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Supreme Court issues its decision on EPA's GHG Tailoring Rule

By Erin Voegele | June 24, 2014

On June 23, the U.S. Supreme Court issued its decision on the U.S. EPA’s Tailoring Rule. While the court invalidated a portion of the rule, it essentially held up EPA’s ability to regulate greenhouse gas (GHG) emissions for certain facilities, specifically those required to obtain a Prevention of Significant Deterioration permit due to the emission of other regulated pollutants. The court’s ruling, however, did nothing to address the uncertainty faced by those in the biomass industry with regard to the EPA’s treatment of biogenic emissions.  

In its decision, the Supreme Court indicated that the EPA exceeded its statutory authority when it interpreted the Clean Air Act to require PSD and Title V permitting for stationary sources based on their GHG emissions. “Specifically, the agency may not [GHGs] as a pollutant for purposes of defining a ‘major emitting facility’ (or a ‘modification’ thereof) in the PSD context or a ‘major source’ in the Title V context. To the extent its regulations purport to do so, they are invalid. EPA may, however, continue to treat [GHGs] as a ‘pollutant subject to regulation under this chapter’ for purposes of requiring [best available control technology (BACT)] for ‘anyway’ sources,” wrote the Supreme Court in its decision.

The regulatory road to the Supreme Court’s most recent decision has been a long one. In April 2007, the Supreme Court ruled in the case of Massachusetts v. EPA, determining that GHGs are air pollutants covered by the Clean Air Act. That decision required the EPA to determine whether GHG emissions from new motor vehicles could endanger public health or welfare. The 2007 decision ultimately paved the way for the EPA’s 2009 endangerment finding, which asserted that GHG emissions do, in fact, threaten public health and welfare.  The endangerment finding ultimately helped open the door for the federal regulation of GHG emissions.

In September 2009, the EPA took its first official steps to regulate GHG emissions when it proposed a joint rule with the U.S. Department of Transportation’s National Highway Traffic Safety Administration to set GHG standards for new light-duty vehicles. Later that month, the EPA proposed its Tailoring Rule, which among other actions aimed to tailor default emissions levels contained in the CAA to make them applicable to GHG emissions. The Tailoring Rule was finalized in May 2010. The final rule, however, did not address the difference between biogenic and fossil-based carbon emissions.  Several groups subsequently challenged EPA’s failure to differentiate between biogenic carbon emissions and those from fossil fuels. In 2011, the agency issued a final deferral for carbon dioxide emissions from bioenergy and other biogenic sources under PSD and Title V permitting. The rule deferred regulation of biogenic emissions for three years. 

The EPA soon began work to develop an accounting framework for biogenic carbon dioxide emissions from stationary sources. In early 2012, the agency’s Science Advisory Board issued a draft response to that framework. The EPA is still working to finalize the accounting framework for biogenic emissions. Earlier this year, EPA Administrator Gina McCarthy indicated she is hopeful the framework could be complete sometime this year. 

Meanwhile, a lawsuit was filed against the EPA in the U.S. Court of Appeals for the District of Columbia Circuit. That legal challenge asserted that the EPA provided insufficient legal justification to defer GHG regulation of biogenic emissions, vacating the EPA’s Deferral Rule. The biomass industry, including the Biomass Power Association, then asked the court for a stay on the matter. According to BPA President and CEO Bob Cleaves, the court accepted the request to put the case on hold pending the Supreme Court’s underlying analysis and ultimate decision on the validity of the tailoring rule. “What the Supreme Court did yesterday, for all intents and purposes, is invalidate the tailoring rule,” Cleaves said.

As it stands now, the EPA will regulate GHG emissions from facilities that are required to obtain PSD permits for any other regulated pollutant. According to the EPA, the PSD permitting program applies to a new plant that will have “major” and “significant” amounts of air pollution from any criteria pollutant. It also applies to existing plants that plan to modify operations such that the modification leads to increases of air pollution that will be “major” or “significant.” “Major” is defined as having the potential to emit 100 tons per year of any criteria pollutant for the specific source categories listed in PSD regulations, or a threshold of 250 tons per year if a plant does not fall into one of those listed source categories. The term “significant” refers to thresholds assigned to each criteria pollutant and certain non-criteria pollutants. 

While the Supreme Court’s decision indicates a facility will not be regulated because of its GHG emissions level, it could be regulated for GHG emissions if it is already regulated for other pollutants under the PSD permit. As such, it is possible that biomass power plants, ethanol plants, advanced biofuel plants, and others in the bioenergy sector will be subject to EPA’s GHG regulations, assuming they are already required to obtain a PSD permit. How biogenic emissions generated at these facilities will be treated under the regulations is currently unclear, and won’t be until the EPA completes its framework for biogenic carbon emissions.  

Cleaves, however, points out its important to note that the Supreme Court said it in its decision that it believes EPA has the authority to impose BACT in those permitting decisions, and that includes GHG emissions. “A number of years ago, EPA issued a guidance document on BACT where they said using biomass actually, in and of itself, can constitute BACT,” he said.

The big question, said Cleaves, is when the EPA is going to issue a decision on biogenic carbon and what form that decision will take. "It all comes back to the job that EPA needs to finish, which is to provide a framework and a clear and simple declaration that biomass is, in fact, good from a carbon perspective," he said. 

 

 

 

 

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