Until recently, every proposal to regulate greenhouse gases (gases that many believe are responsible for causing global warming) had little or no momentum in Congress or at the Environmental Protection Agency (“EPA”). There were far too few supporters for any legislative action in Congress, and administratively, the EPA under the Bush Administration took the position that Congress never granted the EPA any authority to regulate greenhouse gas emissions because:

1. in the Clean Air Act (“CAA”),1 Congress only authorized the agency to research the problem of climate change;
2. historically, whenever Congress addressed global atmospheric issues (such as the ozone hole), Congress created a separate functional regulatory regime tailored to solve the problem; leaving no such issues to the CAA’s general regulatory authorities and to the creativity of agency’s staff; and
3. the agency determined that the CAA’s national ambient air quality standards (“NAAQS”) were “fundamentally ill-suited” to dealing with climate change because the CAA was not designed to address “global” pollution.2

But the winds of change began blowing last year when the U.S. Supreme Court ruled in Massachusetts v. EPA, 127 S.Ct. 1438 (2007), that despite its arguments to the contrary, the EPA has authority to regulate greenhouse gases as “air pollutants” under the CAA. The Supreme Court then ordered the EPA to do its job (1) by determining whether greenhouse gas emissions “endanger public health or welfare,” and if so, by regulating the emissions pursuant to the tools available to it in the CAA; or (2) citing some other “reasonable explanation” why the EPA will not exercise its authority to regulate greenhouse gases.3 Through this decision, the Supreme Court let it be known that courts are ready and willing to allow the fullest possible reach of current environmental laws to avert the perceived “doomsday” scenario associated with climate change.4 This decision is prompting a regulatory storm within the federal government. Unless Congress intervenes, it looks inevitable that, like Hurricane Ike, when the regulatory storm makes landfall, the overhaul envisioned by the EPA will wreak havoc and require us to fundamentally change how we live, work and make many decisions about the use of energy.

 

The Current Regulatory Climate

Since the Supreme Court’s decision last year, Congress has made little progress in addressing the global environmental problem. Some in Congress prefer forcing the EPA to regulate greenhouse gas emissions under existing authority found in the CAA, the Endangered Species Act,5 and the National Environmental Policy Act6 – laws that were written more than 30 years ago to address local and regional environmental problems. Other Congressional members, such as U.S. Representative John Dingell, Chairman of the House Energy and Commerce Committee, have publicly proclaimed that it would “be insane that [Congress] would be talking about leaving this kind of judgment, which everybody tells us has to be addressed with great immediacy, to a long and complex process of regulatory action, litigation upon litigation and a lack of any kind of speedy resolution” by default.7 According to Dingell, if the EPA is forced to regulate greenhouse gases under current laws, a cascade of new rules and mandates will emerge to burden the economy and will “affect potentially every industry and every emitter and every person in this country,” including cars, factories and power plants, farms, schools, hospitals, restaurants, and office buildings. Dingell prophetically described this “the wonderful complexity into which this nation is being thrust” as creating “a glorious mess.”8

Unwilling to wait for federal action, many states are taking action on their own. Some, such as California, have their own goals for reducing greenhouse gas emissions, adopting policies to promote renewable energy and energy efficiency and developing statewide climate action plans. Others, recognizing that collective efforts are often more efficient, reach beyond their borders to create regional initiatives to launch emissions trading programs and support clean energy development. Some examples of these initiatives are the Regional Greenhouse Gas Initiative in the northeast and the Western Climate Initiative.9

Unsatisfied with the lack of progress at the federal level (Congressional and administrative), 12 states, New York City, and the District of Columbia seized the moment to sue the EPA to force it to regulate greenhouse gas emissions from petroleum refineries.10 This latest lawsuit is led by New York Attorney General Andrew Cuomo, who said: “Oil refineries contribute substantially to global warming, posing grave threats to New York’s environment, health, and economy. As long as the Bush EPA continues its blatant violation of the Clean Air Act and its shameful refusal to control global warming pollution, I will continue to fight them aggressively on all fronts.” Not surprisingly, the EPA’s spokesman responded with this statement: “Time and taxpayer dollars will be better spent encouraging the Democratic-led Congress to take action on sound, responsible environmental legislation than by introducing new lawsuits.”11

Despite this political posturing, the EPA reacted to the Massachusetts v. EPA decision on July 30, 2008. The EPA could have simply decided to make an “endangerment” finding and left the issue of creating regulations for another day. Instead, the EPA published a lengthy Advance Notice of Proposed Rulemaking (“ANPR”) in the Federal Register, describing a detailed roadmap for regulating greenhouse gas emissions through a multitude of CAA programs.12 Following is a brief description of “the glorious mess” that will be created if Congressional inaction forces the EPA to regulate greenhouse gases as described in this ANPR.

 

The Glorious Mess

The ANPR raises numerous issues that must be decided, including (perhaps most important) which of the greenhouse gases should be regulated as pollutants. The EPA is not limiting itself to just regulating carbon dioxide (“CO2”) – the best known greenhouse gas. The EPA is looking at all of the greenhouse gases that various state and local governments, environmental groups, and nongovernmental organizations have petitioned to be regulated, namely, carbon dioxide (from fuel combustion), methane (from cow flatulence, landfills, and coal mining), nitrous oxides (from fuel combustion), various fluorocarbons (used in vehicle and building air conditioning systems), water vapor (from airplane exhaust), and black carbon/soot (from fuels combustion).13

The bulk of the ANPR is a hypothetical roadmap outlining ways in which different CAA provisions could be applied to regulate greenhouse gases. The EPA clearly believes that the CAA empowers it to not only regulate specific emissions from all sources of transportation, office buildings, industrial and commercial facilities, farms, hospitals, lawnmowers, and countless other sources, but also to create radical new design and operation standards for those sources. The potential scope of such regulations is breathtaking.

For example, the most direct approach laid out by the EPA is to create National Ambient Air Quality Standards (“NAAQS”) for greenhouse gases. The CAA requires NAAQS to protect public health and welfare with a margin for safety, but not more than necessary. Once NAAQS are determined for each greenhouse gas, every state will be required to identify areas not in compliance with the standard (that is, areas where the actual greenhouse gas level is higher than NAAQS) and to create plans (commonly referred to as “state implementation plans” or “SIPs”) to bring non-attainment areas into compliance.14 However, this system is unworkable for greenhouse gases because the problem is global pollution. As long as the NAAQS is set significantly below the global atmospheric level of a given gas, no area in America will ever be able to achieve attainment, much less maintain it.

With respect to on- and off-road transportation, the EPA could require all newly manufactured vehicles to have substantially higher fuel economies and require the use of even more renewable fuels. The EPA may also require manufacturers to redesign engines and operators to implement new and unprecedented operational requirements (e.g., mandating lower speed limits and specific hours when vehicles can be used).15 Additionally, the EPA’s ANPR suggests that maritime operations could be affected by requiring the redesign of ship hulls, limiting ship speed, using less ballast, and regulating route planning and port management.16 The EPA may also implement regulations for the nation’s fleet or locomotives and airplanes that will force a new and higher level of fuel economy.17

If this were not enough, the ANPR considers using the Prevention of Significant Deterioration (“PSD”) program to require preconstruction permitting and emission controls on certain new and modified stationary sources (i.e., buildings). These requirements would impact the modification or new construction of smaller industrial sources, large office and residential buildings, hotels, and large retail facilities.18 To put this in perspective, as of 2003, there were over one million commercial non-mall buildings in the United States that used natural gas and were large enough (over 5,000 square feet) to require PSD permits.19

Finally, cattle ranching, landfills, and coal mining raise additional regulatory problems due to methane production that will have to be addressed. For example, most farms are not impacted by the CAA. The EPA regulation of climate change, however, would change that by subjecting even very small agricultural operations to costly and time-consuming permitting processes. Every dairy farm with over 25 cows, operations with over 50 cattle or over 200 hogs, and farms with over 500 acres of corn would be affected.20

 

It Just Doesn’t Work

The ANPR discusses at length the formidable shortcomings of applying the CAA to greenhouse gases. The ANPR acknowledges that the CAA is a poor vehicle for such complex and comprehensive regulations. The CAA, rigid and inflexible, primarily uses command and control methods to accomplish its goals and leaves limited room, if any, for creative market-based opportunities and solutions. The CAA also allows no consideration of international sources of pollutants and ignores the need for a multinational negotiated solution. Ultimately, the scheme envisioned in the ANPR will only create multiple, overlapping, complicated, controversial, and costly rulemakings, each of which is guaranteed to be challenged in court and followed by unending litigation. It is hard to think of a worse way to address the climate change problem. This view is not mine alone. The EPA Administrator, along with the heads of eight other federal agencies and offices, openly opine that the CAA is ill-suited for the task of regulating greenhouse gases.21

However, EPA staff members tell us that unless and until Congress steps in, they have no choice but to continue down the path set forth in the ANPR roadmap. The EPA eventually must exert unprecedented control over many sectors of our economy. If followed, the EPA will have a say in the design and operation of almost anything that uses any form of energy. Taken to a logical extreme, the EPA may even have a say in local land use issues and foreign trade policy.

Reducing greenhouse gas emissions may be the biggest challenge of our generation. That challenge will not be painless. The regulatory changes laid out in the ANPR roadmap are sweeping, even breathtaking. If such a vast expansion of the regulatory state is to be brought about, that expansion must be done by elected officials who are accountable to the citizenry. As Representative Dingell noted, it is insane for Congress to leave decisions with such far-reaching impacts and unprecedented unintended consequences to unelected regulators and judges. Deciding how, and to what extent, greenhouse gases are to be regulated should be debated openly in the halls of Congress. The American people deserve an honest assessment of the costs, benefits, and feasibility of any proposed solution by our elected representatives.

 

John Gray is a partner in Gardere Wynne Sewell’s environmental practice group where he co-chairs the firm’s Climate Change Task Force and routinely advises clients on climate change and other environmental issues.  Gray is also active as a council member for the HBA’s Environmental Law Section and is an associate editor for The Houston Lawyer.

 

Endnotes

1. 42 U.S.C. §§ 7401-7671q (2000).  The structure of the Clean Air Act dates from the 1970 amendments to the previous statute, supplemented by further amendments in 1977 and 1990.  See Clean Air Amendments of 1970, Pub. L. No. 91-604, 84 Stat. 1676 (1970); Clean Air Act Amendments of 1977, Pub. L. No. 95-95, 91 Stat. 685 (1977).    2. Memorandum from Robert E. Fabricant, EPA General Counsel, to Marianne L. Horinko, EPA Acting Administrator, EPA’s Authority to Impose Mandatory Controls to Address Global Climate Change Under the Clean Air Act 4-7 (Aug. 28, 2003), available at http://www.icta.org/doc/FabricantMemoAug282003.pdf.   3.Massachusetts v. EPA, 127 S. Ct 1438, 1472 (2007).   4. From the amount of ink used to discuss the seriousness of the climate change issue, the majority of the Court clearly wanted the EPA to do something.  Id. at 1446-49.  There were strong signals in the majority opinion that the court would view with suspicion any finding that greenhouse gas emissions do not endanger public health or welfare, or any conclusion that the EPA has better things to do with its resources.  See, e.g., id. at 1443 (“The harms associated with climate change are serious and well recognized” and “[a]t a minimum . . . EPA’s refusal to regulate such emissions ‘contributes’ to Massachusetts’ injuries”).   5. Endangered Species Act of 1973, Pub. L. No. 93-205, 87 Stat. 884 (1973) (codified as amended at 7 U.S.C. § 136, 16 U.S.C. §§ 1531–44, and in other scattered sections of 16 U.S.C.).   6. 42 U.S.C. §§ 4321-47 (2002).  NEPA requires federal agencies to “include in every recommendation or report on proposals for legislation and other major federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on the environmental impact of the proposed action.”    7. Chairman John D. Dingell, “Strengths and Weaknesses of Regulating Greenhouse Gas Emissions Using Existing Clean Air Act Authorities,” statement during the Subcommittee on Energy and Air Quality, Committee on Energy and Commerce, U.S. House of Representatives, Apr. 10, 2008; see also Editorial, A Glorious Mess, Wall St. J., Apr. 12, 2008.    8.Id.   9.Climate Change 101: Understanding and Responding to Global Climate Change, Pew Center on Global Climate Change and the Pew Center on the States 1 (2006), available at http://www.pewclimate.org/docUploads/101_States.pdf; see also Regional Greenhouse Gas Initiative home page (2008), available at http://www.rggi.org/home; Western Climate Initiative, Statement of Regional Goal, August 22, 2007, available at www.westernclimateinitiative.org/ewebeditpro/items/O104F13006.pdf.   10.New York v. EPA, D.C. Cir., docket number unavailable (Aug. 25, 2008) (alleging that the EPA violated the Clean Air Act when it declined to add greenhouse gas emissions to the new source performance standards for petroleum refineries).  New source performance standards are technology-based emissions limits issued for different industrial sectors and applied when a new plant is built or an existing plant is reconstructed.  See 40 C.F.R. Part 60, Subpart J.  New York was joined in this lawsuit by California, Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Mexico, Oregon, Rhode Island, Vermont, and Washington, as well as the District of Columbia and the City of New York.   11. Andrew Childers, States, Cities Sue EPA for Refusing To Regulate Emissions From Refineries, 165 Daily Env’t Rep. (BNA) (Aug. 26, 2008).   12. EPA, Regulating Greenhouse Gas Emissions under the Clean Air Act, Advance Notice of Proposed Rulemaking, 73 Fed. Reg. 44,354 (July 28, 2008), available at http://www.epa.gov/climatechange/anpr.html.   13.Id. at 44,399 n.26.  These groups have petitioned the EPA to regulate greenhouse gases being released from a multitude of on and off-road mobile sources such as cars, light and heavy-duty trucks, ocean-going vessels, locomotives, construction equipment, farm tractors, forklifts, harbor crafts, lawn and garden equipment, and aircraft.  Id. at 44,399.   14.Id. at 44,417, 44,485-86.   15.Id. at 44440-48.   16.Id. at 44357, 44466-68.   17.Id. at 44,433 (noting that “CAA section 213(a)(5) authorizes EPA to adopt standards for new locomotives and new locomotive engines” and “CAA section 231(a) provides broad authority for EPA to establish emission standards applicable to the ‘emission of any air pollutant from any class or classes of aircraft engines . . . .’”), 44,461-64, and 44,468-73.   18.Id. at 44,417-18, 44,498-500.   19.Id. at 44,375 (noting that buildings that emit more than 21 metric tons of CO2 annually could be subject to PSD permits).   20.Id. at 44,376-77.   21.Id. at 44,356-61.