The Supreme Court Rules on EPA Regulations: A Review and a Look Ahead

A fractured Supreme Court today handed down a decision in Utility Air Regulatory Group v. EPA, which I discussed on FixGov after oral arguments in February. At issue was whether EPA was right to apply the Clean Air Act’s Prevention of Significant Deterioration (PSD) permit requirements to polluters solely on the basis of their greenhouse gas emissions—which are now being regulated under other parts of the act. Complicating this question was the fact that the Clean Air Act’s numerical thresholds for applicability, if applied literally, would encompass tens of thousands of sources that were previously not subject to permitting, creating an administrative morass. EPA hoped to avoid that scenario by “tailoring” the statute so that it would apply only to the largest greenhouse gas emitters, and thus achieve a more reasonable application of the section. As I explained in February, the case could be seen as a referendum on whether executive branch agencies should be allowed to act as they determine reasonable even when statutory provisions seem to constrain them from doing so.

Justice Scalia, joined by the Court’s conservatives (Roberts, Kennedy, Thomas, and Alito), held that EPA’s maneuver in the case of PSD application was too cute. Far from being mandated by the statutory language, the conservative justices found that the overall language of the act made EPA’s application impermissible—meaning that the agency had no business applying PSD to any sources based solely on their greenhouse gas emissions. Indeed, by relying on a “tailoring” strategy explicitly at odds with the statutory text, EPA revealed that this part of the act could not be reasonably applied to greenhouse gases in isolation. The Court’s rejection of EPA’s tailoring was quite emphatic: “Were we to recognize the authority claimed by EPA in the Tailoring Rule, we would deal a severe blow to the Constitution’s separation of powers… The power of executing laws…does not include a power to revise clear statutory terms that turn out not to work in practice” (23).

As I noted in February, Justice Breyer was far more inclined to allow the agency “to read an unwritten exception” allowing it to perform a reasonable tailoring lest a more constraining interpretation deprive it of needed flexibility (see his opinion, at 10). That provoked a sharp rebuke from Scalia and company, who said they “shudder to contemplate the effect that such a principle would have on democratic governance” (Court opinion, 24, footnote 8). To Breyer’s mind, the Court’s context-sensitive interpretation of “air pollutant” precluding a literal reading is every bit as much of an implicit rewrite as the EPA’s tailoring rule; but for the Court’s conservatives, it is important to clearly delineate the limits of Chevron deference, and rewriting explicit numerical elements enshrined in statutory language was a bridge too far.

The decision was far from a complete loss for the EPA. Scalia, Roberts, and Kennedy joined the Court’s liberals in deciding that those sources subject to PSD permits “anyway”—that is, because of their emissions of conventional pollutants—can properly be forced to apply the “Best Available Control Technologies” (BACT) to their greenhouse gas emissions. Only Justices Alito and Thomas dissented from this part of the decision, taking the opportunity to reiterate their opposition to the basic holding of Massachusetts v. EPA, the 2007 case which set in motion the application of the Clean Air Act to greenhouse gases in the first place.

To clarify, the implications of this case have very little to do with the future of the recently-proposed and much-discussed Clean Power Plan, through which the Obama administration will regulate greenhouse emissions from existing power plants under § 111(d) of the Clean Air Act. In terms of policy substance, the PSD case just decided was always something of a sideshow, with the main event to unfold only as EPA finalizes its main power plant emissions controls in the following years. At that point, we are sure to see another round of litigation—with much higher practical stakes. For now, the EPA has sustained a largely-symbolic rebuke, but there is every reason to believe it will still be moving full steam ahead.