US Supreme Court to Review EPA Greenhouse Gas Regulations for Stationary Sources – What is at Stake?

On Tuesday, October 15, 2013, the Supreme Court agreed to review whether EPA took an unreasonable leap by determining that its regulation of greenhouse gas (“GHG”) emissions from new motor vehicles (the “Tailpipe Rule”) automatically triggered a statutory requirement for EPA to regulate GHG emissions from stationary sources.  (See Squire Sanders’ frESH Blog Post discussing one of the petitions for certiorari here.)  The Court declined to hear challenges to the Tailpipe Rule itself and EPA’s 2009 endangerment finding which provided the scientific basis for EPA’s GHG rules.  If the Supreme Court decides in EPA’s favor, prevention of significant deterioration (“PSD”) and Title V GHG permitting will continue uninterrupted.  But, the opposite decision could cause significant ripple effects for major stationary sources.

That is because several other GHG rules are also implicated.  One such rule is the Tailoring Rule, which EPA designed to scale in the automatic GHG permitting requirements beginning with the largest sources.  For example, if the Court determines that regulation under the Tailpipe Rule did not trigger immediate stationary source permitting requirements, the Tailoring Rule would likely no longer have a purpose.  This raises important questions about the status of facilities that were permitted lawfully under the Tailoring Rule.  By granting certiorari, the Court also creates more uncertainty for projects with potential GHG permitting requirements — including planning concerns, construction schedules, financing options and changes in design plans — while a decision is pending.  Moreover, this draws into question the validity and need for state implementation plans that govern GHG permitting as well as the biomass deferral rule vacated in Center for Biological Diversity v. EPA, No. 11-1101 (D.C. Cir. 2013). (See Squire Sanders’ frESH Blog Post about the case here.)

Although still possible, it is less likely the Court’s review will impact EPA’s current efforts to develop New Source Performance Standards (“NSPS”) for power plants under CAA §111(b) and standards of performance for existing sources under CAA §111 (d).  (See Squire Sanders’ frESH Blog Post about President Obama’s climate action plan here.)  That is because EPA’s authority to establish performance standards under CAA §111 does not use the same statutory trigger as the permitting authority being directly reviewed by the Court.  Therefore, while EPA will inevitably face multiple legal challenges to the NSPS, the issue of automatically “triggering” stationary source provisions will not be among them.  Squire Sanders will continue to track and provide updates on these issues as they unfold.