Did EPA overstep in tackling global warming? Supreme Court sharply split.

Under the US system of government, federal agencies are afforded a wide discretion to shape policies that will give force to statutes passed by Congress.

But how much discretion is too much discretion?

On Monday, the US Supreme Court took up a case examining whether the Environmental Protection Agency (EPA) exceeded its regulatory power when it sought to expand the use of the Clean Air Act to regulate the release of greenhouse gases that scientists say are causing global warming.

During 90 minutes of oral argument, the justices appeared to be deeply divided over the issue, with conservative justices skeptical of the agency action and the court’s liberal wing embracing a more flexible posture.

It appears that Justice Anthony Kennedy may hold the decisive vote in the case. He gave few hints in questions and comments during the argument of how he is likely to vote.

At one point Justice Kennedy told US Solicitor General Donald Verrilli, who is defending the EPA’s approach, that he couldn’t find in the briefs “a single precedent that strongly supports your position.”

He then asked the solicitor general: “What are the cases you want me to cite if I write the opinion to sustain your position?”

The question is not whether the EPA has made a wise policy choice, rather the issue is whether the agency is exerting its authority within limits set within the US Constitution and by Congress in the Clean Air Act.

At the center of the case is a decision by the EPA to regulate greenhouse gases under sections of the Clean Air Act that critics say were meant to police more traditional pollutants.

As proof of the misfit, critics point to an EPA decision to recalibrate a key threshold within the Clean Air Act to facilitate regulation of greenhouse gases.

Under the statute, the EPA was required to focus its anti-pollution regulations on the largest emitters of harmful pollutants. Congress set the threshold at 100 tons per year of a regulated pollutant for some plants and 250 tons per year for other facilities.

In expanding its regulatory authority to include greenhouse gases, however, the agency discovered that it would have to greatly increase the existing threshold.

Since a greenhouse gas – like carbon dioxide – is emitted at substantially higher levels than more traditional pollutants, the EPA determined that it would have to raise the top threshold from 250 tons per year to 100,000 tons per year.

Without the increased threshold for greenhouse gas permits, EPA would have been required to regulate a wide swath of the US economy, reaching down to medium-sized businesses, buildings, and homes far from the largest emitters targeted by the Clean Air Act.

The Obama administration, environmentalists, and other supporters of the EPA’s action say the move to expand regulation of greenhouse gases was within the agency’s discretion. (So far, 144 permits have been issued.)

Critics say the EPA engaged in rewriting of the law, not discretionary interpretation. Such rewriting is a legislative act reserved to Congress, they argue.

Washington Lawyer Peter Keisler told the court that the EPA’s action was unprecedented. He said the EPA itself admitted that the new program would render a portion of the Clean Air Act “unrecognizable” to the Congress that enacted it.

He added that the agency was reserving for itself the power to adjust the 100,000-ton threshold in a way that might encompass a larger and larger collection of businesses, groups, and buildings.

“This is not a single, one-time act of statutory rewriting,” he told the justices. “The agency has said it intends to continually adjust and readjust thresholds into the indefinite future based on its ongoing assessment of the cost and benefits of regulation.”

Justice Elena Kagan challenged Mr. Keisler’s argument that greenhouse gases didn’t fit within the regulatory framework chosen by EPA. She noted that the EPA had maintained controls on ozone for many years, a pollutant with similar properties as greenhouse gases.

Also arguing against the EPA was Texas Solicitor General Jonathan Mitchell. He said the Clean Air Act offered unambiguous language about what is – and is not – regulated, and that greenhouse gases do not fit the law as enacted by Congress.

“Congress did not establish round holes for square pegs,” he said, “and … in these situations an agency cannot make a round hole square by rewriting unambiguous statutory language.”

Justice Kagan responded by noting that the threshold amounts were aimed at focusing the EPA’s enforcement on a small group of major polluters – a goal consistent with the intent of Congress.

She said it was reasonable and efficient for the agency to alter the threshold upward for greenhouse gases. With that change, the rest of the statute could remain intact, she said.

Mitchell responded that there is a provision in the Clean Air Act that bars the EPA from exempting any major polluter from the regulations. He said that provision is an example of Congress withholding discretion from a regulatory agency.

In defending the EPA regulations, Solicitor General Verrilli said the agency was undertaking a transition toward greenhouse gas regulation, not a rewriting of the statute.

“The goal of the transition is not to gradually expand the permitting requirement until they’ve got all the Dunkin’ Donuts in America under it,” Mr. Verrilli said. “That’s not what’s going on.”

He said the agency was seeking to “substantially narrow the numbers of people who will be deemed eligible” and make the regulations as efficient and effective as possible.

“This is an urgent environmental problem,” Verrilli told the justices. “It is the gravest environmental problem that we face now… and it is one that gets worse with the passage of time.”

He added: “Every year we wait, we make the hole deeper and we create an even greater threat to future generations.”

In his rebuttal argument, Keisler told the court that the EPA has authority to regulate greenhouse gases through other sections of the law.  But he said the EPA’s current approach to greenhouse gas regulation “has arrogated an exceptional and troubling degree of discretion to design its own climate change program.”

The case is Utility Air Regulatory Group v. Environmental Protection Agency (12-1146). It is among six cases consolidated for high court review.

A decision is expected by late June.