Utility Air Regulatory Group v. EPA, American Chemistry Council v. EPA, Energy-Intensive Manufacturers v. EPA, Southeastern Legal Foundation v. EPA, Texas v. EPA, Chamber of Comm. v. EPA, 12-1146, 12-1248, 12-1254, 12-1268, 12-1269, 12-1272 (Consolidated)

Issues 

Does the Environmental Protection Agency have authority under the Clean Air Act to regulate stationary sources of greenhouse gas emissions?

Oral argument: 
February 24, 2014

Following the Supreme Court’s 2007 decision in Massachusetts v. EPA, the EPA began regulating greenhouse gas emissions from mobile sources, such as cars and trucks. The categorization of greenhouse gases an an “air pollutant” under the Clean Air Act automatically triggered the regulation of stationary sources, such as factories, through the EPA’s Prevention of Significant Deterioration and Title V permit programs. However, because the new regulatory framework easily triggered EPA oversight for low levels of emissions, the EPA decided to increase the threshold emissions level for greenhouse gases. Petitioners, including various states and industry groups, assert that the EPA’s regulation of greenhouse gas emissions from stationary sources expands the scope of the Act beyond Congress’s original intent. Accordingly, Petitioners argue that the EPA lacks authority for this regulation. The EPA responds that because greenhouse gases are plainly air pollutants, the agency has the statutory authority to regulate them. Moreover, the EPA contends that this reading of the Act conforms with Congress’s intent to give the EPA broad discretion in regulating air pollution to protect public health and welfare. The Supreme Court’s determination of whether the EPA may continue to regulate greenhouse gases under these programs will significantly impact the United States’ approach to climate change.

Questions as Framed for the Court by the Parties 

After this Court decided Massachusetts v. EPA, 549 U.S. 497 (2007), the Environmental Protection Agency (EPA) found that its promulgation of motor vehicle greenhouse gas (GHG) emission standards under Title II of the Clean Air Act (CAA), 42 U.S.C. § 7521(a)(1), compelled regulation of carbon dioxide and other GHGs under the CAA's Title I prevention of significant deterioration (PSD) and Title V stationary-source permitting programs. Even though EPA determined that including GHGs in these programs would vastly expand the programs contrary to Congress's intent, EPA adopted rules adding GHGs to the pollutants covered. The panel below held the CAA and Massachusetts compelled inclusion of GHGs and, based on that holding, dismissed all petitions to review the GHG permitting program rules on standing grounds. The questions presented are: 

  1. Whether Massachusetts compelled EPA to in-clude GHGs in the PSD and Title V programs when inclusion of GHGs would (i) transform the size and scope of these programs into something that EPA found would be "unrecognizable to ... Congress," Petition Appendix 345a, 380a, and (ii) expand the PSD program to cover a substance that does not deteriorate the quality of the air that people breathe. 
  2. Whether dismissal of the petitions to review EPA's GHG permit-program rules was inconsistent with this Court's standing jurisprudence where the panel premised its holding that standing was absent on its merits holding that GHGs are regulated "pursuant to automatic operation of the CAA." Id. at 96a. 

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Facts

After the Supreme Court’s decision in Massachusetts v. EPA, categorizing greenhouse gases (GHG) as an “air pollutant” and therefore subject to regulation under the Clean Air Act (CAA), the Environmental Protection Agency (EPA) began regulating GHGs. See Coalition for Responsible Regulation, Inc. v. E.P.A. 684 F .3d 102, 113 (DC Cir 2012). First, the EPA issued an Endangerment Finding, stating that GHGs can “reasonably be anticipated to endanger public health or welfare.” Id.(citing 42 U.S.C. § 7521(a)(1)). The EPA then issued the “Tailpipe Rule,” which set GHG emissions standards for cars and small trucks. Id.  Additionally, the EPA determined that the Tailpipe Rule triggered a requirement, known as the “Timing Rule,” that major stationary sources of GHGs obtain construction and operating permits. Id.  Because of the new administrative burdens on permitting authorities and GHG sources, the EPA issued the “Tailoring Rule,” which requires that only the largest stationary GHG sources obtain permits. Id.

The CAA addresses stationary sources of air pollution in various ways. The EPA’s position is that GHGs must be regulated under Title I, the prevention of significant deterioration program (PSD), and Title V, the stationary source permitting program. Id.at 115 The PSD program mandates pre-construction permitting for stationary air pollutant sources.  Under Title V, certain stationary sources of air pollutants are required to obtain operating-permits.   See 42 U.S.C. § 7470-7479, 42 U.S.C. § 7661-7661f. Both programs fall within the section of the CAA that addresses National Ambient Air Quality Standards (NAAQS). Under the NAAQS, the EPA regulates six “criteria pollutants”: carbon monoxide, lead, nitrogen oxides, ozone, particulate matter, and sulfur dioxide.

PSD programs require that a state issue construction permits for stationary sources (e.g., iron and steel mill plants) that have the potential to emit over 100 tons per year of “any air pollutant.” Id. (citing 42 U.S.C. § 7475).  Any other stationary source is subject to the PSD permit requirement only if the source has the potential to emit over 250 tons per year of “any air pollutant.” Id. (citing 42 U.S.C. § 7479 (1)). Title V requires that stationary sources that have the potential to emit at least 100 tons per year of “any air pollutant” have an operating permit issued by the state. Id.  (Citing 42 U.S.C § 7602(j)).  “Any air pollutant” is and has been traditionally interpreted by the EPA to include all air pollutant regulated under the CAA.Id.

The EPA thus enacted the Timing and Tailoring Rules to implement GHG regulations. Under the Timing Rule, an air pollutant only becomes subject to CAA regulations when a regulation requiring control of the particular pollutant becomes effective. Id.  The EPA determined that applying the statutory thresholds in the Title V and PSD programs would include regulation of thousands of additional industrial, residential, and commercial sources under the PSD program and millions under the Title V program. See 75 Fed Reg. 31, 514 (June 3, 2010) (J.A. 461, 490-492). Therefore, the EPA determined that immediate regulation of smaller sources would not be beneficial and would severely overwhelm permitting authorities. See 75 Fed Reg. 31, 514 (June 3, 2010) (J.A. 268). As a result, under the Tailoring Rule, the EPA required that only the largest GHG sources (i.e. those sources exceeding 75,000 or 100,000 tons per year of CO2) would be subject to the GHG permit requirement. See Coalition for Responsible Regulation at 115-116.

Petitioners – various industry group, states, and interest groups –petitioned for review of the GHG regulations in the United States Court of Appeals for the District of Columbia Circuit. Petitioners challenged all aspects of the GHG regulations including the basis for the endangerment finding, the legality of the Tailoring and Timing Rules, as well as the EPA’s decision to regulate GHGs from motor vehicles, knowing that this would trigger more costly regulation of stationary sources under the Title V and PSD programs. Id. at Parts II-IV.  

The D.C. Circuit held that the EPA reasonably interpreted “any air pollutant” to mean all pollutants subject to regulation under the Acy. See Coalition for Responsible Regulationat 134 Additionally, the court held that the issuance of the Tailpipe rule, regulating motor vehicle emissions, triggered the application of the PSD requirements as well as the Title V permitting requirements for any major stationary source of GHG. Id. at 143.  The court also upheld the EPA’s application of the Timing and Tailoring rules. Id. The United States Supreme Court granted certiorari to determine whether EPA permissibly determined that GHG’s can be regulated under the PSD and Title V Programs. See Petition for Writ of Certiorari, Utility Air Regulatory Group v. EPA (March 20, 2013).

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Discussion

EFFECTS OF REGULATING GHGs UNDER THE CAA

The EPA asserts that it created the Tailoring Rule, which requires that only the largest stationary GHG sources obtain permits, to reduce the heavy administrative burdens that would result from the current pollution thresholds that trigger EPA oversight. See Brief for Federal Respondents at 15-16. Petitioner American Chemistry Council argues that to avoid this “absurd” outcome, the Title V and PSD programs should apply only to criteria pollutants under the NAAQS or to pollutants with local effects, but not to all air pollutants regulated under the Act, such as GHGs. See Brief for Petitioner American Chemistry Council at 28.

In support of EPA, the South Coast Air Quality Management District (South Coast) and the Emmett Center on Climate Change and the Environment (Emmett Center) argue that regulating GHGs at the statutory thresholds provided by the Title V and PSD programs will create workable results in time. See Brief of Amicus Curiae for South Coast Air Quality Management District and Emmett Center on Climate Change, in Support of Respondents at 12. Moreover, South Coast and the Emmett Center argue that Petitioners fail to account for the EPA’s plans to reduce the administrative burden on small source polluters. Id. at 16. South Coast and the Emmett Center also argue that making permitting unnecessary for smaller sources and simplifying the regulatory process for large sources will ensure that regulation of GHGs is manageable. Id. at 17

In support of Petitioners, various states, including Kansas, Kentucky, and Montana, warn that the EPA’s new regulations will be extremely costly.  The states argue that by the EPA’s own initial estimates, “annual permit applications would increase by over 300-fold, from 280 to almost 82,000” and “costs to the permitting authorities would increase more than 100-fold, from $12 million to 1.5 billion.” See Brief of Amici Curiae for Kansas et al. in Support of Petitioners at 13. The states argue that the burden of reviewing additional permits for GHG emissions on top of existing permitting requirements for non-GHG pollutants will put substantial and overwhelming costs on states. Id. at 14 Therefore, these states contend that regulation of GHGs under the PSD and Title V programs would be impossible for states to implement. Id.

ENVIRONMENTAL IMPACTS OF INCLUDING GHGs IN THE PSD AND TITLE V PROGRAMS

The Respondent states, including New York, California, and Connecticut, argue that for decades the EPA, in conjunction with the states, has applied PSD permitting to any air pollutant regulated under the Act, and that regulating GHGs under the PSD is the most recent application of this longstanding construction of the Act. See Brief for Respondents the States of New York et al. at 31. The states argue that limiting the definition of air pollutant to only those pollutants regulated under the NAAQS program would have serious adverse environmental effects. SeeId. Moreover, they contend that many states have followed the PSD provision to require a permitting process for many harmful pollutants that are not subject to the NAAQS, such as “ozone-depleting substances, as well as fluorides, hydrogen sulfide, metals…” See Id. at 32. Therefore, the states argue, if the definition of air pollutant is limited to only those pollutants regulated under the NAAQS, many pollutants not covered by the NAAQS would become deregulated. See Id. The states contend that the deregulation of these pollutants through their exclusion from the PSD provision would lead to harmful environmental outcomes that could negatively affect public health and welfare. See Id.

In support of Petitioners, the Committee for a Constructive Tomorrow (CFACT) argues that the EPA’s attempt to regulate GHGs is inherently flawed and contrary to the public interest. See Brief of Amici Curiae Committee for a Constructive Tomorrow in Support of Petitioners at 9.  CFACT argues that regulating GHGs though the PSD and Title V programs would impose overwhelming costs on thousands of American businesses, thereby harming the economy and American jobs. See Id. at 10.  Further, CFACT argues that the potential adverse employment effects will damage the health and wellbeing of Americans, which undermines the purpose of the CAA. See Id. at 11. CFACT also asserts that the EPA did not consider the possible harmful environmental impacts of regulating GHG emissions. See Id. at 17. For instance, CFACT contends that the GHG rules will force Americans to replace hydrocarbon fuels with expensive renewable alternatives that require more land and materials, thereby adversely impacting wildlife. See Id.

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Analysis

In this case, the Supreme Court will decide whether the EPA’s regulation of GHGs through the PSD and Title V permitting programs of the CAA increases the programs’ scope beyond what Congress intended. Petitioners contend that several CAA provisions show that the PSD program was intended to apply solely to NAAQS pollutants, and that the PSD and Title V programs were only meant to regulate local ambient air quality. See Brief of State Petitioners, at 8–22; see Brief for Respondents Coalition for Responsible Regulation et al. in Support of Petitioners, at 16–25. The EPA responds that GHG regulation under the PSD and Title V programs resulted from the simplest interpretation of the CAA and is well within the scope of the CAA and Congress’s intent to protect public health and welfare from air pollution. See Brief for Federal Respondents, at 24–37.

THE TIMING RULE:  TRIGGERING PSD AND TITLE V PROGRAMS

The EPA argues that it has authority to regulate GHGs under the PSD and Title V programs of the CAA. The EPA’s Timing Rule determines that a pollutant becomes “subject to regulation” at the moment when regulations regarding that pollutant are promulgated under the CAA. Coalition for Responsible Regulation, 684 F.3d at 115. Therefore, the EPA contends that when it began regulating GHG emissions from mobile sources by issuing the Tailpipe Rule, GHGs became a “pollutant subject to regulation” under the CAA. Brief for Federal Respondents, at 24. Accordingly, in the EPA’s view, because GHGs were now subject to regulation, the permit requirements under the PSD and Title V programs were triggered. Id.(citing 42 U.S.C.  § 7473).

Respondent Coalition for Responsible Regulation (the Coalition), citing the text and structure of the CAA, rejects the EPA’s interpretation. First, the Coalition contends that the EPA did not follow the correct steps under the CAA for extending the PSD program to pollutants other than those originally listed. Brief for Respondent Coalition for Responsible Regulation, at 16. The Coalition asserts that rather than allowing automatic PSD permitting for all pollutants under the Act, Section 166 of the CAA lays out specific instructions for how the EPA must regulate criteria and other pollutants under the PSD program. See id. at 16–19 (citing 42 U.S.C. §7476). Second, the Coalition argues that looking broadly at the structure of the CAA, it is apparent that “any air pollutant” refers to any NAAQS pollutant, which are regulated under a scheme that separates attainment areas (areas where specific pollutant levels are safe) and nonattainment areas (areas where specific pollutant levels negatively affect public health or welfare). See id. The Coalition states that the PSD program’s purpose is to prevent factories from moving from nonattainment areas to attainment areas, thus avoiding regulation while sullying the clean areas. See id. The Coalition points to Section 161 of the CAA, which provides that the PSD program shall only apply to each region designated as attainment or unclassifiable. See id. at 17–18 (citing 42 U.S.C. §7471).  However, because GHG levels are uniform worldwide there cannot be attainment, nonattainment, and unclassifiable areas as there are with local pollutants. See id. at 18. Therefore, the Coalition infers from this statutory language that Congress only intended NAAQS pollutants to be regulated under the PSD program. See id.

The EPA counters that the Coalition’s reading of the statute as only applying PSD requirements to NAAQS pollutants fails to account for Section 165(3), which requires PSD-regulated facilities to not contribute to air pollution in excess of any NAAQS standard or “any other applicable emission standard” under the CAA. See Brief for Federal Respondents, at 29–30 (citing 42 U.S.C. 7475(a)(3)(B)–(C) ). Responding to the Coalition’s argument that the PSD program cannot apply because no attainment area for GHGs exists, the EPA argues that applying this reasoning would create anomalies in the PSD program unrelated to GHGs. See id. at 52. Rather, the EPA argues that under the agency’s longstanding interpretation, PSD requirements apply to all major emitting sources of any pollutant where the facilities are located in an area designated as attainment or unclassifiable for one or more criteria pollutants. See id.at 52–53.

THE TAILORING RULE: CONGRESSIONAL INTENT TO REGULATE GREENHOUSE GASES

Petitioners contend that the EPA lacks authority to regulate GHGs under the PSD or Title V programs, because it expands the programs’ scope to the point that they are unrecognizable. Brief for State Petitioners, at 4. Specifically, Petitioners argue that Congress’s narrow scope for these programs is evidenced by the fact that the EPA had to modify the strict numerical triggers through the Tailoring Rule in order to prevent administrative chaos. See id. Petitioners maintain that if the Court determines that the EPA reasonably interpreted the CAA in implementing the PSD and Title V programs through the Timing Rule, then it nevertheless must vacate the Tailoring Rule, because the CAA sets out unambiguous, numerical thresholds. See id. at 9.  Petitioners assert that the EPA cannot justify multiplying the clear numerical thresholds listed in the CAA for the PSD and Title V programs by 750 to 1000 times on the basis that to enforce the standards set out in the CAA would lead to the absurd result of regulating an unmanageable number of small emitters. See id. at 9, 17.Instead, Petitioners contend, the EPA can avoid this absurd result by declining to apply the Timing Rule or forcing Congress to take corrective action by applying the required standards. See id. at 20.Petitioners argue that allowing the EPA to change the strict numerical standards gives EPA impermissible legislative authority in contravention of the nondelegation doctrine, whereby legislative power is reserved to Congress. See id. at 20–24.

The EPA claims that it has authority to increase the threshold triggers for permitting requirements. The EPA contends that it needed to temporarily apply a higher threshold level to avoid a conflict between the congressional directive in the CAA to set certain numerical levels, with the congressional order that permits be processed expeditiously. See Brief for Federal Respondents, at 47–48.  In the EPA’s view, because the threshold amounts in the CAA are an inappropriate measure of carbon dioxide impact, the Tailoring Rule was within the Agency’s broad discretion to allocate its limited resources and personnel. See id. at 48–49. The EPA continues that this temporary numerical adjustment is more consistent with the CAA than the alternatives proposed by Petitioners of declining to follow the EPA’s longstanding interpretation of “pollutants subject to regulation” or setting unworkable standards to force Congress to act. See id. at 49–51. The EPA admits the CAA drafters did not fully realize the consequences of burning fossil fuels, but the EPA maintains that the CAA is a broad regulatory scheme that gives the agency flexibility to implement the CAA’s goals of protecting public health and welfare from air pollution. See id. at 51.

REGULATION OF POLLUTANTS THAT DO NOT AFFECT AMBIENT AIR QUALITY

Finally, Petitioners argue that unlike the CAA’s treatment of mobile sources—the CAA section directly at issue in the Massachusetts decision that delegates power to the EPA to protect public health and welfare—the CAA’s PSD provisions require the EPA to focus on the deterioration of ambient air quality. See Brief for Petitioners, Utility Air Regulatory Group et al., at 25. Petitioners contend that because the danger of carbon dioxide emissions are in its global effects—i.e., humans are not at risk from breathing large quantities of carbon dioxide, but are at risk from the global effects of climate change such as drought and extreme weather—the PSD program is not being used for its appropriate purpose of preventing deterioration of ambient air qualityin specific geographic regions. See id. at 25–26.

The EPA contends that Petitioners’ argument relies on an interpretation of “ambient air” that the Court rejected in Massachusetts. The EPA asserts that in Massachusetts the Court concluded that the CAA uses “ambient air” without distinguishing between atmospheric layers—allowing the CAA to govern air at ground level equally to air in the upper levels of the atmosphere. See Brief for Federal Respondents, at 31. Moreover, the EPA points out that in the 1990 Amendments to the CAA, Congress overhauled restrictions on certain well-mixed gases that deplete the ozone layer, while simultaneously taking care to move local hazardous pollutants to another part of the statute. See id. at 33. Accordingly, the EPA infers from this action that Congress never intended that the PSD program only regulate local pollutants affecting air quality. See id.

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Conclusion

This case will have significant consequences for states, industry groups subject to EPA regulation, and federal and state administrators. If the Court finds that the EPA lacks the authority to regulate greenhouse gases under the Clean Air Act, Congress will face immense political pressure to combat climate change through other mechanisms. If, however, the EPA is found to have the authority, some believe that the agency will be saddled with an ineffective tool that cannot truly address GHGs broadly. Additionally, others believe that if the EPA’s method of regulating GHGs is upheld, the Court will delegate an unconstitutional degree of decision-making to an executive agency. In either case, the outcome will greatly impact efforts to curb climate change.

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Edited by 

Additional Resources 

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