Supreme Court to Weigh Power Plant GHG Regulation Question

The U.S. Supreme Court has agreed to hear a narrow challenge to the Environmental Protection Agency’s (EPA’s) authority to regulate greenhouse gas (GHG) emissions from stationary sources, including power plants.

In a mixed bag for groups fighting the EPA’s GHG regulation, the high court on Tuesday accepted for review six petitions—which were consolidated for oral argument—but said it would consider only a single 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.” It notably declined to revisit its landmark 2007 decision in Massachusetts v. EPA.

In that case, the court ordered the EPA to determine, with the best available science, whether GHGs endangered public health and welfare. In December 2009, the EPA formally made its endangerment finding, declaring that six GHGs—including carbon dioxide—pose health and welfare threats. Later it issued the “Tailpipe Rule” under Title II of the Clean Air Act, which set emission standards for cars and light trucks, and finally, it determined that the Clean Air Act requires major stationary sources of GHGs to obtain construction and operating permits. The agency issued the “Timing” and “Tailoring” rules to mitigate the overwhelming permitting burdens on permitting authorities, but in those rules, it determined that major stationary emitters of GHGs—such as power plants—would be subject to the Clean Air Act’s Title I prevention of significant deterioration (PSD) and Title V permitting programs on January 2011

Industry railed against this finding and sued the EPA, arguing that the rules were based on improper constructions of the Clean Air Act and were “arbitrary and capricious.” They would also impose burdensome regulations that would deeply affect the economy, they claimed.

In June 2012, however, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit dismissed that case, ruling that the EPA was “unambiguously correct” in its interpretation of the Clean Air Act to regulate carbon dioxide, and that the endangerment finding and its decision to set limits for industrial and automotive emissions of GHGs, was “neither arbitrary nor capricious.”

Amid the deluge of reactions to the court’s intent to hear the GHG case, some experts said its outcome should not affect the EPA’s current efforts to limit carbon dioxide from new power plants under the New Source Pollution Standards (NSPS) proposed Sept. 20, because those standards are based on a separate section of the Clean Air Act. “The core components of the president’s Climate Action Plan should therefore remain intact, regardless of how the Supreme Court resolves this case,” said Jonas Monast, the director of the Nicholas Institute for Environmental Policy Solutions Climate and Energy Program at Duke University.

The petitions granted certiorari by the high court on Tuesday raise a number of issues, including the basic question of whether the EPA had justified its so-called “endangerment finding” that GHG emissions harm public health and welfare. The court rejected that appeal, prompting a number of experts from a “free-market” think tank to declare that the “court missed an opportunity to examine the underlying science of the man-made global warming hypothesis.” Joseph D’Aleo, policy advisor to the Heartland Institute, noted that the EPA’s own Office of Inspector General concluded in a 2009 report that the EPA’s endangerment finding did not comply fully with applicable peer review requirements.

The court’s consideration of the case is significant because it will allow the court its first opportunity to examine the EPA’s actions regulating GHGs under the Clean Air Act in the wake of Massachusetts, noted industry lawyers. “Moreover, a decision reversing the D.C. Circuit’s decision could have significant deregulatory effects by eliminating consideration of greenhouse gas emissions for some or all major sources in the Clean Air Act’s prevention of significant deterioration program,” said Mark Delaquil of law firm BakerHostetler.

Environmental groups, however, hailed the decision not to revisit the Massachusetts case. “The Court’s action clears the way for EPA to move forward on carbon pollution standards for power plants, the centerpiece of the President’s climate plan,” Michael Brune, executive director of the Sierra Club said in a statement.

The court broadened its review of a question posed by the Utility Air Regulatory Group (UARG), a coalition of energy companies and organizations, which asked that the court not revisit its holding in Massachusetts, but rather address whether that decision obligated the EPA to regulate GHGs under the Title I PSD program and the Title V operating permit program, which address regulatory requirements that are “fundamentally different” from other Clean Air Act programs, including the mobile sources.

The group says that the EPA “freely acknowledges” that regulation of carbon dioxide emissions under the Title I and Title V permitting programs subjects “an extraordinarily large number of sources” to the Act for the first time—even though Congress explicitly intended for the Act to cover only a limited number of large industrial facilities.

Petitions granted on Tuesday include Utility Air Regulatory Group v. EPAAmerican Chemistry Council v. EPAEnergy-Intensive Manufacturers Working Group on Greenhouse Gas Regulation v. EPASoutheastern Legal Foundation v. EPA,Texas v. Environmental Protection Agency, and Chamber of Commerce of the United States v. EPA. The court, however, rejected three petitions (including one by the EPA) on the agency’s authority to decide on the need to issue a permit for transfers of water from one waterway to another.

The matter is expected to be set for the court’s spring 2014 calendar.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)