What's At Stake in Utility Air Regulatory Group v. EPA

EPA's authority to regulate greenhouse gas emissions in stationary sources will be argued before the U.S. Supreme Court early next year.

• By Antonia Gregory
• Dec 01, 2013

A key test of EPA's authority to regulate green house gas emissions in stationary sources is taking place with oral arguments before the U.S. Supreme Court on Feb. 24, 2014. The sole question before the nation's highest court in the case is "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."

The case, Utility Air Regulatory Group v. EPA, consolidates several petitions filed against the EPA by power industry groups, U.S. states, and the U.S. Chamber of Commerce.

The 'Permissibly Determined' Layer: Massachusetts v. EPA
In 2007, the Supreme Court held the EPA is responsible for regulating greenhouse emissions in motor vehicles after hearing arguments in 2006's Massachusetts v. EPA. Attorneys for the 2006 Massachusetts petitioners argued EPA was not performing its duty to control greenhouse emissions from vehicles, as stipulated in the Clean Air Act, thus endangering public health and welfare. In this case, EPA argued it did not have statutory authority to regulate greenhouse gases, that Congress never intended for EPA to regulate greenhouse gas emission that contribute to climate change, and even if Congress did, under existing circumstances "such authority should not be exercised."

In its decision, the court stated, "The Clean Air Act's sweeping definition of 'air pollution' includes 'any air pollution agent or combination of such agents, including any physical, chemical…substance or matter which is emitted into or otherwise enters the ambient air…' On its face, the definition embraces all airborne compounds of whatever stripe, and underscores that intent through the repeated use of the word 'any.'" The court further wrote that Congress originally designed EPA to regulate air pollution, including greenhouse gas emissions that contribute to climate change, regardless of who held the EPA administrator position and what president sat in the Oval Office.

The Congressional Layer: History of EPA
In 1963, Congress established a federal program within the U.S. Public Health Service to authorize research into techniques for monitoring and controlling air pollution. The Clean Air Act was implemented in 1970, when Congress authorized development of comprehensive federal and state regulations to limit emissions from both stationary (industrial) sources and mobile (vehicle) sources. 1970 legislative revisions to the act provided:

• National Ambient Air Quality Standards (NAAQS)
• State Implementation Plans (SIPs) formed to achieve NAAQS
• New Source Performance Standards (NSPS) for new and modified stationary sources
• National Emission Standards for Hazardous Air Pollutants (NESHAP)
• Increased enforcement authority
• Requirements for control of motor vehicle emissions

Within the same year, a separate legislative act—the National Environmental Policy Act—established the EPA, an administrative agency of the federal government that was created to implement various requirements of the act. States, however, retained rights to enforce compliance.

Major amendments to the 1970 Clean Air Act were added in 1977 and 1990. The 1977 amendments provided:

• Prevention of Significant Deterioration (PSD)
• Areas that are non-attainment with respect to the National Ambient Air Quality Standards. A non-attainment area is a geographic area that does not meet one or more of the federal air quality standards.
• Major permit review requirements to ensure attainment and maintenance of the National Ambient Air Quality Standards.

In 1977, Congress additionally established the New Source Review (NSR) permitting program to ensure air quality was not significantly degraded from new and modified factories, industrial boilers, and power plants in areas with clean air—specifically national parks—and new emissions do not significantly worsen air quality. The NSR program issues permits to facility owners and operators; these permits are legal documents that facility owners and operators must adhere to.

The 1990 Amendments authorized:

• programs for Acid Deposition Control (acid rain);
• a program to control 189 toxic pollutants, including those previously regulated by the National Emission Standards for Hazardous Air Pollutants (NESHAP);
• permit program requirements;
• expanded and modified provisions concerning the attainment of National Ambient Air Quality Standards (NAAQS);
• expanded and modified enforcement authority;
• a program to phase out the use of chemicals that deplete the ozone layer.

The Administrative Layer: EPA Actions
Subsequent to the 2007 Supreme Court ruling, EPA issued an "interpretive memo" known as the "Johnson Memo," after then-EPA Administrator Stephen Johnson, clarifying the scope of EPA's regulation of Prevention of Significant Deterioration (PSD) pollutants and permit requirements for State Implementation Plans (SIPs). Johnson wrote, "Under Title I, Part C of the [Clean Air] Act, the PSD program preconstruction permit requirement applies to any new major stationary source or modified existing major stationary source of regulated air pollutants located in an area that is either attaining the National Ambient Air Quality Standards (NAAQS) or unclassifiable. Under the federal PSD permitting regulations, only newly constructed or modified major sources that emit one or more 'regulated NSR pollutants,' as that term is defined in 40 C.F.R. 52.21(b)(50), are subject to the requirements of the PSD program, including the requirement to install the best available control technology (BACT) for those regulated NSR pollutants that the facility emits in significant amounts. This memorandum contains EPA's definitive interpretation of 40 C.F.R. 52.2 1 (b)(50) and is intended to resolve any ambiguity in subpart (vi) of that paragraph, which includes 'any pollutant that otherwise is subject to regulation under the Act.' As of the date of this memorandum, EPA will interpret this definition of 'regulated NSR pollutant' to exclude pollutants for which EPA regulations only require monitoring or reporting but to include each pollutant subject to either a provision in the Clean Air Act or regulation adopted by EPA under the Clean Air Act that requires actual control of emissions of that pollutant."

In December 2009, EPA issued two findings regarding the Clean Air Act and greenhouse gases. The first, known as "the endangerment finding," stated current and projected levels of six key greenhouse gases, including carbon dioxide, methane, nitrous oxide, perfluorocarbons, and sulfur hexafluoride, threatened the health and welfare of current and future generations. The second, known as "the cause or contribute finding," stated the combined emissions of greenhouse gases from new and existing motor vehicles contribute to the atmospheric concentrations of key greenhouse gases and add to the threat of climate change. Collectively, the two findings established greenhouse gas standards for light-duty vehicles for model years 2012 to 2016 and heavy-duty vehicles for model years 2014 to 2018.

EPA reconsidered the "Johnson memo" in 2010 and confirmed any new pollutant that it regulates under the Clean Air Act is covered under the PSD program, including stationary sources. This is often referred to as the "timing rule." The final action also clarified the effective date for stationary source greenhouse gas emissions would be Jan. 2, 2011, which was when the greenhouse gas emission rule took effect for light-duty vehicles.

Later in 2010, EPA issued the "tailoring rule," which limited greenhouse gas emission standards to the nation's largest greenhouse gas emitters: power plants, refineries, and cement product facilities.

From 2009 to 2012, EPA also established reporting rules for greenhouse gas emission for industries that emit 25,000 metric tons or more per year of greenhouse gas emissions in 2009 and 2010, including fluorinated greenhouse gases, and further required facilities conducting geologic carbon sequestration and all other facilities that inject carbon underground to report greenhouse gases.

On June 25, 2013, President Obama issued a memorandum to the EPA requesting that it provide carbon emission standards for existing power plants. EPA fulfilled the presidential request on Sept. 20, 2013, and announced proposed standards for new power plants. The agency also began discussions with states, stakeholders (power industry officials), and the public to hear concerns and suggestions.

Layers of Green Opinion: The Color of Money...
Marlo Lewis, a senior fellow at the Competitive Enterprise Institute in Washington, D.C., told Forbes he believes the court agreed to hear Utility Air Regulatory Group v. EPA "because some judges do have serious concerns about the legality of EPA's regulation of greenhouse gas emissions from stationary sources." Lewis also said he believes the timing rule established by EPA will be called into question, and overturning that rule would limit the EPA greenhouse regulations mostly to mobile sources, at least for the next few years. EPA would have to mothball its big plans to impose greenhouse permitting requirements on modified power plants, as well as new steel mills, cement production facilities, paper and pulp factories, and other large industrial installations.

Bill Gallagher, chairman of the Montana Public Service Commission, expressed concerns about coal's future to the Montana Energy Review. "I'm very concerned that, besides the fact that it is a de facto prohibition on coal plants, [EPA regulation] comes at a time when we are still reeling from the previous coal rules," said Gallagher. "Regrettably, EPA is the Employment Prevention Agency." Gallagher said he believes the compliance timing established by EPA is impossible to achieve and that consumers will face increased energy costs due to fines imposed by EPA for non-compliance. Montana has the number-one coal resource in the nation, representing 25 percent of total U.S. coal reserves and 8 percent of global coal reserves. Montana joined in a "friend-of-the-court" brief for litigation led by Texas, challenging EPA's underlying rationale for its attempts to regulate carbon dioxide emissions.

Jonathan Martel, a partner at law firm Arnold & Porter LLP who represents business interests in air pollution cases, told the Huffington Post that a ruling against EPA may encourage states to resist other EPA proposals. "If the Supreme Court pushes back against the EPA and says the EPA has to give the states the first chance to address the problem, that gives the states more leverage," said Martel.

...The Color of Life
Jody Freeman, a Harvard law professor and former counselor to the White House for Energy and Climate Change in 2009-2010, wrote in a Harvard Law blog post that she believes the narrow review of the Supreme Court's one question is "already a win for the EPA and administration…because the grant is narrow, and avoided the most danger issue, the endangerment finding." She added that the power industry's goal to strip EPA of its regulatory authority over greenhouse emissions is not in question. And although regulation of greenhouse gas emissions by EPA is called into question, Freeman wrote that she considers the point minor. "The overwhelming majority of greenhouse gas emissions come from sources that also emit traditional pollutants in significant amounts. And once a facility triggers into the program because it emits one of the traditional pollutants, the law clearly says it must control all of the pollution it emits, including greenhouse gases."

Michael Brune, the Sierra Club's executive director, also appeared to take the Supreme Court's limited review as a victory. In a statement issued Oct. 15, 2013, he said, "Today is a victory for all Americans who care about our children's future. We're thrilled to see the Supreme Court has left standing the Environmental Protection Agency's historic Endangerment Finding and vehicles standards. The Court's action clears the way for EPA to move forward on carbon pollution standards for power plants, the centerpiece of the President's climate plan. The EPA can now continue its essential efforts to protect our families from dangerous climate pollution. We have confidence that the full suite of EPA's actions to reduce carbon pollution are legally sound. The President and the EPA have not just the authority, but the responsibility to move forward with bold measures to protect American families from the increasing threat of climate disruption."

John Walke, senior attorney for the Natural Resources Defense Council, told Mother Jones that the high court's limit to one question "means that EPA's legal and scientific findings that greenhouse gases harm health and the climate remains the law of the land." Walke also said the permitting program "is not necessary to establish or enforce" greenhouse gas emission standards for power plants, like those proposed in September that are a signature product of new EPA administrator Gina McCarthy."

For more information about the Clean Air Act, visit http://www.epa.gov/air/caa/index.html. For more information about the Supreme Court, see http://www.supremecourt.gov.