Two years ago, the Supreme Court upheld the major domestic policy initiative of President Obama’s first term, ruling that the Affordable Care Act passed constitutional muster. This coming June, the Court will determine the legitimacy of what is perhaps the major domestic policy initiative of the president’s second term, his administration’s efforts to reduce the emission of greenhouse gases (GHGs).

The Court heard an argument today in Utility Air Regulatory Group v. Environmental Protection Agency addressing a deceptively simple question-“whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.” For more than three decades, EPA has interpreted the Clean Air Act (CAA) to authorize it to regulate pollutants emitted by any source once it had issued rules to regulate those pollutants from any single type of source. EPA’s interpretation of the CAA in this fashion did not generate significant controversy until the EPA sought to apply it to GHGs.

In seeking to regulate GHG emissions from stationary sources, EPA had to resort to linguistic contortions of gold-medal quality. The CAA unambiguously provides that sources having the potential to emit 250 tons per year or more of pollutants subject to regulation are major sources. 42 U.S.C. §169(1). The statute further provides that sources having the potential to emit 100 tons per year or more are major sources if the source is included in a list of 28 specified source categories. Id. According to EPA, applying these major source thresholds to GHG emissions would have expanded the number of facilities it regulates from around 15,000 to more than 6 million. To avoid that result, EPA promulgated the so-called “Tailoring Rule,” raising the major source thresholds to 25,000 tons per year for Title V permits and between 10,000 and 25,000 for PSD permits.

Briefing in the case reflected two potential lines of attack. One involves a frontal assault on the Tailoring Rule, asserting that EPA had no authority to alter the statutory major source thresholds. If the Court were to rule in this fashion, EPA could be left with the policy choice of regulating all six million sources of GHG emissions or none. A second involves a somewhat more nuanced challenge to the long-standing interpretation of the CAA that regulation of a pollutant emitted from a mobile source triggers the requirement that EPA regulate emissions of that pollutant from stationary sources.

In today’s argument, petitioners characterized the rule as EPA’s "rewriting" of the CAA, and they focused on the contention that the PSD provisions of the Act were designed to control "area specific air quality impacts" and not “global” pollutants like GHGs. Petitioners also argued that, in other contexts, EPA has interpreted "air pollutant" to mean different things in different parts of the statute, while refusing to do so here. The government attempted to counter these arguments by citing other instances in which EPA has regulated pollutants that do not have local effects (providing ozone-depleting substances and sulfuric acid mist as examples) under the PSD program. The government also contended that, in promulgating the rule, EPA was simply following its “decades long” interpretation of the pollutants that could be regualated under the PSD program.

With the usual caveat regarding predictions based on the Justices’ questions, a split decision seems likely. Justices Ginsburg, Breyer, Sotomayor and Kagan generally seemed amenable to deferring to EPA's interpretation of its statutory authority. Justice Kagan remarked at one juncture that this case presented the "apex of Chevron deference," explaining that the doctrine should never be more applicable than to "this agency on this statute." Chief Justice Roberts and Justices Scalia and Alito generally seemed hostile to EPA's explanation of its statutory authority. For example, Chief Justice Roberts noted the differences between the types of controls mandated for criteria pollutants and those for GHGs that addressed only energy use. As is his custom, Justice Thomas asked no questions.

So, once again, those inclined to wager will be trying to discern how Justice Kennedy will vote. He did not offer a great deal of insight into his thinking during the argument. He asked only a handful of questions and those he did ask could suggest either skepticism of EPA’s interpretation or the desire for a rationale for upholding the regulations.

In the end, the case may turn on whether five or more Justices can arrive at a “middle ground.” One possibility seems to be allowing EPA to have PSD permits address GHGs for sources that are already required to obtain PSD permits for “traditional” PSD pollutants. We should know one way or the other by July.