Phoenix, AZ


Supreme Court Partially Upholds and Rejects EPA’s “Greenhouse Gas Tailoring Rule”

Jun 23, 2014


          The U.S. Supreme Court’s recent decision in Utility Air Regulatory Group v. EPA partially upheld and partially rejected EPA’s so-called “Greenhouse Gas Tailoring Rule,” greenhouse gas regulations directed at industrial pollution sources.  The rule adopted thresholds of 100,000 tons for new sources of greenhouse gases for PSD, NNSR and Title V applicability, and a 75,000 ton threshold for “major modifications.” 
          The Court, in a 5-4 decision, held that the CAA neither requires nor allows EPA to interpret the Act as requiring a source to obtain a PSD or Title V permit on the sole basis of potential greenhouse-gas emissions. The Court explained that, when the phrase “air pollutant” appears in the operative provisions of the Act, the EPA has routinely limited the scope of that phrase by its context. Additionally, by applying the general definition of “air pollutant” to context-specific instances, the EPA impermissibly sought to expand EPA’s regulatory authority without clear congressional authorization. The Court also held that the EPA could not replace the statutory 100/250 ton “major source” threshold with the new 100,000 ton threshold because such a regulatory act contradicted a clear legislative mandate.
          Also by a 5-4 decision, the Supreme Court held that there are some limits on BACT under greenhouse gas authority – e.g., EPA cannot require “redesign of a source” or mandatory reductions in a facility’s demand for energy from the grid.  This may be dicta, however.
          By a 7-2 decision, the Supreme Court held that the EPA permissibly interpreted the Act to require sources already subject to PSD/NNSR (e.g., those sources that already exceed the 250/100 ton major source threshold or that are undergoing a “major modification”) to comply with BACT for greenhouse gases. The court also found that the 75,000 ton threshold was not adopted as a “de minimis” amount under the PSD program and remanded setting an appropriate de minimis amount to EPA for further proceedings.
          For the full opinion, visit http://www.supremecourt.gov/opinions/13pdf/12-1146_4g18.pdf.



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