Legal Niches

EPA Climate Change ANPR Released

By Jim Holtkamp

On Friday, July 11, the Environmental Protection Agency released an Advance Notice of Proposed Rulemaking (?ANPR?) seeking comment on a large number of issues concerning regulation of greenhouse gas emissions (?GHGs?) under the Clean Air Act (?CAA?). The ANPR was ostensibly issued in response to the mandate of the U.S. Supreme Court in Massachusetts v. EPA, in which the Court held that carbon dioxide (?CO2?) is a regulated pollutant for purposes of the mobile source provisions of the CAA and that EPA is required to make a determination as to whether emissions of CO2 from mobile sources endanger human health or the environment.

After an intensely political process involving the professional staff at EPA, the Office of Management and Budget, various other federal agencies, and, not least importantly, the Vice-President?s office, EPA Administrator Johnson decided that, rather than issue a proposed endangerment finding, EPA would lay out all of the issues raised by regulating GHGs under the CAA and seek public comment on those issues.

In the media conference call announcing the release of the ANPR, Administrator Johnson emphasized that the CAA is ?ill-suited? for regulation of GHGs and predicted years, if not decades, of litigation as a result. He urged Congress to step in with a program designed specifically for GHGs ? otherwise, the actual regulatory programs would likely not be in place for several years.

The ANPR is 588 pages long and is a comprehensive survey of virtually every regulatory provision of the CAA that might apply to GHGs. The ANPR seeks comments on dozens of issues relating to whether it is practicable or even feasible to regulate GHGs under those provisions. Of particular interest to the energy and manufacturing industries are the issues raised surrounding the development of National Ambient Air Quality Standards (?NAAQS?) for GHGs and State Implementation Plans (?SIPs?) to assure compliance with the NAAQS; whether New Source Performance Standards (?NSPS?) should include requirements for control of GHGs; and how the New Source Review (?NSR?) and Prevention of Significant Deterioration (?PSD?) provisions of the CAA can accommodate GHG emissions and otherwise comply with a GHG NAAQS.

With regard to a NAAQS and SIPs, EPA is concerned that the global nature and very long residence time of GHGs in the atmosphere would render meaningless any attempt to set a NAAQS for CO2 or other GHGs and require states to develop SIPs to show how they would comply with the NAAQS.

With regard to the NSPS program, EPA is interested in whether a cap-and-trade program could be designed under the authority of the NSPS provisions of the CAA. Notwithstanding the D.C. Circuit?s invalidation of the Clean Air Mercury Rule, which included a mercury trading program under the NSPS authority of the Act, the ANPR suggests that EPA would favor a cap-and-trade system for GHGs as part of the NSPS for each category of sources emitting GHGs. It is significant that on the same day that EPA released the ANPR, the D.C. Circuit released its opinion striking down the Clean Air Interstate Rule ("CAIR"). State of North Carolina v. Environmental Protection Agency, No. 05-1244, et seq. (D.C.Cir. July 11, 2008). As the CAIR Rule was largely an emissions trading rule, the Court's holding casts some doubt on EPA's authority to craft a cap-and-trade program for GHGs.

As for the NSR/PSD program, EPA is concerned about how to deal with the huge increase in the number of major sources that would become subject to the NSR/PSD program if CO2 becomes a regulated pollutant, given that commercial buildings, apartment complexes and other hitherto minor or di minimis sources would emit CO2 in excess of a triggering threshold for NSR/PSD permitting review. In addition, EPA is concerned that the Best Available Control Technology analysis for GHGs, and CO2 in particular, may not be a fruitful exercise given the lack of effective technology controls; rather, most of the reductions would come from energy efficiency measures.

Litigation over the ANPR is a virtual certainty, given that EPA declined to make the endangerment finding ordered by the Supreme Court. Nonetheless, the record built up in the ANPR will be important even if only as a source of recommendations and arguments that can be used in formulating the next round of legislative proposals to deal with GHGs. In addition, it may influence the shape and scope of the actual endangerment finding when it is ultimately issued by EPA.

The comment period on the issues raised in the ANPR runs for 120 days following the date of publication in the Federal Register. Thus, absent intervention by the D.C. Circuit or Congress, it is likely that nothing more will be promulgated until after the new administration takes office in January.

(This post was contributed by James Holtkamp, Chair of Holland & Hart's Global Climate Change Practice Group.  Mr. Holtkamp is resident in the Salt Lake City office.)

Full post as published by Climage Change Law on July 15, 2008 (boomark / email).