Today, June 23, 2014, the Supreme Court issued a significant decision in Utility Air Regulatory Group v. EPA, No. 12-1146 (L), that substantially restricts the authority of the U.S. Environmental Protection Agency (EPA) to regulate greenhouse gas emissions (GHGs) from stationary sources under the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Title V permitting programs. That decision, adopting one of the petitioners’ principal arguments, holds that EPA may not impose permitting requirements on facilities based solely on their emissions of GHGs, but may regulate those emissions under these programs only if a facility is otherwise subject to permitting based on emissions of other air pollutants.
Below we offer a brief background of the case and discussion of the Court’s holding, followed by several immediate key points from the decision.
In the rules under review, EPA adopted an interpretation of the Clean Air Act under which stationary sources would be required to obtain construction and operating permits under the PSD and Title V programs, whenever a facility emits GHGs above certain threshold levels as set forth in the Clean Air Act. EPA recognized, however, that because the statutory thresholds were quite low when applied to GHGs (compared to “conventional” air pollutants), applying the programs as written to GHG emissions would lead to “absurd results” by subjecting millions of small sources such as schools, hospitals and churches to permitting requirements. Despite that outcome, EPA chose to include GHGs among the pollutants that could trigger permitting requirements. At the same time, EPA modified the statutory emission thresholds, in a rulemaking known as the Tailoring Rule, so that only large industrial sources would be subject to permitting requirements at the outset, although the agency retained authority to lower the thresholds further over time to cover additional sources.
A wide range of commercial and industrial associations and advocacy organizations challenged those rules and the interpretation of the Clean Air Act on which they were based. The petitioners argued that EPA’s interpretation could not stand as an initial matter because, by the agency’s own admission, it produced “absurd results” through application of the PSD and Title V permitting programs to millions of smaller sources of GHG emissions that Congress never intended to cover. To avoid these results, the petitioners argued, EPA should have adopted a different interpretation of the Clean Air Act under which either (i) GHGs cannot ever constitute an “air pollutant” for purposes of these programs and therefore cannot be regulated under them in any circumstances or, in the alternative, (ii) emissions of GHGs cannot trigger permitting obligations under PSD or Title V but may be regulated under those programs only if a facility is otherwise subject to permitting by virtue of conventional pollutant emissions.
Six petitions for certiorari by several different groups were granted by the Court, and consolidated for purposes of decision. Oral argument was heard on February 24, 2014. Peter D. Keisler of Sidley Austin LLP presented argument on behalf of all petitioners.
In today’s divided 5-4 decision, authored by Justice Scalia, the Court agreed with the petitioners’ alternative argument and held that EPA’s rulemakings were invalid. It reasoned that, although the Court in Massachusetts v. EPA, 549 U.S. 497 (2007), had held that GHGs qualify as an “air pollutant” for purposes of the term’s general definition in the Clean Air Act, that broad definition does not compel EPA to regulate GHG emissions as an “air pollutant” when doing so would be contrary to the statutory purpose and context. Given the “absurd results” that would admittedly be produced by applying the PSD and Title V programs to facilities based solely on their emissions of GHGs, the Court held that those emissions cannot reasonably be deemed an “air pollutant” for purposes of the triggering provisions of those programs. The Court specifically and unequivocally rejected EPA’s attempt to avoid those absurd results by modifying the statutory thresholds in the Tailoring Rule, stating that “[t]he power of executing the laws … does not include a power to revise clear statutory terms that turn out not to work in practice.”
The Court, however, stopped short of holding that GHGs could not be regulated at all under the PSD and Title V programs. In particular, it held that, for those sources otherwise required to obtain a PSD permit absent GHG emissions, such sources must comply with “best available control technology” (BACT) standards for GHGs. While the Court acknowledged that the application of BACT to GHGs could conceivably “lead to an unreasonable and unanticipated degree of regulation,” by subjecting essentially every aspect of a facility’s operation to oversight and control to limit overall GHG emissions, it concluded that these problems were not certain to result and might be addressed through appropriate agency guidance. The Court emphasized, though, that it was not approving of EPA’s current approach to BACT regulation of GHGs, or of any approach that may be adopted, and that it was holding only “that nothing in the statute categorically prohibits EPA from interpreting the BACT provision to apply to greenhouse gases.”
The decision was joined in different parts by different groups of Justices. The principal opinion, authored by Justice Scalia, was joined in full by Chief Justice Roberts and Justice Kennedy. Justices Thomas and Alito joined in the holding that GHG emissions cannot trigger PSD or Title V permitting, but (as stated in a concurring and dissenting opinion authored by Justice Alito) would have gone further and held that GHGs are not subject to BACT under any circumstance. Justice Breyer authored a separate opinion, with Justices Ginsburg, Sotomayor and Kagan, dissenting from the Court’s conclusion that GHG emissions cannot trigger permitting, but agreed with and joined the Court’s opinion holding that those emissions are subject to BACT.
The Court’s decision will have significant and continuing impacts on EPA’s authority to regulate GHG emissions and the interpretation of the Clean Air Act. In the near term, five key points are relevant:
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Peter D. Keisler
Roger R. Martella
Quin M. Sorenson
Teleconference - Debrief of the Supreme Court's UARG v. EPA Opinion on EPA's GHG Rulemakings
June 24, 2014, 2:00 PM ET
To learn more about this topic, join Roger Martella, who will be moderating this teleconference sponsored by the Environmental Law Institute, ABA Section of Environment, Energy, and Resources and the D.C. Bar Environment, Energy, and Natural Resources Section.
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