In environmental law, things aren't always what they seem at first blush. Hence, when the Supreme Court handed down its decision in Utility Air Regulatory Group v. EPA, 134 S. Ct. 1050 (2014) in June, both industry and EPA claimed victory. Given that the Court struck down EPA's interpretation of its authority under two specific provisions of the Clean Air Act, how could EPA claim a win?
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The answer is that there was a broader issue at stake in UARG than the EPA's interpretation of its authority under those provisions of the CAA. That issue was whether the EPA's more general authority to regulate greenhouse gases under the CAA would survive. EPA's regulatory authority over GHGs was first established by the landmark case Massachusetts v. EPA, 549 U.S. 497 (2007), which held that EPA may regulate GHG emissions from mobile sources of air pollutants.
Following Massachusetts, EPA sought to exercise its GHG regulatory authority over stationary sources under the Prevention of Significant Deterioration provisions of Title I of the CAA, as well as the permitting provisions of Title V of the CAA. However, these statutory provisions set such low threshold volumes for emissions, that they were impractical when it came to regulating GHGs.
If EPA was forced to regulate GHGs at the low statutory threshold emissions volumes for PSD and Title V, it would have embraced a tremendous number of sources within the purview of EPA's regulatory authority. This volume of regulated entities would have drained EPA's resources to actually regulate, so it promulgated the "Tailoring Rule" to focus only on the largest stationary sources of GHGs.
The Tailoring Rule was the crux of the UARG case: industry argued that EPA could not unilaterally ignore the substance of a statute-the statutory thresholds for PSD and Title V-while EPA responded that it was entitled to focus its regulatory resources as it saw fit, namely, on the most significant sources of such pollution.
While executive agencies are typically given broad discretion to interpret and enforce the statutes they are charged with administering, the Tailoring Rule went too far for the Supreme Court. In UARG, the majority wrote that EPA couldn't "effectively rewrite" the substance of the Clean Air Act through the Tailoring Rule. However, and most importantly, the court left untouched the EPA's general regulatory authority over GHGs, blessing the expansion from the original mobile sources of such pollution to stationary sources, as well (despite a strongly worded dissent by Justices Alito and Thomas that stated Massachusetts was wrongly decided).
The takeaway is that EPA can regulate GHG emissions from this broader range of sources of air pollution that are already subject to the PSD and Title V provisions of the CAA-dubbed "anyway sources" in the UARG decision. EPA calculates that this amounts to 83 percent of the GHGs that it was trying to regulate, so even though its Tailoring Rule was struck down, it still claims a victory in the UARG case.