EPA Regulations Hold Up In Court, Sort Of

Yesterday, SCOTUS issued a ruling on the EPA’s powers to regulate greenhouse gas emissions under the Clean Air Act, but nobody could seem to decide whether it was good or bad news for the agency:

The cases, led by Utility Air Regulatory Group v. the EPA, challenged the EPA’s authority to regulate greenhouse gasses from stationary sources (like coal plants.) The 5-4 decision — split along several lines — will effectively limit the EPA’s ability to regulate those gasses in some instances. However, it seems likely that the EPA will be able to find a way of maintaining those regulations even with today’s decision.

The mixed, complicated opinion is producing split results from the media, too. The New York Times’s quick take on the opinion proclaimed it a “victory” for “President Obama’s Environmental Protection Agency,” because it preserves most of the EPA’s tools and programs for regulating greenhouse gasses in stationary sources. However, because the court’s opinion rejects the way in which the EPA imposed those regulations in some instances, the decision produced a different lede over at Fox News: “the Supreme Court delivered a setback to the Environmental Protection Agency,” it begins. As experts comb through the details of the opinion, its likely that the reality lies somewhere in the middle.

Essentially, the court ruled that the law does not give the agency carte blanche to regulate greenhouse gas emissions but left it with a workaround that would allow it to continue doing so in most cases:

The high court ruled 5-4 that EPA may only require newly built or modified industrial pollution sources—such as power plants, refineries, and factories—to limit greenhouse gases if those same sources must already obtain permits for their so-called conventional pollutants. In practice, that means only a slight change in the number of big industrial polluters that would be captured by the existing, case-by-case greenhouse-gas permitting program at issue in the case decided Monday. The permitting program itself was not struck down.

The permitting program requires polluters to use so-called best available control technology, which for greenhouse gases has largely meant increased energy efficiency thus far, the Obama administration noted when defending the program before the Court in February. Limiting the program to facilities that must already get permits for their conventional pollutants (such as emissions that cause smog) addresses the sources of 83 percent of U.S. greenhouse-gas emissions from industrial polluters, compared with 86 percent without that restriction, according to the Obama administration.

At issue was whether the agency had overreached in “tailoring” the Clean Air Act to regulate CO2:

The statute calls for the EPA to regulate any source that emits more than 250 tons of the pollutant; most major sources of CO2 emit far more than that. In fact, under a strict regulatory approach, the EPA would have to issue permits to 6.1 million facilities (it currently regulates 15,000 under this provision). The administrative costs alone would jump by $21 billion. Since the EPA recognized this as unworkable, it set a much higher limit of 100,000 tons per year of carbon dioxide or an equivalently potent amount of another greenhouse gas. This “tailoring” approach to the distinct issue of greenhouse gases was then challenged in court by a variety of groups, from industry organizations to individual states.

Writing for the majority, Justice Antonin Scalia struck down the tailoring approach. The general argument is that if a statute produces absurd results—and even the EPA recognizes that the Clean Air Act does in this case—then an agency doesn’t gain the right to rework the statute in order to produce saner results. Left on its own, this portion of the ruling would be enough to throw out the EPA’s regulations.

Doug Kendall and Mei-Wah Lee call it “a 97% victory for the environment.” Their caveats:

First, the court’s willingness to find the Clean Air Act’s text of “any air pollutant” ambiguous — despite both the term’s capacious definition and its acceptance in Massachusetts v. EPA — will be cited by industry challengers as evidence that EPA’s authority is limited when it comes to regulating greenhouse gases. In effect, that would be an argument that greenhouse gases are somehow separate and unequal pollutants for purposes of the Clean Air Act. Massachusetts v. EPA makes it clear that this isn’t true, but some of the language in Scalia’s opinion may inspire other last-ditch efforts by industry groups to undermine the government’s authority to address the gravest environmental challenge of our time.

Second, in rejecting EPA’s attempt to keep faith with the act’s text and underlying purpose by adjusting the PSD program’s numerical threshold requirements, Scalia appears to define “reasonable” merely in terms of how much the interpretation would increase EPA’s regulatory authority — the more authority for the EPA, the less reasonable the interpretation (or, at least, so some challengers may argue). Again, industry will take heart in the limits drawn by Scalia’s decision and emphasize them in future cases.

For Jonathan Adler, the bottom line is that the “EPA can regulate, but it does not have free rein”:

The court made clear that it was not addressing any potential objections as to how the EPA decides to regulate stationary source emissions of GHGs going forward. On this the Court was explicit: “our decision should not be taken as an endorsement of all aspects of EPA’s current approach, nor as a free rein for any future regulatory application of BACT in this distinct context.”

In upholding the EPA’ authority to require facilities already subject to regulation under the PSD program, the court seemed aware that regulating GHG emissions, and carbon dioxide emissions in particular, is different from regulating traditional pollutants and that the EPA may not have a free hand in controlling GHG emissions however it sees fit.  So, for instance, the EPA may be limited in its ability to force facilities to adopt energy efficiency improvements as a means of reducing GHG emissions.

Daniel Gross shrugs off the ruling, noting that the tide is already turning against carbon:

[We’re seeing] a heartening effort by polluting industries to get ahead of regulations rather than fight or undermine them. Since the promulgation of new gasoline mileage standards, as I noted earlier this month, the U.S. auto industry has made stunning progress. The typical new car sold in May got 25.6 miles per gallon, up an impressive 27.4 percent from the rating of the typical new car sold in October 2007. Less gasoline used equals fewer emissions.

America’s power industry is likewise taking steps to reduce emissions—partly in response to higher standards, partly due to tax credits and other financial incentives attached to renewables, and partly because of the availability of cheap, cleaner-burning natural gas. The fastest way to reduce emissions sharply would be to stop using coal in generating electricity. The EPA can’t ban the use of coal, and the Supreme Court wouldn’t sign off any such effort. But the market, structured as it is now, is slowly driving coal out of America’s energy mix.

In Drum’s view, the real story here is about how the court views the power of executive agencies to interpret the law:

[T]oday’s ruling is a demonstration of something I’ve mentioned before: When an executive agency modifies the way it interprets a law, it’s a fairly routine affair. Interpretations of federal statutes, especially complex regulatory constructions, are notoriously difficult, and agencies do it all the time. There’s no presidential “lawlessness” or “tyranny” involved, and disputes over these interpretations are routinely resolved by courts. In this case, it was obviously a close call, since the decision was 5-4 and the opinion was long and dense. This is what’s likely to happen in other cases where the Obama administration has interpreted a law in ways that his critics don’t like. If the critics are serious, they’ll go to court, and in some cases they’ll win. In others, they’ll lose. Welcome to the 21st century.

Also picking up on that theme, Andrew Grossman looks ahead:

The Court’s decision may be a prelude of more to come. Since the Obama Administration issued its first round of greenhouse gas regulations, it has become even more aggressive in wielding executive power so as to circumvent the need to work with Congress on legislation. That includes recent actions on such issues as immigration, welfare reform, and drug enforcement. It also includes new regulations for greenhouse gas emissions by power plants, proposed just this month, that go beyond traditional plant-level controls to include regulation of electricity usage and demand—that is, to convert EPA into a nationwide electricity regulator.

Today’s decision—as well as one last month by the D.C. Circuit rejecting a nearly identical regulatory gambit by the Federal Energy Regulatory Commission—suggests that this won’t be the last court decision throwing out Obama Administration actions as incompatible with the law.