Since the United States Supreme Court held in Massachusetts v. EPA (2007) that the Environmental Protection Agency (EPA) has the authority to regulate motor vehicle greenhouse gas emissions as pollutants under the Clean Air Act, industry has been waiting for the other shoe to drop. Would new sources have to evaluate and control their greenhouse gas emissions and would thousands of small sources suddenly have to obtain Title V permits? A recent EPA proposed rulemaking showed that the shoe could drop soon and drop hard. However, federal legislators took notice and have been applying considerable pressure on EPA in an effort to limit the effect of its actions. EPA Administrator Jackson’s February 22, 2010 letter to Senator Rockefeller (D-WV) demonstrates that EPA is listening and will take steps to ensure the shoe lands softly, at least in the short run.

As a direct response to the Supreme Court’s holding in Massachusetts v. EPA, Administrator Jackson has issued a determination that GHG emissions from light-duty vehicles may be reasonably anticipated to endanger human health and welfare (the so-called “endangerment finding”). As a consequence of the endangerment finding, the Clean Air Act obligates EPA to issue regulations restricting GHG emissions from vehicles. EPA, the Department of Transportation, vehicle manufacturers, and states reached an agreement regarding acceptable regulations for model year 2012-2016 light-duty vehicles. When the light-duty vehicle rules regulations go final—which Administrator Jackson indicates will occur next month—GHGs will be “subject to regulation” under the Clean Air Act for the first time.

Because GHGs will be “subject to regulation” after the promulgation of the light-duty vehicle rule, the vehicle rule will be of much greater significance to stationary sources than one might otherwise suspect. When an air pollutant is “subject to regulation” and a stationary source will emit that pollutant above certain thresholds, the stationary source will be required to obtain a Title V Clean Air Act operating permit and may be required to restrict emissions under the Clean Air Act’s preconstruction program if it adds new equipment or modifies existing equipment. Consequently, the promulgation of the vehicle rule in March 2010 would effectively cause EPA to regulate GHG emissions from such stationary sources.

For attainment areas (i.e., areas that are in compliance with Clean Air Act ambient air quality standards), the preconstruction review program applies to sources with emissions greater than 100 or 250 tons per year, depending on the source category. The Title V permitting program has thresholds ranging from 10 to 100 tons per year, depending on the attainment status of the area in which the source is located. These are extremely low thresholds for greenhouse gases. According to EPA, if these thresholds were applied to greenhouse gas emissions, millions of sources would be subject to these two programs. EPA, though, appears committed to avoiding these drastic impacts, and Jackson’s letter is the strongest evidence of that commitment to date.  

On September 30, 2009, EPA proposed its so-called Tailoring Rule, which would rewrite the Clean Air Act’s Title V and preconstruction permitting thresholds and establish a 25,000 ton per year regulatory threshold for stationary sources of GHGs. The effect of the Tailoring Rule would be to exempt all but about 14,000 stationary sources of GHG emissions from the Clean Air Act’s operating and preconstruction permit programs until at least 2016. However, Jackson’s letter indicates that EPA intends to provide further regulatory relief than that contained in the proposed Tailoring Rule.  

Specifically, Jackson “expects”  

  • “By April [2010], . . . to take actions to ensure that no stationary source will be required to get a Clean Air Act permit to cover its greenhouse gas emission in calendar year 2010.”  
  • “EPA will phase in permit requirements and regulation of greenhouse gases for large stationary sources beginning in calendar year 2011.”  
  • In the first half of 2011, only those facilities whose non-GHG emissions trigger Clean Air Act permitting requirements will need to address their GHG emissions.  
  • “That greenhouse gas emissions from other large sources will phase in starting in the latter half of 2011.”  
  • “That between the latter half of 2011 and 2013, . . . the threshold for permitting will be substantially higher than the 25,000-ton limit that EPA originally proposed [in the Tailoring Rule].”  

Finally, “EPA does not intend to subject the smallest sources to Clean Air Act permitting for greenhouse-gas emissions any sooner than 2016.”  

EPA’s approaches to softening the regulatory blow of GHG emission limits are novel because the rationales on which EPA will rely to show that its approaches are lawful are relatively untested. First, Jackson’s letter suggests that EPA is poised to release a new memorandum interpreting what “subject to regulation” means. The letter hints that the new memorandum will find that GHGs will not be subject to regulation until 2011—when 2012 model year vehicles will first have compliance obligations—despite the fact that the vehicle regulation will be promulgated in March 2010. Additionally, EPA defends its efforts to change the regulatory thresholds contained in the text of the Clean Air Act based on the doctrines of absurd results and administrative necessity— essentially arguing that not changing the thresholds would make the Clean Air Act impossible to implement and lead to results not intended by Congress. Whether EPA may rely upon these doctrines to make alterations to the Clean Air Act’s scope and applicability of the magnitude proposed is unclear.

Moving forward, significant question marks continue to surround both how EPA intends to address stationary source GHG emissions under the Clean Air Act and the reaction of federal legislators to EPA’s efforts. For many existing and future stationary sources, the near-term consequences of Clean Air Act regulations may be limited if EPA’s efforts to mitigate those consequences are upheld. Nonetheless, in the absence of new, comprehensive climate change legislation, EPA appears committed to implementing a robust GHG emission regulatory program that may affect the bulk of large GHG sources on a two- to five-year timeframe.