Supreme Court Case Gives Fossil Fuel Industry A Chance To Throw A Wrench Into EPA’s Carbon Rules

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“The future is what people are worried about the most,” lawyer Richard Faulk of Hollingsworth LLP, told the Wall Street Journal about Monday’s Supreme Court hearing regarding the EPA’s permitting program that regulates large stationary sources of greenhouse gases. Faulk was speaking on behalf of the challengers to the EPA’s efforts who are worried that applying the Clean Air Act to GHGs would lead to regulatory overreach involving the added inclusion hundreds of thousands of new sources including commercial buildings and small businesses. However, his words could be easily adopted by those promoting the regulations as an effort to prevent runaway GHGs from trapping more heat, causing additional devastating climate change.

The Supreme Court won’t be addressing the EPA’s fundamental authority to regulate GHGs, which was decided in the landmark Massachusetts v. EPA case seven years ago, but rather the agency’s authority to require only large industrial sources to obtain Clean Air Act permits for their GHGs. This case revolves around arguments on whether the EPA’s GHG standards for vehicles necessarily trigger similar permitting requirements for large stationary sources under the Clean Air Act. It is separate from the Supreme Court case considering EPA rules that limit power-plant emissions crossing state lines. Decisions in both cases are expected by July.

The arguments for this question were brought on by six separate petitions from industry and a group of 12 states, including Texas and Michigan, that said in a court brief that the EPA’s permit rule “is one of the most brazen power grabs ever attempted by an administrative agency.”

By deciding to hear this case and not other petitions, including ones calling into question the EPA’s ability to regulate GHGs as a danger to public health, the Court limited the issue to whether the agency “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 greenhouses gases.”

In the 2010 case American Electric Power v. Connecticut the Court unanimously upheld the EPA’s “Endangerment Finding” that GHGs threaten public health.

“After the Obama administration’s push for legislation to create a national cap-and-trade program failed, the EPA used the Clean Air Act to regulate GHG emissions from motor vehicles and large stationary sources,” writes Robert Percival, Director of the Environmental Law Program at the University of Maryland Francis King Carey School of Law, of the current situation. “This triggered the mother of all legal battles in the D.C. Circuit, which culminated in that court rejecting all challenges to the EPA’s actions:

“But those who anticipated an epic environmental battle in the Supreme Court had their hopes dashed when the Court granted cert. on a single, narrow question. Thus, the greenhouse gas cases come before the Court not as a war over whether GHG emissions should be regulated by the EPA, but as a narrower skirmish over what permitting requirements apply to stationary sources of them.

According to Percival, the most controversial part of the EPA’s stationary source permitting regulations, which have been in place for several years, is the agency’s decision to apply the standards only to the very largest emitters. Called the “Tailoring Rule”, this allows the EPA the require permits only for sources whose GHG emissions exceed 75,000 or 100,000 tons per year rather than the CAA statutory threshold of 100 and 250 tons per year for any particular pollutant covered by the PSD and Title V permit programs — Clean Air Act Section 169(1) requires stationary sources with emissions greater than 250 tons per year to obtain prevention of significant deterioration permits, and sources with emissions greater than 100 tons per year are required to obtain Title V operating permits.

Without this exception, the permitting program would be overwhelmed by an EPA-estimated additional 81,000 PSD permits and 6.1 million Title V permits. By employing the tailoring rule the EPA is able to reduce regulatory burden while still permitting sources responsible for 86 percent of GHG emissions from stationary sources.

“The heart of the industry petitioners’ case is the argument that stationary sources of GHGs cannot be regulated under the CAA because the EPA has only regulated the largest sources of them,” writes Percival. He believes that if the EPA loses the upcoming case it could result in a more burdensome regulatory program in which the EPA used its Endangerment Finding to set a National Ambient Air Quality Standard for GHGs that would require every state to develop an individual plan to meet the standard. “But because the harm GHGs do is global, it can be addressed in a less burdensome fashion, as the EPA has sought to do,” he concludes.

While the EPA is not in danger of losing regulatory control over GHGs, the case could have larger political implications as it comes amid President Obama’s recent executive efforts to address climate change as Congress stalls on all fronts. A loss in the case would give Republicans a critical moment to further pound away at their main talking point of the Administration overreaching its executive authority.

“It is far more important as a matter of optics than of actual legal consequences,” Amanda C. Leiter, a law professor at American University, told the New York Times. A loss “would be painted as another situation in which the Obama administration has overreached against the public will.”

Industry ire and political jockeying to make the EPA out as a regulatory behemoth intent on causing economic harm seems misdirected when the agency made an effort to be candid and called out the “absurd results” that implementing the CAA in a straightforward manner would lead to.

“What EPA did with the tailoring rule is to come up with a way to catch the biggest sources of greenhouse gas emissions for permitting,” David Doniger, policy director for the climate and clean air program at the Natural Resources Defense Council told the ABA Journal. “There’s not a single hospital, school, apartment building or hot dog stand that’s been forced to do anything.”