April 20, 2009
The Environmental Protection Agency recently took a first key step towards regulating greenhouse gas emissions from new motor vehicles by announcing its proposed endangerment finding under Section 202(a) of the Clean Air Act. EPA’s announcement stems from the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which found that greenhouse gases could be air pollutants covered by the Clean Air Act and that the EPA’s stated reasons for declining in the past to regulate such emissions based on policy concerns were an abuse of its discretion. The Court held that the EPA Administrator must determine whether emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger the public health or welfare, or whether the science is too uncertain to make a reasoned decision.
EPA’s Action
On April 17, 2009, EPA’s Administrator announced two proposed findings regarding greenhouse gases under Section 202(a) of the Clean Air Act:
In support of these findings, EPA relied heavily on recent assessments of the U.S. Climate Change Science Program and the Intergovernmental Panel on Climate Change. The proposed findings are based on EPA’s assessment of increases in morbidity and mortality due to an increase in the number and intensity of severe heat waves, as well as increased risks of respiratory infection, asthma aggravation and premature death due to worsened regional ozone, which is exacerbated by increased temperatures. In making its proposed endangerment findings, EPA also pointed to the impacts of climate change on the severity of storms, especially along the Gulf and Atlantic coasts, and on the intensity of precipitation events.
EPA will now hold public hearings and accept comments before issuing a final endangerment finding.
Implications of an Endangerment Finding
The announcement is also significant for what EPA failed to do. While proposing to make a positive endangerment finding, EPA did not announce any particular standards setting emissions limits for greenhouse gases. Any specific regulations EPA proposes would be subject to further notice and comment. Some observers suggest that EPA declined to propose specific regulations because the Agency would prefer to have Congress enact new legislation tailored to greenhouse gases rather than be required to use the blunt instrument of regulation under the Clean Air Act.
However, the proposed endangerment finding for mobile sources sets in motion a chain of events that, in the absence of congressional action, likely will result in the sweeping use of existing Clean Air Act authorities to regulate greenhouse gas emissions. While the announcement only addresses the endangerment finding for mobile sources emissions, this initial finding could have vast regulatory repercussions.
Endangerment Finding & NAAQS
In its announcement on the EPA website concerning the endangerment finding, EPA stated that an “endangerment finding under one provision of the Clean Air Act would not by itself automatically trigger regulation under the entire Act.” While this is technically true, EPA’s final endangerment finding for motor vehicles may, as a practical matter, compel EPA to establish greenhouse gas regulations under other parts of the Clean Air Act that also use an “endangerment finding” as the triggering event for regulation. Under Title I of the Act, for example, EPA is required by Section 108 to establish national ambient air quality standards (“NAAQS”) when the Agency determines that emissions of an air pollutant “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare” and where “the presence of [such pollutant] in the ambient air results from numerous or diverse mobile or stationary sources.” 42 U.S.C. § 7408(a)(1).
Although EPA has not publicly stated that it intends to establish an air quality standard for greenhouse gases, such standards might well result from Friday’s proposed endangerment finding. There is a near-perfect correlation in the language used by the regulatory triggers in the mobile source and NAAQS sections of the Clean Air Act, making it difficult for the Agency to explain why it found that greenhouse gas emissions from mobile sources trigger an endangerment finding under Section 202(a), but failed to find that the presence of greenhouse gases in the ambient air “results from numerous or diverse mobile or stationary sources” so as to result in an endangerment finding under Section 108. Even if EPA desires to proceed cautiously on enacting such regulations in light of the current economic climate–as the language on EPA’s website would indicate–its hand may be forced by petitions from environmental advocates. For example, at the time Massachusetts v. EPA was decided, EPA was facing a number of rulemaking petitions asking the Agency to regulate greenhouse gases from a variety of sources such as ocean-going vessels, aircraft, and lawn and garden equipment. If the environmental community grows frustrated at the pace of climate action out of Congress or EPA, they may file similar petitions to cover additional source categories or litigate to compel regulation on existing petitions.
Endangerment Finding & Prevention of Significant Deterioration Permitting
The proposed endangerment finding also could impact another key program under the Clean Air Act–the Prevention of Significant Deterioration or PSD program, which is part of EPA’s preconstruction permitting program for new sources of air pollution. PSD requirements are triggered by regulation of a pollutant under any other section of the Act and generally require preconstruction review and permitting for “major stationary sources” in areas currently in “attainment” with air quality standards. In these areas, “stationary sources,” which include “any building, structure, facility or installation” which emits or may emit a regulated pollutant, 42 U.S.C. § 7411(a)(3), are regulated as “major stationary sources” if they have the potential to emit at least 250 tons per year of a regulated pollutant or, if included on EPA’s select list of source categories, at least 100 tons per year of a regulated pollutant. Id. § 7479(1).
The issue before EPA in a parallel administrative proceeding is whether greenhouse gases are currently “subject to regulation” under the Clean Air Act, and if so, whether any new or modified source will have to include the best available technology to control the emission of greenhouse gases (“BACT”). Citing provisions in the Clean Air Act mandating the monitoring of greenhouse gas emissions, one state court has held that carbon dioxide (the primary greenhouse gas) is a “pollutant subject to regulation under the [Clean Air] Act” and therefore “a PSD permit cannot issue for [the new or modified facility] without [carbon dioxide] emissions limitations based on a BACT analysis.” Friends of the Chattahoochee, Inc. v. Couch (Ga. Super. Ct. June 30, 2008). In December of 2008, then-EPA Administrator Stephen Johnson issued an interpretive memorandum to resolve a split within the EPA regions on this question. In that memorandum, he determined that the term “regulated Pollutant” only applies to “each pollutant subject to either a provision in the Clean Air Act or regulation adopted by EPA under the Clean Air Act that requires actual control of emissions of that pollutant” and does not include “pollutants for which EPA regulations only require monitoring or reporting.”
Upon taking over the Agency, Administrator Jackson promptly granted a petition for reconsideration of this decision by Sierra Club “in order to allow for public comment on the issues raised in the [Johnson] memorandum.” The April 17 proposed endangerment finding also refers to this controversy, noting that EPA is reconsidering the Johnson memorandum and invites comment in the parallel proceeding on whether a positive endangerment finding for mobile sources would trigger regulation of greenhouse gases under PSD.
If EPA finds that greenhouse gases are “subject to regulation” by virtue of the monitoring rule or the mobile source endangerment finding, the PSD program will automatically apply to greenhouse gases. This result will impose costly PSD permit requirements on industry. Although a threshold of 100 or 250 tons per year for traditional pollutants generally limits permit requirements to large stationary sources, like electric utilities, chemical plants, and refineries, that threshold is not set high enough to capture only “major stationary sources” of the primary greenhouse gas, carbon dioxide. Rather, the application of the definition of major stationary source to greenhouse gases will dramatically expand the number of facilities regulated. Office and apartment buildings, hotels, enclosed shopping malls, large retail stores and warehouses, college buildings, and hospitals could become subject to the Clean Air Act permitting process for the first time. For example, the average office building in New York City emits 20 pounds of carbon dioxide per square foot. This average would indicate that any building over 25,000 square feet would be a major stationary source.
EPA Expresses a Preference for Comprehensive Legislation
Perhaps recognizing that the existing regulatory programs under the Clean Air Act are ill-suited for regulating greenhouse gas emissions, EPA’s press release refers to its endangerment finding under Section 202(a) as a “required regulatory process,” and states that “both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy.” Such legislation has been proposed by the House Energy and Commerce Committee. The draft bill, “The American Clean Energy and Security Act of 2009,” would provide for the addition of a new Title VII to the Clean Air Act establishing a greenhouse gas cap-and-trade system that would reduce greenhouse gas emissions to 20% below 2005 levels by 2020 and to 83% below 2005 levels by 2050. Significantly, this draft bill attempts to provide a fix to the problem of applying some of the other, ill-fitting portions of the Clean Air Act to greenhouse gases, as it would exempt greenhouse gases from being listed as criteria or hazardous air pollutants under Sections 108 or 112, respectively, or being subject to the PSD program or to Title V permitting requirements.
Conclusion
EPA’s proposed endangerment finding is a first step in regulating greenhouse gases. If the endangerment finding is finalized, the next step for EPA will be to propose greenhouse gas emissions standards for motor vehicles. Should the Agency do so, and, if Congress does not intervene and enact comprehensive climate change legislation, EPA may confront a nondiscretionary obligation to regulate greenhouse gas emissions under other parts of the Clean Air Act.
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have about these developments. To learn more about the firm’s Environmental Litigation and Mass Tort Practice Group, please contact the Gibson Dunn attorney with whom you work, or any of the following:
Raymond B. Ludwiszewski (202-955-8665, [email protected])
Charles H. Haake (202-887-3581, [email protected])
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