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U.S. Supreme Court Validates Greenhouse Gas Permitting Requirements, Narrows Applicability

Posted Wednesday, July 2nd, 2014

On June 23, 2014, a divided U.S. Supreme Court affirmed in part and reversed in part the U.S. Court of Appeals for the District of Columbia Circuit’s validation of the U.S. Environmental Protection Agency’s (EPA) greenhouse gas (GHG) prevention of significant deterioration (PSD) and Title V permitting requirements.  The Court held that (1) the Clean Air Act neither compels nor permits EPA to require a source to obtain a permit solely on the basis of its potential GHG emissions (GHG-only permits), but (2) EPA reasonably interpreted the Act to require a source that must obtain a PSD permit based on its emission of conventional pollutants (PSD-anyway sources) to also comply with the best available control technology (BACT) requirements for GHGs.

The Court first considered whether the Act compels or allows GHG-only PSD or Title V permits.  The Court explained that while GHGs are “air pollutants” under the Act-wide definition, EPA has routinely given the term a narrower, context-appropriate meaning in the Act’s operative provisions, and, therefore, the Act does not compel GHG-only PSD and Title V permits.  The Court then explained that in addition to the Act not compelling EPA’s GHG-only interpretation, such an interpretation exceeded EPA’s interpretive discretion and was impermissible under the Act—citing in part EPA’s repeated acknowledgment that applying PSD and Title V permitting requirements to GHGs is inconsistent with the Act’s structure and design.  In reaching this conclusion, the Court also expressly invalidated EPA’s “tailoring” rule, which established higher, extra-statutory emission thresholds for triggering GHG PSD permitting.

The Court then considered whether EPA may require PSD-anyway sources to comply with BACT for GHGs.  Concluding that EPA is permitted to do so, the Court explained that EPA’s interpretation is permissible under Chevron, and the statutory requirement to install BACT “for each pollutant subject to regulation under” the Act cannot be construed to exclude GHGs.  The Court further held, however, that a PSD-anyway source must comply with BACT for GHGs “only if the source emits more than a de minimis amount of [GHGs].”

All nine Justices participated in the decision, with Justice Scalia writing the majority opinion.  Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, and Justice Alito, joined by Justice Thomas, each filed an opinion concurring in part and dissenting in part.

For additional information, contact Andrew Holway.

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