On April 17, 2009, the U.S. Environmental Protection Agency (EPA) issued a proposed finding that air pollution from greenhouse gases (GHGs) currently endangers public health and welfare, and that new motor vehicles cause or contribute to this pollution. While the endangerment findings were issued under the new motor vehicles and new motor vehicle engines provisions of the Clean Air Act, the implications of the findings are considerably broader.

The Endangerment and Cause/Contribution Findings.

The proposal consists of two distinct findings, namely that (1) the current and projected concentrations of a "mix of six key" GHGs in the atmosphere endanger the public health and welfare, and (2) motor vehicles contribute to these GHGs and therefore to the threat of climate change. The EPA was required to engage in the endangerment inquiry as a result of the U.S. Supreme Court's decision in Massachusetts v. EPA, and, if the endangerment finding becomes final, Section 202(a) of the Clean Air Act requires that the agency prescribe emissions standards for new motor vehicles contributing to such endangerment. The EPA concludes that "science compellingly supports a positive endangerment finding."

The finding proposes that the six implicated GHGs—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6)—be treated collectively as an air pollutant, purportedly to provide for flexibility in establishing and administering the emissions standards for the gases (most likely in the form of CO2 equivalents). In unusual fashion, the EPA opted not to propose the emissions standards themselves along with the endangerment finding.

The publication of the proposed findings initiates a 60-day comment period, after which the EPA may issue a final rule on the findings. Two public hearings will be held during the comment period: one on May 18, 2009, in Arlington, Virginia, and the second on May 21, 2009, in Seattle, Washington. Once the EPA addresses all comments and publishes a final rule, it would then be required to issue GHG emissions standards for new motor vehicles and new motor vehicle engines. However, the EPA will have substantial latitude over the timing, sequence and scope of any regulations adopted.

Implications.

While the proposed endangerment finding itself merely sets the stage for eventual EPA regulation of the auto industry, the finding has significant implications for a broader group of U.S. industries. The endangerment language of the Clean Air Act's new motor vehicle and engine provisions, under which the finding was made, is similar to the language in other Clean Air Act provisions, though important differences exist. Some observers have indicated that this could lead to the regulation of GHGs under other Clean Air Act provisions; e.g., those governing ambient air quality standards, fuel additives, non-road and aircraft engines, and even electrical generation facilities. In addition, with respect to future proposed development projects subject to environmental review under the National Environmental Policy Act or similar state statutes, the endangerment finding, given its broad scope, is likely to be relied upon to require more detailed, expensive and time-consuming analysis and modeling of the projects' GHG emissions and their direct, indirect and cumulative impacts on climate change.

Beyond these effects under the current regulatory framework, the EPA findings likely will put pressure on Congress to adopt climate control legislation that would save the EPA from having to regulate GHGs in a piecemeal fashion under the Clean Air Act. In fact, the EPA itself, in a press release accompanying the endangerment findings, stated that "[n]otwithstanding this required regulatory process, both President Obama and [EPA] Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue." Passing such legislation, or achieving significant progress in implementing GHG regulations, likely will be a central priority of the Obama administration this year, particularly as it seeks to engage meaningfully in the U.N. Conference of the Parties on Climate Change to be held in Copenhagen, Denmark, in December 2009.

While climate change legislation seems destined to be the subject of heated Congressional battles this year, and while promulgation of GHG regulations in the absence of such legislation could be a lengthy and protracted process, EPA's endangerment finding makes significant Congressional action on climate change more likely and sets the stage for the regulation of GHGs by the EPA if Congress does not act.