(If) Things Fall Apart: Searching for Optimal Regulatory Solutions to Combating Climate Change Under Title I of the Existing CAA if Congressional Action Fails
| Date | 01 September 2010 |
| Author | Timothy J. Mullins and M. Rhead Enion |
40 ELR 10864 ENVIRONMENTAL LAW REPORTER 9-2010
A R T I C L E S
(If) Things Fall Apart:
Searching for
Optimal Regulatory
Solutions to
Combating Climate
Change Under Title
I of the Existing
CAA if Congressional
Action Fails
by Timothy J. Mullins and
M. Rhead Enion
Timothy J. Mullins is an associate at Arnold & Porter LLP,
admitted only in Maryland, practicing law in the District
of Columbia pending approval of application for admission
to the D.C. Bar and under the supervision of lawyers of
the rm who are members in good standing of the D.C.
Bar. M. Rhead Enion is the Emmett/Frankel Fellow in
Environmental Law and Policy at UCLA School of Law.
Editors’ Summary:
If legislative prospects for a national climate change bill
fail, EPA retains a number of options under the exist-
ing CA A to create a cap-and-trade program that could,
in many ways, mimic a congressionally created regime.
Under Title I in particular, EPA could turn to the
NAAQS program (§§107-110) or the new source perfor-
mance standards (NSPS) and existing source regulation
(§111(b) and (d)). Various legal constraints, however, may
be imposed upon these dierent statutory hooks. Exam-
ining the interplay between these regulations suggests that
EPA may need to move in an incremental fashion, given
the uncertain statutory authority and legislative process.
How could the Clean A ir Act (CAA)1 best be used
to address global climate change? Unlike the U.S.
Congress, which c an choose whether or not to act,
the U.S. Environmental Protection Agency (EPA) enjoys no
such discretion in the wake of Massachusetts v. EPA2 and the
recently nalized §202(a) Endangerment Finding3 virtually
mandated by t hat decision. At best, EPA may have some
choices regarding how and when to regulate.
Despite the 2008 election of President Barack Obama
and the rather swift passage of Waxman-Markey by the U.S.
House of Representatives,4 this once-pressing issue appeared
to have been marginalized to, at best, a bargaining strategy
to prod the U.S. Senate to pass a bill before the Copenhagen
negotiations began in December. But then the Senate process
stalled, and no bill had received any serious consideration
on the Senate oor by the time the delegates met in Copen-
hagen. With legislative prospects dwindling as the 2010
mid-term elections swiftly approach,5 it therefore becomes
1. 42 U.S.C. §§7401-7671q, ELR S. CAA §§101-618.
2. 549 U.S. 497, 37 ELR 20075 (2007).
3. Endangerment and Cause or Contribute Findings for Greenhouse Gases Un-
der Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66496 (Dec. 15, 2009).
4. See American Clean Energy and Security Act of 2009, H.R. 2454, 111th
Cong., available at http://www.opencongress.org/bill/111-h2454/show [here-
inafter Waxman-Markey].
5. ere are three climate bills under consideration in the U.S. Senate: Wax-
man-Markey, the American Power Act (Kerr y-Lieberman), and the CLEAR
Act (Cantwell-Collins). See Clean Energy and American Power Act, S. 1733,
111th Cong., available at http://www.opencongress.org/bill/111-s1733/show
[hereinafter American Power Act]; Carbon Limits and Energy for America’s
Renewal (CLEAR) Act, S. 2877, 111th Cong., available at http://www.open-
congress.org/bill/111-s2877/show/. While passage of any of these bills is di-
cult to predict, many see signicant hurdles to passage, particularly in the near
term. See, e.g., Ben German, , T H,
May 12, 2010, available at http://thehill.com/homenews/senate/97653-1000-
page-climate-bill-is-unveiled (“[T]he glaring absence of a GOP senator under-
scored the [American Power Act’s] gloomy future in the 111th Congress.”);
Ezra Klein, Is Reid’s Energy Bill Worse an No Bill at All?, W. P, June 7,
2010, available at http://voices.washingtonpost.com/ezra-klein/2010/06/is_
reids_energy_bill_worse_tha.html (noting that taking cap and trade out of the
energy bill will likely doom prospects of passing cap and trade);
, W. P, May 16, 2010, avail-
able at http://www.washingtonpost.com/wp-dyn/content/article/2010/05/14/
AR2010051404235_pf.html.
Article; and everyone who attended the Nicholas Institute’s roundtable
ings Fall Apart.
Copyright © 2010 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
9-2010 NEWS & ANALYSIS 40 ELR 10865
necessary to seriously reexamine the best options for regulat-
ing greenhouse gases (GHGs) under the existing CAA .
EPA, in the mea ntime, has cautiously moved forward
with regulation of GHGs.6 e purpose of this Article,
therefore, will be to analyze EPA’s best options for regulating
GHGs under Title I of the existing CAA . Given the prevail-
ing consensus that some sort of market-based mechanism
should regulate GHGs,7 this Article will focus primarily on
how to utilize the CAA to reproduce a cap-and-trade pro-
gram similar to that envisioned in Waxman-Markey. Part I
will summarize some basic design considerations of cap-and-
trade programs under the CAA . Parts II and III each pres-
ent a distinct regulatory option for a cap-and-trade program
under Title I of the CA A.8 Part II discusses factors involved
6. EPA has limited G HGs of cars an d light trucks using §202 of the CAA.
Light-Duty Vehicle Greenhouse Gas Emission Standards and Co rporate
Average Fuel Economy Standards, Final Rule, 75 Fed. Reg. 2 5324 (May
7, 2010). EPA has also nalized a “tailori ng rule” creating a lower limit
threshold for future GH G regulation and a repor ting rule for GHG emis -
sions. Preventi on of Signican t Deterioration and Title V Greenhous e Gas
Tailoring Rule, Final Rule, 75 Fed. Reg. 31514 (June 3, 2010). e tailor-
ing rul e and t he reporting rule foresh adow future regulation of individual
source GHG emissions under §111. See generally Robert B. McKinstry et al.,
Memorandum, EPA Takes Action to Regulate Greenhouse Gas Emissions, With
Much More to Come, available at ht tp://www.ballardspahr.com/~/media/
Files/Alerts/2010-0 6-09_ClientMemoGHGDevelopmen ts.ashx (discussing
how EPA’s recent moves in GHG regulat ion “are likely just the rs t wave of
future actions to address climate change”).
7. See, e.g., Posting of Robert Stavins to An Economic View of the Environment,
(Oct. 5, 2009),
http://belfercenter.ksg.harvard.edu/analysis/stavins/?paged=2 (explaining the
advantages of market-based regulation of GHGs).
8. Another potential statutor y option under Title I, not discussed in depth in
this Article, would be to base a trading program on §115. Section 115 al-
lows EPA to require revisions to a state plan when air pollutants emitted in
the United States “cause or contribute to air pollution which may reasonably
be anticipated to endanger public health or welfare in a foreign country.” 42
U.S.C. §7415(a) (2007), ELR S. CAA §115(a), notes 118-22 and
accompanying text.
ere are at least two other potential options for establishing a cap-
and-trade program that do not base their authority under Title I. First, the
Institute for Policy Integrity (IPI) has petitioned EPA to establish a trading
program for vehicle fuels under §211(c). See Petition from Inst. for Policy
Integrity, NYU Sch. of Law, to Lisa P. Jackson, Adm’r, EPA, Petition for
Rulemaking Under Sections 211 and 231 of the CAA to Institute a Cap-and-
Trade System for Greenhouse Gas Emissions From Vehicle Fuels (July 29,
2009) [hereinafter IPI Petition], available at http://www.policyintegrity.org/
documents/72909IPIPetitiontoEPA.pdf. is proposed program would target
“upstream, domestic importers, reners, and producers of fuel” and would cre-
ate tradable emissions permits equal to “a certain amount of potential GHG
emissions” from the fuel. Id. at 13. According to the IPI, §211(c) may provide
sucient authority for this type of program because the statute allows EPA to
“control or prohibit” any fuel that “causes, or contributes, to air pollution ...
that may reasonably be anticipated to endanger the public health or welfare,”
a grant of authority that may be broad enough to establish the type of cap-
and-trade program. Id. at 21. Although the IPI makes a persuasive case, there
are two points that should be considered regarding this section. First, §211(c)
states that the “Administrator may, from time to time ... by regulation, con-
trol or prohibit ...,” which appears to give EPA discretion regarding whether
or not to regulate under this section. e IPI addresses this issue by arguing
that EPA would still be required to “articulate a coherent reason for choosing
not to regulate a source that contributes so signicantly to the endangerment
of public welfare,” id., but this may not be sucient to get around the appar-
ently discretionary language of the statute. Second, §211(c), with its focus
in a trading program based on the national ambient air qual-
ity standards (NAAQS) program. Part III focuses on the
potential for §111—new source and/or existing source regu-
lation—to provide the basis for a cap-and-trade program.
Part I V concludes by examining the interplay bet ween the
regulations and laying out a path for incremental regulation
by EPA based in these statutory authorities.
roughout t his discussion, three overall points are
important to keep in mind. First, it is uncertain whether
virtually e very program discussed is legal under the existing
CAA . As then-EPA General Counsel Joseph Cannon con-
cluded in 1998: “[n]one of these provisions easily lends itself
to market-based national or regional emissions cap-and-
trade programs.”9 e Bush Administration’s failed attempts
to craft such a program hig hlight this diculty,10 although
they do not completely foreclose a potential program. Sec-
ond, due to the almost-certain triggering of the prevention of
signicant deterioration (PSD) program and its requirement
that certain sources implement best available control tech-
nology (BACT ), it is very unlikely that any cap-and-trade
program envisioned in this Article could exist without some
type of technological standards. ird, throughout the regu-
latory process, Congress, subject to the power of presidential
veto, ha s t he potential to either strip EPA of its authority
solely on fuels, could not lead to the type of broad-ranging program poten-
tially available under NAAQS or §111(d) and envisioned in most legislative
attempts. However, §211(c) could be used to provide a strong complementary
program that could work alongside the more general regime created under
NAAQS or §111(d). is point will be further discussed in Part IV., .
Second, EPA may be able to establish a broad trading program based on
Title VI’s control over stratospheric pollution. See 42 U.S.C. §7671n (“If ...
any substance, practice, process, or activity may reasonably be anticipated to
aect the stratosphere . .., and such eect may reasonably be anticipated to
endanger public health or welfare, the Administrator shall promptly promul-
gate regulations....”). Both EPA and the IPI agree that §615 could provide
“sucient authority to create a legal and eective cap-and-trade system, broad
in its scope and consistent with international negotiations.” I M. C-
J A. S, I. P I, T R A:
EPA’ O O R G G 72
(2009) [hereinafter T R A]; see also Regulating Greenhouse Gas
Emissions Under the CAA, 73 Fed. Reg. 44354, 44519 ( July 30, 2008); Cli-
mate Policy Center of Clean Air—Cool Planet, Comment to EPA, Comments
of the Climate Policy Center of Clean Air—Cool Planet (Nov. 26, 2008),
available at http://www.cleanair-coolplanet.org/cpc/documents/2008-12-01_
Comments_on_EPA_CAA_ANPR.pdf.
e IPI also discusses a potential program based on §617, which gives
the president the ability to “undertake to enter into international agree-
ments . .. to develop standards and regulations to protect the stratosphere
consistent with regulations applicable within the United States.” 42 U.S.C.
§7671p(a); see also T R A, supra, at 73. GHGs reside primarily
in the troposphere, T R A, supra, at 56, and any eect GHGs have
on the stratosphere must be sucient to endanger public health and welfare.
Of course, the ongoing scientic research regarding the relationship between
GHGs, climate change, and the stratosphere may, in the future, lead to these
necessary conclusions, but this link has not yet been established.
9. See Memorandum from Jonathan Z. Cannon, Gen. Counsel, U.S. EPA, to
Carol M. Browner, Adm’r, U.S. EPA, EPA’s Authority to Regulate Pollut-
ants Emitted by Electric Power Generation Sources (Apr. 10, 1998), avail-
able at http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&File
Store_id=7b2da6-a3ed-4e15-bcae-7a738541f9e9.
10. notes 75-84 and accompanying text.
Copyright © 2010 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
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