Update on EPA’s Greenhouse Gas Rulemakings

Norman W. Fichthorn

Hunton & Williams LLP

2010

American Public Power AssociationEnergy and Air Quality Task ForceSpring MeetingApril 27, 2010

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1999: Groups petition EPA for rulemaking on GHG emissions from new motor vehicles

2003: EPA denies petition; determines it lacks GHG regulatory authority under CAA

Litigation on 2003 action: Court of Appeals’ 2005 decision and Supreme Court’s 2007 decision in Massachusetts v. EPA

CAA Regulation – Background

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CAA Regulation – Massachusetts v. EPA In 2007, Supreme Court rules that:

– EPA has authority to regulate – Carbon dioxide and other GHGs are “air pollutants” under CAA– As articulated in its 2003 decision, EPA’s policy

reasons for declining to regulate are inadequate– Regulation not mandatory, but EPA response must

be consistent with CAA “endangerment” provision

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CAA Regulation – EPA’s Response 2008: EPA’s Advance Notice of Proposed

Rulemaking (ANPR) – Automobile GHG rules could trigger economy-wide Prevention of Significant Deterioration (PSD) regulation of GHG emissions

April 2009: EPA moves toward regulation by proposing “endangerment” finding for public comment

May 2009: White House/California/automaker negotiations result in “National Policy” on auto fuel efficiency and GHG emission limits

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CAA Regulation – Endangerment Finding Dec. 2009 – EPA issues final endangerment

finding as predicate to CAA auto regulation Finds 6 GHGs in the global atmosphere (CO2,

methane, nitrous oxide, HFCs, PFCs, SF6) endanger public health and welfare in U.S.

Finds GHG emissions from new vehicles in U.S. “contribute” to the endangerment

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CAA Regulation – Motor Vehicle Rules Sept. 2009 – EPA proposes GHG emission

limits for vehicles under CAA, in conjunction with similar DOT fuel efficiency standards

April 1, 2010 – Final vehicle GHG rules signed Implications for stationary source regulation

– PSD Interpretive Memorandum rule (4/2/2010)– “Tailoring” rule (proposed Oct. 2009; final pending)

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CAA Regulation – Litigation Pending challenges to endangerment finding Filed against EPA by 3 states (Texas, Virginia,

Alabama), numerous business groups and companies, public interest groups; intervenors opposing EPA include 14 additional states

18 states, several environmental groups filed motions to intervene in support of EPA

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CAA Regulation – Litigation After EPA publishes vehicle rule (probably in

April or May 2010), court challenges to the rule are likely from stationary-source sectors and perhaps states, given rule’s PSD effects– EPA says PSD stationary source regulation

triggered by vehicle rule will begin Jan. 2, 2011– EPA: No permit “grandfathering” for GHGs

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PSD for GHGs April 2, 2010: EPA publishes final rule on

reconsideration of the PSD Interpretive Memorandum– Air pollutant is covered by PSD program when the pollutant

becomes “subject to regulation” under Clean Air Act.– The air pollutant becomes “subject to regulation” only when

“subject to either a provision in the CAA or regulation adopted by EPA under the CAA that requires actual control of emissions of that pollutant.”

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PSD for GHGs (cont’d) PSD Interpretive Memorandum Rule (cont’d)

– PSD requirements apply to a newly regulated air pollutant when “a regulatory requirement to control emissions of that pollutant ‘takes effect.’”– EPA will allow no “grandfathering” of PSD permit

applications that are pending at the time GHGs become subject to PSD on January 2, 2011.

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PSD for GHGs (cont’d) PSD Interpretive Memorandum Rule (cont’d)

– Title V will apply in a similar fashion.– EPA will implement these interpretations

immediately in areas subject to federal PSD rules.– EPA will allow these interpretations to be

implemented without the need for rule changes or further SIP approval in SIP-approved states with compatible regulatory language.

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PSD for GHGs (cont’d) What would it mean to regulate GHGs under the PSD

permit program, as EPA has “traditionally” implemented the program?– Statutory 100/250 tons-per-year major source thresholds.– Statutory default significance threshold of “zero.”– By EPA’s estimates:– PSD applicability would increase from 300 to 41,000 permits/yr.– Title V applicability would increase from 14,000 to 6.1 million.

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PSD for GHGs (cont’d) October 2009: EPA proposes to temporarily “tailor”

the applicability of PSD and Title V to GHGs.– Proposed PSD/Title V major source thresholds of 25,000 tpy

CO2e.

– Proposed PSD significance threshold of 10,000 to 25,000 tpy CO2e.

– Grounded in “absurd results” and “administrative necessity.”

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PSD for GHGs (cont’d) PSD/Title V Tailoring Proposal (cont’d)

– Revised thresholds would directly apply in areas subject to the federal programs.– Revised thresholds would immediately apply in

SIP-approved states based on:– EPA’s general Clean Air Act rulemaking authority.– EPA’s authority to correct “errors” in prior SIP approvals.– Underlying state laws and rules?

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PSD for GHGs (cont’d) PSD/Title V Tailoring Proposal (cont’d)

– Feb./Mar. 2010: Administrator Jackson indicates tentative EPA decision to raise GHG major source threshold to 75,000 tpy CO2e initially.– In first half of 2011, only sources already subject to

PSD for non-GHG pollutants need address GHGs.– “Smallest sources” not subject to PSD before 2016.– Final rule expected in the next few weeks.

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CAA Regulation – What’s Down the Road? New source performance standards – and

existing-source standards – for electric generators and other major industries

National ambient air quality standards?– Dec. 2009 petition to EPA by CBD and 350.org– Problems with this approach, and EPA’s reaction

What – if anything – will Congress do?