Greenhouse Gas Regulation Under the Clean Air Act: Structure, Effects, and Implications of a Knowable Pathway

Date01 February 2011
Greenhouse Gas
Regulation Under
the Clean Air Act:
Structure, Effects,
and Implications
of a Knowable
by Nathan Richardson, Art Fraas, and
Dallas Burtraw
Nathan Richardson is a resident scholar, Art
Fraas is a visiting scholar, and Dallas Burtraw is
a senior fellow at Resources for the Future.
Absent legislative intervention, CAA regulation of GHGs
is moving beyond mobile sources to the industrial and
power facilities that emit signicant U.S. GHG emis-
sions. e authors analyze the mechanisms available to
EPA for regulating such sources, and identify one, NSPS,
as the most predictable, likely, and practical, i.e., know-
able, pathway. Indeed, EPA announced in late 2010 that
it intends to pursue this pathway. Based on the legal
structure of the NSPS and EPAs traditional approach,
the authors analyze a hypothetical GHG NSPS for one
sector, coal electricity-generation. is analysis indicates
that eciency improvements and perhaps biomass cor-
ing could be implemented through the NSPS, yielding
modest but meaningful emissions reductions. Trading
could also rein in costs. ough analysis is limited to one
sector and does not include modeling of costs, it suggests
that CAA regulation, though inferior to comprehensive
climate legislation, could be a useful tool for regulating
stationary source GHGs.
Until late 2009, most observers considered it likely
that t he U.S. Congress would pass some form of
comprehensive climate legislation, including an
economywide cap-and-trade s ystem for greenhouse gases
(GHGs). at did not happen in 2009— though the U.S.
House of Representatives passed such a bill (Waxman-
Markey, H.R. 2454), the U.S. Senate did not. It is now
unclear when, or even if, Congress will pass any compre-
hensive legislation.
is legislative inertia has resulted in a shift in interest
to actions by the U.S. Environmental Protection Agency
(EPA) to regulate GHGs under its existing Clean Air Act
(CAA)1 authority. Under President Barack Obama, EPA
has proposed and nalized rules requiring the reporting of
GHG emissions and an “endangerment nding” that per-
mits and requires the regulation of GHG emissions from
cars and trucks (mobile sources, in C AA terminology).
is endangerment nding was followed by the recent EPA
announcement of new GHG emissions standards for these
mobile sources.
e steps EPA will ta ke as it moves to regulate mobile-
source emissions are relatively well understood. Substantial
uncertainty remains, however, over how EPA will use its
CAA authority to regulate stationary sources—the power
plants and industrial facilities responsible for the majority
of U.S. GHG emissions; particularly existing, unmodi-
ed sources. A recent settlement agreement provides some
broad clarity, but details remain obscure.
is Article attempts to resolve some of that uncertainty
by ana lyzing a set of plausible pathways EPA may use to
regulate stationary-source GHG emissions under the CAA.
Section III describes each of these pathways, and Section
IV oers evidence that points to one program in particular,
the new source performance standards (NSPS), as the most
likely, predictable, and practical vehicle for CAA regula-
tion of GHGs. In short, the NSPS are the knowable path-
way for regulation of GHGs under the CAA.
1. 42 U.S.C. §§7401-7671q, ELR S. CAA §§101-618.
Author’s Note: is Article was written and released for discussion
       
         
       
    
not begun the rulemaking process or released any details regarding
        
         
   
path. e authors appreciate the assistance of Erin Mastrangelo, and
Copyright © 2011 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®,, 1-800-433-5120.
2-2011 NEWS & ANALYSIS 41 ELR 10099
EPA could choose from a variety of specic measures
under its general NSPS authority, with increasing strin-
gency a nd reach across existing stationary sources. ese
measures range from performance standards that vary in
stringency and are dened over relatively narrow categories
of emissions sources to more exible standards that allow
some form of trading to achieve compliance with an aver-
age performance standard. It is also possible that the NSPS
program could be used as a vehicle to introduce a sector-
based cap-and-trade program.
In Section V, we assess the magnitude of emissions
reductions t hat could be achieved under the most mod-
est of the possible approaches outlined in Section IV. We
examine only coal-red electricity-generating units, but
within this single, narrowly dened class of emitters, we
discuss regulatory options that could achieve emissions
reductions equivalent to roughly 3% of total U.S. emis-
sions at what we believe would be modest cost and with
minimal disruption to current capacity use. Although we
do not explore the more expansive options here, substan-
tially greater reductions would be possible from NSPS for
other source categories, such as petroleum a nd gas ren-
eries, more stringent performance standards, and/or from
trading across source categories that would allow for sub-
stitution from coal to natural gas. An analysis of the costs
and emissions reductions of all of these measures would
require modeling that is beyond the scope of this Article.
In discussing an NSPS approach, we do not intend to
present it as the ideal or even necessa rily preferable path-
way for controlling GHG emissions. New, comprehensive
climate change legislation from Congress would provide a
superior alternative. It is also possible that other pathways
under the existing C AA could produce better emissions
results, could achieve results at lower cost, might be more
likely to survive lega l or political challenges, or could oth-
erwise constitute a better approach for EPA. In our analysis
of possible GHG NSPS pathways, we are ca reful to point
out both the associated advantages and the disadvantages.
Rather than advocating for NSPS regulation of GHGs, our
goal is to oer an analysis of what appears to us to be the
most likely route for EPA to choose. Some studies from
EPA2 and from academic sources3 discuss the pathways
2.  Advance Notice of Proposed Rulemaking: Regulating Green-
house Gas Emissions Under the Clean Air Act, 73 Fed. Reg. 44354, 44476-
520 (July 30, 2008) (hereinafter ANPR).
3.  L P  J E. MC, C R
S, C C: P R  S
G G S U  C A A, Report R40585
(2009), at 1; I M. C  J A. S, N Y U-
 S  L, T R A: EPA’ O  O-
  R G G (2009), at v, http://www.poli-
cyinteg ications/d ocuments/T heRoadAhead .pdf; Timothy
Mullins & Michael Rhead Enion, -
Existing Clean Air Act if Congressional Action Fails, 40 ELR 10864, 10881
that are available to EPA in general terms, but few if any
discuss any of those pathways in depth. It is this gap that
we aim to begin to ll with this Article.
We argue that a modest GHG regulatory program
under existing CAA NSPS authority could be eective
without deviating greatly from traditional EPA practice
under this authority. We further nd that such a program
could achieve meaningful emissions reductions in the elec-
tricity sectors (and potentially elsewhere, though we do not
study other sectors). Although a more detailed empirical
exercise is necessary to fully determine the costs of regula-
tion, it is our sense that a modest regulatory approach is
unlikely to impose large costs. Moreover, the inclusion of
emissions trading mechanisms could probably be used to
reduce the costs of more stringent regulation even under
the CAA, although such mechanisms would probably be
limited to individual sectors of the economy.
I. A Brief Overview of the CAA and
Until and unless Congress enacts legislation that changes
EPA authority, the existing CAA gives EPA authority to
regulate GHG emissions.4 Furt hermore, EPA has already
begun to regulate GHGs from some sources under that
statute. Understanding how EPA may regulate GHG emis-
sions, therefore, requires at least a basic understanding of
the CAA .
e CA A is a massive, complex regulatory statute with
a wide variety of interconnected programs covering dier-
ent types of pollutants. e principal division within the
statute is between the regulation of stationary emissions
sources (power plants, industrial facilities, and so forth),
primarily under Title I, and mobile emissions sources
(vehicles and vehicle engines) under Title II. In the past
year, EPA has moved quickly toward the regulation of
GHGs from mobile sources, but has provided only a lim-
ited discussion of regulation of stationary-source GHGs.
Because stationary sources emit the majority of GHGs in
the United States, how EPA chooses to regulate them is by
far the most signicant open question in any analysis of the
Agency’s GHG regulatory eorts.
A. The Regulatory Process so Far
Although our focus in this Article is on stationary-source
regulation, the story of EPA regulation of GHGs begins
with, a nd to date has been dominated by, mobile-source
(Sept. 2010); Roger Martella & Matthew Paulson, Regulation of Greenhouse
    , D E’ R., Mar. 9,
2009, at 1.
4.  Massachusetts v. EPA, 549 U.S. 497, 528-29, 37 ELR 20075 (2007).
Copyright © 2011 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®,, 1-800-433-5120.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT