The EPA GHG Rule is 16 pages long, but it is accompanied by 499 pages of explanation and justification. This is the EPA website link to a copy of the rule, a fact sheet, and an implementation time line. Here is a summary and a brief analysis based on a quick first read and an EPA telephone briefing.
To begin with, EPA admits that the Clean Air Act PSD and title V requirements presumptively apply, as of January 2, 2011, at the 100 or 250 tons per year (tpy) levels of CO2 or its equivalent ("CO2e"). On its face, this means just about every business, restaurant, and apartment building in the country is theoretically subject to EPA permits and control. (p.15). Therefore, ostensibly for reasons of administrative convenience, the agency is attempting to buy time by "tailoring" the GHG rule to phase in the permitting requirements. Thus, the rule bites in stages.
Step 1 - beginning January 2, 2011, facilities currently subject to Clean Air Act new source review (primarily power plants and refineries) and that also will emit or will have the potential to emit 75,000 tpy CO2e or more, and existing major stationary source for a regulated NSR pollutant that is not GHGs, and also will have an emissions increase of a regulated NSR pollutant, and an emissions increase of 75,000 tpy CO2e or more, are subject to EPA GHG regulation, including PSD.
Step 2 - beginning July 1, 2011, EPA phases in additional large sources of GHG emissions. New sources as well as existing sources not already subject to title V that emit, or have the potential to emit, at least 100,000 tpy CO2e will become subject to the PSD and title V requirements. In addition, sources that emit or have the potential to emit at least 100,000 tpy CO2e and that undertake a modification that increases net emissions of GHGs by at least 75,000 tpy CO2 will also be subject to PSD requirements. EPA said on the briefing call this will capture at least 550 new facilities, "mainly" municipal landfills, plus 900 additional PSD permits.
Step 3 – EPA will “solicit comment” on lower GHGs thresholds for PSD applicability and issue a small source rule by July 1, 2013. EPA has promised not to regulate emitters of less than 50,000 tpy CO2e until this "small source" rule is final.
Step 4 - No later than April 30, 2015 EPA shall complete a study projecting the administrative burdens that remain with respect to all other sources. EPA promises to issue a small sources rule no later than April 30, 2016. EPA says "We cannot say at this point how close to the statutory thresholds we will eventually reach. Because this rule establishes only the first two phases of the tailoring approach, we do not find it necessary to answer these questions in this rule, and instead we expect to resolve them through future rulemaking." It also reserves the right to "exempt" small sources from regulation altogether, based on findings of "absurd results" and "administrative necessity."
So what does this all mean? Well, the battle over regulation of the corner pizza shop is not over. For starters, EPA acknowledges the tailoring rule is actually an agency re-write of the Clean Air Act. The EPA's legal rationale for its tailoring authority is essentially that the Congress intended to regulate CO2 in the Clean Air Act, on the one hand, but that the Congress did not intend to require permits for CO2 emitters who exceed the plain 100 tpy and 200 tpy thresholds written into the statute, on the other. Therefore, EPA argues that applying the statute as written would lead to absurd results and is forclosed by administrative necessity. Given the absence of supportive statutory language, EPA's logic will require a judge to make an extensive analytic reach. Furthermore, it is critical to note that the agency does not promise to exempt small sources, it simply defers potential regulation for the moment (and until what would be the second Obama term).
The initial focus of EPA's actions are power plants, refineries, and iron and steel mills. If past is prologue, then EPA's regulations will mean more expensive electricity, more expensive fuel, and accelerated movement of heavy manufacturing jobs off-shore. As EPA expands its reach over more of the economy, these economic impacts will be amplified. EPA, however, dodges an economic impact analysis by asserting "this action is a burden relief rule and as such it does not create any new requirements for sources in the energy supply, distribution, or use sectors." (p.484)
Finally, notably missing from EPA's analysis is any discussion of the environmental benefits associated with the regulatory burden. This could be because EPA's rules will not reduce (or even materially slow) the increase in US CO2 levels caused by rapidly increasing emissions from China, India, Mexico, Brazil, and other Third World countries.