Greenhouse gas regulations could go up in smoke

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The Obama administration is urging the justices of the U.S. Supreme Court to rule that the Environmental Protection Agency’s statutory mandate to regulate motor vehicle greenhouse gas emissions triggers a requirement that the agency also regulate emissions from stationary buildings in order to combat the “urgent” problem of climate change.

“It is the gravest environmental problem that we face now,” U.S. Solicitor General Donald Verrilli Jr. said during oral argument Monday. “The effects are cumulative [so] every year we wait, we make the hole deeper and we create an even greater threat to future generations”

But attorneys for a number of industry groups and states argue that the EPA has overstepped its regulatory authority by stretching the meaning of the Clean Air Act so far as to essentially rewrite the law to apply to pollution sources in a way that Congress never intended.

“Congress does not establish round holes for square pegs,” Texas Solicitor General Jonathan Mitchell said. “[An] agency cannot make a round hole square by rewriting unambiguous statutory language.”

During an extended oral argument session that ran beyond the allotted 90 minutes, the justices took up a group of six consolidated cases known colloquially as the “greenhouse gas cases.” At issue is whether the EPA had statutory authority to enact a number of regulations aimed at regulating emissions of carbon dioxide, methane, hydrofluorocarbons and other greenhouse gases from stationary buildings, and whether the agency’s interpretation of the CAA should be given deference.

But at least some justices seemed unwilling to give the EPA the wide leeway it seeks in regulating gases from sources which, but for exceptions carved out by the agency, could subject apartment buildings, schools and even some large private homes to EPA regulation.

“I couldn’t find a single precedent that strongly supports your position,” Justice Anthony Kennedy told Verrilli.

Clarifying Massachusetts v. EPA

The cases give the justices the opportunity to elaborate on, and possibly limit, their holding in the 2007 decision Massachusetts v. EPA, which held that greenhouse gases were air pollutants under the CAA and that the EPA was statutorily required to regulate them.

Starting in 2009, the Obama administration issued a number of regulations aimed at curbing greenhouse gas emissions, starting with the “Tailpipe Rule,” which set emission standards for cars and light trucks under Title II of the CAA.

The EPA then determined that its regulation of automobiles automatically triggered an obligation to regulate greenhouse emissions from stationary sources under two CAA provisions: the Prevention of Significant Deterioration of Air Quality provision and the Stationary Source Operation Permit program of Title V. Acting under those provisions, the EPA created regulations that covered buildings considered to be a “major source” of greenhouse gas emissions. But it also created a “Tailoring Rule,” which raised the regulatory threshold for greenhouse emissions from 100 to 250 tons per year (depending on the facility) to 75,000 to 100,000 tons per year an effort to prevent the new rules from applying to small structures like residential buildings and other entities that had never been subjected to EPA regulation.

Private sector and state officials challenged the regulations in court, arguing that the EPA was essentially making up its own rules without respect to the CAA in order to regulate more sources of greenhouse gases.

The U.S. Court of Appeals for the D.C. Circuit disagreed, holding that the regulations were rational and legally permissible under the CAA.

Litigants in dozens of cases sought Supreme Court review and the justices granted certiorari in six cases, consolidating them and asking for the parties’ views on a single question: Whether the EPA had permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the statute.

Rewriting the law?

Peter Keisler, a partner in the Washington office of Sidley LLP, argued on behalf of the private companies challenging the EPA’s rulemaking that the agency took its authority to regulate automobile tailpipe emissions too far, “rewriting other provisions of the statutes that are clear and unambiguous” in order to regulate stationary sources.

Justice Stephen Breyer pointed out that the Tailoring Rule and other exemptions read into the statute were created in order to avoid regulating structures that were not intended to fall within the CAA’s purview.

“For example, if there were a statute that said you have to throw out all bubble gum that’s been around for more than a month,” Breyer said, “bubble gum used in a display case that nobody ever intends to eat [could be exempted]. Why can’t EPA take the same approach here?”

“I don’t know that there actually is a precedent of this court which says the agency can do precisely what it did here, which is make an express command that identifies thresholds,” Keisler replied.

Mitchell argued on the states’ behalf that the EPA’s aggressive approach to greenhouse gas regulation tramples over the CAA.

“Congress never delegated regulatory authority over greenhouse gases in the PSD and Title V programs,” he said.

But after wrangling over the text of the statute and whether the regulations applied in cases where the impact of the greenhouse emissions was primarily local, Justice Elena Kagan asked whether the EPA wasn’t in the best position to make a determination.

“That to me is the quintessential ambiguity in a statute where we give deference to the agency,” she said.

During Verrilli’s argument, the justices spent a good deal of time arguing with each other.

“Statutes all the time have implicit exceptions,” said Breyer, underscoring his earlier point.

“I don’t have as expansive a notion of reading exceptions into a statute that are not there as Justice Breyer does,” replied Justice Antonin Scalia.

The consolidated cases are: Utility Air Regulatory Group v. EPA, No. 12-1146; American Chemistry Council v. EPA, No. 12-1248; Energy-Intensive Manufacturers Working Group on Greenhouse Gas Regulation v. EPA, 12-1254; Southeastern Legal Foundation v. EPA, No. 12-1268; Texas v. EPA, No. 12-1269; and Chamber of Commerce of the United States v. EPA, No. 12-1272.

A decision is expected later this term. Follow @dcdicta