On Monday, the U.S. Supreme Court issued the next major climate change decision in Utility Air Regulatory Group v. EPA (UARG). In reading commentary across the web it appears most think the Court's decision isn't really a big deal. After all, the Court upheld EPA's permitting authority to regulate greenhouse gases (GHGs) from stationary sources. This from the Guardian:
"The US Supreme Court largely upheld Barack Obama's plans to cut carbon pollution from power plants on Monday, delivering critical support for his climate action plan."
The Court's ruling did limit EPA authority, but most commentators note that the difference in covered emissions is only 83% of the sources instead of 86% of the sources. So, really what is the big deal?
The Court's ruling is, in fact, a very big deal for two principle reasons:
- The Court held EPA has discretionary authority to regulate GHGs under major source permitting authority, not a mandate as EPA claimed; and
- The Court took EPA off its frightening path of ever increasing regulation of smaller and smaller sources of GHGs.
The news media have largely focused on the 83% versus 86% figure in concluding EPA got most of what it wanted. However, the impact of the decision is more complicated then this simple figure. A review of how EPA got before the Supreme Court is important in order to understand the significance of its ruling.
Massachusetts v. EPA
The Supreme Court already determined that EPA had authority under the existing terms of the Clean Air Act to regulate GHGs. At issue in the Court's landmark decision in Massachusetts v. EPA
was the language in Section 202(a)(1) of the Clean Air Act (CAA) which requires the Administrator of EPA to set emission standards for "any air pollutant" from motor vehicles "which in his judgment cause(s), or contribute(s) to, air pollution which may reasonably be anticipated to endanger public health and welfare."
Back in 2003, the Bush Administration was trying to delay or avoid regulating GHGs under the Clean Air Act. One action it took was to deny a petition from twelve states and several cities to regulate GHGs under Section 202(a)(1). EPA took the position that it did not have the authority to regulate GHGs under the CAA and EPA should be more deliberate before embarking on such a massive regulatory expansion.
In a 5-4 climate decision, the Court ruled against the Bush Administration in Massachusetts v. EPA. The Court pointed to the extremely broad definition of "air pollutant" under the CAA and held that EPA was required to evaluate whether GHGs endanger public health and welfare (i.e the so called "Endangerment Finding")
Following the ruling, the Obama Administration attempted to pass comprehensive climate change legislation (cap and trade). One argument the Administration used to support the proposed legislation was the threat that without such legislation it would have no choice but to move forward with promulgating rules under the existing CAA. Even then the Obama Administration commented that the CAA was ill-suited to regulate GHGs.
While legislation was close to passing, health care was the priority, and cap-and-trade died in the Senate. The Administration soon moved forward with its Endangerment Finding and regulation of GHGs from motor vehicles.
Point of No Return?
EPA has asserted that once the rulemaking process under the Clean Air Act was initiated, there was no turning back. EPA argued that once it issued its Endangerment Finding and GHGs became a "regulated pollutant" under the CAA, other regulatory provisions under the Act pertaining to stationary sources were automatically triggered.
Of grave concern was the stationary major source permitting provisions (PSD and Title V programs) which were triggered anytime a source emitted 250 tons or, in case of Title V, 100 tons of a pollutant. While these thresholds only captured truly large sources when applied to emissions of traditional pollutants, this would not be the case with GHGs.
EPA warned that applying the 100/250 ton threshold to GHGs would result in an unprecedented expansion of regulatory authority over even small sources. In fact, thousands of previously unregulated sources would be captured and EPA would be overwhelmed with the new permits.
When EPA was questioned as to why it would embark on regulating GHGs under the PSD and Title V programs when it would cause such dramatic results, EPA said it had no choice. The Agency claimed the plain language of the Act as well as the decision in Massachusetts v. EPA, legally compelled the Agency to regulate GHGs under the PSD and Title V programs.
In an effort to mitigate the impact of such regulations, EPA published the Tailoring Rule. EPA said the rule was necessary due to the fact application of the 100/250 tons threshold to GHGs would produce "absurd results." Therefore, due to these absurd results, EPA claimed it had authority to tailor the thresholds to more practical thresholds.
EPA's Tailoring Rule set the GHG trigger at 100,000 tons per year of GHGs and 75,000 tons for existing sources making major modifications. However, EPA clearly stated that its authority to rewrite the CAA in this manner was only temporary and over time it would be forced to apply the 100/250 tons threshold to GHGs. In other words, EPA would eventually regulate thousands of new small sources of carbon emissions.
Supreme Court Finds EPA has Discretion But Cannot Rewrite the Clean Air Act
On June 23, 2014, in another 5-4 climate change ruling, the Supreme Court found EPA (as well as the D.C. Circuit Court) were incorrect when it asserted regulation of GHGs from motor vehicles mandated regulation of GHG emissions from major sources under the PSD and Title V programs. The Court held EPA had a choice whether to regulate GHGs under the PSD and Title V program.
The Court also ruled that EPA could not rewrite the CAA through its Tailoring Rule raising the 100/250 trigger thresholds to 100,000 tons. The Court ruled that the absurd results that would come from application of the 100/250 ton threshold to GHGs really meant the PSD and Title V requirements were not meant to apply to sources solely on basis of their GHG emissions. Rather, new pollution controls to address GHGs would only be required if the source emitted a previously regulated pollutant over the 100/250 ton threshold (so called "Anyway Sources").
Why the Ruling is So Significant
First, the Court has invalidated EPA's Tailoring Rule. The Court said the history behind the 100/250 ton threshold established by Congress showed the legislature's intent that they not apply to pollutants such as GHGs. As a result, regulations will not be slowly ratcheted down to cover thousands of previously unregulated sources.
Second, the Court clearly held that EPA has discretion whether to include regulation of GHGs under the PSD and Title V programs. It is much easier to justify a large regulatory expansion when you can argue it is mandated under the law. The Court's decision eliminates that justification. This means the Agency actions to regulate GHGs under the PSD and Title V programs could be undone by a future Administration.