July 16, 2012 - In the 2007 case of Massachusetts v. EPA, the Supreme Court held that carbon dioxide and five other kinds of greenhouse gas (GHG) were “air pollutants” subject to regulation under the federal Clean Air Act (CAA). The EPA previously had taken the position that GHGs were not air pollutants. The EPA’s previous position was understandable in light of the fundamental difference between GHGs and other air pollutants that are directly dangerous to human health. GHGs in common concentrations do not pose direct risks to human health as a result of inhalation or exposure. Rather, their accumulation is generally believed to cause global warming and resulting rise in sea levels and other consequences that threaten public health and welfare. Moreover, given the ubiquitous activities that generate GHG emissions, and the relatively low thresholds for regulation of air pollutants under the CAA, millions of industrial, commercial, and residential sources would be subject to CAA permitting as a result of their GHG emissions, many times more than the sources of other air pollutants that are subject to CAA regulation.

In response to Massachusetts v. EPA, a series of four actions were taken by the EPA:

• First, in direct response to the Supreme Court’s directive, the EPA issued an Endangerment Finding for GHGs, defining as a single “air pollutant” an aggregate group of six GHGs: carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflourocarbons, and sulfur hexafluoride. The EPA concluded that GHG emissions contribute to global warming and resulting endangerment of public health and welfare.
  
  
• Second, pursuant to the CAA requirement that automobile emission standards be established for air pollutants, the EPA adopted a “Tailpipe Rule,” establishing GHG emission standards for cars and light trucks, in joint rule-making with the National Highway Traffic Safety Administration (NHTSA).
  
  
• Third, the Tailpipe Rule automatically triggered regulation of stationary GHG emitters under two separate sections of the CAA, requiring state-issued permits for sources emitting over 100 tons per year (tpy) of any pollutant, under one of these CAA sections, and 250 tpy, under the other CAA section.
  
  
• Fourth, because millions of industrial, commercial, and residential sources would be subject to CAA regulation under these rules, many times more than the sources subject to CAA regulation for other pollutants, the EPA adopted “timing” and “tailoring” rules that greatly reduced the number of sources that would be subject to CAA regulation. These rules limit the CAA’s regulatory reach to new facilities with GHG emissions of at least 100,000 tpy of carbon dioxide, or to existing facilities emitting at least 100,000 tpy that make facility changes increasing GHG emissions by at least 75,000 tpy. The EPA reasoned that immediately subjecting all sources emitting over 100/250 tpy of GHGs would impose overwhelming costs on industry and state permitting authorities.

Numerous states and regulated industries directly challenged the EPA’s four actions in the federal Court of Appeals. In its June 26, 2012 decision, the Court upheld the Endangerment Finding, Tailpipe Rule, and permitting requirements, but declined to actually decide challenges of the “timing” and “tailoring” rules because none of the challengers had standing to obtain judicial review of those rules. In short, none of the challenges to the EPA's actions on GHGs succeeded. The Court's decision is available here. Appeals to the Supreme Court are virtually certain. The Supreme Court may or may not agree to review the Court of Appeals decision.

The EPA has repeatedly stated that GHGs should be regulated using “common sense,” and, for now, industries may rely upon the tailoring rule’s 100,000 tpy threshold for GHGs. However, the EPA established the 100,000 tpy threshold because state permitting authorities do not have adequate staff to permit the millions of facilities that exceed the 100/250 tpy threshold level. Before the Court of Appeals, the EPA argued (and the court seemed to agree) that GHGs are subject to the CAA’s 100/250 tpy statutory threshold level. And the EPA acknowledged that millions of industrial, residential, and commercial sources exceed the 100/250 tpy threshold for GHGs. If and when the EPA will require permits for smaller emitters that exceed the statutory threshold but fall far short of the tailoring rule remains to be seen. Stay tuned.

For additional information, please contact any attorney from our Environmental practice group.