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Industry Sees Warning on Power Plant Carbon Rules in Supreme Court Decision

Tuesday, June 24, 2014

By Andrew Childers  

June 23 — A U.S. Supreme Court decision limiting the scope of the Environmental Protection Agency's greenhouse gas permitting program won't directly impact its efforts to regulate carbon dioxide from power plants.

However, the June 23 decision written by Justice Antonin Scalia is providing plenty of rhetorical ammunition to industry groups that argue the agency's proposed carbon dioxide standards for existing power plants exceed its statutory authority.

In a footnote, Scalia acknowledged the EPA's authority to regulate carbon dioxide emissions from industrial sources such as power plants under Section 111 of the Clean Air Act, but attorneys said his opinion is full of language regarding regulatory overreach that should caution the agency as it readies its rules.

The court in its decision ruled that greenhouse gases can't trigger the permitting requirements because they are emitted in quantities that would make enforcing the statutory permitting thresholds impractical.

In the opinion, Scalia said that the EPA's permitting program was “an enormous and transformative expansion in EPA's regulatory authority without clear congressional authorization.”

Court Cites ‘Measure of Skepticism.'

He also warned that, “When an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,' Brown & Williamson, 529 U. S., at 159, we typically greet its announcement with a measure of skepticism.”

Opponents of the EPA's plan to regulate carbon dioxide emissions from existing power plants (RIN 2060-AR33) say that the agency has overstepped its regulatory authority by proposing state-level emissions rates rather than setting a standard specific to individual power plants (79 Fed. Reg. 34,830).

Scalia's opinion could be used to make that argument, attorneys said.

“You would be foolish not to be citing this language in the first paragraph of your comments,” Roger Martella, a partner at Sidley Austin LLP who represented the American Chemistry Council in the litigation, told reporters June 23.

Facility Controls Discussed

Thomas Lorenzen, a partner at Dorsey & Whitney LLP, told Bloomberg BNA that the decision discusses the types of unit-specific controls such as carbon capture that can be applied to industrial facilities as part of the best available control technology review.

Industry groups could use that language to argue the EPA overstepped its bounds when it proposed carbon dioxide standards for existing power plants that would seek emissions reductions through renewable energy investments and demand reduction programs outside of the power plants themselves.

“EPA had hoped to come out of this with their 111(d) authority unquestioned,” Lorenzen said. “That's where industry gained something. There are parts of this opinion that can be used to say EPA is overreaching.”

Lorenzen defended the EPA's permitting rule before the U.S. Court of Appeals for the District of Columbia Circuit during his time at the Justice Department.

Question Raised on EPA's Reach

Ann Weeks, senior counsel at the Clean Air Task Force, told Bloomberg BNA that the question of how far the EPA can reach beyond the facility for emissions reductions wasn't before the Supreme Court, but the decision indicates it is an issue the justices are aware of.

“Clearly these justices are thinking about the distinction about what can be done at a facility and how far beyond the facility you can look,” she said.

While Scalia's opinion seems to bolster industry's arguments against the EPA's proposed power plant rule, Nathan Richardson, a resident scholar at Resources for the Future, told Bloomberg BNA that doesn't indicate whether there are five votes to overturn the EPA's rule should it come before the Supreme Court.

“It doesn't tell you whether you have the votes for that in another case,” he said.

Majority of Emissions Still Regulated

Though the decision curbs the scope of the EPA's greenhouse gas permitting program, Scalia said the EPA will still regulate 83 percent of greenhouse gas emissions from stationary sources even after the court decided that greenhouse gases alone cannot trigger prevention of significant deterioration or Title V permitting requirements.

That is only 3 percent less than the EPA would be able to regulate if greenhouse gases were determined to trigger the permitting regulations.

“The vast majority of emissions the EPA sought to regulate it can regulate,” Professor Richard Revesz, director of the Institute for Policy Integrity at the New York University School of Law, told reporters June 23.

While the decision is the first legal setback for the EPA's greenhouse gas regulatory program, the agency's fundamental authority to regulate greenhouse gas emissions under the Clean Air Act has been reaffirmed by the Supreme Court for a third time, attorneys said.

“It's now safe to say, if it wasn't already, that it's settled law the EPA has authority to regulate greenhouse gases under the Clean Air Act,” Sean Donahue, an attorney who represented environmental groups in the lawsuit, told reporters June 23.

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

The Supreme Court's opinion in Util. Air Regulatory Grp. v. EPA is available at http://www.supremecourt.gov/opinions/13pdf/12-1146_4g18.pdf.

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