On Monday, June 22, the U.S. Supreme Court issued a much anticipated decision in Utility Air Regulatory Group v. Environmental Protection Agency (slip opinion) where it  affirmed EPA’s authority to impose limits for greenhouse gas (GHG) emissions by major emissions sources that are otherwise required to have a Clean Air Act permit for conventional pollutants.  At the same time, the Court rejected the Agency’s assertion that it has the authority to impose GHG emission limits on facilities independent of any other obligation those facilities may have to obtain permits.  Thus, EPA (and the States) may impose GHG limits in permits required by rules intended to Prevent Significant Deterioration (PSD) of air quality, but the Agency cannot require permits based solely on GHG emissions or for facilities that do not have other emissions above threshold levels.

Several years ago, the Supreme Court provided a method for regulating greenhouse gases  under the Clean Air Act (CAA). Massachusetts v. Environmental Protection Agency. (2007) (slip opinion). That decision provided that the Agency can classify greenhouse gases as air pollutants and regulate them if it made a determination that they constitute a danger to human health or the environment.  EPA subsequently made such an endangerment finding and then proceeded with the rulemaking challenged by the Utility Air Regulatory Group and others.  The basic issue in the recent case centered on the fact that the CAA contains very specific thresholds that trigger permitting obligations for air pollutants, those being either one hundred (100) tons per year or two hundred fifty (250) tons per year depending on the type of industry.  Since greenhouse gases are emitted in volumes much larger than the criteria pollutants regulated under the CAA (commonly: carbon monoxide, sulfur dioxide, oxides of nitrogen, ozone, lead and particulate matter), the use of such comparatively low statutory numbers would impose regulatory obligations on millions of sources that are not currently required to have permits.  Thus, EPA sought to impose much higher permit trigger thresholds for GHG in a process it called tailoring.  The Court rejected the tailoring concept outright.  However, it held that the Agency could accomplish essentially the same purpose by limiting the regulation of greenhouse gases to facilities that would be required to obtain a permit under the PSD program anyway.  Thus, EPA effectively ended up with a comparable regulatory field, but with the Court using a much different method.

A number of questions remain with respect to this approach, and EPA will have to provide some guidance or instruction about its interpretation of the decision and its authorities going forward.  Perhaps the most significant of these questions is the thresholds at which greenhouse gases will be regulated under the PSD program.  Currently, there is disagreement about whether the thresholds established in EPA’s disapproved tailoring rule remain effective for application to PSD permits, or whether EPA must repromulgate those or new thresholds.  While EPA is expected to provide guidance on this in the near future, the contention surrounding greenhouse gas regulation would indicate that this aspect of the requirements is also likely to face significant challenges.