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.

U.S. Supreme Court to Review EPA Greenhouse Gas Permitting Requirements for Industrial Facilities

On Tuesday, the United States Supreme Court agreed to consider challenges to the Environmental Protection Agency's (EPA) application of Clean Air Act permitting requirements to greenhouse gas emissions from stationary sources.

The six petitions for certiorari invited the Court to take up a long list of issues, including the extent of EPA’s authority to regulate greenhouse gas emissions.
The Supreme Court, however, limited its review to a single question: “Whether EPA 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 greenhouse gases.”

Although the Supreme Court’s decision to consider this issue could potentially be a setback for EPA’s ability to regulate greenhouse gas emissions from certain industrial facilities, the limited scope of the Court’s review means that much of the agency’s efforts to curb greenhouse gas emissions will remain unaffected. For example, the Supreme Court is NOT reviewing EPA’s determinations that:

• Greenhouse gases may be regulated as a pollutant under the Clean Air Act;

• Greenhouse gases are a threat to public health (Endangerment Finding); and

• Regulation of vehicle tailpipe pollution is appropriate under the Clean Air Act (Tailpipe Rule).

The sole issue before the Court will be whether EPA’s regulation of greenhouse gases from vehicles automatically triggers permitting requirements for stationary sources under other provisions of the Clean Air Act.

Under the Clean Air Act, any facility considered a “major emitting facility” that undergoes construction or modification must obtain a permit and install the “best available control technology” (BACT) for any pollutant subject to regulation under the Act. 42 U.S.C. § 7475(a). A “major emitting facility” is defined in the Act as a stationary source that may emit a threshold amount of “any air pollutant.” 42 U.S.C. § 7479(1).

EPA interprets “any air pollutant” to mean “any air pollutant regulated under the Clean Air Act.” Thus, under EPA’s reasoning, once EPA began regulating greenhouse gases as air pollutants for new motor vehicles, all stationary sources that had the potential to emit the threshold amount of greenhouse gases would be required to install BACT and apply for a permit.

The D.C. Circuit Court of Appeals considered this issue in its 2012 decision in Coalition for Responsible Regulation, Inc., et al., v. United States Environmental Protection Agency, 684 F.3d 182 (D.C. Cir. 2012), and upheld EPA’s interpretation of the Clean Air Act, holding that the text of the statute was unambiguous and "compelled" EPA’s interpretation. The Supreme Court will now review this aspect of the decision. Oral arguments are likely to be held in early 2014, and a decision is expected by June 2014.

Although the Court’s decision to review this single issue is concerning, it is important to recognize that, regardless of the outcome of the Supreme Court case, important programs for reducing greenhouse gas emissions will remain in place.

Pa. Supreme Court watch: Act 13 may still only have six justices voting

We previously did a review of candidates forwarded by Democratic senators for Governor Tom Corbett to consider for appointment to the Pennsylvania Supreme Court.

Corbett appointed Correale Stevens, one of the five nominees forwarded to him by Daylin Leach, Democratic Chair of the Senate Judiciary Committee, and then the President Judge of the Superior Court.

It was thought by some that the Supreme Court was waiting for the seat of convicted Justice Joan Orie Melvin to be filled, before it made a decision on the constitutionality of Act 13.

But last week I was talking to a reporter from Platts, an energy sector news service, and she informed that the Supreme Court told her that Justice Stevens would not participate in any decision in which he had not heard oral argument.

This means that the Supreme Court will either make its decision on Act 13 based on the votes of six justices, or the Court will need to order re-argument if Justice Stevens is to take part in the decision.

The takings hits keep on coming from the Supremes

The Supreme Court, on June 25, handed down its decision in Koontz v. St. John's River Water Management District. The 5 to 4 decision should be of keen interest to regulators who must decide how to issue permits for construction projects that impact wetlands.

In takings cases, the general concern is whether government regulation so severely restricts a person's use and enjoyment of their real property as to effectuate an unconstitutional "taking without just compensation" in violation of the Fifth Amendment, the classic case being Penn Central Transp. Co. v. New York City, 438 U. S. 104 (1978).

The Supreme Court's decisions in Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), layered another level of protection for property owners in special cases involving land exactions - that is, where the government seeks to have a person surrender real property in exchange for a permit to develop a piece of land. To avoid an unconstitutional taking, the government must demonstrate that its demand bears a logical relationship (or “nexus”) to, and is proportional to, the impacts of the proposed land development.

In Koontz, Justice Alito, writing on behalf of the Supreme Court's conservative majority, said that (1) it doesn't matter whether the state issues a permit with an unconstitutional condition or denies the permit because the applicant will not assent to the unconstitutional condition - both cases are unconstitutional; and (2) even when the government demands monetary expenditures as compensation for harm, that claim must satisfy the Nollan and Dolan standards of nexus and proportionality.

As in Pennsylvania, Florida law requires a person obtain a permit to build in a wetland, and in the process, the applicant must mitigate any harm to the wetlands.  Koontz offered to provide a conservation easement to the state for almost three-quarters of his property as mitigation for harm to a portion of the wetland. The Conservation District wanted a smaller development and a larger easement than what Koontz had offered. As an alternative, the District requested that Koontz hire a contractor to make improvements to wetlands several miles away.  Koontz filed suit under a state law allowing for takings claims, and the District denied the permit.

The trial court found that the District had acted unlawfully because the conditions were unreasonable for failing to satisfy standards of  Nollan and Dolan.  The State Supreme Court reversed on two grounds - that the case was distinguishable because the District ultimately denied the permit, and that a takings claim could not be based on a demand for money. The U.S. Supreme Court overturned that decision.

In a dissenting opinion authored by Justice Kagan, the Supreme Court's minority only contested the second part of the majority decision - that Nollan and Dolan should not be extended to cases where the government conditions issuance of a permit on the expenditure of money.  Nollan and Dolan, Kagan argued, should apply "only when the property the government demands during the permitting process is the kind it otherwise would have to pay for—or, put differently, when the appropriation of that property, outside the permitting process, would constitute a taking."

Local Right to Zone Gas Development Hangs in the Balance

In March 2012, seven municipalities, the Delaware Riverkeeper and a local health professional filed suit to declare portions of Act 13, Pennsylvania's oil and gas law, unconstitutional. The Commonwealth Court struck down the portion of the law that sought to preclude local municipalities from adopting zoning ordinances that applied to oil and gas operations. An appeal of that decision is before the Pennsylvania Supreme Court.

The Supremes have been operating since last May with six justices - three Dems and three Repubs. On May 1, the seat of convicted Justice Joan Orie Melvin will become open and Governor Corbett will be able to appoint a successor to fulfill her term with the concurrence of 2/3 of the Senate.  Since the Senate is split 27 (R) - 23 (D), Corbett will need 7 Dems to vote for confirmation of his nominee. Whoever is confirmed could be the deciding vote in the Act 13 litigation.

Senator Daylin Leach, Dem Chair of the Senate Judiciary Committee, sent a letter to Corbett appealing for a bi-partisan approach to the opening.  He offered five names of sitting Republican judges that would be acceptable. Here they are:

Judge Cheryl Allen, the only African American in the group, currently serves on Pennsylvania's Superior Court (an appellate court that largely handles criminal matters). She has a BS from Penn State and law degree from Pitt (presumably she would recuse herself from any case arising out of revival of the Pitt/Penn State football rivalry). She was a public school teacher right out of college and eventually got appointed to the Allegheny County Common Pleas Court, where she spent 12 years in the Juvenile Division working with children and families before election to the Superior Court. Judge Allen ran for the Republican nomination to the Supreme Court in 2009 but, coincidentally, she lost that race to none other than Joan Orie Melvin. 

Judge Correale Stevens, is the President Judge of Superior Court - where Judge Allen sits. He received a BA from Penn State (go Lions - that's two in a row), and JD from Dickinson. He hails from Hazelton in Luzerne County, where he was a city solicitor, state representative, district attorney and, eventually, a Common Pleas Court judge. Judge Stevens apparently enjoys outdoor challenges, as he lists graduation from the Outward Bound Adventure program on his official biography. He also has a bit of a sense of humor - when someone tried to break into his Hazleton Office, he quipped “Why would someone want to break into a court office? I don’t know unless he wants to read how long he’s going to be in jail." Not only that, he actually has his own television show where he is interviewed by a guy named Sam Lesante - apparently a Northeast Pennsylvania fixture reminiscent of the great Joe Franklin. 

Judge Kathrynann Durham is from Delaware County and another nominee with experience on Common Pleas Court. Durham got her BA at Widener and JD from Delaware Law. She spent seventeen years in the State House representing the 160th District before being nominated to the Court by Gov. Tom Ridge. Like Allen, Durham spent time teaching in public school after college. She does not appear to have practiced law outside of her court experience. When nominated in 2001, Durham credited her mother, Catherine T. Walrath, a widow who raised five children while operating a flower shop in Parkside. "She had a reputation for being able to get things done. . . . She never turned anyone away," 

Judge Thomas Branca is another Common Pleas Court Judge - this time from Montgomery County. He got his BA from Ursinus College, and JD from Pitt. Before being elevated to the bench and unlike any of the other four, Branca worked on the public defender side of the aisle from '73-'76, and served as chief public defender for Montgomery County from 2000-02. Between stints as a PD, Judge Branca worked in private practice doing civil and criminal trials. It's not believed that the Judge is related to Ralph Branca, the former Dodger's pitcher who gave up the "shot heard round the world" to Bobby Thompson in the bottom of the ninth to hand the New York Giants the 1951 National League Pennant. 

Judge Carmen Minora rounds out Sen. Leach's list, the third Common Pleas Court Judge who hails from Lackawanna County.  Judge Minora got his BS from the University of Scranton, and is the only Duquesne University Law School grad amongst the five. In 2010, US Senators Casey and Specter submitted Minora and two others to the White House to fill vacancies on US District Court for the Middle District of Pennsylvania, but he was not eventually nominated for that position. Several years earlier, Sen. Specter asked George W. Bush to consider Minora for a position on the D.C. Circuit Court, but there was no opening at the time and he was not eventually nominated for that position either. Judge Minora was reportedly a lifelong friend of Senator Specter.