Sometime during April 2009, EPA is expected to propose its long-anticipated endangerment finding under Section 202(a)(1) of the Clean Air Act (CAA), pursuant to the mandate of the Supreme Court in the landmark decision Massachusetts v. EPA, 549 U.S. 497 (2007). In December 2007, EPA submitted an endangerment finding to OMB, but it was subsequently withdrawn following enactment of the Energy Independence & Security Act of 2007 that same month. (We anticipate that the proposal will be signed by Administrator Jackson on April 16, and thus released on the internet that day, and thereafter published in the Federal Register on April 30; there will likely be a 60-day comment period and two public hearings.)

We expect EPA to make a positive endangerment finding that has the following elements: (i) "air pollution" will be defined as the total collective elevated concentrations of 6 GHGs (C02, CH4, N20, HFCs, PFCs, and SF6); (ii) endangerment will be made for public health and human welfare; (iii) "air pollutant(s)" — i.e., the specific substance(s) that contribute to "air pollution" — will be defined as the collective group of GHGs in (i) above; and (iv) a definition for "contribute."

The definition of "contribute" is likely to constitute the meat of the proposal. The CAA compels EPA to issue emission standards applicable to air emissions ". . . that cause, or may contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare." 42 U.S.C. 7521(a)(1) (emphasis added). The verb "contribute" follows the noun "emissions" in that clause, and emissions are of course associated with sources. Thus, a "contribution" analysis necessarily requires an assessment of sources making such contributions. Significantly for smaller sources, Administrator Jackson appears to be leaning towards saying that some sources are too small to make a contribution. Such an approach would be consistent with aspects of the NOx SIP Call litigation, in which battles were fought over whether an individual upwind smokestack in Missouri, for example, could contribute to air quality degradation in the state of Maine. Good news for small sources, in other words — dry cleaners perhaps can rest easy.

More broadly, what does all of this mean? Good question. Here are some observations:

+ Some might say that regulation of GHGs under the CAA would be so complex that, at the end of the day, the endangerment finding is an effort to make industry cry uncle and further its calls for national cap-and-trade legislation in lieu of regulating carbon under the CAA.

+ Others might say that EPA is merely fulfilling its statutory duties under the CAA consistent with the mandate of the Supreme Court. Assuming this is the situation, the following additional observations come to mind (the rest of this post focuses on CO2, not all GHGs, to simplify the analysis):

* A narrow impact is that EPA will proceed with implementing tailpipe emission standards for certain new motor vehicles or new motor vehicle engines. After all, Massachusetts v. EPA was a mobile source case. Doing so, however, might entail some confusion between EPA and the U.S. Department of Transportation, which has authority to set (in some instances) fuel economy standards — known as CAFE standards — for motor vehicles. Why? Because it could be argued that a tailpipe emission standard for CO2 is functionally identical to a fuel economy standard. DOE and EPA are already cooperating on these issues as a practical matter, so perhaps this concern is overblown. Also to be addressed is squaring a federal CO2 tailpipe emission standard with California's pending preemption waiver request to accomplish the same outcome under State law. The EPA/CARB issues also should be solvable, in our view, because after all there already are two kinds of cars made in America — federally certified and California-certified. Been there, done that.

* A broader impact is that EPA will proceed with stationary source regulation, too. And if we were Las Vegas types, we would bet that EPA is going to go that way. Why, you ask, would a mobile source case compel this result? It's because the section 202 "endangerment" language appears throughout the CAA. See 42 U.S.C. 7411(b)(1)(A) (NSPS program). Plus practically, it might just seem weird for EPA to say that CO2 coming from a vehicle was a problem while the same gas coming from a fertilizer plant was not. Stationary sources are thus at risk.

* How, you ask, would stationary sources be regulated? A great question. We don't know. Declaring attainment and nonattainment regions for CO2, then requiring States to submit SIPs, is hard to fathom given that CO2 concentrations are uniform, thus making SIPs an awkward regulatory tool, at best. We are thus betting that EPA tosses the entire country into maintenance. While still cumbersome, maintenance might work as it would require EPA to declare that the entire country was in attainment for CO2, but nonetheless require the States to regulate CO2 sources via maintenance SIPs, which generally are considered to provide a lighter regulatory touch than, for example, nonattainment SIPs.