Util. Air Regulatory Group v. EPA

We need not, and do not, pass on the validity of all the limiting constructions EPA has given the term “air pollutant” throughout the Act. We merely observe that taken together, they belie EPA’s rigid insistence that when interpreting the PSD and Title V permitting requirements it is bound by the Act-wide definition’s inclusion of greenhouse gases, no matter how incompatible that inclusion is with those programs’ regulatory structure.

In sum, there is no insuperable textual barrier to EPA’s interpreting “any air pollutant” in the permitting triggers of PSD and Title V to encompass only pollutants emitted in quantities that enable them to be sensibly regulated at the statutory thresholds, and to exclude those atypical pollutants that, like greenhouse gases, are emitted in such vast quantities that their inclusion would radically transform those programs and render them unworkable as written.

2

Having determined that EPA was mistaken in thinking the Act compelled a greenhouse-gas-inclusive interpretation of the PSD and Title V triggers, we next consider the Agency’s alternative position that its interpretation was justified as an exercise of its “discretion” to adopt “a reasonable construction of the statute.” Tailoring Rule 31517. We conclude that EPA’s interpretation is not permissible.

Even under Chevron’s deferential framework, agencies must operate “within the bounds of reasonable interpretation.” Arlington, 569 U.S., at 296, 133 S. Ct. 1863, 185 L. Ed. 2d 941, 951. And reasonable statutory interpretation must account for both “the specific context in which . . . language is used” and “the broader context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341, 117 S. Ct. 843, 136 L. Ed. 2d 808 (1997). A statutory “provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme . . . because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.” United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 371, does not merit deference.

EPA itself has repeatedly acknowledged that applying the PSD and Title V permitting requirements to greenhouse gases would be inconsistent with—in fact, would overthrow—the Act’s structure and design. In the Tailoring Rule, EPA described the calamitous consequences of interpreting the Act in that way. Under the PSD would be so “contrary to congressional intent,” and would so “severely undermine what Congress sought to accomplish,” that they necessitated as much as a 1,000-fold increase in the permitting thresholds set forth in the statute. Id., at 31554, 31562.

Like EPA, we think it beyond reasonable debate that requiring permits for sources based solely on their emission of greenhouse gases at the 100- and 250-tons-per-year levels set forth in the statute would be “incompatible” with “the substance of Congress’ regulatory scheme.” Brown & Williamson, 529 U.S., at 156, 120 S. Ct. 1291, 146 L. Ed. 2d 121. A brief review of the relevant statutory provisions leaves no doubt that the PSD program and Title V are designed to apply to, and cannot rationally be extended beyond, a relative handful of large sources capable of shouldering heavy substantive and procedural burdens.

Start with the PSD program, which imposes numerous and costly requirements on those sources that are required to apply for permits. Among other things, the applicant must make available a detailed scientific analysis of the source’s potential pollution-related impacts, demonstrate that the source will not contribute to the violation of any applicable pollution standard, and identify and use the “best available control technology” for each regulated pollutant it emits. § 7475(a)(3), (4), (6), (e). The permitting authority (the State, usually) also bears its share of the burden: It must grant or deny a permit within a year, during which time it must hold a public hearing on the application. § 7475(a)(2), (c). Not surprisingly, EPA acknowledges that PSD review is a “complicated, resource-intensive, time-consuming, and sometimes contentious process” suitable for “hundreds of larger sources,” not “tens of thousands of smaller sources.” 74 Fed. Reg. 55304, 55321-55322.

challenged in federal court. § 7661d(b)(2)-(3). As EPA wrote, Title V is “finely crafted for thousands,” not millions, of sources. Tailoring Rule 31563.

The fact that EPA’s greenhouse-gas-inclusive interpretation of the PSD and Title V triggers would place plainly excessive demands on limited governmental resources is alone a good reason for rejecting it; but that is not the only reason. EPA’s interpretation is also unreasonable because it would bring about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization. When an agency claims to discover in a long-extant statute an unheralded power to regulate “a significant portion of the American economy,” Brown & Williamson, 529 U.S., at 159, 120 S. Ct. 1291, 146 L. Ed. 2d 121, that it admits the statute is not designed to grant.

EPA thought that despite the foregoing problems, it could make its interpretation reasonable by adjusting the levels at which a source’s greenhouse-gas emissions would oblige it to undergo PSD and Title V permitting. Although the Act, in no uncertain terms, requires permits for sources with the potential to emit more than 100 or 250 tons per year of a relevant pollutant, EPA in its Tailoring the validity of the Tailoring Rule.

We conclude that EPA’s rewriting of the statutory thresholds was impermissible and therefore could not validate the Agency’s interpretation of the triggering provisions. An agency has no power to “tailor” legislation to bureaucratic policy goals by rewriting unambiguous statutory terms. Agencies exercise discretion only in the interstices created by statutory silence or ambiguity; they must always “‘give effect to the unambiguously expressed intent of Congress.’” National Assn. of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 665, 127 S. Ct. 2518, 168 L. Ed. 2d 467 (2007) (quoting Chevron, 467 U.S., at 843, 104 S.Ct. 2778, 81 L. Ed. 2d 694). It is hard to imagine a statutory term less ambiguous than the precise numerical thresholds at which the Act requires PSD and Title V permitting. When EPA replaced those numbers with others of its own choosing, it went well beyond the “bounds of its statutory authority.” Arlington, 569 U.S., at 297, 133 S. Ct. 1863, 185 L. Ed. 2d 941, 951 (emphasis deleted).

The Solicitor General does not, and cannot, defend the Tailoring Rule as an exercise of EPA’s enforcement discretion. The Tailoring Rule is not just an announcement of EPA’s refusal to enforce the statutory permitting requirements; it purports greenhouse gases in amounts exceeding the statutory thresholds would have remained subject to citizen suits—authorized by the Act—to enjoin their construction, modification, or operation and to impose civil penalties of up to $37,500 per day of violation. §§ 7413(b), 7604(a), (f)(4); 40 CFR § 19.4. EPA itself has recently affirmed that the “independent enforcement authority” furnished by the citizen-suit provision cannot be displaced by a permitting authority’s decision not to pursue enforcement. 78 Fed. Reg. 12477, 12486-12487 (2013). The Solicitor General is therefore quite right to acknowledge that the availability of citizen suits made it necessary for EPA, in seeking to mitigate the unreasonableness of its greenhouse-gas-inclusive interpretation, to go beyond merely exercising its enforcement discretion. See Tr. of Oral Arg. 87-88.

For similar reasons, Morton v. Ruiz, 415 U.S. 199, 94 S. Ct. 1055, 39 L. Ed. 2d 270 (1974)—to which the Solicitor General proper administrative procedures, “create reasonable classifications and eligibility requirements in order to allocate the limited funds available.” Id., at 230-231, 94 S. Ct. 1055, 39 L. Ed. 2d 270. That dictum stands only for the unremarkable proposition that an agency may adopt policies to prioritize its expenditures within the bounds established by Congress. See also Lincoln v. Vigil, 508 U.S. 182, 192-193, 113 S. Ct. 2024, 124 L. Ed. 2d 101 (1993). Nothing in Ruiz remotely authorizes an agency to modify unambiguous requirements imposed by a federal statute. An agency confronting resource constraints may change its own conduct, but it cannot change the law.

Were we to recognize the authority claimed by EPA in the Tailoring Rule, we would deal a severe blow to the Constitution’s separation of powers. Under our system of government, Congress makes laws and the President, acting at times through agencies like EPA, “faithfully execute[s]” them. U. S. Const., Art. II, § 3; see Medellan v. Texas, 552 U.S. 491, 526-527, 128 S. Ct. 1346, 170 L. Ed. 2d 190 (2008). The power of executing the laws necessarily includes both authority and responsibility to resolve some questions left open by Congress that arise during the law’s administration. But it does not include a power to revise clear statutory terms that turn out not to work in practice. See, e.g., Barnhart v. Sigmon Coal Co., 534 U.S. 438, 462, 122 S. Ct. 941, 151 L. Ed. 2d 908 (2002) (agency lacked authority “to develop new guidelines or to assign liability in a manner inconsistent with” an “unambiguous statute”).

In the Tailoring Rule, EPA asserts newfound authority to regulate millions of small sources—including retail stores, offices, apartment buildings, shopping centers, schools, and churches—and to decide, on an ongoing basis and without regard for the as EPA embarks on this multiyear voyage of discovery. We reaffirm the core administrative-law principle that an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate. EPA therefore lacked authority to “tailor” the Act’s unambiguous numerical thresholds to accommodate its greenhouse-gas-inclusive interpretation of the permitting triggers. Instead, the need to rewrite clear provisions of the statute should have alerted EPA that it had taken a wrong interpretive turn. Agencies are not free to “adopt . . . unreasonable interpretations of statutory provisions and then edit other statutory provisions to mitigate the unreasonableness.” App. 175, 2012 U.S. App. LEXIS 25997, 2012 WL 6621785, *16 (Kavanaugh, J., dissenting from denial of rehearing en banc). Because the Tailoring Rule cannot save EPA’s interpretation of the triggers, that interpretation was impermissible under Chevron.

For the reasons we have given, EPA overstepped its statutory authority when it decided that a source could become subject to PSD or Title V permitting by reason of its greenhouse-gas emissions. But what about “anyway” sources, those that would need permits based on their emissions of more conventional pollutants (such as particulate matter)? We now consider whether EPA reasonably interpreted the Act to require those sources to comply with “best available control technology” emission standards for greenhouse gases.

1

To obtain a PSD permit, a source must be “subject to the best available control technology” for “each pollutant subject to regulation under [the Act]” that it emits. § 7475(a)(4). The Act defines BACT as “an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation” that is “achievable . . . through application of production processes and available methods, systems, and techniques, including fuel cleaning, clean techniques.” § 7479(3). BACT is determined “on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs.” Ibid.

Some petitioners urge us to hold that EPA may never require BACT for greenhouse gases—even when a source must undergo PSD review based on its emissions of conventional pollutants—because BACT is fundamentally unsuited to greenhouse-gas regulation. BACT, they say, has traditionally been about end-of-stack controls “such as catalytic converters or particle collectors”; but applying it to greenhouse gases will make it more about regulating energy use, which will enable regulators to control “every aspect of a facility’s operation and design,” right down to the “light bulbs in the factory cafeteria.” Brief for Petitioner Energy-Intensive Manufacturers Working Group on Greenhouse Gas Regulation et al. in No. 12-1254, p. 7; see Joint Reply Brief for Petitioners in No. 12-1248 etc., pp. 14-15 (“BACT for [greenhouse gases] becomes an unbounded exercise in command-and-control regulation” of everything from “efficient light bulbs” to “basic industrial processes”). But see Brief for Calpine Corp. as Amicus Curiae 10 (“[I]n Calpine’s experience with ‘anyway’ sources, the [greenhouse-gas] analysis was only a small part of the overall permitting process”).

EPA has published a guidance document that lends some credence to petitioners’ fears. It states that at least initially, compulsory improvements in energy efficiency will be the “foundation” of greenhouse-gas BACT, with more traditional end-of-stack controls either not used or “added as they become more available.” PSD and Title V Permitting Guidance for Greenhouse Gases 29 (Mar. 2011) (hereinafter Guidance); see Peloso & Dobbins, Greenhouse Gas PSD Permitting: The Year in Review, 42 Tex. Env. L. J. 233, 247 (2012) (“Because [other controls] tend to prove infeasible, energy efficiency measures dominate the [greenhouse-gas] BACT controls approved by the states and EPA”). But EPA’s guidance also states that BACT analysis should consider options other than energy efficiency, such as “carbon capture and storage.” Guidance 29, 32, 35-36, 42-43. EPA argues that carbon capture is reasonably comparable to more traditional, end-of-stack BACT technologies, id., at 32, n. 86, and petitioners do not dispute that.

Moreover, assuming in emissions to be achieved, and should concentrate on the facility’s equipment that uses the largest amounts of energy. Ibid.

2

The question before us is whether EPA’s decision to require BACT for greenhouse gases emitted by sources otherwise subject to PSD review is, as a general matter, a permissible interpretation of the statute under Chevron. We conclude that it is.

The text of the BACT provision is far less open-ended than the text of the PSD and Title V permitting triggers. It states that BACT is required “for each pollutant subject to regulation under this chapter” ( i.e., the entire Act), § 7475(a)(4), a phrase that—as the D. C. Circuit wrote 35 years ago—“would not seem readily susceptible [of] misinterpretation.” Alabama Power Co. v. Costle, 636 F. 2d 323, 404, 204 U.S. App. D.C. 51 (1979). Whereas the dubious breadth of “any air pollutant” in the permitting triggers suggests a role for agency judgment in identifying the subset of pollutants covered by the particular regulatory program at issue, the more specific phrasing of the BACT provision suggests that the necessary judgment has already been made by Congress. The wider statutory context likewise does not suggest that the BACT provision can bear a narrowing construction: There is no indication that the Act elsewhere uses, or that EPA has interpreted, “each pollutant subject to regulation under this chapter” to mean anything other than what it says.

Even if the text were not clear, applying BACT to greenhouse gases is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable. We are not talking about extending EPA jurisdiction over millions of previously unregulated entities, but about moderately increasing the demands EPA (or a state permitting authority) can make of entities already subject to its regulation. And it is not yet clear that EPA’s demands will be of a significantly different character from those traditionally associated with PSD review. In short, the record before us does not establish that the BACT provision as written is incapable of being sensibly applied to greenhouse gases.

We acknowledge the potential for greenhouse-gas BACT to lead to an unreasonable and unanticipated degree of regulation, and our decision should not be taken as an endorsement of all aspects of EPA’s current approach, nor as a free rein for any future regulatory application of BACT in this distinct context. Our narrow holding is that nothing in the statute categorically prohibits EPA from interpreting the BACT provision to apply to greenhouse gases emitted by “anyway” sources.

However, EPA may require an “anyway” source to comply with greenhouse-gas BACT only if the source emits more than a de minimis amount of greenhouse gases. As noted above, the Tailoring Rule applies BACT only if a source emits greenhouse gases in excess of 75,000 tons per year CO2e, but the Rule makes clear that EPA did not arrive at that number by identifying the de minimis level. See nn. 1, 3, supra. EPA may establish an appropriate de minimis threshold below which BACT is not required for a source’s greenhouse-gas emissions. We do not hold that 75,000 tons per year CO2e necessarily exceeds a true de minimis level, only that EPA must justify its selection on proper grounds. Cf. Alabama Power, supra, at 405.

***

To sum up: We hold that 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 greenhouse-gas emissions. Specifically, the Agency may not treat greenhouse gases 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 greenhouse gases as a “pollutant subject to regulation under this chapter” for purposes of requiring BACT for “anyway” sources. The judgment of the Court of Appeals is affirmed in part and reversed in part.

It is so ordered.

Concur by:Breyer(In Part); Alito (In Part)

Dissent by:Breyer(In Part); Alito (In Part)

Dissent

Justice Breyer, with whom Justice Ginsburg, Justice Sotomayor, and Justice Kagan join, concurring in part and dissenting in part.

In Massachusetts v. EPA, 549 U.S. 497, 127 S. Ct. 1438, 167 L. Ed. 2d 248 (2007), we that greenhouse gases “contribute to . . . air pollution which may reasonably be anticipated to endanger public health or welfare,” § 7521(a)(1). 549 U.S., at 532-533, 127 S. Ct. 1438, 167 L. Ed. 2d 24. The EPA determined that greenhouse gases endanger human health and welfare, 74 Fed. Reg. 66496 (2009) (Endangerment Finding), and so it issued regulations for mobile emissions, 75 Fed. Reg. 25324 (2010) (Tailpipe Rule).

These cases take as a given our decision in Massachusetts that the Act’s general definition of “air pollutant” includes greenhouse gases. One of the questions posed by these cases is whether those gases fall within the scope of the phrase “any air pollutant” as that phrase is used in the more specific provisions of the Act here at issue. The Court’s answer is “no.” Ante, at ___ - ___, 189 L. Ed. 2d, at 389-397. I disagree.

The Clean Air Act provisions at issue here are Title I’s Prevention of Significant Deterioration (PSD) program, § 7470 et seq., and Title V’s permitting regime, § 7661 et seq. By contrast to Title II, Titles I and V apply to stationary sources, such as power plants and factories. Under the PSD program, “major emitting facilities” constructed in the United States must meet certain requirements, including obtaining a permit that imposes emissions limitations, § 7475(a)(1), and using “the best available control technology for each pollutant subject to regulation under [the Act] emitted from” the facility, § 7475(a)(4). Title V requires each “major source” to obtain an operating permit. § 7661a(a).

These cases concern the definitions of “major emitting facility” and “major source,” each of which is defined to mean any stationary source that emits more than a threshold quantity of “any air pollutant.” See § 7479(1) (“major emitting facility”); §§ 7602(j), 7661(2)(B) (“major source”). To simplify the exposition, I will refer only to the PSD program and its definition of “major emitting facility”; a parallel analysis applies to Title V.

As it is used in the PSD provisions,

“[t]he term ‘major emitting facility’ means any of [a list of specific categories of] stationary sources of air pollutants which emit, or have the potential to emit, one hundred tons per year or more of any air pollutant . . . . Such term also includes any other source with the potential to emit two hundred and fifty tons per year or more of any air pollutant.” § 7479(1).

To simplify further, I will ignore the reference to specific types of sources that emit at least 100 tons per year (tpy) of any air pollutant. In effect, we are dealing with a statute that says that the PSD program’s regulatory requirements must be applied to

“any stationary source that has the potential to emit two hundred fifty tons per year or more of any air pollutant.”

The interpretive difficulty in these cases arises out of the definition’s use of the phrase “two hundred fifty tons per year or more,” which I will call the “250 tpy threshold.” When applied to greenhouse gases, 250 tpy is far too low a threshold. As the Court explains, tens of thousands of stationary sources emit large quantities of one greenhouse gas, carbon dioxide. See ante, at ___ - ___, 189 L. Ed. 2d, at 393-395, and n. 7. To apply the programs at issue here to all those the statutory figure of 250 tpy to 100,000 tpy in order to keep the programs’ coverage limited to “a relatively small number of large industrial sources.” 75 Fed. Reg. 31514, 31555; see id., at 31523-31524.

The Tailoring Rule solves the practical problems that would have been caused by the 250 tpy threshold. But what are we to do about the statute’s language? The statute specifies a definite number—250, not 100,000—and it says that facilities that are covered by that number must meet the program’s requirements. The statute says nothing about agency discretion to change that number. What is to be done? How, given the statute’s language, can the EPA exempt from regulation sources that emit more than 250 but less than 100,000 tpy of greenhouse gases (and that also do not emit other regulated pollutants at threshold levels)?

The Court answers by (1) pointing out that regulation at the 250 tpy threshold would produce absurd results, (2) refusing to read the statute as compelling such results, and (3) consequently interpreting the phrase “ any air pollutant” as containing an implicit exception for greenhouse gases. (Emphasis added.) Put differently, the Court reads the statute as defining “major emitting facility” to mean “stationary sources that have the potential to emit two hundred fifty tons per year or more of any air pollutant except for those air pollutants, such as carbon dioxide, with respect to which regulation at that threshold would be impractical or absurd or would sweep in smaller sources that Congress did not mean to cover.” See ante, at ___ - ___, 189 L. Ed. 2d, at 392 (“[T]here is no insuperable textual barrier to EPA’s interpreting ‘any air pollutant’ in the permitting triggers of PSD and Title V to encompass only pollutants emitted in quantities that enable them to be sensibly regulated at the statutory thresholds, and to exclude those atypical pollutants that, like greenhouse gases, are emitted in such vast quantities that their inclusion would radically transform those programs and render them unworkable as written”).

I agree with the Court that the word “any,” when used in a statute, does not normally mean “any in the universe.” Cf. FCC v. NextWave Personal Communications Inc., 537 U.S. 293, 311, 123 S. Ct. 832, 154 L. Ed. 2d 863 (2003) (Breyer, J., dissenting) (“‘Tell all customers that . . .’ does not refer to every customer of every business in the world”). Rather, “[g]eneral terms as used on particular occasions often carry with them implied restrictions as to scope,” ibid., and so courts must interpret the word “any,” like all other words, in context. As Judge Learned Hand pointed out when interpreting another statute many years ago, “[w]e can best reach the meaning here, as always, by recourse to the underlying purpose, and, with that as a guide, by trying to project upon the specific occasion how we think persons, actuated by such a purpose, would have dealt with it, if it had been presented to them at the time.” Borella v. Borden Co., 145 F. 2d 63, 64 (CA2 1944). The pursuit of that underlying purpose may sometimes require us to “abandon” a “literal interpretation” of a word like “any.” Id., at 64-65.

of the Speluncean Explorers, 62 Harv. L. Rev. 616, 619, 624 (1949); see also United States v. Kirby, 74 U.S. 482, 7 Wall. 482, 485-487, 19 L. Ed. 278 (1869) (holding that a statute forbidding knowing and willful obstruction of the mail contains an implicit exception permitting a local sheriff to arrest a mail carrier). The maxim cessante ratione legis cessat ipse lex—where a law’s rationale ceases to apply, so does the law itself—is not of recent origin. See, e.g., Zadvydas v. Davis, 533 U.S. 678, 699, 121 S. Ct. 2491, 150 L. Ed. 2d 653 (2001) (citing 1 E. Coke, Institutes *70b); Green v. Liter, 12 U.S. 229, 8 Cranch 229, 249, 3 L. Ed. 545 (1814) (Story, J.) (“ cessante ratione, cessat ipsa lex”).

I also agree with the Court’s point that “a generic reference to air pollutants” in the Clean Air Act need not “encompass every substance falling within the Act-wide definition” that we construed in Massachusetts, § 7602(g). See ante, at ___ - ___, 189 L. Ed. 2d, at 390. As the Court notes, the EPA has interpreted the phrase “any air pollutant,” which is used several times in the Act, as limited to “air pollutants for which EPA has promulgated [new source performance standards]” in the portion of the Act dealing with those standards, as limited to “ visibility-impairing air pollutants” in the part of the Act concerned with deleterious effects on visibility, and as limited to “pollutants for which the area is designated nonattainment” in the part of the Act aimed at regions that fail to attain air quality standards. Ante, at ___, 189 L. Ed. 2d, at 390.

But I do not agree with the Court that the only way to avoid an absurd or otherwise impermissible result in these cases is to create an atextual greenhouse gas exception to the phrase “any air pollutant.” After all, the word “any” makes an earlier appearance in the definitional provision, which defines “major emitting facility” to mean “ any . . . source with the potential to emit two hundred and fifty tons per year or more of any air pollutant.” § 7479(1) (emphasis added). As a linguistic matter, one can just as easily read an implicit exception for small-scale greenhouse gas emissions into the phrase “any source” as into the phrase “any air pollutant.” And given the purposes of the PSD program and the Act as a whole, as well as the specific roles of the different parts of the statutory definition, finding flexibility in “any source” is far more sensible than the Court’s route of finding it in “any air pollutant.”