Today, a divided Supreme Court issued a highly anticipated Clean Air Act (the “Act”) decision in Utility Air Regulatory Group v. EPA. In an opinion authored by Justice Scalia, the Court rejected EPA’s application of the Act to require stationary sources to obtain a Prevention of Significant Deterioration (PSD) permit or Title V “major source” permit based solely on their potential greenhouse gas (GHG) emissions. At the same time, the Court upheld EPA’s determination that for sources that would otherwise require PSD permits—known as “anyway” sources—EPA can require compliance with “best available control technology” (BACT) emission standards for greenhouse gases.

The decision is both a win and a loss for EPA. The win was the Court’s confirmation of EPA’s ability to regulate GHGs under the Clean Air Act and preservation of the majority of EPA’s rule, which is a critical element of President Obama’s efforts to implement climate change regulations without the need for Congressional action. After the Supreme Court’s 2007 decision in Massachusetts v. EPA, which concluded that GHG emissions from motor vehicles constituted “air pollutants” under the Act and therefore were subject to EPA regulation, EPA embarked upon a rule-making process that ultimately regulated GHG emissions from stationary sources. Recognizing that existing statutory emissions thresholds under the Act of 100 or 250 tons of GHGs would sweep in too many small stationary sources, EPA issued regulations raising these thresholds to 75,000 to 100,000 tons per year—known as the “tailoring” rule—to ensure that GHG-based PSD and Title V permitting requirements would apply only to the largest industrial sources of GHG emissions.