Both the US Senate and Environmental Protection Agency (EPA) on September 30 moved ahead with programs to reduce greenhouse gas emissions. Which program goes into effect will determine whether those emissions are controlled pursuant to a nationwide cap-and-trade program that ratchets them down approximately 80 percent below 2005 levels by 2050 or, at least initially, pursuant to permitting and new source review (NSR) under the Clean Air Act (CAA) or public nuisance law suits.

In Congress, Senators Boxer (D-CA) and Kerry (D-MA) introduced S.1733, the Clean Energy Jobs & American Power Act. Comparable to HR 2454, the American Clean Energy and Security Act that the House of Representatives passed in June the Senate bill requires near-term economy-wide reductions of 20 percent below 2005 emissions by 2020, increasing to 83 percent by 2050. Facilities that emit 25,000 tons of carbon dioxide equivalents (CO2e) would be required to hold an emission allowance for each ton of CO2e emitted beginning in 2012, and EPA would reduce the number of allowance issued each year through 2050 and beyond. Whereas the House bill details a process for distributing emission allowances (principally through free allocations to electric distribution companies) and exempts from CAA regulation greenhouse gas source facilities to which the House bill applies, the Senate is silent on how allowances will be made available and provides no exemption from CAA regulation.

In the Executive Branch, EPA concurrently issued a proposed greenhouse gas rulemaking under the CAA that, if finalized, would for the first time require emission sources of greenhouse gases to obtain a CAA Title V air permit and subject them to new source review (NSR) beginning as soon as March 2010. NSR requires that new and majorly modified pollution sources adopt best-available control technologies to reduce their emissions. To prevent the proposed rule from applying to an unmanageably large number of relatively small source of greenhouse gas emissions (e.g., schools, hospitals, bakeries), EPA proposes in the rulemaking to raise the Title V permitting and NSR applicability thresholds for purposes of greenhouse gasses from 100 or 250 tons per year to 25,000 tons (comparable to the applicability threshold in the Senate bill). As noted, the House bill would stop this proposed rule in its tracks, but not the Senate bill, which in its present form would accommodate regulation of greenhouse gas emission source under both the cap-and-trade program and the CAA. To be considered, public comments on the proposed rule must be submitted to EPA by December 7.

Adding to the likelihood that US sources of greenhouse gas emissions will soon be controlled, one week before Senators Boxer and Kerry introduced S. 1733 and EPA announced its greenhouse gas rulemaking, a two-judge panel of the US Court of Appeals for the Second Circuit ruled that the federal common-law nuisance law suit of eight states, New York City and three land conservancy trusts against the nation’s five largest coal-fired electricity generators could proceed to trial. The suit alleged that the generators emissions of carbon dioxide contributed to the public nuisance of global warming and sought injunctive relief capping future emissions. In its September 21 decision in Connecticut v. American Electric Power Co., the appeals court panel reversed a US district court that had earlier dismissed the suit on the ground that it raised only non-justiciable political questions. Not so, ruled a two-judge panel of the appeals court. The case could be decided judicially on the basis of “[w]ell-settled principles of tort and public nuisance law . . . .” The court cautioned, however, that the plaintiffs’ complaint may become preempted by federal law when and if Congress legislates greenhouse gas controls that occupy the field.

But until Congress takes that step and the details of a cap-and-trade program congeal, the US is on track to control greenhouse gases under the CAA, federal common-law of public nuisance, as well as a cap-and-trade.