Supreme Court Rules on GHG Regulatory Approach

In response to a petition by several industry groups, the U.S. Chamber of Commerce, and several states, the U.S. Supreme Court ruled on Monday, June 23, that EPA lacks the authority to require air quality permits from facilities based solely on their greenhouse gas emissions.  It affirmed, however, that EPA can regulate GHG emissions from sources already subject to Prevention of Significant Deterioration and Title V permitting requirements due to their emissions of conventional criteria pollutants, including requiring the installation of Best Available Control Technology (BACT).  EPA estimates these sources to account for approximately 83% of U.S. stationary source GHG emissions although this figure may overestimate the emissions that are ultimately targeted since existing facilities can net-out to avoid PSD for conventional pollutants and also avoid regulation of GHGs.

The ruling invalidates several key elements of EPA’s PSD and Title V Tailoring Rule (“the Tailoring Rule”) that was issued following the 2007 landmark GHG U.S. Supreme Court case, Massachusetts v. EPA, which paved the way for regulation of carbon dioxide and other greenhouse gases as pollutants under the Clean Air Act (CAA).  The Court ruled that EPA could not change the major source thresholds legislated in the Clean Air Act as it had attempted to do in order to adapt the process to the inherently higher levels of GHG pollutants in the environment.  However, the court upheld EPA’s authority to establish a PSD de minimus increase trigger for sources otherwise subject to PSD regulations though EPA will be required to properly justify this level.

The immediate implications for GHG emissions sources are unclear.  The DC Circuit Court must implement the Supreme Court’s decision, effectively requiring EPA to rescind or withdraw the vacated portion of the rule.  EPA may issue guidance to the permitting agencies on how to proceed in the interim.  The path forward for facilities with permits in the pipeline will depend primarily on whether they are an “anyway" source.  If not, their permitting requirements could be drastically reduced by this ruling.