CO2 Emissions Regulations from EPA Narrowed by Supreme Court

Since the US Supreme Court affirmed in 2007 that the Clean Air Act (CAA) provides the EPA with authority to regulate CO₂ and other greenhouse gases, EPA has pursued a growing set of regulatory initiatives. In each, EPA has attempted to fit GHGs into statutory and regulatory programs originally designed for more conventional pollutants – and the entities it targets have sued the agency claiming the stretch to GHGs exceeds EPA’s authority. Each court decision has adjusted the contours of EPA’s CAA authority, legitimizing some stretches and vacating others.

On June 23, the US Supreme Court capped four years of litigation over EPA’s so-called Tailoring Rule (Utility Air Regulatory Group v. EPA). This decision affirms in part and reverses in part an underlying District of Columbia Circuit Court decision from 2012 (I wrote about that decision here).

What Did EPA's Tailoring Rule Require?

EPA asserted authority to use GHG emissions as the sole basis for requiring a major source to obtain a Prevention of Significant Deterioration (PSD) permit for construction, and a subsequent Title V permit for ongoing operations. Both these permit programs are designed for conventional and hazardous air pollutants. EPA decided to “tailor” the threshold emissions levels above which to require PSD and/or Title V permits, recognizing that emissions of CO₂ and other GHGs are much higher per unit of fuel than other combustion generated, so that much smaller sources would be classified as “major” if the standard thresholds were applied. The Tailoring Rule set the following thresholds:

• For sources emitting 100,000 tons per year of CO₂ and CO₂–equivalent other GHGs, even if no permit is required for other pollutants (much higher thresholds than the 10-100 tpy used for other pollutants (such as NOx and CO₂).
• Add GHG control requirements to permits for sources that exceed thresholds for other pollutants (for example, fossil fuel power plants subject to NOx and SO₂ controls), if GHG emissions exceed 75,000 tpy of CO₂-e (“anyway” sources).

What Did the Supreme Court Just Decide?

The nine justices split into three groups: Justice Scalia wrote the opinion, and was joined in full by Chief Justice Roberts and Justice Kennedy (3 votes); Justices Thomas and Alito joined for one part (2 votes); while Justices, Breyer, Ginsburg, Kagan and Sotomayor (4 votes) joined for the remainder.

• Five justices ruled that EPA cannot require PSD or Title V permits from a source that exceeds threshold emissions only for GHGs and not for other pollutants. They found GHGs to be fundamentally different than the conventional pollutants already subject to these requirements, and found EPA’s scramble to justify much higher permit thresholds as evidence of this difference and the unsuitability of GHG-only regulation under these programs. This majority also ruled that the administrative agency (here, EPA), cannot tailor away statutory requirements enacted into CAA by Congress. (the other four justices would have approved the Tailoring Rule completely)
• Seven justices ruled that EPA can add GHG restrictions to PSD and Title V permits for sources subject to those programs “anyway” because of their other emissions. These justices decided that adding some regulatory controls to the small numbers of large facilities already subject to permitting is a reasonable exercise of EPA’s CAA authority. They also added an un-quantified condition that GHG emissions must be “more than de minimis” to justify the additional burdens, and left EPA to establish appropriate thresholds. (the other two justices would have rejected coverage of “anyway”sources).

Now What?

This fragmented decision allows EPA to add regulatory limits on GHG emissions to permits for the largest sources – the Supreme Court repeated EPA’s estimate that these “anyway” sources represent fully 83% of all stationary source emissions of GHGs. It prohibits stand-alone regulation of a small number of other sources – the Supreme Court repeated EPA’s estimate that this group accounts for an additional 3% of emissions. And it appears to foreclose application of standard PSD and Title V thresholds to GHGs as separate pollutants.

So it appears that the surviving version of these EPA rules will be able to achieve further reductions in GHG emissions, but not to expand the universe of facilities with regulated GHG emissions. Of course, EPA has many other regulatory initiatives underway…

Self-assessment Checklist

Does my organization have any facilities that are subject to regulation as major sources of any air pollutants, subject to PSD and Title V?

• If so, do any of those sources also emit CO₂ and/or other GHGs?
• If so, do any of these facilities’ permits already include restrictions on CO₂ and/or other GHGs?
• If so, have those emissions been quantified (for comparison against future de minimis thresholds EPA may establish)?

Where Can I Go For More Information?

• Supreme Court’s Utility Air Regulatory Group v. EPA decision

• EPA Climate Change webpage, with extensive links to regulatory and scientific information

Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. He was involved in developing 16 existing products, including Environmental Compliance: A Simplified National Guide and The Complete Guide to Environmental Law. Specialty Technical Publishers (STP) provides a variety of single-law and multi-law services, intended to facilitate clients’ understanding of and compliance with requirements. These include:

• Federal Toxics Program Commentary
• U.S. Federal Mandatory Greenhouse Gas Emissions Reporting Audit Protocol
• Greenhouse Gas Auditing of Supply Chains
• The Complete Guide to Hazardous Materials Enforcement and Liability: California