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EPA Says Clean Air Act “Ill-Suited” to Address Greenhouse Gases

July 16, 2008

Last week, the Environmental Protection Agency (EPA) published a highly anticipated Advanced Notice of Public Rulemaking (ANPR) which states that the Clean Air Act is “ill-suited for the task of regulating global greenhouse gases” and that, instead, Congress should enact comprehensive climate change legislation. The presumptive major party Presidential candidates, Senators John McCain (R. Az.) and Barack Obama (D. Il.), promptly agreed.[1] Congress, however, has been unable to move any legislation, and just last month shelved debate on the Lieberman-Warner Climate Security Act (S. 2191/S. 3036) until 2009.

The ANPR is EPA’s first formal response to the United States Supreme Court’s April 2007 decision in Massachusetts v. EPA. In that landmark opinion, the Supreme Court held that carbon dioxide and other greenhouse gases are “pollutants” under the Clean Air Act. The fact that greenhouse gases are pollutants, in turn, triggers a requirement for EPA to make an “endangerment” finding – that is, a determination as to whether greenhouse gases endanger public health or welfare. An endangerment finding, once made, would require EPA to begin rulemaking to bring greenhouse gases within the ambit of the Clean Air Act.

That is something EPA is reluctant to do. In his preface to the ANPR, EPA Administrator Stephen Johnson described the Clean Air Act as “an outdated law originally enacted to control regional pollutants that cause direct health effects,” and one that would be “relatively ineffective at reducing greenhouse gas concentrations given the potentially damaging effect on jobs and the U.S. economy.” The 564-page ANPR goes on to provide a detailed analysis of the challenges EPA would face in regulating greenhouse gases under existing provisions of the Clean Air Act.

Publication of the ANPR triggers a 120-day public comment period, after which EPA could potentially proceed with formal rulemaking activities. Given this timeline, however, it is clear that EPA is unlikely to take further action on developing greenhouse gas regulations until there is a new President and a new Congress.

I. Background

States and environmental NGOs have been attempting to force EPA action on greenhouse gas emissions for nearly a decade. In 1999, twelve states and various environmental organizations filed a rulemaking petition which asked EPA to regulate greenhouse gas emissions from motor vehicles under the Clean Air Act. EPA, however, denied the rulemaking petition in September 2003, concluding that it lacked the statutory authority to address global climate change under the Clean Air Act. EPA also contended that even if it did have statutory authority to regulate greenhouse gases, doing so would be unwise given scientific uncertainty and political and foreign policy considerations.

Following the Supreme Court’s resulting Massachusetts v. EPA decision, which reversed and remanded EPA’s denial of the motor vehicle rulemaking petition,several states and environmental groups filed additional rulemaking petitions asking EPA to regulate greenhouse gas emissions from a variety of mobile sources, including airplanes, ocean vessels, locomotives, and non-road engines such as construction equipment. A positive endangerment finding on any of these rulemaking petitions would require regulation of greenhouse gases under the Clean Air Act.

II. EPA’s Advanced Notice of Public Rulemaking

Rather than making the statutory “endangerment” determination, EPA announced in March 2008 that it would issue an ANPR to solicit public input on the potential implications of a positive “endangerment” determination and adopting greenhouse gas regulations via existing Clean Air Act authority. The ANPR is not a consensus document and does not advocate or propose any particular course of regulatory action. Instead, the ANPR, which includes nearly 100 pages of criticism on an earlier draft by various White House offices and federal agencies, summarizes existing Clean Air Act programs and assesses how those programs could be used to potentially regulate greenhouse gas emissions.

The ANPR and the various agency comments make clear that EPA would face significant challenges if it proceeded with regulating greenhouse gas emissions under the Clean Air Act. The Clean Air Act was designed to control air pollution and improve local and regional air quality through source- and sector-specific regulations. Unlike traditional air pollutants, however, greenhouse gases are emitted across the globe and freely mix in the atmosphere at generally consistent concentrations. These characteristics present numerous challenges for regulatory design under the Clean Air Act.

The ANPR first identifies complex issues that must be resolved before making the threshold determination of whether greenhouse gases “endanger public health or welfare.” For example, EPA must determine whether to define the six primary greenhouse gases as “air pollution” either individually or collectively, and whether to regulate other atmospheric constituents that have warming potential such as water vapor and black carbon. Furthermore, EPA must determine what levels of greenhouse gas concentrations (past, current, or expected future) constitute the baseline for an endangerment determination.

The ANPR goes on to identify potential problems associated with establishing allowable greenhouse gas concentrations (National Ambient Air Quality Standards or NAAQS). While greenhouse gas concentrations are generally distributed uniformly across the globe, the potential impacts of global warming are unevenly distributed. In other words, certain locations, such as low-lying Pacific islands, are more vulnerable to the consequences of warming. EPA must therefore determine whether NAAQS should be set at a level necessary to avoid dangerous interference with the global environment, or whether NAAQS should be established to avoid negative impacts to the United States.

Establishing NAAQS for traditional air pollutants triggers a requirement to designate various regions as complying with or exceeding (i.e., attainment or non-attainment) NAAQS. Again, because of the generally uniform distribution of greenhouse gas concentrations, EPA would likely need to take the unprecedented step of designating the entire country as either an attainment or non-attainment area. The designation of NAAQS would also trigger rigid timelines for developing state or federal implementation plans to achieve attainment. However, the ANPR notes that emission reduction measures may not successfully attain NAAQS within statutorily-mandated timeframes due to their long atmospheric lifespan, and failure to attain NAAQS could result in the application of long-term sanctions on a national-scale. Other factors could prevent attaining NAAQS, including the lack of emission reductions by other major emitting countries and the potential leakage of emission sources to unregulated economies.

Furthermore, designating non-attainment areas for greenhouse gases would result in the establishment of emission performance standards for categories of new and modified sources (NSPS). Similarly, non-attainment designations could potentially expand the scope of preconstruction permitting to include myriad small sources that have not been previously regulated, such as apartment buildings with natural gas heat. The expansion of preconstruction permitting would likely pose significant administrative and economic burdens.

III. Next Steps

The ANPR solicits public comment on these issues and many others. EPA’s analysis and the ensuing public comments will likely help frame the climate change debate next year. The fundamental issue highlighted by the ANPR, and that Congress must address, is whether a market-based approach (e.g., carbon tax or a cap-and-trade program), traditional command-and-control regulation under the Clean Air Act, or a combination of both is the appropriate framework for reducing the nation’s greenhouse gas emissions.

While the ANPR notes that certain programs under the Clean Air Act may support limited emissions trading, agency comments suggest that applying those programs on a national-level to address greenhouse gas emissions would necessitate novel interpretations of the statute that have not been tested in court. Indeed, the District of Columbia’s recent decision in North Carolina v. EPA, --F.3d--, 2008 U.S. App. LEXIS 14733 (July 11, 2008), which vacated EPA regulations expanding the trading program for power plant emissions, emphasizes legal hurdles EPA may have to clear in order to develop and successfully implement a nation-wide greenhouse gas trading program under the Clean Air Act.

The ANPR highlights the fact that many of the Clean Air Act’s programs are relatively rigid, whereas market-based systems may be more successful at controlling costs and spurring innovation through incentives and regulatory flexibility. Despite these potential advantages, EPA warns that it will eventually be forced by the Supreme Court’s Massachusetts v. EPA decision to proceed with developing greenhouse gas regulations under the Clean Air Act unless Congress acts relatively soon.

For more information on the ANPR and other climate change developments, please contact any member of Marten Law Group’s Climate Change and Sustainability practice group.

[1] Darren Samuelsohn, McCain, Obama on Same Page with EPA Climate Regulations, Greenwire (July 15, 2008) (subscripton required).

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