The Supreme Court, with a hiccup, holds EPA can regulate GHGs from new and modified stationary sources

On Monday, the U.S. Supreme Court issued its much-anticipated decision in Utility Air Regulatory Group v. EPA (UARG). The case embodied another industry challenge to the Environmental Protection Agency's (EPA) attempt to regulate greenhouse gas (GHG) emissions under the Clean Air Act (CAA). It’s often a poor sign for the environment when Justice Antonin Scalia delivers the majority opinion for the Court. In this instance, however, the majority upheld EPA’s authority to regulate GHG emissions under the Clean Air Act. The case did not play out exactly as the federal government had planned, however.

UARG involved challenges to EPA’s attempt to regulate GHGs from major stationary sources of air pollutants (power plants, factories, etc.) after its decision to regulate GHGs from mobile sources was upheld. Justice Scalia joined with the conservative block to rule 5-4 that EPA lacked “standalone” authority under the Clean Air Act to regulate GHG emissions from stationary sources.  He then, however, went on to join with the more liberal block (along with Chief Justice John Roberts and Justice Anthony Kennedy) to affirm 7-2 that EPA could regulate GHG emissions from stationary sources, so long as those facilities otherwise required an air permit for emitting conventional air pollutants. This means that there are now seven justices on the Supreme Court who affirmed that the Clean Air Act covers GHG emission since its 2006 decision in Massachusetts v. EPA.

In the Beginning There Were Mobile Sources

Section 202(a)(1) of the Clean Air Act (CAA), 42 U.S.C. § 7521(a)(1), requires the Administrator of the Environmental Protection Agency to set emission standards for "any air pollutant" from motor vehicles or motor vehicle engines "which in his judgment cause[s], or contribute[s] to, air pollution which may reasonably be anticipated to endanger public health or welfare." In 2003, the Bush Administration’s EPA denied a petition by twelve states (but not Pennsylvania) and several cities to regulate carbon dioxide and other GHGs from motor vehicles under the CAA. EPA took the position that it lacked the authority to regulate GHGs under the CAA, and even if it had the authority, regulation at that time was not consistent with President Bush’s policies to address climate change.

Total US Greenhouse Gas Emissions by Economic Sector
 in 2012 from EPA's Inventory of Greenhouse Gas Emissions

Petitioners brought suit to compel EPA to take action, and in April 2007, Justice John Paul Stevens led a 5-4 majority in Massachusetts v. EPA to reject EPA's argument that the CAA was not meant to cover carbon emissions. The Court said that the Act's definition of "air pollutant" was written with "sweeping," "capacious" language so that it would not become obsolete, and that the EPA could not delay its decision on the basis of prudential and policy concerns. Instead, EPA had to base any inaction on regulating carbon emissions upon a consideration of "whether greenhouse gas emissions contribute to climate change." In dissent, Justice Scalia argued that the Clean Air Act was intended to combat conventional lower-atmosphere pollutants and not global climate change.

Though President Bush issued an Executive Order requiring EPA to use its authority under the CAA to regulate carbon emissions from mobile sources in May 2007, it would not be for another two and one half years (December 2009) before EPA issued its "Endangerment and Cause or Contribute Finding, " which found, as required by Massachusetts v. EPA, that motor vehicle emissions of six GHGs threatened the health and welfare of current and future generations, which set up for the first time the promulgation of federal regulations to control carbon emissions from mobile sources. This led to the establishment of greenhouse gas emission standards under Section 202 of the CAA (the so-called "Tailpipe Rule").

And Then There Were New and Modified Stationary Sources (The Tailoring Rule)

Large stationary sources challenged the Tailpipe Rule because of concern that regulation of GHG emissions from mobile sources would lead to exactly what happened here, that EPA would have to regulate GHG emissions from stationary sources. The CAA says that its permit requirements apply to stationary sources emitting "any air pollutant." The EPA, in 2010, took the position that once the agency found that GHGs were enough to warrant vehicle regulations, the Act's permitting requirements were automatically triggered. Industry argued that the cost of regulating GHGs from stationary sources was so large that the EPA should not have regulated tailpipe emissions. A unanimous D.C. Circuit Court of Appeals, in Coalition for Responsible Regulation v. EPA, rejected this argument, holding instead that the EPA lacked any discretion at all in setting tailpipe emissions once it found that that greenhouse gases endanger public health and welfare.

The D.C. Circuit Court’s ruling cleared the way for EPA to move forward with regulating major stationary sources of GHG emissions. The challenge for EPA, however, was that the CAA defines "Major" as any source that emits 100 tons per year of a regulated pollutant, which only captures large facilities when measuring criteria pollutants, but when measuring GHGs, the same standard would capture thousands of very small sources such as homes and businesses. To avoid this problem, EPA sought to interpret or "tailor" its GHG rule to only apply to sources emitting 100,000 tons per year of GHGs (and existing sources making modifications that would increase emissions by 75,000 tons per year). Industry challenged application of the CAA to stationary sources, and EPA”s attempt to "tailor" the language of the CAA.

Utility Air Regulatory Group v. EPA

In UARG, the Supreme Court reviewed whether EPA’s Endangerment Finding and regulation of GHGs under Section 202 of the CAA triggered regulation of GHGs under EPA’s Prevention of Significant Deterioration (PSD) and Title V permitting programs, and whether EPA properly excluded a great number of those sources from regulation under its Tailoring Rule. It should be noted that while industry tried to again challenge EPA’s Endangerment Finding and setting of GHG standards for motor vehicles, the Supreme Court limited its consideration to whether the agency “permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouses gases.”

The Court ruled that EPA could not interpret the CAA in a manner that applied its PSD Program to sources emitting solely GHGs, as that would be inconsistent with the CAA’s structure and design, which intended only to impose those burdens on large facilities. The Court also held that EPA improperly attempted to "tailor" the CAA’s unambiguous numerical definitions of "major" source. Nonetheless, the Court said that EPA reasonably interpreted the CAA as requiring sources that required a PSD permit to comply with Best Available Control Technology (BACT) respecting GHG emissions. The CAA requires the application of BACT "for each pollutant subject to regulation" under the Act.

The case is Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146.

George Jugovic, Jr. is chief counsel for PennFuture. He is based in Pittsburgh.