Outlooks divided on possible outcomes of Supreme Court case

Source: Tiffany Stecker, E&E reporter • Posted: Tuesday, February 25, 2014

The industry case against U.S. EPA’s climate rules doesn’t disqualify the agency’s authority to regulate greenhouse gases, but it could lead to a redefinition of how the agency uses the Clean Air Act, said legal experts.If the justices rule in favor of the petitioners — a coalition of industry groups, business association, and conservative states — EPA will need to re-examine if and how it will control greenhouse gases from new and modified facilities other than power plants that emit tons of climate-warming gases. This includes steel mills, cement kilns, chemical factories and major sources outside of the electric sector.

“The big deal is, if you’re not the subject of the New Source Performance Standards, this could give you some relief,” said Thomas Lorenzen, a partner at Dorsey & Whitney and the former assistant chief in the Environment and Natural Resources Division at the Justice Department.

EPA is currently working on power plant rules under Section 111 of the Clean Air Act, the New Source Performance Standards (NSPS). The current legal challenge surrounds the legality of EPA’s interpretation of another part of the statute, the Prevention of Significant Deterioration (PSD) Program, incorporated into the Clean Air Act in 1977.

Attorneys will present their arguments to Supreme Court justices this morning. Justices will decide whether EPA justifiably allowed its new motor vehicles standards, or “tailpipe rule,” to trigger permitting requirements for stationary sources that emit greenhouse gases. New and modified facilities must obtain pollution permits if they emit 100,000 tons of CO2 per year or more (Greenwire, Feb. 21).

The Supreme Court does not question EPA’s finding that greenhouse gases constitute a danger to public health, nor its authority to set efficiency standards for vehicles. The court also doesn’t question EPA’s authority to make standards for new and existing power plants.

If EPA successfully writes and implements performance standards for new and existing plants, the electric sector will be required to limit carbon dioxide emissions under the NSPS. These account for about one-third of the country’s greenhouse gases.

Limiting permits to only 6 pollutants

The industrial sector is the source of about one-fifth of the country’s emissions, according to EPA.

Industry groups have argued, in this case and a similar one in the District of Columbia’s Circuit Court of Appeals, that the PSD program only applies to “criteria” pollutants: lead, nitrogen oxides, sulfur dioxide, carbon monoxide, ozone and particulate matter. This view was supported by one of the circuit court judges, Brett Kavanaugh (ClimateWire, Oct. 16, 2013).

EPA and its supporters argue that the program applies to all pollutants. Once a pollutant has “triggered” the PSD requirement, a facility must install the “best available control technology” for every regulated pollutant.

The relief to large emitters could be limited, said Lorenzen. For example, if a big manufacturing plant is in the PSD program because it emits one of the criteria pollutants, it could — if the court applies a broad interpretation — be responsible for installing the best available technology to control carbon. This reading was put forth by both the industry-friendly American Chemistry Council and the U.S. solicitor general on behalf of EPA.

Although standards are fully enforceable on their own, permits are an important tool for curbing carbon emissions, wrote David Doniger, policy director for the Natural Resources Defense Council’s climate and clean air program, in a blog post. Construction permits require pollution controls when there is no standard and can push plants to adopt new control technology when standards become out of date. Operating permits streamline compliance and enforcement.

If the Supreme Court rules that EPA can no longer use the tailpipe as a trigger for PSD, the agency has several options, said Jonas Monast, director of the climate and energy program at Duke University’s Nicholas Institute for Environmental Policy Solutions. It could devise NSPS for the industrial sector, source by source. It could also choose to proceed under another Clean Air Act program, like the National Ambient Air Quality Standards (NAAQS), which set local pollution limits that states must attain. EPA could also try to reincorporate the PSD program without tying the standards to the timing of motor vehicle rules, as the agency did initially.

EPA’s loss could lead to more complicated rules

NAAQS are generally not viewed as the best way to manage carbon dioxide, said Jeff Holmstead, head of Bracewell & Giuliani’s Environmental Strategies Group and former EPA assistant administrator. He is skeptical that regulation of carbon under NAAQS would work. Such a program works with pollutants that cause localized health problems. Excessive greenhouse gases have global consequences. High emissions in one country lead to climate change anywhere in the world.

“If EPA lost on this, they could easily go and promulgate a Nation Ambient Air Quality Standard for greenhouse gases,” said Robert Percival, a professor of law and director of the Environmental Law Program at the University of Maryland. “That would be kind of crazy, because there’s no reason [for greenhouse gases] to pass every air quality region in the country to meet some ambient level, because the ambient level doesn’t matter.”

Ironically, EPA’s loss might lead to more onerous regulations for states and industry groups, said Percival.

It’s unlikely that the agency would take the NAAQS route, and more realistic that EPA would apply New Source Performance Standards for sources other than power plants, said Holmstead.

“It’s certainly more efficient from an overall societal perspective, because everybody knows what the rules are and they know they have to meet those rules when they build a new plant, or modify a plant, or reconstruct,” he said.