In a highly anticipated decision last week, the Supreme Court struck down a portion of EPA’s so-called Tailoring Rule for greenhouse gas emissions. By its Tailoring Rule, EPA had attempted to regulate certain stationary sources under the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Title V permitting programs, based solely on those sources potential to emit greenhouse gases (GHGs). But because the numerical threshold required to trigger PSD and Title V regulation as set forth in the CAA were so low – 250 tons per year – thousands of small sources like apartment complexes, schools and churches would likely come within EPA’s regulatory purview. Calling this result “absurd,” EPA attempted to “tailor” its regulations to subject only those sources that had the potential to emit 100,000 tons per year of GHGs to PSD and Title V obligations.
Rejecting this approach, the Supreme Court in Utility Air Regulatory Group v. EPA held that EPA’s tailoring of a clear numerical threshold amounted to an “enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization.”
Instead, according to the Supreme Court, EPA may regulate any level of GHGs emissions directly under the CAA’s PSD and Title V permitting programs, but only from those sources that are already subject to the permitting programs by virtue of their emissions of conventional pollutants. For those sources, EPA may require that the Best Available Control Technology (BACT) be used to address the source’s GHG emissions, so long as the source’s GHG emissions are more than a de minimis amount. On the other hand, for sources whose conventional emissions do not trigger PSD or Title V permitting, their GHG emissions alone will not suffice to trigger these regulations.
Because many of the country’s largest GHG emitters are already subject to PSD and Title V programs by virtue of their conventional pollutant emissions, the Court’s decision has been called “somewhat inconsequential.” Indeed, according to Justice Scalia, the Court’s decision means that, as a practical matter, EPA will retain its ability to regulate 83% of GHG emissions (from larger industrial sources already subject to the relevant CAA provisions), as opposed to 86% of GHG emissions EPA would have authority to regulate under its Tailoring Rule.
As many commentators have noted, the most significant part of the UARG decision may be what it lacks – under the petition for certiorari of these cases the Court had the ability to revisit (and potentially revise) its finding in Massachusetts v. EPA, its 2007 decision holding GHGs subject to CAA regulations in the first place, but it declined to do so. This means EPA’s authority to regulate GHGs generally, and carbon dioxide specifically, may be here to stay. But how EPA will implement this authority – and under what specific CAA provision – remains an outstanding question.
So, what does the UARG decision mean for your business?
If you are a business that was included in EPA’s Tailoring Rule – i.e., a high emitter of GHG emissions, but lacking in emissions of conventional pollutants to otherwise trigger PSD and Title V requirements – this decision offers your business significant regulatory relief. You will not need to obtain PSD or Title V permits based on your GHG emissions alone.
If your business is already subject to PSD or Title V programs, EPA may now require you to install the Best Available Control Technology to address your GHG emissions. But even this requirement depends on the amount of GHG emissions your source emits. Under UARG, the Court stated that BACT should not be required for sources that emit only a “de minimis” amount of GHGs, or where such requirement would result in an “unreasonable and unanticipated degree of regulation.” If you think your business would fall under such description, obtaining a minor-source permit to avoid the GHG BACT may be the right choice for you.