Supreme Court Could Clarify EPA Authority to Regulate  Carbon Pollution

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Photographer: David McNew/Getty Images

Heat waves emanate from the exhaust pipe of a city transit bus on April 25, 2013 in Los Angeles.

Bloomberg BNA – The U.S. Supreme Court won't address the Environmental Protection Agency's fundamental authority to regulate greenhouse gases during oral arguments Feb. 24, but lawsuits challenging the permitting requirements could provide an opportunity for the court to clarify the agency's authority.

The Supreme Court will hear challenges from some states and industry groups opposed to the EPA's requirement that large industrial sources obtain Clean Air Act permits for their greenhouse gas emissions.

The permitting program is the only regulation at issue, and the Supreme Court's decision isn't expected to undermine the EPA's overall authority to regulate greenhouse gases or its upcoming carbon dioxide regulations for power plants.

Possible Guidance for Agencies

However, attorneys said the lawsuit could provide an opportunity for the court to issue new guidance to federal agencies on how they should interpret federal statutes.

Industry groups opposed to the permitting program have argued that the EPA ignored alternate interpretations of the Clean Air Act's permitting provisions that would have been less onerous.

Environmental advocates said the permitting programs are an important stopgap measure until the EPA can issue sector-specific regulations for greenhouse gas emissions. The permitting programs also are expected to drive the development of the control technologies necessary to reduce greenhouse gas emissions, they said.

“This case is important for greenhouse gas control because the application of the [best available control technology] analysis is likely to spur the development of technology that will help us across a wide variety of source types reduce emissions,” Sean Donahue, an attorney representing the Environmental Defense Fund in the lawsuit, told reporters Feb.18.

Statutory Interpretation

The Supreme Court will only hear arguments on whether the EPA's greenhouse gas standards for vehicles necessarily trigger similar permitting requirements for large stationary sources under the Clean Air Act. The court has rejected challenges to the agency's fundamental determination that greenhouse gas emissions endanger public health and the environment and should be regulated.

However, the Supreme Court's decision could offer new guidance on how much latitude federal agencies are due when interpreting statutes.

The EPA has argued that it is compelled by the Clean Air Act to require prevention of significant deterioration and Title V operating permits for greenhouse gas emissions. But the agency determined the emissions thresholds stipulated in the Clean Air Act would require millions of small sources to obtain permits, overwhelming state and local permitting authorities.

Environmental groups are painting the Supreme Court's decision to limit argument only to permitting issues as a win for the EPA because the agency's fundamental authority to regulate greenhouse gases under the Clean Air Act isn't at issue.

Industry groups have argued that the permitting requirements are burdensome without achieving significant emissions reductions.

Program Costs

“In terms of the cost of these programs, there are a lot of facilities being held over their CO2 emissions now,” Jeffrey Holmstead, a partner at Bracewell & Giuiliani LLP who represents industry clients, told Bloomberg BNA. Holmstead is not a participant in the lawsuits.

Clean Air Act Section 169(1) requires stationary sources with emissions greater than 250 tons per year to obtain prevention of significant deterioration permits. Sources with emissions greater than 100 tons per year are required to obtain Title V operating permits.

Instead, the EPA's tailoring rule limits prevention of significant deterioration and Title V greenhouse gas permitting to new sources that emit more than 100,000 tons per year of carbon dioxide-equivalent and modified sources that increase their emissions by more than 75,000 tons per year.

States and industry groups challenging the EPA argue that the agency could have adopted other reasonable interpretations of the Clean Air Act that would have exempted greenhouse gases from

the permitting program and avoided the need to deviate from the statutory emissions thresholds.

The EPA has defended its decision to require large stationary sources to obtain prevention of significant deterioration and Title V permits for their greenhouse gas emissions as consistent with its long-standing interpretation of the Clean Air Act. The agency argues that industrials sources are required to obtain permits for emissions of “any pollutant” regulated under the act and not just those subject to national ambient air quality standards (NAAQS), as some challengers have argued.

Plain Text of Air Act

The EPA's argument that it was compelled to permit greenhouse gas emissions by the plain text of the Clean Air Act is intended to persuade the Supreme Court justices who had originally opposed such regulation, attorneys said.

“The case has got some very odd—potentially—pulls and counter-pulls on some of the justices,” David Doniger, policy director of the Natural Resources Defense Council's Climate Center, told Bloomberg BNA. The Natural Resources Defense Council is supporting the EPA in the lawsuit.

While some justices such as Antonin Scalia dissented in the 2007 Massachusetts v. EPA decision that determined that greenhouse gases are air pollutants for purposes of the Clean Air Act, the EPA has relied on textualist arguments to defend its permitting program that Scalia and others may find persuasive, Doniger said.

Scalia recently reiterated his textualist approach to interpreting law in the Jan. 27 decision in Burrage v. United States, Doniger said.

“But in the last analysis, these always-fascinating policy discussions are beside the point. The role of this Court is to apply the statute as it is written—even if we think some other approach might” be preferable, Scalia wrote in that opinion.

Doniger said that same reasoning should apply to the EPA's interpretation of the Clean Air Act's permitting requirements.

“The statute is very clear,” he said. “Each pollutant subject to regulation is as inclusive as you can get.”

Permitting, Air Quality

Industry groups, including the Utility Air Regulatory Group, have argued that prevention of significant permitting should only apply to those pollutants shown to degrade air quality, which would exclude greenhouse gases

“Further, whatever ‘endangerment' carbon dioxide may present due to the effects of global climate change, carbon dioxide does not deteriorate ambient air quality—the quality of the air people breathe,” the Utility Air Regulatory Group argued in its brief. “The [Clean Air Act's] PSD provisions address exclusively the review, analysis, monitoring and control of ‘air pollutants' that deteriorate ambient air quality in specifically defined geographic areas. Carbon dioxide does not fit within these provisions.”

Holmstead said that the Utility Air Regulatory Group's argument “probably has the best chance of prevailing” among those offered by petitioners.

Not all utilities have opposed the EPA's greenhouse gas permitting regulations. Calpine, which filed an amicus brief in support of the EPA, said it has obtained six prevention of significant deterioration permits for its energy projects and didn't find the process to be particularly onerous.

Calpine's Experience

“First, in Calpine's experience, complying with the procedural requirements of the PSD program for GHGs has not resulted in the insurmountable burdens or excessive delays for applicants predicted by the rule's critics,” the company said. “Rather than the drastic revolution critics suggest, application of the PSD review process to GHGs represents a natural evolution of the program.”

The American Chemistry Council in its brief had argued that only industrial facilities that would already be required to obtain prevention of significant deterioration permits for emissions of pollutants subject to national ambient air quality standards (NAAQS) should have their greenhouse gas emissions regulated.

“Nowhere does the legislative record indicate that PSD permitting obligations would be triggered also by sources of non-NAAQS pollutants, such as smaller commercial and residential facilities,” the industry group argued. “Quite the contrary, Congress recognized that requiring these facilities to comply with these obligations would be ‘costly' and ‘unreasonable.' ”

Limiting greenhouse gas permitting to only those sources, sometimes called “anyway sources” because they would be subject to prevention of significant deterioration requirements anyway, could provide an attractive middle ground option for the justices to decide the case, attorneys said.

‘Soft Landing'

Jody Freeman, director of the Environmental Law Program at Harvard Law School and former White House counselor for energy and climate change, said that approach “doesn't lose EPA that much.”

“It would be what we might call a soft landing. From EPA's perspective that would be a very manageable place to be,” she told Bloomberg BNA.

Judge Brett Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit made a similar argument in his dissent after that court voted not to rehear challenges to the EPA's greenhouse gas regulations in 2012.

In his dissent, Kavanaugh argued that only pollutants subject to a national ambient air quality standard could trigger the permitting requirements. But once industrial sources have reached that emissions threshold, they are required to obtain permits for all of their emissions, which would also include greenhouse gases.

Open to Argument

The EPA in its brief dismissed that interpretation as “self-evidently crafted to produce a particular result in a particular case, rather than to promote the sound long-term administration of the PSD program.”

However, attorneys said that the EPA's brief did seem to indicate the agency would prefer for the court to limit the permitting trigger to criteria air pollutants rather than exclude greenhouse gases from the permitting program entirely.

“EPA almost seems to be inviting the court to adopt that interpretation,” Holmstead said.

While limiting greenhouse gas permitting to only those sources already subject to prevention of significant deterioration might offer a pragmatic course for the Supreme Court to resolve the lawsuit, Freeman said that interpretation is “a bit of a strain of the natural reading of the term ‘any pollutant' ” under the Clean Air Act.

Limiting the permitting requirements to only pollutants subject to air quality standards also would exclude pollutants such as fluorides and hydrogen sulfide from regulation, the American Thoracic Society said in an amicus brief in support of the EPA.

“Adopting [the American Chemistry Council's] proposal would, therefore, do much more than simply carve GHGs out of the PSD program; it would hobble EPA in its effort to follow the Clean Air Act's mandate to ‘protect public health and welfare from any actual or potential adverse effect,' ” the American Thoracic Society said.

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