On June 23, 2014, the United States Supreme Court issued its widely anticipated decision in Utility Air Regulatory Group v. EPA concerning the U.S. Environmental Protection Agency’s regulation of greenhouse gas emissions (GHGs) from stationary sources. In a divided decision with a majority opinion written by Justice Antonin Scalia, the Court rejected EPA’s regulation of sources that would become newly subject to federal Clean Air Act permitting based only on their potential to emit GHGs. The Court’s decision to remove a wide range of sources from EPA’s permitting jurisdiction raises the question of whether those sources are now more vulnerable to common law claims.
In the Court’s landmark 2007 decision in Massachusetts v. EPA—widely known as the “single largest expansion in the scope of the Clean Air Act in its history”—the Court rejected EPA’s position at that time that the Clean Air Act could not encompass GHGs. EPA then began the regulatory process mandated by the Court, resulting in the rules at issue in UARG. In the same time frame, plaintiffs sought to obtain injunctive relief or damages under nuisance and other common law theories. In American Elec. Power Co. v. Connecticut, 131 S.Ct. 2527 (2011), one of those common law suits, the Court held that the Clean Air Act’s authorization of EPA regulation displaced any federal common law right to seek reduction of GHG emissions under common law theories. Id. at 2537.
In the rulemaking at issue in UARG, EPA interpreted the Act and its rules to mean that once GHGs were regulated under any part of the Clean Air Act, Title V and PSD permitting requirements would automatically apply to any stationary source with the potential to emit GHGs in excess of the respective 100- or 250-ton statutory air pollutant thresholds. Recognizing the regulatory burden this interpretation would impose on smaller sources never before subject to PSD or Title V requirements—such as malls, apartment buildings, and schools—EPA attempted to “tailor” its program for those “new” sources by redefining the statutory threshold for GHGs to 100,000 tons per year, as opposed to the statutorily-required 100 or 250 tons.
In its decision, the Court saw EPA’s attempt to “tailor” a clear 100- or 250-ton statutory threshold to 100,000 tons as an overstep in the Agency’s authority and an impermissible attempt to “tailor legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.” However, the Court supported EPA’s interpretation that sources already subject to PSD and Title V for conventional pollutants may be required to limit emissions of GHGs through conditions in their federal air permits. As a result of these two primary holdings, federal air permitting controls on GHGs apply only to large sources, such as power plants, refineries and heavy manufacturing facilities, and not to a wide range of other sources.
Does this mean that displacement of federal common law no longer applies for those other sources? For at least two reasons, the answer should be no.
First, the issues before the Court in UARG concerned certain federal permitting programs, not the entire Clean Air Act. Other sections of the Act, particularly section 111, provide alternate pathways for regulating greenhouse gas emissions. And the Court explicitly stated that its ruling on the permitting programs did not undercut EPA’s authority under section 111 to issue performance standards. See UARG, slip op. at 14-15 n. 5. Section 111 regulates by category, not by size. Indeed, EPA recently issued its first set of performance standards for GHG emissions, which will cover fossil fuel-fired power plants. Standards for other categories will very likely follow. Consequently, sources excluded by UARG from PSD and Title V regulation could nonetheless be included in section 111 performance standards and be required to reduce GHGs at some point in the future.
Second, even if EPA declines to issue performance standards for every category of sources, the displacement of federal common law remains intact.
The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law. Indeed, were EPA to decline to regulate carbon-dioxide emissions altogether at the conclusion of its ongoing § 7411 rulemaking, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination.
AEP, 131 S. Ct. at 2538-39. Thus, the regulatory process remains the exclusive avenue for federal limits on GHG emissions.
