Opinion of the Court in Utility Air Regulatory Group v. EPA Displays a Curious Alignment of Justices

Summary: Last week the Supreme Court handed down its second Clean Air Act case of the term, Utility Air Regulatory Group v. EPA. This plain English guide to the Supreme Court’s opinion summarizes its three holdings, split 5-4, 5-4, and 7-2. It also assesses implications for EPA, business, and industry.

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By Christopher D. Ahlers

Assistant Professor, Vermont Law School

1. What is the holding of the case?

The case involved a challenge to EPA’s attempt to regulate greenhouse gases in the Prevention of Significant Deterioration (PSD) program of the Clean Air Act.  Also known as “new source review,” this program requires certain new or modified stationary sources (industrial plants) to obtain a permit before construction and it requires the installation of the best available control technology (BACT).  A facility is subject to new source review if it has potential emissions of 100 or 250 tons per year of an air pollutant, depending on the source.  Such a facility must install BACT for each pollutant subject to regulation under the Clean Air Act.

Ahlers_SCOTUSJustice Scalia’s Opinion of the Court might appear confusing because only two of the other nine justices joined the opinion in full (Justices Roberts and Kennedy).  How could this be the Opinion of the Court?  To understand this, it is important to break the opinion into three distinct holdings.

First, the three justices held that the Clean Air Act did not require EPA to conclude that a facility may trigger new source review based solely on its greenhouse gas emissions, as opposed to conventional pollutants:

 

 

… there is no insuperable textual barrier to EPA’s interpreting “any air pollutant” in the permitting triggers of PSD [Prevention of Significant Deterioration] and Title V to encompass only pollutants emitted in quantities that enable them to be sensibly regulated at the statutory thresholds, and to exclude those atypical pollutants that, like greenhouse gases, are emitted in such vast quantities that their inclusion would radically trans­form those programs and render them unworkable as written.

Justices Alito and Thomas joined in this opinion: “I agree with the Court that the EPA is neither required nor permitted to take this extraordinary step.” With five justices, this is a majority of the Court.

Second, the three justices held that EPA’s interpretation that a facility may trigger new source review based solely on its greenhouse gas emissions, was not justified as an exercise of its discretion:

… it would be patently unreasonable—not to say outrageous—for EPA to insist on seizing expansive power that it admits the statute is not designed to grant.

In addition, the Court held that EPA could not salvage this impermissible interpretation through the Tailoring Rule, which created new regulatory thresholds for greenhouse gases (100,000/75,000 tpy) that replaced those in the statute (100/250 tpy):

We conclude that EPA’s rewriting of the statutory thresholds was impermissible and therefore could not validate the Agency’s interpretation of the triggering provisions. An agency has no power to “tailor” legislation to bureaucratic policy goals by rewriting unambiguous statutory terms. Agencies exercise discretion only in the interstices created by statutory silence or ambiguity; they must always “‘give effect to the unambiguously expressed intent of Congress.’” National Assn. of Home Builders v. Defenders of Wildlife, 551 U. S. 644, 665 (2007) (quoting Chevron, 467 U. S., at 843). It is hard to imagine a statu­tory term less ambiguous than the precise numerical thresholds at which the Act requires PSD and Title V permitting. When EPA replaced those numbers with others of its own choosing, it went well beyond the “bounds of its statutory authority.” Arlington, 569 U. S., at ___ (slip op., at 5) (emphasis deleted).

Justices Alito and Thomas joined in this opinion. Again, with five justices, this is a majority of the Court.

Third, the three justices held that EPA’s decision to require BACT for greenhouse gases emitted by sources otherwise subject to the PSD program review was a permissible interpretation of the statute:

Our narrow holding is that nothing in the statute categorically prohibits EPA from interpreting the BACT provision to apply to greenhouse gases emitted by “anyway” sources.

Justices Breyer, Ginsburg, Sotomayor, and Kagan joined in this opinion:

I agree with the Court’s holding that stationary sources that are subject to the PSD program because they emit other (non-greenhouse-gas) pollutants in quantities above the statutory threshold—those facilities that the Court refers to as “anyway” sources—must meet the “best avail­able control technology” requirement of §7475(a)(4) with respect to greenhouse gas emissions.

With seven justices, this is a majority of the Court.

Therefore, there are actually three holdings in this case, split 5-4, 5-4, and 7-2.

2. What is the implication of the first holding?

The implication of the first holding is that it avoids the “absurd result” of subjecting smaller facilities to new source review, a program that was intended only for large facilities.  This favors business and industry and hurts EPA, because it means that these facilities will not have to go through new source review.

The holding reflects a moderation of the Court’s decision in Massachusetts v. EPA (2007), in which the Court held that the term “air pollutant” includes greenhouse gases from cars and trucks under Title II of the Clean Air Act.  In the context of new source review for stationary sources under Title I, the Court says that “air pollutant” does not include greenhouse gases.  Because of the vast number of stationary sources of greenhouse gases, and the tremendous volumes of greenhouse gas emissions, a contrary view would transform the PSD program and make it unworkable as written.  The holding is limited to greenhouse gases, and does not extend to other air pollutants.

In dissenting on the Tailoring Rule, Justices Breyer, Ginsburg, Sotomayor, and Kagan disagreed with the notion that greenhouse gases cannot trigger new source review:

But as for the Court’s hold­ing that the EPA cannot interpret the language at issue here to cover facilities that emit more than 100,000 tpy of greenhouse gases by virtue of those emissions, I respect­fully dissent.

In addition, they disagreed with the majority’s creation of an implicit exemption for greenhouse gases from the definition of “air pollutant,” which is not consistent with Massachusetts v. EPA.  Instead, they proposed tying any such implicit exemption to the source triggering new source review, as opposed to the air pollutant coming from that source.

3. What is the implication of the second holding?

The implication of the second holding is the same as that for the first holding.  The Court’s second holding is a logical extension of the first holding.  If the statute does not require such an extreme result for stationary sources, then EPA does not have the discretion to reach such an extreme result.

4. What is the implication of the third holding?Ahlers_Smokestacks

The implication of the third holding is that stationary sources that trigger new source review through conventional pollutants must install BACT for greenhouse gases.  This favors EPA and hurts business and industry.  Ultimately, this leads to the question of what is BACT for greenhouse gases.  This is controversial because greenhouse gases cannot be controlled through baghouses, scrubbers, and other equipment like other conventional pollutants can. Rather, the control of greenhouse gases involves lowering the use of fossil fuels in the combustion process that generates energy.

The Court is attentive to this controversy.  The majority opinion calls attention to EPA guidance documents that talk about “efficiency,” which reinforce the concerns of those who say that BACT is fundamentally unsuited to greenhouse gas regulation, and that it is more about regulating energy use.   Still, there are limitations on BACT, including a requirement that it cannot be used to redesign a facility.    

In their dissenting opinion, Justices Alito and Justice Thomas argue that BACT is fundamentally incompatible with the regulation of greenhouse gases, because a facility cannot quantify the environmental benefit gained from the reduction of greenhouse gases at the source, as it is required to do under EPA guidance documents.

At the end of the day, it is likely that the solution to the problem of greenhouse gases requires flexibility by both EPA and business and industry, in finding ways to reduce the combustion of fossil fuels.

Christopher Ahlers is an Assistant Professor of Law at Vermont Law School, where he has taught Air Pollution Law & Policy.  He has a background in conducting environmental due diligence and audits for manufacturing companies, as well as environmental litigation.