Supreme Court sets limit on EPA’s power to regulate carbon dioxide emissions

June 26, 2014

Recently, this blog discussed the Obama Administration's plan to order the U.S. Environmental Protection Agency (EPA) to write rules that would encourage the creation of state cap-and-trade programs and cut carbon emissions at coal-fired plants. At the time, we noted that the authority to make this decision came from a 2007 Supreme Court decision, in which the high court ruled that the EPA was required to regulate these emissions under the Clean Air Act, provided that the agency found them to be a threat to human health and welfare.

Earlier this week, the Court issued another ruling related to this issue. Though the decision will not have a large impact on the Obama Administration's policy toward carbon emissions, it will affect how the EPA handles regulation.

According to an article on Vox, the decision will reduce the number of carbon-emitting facilities that the EPA is allowed to regulate. Specifically, the Court ruled that the term "air pollutant" would have different meanings in different parts of the Clean Air Act. While in some parts of the act the term would refer to carbon dioxide, in other parts, it would not.

To understand why this is the case, it is important to learn about the Clean Air Act as it currently stands. The law requires facilities to be regulated if they emit more than 250 tons of pollutants per year. At the time the act was written, this referred to hazardous chemicals, like lead, which are dangerous in small amounts. But now that carbon dioxide is counted as an air pollutant, virtually every factory would be required to seek out a permit from the government to operate. If allowed to continue unchecked, this quirk of the regulation could seriously slow down industrial production.

Since Congress was not about to change the law, the EPA decided to take matters in its own hands. It exempted facilities that emitted fewer than 100,000 tons of carbon dioxide per year. Arguing that this would constitute an executive re-write of the law, the Court chose its own interpretation. In practice, this means that the EPA will still be able to regulate carbon dioxide coming from plants that are already being regulated for other pollutants. It will not be able to regulate new power plants based on carbon emissions alone.

Whether this amounts to a major change remains to be seen. According to one estimate, the new interpretation of the Clean Air Act will allow the EPA to regulate 83 percent of greenhouse gases emitted by industry and power generation. Previously, that amount was thought to be 86 percent.

In short, this means that energy utilities and other industries still have an incentive to work with environmental consultants to reduce their impact on the environment and ensure compliance by cutting back on their emission of air pollutants. For the time being, it appears unlikely that the Court will act further to limit this policy.