On June 23, 2014 the U.S. Supreme Court issued its long-awaited and much anticipated decision in Utility Air Regulatory Group v. EPA. At issue was the legitimacy of the EPA’s “tailoring” Rule which sought to impose regulations on greenhouse gas emissions on industrial stationary sources. Other than the EPA, everyone else didn’t want the regulations to be upheld though for different reasons. Environmental groups thought that the EPA was giving much of industry a pass by not imposing draconian regulations on everyone. Industry did not like the rules because they would impose additional regulatory burdens that would be difficult to handle.
Regardless, Everyone ended up winning a little bit or losing a little bit, depending on your perspective. The biggest losers are Title V/PSD permit holders and the biggest winners are small source generators that are not regulated under Title V or PSD. Rather than affirm the EPA’s method of applying a sweeping definition of greenhouse gases and resulting regulations on all of industry, though in different ways and in different amounts, the Court decided to give the EPA the authority to only apply the definition on existing Title V/PSD stationary sources. The logic used to get to that particular conclusion is difficult to follow even though Justice Scalia wrote the majority opinion. Normally, his opinions display an impressive logical flow even if they presuppositions are (usually) fatally flawed. It appears to me that the conclusion was reached because Justice Scalia thought it was the conclusion that would do the least amount of harm. I don’t know how else to describe the reasoning in this opinion.
Ultimately, the impact is unclear for now as the EPA will have to refashion its regulatory tools to apply greenhouse gas emission regulations to Title V/PSD permit holders including some new undefined definition or application of BACT for those emissions.
Here are the main quotes of interest:
“Even if the text were not clear, applying BACT to greenhouse gases is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable. 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. And it is not yet clear that EPA’s demands will be of a significantly different character from those traditionally associated with PSD review. In short, the record before us does not establish that the BACT provision as written is incapable of being sensibly applied to greenhouse gases.”
. . .
“To sum up: We hold that EPA exceeded its statutory authority when it interpreted the Clean Air Act to require PSD and Title V permitting for stationary sources based on their greenhouse-gas emissions. Specifically, the Agency may not treat greenhouse gases as a pollutant for purposes of defining a “major emitting facility” (or a “modification” thereof) in the PSD context or a “major source” in the Title V context. To the extent its regulations purport to do so, they are invalid. EPA may, however, continue to treat greenhouse gases as a “pollutant subject to regulation under this chapter” for purposes of requiring BACT for “anyway” sources. The judgment of the Court of Appeals is affirmed in part and reversed in part. It is so ordered.”
An “anyway” source is defined this way by the court: “sources required to obtain permits anyway because of their emission of conventional pollutants (so-called “anyway” sources) would need to comply with BACT for greenhouse gases if they emitted those gases in significant amounts, defined as at least 75,000 tons per year CO2e.”