Update - Big Win at U.S. Supreme Court

July 15, 2014

After our recent e-mail announcement “Big Win at U.S. Supreme Court,” you may have noticed that EPA and some environmental organizations, aided by media politically inclined to cheer on the Administration, were claiming that the decision was a “big win” for EPA. You may be wondering what’s going on. Here’s a short explanation from our perspective.

First, there is no doubt that the Supreme Court expressly overruled all of the key aspects of the two main foundations of EPA’s GHG program: the Tailoring Rule (the rule by which EPA claimed authority to override the statutory provisions stated in the Clean Air Act) and the Triggering Rule (the rule by which EPA claimed that regulation of GHG emissions from vehicles automatically triggered regulation of GHGs under the PSD and Title V programs). As we view it, and as we think any fair-minded person will view it, this was a total reversal of those aspects of EPA’s program and only the most brazen EPA apologist would claim otherwise.

Second, where the Court did throw a bone to EPA was in its holding that, for sources that were already subject to PSD or Title V permitting, EPA could impose BACT requirements on GHG emissions from those sources. Industry petitioners conceded from the outset that this was a plausible reading of the statute, so it wasn’t much of a “win” for EPA. Even within this scope of authority, however, the Court imposed a number of significant restrictions, all suggested by industry and resisted to the end by EPA: GHG emissions alone could never trigger PSD or Title V review; EPA can only regulate emissions above some yet-to-be-established de minimis threshold, and BACT has to be facility-specific and cannot be used to regulate energy consumption broadly or to regulate the electric grid. We’ll have to see how all of this shakes out, but in our view this isn’t much of a “win" for EPA either.

Finally, there are certain aspects of the opinion that perhaps leave some openings through which EPA could try to launch an altered version of the program that the Court invalidated. Such has been known to occur in the past.  For example, EPA has used the Court’s ruling in Rapanos (which was clearly intended to limit EPA’s jurisdiction) as a launching pad for a dramatically expanded definition of “waters of the United States.” Perhaps the agency’s rosy reading of the Court’s opinion is a harbinger that the agency, in similar fashion, will simply try again where at first it did not succeed.

Incidentally, the Georgia Environmental Protection Division recently came out with a guidance document that confirms our assessment of the Supreme Court opinion: After noting that the Triggering and Tailoring Rules were invalidated, EPD rescinded its own rules previously promulgated to match those federal rules. Interestingly enough, EPD said it would continue to implement the 75,000 tons-per-year threshold pending EPA’s issuance of a new “de minimis” level.

In short, we think that EPA’s claiming a “win” is pretty bold and won’t withstand an impartial assessment. The bad news, though, is that the fact that EPA is making such statements may indicate that industry will face future litigation over the very points we think we’ve already “won.”

Please feel free to contact the firm if you have any questions or require further information.