The Supreme Court heard arguments this morning in Utility Air Regulatory Group v. EPA, a suit challenging the agency's authority to address greenhouse gas emissions using the Clean Air Act's PSD permitting program. I have not followed the case closely, and hesitate to make any predictions based on comments at oral arguments anyway. However, one comment made in passing by Solicitor-General Verrilli (arguing on behalf of EPA) could have serious implications, if I'm interpreting it correctly.If you aren't familiar with the background here, or if you do want some predicitons, see NRDC's David Doniger, Richard Frank on Legal Planet, or Johnathan Adler at the Volokh Conspiracy.
In any case, some minimal background: in 2007's Massachusetts v. EPA, the Court ruled that greenhouse gases were air pollutants within the definition of the Clean Air Act, and directed EPA either to regulate GHG emissions from cars and trucks, or explain why it would not do so. Having since issued such rules, EPA concluded that it must also review GHG controls as part of the permitting process for new and modified stationary emitters like factories and power plants. This is because the statute requires (or at least appears to require) new facilities that emit "any air pollutant" to use "best available control technology" to be eligible for a permit.
This, if interpreted strictly, leads to some costly and arguably absurd results. EPA's attempt to deal with those results while still regulating in this area are what's at issue in the case. When asked by Justice Sotomayor on what grounds he would prefer to lose, if indeed the court were to rule against him, Solicitor-General Verrilli opted for a creative reading of "any air pollutant" such that it would not include CO2 (see the transcript, starting on page 67; h/t James Coleman). Looking at the permitting program alone, this would be an acceptable result for EPA since it would exclude the many smaller emitters EPA would rather not review, but keep big emitters in if EPA has issued performance standards for them, as the agency is currently doing for power plants.
The potential problem I see arises from the fact that the "any air pollutant" language that is being creatively interpreted here pops up elsewhere in the statute, most importantly in section 111(d), which grants the agency (along with states) the authority to issue performance standards not just for new sources, but existing ones. Most analysts, myself included, think these existing-source performance standards (ESPS) will be by far the most important part of EPA's climate regulations, both in terms of costs and potential emissions reductions. But if "any air pollutant" is interpreted (for whatever reason the court can find that's not inconsistent with Massachusetts) not to include CO2, then it appears the agency will lack any basis to write GHG ESPS.
Similar language in section 111(a) ("air pollutants", without the "any") is also key to the scope of new source performance standards (NSPS). Of course, (as Johnathan Adler points out) that the same words sometimes are given different meaning even within the same statute. Moreover, Solicitor-General Verrilli of course was not arguing that the Court should take this position - in fact, he repeatedly made clear that he did not agree with it, only that it would be the least-bad outcome in his view. He's a better lawyer than I am, but I don't agree that this would be the least-bad outcome.
This case has received a lot of press and legal attention that, frankly, I think vastly overrates it's real-world importance. I don't think the permitting program is very important for emissions-cutting purposes or as a keystone in EPA's regulatory plan for climate. This whole case is about EPA's efforts to bend the statute to make the program as small as possible. Efforts to portray the case as some kind of bellweather or legal preview of future challenges to the much more important new- and existing-source performance standards don't hold water. This case is about different stautory language and a different regulatory program. The last thing I'd want, if I were EPA, would be to advocate an outcome to this case that made those future cases (there will surely be litigation over each step EPA takes) any harder to win. I think the Solicitor-General's preferred way to lose does that.