The new administration did not take long to do what the Bush Administration assiduously avoided for two years – finding that the emission of six greenhouse gases (GHGs) constitute “air pollution” which “endangers” public health and welfare given their effect on climate change. In her just-published proposed endangerment finding, Lisa Jackson, the new Environmental Protection Agency Administrator, also determined that emissions of four of these GHGs come from motor vehicle engines, and cause or contribute to that danger.

The language Jackson uses in her findings is strident and unmistakable: “In both magnitude and probability, climate change is an enormous problem,” she said. “[T]he case for finding that greenhouse gases in the atmosphere endanger public health and welfare is compelling and, indeed, overwhelming” and “the effects of climate change on public health include sickness and death. It is hard to imagine any understanding of public health that would exclude these consequences.”

Given this tone, there is little chance that EPA will reverse itself after the public comment period, even though the endangerment finding will affect all sectors of our economy. But the real purpose of the finding may be to spur a legislative rather than regulatory solution to mounting concerns about climate change.

Background

In Massachusetts v. EPA, the U.S. Supreme Court held that GHGs are “air pollutants” under the Clean Air Act and directed the EPA to determine whether GHGs threaten the public health and welfare when emitted from motor vehicles. For the most part, the federal Clean Air Act (CAA) regulates mobile sources (motor vehicles, etc.) and stationary sources separately, with one important exception – stationary sources emitting regulated air pollutants are subject to certain requirements, even if the specific air pollutant is regulated solely under mobile source requirements. EPA’s proposed endangerment finding will make the six GHGs regulated air pollutants and subject a large number of stationary sources to new or additional regulation under the Clean Air Act.

Analysis

When EPA issues the final endangerment finding, it will lead to potentially lengthy and complex rulemaking proceeding(s) for the control of GHG emissions from motor vehicles. The proposed finding does not provide insight into the type of rules it may propose – but stiffer mileage standards and encouragement of alternate technologies (e.g., plug-in hybrids) – appear likely. Regulation of other mobile sources, such as airplanes, diesel locomotives and ships, may follow.

For a variety of reasons, nearly all commentators, regardless of their viewpoint or affiliation, believe that the CAA is poorly designed to address GHG emissions from stationary sources and that new legislation specifically addressing climate change is a much better solution. By way of example, Prevention of Significant Deterioration/New Source Review requirements (PSD/NSR), which apply to “major” new and modified sources of emissions such as power plants, chemical plants and other large industrial facilities, will become applicable in the context of GHG emissions 18 months after the endangerment finding is finalized. Carbon dioxide, the most prevalent GHG, is generated by the combustion of fossil fuels. Because this combustion results in emissions that are orders of magnitude higher than the emission of currently regulated air pollutants from similar economic activities, facilities that were never intended to be regulated under the PSD/NSR program will now be subject to those requirements, including university campuses, department stores, office buildings and small apartment buildings. The U.S. Chamber of Commerce estimates “hundreds of thousands, if not more than a million, small sources” would become subject to regulation for the first time under PSD/NSR and/or the Title V operating permit program, which applies to existing major stationary sources.

This far reaching result stands in stark contrast to EPA’s recently proposed rule on GHG disclosure, requiring certain entities to calculate and disclose their GHG emissions. In that proposed rule, EPA selected a GHG emission threshold high enough (25,000 metric tons CO2 equivalent per year) to capture only 13,000 of the largest emission sources on the theory that this threshold would capture 85 to 90 percent of the GHG emissions. EPA specifically declined to select a lower threshold and require smaller sources to disclose emissions, on the theory that the additional emissions captured would not warrant the burden on smaller sources. Yet, absent congressional action, the endangerment finding will lead to the imposition of harsher permit and technical requirements on those very sources deemed too small to require mere GHG emission disclosure – in many cases, sources with just 250 tons of GHG emissions.

The practical (and likely intended) effect of the endangerment finding is to force Congress to either pass GHG legislation pre-empting the CAA (at least as it applies to stationary sources) or face the economic (and electoral) consequences of the CAA applying automatically to these sources, which the US Chamber says would put the “economy into a regulatory straightjacket.” And, it appears to be working – Congress is holding legislative hearings on statutory proposals to address climate change without the far-reaching consequences of EPA’s endangerment finding. Stay tuned. . . .

Comments and Hearings

The proposed finding was published in the Federal Register on April 24, 2009, and comments are due no later than June 23, 2009. Public hearings will be held May 18, 2009, (Washington, D.C.) and May 21, 2009 (Seattle, Washington).