruitful way to right-size government than risky legal battles.