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EPA Answers Key Questions Regarding GHG Regulation Under the Clean Air Act
Alert
02.23.2010
On February 22, 2010, the Environmental Protection Agency (EPA) provided answers to key questions posed by eight U.S. Senators regarding the regulation of greenhouse gases (GHGs) under the Clean Air Act. On February 19, 2010, Senator Jay Rockefeller (D-WV) and seven other Senate Democrats sent EPA a letter requesting answers to various questions regarding EPA's plans to implement GHG regulations under the Clean Air Act. The seven other Senators signing the letter to EPA Administrator Lisa Jackson were Sens. Mark Begich (D-AL), Sherrod Brown (D-OH), Carl Levin (D-MI), Robert Casey (D-PA), Robert Byrd of West Virginia, Claire McCaskill (D-MO) and Max Baucus (D-MT).
The senators explained that, although they support EPA moving forward with a single national standard on GHGs for new motor vehicles (to comply with the Supreme Court's decision in Massachusetts v. EPA), they are concerned about the economic impacts on industry sectors of moving beyond vehicle GHG emissions to stationary sources.
"We have a responsibility to the workers and industries in our states to address both your agency's timetable for the implementation of these stationary source regulations, and what you intend the exact requirements for businesses to be," the Senators wrote. "As you are undoubtedly aware, there are legislative efforts in the House and Senate seeking to disallow further agency action based upon the endangerment finding."
One of the legislative efforts referred to in the Senators' letter has been proposed by Sen. Lisa Murkowski (R-AL) who is seeking to overturn EPA's endangerment finding that GHGs are a threat to public health and welfare. Sen. Murkowski's resolution would essentially veto EPA's regulations and force the agency to start over. Sen. Rockefeller has announced plans to introduce an alternative bill that would, instead, merely suspend EPA's efforts.
In a statement from Sen. Murkowski's office, Murkowski argued that her proposal -- which requires 51 votes to pass the Senate -- provides the clearest path to stop a sweeping series of Obama administration rules for power plants and a range of other industrial sources. She said her approach "The Congressional Review Act" is better than legislation from Sen. Jay Rockefeller, which would need 60 votes to pass and would instead merely delay EPA's rules for two to five years.
I. Questions for EPA
In their letter, the eight Senators asked EPA to answer a number of broad as well as specific questions and provide other information regarding the implementation of GHG regulations. The questions/information requests included: (1) a request for a specific timeline on EPA plans to finish stationary source rules; (2) whether EPA read Sen. Murkowski's resolution to nullify EPA's endangerment finding and if so whether it would impact EPA's ability to regulate mobile sources as well as stationary sources; (3) the purpose of the tailoring rule and how this rule would impact regulation of stationary sources under the Clean Air Act; (4) the likelihood that the tailoring rule would survive legal challenge; (5) the number of facilities that would be required to obtain permits under GHG regulation under the Clean Air Act; (6) the process that would be used to determine "Best Available Control Techinology" (BACT) for GHG; (7) how GHG regulations will impact the competitiveness of domestic oil and gas industries in the global marketplace; and (8) what the direct and indirect costs are for industrial sources from regulating GHG under the Clean Air Act prevention of significant deterioration (PSD) regulations.
II. EPA's Response
In a response apparently crafted over the weekend, Administrator Jackson did not answer all of the Senators questions. However, she did provide a number of responses that clarify EPA's anticipated direction on important issues surrounding the regulation of GHGs under the Clean Air Act and the impact of the passage of Sen. Murkowski's resolution.
With respect to the timing of regulating GHGs from stationary sources, Administrator Jackson stated that she expects to take action by April of 2010 to ensure that no stationary sources will be required to get a Clean Air Act permit to cover GHGs in 2010. She expects that EPA will phase in requirements and regulation of GHGs for large stationary sources beginning in 2011.
In addition, Administrator Jackson noted that in the first half of 2011, only those facilities that currently must apply for Clean Air Act permits (currently fewer than 400 facilities) will have to address GHG in their permit applications. EPA further expects that GHG emissions from "other large sources" will phase in during the latter half of 2011.
In that regard, Administrator Jackson noted that: (1) the threshold for required permitting between the latter half of 2011 and 2013 likely will be substantially higher than the 25,000 ton limit that EPA originally proposed, and (2) the smallest sources of permitting for GHG emissions would not be subject to regulation under the Clean Air Act until 2016.
Further, Administrator Jackson's letter makes it clear that if EPA's endangerment finding is nullified EPA believes that it would not only impact the regulation of stationary sources under the Clean Air Act, but it would also prevent EPA from regulating mobile sources of GHGs emissions under the Clean Air Act in compliance with Massachusetts v. EPA.
EPA reiterated its understanding that the Tailoring Rule is lawful and would be upheld if challenged. In response to questions about what would constitute Best Available Control Technology (BACT) for GHGs and how new rules will affect the coal, natural gas, oil and petroleum refining industries, Jackson explained that EPA has yet to determine what would constitute BACT for GHG emissions. She noted that EPA will determine what constitutes BACT in this context by applying the current framework for determining BACT for non-GHG pollutants, including the feasibility and commercial availability of required pollution control technologies.
EPA did not directly answer the Senators' questions regarding the direct and indirect costs to energy-intensive and trade-exposed industries as a result of the regulation of GHGs. However, the Administrator did state that in the context of examining the effects of the Waxman-Markey bill (H.R. 2454), it was determined that the impact of energy and climate legislation "is effectively nil on the production costs for these industries." EPA offered the view that facilities in these energy-intensive and trade-exposed industries are already subject to PSD regulations for other pollutants, and that PSD costs associated with GHG regulation would be a small cost factor for industry.
In a surprisingly political statement, Jackson noted in the penultimate paragraph of her letter that "a vote to vitiate the greenhouse-gas endangerment finding would be viewed as a vote to reject the scientific work of the thirteen U.S. government departments that contribute to the U.S. Global Change resource program. It also would be viewed by many as a vote to move the United States to a position behind that of China on the issue of climate change, and more in line with the position of Saudi Arabia."
Questions?If you have questions regarding this proposed rule and the impacts that it may have for your company, please contact Jeff Talbert or David Van Slyke with Preti Flaherty's Climate Strategy Group. Click to view link to the letter from the eight Senators and EPA's response.