|March 5, 2014|
Previously published on February 24, 2014
As you’ve likely heard, the Environmental Protection Agency (EPA) has now officially taken the position that greenhouse gases like carbon dioxide are fair game for regulation and in fact are required to be regulated under the Clean Air Act. While this development may be cheered by environmental conservation groups and climate scientists, those who will actually have to implement the technology necessary to comply with EPA’s new regulations are less thrilled. Another pitched battle is about to take place before the Supreme Court on this issue, and large manufacturers, utilities, and other owners of large sources of greenhouse gases should take note.
In a well-publicized decision in 2007, the United States Supreme Court determined that greenhouse gases are an “air pollutant” subject to regulation under the Clean Air Act. In the wake of that decision, EPA was compelled to promulgate a series of rules related to greenhouse gases, just as it would with any other air pollutant. One such rule, the so-called “Tailpipe Rule,” set greenhouse gas emission standards for cars and light trucks. In the arcane world of EPA regulation, issuing even a single rule necessarily sets off a series of follow-up rules and regulations - thus, EPA determined that issuing the Tailpipe Rule in turn required the agency to issue regulations for the construction and operation of all stationary sources of greenhouse gases in order to comply with the Clean Air Act’s other provisions regarding National Ambient Air Quality Standards (NAAQS).
Because millions of sources exceed the statutory emissions threshold for greenhouse gases such as carbon dioxide, EPA and others predicted that implementing the rules (even with phasing-in) would result in tremendous costs to industry and state permitting authorities. The rules require every source to use the “best available control technology” to keep emissions below the regulatory threshold and, therefore, companies big and small would face a daunting investment in equipment and processes to keep their emissions in line. Large sources, such as utilities, face the prospect of potentially investing millions of dollars to acquire and/or construct unique emissions control technology. And because compliance requires constant vigilance, these large source emitters face the additional prospect of hiring personnel to monitor efficacy, keep the equipment in working order, and keep abreast of advances in technology which may supplant their current equipment as the “best available control technology.”
Predictably, many groups affected by the regulations challenged EPA, contending that the Clean Air Act provisions in question are not proscriptive and that EPA’s decision to regulate was “arbitrary and capricious.” Instead, they argued that EPA had leeway under the Act to avoid extending the permitting requirements to major greenhouse gas emitters, and that EPA should have done so. In support of their argument, the industry groups contend, among other things, that the NAAQS program was meant to limit “pollutants” which affect air quality in narrowly defined geographic areas. Because greenhouse gases may have a cumulative effect nationally or globally, but do not necessarily “pollute locally,” the groups argue that greenhouse gases are not subject to regulation under the program.
In Coalition for Responsible Regulations, Inc., et al., v. U.S. EPA, the United States Court of Appeals for the District of Columbia rejected the industry group objections and upheld EPA’s determination to regulate stationary sources. In fact, the court held that the Clean Air Act compelled EPA to implement the permitting requirements for stationary sources.
On February 24, 2014, the United States Supreme Court will hear oral argument in this case (consolidating it with others involving the same question). The industry plaintiffs and state agencies opposing EPA’s regulations must now convince the Supreme Court that the court of appeals got it wrong, and that EPA exceeded its authority by extending the regulations to stationary sources. Whether they succeed or fail will have far-reaching economic consequences throughout a wide variety of industries.