Efforts by the U.S. Environmental Protection Agency (EPA) to regulate greenhouse gas emissions just cleared a significant hurdle through a recent U.S. Supreme Court decision, which appears to give the agency a green light to move forward with its development of a regulatory regime concerning utility power plant greenhouse gas emissions. In Utility Air Regulatory Group v. EPA,1 the U.S. Supreme Court did not give the EPA a free pass to regulate greenhouse gas sources at will, but took a somewhat measured approach that utilizes the current reach of the agency's jurisdiction.
The Court decided two core questions. The first involved the EPA's contention that under the Clean Air Act (the "Act"), it may regulate a source of greenhouse gases solely due to the potential of that source to emit greenhouse gases. The second focused on EPA's assertion that it could regulate greenhouse gas emissions only after the source of those greenhouse gas emissions qualified for regulation under the Act's provisions relating to Prevention of Significant Deterioration (PSD) and the Title V permitting regime. The Court could not countenance the first, but found merit in the second. With respect to the first question, the Court found that EPA's assertion of authority over greenhouse gas sources simply due to a potential to emit was inconsistent with EPA's prior usage of the term "air pollutant." Furthermore, the Court rejected EPA's efforts to tailor, or revise, the regulatory pollutant thresholds set forth in the Act so that those thresholds appeared reasonable when viewed in the context of greenhouse gas emissions.
In contrast, the Court found that the second scenario presented a course that is consistent with the provisions of the Act, albeit one with some flexibility. Under the PSD program, once a source is determined to be subject to PSD, the source then "must comply with emissions limitations that reflect the 'best available control technology' or (BACT) for 'each pollutant subject to regulation under' the Act."2 Under EPA's approach, a source that becomes subject to PSD would also be subject to EPA's greenhouse gas permitting process and BACT requirements. The Court endorsed this application of BACT, noting that such application will not "extend EPA jurisdiction over millions of previously unregulated entities, but [is] moderately increasing the demands EPA (or a state permitting authority) can make of entities already subject to its regulation."3
While the full impact of the Court's findings has not yet been realized, it appears that the opinion has paved the way for EPA to move forward with its recently proposed "Clean Power Plan," which was unveiled by EPA on June 2, 2014.4 The Clean Power Plan proposes greenhouse gas emissions regulations for existing power plants—a first by EPA. The proposed regulations, according to EPA, are designed to provide significant flexibility to the states in their efforts to carry out the proposed regulations:
The Clean Power Plan will be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program. The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans.5
The Clean Power Plan, which is still in the proposal stage, is open to public comment until October 16, 2014. EPA also will conduct four public hearings on the proposal at the end of July.