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Expert’s take: Supreme Court EPA ruling

Expert's take: Supreme Court EPA ruling

The Supreme Court ruled yesterday on the Utility Air Regulatory Group v. Environmental Protection Agency case. Rich Trzupek, an expert in environmental regulation and a Policy Advisor to the Heartland Institute, sets us straight on what this ruling means for us:

Briefly, what was debated in the Supreme Court case regarding EPA and greenhouse gas emissions? What was each side arguing?

Essentially, the EPA had made what many believed was a very aggressive interpretation of the Clean Air Act in order to use that statute to regulate large sources of Greenhouse Gases. Greenhouse Gases, commonly referred to as GHG, are compounds like carbon dioxide and methane that some people believe are dramatically affecting the earth’s climate. The Clean Air Act does not specifically contain provisions to regulate GHGs, so the EPA got creative in order to do so.

The problem involves thresholds. For “conventional pollutants” like particulate matter, the Clean Air Act says that if a source emits more than so many tons per year (usually 250 tons, but sometimes 100 tons) then it has to jump through thus and so regulatory hoops. But when you apply a 250 ton threshold to GHG emissions, everything goes to hell in a hand-basket. It’s incredibly easy to emit 250 tons of GHG. A moderate sized church or a commercial establishment would do so. In order to avoid regulating millions of sources like that, the EPA put forth it’s “tailoring rule” that said the threshold for regulating GHG emissions would be 100,000 tons per year. That would limit the regulatory effect to only very large sources of GHG, like power plants and oil refineries.

A number of people in industry (including me) were troubled by an agency reporting to the Executive Branch making arbitrary changes to an Act of Congress. This was the position of the Utility Air Regulatory Group that filed the suit against the EPA. The EPA argued that it had the authority to do make that change and that it’s duty to prevent “absurd outcomes” meant that it had an obligation to do so.

What was the outcome of the case? How will Americans be impacted the most?

The court unambiguously struck down the tailoring rule. Writing for the majority, Justice Scalia was very critical of the EPA and it’s attempt to rewrite the Clean Air Act to serve its own purposes. The following two sentences from his opinion give you a sense of Justice Scalia’s mood:

In the Tailoring Rule, EPA asserts newfound authority to regulate millions of small sources—including retail stores, offices, apartment buildings, shopping centers, schools, and churches—and to decide, on an ongoing basis and without regard for the thresholds prescribed by Con­gress, how many of those sources to regulate. We are not willing to stand on the dock and wave goodbye as EPA embarks on this multiyear voyage of discovery.

This is good news for most Americans. It clears away one obstacle that could have stood in the way of the kind of new energy projects we need. It also serves as a sharp rap on the knuckles to EPA, an agency that many believe has been exceeding its statutory authority for years.

There was some bad news with the good however. A part of the decision preserved EPA’s authority to regulate GHG emissions, but only at facilities that trigger federal permitting requirements for some other pollutant. The Administration and the EPA will claim this part of the ruling as a victory, because they believe this provision will allow them to get their regulatory hands on GHG emitters through what is essentially a back door. I don’t believe this will be the case nearly as much as they appear to believe it will be. Many, if not most, in industry will take great care to avoid tripping federal permitting for other pollutants so they can avoid the GHG regulatory quagmire.

Does this mean that coal-fired power plants will make a comeback?

Sadly, no. The tailoring rule was only one arrow in a regulatory quiver full of ammunition that has targeted coal-fired power for more than a decade. There are a number of rules and programs at the federal, regional and state levels that have resulted in many coal plant shutdowns in the past few years, with more scheduled in the future. With or without this rule, coal-fired power will remain on the decline, which is – in large part – why GHG emissions in the United States have been steadily declining for years and will continue to do so.

Fortunately, natural gas has taken up a lot of the slack. It’s in that sense that this ruling is important. The tailoring rule could have been used by environmental groups to block construction of new, energy-efficient natural gas fired power plants. Without it groups like the Sierra Club and NRDC are going to have a much harder time getting in the way of those kinds of projects. They’ll continue to try of course, for with the decline of coal, the natural gas industry looms ever larger on their target-acquisition radar.

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