SCOTUS Strikes Down GHG Tailoring Rule

(Federal GHG regulations, Litigation) Permanent link
On Monday, the U.S. Supreme Court decided Utility Air Regulatory Group v. Environmental Protection Agency (UARG v. EPA).* The narrow issue in UARG was EPA’s determination that its regulation of greenhouse gas (GHG) emissions from motor vehicles compelled regulation of GHGs from large stationary sources under the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Title V programs. The Court also decided whether EPA could change the statutory emission thresholds to trigger regulation under these programs.

On the first issue, the Court held that the Act “neither compels nor permits EPA to adopt an interpretation of the Act requiring a source to obtain a PSD or Title V permit on the sole basis of its potential greenhouse-gas emissions.” The Court thus rejected EPA’s position that greenhouse gases must be regulated as air pollutants under the PSD and Title V programs. Instead, the Court said that the PSD and Title V permitting requirements only apply to pollutants emitted in quantities that enable EPA to regulate them at the statutory thresholds, not pollutants such as GHGs that are emitted in such vast quantities that their inclusion in those programs would render them unworkable as written.

Having decided that EPA was not required to regulate GHGs under the PSD and Title V programs, the Court then considered whether EPA’s so-called “Tailoring Rule” was permissible. Because direct application of the PSD and Title V permitting requirements to GHG emissions would have created an enormous surge in the number of annual permit applications and associated administrative costs, EPA increased the Act’s permitting thresholds by 1,000 fold. In UARG, the Court held that EPA exceeded its authority under the Act by adopting the Tailoring Rule, thus affirming the “core administrative-law principle that an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate.”

Today’s decision will not prevent EPA from regulating GHG emissions from major stationary sources. For example, the Court stated that EPA could interpret the Act to allow for regulation of GHG emissions from sources already subject to regulation under the PSD and Title V program due to their emissions of criteria pollutants. Further, the ruling does not prevent EPA from regulating GHGs from new or existing sources under its new source performance standard regime. In other words, large stationary sources already subject to these programs must control GHG emissions as part of their efforts to control other kinds of emissions. This covers about 83% of all sources of GHGs. However, sources that only emit large amounts of GHGs will not become subject to EPA’s regulations under the PSD and Title V provisions.

We are currently reviewing today’s ruling, and a more detailed report is forthcoming.

*Disclosure: Vinson & Elkins represented respondents the Coalition for Responsible Regulation et al.

Posted by Jordan Rodriguez at 6/23/2014 3:31 PM

Disclaimer & Legal Notice | ©1999- Vinson & Elkins LLP Attorney Advertising