Could New EPA Regulations Drive Congress to Pass Carbon Legislation?
Just one day after Senators John Kerry and Joe Lieberman released the details of the American Power Act, the U.S. EPA made headlines related to greenhouse gas regulation. On May 13, 2010, EPA finalized its plan to regulate 70% of all U.S. greenhouse gas (GHG) output through the implementation of Clean Air Act permitting programs for stationary sources. These efforts stem from the Supreme Court's 2007 decision in Massachusetts v. EPA where the Court concluded that GHGs are "pollutants" under the Clean Air Act, and ordered EPA make a determination as to whether GHG emissions contribute to an endangerment of public health and welfare. EPA issued such an endangerment finding in December 2009 and triggered an obligation for to regulate GHG emissions.
What does the EPA "Tailoring Rule" mean for the energy, industrial, and manufacturing sectors?
- Generally, the rule requires large GHG emitting facilities to obtain permits that demonstrate they are using best available technologies (BACT) to reduce emissions.
- Phase 1 (January 2, 2011 to June 30, 2011) - permitting rules apply to facilities with existing permit requirements for non-GHG emissions and where modifications will increase GHG emissions by 75,000 tons carbon dioxide-equivalent (CO2e) per year or more.
- Phase 2 (July 1, 2011 to June 30, 2013) - permitting requirements apply to new sources emitting at least 100,000 tons CO2e per year.
- Phase 3 (2013) - Beginning in 2011, EPA will develop additional rules to phase in permitting requirements for sources below the 75,000 and 100,000 ton thresholds.
Challenges are present. The definition of what constitutes BACT for GHGs at various facilities has not been resolved. Currently, such technologies generally are not available for controlling GHG emissions. Furthermore, it is anticipated that legal hurdles will evolve from petitions to challenge EPA's endangerment finding. And, initiatives in Congress may be employed in an attempt block or suspend EPA's authority to regulate GHG emissions from stationary sources.
While EPA is obligated to regulate GHG emissions, clearly passage of legislation through Congress is viewed as the preferable approach. The American Power Act, which would preempt EPA's efforts, may represent a more appealing option as Senators consider their positions on the newest cap-and-trade bill.