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Interest Groups Take Novel Approach of Using Cross-Boundary Provisions of Clean Air Act to Prod EPA Greenhouse Gas Rulemaking

March 25, 2013

With climate legislation stalled in Congress, environmental groups have been refocusing their efforts on EPA rulemaking and litigation in efforts to speed up greenhouse gas regulation. In a recent rulemaking petition, the Institute for Policy Integrity (the Institute) seeks to compel EPA rules under three separate sections of the Clean Air Act. The Institute first argues that Section 115 of the Clean Air Act, a never-before-used provision addressing international air pollution, requires EPA to order all 50 states to modify their state-level implementation plans to address greenhouse gas emissions.

The debate around the Institute’s petition will likely focus on whether § 115 applies to non-criteria pollutants, meaning those pollutants for which EPA has not established ambient air quality standards. Carbon dioxide and other greenhouse gases are non-criteria pollutants. The Institute contends that § 115 applies to non-criteria pollutants, but their position is somewhat novel. Numerous commentators have concluded that § 115 only applies to criteria pollutants – a position echoed by EPA during the Bush administration. Now the question is whether the Obama administration will follow suit or adopt a more expansive interpretation of § 115.

The Institute also asked EPA to expand its greenhouse gas regulations under § 111 of the Clean Air Act – the New Source Performance Standards (NSPS) program. EPA is presently working on NSPS rules for greenhouse gas emissions from new fossil fuel-fired power plants and petroleum refineries. In its rulemaking petition, the Institute argues that EPA must develop greenhouse gas limits for source categories already subject to NSPS for non-greenhouse gas pollutants, and expand the source categories subject to NSPS to include other source categories with significant greenhouse gas emissions. The group singles out agricultural sources and coal mines as being responsible for substantial emissions. Expanding the NSPS program to cover agricultural activities and active and abandoned coal mines would significantly expand EPA’s regulatory reach.

Finally, the Institute asked EPA to solicit public information on the extent to which greenhouse gas emissions impact the stratosphere, and if such impacts are identified, to issue regulations addressing such emissions under Title VI, a rarely-used provision of the Clean Air Act.

I. The Clean Air Act

A. The Role of EPA & the States

The federal Clean Air Act establishes a cooperative framework under which EPA and the states regulate air quality from stationary sources. At the federal level, EPA is required to establish limits on the concentrations of air pollutants allowable in various parts of the country. These limits are referred to as National Ambient Air Quality Standards, or NAAQS, and must be set at levels which, “allowing an adequate margin of safety, are requisite to protect the public health.”[1] EPA establishes two types of NAAQS. Primary NAAQS set limits to protect public health, including the health of “sensitive” populations such as asthmatics, children, and the elderly. Secondary NAAQS set limits to protect public welfare, including protection against visibility impairment, and damage to animals, crops, vegetation, and buildings.

EPA has developed NAAQS for ozone, carbon monoxide (CO), particulate matter (PM10), sulfur dioxide (SO2), lead (Pb) and nitrogen dioxide (NOx). EPA also develops standards for other pollutants, including hazardous air pollutants, but these are not considered NAAQS. EPA, however, has not yet established NAAQS for carbon dioxide or other greenhouse gases.

States are primarily responsible for implementing NAAQS within their borders, and are required to develop plans (known as State Implementation Plans or SIPs) for achieving and maintaining compliance with NAAQS.[2] SIPs detail, among other things, which sources within the state must reduce emissions, and by how much. States must submit SIPs to EPA within three years of each new or revised NAAQS.[3] Under § 110(a)(2)(H), EPA may require states to revise their SIPs when NAAQS are revised, or when revisions are needed to “otherwise comply with any additional requirements established under [the Clean Air Act].”[4]

B. International Air Pollution – Section 115

Clean Air Act § 115 establishes a procedure for preventing air pollution in the United States from impacting air quality in foreign nations.[5] Section 115 provides, in relevant part, that:

Whenever the Administrator, upon receipt of reports, surveys or studies from any duly constituted international agency has reason to believe that any air pollutant or pollutants emitted in the United States cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a foreign country ..., the Administrator shall give formal notification thereof to the Governor of the State in which such emissions originate.[6]

This determination is known as the “endangerment finding.”

Section 115, however, only applies “to a foreign country which [EPA] determines has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section.”[7] This determination is referred to as the “reciprocity finding.”

When EPA makes both endangerment and reciprocity findings, states receiving notice from EPA must revise their SIPs to “to prevent or eliminate the endangerment.”[8]

C. New Source Performance Standards – Section 111

Under § 111, EPA is required to establish performance standards (referred to as New Source Performance Standards, or NSPS) for various categories of new and modified stationary sources.[9] For each source category, the performance standard must reflect “the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and environmental impact and energy requirements) [EPA] determines has been adequately demonstrated.”[10] The standard is sometimes referred to as Best Demonstrated Technology (BDT).

EPA is in the process of developing two NSPS rules addressing greenhouse gas emissions from fossil fuel-fired power plants and petroleum refineries pursuant to the terms of settlements reached in 2010. See EPA Expected to Issue Series of New and Revised Air Rules Before Year’s End, Marten Law Environmental News (Nov. 19, 2012). In April 2012, EPA published its draft power plant NSPS. The draft rule would require coal- and natural gas-fired power plants to emit no more than 1,000 pounds per megawatt-hour of carbon dioxide – a standard that would effectively prohibit the construction of new coal-fired generating units. Significantly, the draft rule applies only to new generating units, and although the Clean Air Act authorizes EPA to develop NSPS for existing units, the agency has not yet done so. EPA is currently reviewing over 2 million public comments on the proposed NSPS rule, and is expected to finalize the rule later this year.[11]

The timing on the NSPS rules for refineries is less certain. The settlement required EPA to finalize the refinery NSPS by November 2012. EPA, however, has not publically committed to a timeline for issuing a draft for public comment.

D. Stratosphere – Title VI

Under Title VI, EPA is required to “promptly” develop regulations if, in the agency’s judgment, “any substance, practice, process, or activity may reasonably be anticipated to affect the stratosphere” or “ozone in the stratosphere” in a way that endangers public health or welfare.[12]

II. The Institute’s Rulemaking Petition

On March 19, 2013, the Institute filed a petition asking EPA to require that states modify their SIPS pursuant to § 115 in order to address the impact of greenhouse gases on foreign countries. eThe Institute also asked EPA to expand the scope of its NSPS program, including developing NSPS for existing source categories, as well as formalizing new source categories. Finally, it asked EPA to solicit public information on the affect of greenhouse gases on stratospheric ozone, and issue regulations as warranted based on that information.

A. Section 115 Petition

The Institute’s petition first argues that the conditions precedent for EPA action under Section 115 have already been satisfied, and that EPA accordingly has a nondiscretionary duty to require all 50 states to modify their SIPs to address greenhouse gas emissions. With respect to the “endangerment finding,” the Institute contends that the International Panel on Climate Change (IPCC) is a “duly constituted international agency,” and that that the IPCC’s various reports have given EPA “reason to believe” that greenhouse gases from the United States may endanger public health and welfare in a foreign nation. It similarly argues that EPA “already possesses considerable evidence of major greenhouse gas sources and emission levels” in each state, and that such data correlates endangerment to sources within particular states. This data, according to the Institute, mandates that EPA require all 50 states to revise their SIPs to prevent or eliminate the alleged endangerment.

The petition also argues that the “reciprocity” prong of § 115 has already been satisfied. For example, it contends that Canadian law creates reciprocal rights for purposes of § 115. EPA previously determined that a prior version of Canadian law addressing air quality was “enacted specifically to meet the requirements of Section 115.”[13] Although that statute has been replaced, its predecessor, the Canadian Environmental Protection Act (CEPA), similarly fulfills the reciprocity requirement. The Institute notes that CEPA, among other things, authorizes the Federal Minister of Environment to take preventative action if “a substance released from a source in Canada into the air creates, or may reasonably be anticipated to contribute, to air pollution in a country other than Canada.”

The principal point of contention may be the Institute’s position that § 115 applies to pollutants for which NAAQS have not been established. Clean Air Act § 110 states that SIPS “provide[] for the implementation, maintenance, and enforcement of [NAAQS].”[14] While EPA has imposed emission standards for greenhouse gases, including for new and modified stationary sources under the Prevention of Significant Deterioration (PSD) program, it has not established NAAQS for those pollutants.

Numerous commentators have taken the position that § 115 only applies to criteria pollutants (i.e., those pollutants subject to NAAQS). [15] EPA has reached a similar conclusion. In 2008, EPA issued an Advanced Notice of Proposed Rulemaking (Notice) seeking public comment on regulating greenhouse gas emissions under the Clean Air Act. In the ANPR, EPA stated that § 115 “could not be used to require states to incorporate into their SIPs measures unrelated to attainment or maintenance of a NAAQS.”[16] Conversely, EPA concluded that it could “exercise [its] authority under [§ 115] if EPA were to promulgate NAAQS for [greenhouse gases].” The ANPR suggests that EPA believes that § 115 only applies to NAAQS. However, the ANPR was issued by EPA during the waning months of the Bush administration, and it is unclear whether the EPA under President Obama would maintain that interpretation.

The Institute argues that § 115 applies to non-criteria pollutants. Its position is that § 115 “requires the regulation of ‘any air pollutant,’ which suggests a broader ambit than the category of criteria pollutants subject to the NAAQS program.”[17] Regardless of what position EPA ultimately takes on this issue, litigation is virtually certain and will present the courts with an issue of first impression.

Petitioners argue that § 115 does not require the elimination of all emissions, but rather, requires only “reasonable progress” towards greenhouse gas abatement. To that end, it suggests that § 115 allows the states to adopt flexible regulatory mechanisms, including market-based programs (i.e., cap and trade) in order to make “reasonable progress” on reducing emissions. In fact, it argues that § 115 authorizes EPA to “set either a national cap or state-based budgets at the level required to eliminate” the purported endangerment.[18] At the same time, it concedes that while “EPA cannot mandate the form of states’ implementation plans, it can encourage states to coordinate their plans to create a nationwide auction system.”[19]

B. NSPS Petition

The Institute also asks EPA to expand the scope of its NSPS for greenhouse gases. As noted above, EPA has proposed NSPS for fossil fuel-fired power plants and is developing NSPS for refineries. The group urges EPA to finalize those rules, both for new and existing sources. At the same time, it argues that “EPA must also regulate greenhouse gases from all other significant sources of emissions … [and] should develop performance standards for new and existing sources simultaneously to avoid grandfathering.”[20]

Among other things, § 111 of the Clean Air Act requires EPA to create a list of sources of categories that, in its judgment, “cause, or contribute significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare.”[21] Once EPA lists an emission source category, it is required to revise the performance standards every eight years.[22] Based on those statutory provisions, the Institute argues that EPA should revise existing NSPS to include greenhouse gases. It contends that it would be arbitrary and capricious for EPA to refuse to regulate greenhouse gases from existing source categories since it is already developing NSPS for power plants and petroleum refineries.

The Petitioners also argue that EPA should expand its list of source categories to include other sources that emit significant amounts of greenhouse gases. Rather than establishing a numeric threshold, the Institute asks EPA to prioritize source categories that make the largest contribution to greenhouse gas emissions. It identifies coal mines and agricultural activities as two sources that EPA should prioritize, although such activities are generally not subject to NSPS regulations or other Clean Air Act requirements applicable to stationary sources.[23]

As it did with its § 115 petition, the Institute argues that flexible, market compliance mechanisms like cap-and-trade should qualify as “standards of performance” for NSPS, and should define the market as the “best system” of emission reduction. Policy Integrity’s proposal would represent a significant departure from the traditional implementation of NSPS via technology-based controls (i.e., best demonstrated technology or BDT).

C. Call for Information

Finally, the Institute asks EPA to evaluate the impact of greenhouse gases on the stratosphere and respond with regulations under Title VI. As explained above, Title VI is a rarely-used provision that allows EPA to regulate “any substance, practice, process, or activity [that] may reasonably be anticipated to affect the stratosphere” or “ozone in the stratosphere” in a way that endangers public health or welfare.[24] The Institute focuses on nitrous oxide, contending that it has significant ozone-depleting potential, and that it is not presently addressed under the Montreal Protocol (an international treaty designed to protect the ozone layer).

The Institute asks EPA to issue a call for public information designed to gather information concerning the interaction between greenhouse gases and the stratosphere. Based on that information, and any subsequent assessments that EPA may conduct, EPA should, according to the Institute, determine whether greenhouse gases affect the stratosphere in a manner that endangers health or welfare. If EPA makes such a finding, the Institute argues that EPA must develop a regulatory program to address such emission, and again suggests that the agency may identify market-based regulations in that program.

III. Conclusion

Environmental petitioners have asked EPA to respond to its rulemaking petition within 180 days. It is a novel approach, and certainly a controversial one. For more information, please contact any member of Marten Law’s Climate Change or Air Quality practice groups.

[1] 42 U.S.C. § 7409(a)-(b).

[2] 42 U.S.C. § 7410(a).

[3] 42 U.S.C. § 7410(a)(1).

[4] 42 U.S.C. § 7410(a)(2)(H).

[5] 42 U.S.C. § 7415.

[6] 42 U.S.C. § 7415(a).

[7] 42 U.S.C. § 7415(c).

[8] 42 U.S.C. § 7415(b).

[9] 42 U.S.C. § 7411.

[10] 42 U.S.C. § 7411(a).

[11] White House Raises Doubts Over GHG Rules for Power Plants, Inside EPA’s Clean Energy Report (Mar. 17, 2013).

[12] 42 U.S.C. § 7671n.

[13] Petition at 8, citing Canada’s Clean Air Act Section 21.1.

[14] 42 U.S.C. § 7410(a)(1).

[15] Hannah Chang, Cap and Trade Under the Clean Air Act?: Rethinking § 115, 40 ELR 10894 (2010).

[16] 73 Fed. Reg. 44354, 44482-83 (July 30, 2008). For more information on the ANPR, please see EPA Says Clean Air Act “Ill Suited” to Address Greenhouse Gases, Marten Law Environmental News (July 2008).

[17] Petition at 12.

[18] Petition at 15.

[19] Petition at 15.

[20] Petition at 18.

[21] 42 U.S.C. § 7411(b)(1)(A).

[22] 42 U.S.C. § 7411(b)(1)(B).

[23] Earthjustice filed a similar petition in 2010 requesting that EPA adopt NSPS for coal mines. In November 2011, Wildearth Guardians and other environmental groups filed a lawsuit in the U.S. District Court for the District of Columbia asking that the court use the power of mandamus action to order EPA to act immediately on the rulemaking petition. That case is presently stayed while the parties pursue settlement. Wildearth Guardians v. EPA, 11-cv-0206eRJL (D.D.C., filed November 7, 2011).

[24] 42 U.S.C. 7671n.

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