Considerable criticism greeted last week's publication of EPA's Greenhouse Gas Advanced Notice of Propose Rulemaking (ANPR). If the Agency had only waited a bit longer, the Administration could have cited the same day's North Carolina v. EPA decision (D.C. Cir. No. 05-1244) as justification for the 564-page ANPR's inconclusiveness.

The internal governmental disagreements about the ANPR and its contents have been well publicized. They were underlined when EPA Administrator Johnson described the ANPR to the press upon its release, and by the unprecedented simultaneous distribution of strongly critical letters from many other government agencies. In the words of Susan Dudley, administrator of the OMB's Office of Information and Regulatory Affairs, "[t]he issues raised during interagency reviews are so significant that we have been unable to reach interagency consensus in a timely way, and as a result, this [ANPR] cannot be considered Administration policy or representative of the views of the Administration."

If the North Carolina decision had only come out a few days before the ANPR, these concerns might not have seemed so obstructive.

The Massachusetts Decision and the ANPR

In the 2007 Massachusetts v. EPA decision (549 U.S. 497; 127 S. Ct. 1438), the Supreme Court essentially rejected EPA's conclusion that trying to regulate greenhouse gases under the Clean Air Act would involve squeezing round pegs into square holes. The Supreme Court essentially told EPA it could not duck the issue of deciding whether those gases endangered human health and the environment, regardless of what regulatory activities would be triggered by such a finding or how poorly designed they are to address climate change controls. Writing for the majority, in the context of motor vehicle emissions regulation, Justice Stevens characterized the Act as putting onto EPA the burden of not using the existing law to attack climate change:

Under the clear terms of the Clean Air Act, EPA can avoid taking further action only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.

127 S.Ct. at 1462.

Most of the new ANPR (which is formally captioned "Regulating Greenhouse Gas Emissions under the Clean Air Act" and available here) is devoted to a discussion of the implications of making this determination. (The determination is generally referred to as the "endangerment finding," in reference to the actual terms used in the Clean Air Act.) As such, it has been met with searing criticism from other agencies and many in the business community because it seems to accept the premise that it would make sense to apply the command-and-control systems of the Clean Air Act to the global warming challenge. At the same time, the Administration has been vilified by much of the environmentalist community for deferring any decisions in this critical policy area.

How the North Carolina Decision Impacts the Global Warming Debate

In reality, the North Carolina v. EPA decision exemplifies the very real challenge EPA faces in responding to the Massachusetts mandate and underlines why new legislation probably will be required before meaningful action can be taken on the climate change issue. North Carolina involved challenges to EPA's "Clean Air Interstate Rule (CAIR)," which sought to extend the cap-and-trade system already in place as to utility sulfur dioxide emissions to cover fine particulates and ozone. The court essentially found, however, that the current mandate of the Clean Air Act is inconsistent with such an extension.

The fundamental problem, in the view of the D.C. Circuit, is that stationary source regulation under the Clean Air Act depends largely on state-by-state adoption of "state implementation plans" (SIPs), and the cap-and-trade rule EPA had adopted did not sufficiently recognize the pertinent statutory provision, § 110(a)(2)(D)(i)(1). That provision states in pertinent part:

[SIPs must] contain adequate provisions -- (1) prohibiting, consistent with the provisions of this subchapter, any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will -- (I) contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any [National Ambient Air Quality Standard]. . . .

As the D.C. Circuit explained:

It is unclear how EPA can assure that the trading programs it has designed in CAIR will achieve § 110(a)(2)(D)(i)(I)'s goals if we do not know what each upwind state's "significant contribution" is to another state."

Slip op. at 17.

The Court also rejected the efforts of EPA (and the many environmental and industry groups which supported the CAIR) to try to stretch other provisions of the Clean Air Act to justify its cap-and-trade program. The Court held that "EPA's notions of what is an 'equitable governmental approach to attainment' is not among the objectives of § 110(a)(2)(D)(i)(I)." Slip op. at 36. While the Agency has some discretion, "EPA's interpretation cannot extend so far as to make one state's significant contribution depend on another state's cost of eliminating emissions." Id. at 39. "The statute requires each state to prohibit emissions 'within the state' that contribute significantly to downwind pollution. . . ." Id. at 41.

There, of course, is much more to the North Carolina decision, and its implications will be debated for some time to come. There is no doubt, however, that it emphatically demonstrates the difficulty of using the existing Clean Air Act as a tool to address climate change.

The ANPR (and the Criticisms from Other Agencies) Make the Same Point: The Clean Air Act Doesn't Work Well as a Greenhouse Gas Control Tool

The Clean Air Act and EPA's existing air programs are focused mainly on traditional command and control regimes. Thus, most of the ANPR's discussion of those program's requests comment on legitimate questions about how those programs could be applied in the greenhouse gas emission context. A preliminary question is whether EPA would be regulating a new list of individual pollutants, as historically has been the case, or trying to apply its single-pollutant tools to an indivisible basket of gases. Further questions extend to many equally complex matters, such as how does one accommodate under the Clean Air Act the indisputable fact that most emissions of greenhouse gases come from outside the U.S. The ANPR provides an opportunity to comment on these and many other complex issues.

As shown by the ANPR, the difficulties of using existing Clean Air Act programs to regulate greenhouse gases are numerous. A few examples emphasize how burdensome and complicated it would be. Under § 108 of the Clean Air Act, once EPA determines that an air pollutant presents an endangerment to public health and welfare, it must establish a "National Ambient Air Quality Standard" (NAAQS) for it. Once established, the NAAQS air concentration limit triggers a process by which areas of the country must be designated as in "attainment" or "nonattainment" for that pollutant. States also must develop the implementation plans discussed in the North Carolina decision, have them approved by the Federal government, and put them into place.

It takes years to establish a NAAQS even for well-understood pollutants. It would take even longer to set one for greenhouse gases. And that would only be the beginning of the SIP development and implementation process.

Similarly, § 111 of the Act requires EPA to establish standards of performance (emission control standards) for new and modified emission sources, by industrial or other economic category. These standards mandate use of "best demonstrated technology" or BDT in each category. Once BDT is established by the federal government, states must implement and enforce it for all new and modified sources within their geographic area. Again, this process would take years to implement, even if the necessary technology was developed, which currently it is not.

Another example is demonstrated by § 160 through 168 of the Clean Air Act, which establish the "prevention of significant deterioration" (PSD) program. Under PSD, permits must be obtained before construction of any "major" new source of regulated air pollutants in nonattainment areas—28 categories of facilities, including power plants, refineries, steel mills, cement plants, steel mills and chemical plants. Given the inability to segregate greenhouse gases by state, however, the entire U.S. is likely to be considered out of attainment, and industrial expansion could well come to a halt.

These and many other issues are flagged for comment in the ANPR. The more one considers the complications, the clearer it becomes that the concerns are legitimate. Perhaps pieces of the Clean Air Act can be adopted to address the global warming challenge, but wholesale reliance upon it would be extraordinarily difficult.

What's Next?

Over the last several years, the challenge of global climate change has become widely understood. Remarkably, however, many in industry and business have yet to come to recognize, much less come to grips with, the huge difficulties in developing meaningful, fair and effective responses. The potential magnitude of climate-directed regulation will rival the scope of the programs of the New Deal.

Hopefully, the publication of the ANPR, especially when read in the context of the North Carolina decision, will widen the ring of stakeholders paying attention to (and participating in) this debate. The fundamental importance of both events is to underline the difficultly of addressing greenhouse gas control through existing regulatory mechanisms. At the same time, last month's Senate debate on the Lieberman-Warner bill showed how much more work must be done before consensus on federal legislation can be achieved. If comments submitted in response to the ANPR help to better define the options facing the next administration and Congress, it will have served a useful purpose—notwithstanding the vehement protests that accompanied its release.