Utility Air Regulatory Group v. EPA: An Upcoming Battle For Clean Air Before the Supreme Court

By Patrick Carroll

 

Introduction

The U.S. Supreme Court is heard arguments Monday over whether the U.S. Environmental Protection Agency’s (“EPA”) authority to regulate new motor vehicles for greenhouse gas (“GHG”) emissions also provided it with the authority to regulate stationary sources of GHG emissions under the Clean Air Act.[1],[2]  This could dramatically affect EPA’s regulatory agenda and the Obama Administration’s Executive-driven energy policy, by potentially limiting or expanding the authority of the Clean Air Act.

 

Regulatory Background

In Massachusetts v. EPA, 549 U.S. 497 (2007), the U. S. Supreme Court held GHGs were air pollutants that may be regulated under the Clean Air Act (“Act”).[3]  Moreover, the Court instructed EPA that it had a “clear statutory command” to analyze “whether an air pollutant ‘cause[s], or contribute[s] to, air pollution which may reasonably be anticipated to endanger public health or welfare . . . .’”[4]  Since EPA had not yet exercised this authority for GHGs, the Court declared that EPA must determine “whether sufficient information exists to make an endangerment finding.”[5]  EPA’s authority to make an endangerment finding falls under § 202(a) of the Act.[6]

Subsequently, EPA issued an endangerment finding concluding that “six long-lived and directly-emitted greenhouse gases: carbon dioxide (CO2 ), methane (CH4 ), nitrous oxide (N2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6 ),” were  “reasonably . . . anticipated both to endanger public health and to endanger public welfare.”[7]

EPA determined that the transportation sources covered under § 202(a) of the Act, including “passenger cars, light- and heavy-duty trucks, buses, and motorcycles,”[8] add sufficient quantities of these pollutants to the atmosphere, “contribute to the total greenhouse gas air pollution, and thus to the climate change problem, which is reasonably anticipated to endanger public health and welfare.”[9]

EPA must promulgate a regulation prescribing a motor vehicle emission standard for “any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines . . . [that] cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.”[10]  Consequently, EPA issued the “Tailpipe Rule,” to implement a “coordinated Federal greenhouse gas (GHG) and fuel economy program for passenger cars, light-duty-trucks, and medium-duty passenger vehicles” as part of a joint rulemaking with the National Highway Traffic and Safety Administration.[11]

EPA has consistently interpreted the phrase “any air pollutant” to mean any air pollutant regulated under the Act.[12]  According to EPA, the regulation of GHGs under the Tailpipe Rule, triggered EPA’s regulatory authority under two other provisions.[13]  The first provision is the Prevention of Significant Deterioration of Air Quality (“PSD”) program, which “requires state issued construction permits for certain types of stationary sources . . . if they have the potential to emit over 100 tons per year (tpy) of ‘any air pollutant.’”[14]  All other stationary sources not specifically set forth as a “major emitting facility” that have the potential to emit over 250 tpy of “‘any air pollutant”’ are also covered by this program.[15]  The second provision, Title V of the Act, “requires state-issued operating permits for stationary sources that have the potential to emit at least 100 tpy of ‘any air pollutant.’”[16]

The third EPA action challenged in this suit was its promulgation of the “Timing Rule,” which determined that an air pollutant is “subject to regulation” when an air pollutant becomes subject to a provision of the Act or an EPA regulation promulgated under the Act requiring control of the pollutant.[17] Thus, the Timing Rule clarifies EPA’s interpretation that the PSD permitting will not be triggered regulatory control over that air pollutant’s emissions becomes effective.[18]  Thus, once the Tailpipe Rule came into effect on January 2, 2011, GHGs could be regulated under the PSD program and Title V.[19]

Finally, EPA, foreseeing the regulatory problems of subjecting all GHG sources that could possibly fall under the PSD and Title V tpy thresholds, promulgated the “Tailoring Rule.”[20]  This rule “provided that only the largest sources—those exceeding 75,000 or 100,000 tpy CO2e, depending on the program and project—would initially be subject to greenhouse gas permitting.”[21]

Several Industry and State petitioners (“Industry”) sought to challenge the aforesaid regulatory actions that EPA had engaged: 1) the Endangerment Finding; 2) the Tailpipe Rule; 3) the Timing Rule; and 4) the Tailoring Rule.[22]  Nonetheless, the D.C. Circuit disposed of all such challenges in favor of EPA.[23]  While nine petitions for a writ of certiorari were filed with the U.S. Supreme Court, positing twenty-one individual issues for argument, the Supreme Court only granted certiorari over one issue:[24] whether EPA’s long standing interpretation of the CAA that its authority to regulate new motor vehicles for greenhouse gas emissions also provided it with the authority to regulate stationary sources of greenhouse gas emissions was appropriate.[25]

 

The U.S. Court of Appeals for the District of Columbia Circuit’s Decision on the Relevant Issue Before the Supreme Court

EPA’s Interpretation

The D.C. Circuit found that Congress had provided its unambiguous intent in the phrase “any air pollutant” in favor of EPA’s long-standing position.[26]  The court interpreted the word “any” as providing an “expansive” scope, and that the term “air pollutant,” without dispute, encompasses GHGs.[27] Thus, the court concluded that there was a “strong[] suggest[ion]” that Congress intended the term “any air pollutant” to govern GHG emissions.[28]  Moreover, the D.C. Circuit relied on Massachusetts v. EPA for its expansive reading of the term “air pollutant” as used in § 302(g) of the Act, a section that applies to each and every other section of the Act.[29]  The Court held that “[o]n its fact, the definition embraces all airborne compounds of whatever stripe, and underscores that intent through repeated use of the word ‘any.’”[30]

While the D.C. Circuit acknowledged that EPA’s interpretation of “any air pollutant” is a bit more narrow than its own broad construction, the court believed EPA’s requirement that the air pollutant be a “regulated” air pollutant was the only logical conclusion to be found.[31]  If air pollutants that were not regulated fell under the phrase, then a source deemed a “major emitting facility” that emitted a “physical, chemical, biological, [or] radioactive substance . . . into . . . the ambient air” would fall under PSD requirements even if EPA did not believe that particular air pollutant was harmful to the public health or welfare.[32]  In addition, the D.C. Circuit’s review of the PSD program discerned that it required Best Available Control Technology (“BACT”) to be implemented at “major emitting facilities” “for ‘each pollutant subject to regulation under [the Act].’”[33]  These sources must prove that they “‘will not cause, or contribute to, air pollution in excess of any . . . emission standard . . . under [the Act].’”[34]  Therefore, the court believed EPA’s interpretation that only those air pollutants regulated under the Act fall within the phrase “any air pollutant” was in accord with the statutory intent underlying the PSD program to control those pollutants regulated under “every section of the Act.”[35]  However, for good measure then court refers to the “Declaration of Purpose” section for the PSD program, which indicates that the program was meant to prevent “adverse effects on ‘weather’ and ‘climate’—precisely the types of harm caused by greenhouse gases.”[36]

 

Industry’s Three Alternative Interpretations

Alternative One

Before the D.C. Circuit disposed of Industry’s opposing arguments, it noted that none of Industry’s alternative interpretations applied to the extension of GHG regulation under Title V and thus, Industry forfeited its challenge to EPA’s interpretive extension to that provision of the Act.[37]  The court then turned to the substance of Industry’s arguments. First, while industry posited that the Act was only intended to reach local air pollutants breathed in by persons in confined regions, the court read the Act as unambiguously requiring BACT at all major emitting facilities subject to the PSD program “‘for each pollutant subject to regulation under [the Act].’”[38]  Thus, the Act makes no distinction between air pollutants with local, regional, or global affects.[39]

Although the PSD program sets forth that the State Implementation Plans, necessary for its execution, are to focus on the “‘air quality in each region,’”[40] and that when the PSD program was enacted by Congress it was with a legal understanding of particularized air pollutants whose effects could be realized at ground-level,[41] Massachusetts v. EPA has already disposed of this local versus global argument.[42]  There, the Court held that the Act made no distinction between what Industry considered to be more traditional air pollutants and GHGs, and did not distinguish between the atmospheric layers upon which these pollutants endanger the public health or welfare since the Act merely uses the term “ambient air” to include all atmospheric layers.[43] Moreover, the D.C. Circuit determined that while the PSD program is clearly concerned with local pollution, there is nothing that limits it to local air quality.[44] Indeed, it is meant to protect against any harm to “‘weather’” and “‘climate’” which evinces a broader consideration of air pollution and its consequences.[45]

 

Alternative Two

Industry’s second alternative interpretation would require that the PSD program only apply to those “major emitting facilities” that emit one of the criteria pollutants under the National Ambient Air Quality Standards (“NAAQS”), and that is located in an attainment area for that particular pollutant.[46]  The court regards this interpretation as setting a “pollutant-specific situs requirement.”[47]  Such a reading would curtail the number of facilities subject to PSD requirements because EPA has not designated GHGs as criteria pollutants and thus, there are no attainment areas for them.[48]  Thus, only those facilities that are major sources of a criteria pollutant and are located in an attainment area for that pollutant would still have to apply BACT for “‘each pollutant subject to regulation under the Act,’”[49] such as GHGs, but not to those facilities that are only major emitters of GHGs.[50]

Industry argues that “any air pollutant” is a flexible phrase, and that EPA had already narrowed its scope to regulated pollutants.[51] Similarly, EPA refined the phrase “any pollutant” in the Act’s definition of a “major stationary source,” as applying to “any visibility-impairing pollutant,” when “interpreting Part C, Subpart 2 [of the Act], entitled, Visibility Protection.”[52]  Since the definition of a “major stationary source” in this context is similar to a “major emitting facility” in the PSD program, Industry argues the forgoing proves its more narrowed pollutant-specific situs requirement should have been adopted.[53]  Additionally, Industry cites § 163(b)(4) of the Act, which “provides guidelines for areas designated as in attainment under the program,” but does not provide the “permitting requirements for sources covered under the program,” which is found in § 165(a).[54]  Section 163(b)(4) sets the “‘maximum allowable increase in concentration’” for all NAAQS pollutants, besides sulfur dioxide and particulate matter, that would be allowed without jeopardizing the “attainment” status of the area.[55]  This section uses the phrase “any air pollutant in any area to which this part applies,” such that “‘any air pollutant’ must mean ‘any NAAQS pollutant,’ and ‘in any area to which this part applies’ must mean ‘any area that is in attainment for that NAAQS pollutant.’”[56]  Industry also posited that the same interpretation applies “to CAA § 165(a)(3)(A), which prohibits PSD permittees from ‘caus[ing], or contribut[ing] to, air pollution in excess of any . . . maximum allowable concentration for any air pollutant in any area to which this part applies more than one time per year.’”[57] Indeed, the court agreed with that extension,[58] however the D.C. Circuit did not agree that this reading must therefore, also apply to the definition of a “major emitting facility” within the PSD program.[59]

First, the D.C. Circuit found that the language “any pollutant” found in the definition of “major stationary sources” fell under Part C, Subpart 2, for “Visibility Protection,” and thus, EPA’s regulations under this subpart logically deal with “visibility-impairing pollutants.”[60]  The phrase at issue here, “any air pollutant,” is found in Part C Subpart 1, and is not accompanied with such a specific designation.[61]  Instead, Subpart 1 is labeled “Clean Air,” which offers much greater coverage and scope.[62]  Furthermore, § 163(b)(4) and the PSD permitting trigger diverge in their purpose and form.[63] Whereas § 163(b)(4) maintains the phrases “any air pollutant” and “in any area to which this part applies” in conjunction,  and focuses on the maximum concentration of a pollutant in the area, the PSD permitting trigger focuses on the location of the facility and provide the two aforesaid regulatory phrases in separate subsections.[64]

Secondly, while Part D of the Act, which regulates nonattainment areas, indicates “pollutant-specific” language such “[t]he term ‘nonattainment area’ means, for any air pollutant, an area which is designated ‘nonattainment’ with respect to that pollutant,” Part C of the Act, which implements the PSD program, offers no such limiting language to the “any air pollutant.”[65]  Thus, while Congress conveyed that it knew how to tailor its language narrowly when it intended to use “pollutant-specific” terms, the absence of that language indicates an intent for a broad construction.[66]

Thirdly, Industry argued that Congress would have simply left out the phrase “in any area to which this part applies” if EPA’s “pollutant-indifferent” interpretation was correct.[67]  However, the court found that Industry conflated the notion that the phrase could, at present, have no import, with the idea that it had no value in general.[68]  If, for example, an area was found to be in “nonattainment” for all of the NAAQS pollutants, the phrase at issue would limit PSD coverage because Part D, as described above, would control the regulation of the sources instead.[69]  Such a hypothetical was also not deemed as merely theoretical, but was a possibility at the time the PSD program was enacted.[70]

 

Alternative Three

Lastly, the court disposed of Industry’s third alternative interpretation relatively quickly. This argument was based on § 166, which requires specific steps for EPA to take in setting a new pollutant as a criteria pollutant under the NAAQS program.[71]  However, while it is true that EPA did not follow the processes set forth in § 166, EPA did not designate GHGs as criteria pollutants subject to NAAQS, “it simply determined that under § 165, major emitters of greenhouse gases are subject to the PSD program and all covered sources must install BACT for greenhouse gases.”[72]

 

Conclusion

Thus, the court concluded that the Act required PSD and Title V permits for major emitters of GHGs.[73]  While there were many other issues addressed by the D.C. Circuit,[74] this interpretation as to whether the regulation of GHGs for new motor vehicles and new motor vehicle engines triggered PSD and Title V regulation of major emitting facilities of GHGs is the only issue to be heard by the U.S. Supreme Court.[75]  A significant portion of the D.C. Circuit’s rationalization in this section of its opinion stems from its own statutory interpretation of the structure and function of the PSD permitting program. However, it is notable that both supporting EPA’s interpretation of “any air pollutant” as well as in dismissing the first of Industry’s alternative interpretations, the D.C. Circuit relied on the Supreme Court’s construction of the Act as expounded by Massachusetts v. EPA.[76]  Even in the discharge of Industry’s second alternative reading of the Act, Massachusetts v. EPA was cited as relevant to its the court’s disapproval.[77]  Furthermore, since the Court in Massachusetts v. EPA had already reviewed the term “any air pollutant,” albeit in a different context, as significantly broad and “unambiguous,”[78] it may be indicative that the Court will concur with the D.C. Circuit’s Chevron step one interpretation of the Act in favor of EPA.[79]  While it is not yet clear if EPA’s actions under the Act to expand its jurisdiction into the yet untapped regulatory arenas of GHG emissions will be allowed to continue, it is certain that the Court’s decision will have a significant impact on the future regulation of stationary sources that are major emitters of GHGs as allowed under existing legislation.

 

 


[1] Utility Air Regulatory Group v. Environmental Protection Agency, SCOTUSblog (last visited Feb. 18, 2014),

http://www.scotusblog.com/case-files/cases/utility-air-regulatory-group-v-environmental-protection-agency/.

[2] Id.

[3] Massachusetts v. E.P.A., 549 U.S. 497, 532 (2007).

[4] Id. at 532-33 (quoting 42 U.S.C. § 7521(a)(1) (2012)).

[5] Id. at 534.

[6] 42 U.S.C. § 7521(a)(1) (2012); Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496, 66499 (Dec. 15, 2009).

[7] Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496, 66497 (Dec. 15, 2009).

[8] Id. at 66499.

[9] Id.

[10] 42 U.S.C. § 7521(a)(1) (2012).

[11] Light–Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule, 75 Fed. Reg. 25,324, 25,326 (May 7, 2010); Coal. for Responsible Regulation, Inc. v. EPA, 684 F.3d 102, 115 (D.C. Cir. 2012).

[12] Coal. for Responsible Regulation, Inc., 684 F.3d at 115.

[13] Id.

[14] Id. (referring to 42 U.S.C. §§ 7475, 7479(1) (2012)).

[15] 42 U.S.C. §§ 7475, 7479(1) (2012); Coal. for Responsible Regulation, Inc., 684 F.3d at 115.

[16] Coal. for Responsible Regulation, Inc., 684 F.3d at 115 (referring to 42 U.S.C. § 7602(j) (2012)).

[17] Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004, 17,004 (Apr. 2, 2010); Coal. for Responsible Regulation, Inc., 684 F.3d at 115.

[18] Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004, 17,004 (Apr. 2, 2010).

[19] Id. at 17,007.

[20] Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31,514, 31514 (June 3, 2010); Coal. for Responsible Regulation, Inc., 684 F.3d at 115-16.

[21] Coal. for Responsible Regulation, Inc., 684 F.3d at 116.

[22] Id.

[23] Id.

[24] David Buente, Grant of Certiorari in Greenhouse Gas Regulation Litigation: Limited But Important, American College of Environmental Lawyers (Oct. 30, 2013), http://www.acoel.org/post/2013/10/30/Grant-of-Certiorari-in-Greenhouse-Gas-Regulation-Litigation-Limited-But-Important-.aspx.

[25] Utility Air Regulatory Group v. Environmental Protection Agency, SCOTUSblog (last visited Feb. 18, 2014),

http://www.scotusblog.com/case-files/cases/utility-air-regulatory-group-v-environmental-protection-agency/.

[26] Coal. for Responsible Regulation, Inc. v. EPA, 684 F.3d 102, 134 (D.C. Cir. 2012) (referring to Chevron, U.S.A. Inc. v. NRDC, 467 U.S. 837, 842 (1984)).

[27] Id. (referring to Massachusetts v. E.P.A., 549 U.S. 497, 528-29 (2007)).

[28] Id.

[29] Id.

[30] Massachusetts v. E.P.A., 549 U.S. at 529 (emphasis added).

[31] Coal. for Responsible Regulation, Inc., 684 F.3d at 134.

[32] Id. at 135.

[33] Id. (quoting 42 U.S.C. § 7475(a)(4) (2012)).

[34] Id. at 136 (quoting 42 U.S.C. § 7475(a)(3) (2012) (emphasis added)).

[35] Id.

[36] Id. (citing to 42 U.S.C. § 7470(1) (2012)).

[37] Id.

[38] Id. at 136-37 (quoting 42 U.S.C. § 7475(a)(4) (2012)).

[39] Id. at 137-38.

[40] Id. at 138 (quoting 42 U.S.C. § 7471 (2012)).

[41] Id. at 137.

[42] Id. at 137-38.

[43] Id. at 138 (internal quotations omitted).

[44] Id.

[45] Id. (quoting 42 U.S.C. § 7602(h) (2012)).

[46] Id. at 138-39.

[47] Id. at 138.

[48] Id. at 139.

[49] Id. (quoting 42 U.S.C. § 7475(a)(4) (2012)).

[50] Id. (emphasis added).

[51] Id. (internal citations omitted).

[52] Id. (internal citations omitted).

[53] Id. at 139-40.

[54] Id. at 140 (internal quotations omitted).

[55] Id. (referring to 42 U.S.C. § 7473(b)(1)-(4) (2012)).

[56] Id. (referring to 42 U.S.C. § 7473(b)(4) (2012)).

[57] Id. at 141 (quoting 42 U.S.C. § 7475(a)(3)(A) (2012) (emphasis added)).

[58] Id.

[59] Id.

[60] Id. (internal quotations omitted).

[61] Id.

[62] Id. (internal quotations omitted).

[63] Id. at 142.

[64] Id.

[65] Id. (quoting 42 U.S.C. § 7501(2) (2012) (emphasis added)).

[66] Id. (citing Keene Corp. v. United States, 508 U.S. 200, 208 (1993) (“[W]here Congress includes particular language in one section of a statute but omits it in another . . ., it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”) (internal citations omitted)).

[67] Id.

[68] Id. at 143.

[69] Id.

[70] Id.

[71] Id.; 42 U.S.C. § 7476(a) (2012).

[72] Coal. for Responsible Regulation, Inc., 684 F.3d at 143.

[73] Id. at 144.

[74] See Id. at 116.

[75]Utility Air Regulatory Group v. Environmental Protection Agency, SCOTUSblog (last visited Feb. 18, 2014),

http://www.scotusblog.com/case-files/cases/utility-air-regulatory-group-v-environmental-protection-agency/.

[76] Coal. for Responsible Regulation, Inc., 684 F.3d at 134-38.

[77] Id. at 140.

[78] Massachusetts v. E.P.A., 549 U.S. 497, 528-29 (2007).

[79] Coal. for Responsible Regulation, Inc., 684 F.3d at 133-36.

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