Does The Supreme Court’s Opinion In Utility Air Regulatory Group v. Environmental Protection Agency, et al. (June 23, 2014) Foretell The Future Of Greenhouse Gas Regulation Under The Clean Air Act?

Background – The Tailoring Rule

On May 13, 2010, the United States Environmental Protection Agency ("EPA") issued a final rule requiring new or modified stationary sources of Greenhouse Gas ("GHG") emissions located in areas of the country that are in attainment or are unclassifiable for any National Ambient Air Quality Standard to obtain pre-construction permits under section 165(a) (Prevention of Significant Deterioration) of the Clean Air Act ("Act"). This new GHG rule also defined when new and existing industrial sources of GHG emissions were required to obtain a Title V permit under section 502 of the Act.

In adopting the so-called "Tailoring Rule" for GHG emitting sources, EPA decided to ignore the statutory numerical thresholds that traditionally triggered the PSD and Title V requirements for "major emitting facilities" and "major sources." The PSD rules require specified stationary sources of air pollutants that directly emit, or have the potential to emit, 100 tons per year or more of any air pollutant, or any other (non-specified) source with the potential to emit 250 tons per year or more of any air pollutant, to obtain a PSD permit. CAA §§ 165(a)(1) and 169(1). Title V permits are required for sources that directly emit or have the potential to emit 100 tons per year or more of any air pollutant. CAA §§ 302(j) and 502(a). EPA's rationale for the Tailoring Rule was that while PSD and Title V triggering thresholds were appropriate for criteria pollutants, they were not "feasible" for GHGs because GHGs from even minor sources are emitted in much larger quantities. It perceived an administrative nightmare if all sources of GHG emitting 250 tons per year or more were subject to PSD and the need to obtain a Title V permit. Despite EPA's purported largess, the new GHG rules still applied to some relatively small industrial sources.

EPA initially phased in the GHG permitting requirements in two steps, but promised to later consider adding smaller sources in a third step.

Step 1 required GHG sources emitting 75,000 tpy or more that were already subject to the PSD and Title V permitting programs ("anyway sources") to determine the Best Available Control Technology ("BACT") for their GHG emissions. In Step 2, new or modified sources emitting 100,000 tpy or more of GHGs were required to obtain PSD and Title V permits, even if they did not exceed the permitting threshold for any criteria pollutant ("GHG only sources"). Step 3, which might have drawn smaller GHG sources into the PSD and Title V programs, was considered by EPA, but it decided in June 2012 that it would not lower its threshold limits.

According to EPA, without the Tailoring Rule, and its compliance deadlines and triggering thresholds, PSD and Title V permitting at the 100 and 250 tons per-year level would have taken effect immediately and would...