U.S. Supreme Court to Address the Scope of Stationary Source Permitting Requirements in Review of EPA’s Greenhouse Gas Regulations

October 16, 2013

On October 15, 2013, the U.S. Supreme Court granted certiorari to address whether the United States Environmental Protection Agency permissibly determined that its regulation of greenhouse gas (“GHG”) emissions from new motor vehicles under Title II of the Clean Air Act triggered permitting requirements under the Act for stationary sources that emit GHGs.  In granting review on this limited question, the Court left untouched EPA’s determination under Section 202(a) of the Act that emissions of GHGs from new motor vehicles contribute to air pollution that “may reasonably be anticipated to endanger public health or welfare,” as well as the Agency’s promulgation of standards limiting motor vehicle GHG emissions.

A.        EPA’s Regulation of Greenhouse Gas Emissions

In Massachusetts v. EPA,[1] the Supreme Court held that GHGs such as carbon dioxide are pollutants that may be regulated under the Clean Air Act if EPA makes an “endangerment finding.”  The Court further held that “[i]f EPA makes a finding of endangerment” under Section 202(a), a provision that applies only to motor vehicles, “the Clean Air Act requires the Agency to regulate emissions of the deleterious pollutant from new motor vehicles.”[2]

In the wake of that decision, EPA published a number of interrelated findings and rules concerning GHG emissions.  First, in December 2009 EPA made an Endangerment Finding under Section 202(a), concluding that “elevated concentrations of greenhouse gases in the atmosphere may reasonably be anticipated to endanger the public health and … welfare,” and that “emissions of … greenhouses gases from new motor vehicles contribute to th[at] air pollution.”[3]  In light of that Endangerment Finding, EPA subsequently issued the “Tailpipe Rule” establishing jointly with the National Highway Traffic Safety Administration coordinated fuel economy and GHG emission standards for light duty vehicles.[4]

EPA’s proposal to promulgate the Tailpipe Rule raised the question of whether stationary sources would automatically be subject to GHG emission regulations under other provisions of the Clean Air Act.  Addressing this question, EPA issued the “Timing Rule”[5] in April 2010 in which it determined that regulating vehicular GHG emissions under Section 202 triggers two stationary-source permit programs under the Act—Prevention of Significant Deterioration (“PSD”)[6], and Title V permitting.[7]

The Clean Air Act’s PSD provisions apply to any “major emitting facility,” which is defined in the statute as a facility that emits (or has the potential to emit) at least 250 tons per year (“tpy”) of “any air pollutant,” or at least 100 tpy of “any air pollutant” if the facility is within certain, statutorily enumerated industrial source categories.[8]  Title V applies to any “major stationary source,” that has the potential to emit at least 100 tpy of “any air pollutant.”[9]  EPA found that applying these statutory thresholds to CO2, however, would sweep tens of thousands of sources into the PSD and Title V permitting programs for the first time and at a cost of billions of dollars.  In order to avoid this “absurd” result, EPA issued the separate “Tailoring Rule” which revised upwards the statute’s numerical permitting thresholds for stationary-source GHG emissions.[10]

B.        The Supreme Court Granted Certiorari on a Limited Issue Raised by Challengers of EPA’s Rulemaking

All aspects of EPA’s GHG rulemaking were challenged in the D.C. Circuit Court of Appeals by several coalitions of states, industry trade associations and public interest groups.  These challenges raised three broad issues: (1) the scientific basis for EPA’s Endangerment Finding, (2) the legal bases for the Timing Rule and the Tailoring Rule, (3) and EPA’s decision to promulgate motor-vehicle emission standards under Section 202(a) despite the Agency’s conclusion that doing so would trigger costly stationary-source regulation.  The D.C. Circuit rejected the petitioners’ challenges and upheld all aspects of EPA’s GHG rulemaking.[11]

After the D.C. Circuit denied rehearing en banc, nine separate petitions for writ of certiorari were filed in the Supreme Court seeking review of various aspects of EPA’s GHG rulemaking and the D.C. Circuit’s decision.  These petitions similarly presented multiple questions concerning EPA’s GHG rulemaking for the Supreme Court to review.  The Supreme Court denied certiorari of those petitions that sought only to overturn EPA’s Endangerment Finding or to question the Agency’s failure to reconsider its Endangerment Finding,[12] or that challenged only the legal sufficiency of the Tailpipe Rule.[13]  At the same time, the Court granted certiorari of those petitions that challenged EPA’s determinations concerning stationary source regulation.  However, as those petitions presented several questions for review concerning EPA’s rulemaking, the Supreme Court’s order granting certiorari states that

[t]he petitions for writs of certiorari are granted limited to the following 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.”

Thus, the Supreme Court has explicitly declined to review EPA’s Endangerment Finding or the authority of the Agency to promulgate motor vehicle GHG regulations under Section 202(a) of the Clean Air Act.

C.        The Supreme Court Will Address the Scope of the Permitting Requirements Found in Title V and the PSD Provisions of The Clean Air Act

The question on which the Supreme Court accepted certiorari relates to the scope of the permitting requirements found in Title V and the PSD provisions of the Clean Air Act.  In the Timing Rule and the Tailoring Rule, EPA adhered to its longstanding reading of the Clean Air Act—dating back to 1980—that a facility is subject to PSD permitting requirements if it emits at least 250 tons per year (or 100 tons per year for certain sources) of any pollutant regulated under any provision of the Act.[14]  The Timing Rule extended this reading to Title V.[15]  Petitioners before both the D.C. Circuit and the Supreme Court have argued that this interpretation is incorrect, and that the “trigger” for stationary source regulation under these sections of the Clean Air Act should be limited to pollutants for which EPA has promulgated a National Ambient Air Quality Standard (“NAAQS”).   Two subtly different theories have been offered to support this contention.

1.  Some of the petitioners focus on the PSD program’s definition of “major emitting facility” found at 42 U.S.C. § 7479(1), and argue that the term “air pollutant” in that definition should be given a narrower interpretation to cover just the six NAAQS pollutants, and thereby avoid the “absurdity” EPA found would result by applying it to greenhouse gases.[16]  That definition, the argument goes, should be read in conjunction with the overall purpose of the PSD program, which is to prevent a degradation of air quality in regions of the nation that are already in attainment with the NAAQS.  Construing the term “air pollutant” in the PSD provisions to include GHGs would not further that purpose.  Consequently, the petitions urge the Supreme Court to “hold that EPA’s authority to regulate ‘air pollutant[s]’ under the PSD and Title V programs extends only to the pollutants for which EPA has established NAAQS under 42 U.S.C. § 7407.”[17]  Judge Kavanaugh, who dissented from the D.C. Circuit’s denial of rehearing en banc in Coalition for Responsible Regulation v. EPA,[18] agreed with this argument, as he concluded that even though “[g]reenhouse gases may qualify as ‘air pollutants’ in the abstract, . . . context tells us that the Prevention of Significant Deterioration program uses the term ‘air pollutant’ to refer only to a subset of all air pollutants (namely, the NAAQS pollutants).”[19]

2.  Alternatively, another petition focuses on the PSD program’s preconstruction requirements found at 42 U.S.C. § 7475(a), which applies to any “major emitting facility … in an[ ] area to which this part [the PSD program] applies.”[20]  This petition contends that the phrase “to which this part applies” means that PSD permitting applies only where a facility is emitting threshold quantities of a NAAQS pollutant for which the area is in attainment, and since carbon dioxide is not a NAAQS pollutant, the emission of that compound cannot trigger the PSD permitting requirements found in 42 U.S.C. § 7475(a).

All of these petitioners challenging EPA’s stationary source regulation argue that construing the PSD and Title V provisions of the Clean Air Act as not applying to GHGs is necessary to avoid what EPA itself found to be an “absurd result”—i.e., applying the low statutory thresholds to carbon dioxide which would sweep tens of thousands of new sources into these programs, thus requiring the Agency to issue the “Tailoring Rule” to rewrite those thresholds.  As Judge Kavanaugh noted in his dissent:

When an agency is faced with two initially plausible readings of a statutory term, but it turns out that one reading would cause absurd results, I am aware of no precedent that suggests the agency can still choose the absurd reading and then start rewriting other perfectly clear portions of the statute to try to make it all work out.[21]

By accepting certiorari, the Supreme Court will address whether EPA improperly did exactly what Judge Kavanaugh claims when it concluded that its regulation of GHG emissions from motor vehicles automatically triggers all Clean Air Act stationary source permitting requirements.

   [1]   Massachusetts v. EPA, 549 U.S. 497 (2007).

   [2]   Id. at 533.

   [3]   Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496, 66,516, 66,537 (Dec. 15, 2009).

   [4]   Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. 25,324 (May 7, 2010).

   [5]   Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004 (Apr. 2, 2010).

   [6]   42 U.S.C. § 7470 et seq.

   [7]   Id. § 7661 et seq.

   [8]   42 U.S.C. § 7479(1).

   [9]   Id. §§ 7602(j), 7661a(a).

  [10]   Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31,514 (June 3, 2010).

  [11]   Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102 (D.C. Cir. 2012).

  [12]   Virginia v. EPA, Case No. 12-1152; Pacific Legal Foundation v. EPA, Case No. 12-1153.

  [13]   Coalition for Responsible Regulation, Inc. v. EPA, Case No. 12-1253.

  [14]   Requirements for Preparation, Adoption, and Submittal of Implementation Plans; Approval and Promulgation of Implementation Plans, 45 Fed. Reg. 52676 (Aug. 7, 1980).  In the Timing Rule, EPA found that a pollutant is “subject to regulation” under the Clean Air Act when it is subject to emission limitations, as opposed to some other form of regulation such as reporting requirements.  75 Fed. Reg. at 17,005-17,007 and 12,022-17,023.

  [15]   75 Fed. Reg. at 17,022-17,023.

  [16]   See, e.g., Petition for Writ of Certiorari in Chamber of Commerce v. EPA, Case No. 12-1272 at 28-29.

  [17]   See Petition for Writ of Certiorari in Texas v. EPA, Case No. 12-1269 at 30.  As an alternative, the State of Texas argued that the Supreme Court could “remand the Tailpipe Rule on account of EPA’s failure to consider how its decision to regulate mobile-source greenhouse-gas emissions would trigger an obligation to regulate greenhouse-gas emissions from stationary sources under EPA’s construction of the Clean Air Act.”  Id. at 30-31 (emphases omitted).  However, given the narrow question presented, the Court appears to have rejected that alternative approach.

  [18]   Coalition for Responsible Regulation, Inc., 2012 WL 6621785 at 14-18 (D.C. Cir. Dec. 20, 2012)

  [19]   Id. at *19.

  [20]   See Petition for Writ of Certiorari in American Chemistry Council v. EPA, Case No. 12-1248 at 21.

  [21]   Coalition for Responsible Regulation, Inc., 2012 WL 6621785 at *16.

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