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June 23, 2014
Supreme Court limits GHG regs for stationary sources

The Tailoring Rule, one of the EPA’s major actions following the Supreme Court’s opinion in Massachusetts v. EPA, did not escape intact following the Court’s second look at the Agency’s program for GHG emissions from stationary sources ( Utility Air Regulatory Group v EPA, et al.). 

In a 5 to 4 opinion written by Justice Scalia, the majority found that the Agency overstepped its authority under the Clean Air Act (CAA) by setting new GHG emission limits for stationary sources under CAA’s prevention of significant deterioration (PSD) and Title V permitting programs when those sources are not already subject to such permitting.  However, the majority decided that the EPA did not overstep its authority by requiring that sources with existing PSD and Title V permits meet best available control technology (BACT) requirements for GHGs emitted over a level set by the Agency in the Tailoring Rule. 

The effect of the ruling may not substantially alter the EPA control of GHG emissions from major sources.  The majority points out that that sources already subject to PSD permitting (called “anyway sources”) constitute 83 percent of GHG emissions from stationary sources in the U.S. while those sources the Court said may not be regulated under the Tailoring Rule (i.e., sources not already subject to PSD permitting, or non-“anyway” sources) account for only 3 percent of stationary source GHG emissions.

Massachusetts v. EPA

The EPA issued the Tailoring Rule following the Agency’s imposition of GHG emission limits on motor vehicles.  The Agency’s authority to set motor vehicle GHG emission limits was one of the core issues in Massachusetts v. EPA.  According to the Agency, once the vehicle emission regulations were established, the CAA required that limits on the same GHGs be set for newly constructed or modified stationary sources under the PSD program. 

But the CAA specifies that stationary sources with the potential to emit 250 tons per year (100 tpy in some cases) of the regulated pollutant must obtain PSD permits.  If those thresholds were to be extended to stationary sources that emit GHGs, the number of sources subject to PSD would go up at least tenfold, the national cost of obtaining permits would vastly increase, and state permitting agencies would be overwhelmed with permit applications. 

This situation resulted in the Tailoring Rule, in which the EPA limited PSD GHG permitting for non-“anyway” sources to those that emit at least 100,000 tpy and for “anyway” sources that emitted at least 75,000 tpy. 

The Tailoring Rule and other aspects of the Agency’s stationary GHG program were challenged by industry groups and some states in the U.S. Court of Appeals for the DC Circuit.  The DC Circuit dismissed some of the petitioners’ claims for lack of jurisdiction and denied the remainder.  The Supreme Court agreed to entertain six petitions, but distilled them all into 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.” 

Chevron defense

Much of the majority opinion focuses on the amount of latitude the EPA should be afforded via the Chevron Defense, a Supreme Court interpretation that says the courts should defer to actions the Agency takes in areas where the CAA is ambiguous.  But such deference has its limits, according to the majority.

“Even under Chevron’s deferential framework, agencies must operate ‘within the bounds of reasonable interpreta­tion,’” writes Justice Scalia.  He notes that since 1978, the PSD and Title V permitting trigger has applied only to “regulated air pollutants.”  Such pollutants include, for example, those already addressed in the federal new source performance standards or regional haze program. 

“It is plain as day that the Act does not envision an elaborate, burdensome permitting process for major emitters of steam, oxygen, or other harmless airborne substances,” writes Justice Scalia.  In this context, he quotes a line from an amici brief he finds particularly relevant – “…while Massachusetts ‘rejected EPA’s categorical contention that greenhouse gases could not be “air pollutants” for any purposes of the Act,’ it did not ‘embrace EPA’s current, equally categorical position that greenhouse gases must be air pollutants for all purposes’ regardless of the statutory context.”  

Justice Scalia adds that the EPA itself admitted that the CAA does not grant the authority it claimed for non-“anyway” sources.  “Since, as we hold above, the statute does not com­pel EPA’s interpretation, it would be patently unreasonable—not to say outrageous—for EPA to insist on seizing expansive power that it admits the statute is not designed to grant.”

BACT found reasonable
But regarding “anyway” sources, the majority says there are a variety of approaches such sources can take to control emissions of GHGs, including both energy efficiency measures and end-of-stack controls.  (The majority notes that the EPA argued that carbon capture and storage [CCS] is “reasonably comparable to more traditional, end-of-stack BACT technologies, and petitioners do not dispute that.”  The absence of argument here is interesting because very few industrial sectors have embraced CCS.)  

The main point the majority makes is that applying BACT in this context would not result in “the drastic expansion of agency authority” the EPA assumes in the PSD and Title V provisions of the Tailoring Rule.

“We are not talking about extending EPA jurisdiction over millions of previously unregulated enti­ties, but about moderately increasing the demands EPA (or a state permitting authority) can make of entities already subject to its regulation,” writes Justice Scalia.

Partial dissents
In a partial dissent, Justice Breyer was joined by justices Ginsburg, Sotomayor, and Kagan in asserting that the majority’s rejection of the modified limits the EPA established for the PSD and Title V programs “drains the Act of its flexibility and chips away at our decision in Massachusetts.”

In another partial dissent, Justice Alito disagreed that “anyway” sources can be sensibly required to install BACT for GHGs.  According to Alito, permitting authorities are required to conduct an analysis to determine BACT for individual sources.  Such analyses must consider impacts on public health, which, says Alito, cannot be determined because of the global impact of GHG emissions.  Justice Thomas joined in this dissent.

Utility Air Regulatory Group v EPA, et al.

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