US Supreme Court limits EPA ability to restrict greenhouse gases

23 June 2014 18:02 Source:ICIS News

US Supreme Court limits EPA ability to restrict greenhouse gasesWASHINGTON (ICIS)--The US Supreme Court on Monday imposed limits on the Obama administration’s plans to sharply reduce greenhouse gas (GHG) emissions by industrial sites, ruling that the Environmental Protection Agency (EPA) has overstepped its authority.

The decision was quickly welcomed by the American Petroleum Institute (API), which, along with many other industry groups, was one of the plaintiffs challenging the EPA’s authority to regulate GHG emissions from what the agency calls “stationary sources”, such as chemical plants, refineries and a wide range of other production facilities.

In what may prove to be a key ruling, the high court held that the EPA does not have the right to interpret and adjust congressional intent as expressed in the Clean Air Act (CAA) to fit agency objectives that are not authorised by the law.

The EPA has authority under the CAA’s “prevention of significant deterioration” programme (PSD) to require an existing “major emitting facility” or planned new major plant to use the best available control technology (BACT) to limit emissions of pollutants.

But in May 2010 EPA sought to expand that PSD permitting authority to reach factories’ emissions of carbon dioxide (CO2) and other greenhouse gases.   

However, in expanding its reach to GHG emissions by stationary sources, the EPA was obliged to issue a “tailoring rule", because as defined in the CAA, any source that emits more than 100-250 tonnes annually of a regulated substance is subject to EPA limits and PSD permitting obligations.

But because that 100-250-tonne criteria would have required EPA to impose GHG regulations on possibly millions of facilities across the country - even a donut shop likely emits more than 250 tonnes of GHG annually - the agency redefined or “tailored” the CAA's major emitter criteria, raising the emissions threshold from 100-250 tonnes to 100,000 tonnes, to avoid what EPA itself called an “absurd result”.

Opponents of the EPA’s GHG rules contend that the agency has no authority to unilaterally alter provisions of the Clean Air Act as approved by Congress.

In its ruling on Monday, the high court agreed.

“The Act [CAA] neither compels nor permits EPA to adopt an interpretation of the Act requiring a source to obtain a PSD … permit on the sole basis of its potential greenhouse gas emissions,” the court ruling said.

“Nor does the Act permit EPA’s interpretation” of the CAA as expressed in the agency’s tailoring rule, said the Supreme Court.

“EPA’s interpretation would … bring about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorisation,” the court held.

“EPA lacked authority to ‘tailor’ the Act’s unambiguous numerical thresholds of 100 or 250 tonnes per year to accommodate its greenhouse gas-inclusive interpretation of the permitting triggers,” the opinion said, adding: “The power to execute the laws does not include a power to revise clear statutory terms that turn out not to work in practice.”

On its face, the ruling does not bar EPA from imposing PSD permitting requirements on major facilities for their GHG emissions, but it does call into question the manner in which the agency has sought to draw greenhouse gas emissions within its regulatory grasp.

Some industry officials expressed confidence that the high court ruling is “a victory - but we’re still trying to figure out how big a victory”.

The API noted that “today’s decision will help to ensure that [PSD] permitting requirements fall within the authority granted by Congress”.

API general counsel Harry Ng said that the high court’s decision “is a stark reminder that the EPA’s power is not unlimited”.

“Any new rules should be designed to complement - not strangle - the manufacturing renaissance America is experiencing thanks to new energy production,” Ng said.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By Joe Kamalick