Put me closer to the "okay" side of the spectrum in terms of what this hints at for future challenges to the proposed regulation that Obama announced in early June.
The big picture is that the Clean Air Act is very broad legislation from the 1970s meant to regulate air pollutants that would be specified at a later date, but it is still difficult to adapt the law to very unexpected air pollutants in the form of greenhouse gases. Past current and future litigation revolves around the extent to which the EPA can be flexible. Climate hawks mostly want flexibility.
Theory Number 1 tried to install flexibility to avoid an over-harsh result (a numerical limit that catches relatively small producers of GHGs), which the Court rejected, but it had a backup theory to use (larger producers were already regulated for their other emissions and therefore could be regulated "anyway" for GHGs). Not clear how that approach affects the June proposal, which would limit overall emissions but look "outside the fence" of emitters and allow energy efficiency and carbon markets to achieve reductions. I think the previous decision earlier this month is somewhat more indicative.
Some commenters think this decision reaffirms the 2007 Massachusetts v EPA ruling establishing EPA's ability to regulate GHGs, but I think it just treats it as the controlling law without commenting on whether it's correct. If President Cruz gets to replace Ginsburg or Breyer, then we could be in big trouble.
Some other comments:
One thing I haven't seen mentioned elsewhere is this excuse the Court majority gave for rejecting the EPA's proposal to rescue Theory 1 by someday issuing general permits that cover small emitters:
"Nor have we been given any information about the ability of other possible “streamlining” techniques alluded to by EPA—such as "general ” or “electronic” permitting—to reduce the administrability problems identified above."
I don't know if no one briefed them (they could always demand more briefing, they are the Supremes) but anyone with a passing familiarity with environmental law knows that one-size-fits-all general permits are commonly used to make permitting easier for the regulated and the regulators. This excuse doesn't work.
To read more, the first link above is for the case, read as much as you like. Or to get the essence, read these two paragraphs in the dissent as to why EPA should have prevailed:
The implicit exception I propose reads almost word for word the same as the Court’s, except that the location of the exception has shifted. To repeat, the Court reads the definition of “major emitting facility” as if it referred to “any source with 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.” I would simply move the implicit exception, which I’ve italicized, so that it applies to “source” rather than “air pollutant”: “any source with the potential to emit two hundred fifty tons per year or more of any air pollutant except for those sources, such as those emitting unmanageably small amounts of greenhouse gases, 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.”
From a legal, administrative, and functional perspective—that is, from a perspective that assumes that Congress was not merely trying to arrange words on paper but was seeking to achieve a real-world purpose—my way of reading the statute is the more sensible one. For one thing, my reading is consistent with the specific purpose underlying the 250 tpy threshold specified by the statute.The purpose of that number was not to prevent the regulation of dangerous air pollutants that cannot be sensibly regulated at that particular threshold, though that is the effect that the Court’s reading gives the threshold. Rather, the purpose was to limit the PSD program’s obligations to larger sources while exempting the many small sources whose emissions are low enough that imposing burdensome regulatory requirements on them would be senseless.