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The Supreme Court just made it a little harder for the EPA to fight climate change

Jeff Swensen/Getty Images

Monday Supreme Court ruling has limited the Environmental Protection Agency's power to regulate facilities that emit carbon dioxide.

The decision won't have a huge impact on US climate policy, as the decision only modestly changed the number of large facilities subject to certain permitting requirements. It also won't affect the Obama administration's  proposal to reduce emissions from power plants, which is a separate program.

But it does reduce the number of carbon-emitting facilities the EPA can regulate. Also, the fractured decision is a good illustration of how congressional dysfunction forces other branches of government to make decisions that would be best made by the legislature.

Why is the EPA regulating carbon dioxide?

The Clean Air Act requires the EPA to regulate any pollutant that endangers public health or welfare. Traditionally, the EPA hasn't counted carbon dioxide, the greenhouse gas most responsible for global warming, as a pollutant. But a decade ago, a coalition of states and environmental groups sued the EPA, seeking to change that.

In 2007, the Supreme Court ruled that the Clean Air Act required the agency to reconsider the scientific case for treating carbon dioxide as a pollutant. When the agency performed the analysis required by the courts, it concluded that carbon dioxide was a pollutant and began issuing new regulations designed to limit carbon pollution.

Why is the EPA facing another legal challenge now?

When the EPA classifies something (like carbon dioxide) as a harmful pollutant, it triggers a number of legal requirements under the Clean Air Act. One of them, known as a "prevention of significant deterioration" (PSD) rule, requires factories, power plants, and other large facilities to get the EPA's approval before they make changes that would lead to higher pollution. These facilities also must use the "best available control technology" to reduce the effects of pollution they emit. Another provision requires any facility that is a "major source" of pollution to get a permit from the EPA.

Under the Clean Air Act, facilities become subject to these regulations if they emit more than 250 tons (or in some cases as little as 100 tons) of pollution per year. Traditional pollutants such as sulfur dioxide or lead can be harmful even if they are only emitted in trace amounts, so a relatively low threshold makes sense. Only large factories and power plants emit that much of these conventional pollutants.

But carbon dioxide is different. Factories produce vastly more carbon dioxide than other pollutants regulated by the EPA. Under existing rules, about 15,000 facilities are required to get permits under the Clean Air Act based on their emissions of non-carbon pollutants. If the EPA had used the same 250-ton threshold for carbon dioxide emissions, 6.1 million facilities would suddenly have needed permits. The agency estimated it would cost $21 billion per year just to process all that paperwork.

So the agency effectively re-wrote the law, exempting facilities that emitted less than 100,000 tons of carbon dioxide from getting a permit. Several states and business groups challenged this decision, arguing that the EPA had no authority to unilaterally re-write the law.

What did the Supreme Court say on Monday?

Almost everyone agrees that a literal reading of the Clean Air Act would lead to madness. The EPA has warned that "decade-long delays in issuing permits would become common, causing construction projects to grind to a halt nationwide." The Supreme Court didn't want that to happen.

But a majority of the court, led by Justice Scalia, also didn't like the EPA's approach. The court said that if Congress set a threshold of 250 tons, the EPA can't just unilaterally change it to 100,000 tons.

Instead, the court's majority held that the term "air pollutant" can have different meanings in different parts of the Clean Air Act. While the "Act-wide definition" of air pollutant includes carbon dioxide, Scalia wrote, "EPA has routinely given it a narrower, context-appropriate meaning" in certain parts of the Clean Air Act. Scalia used the same trick to avoid subjecting millions of facilities to burdensome permitting requirements. He held that the definition of "air pollutant" didn't include carbon dioxide in sections of the Clean Air Act where including it would lead to a vast expansion in regulation.

The court's four liberals, led by Justice Stephen Breyer, preferred a different approach. Rather than selectively interpreting "any air pollutant" to exclude carbon dioxide, Breyer would instead have interpreted another phrase in the same section of the law, "any source" to exclude power plants that produce only modest amounts of carbon dioxide.

Two of the court's conservatives, Samuel Alito and Clarence Thomas, wrote a separate opinion arguing that the Supreme Court had been wrong to push the EPA into regulating carbon dioxide in the first place in 2007.

What's the practical effect of the ruling?

The practical effect of the ruling won't be large. While the EPA can't impose regulations on new power plants based on their carbon dioxide emissions, the court ruled that the courts can regulate the carbon dioxide emissions of facilities that are already subject to regulations based on their emissions of conventional pollutants.

And the large facilities that produce the most conventional pollution also happen to be the biggest producers of carbon dioxide. So the practical difference between the EPA's preferred approach — regulating sources that emit more than 100,000 tons of carbon dioxide — and the Supreme Court's approach — only regulating sources that are already subject to regulation based on conventional emissions — will be small.

According to one estimate, "83 percent of greenhouse gas emissions that could potentially be regulated under the Environmental Protection Agency's interpretation of the law would still be covered as a result of the ruling, compared with the 86 percent of emissions that the EPA says it wants to regulate."

However, the Supreme Court ruling limits the EPA's flexibility to expand carbon regulation in the future. Under the approach preferred by Justice Breyer, the EPA might have had the flexibility to lower its 100,000 ton threshold if it decided that more carbon regulation was needed. That's not possible under Justice Scalia's ruling.

Also, the ruling only affects certain types of EPA regulation. For example, the ruling is not expected to affect the power plant regulations President Obama unveiled earlier this month.

The Supreme Court and the EPA seem to be selectively re-writing the Clean Air Act. Why are they doing that?

Regulation of carbon dioxide is occurring under the Clean Air Act, a law that was written in 1970 and last overhauled in 1990. Congress clearly didn't have carbon dioxide in mind when it wrote the statute. As a result, the EPA has struggled to interpret it in a sensible fashion.

Ideally, Congress would have stepped in after the 2007 Supreme Court ruling and clarified the law. A conservative Congress might have overruled the Supreme Court and taken carbon dioxide regulation out of the Clean Air Act. A more liberal Congress might have updated other provisions of the Clean Air Act — like the permitting thresholds — to create a rational system for regulating carbon emissions.

But Congress has become so dysfunctional that no one seriously expects it to revise the Clean Air Act any time soon. As a result, the EPA and the courts have been forced to stagger along with a statute that almost everyone agrees is out of date.

This is a good example of a point Vox's Ezra Klein has made before: when Congress stops legislating, the policymaking process doesn't stop. It simply shifts to other parts of government that are less representative and less responsive to the public. As statutes become more and more outdated, administrative agencies and the courts are forced to fill in more and more of the gaps using their own judgments and policy preferences. That's probably better than nothing, but it would be better if Congress did its job.