Two cases are being closely watched for their implications regarding regulation of greenhouse gases under the Act. 

Since the U.S. Supreme Court ruled that greenhouse gases such as carbon dioxide fit within the definition of “air pollutant” under the Clean Air Act (“Act”), the U.S. Environmental Protection Agency (“USEPA”) has been required to determine whether the conditions for regulating greenhouse gases under the Act have been met. USEPA must now decide whether, in its judgment, greenhouse gases cause or contribute to air pollution “which may reasonably be anticipated to endanger public health or welfare.”

To make this determination and receive public comment on its implications, the USEPA recently published a lengthy advanced notice of proposed rulemaking, discussing program-by-program the implications and difficult issues that would need to be resolved if greenhouse gases were to become “regulated” air pollutants under the Act.

While USEPA determines how to respond to the remand from the Court, case-by-case challenges to power plant permits have continued to multiply. The litigants claim that the Supreme Court’s ruling makes greenhouse gases “subject to regulation under the Act,” even though USEPA has not yet made its “endangerment” determination, and has consistently stated that it does not view greenhouse gases as yet “subject to regulation” under the Act. USEPA’s decision will be momentous. The way the Act is structured, there are multiple references within the statute and its implementing regulations which apply most programs to any pollutant “subject to regulation” under the Act. As a result, the USEPA’s decision will have impacts far beyond setting the new motor vehicle standards at issue in Massachusetts v. USEPA.

Two cases are being closely watched for their implications regarding regulation of greenhouse gases under the Act. In a state lower court decision, Friends of the Chattahoochee, Inc. v. Georgia Department of Natural Resources, a superior court judge ruled, based on Massachusetts, that the Supreme Court’s ruling directly made greenhouse gases “subject to regulation” under the Act. In rejecting the two-step approach that was referenced by the Court, the judge ruled that if greenhouse gases are “air pollutants,” then they are “subject to regulation” under the Act, even if they are not currently being regulated under any standard. The judge then found that the Act’s New Source Review (“NSR”) restrictions apply to carbon dioxide (“CO2”) emissions from a proposed coal-fired power plant, and remanded the case for a best available control technology (“BACT”) analysis and an analysis of the impact of the proposed plant on attainment of the National Ambient Air Quality Standard for fine particles.

Similarly, the judge rejected the long-held policy of USEPA that in considering BACT for an emission facility, the regulatory agency cannot “redefine the source.” That is, the NSR program has long been implemented under the policy that, while the permitting authority could require the use of BACT, the BACT technology chosen could not require that the applicant change what the planned facility is. In recent years, there has been substantial litigation about whether an applicant who proposes a pulverized coal-fired power plant must consider instead constructing an integrated gasification combined cycle plant, if that plant would have lower air emissions. In the Georgia case, the judge defined the project very generally, as a project to consume coal to produce electricity, and determined that IGCC technology had to be evaluated as potential BACT for the facility.

A second case which is being closely watched concerns a proposal by six electric cooperatives that run the Bonanza generator on an Indian reservation in Utah to add a new 110 megawatt coal-fired unit to the facility. After the USEPA issued a permit for the facility, the Sierra Club petitioned the federal Environmental Appeals Board (“EAB”) for review, arguing that the USEPA Regional Office failed to require a BACT emission limit for CO2. The EAB recently required USEPA to brief the issue of whether a CO2 monitoring requirement that was part of the 1990 Amendments to the Act is enforceable (presumably to determine whether CO2 is “subject to regulation” under the Act). Additionally, the USEPA has informed the EAB of its recent approval of a Delaware State Implementation Plan (“SIP”) amendment to meet the standards for ozone and fine particles, but which also included CO2 limits for diesel generators. This raises the potential that a federally-approved SIP that contains a limitation on CO2 might cause CO2 to be found to be “subject to regulation” under the Act. The fact that a regional SIP decision has become notable in a decision on a different source type half-way across the country illustrates the extensively interlocking nature of the Act’s programs through their references to pollutants “subject to regulation” under the Act.

Advocates are potentially one court victory away from superseding the USEPA’s deliberative processes and succeeding in a claim that greenhouse gases are subject to regulation under the Act. These cases need to watched closely as coal-fired power plant projects are developed, and the issue will be raised in litigation to challenge the air emission permits that are ultimately issued.