U.S. Supreme Court to Review EPA Regulation of Greenhouse Gases under the Clean Air Act

Posted By on December 27, 2013

Go to the head of the class if you know the difference between CAFE standards and CAFO standards: in January of 2011, new corporate average fuel economy (“CAFE”) standards went into effect, requiring all automobile manufacturers to curb the amount of greenhouse gases (“GHGs”) emitted from the tailpipes of Model Year 2012 cars. These revised CAFE standards were jointly designed by the National Highway Traffic and Safety Administration and the Environmental Protection Agency (“EPA”), and issued under the motor vehicle program (Title II) of the Clean Air Act (“CAA”).  Before this time, the annually-updated CAFE standards did not include a GHG curb, and GHGs were not regulated under any part of the CAA.

In the 2007 case Massachusetts v. EPA, the U.S. Supreme Court concluded that under the CAA’s broad definition, GHGs are air pollutants.  This is what prompted EPA to begin its regulatory process; before this ruling EPA did not think it had the authority to regulate GHG emissions.  In consequence, in 2009 EPA issued endangerment and “cause and contribute” findings – that GHGs threaten the public health, safety, and welfare of current and future generations, and that motor vehicle emissions contribute to this threat.  This was a prerequisite to implementing CAFE standards that incorporate GHG controls.

The EPA’s interpretation of the CAA is that once a pollutant (such as a GHG) is subject to regulation under any subsection of the Act, it must be regulated under all other portions of the Act.  This means that when the 2011 version of the CAFE standards took effect (i.e., when vehicles subject to the revised standards hit the market), the EPA was then required to regulate GHGs emitted from stationary sources, such as power plants and factories, as well.

Stationary sources are regulated by the Prevention of Significant Deterioration (“PSD”) Program and Title V of the CAA.  EPA issues permits for any stationary sources that discharge greater than a threshold amount of pollutants, and these sources are required to use the Best Available Control Technology (“BACT”) to reduce their emissions.

However, EPA acknowledged that it did not have the resources to immediately issue permits to all stationary sources, requiring the use of BACT to control GHG emissions across the board.  EPA also was sensitive to industry concern about the burden of implementing BACT.  Accordingly, EPA issued a tailoring rule to make the rollout of this program manageable.  At first, only stationary sources already subject to PSD permits for their air pollutant emissions would have to implement GHG controls.  Then, EPA would require new discharge permits for stationary sources emitting more than 75,000 tons per year of GHGs – a significantly greater threshold than the 100 to 250 ton threshold applicable to other pollutants regulated under the Act.  Over time, the program would be further developed, and additional sources would be included under its purview.  This practice is consistent with the Court’s Massachusetts v. EPA decision, which recognized that agencies typically do not address problems all at once, but implement regulations that address a problem in smaller pieces that can be refined over time.

A plethora of petitions for review were filed by various industry and environmental groups, some seeking more stringent regulation and some seeking relief from the burden of the BACT requirement.  The U.S. Court of Appeals for the District of Columbia unanimously upheld EPA’s rulings.  On October 15, 2013, the Supreme Court granted certiorari to six petitioners – the Utility Air Regulatory Group, the American Chemistry Council, the Energy-Intensive Manufacturers, the Southeastern Legal Foundation, the U.S. Chamber of Commerce, and the State of Texas – seeking review of the Court of Appeals decision.

The Court’s review is expected to be extremely narrow.  The petitioners will collectively have one hour to advocate before the court, and the many challenges to the rule have been consolidated and reduced to 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.”

Oh, yes, CAFO: that’s concentrated animal feeding operations.

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