“Trading Ready” Approach to Clean Power Plan Compliance

(Federal GHG Regulations) Permanent link

In anticipation of EPA’s release of its final Clean Power Plan rule in August, a number of stakeholders and states are encouraging the use of “trading-ready” compliance plans as the best way to satisfy the rule’s state-specific carbon-reduction targets.

Background

EPA’s proposed Clean Power Plan rule would set individual state greenhouse gas (GHG) reduction targets for existing power plants. The proposed rule includes an individual “interim goal” for each state to meet in 2020 and a “final goal” that states must meet beginning in 2030. EPA calculated these mandatory goals, which vary across states, based on four building blocks:

  1. Making coal-fired power plants more efficient;
  2. Using low-emitting natural gas combined cycle plants more where excess capacity is available;
  3. Using more zero- and low-emitting power sources such as renewables and nuclear; and
  4. Reducing electricity demand by using electricity more efficiently.

EPA has proposed that states adopt plans that incorporate a combination of “strategies,” and noted that states “may work alone or in cooperation with other states to comply with the proposed rule.” The proposed rule requires each state to submit a plan for meeting these goals to EPA by June 30, 2016. Under the proposed rule, states could either submit individual plans, or work together and submit a multi-state plan.

Trade Ready Approach

Under the trading-ready approach, states could gain the benefits of a multi-state compliance plan without the potential difficulty of achieving multistate agreement on a plan. Instead, states could develop individual compliance plans incorporating certain common elements designed to allow trading across state lines. To be “trading ready,” compliance plans would need to incorporate a mass-based emissions limit and authority for electricity-generators to buy and sell emissions allowances across state lines. Additionally, compliance plans would need to include similar accounting and allowance standards.

Supporters of trading-ready plans say that they allow states to achieve all the benefits of a market-based approach to compliance, while avoiding the political difficulty of getting several states legislatures to agree on a single complex implementation plan.

Some supporters of the trading ready approach are urging EPA to amend the rule to make it easier for states to adopt such plans. The Midwestern Power Sector Collaborative, for example, asked EPA to include minimum compatibility requirements in its final rule that states would need to meet for power plant operators to trade emissions credits across state lines.

Conclusion


As the issuance of the final rule draws near, states and commentators have been discussing a number of possible ways to meet the proposed GHG limits, including possible GHG trading schemes. The “trade ready” approach has been identified as an approach to offer states additional flexibility as they work to develop compliance strategies. 

Posted by Lauren Sidner at 07/27/2015 4:19 PM


Court of Appeals Upholds Colorado’s Renewable Energy Mandate

(Renewable Fuel Standards and Biofuels, Litigation) Permanent link

On July 13, 2015, the United States Court of Appeals for the Tenth Circuit agreed with the district court below that Colorado’s Renewable Energy Mandate did not violate the Dormant Commerce Clause by potentially impacting out-of-state coal producers who share an electric grid with Colorado.

Background

Colorado’s Renewable Energy Mandate requires electricity generators to ensure that 20% of the electricity they sell to Colorado consumers comes from renewable sources by 2020. Colorado was the first state in the U.S. to adopt a renewable energy standard by ballot initiative in 2004. The initiative requires Colorado’s top electric utility companies to provide an increasing percentage of their retail electricity sales from renewable resources; such as wind, solar and biomass; starting at 3% in 2007, 6% by 2011, and increasing to 10% by 2015. The Mandate now requires the use of 30% renewables by 2020.

Colorado shares an electric grid with eleven states and portions of Canada and Mexico, so while the Mandate only directly applies to consumers in Colorado, it has the potential to impact the source of electric generation beyond the state’s boarders. Energy and Environment Legal Institute (EELI) challenged the Mandate, arguing that it violated the Dormant Commerce Clause by decreasing demand for electricity generated from coal-fired plants outside of Colorado that also service the grid.



Tenth Circuit Decision

The Commerce Clause gives Congress the power to regulate interstate commerce. The so-called Dormant Commerce Clause prohibits state legislation that discriminates against, or unduly interferes with, interstate commerce. “Because electricity can go anywhere on the grid and come from anywhere on the grid, and because Colorado is a net importer of electricity,” EELI argued that “Colorado’s renewable energy mandate effectively means some out-of-state coal producers, like an EELI member, will lose business with out-of-state utilities who feed their power onto the grid.”

In the district court, EELI argued that those impacts amounted to a violation of all “three branches of dormant commerce clause jurisprudence.” On appeal, EELI only argued that the Mandate violated the test laid out in the Supreme Court’s decision in Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935), because of its pricing impact on conduct outside of Colorado’s boarders. The Tenth Circuit rejected this argument, explaining that the Supreme Court has only used Baldwin’s “extraterritoriality principle” to strike down a state law in three cases. According to the Tenth Circuit, those cases shared three factors missing from the EELI’s challenge: “(1) a price control or price affirmation regulation, (2) linking in-state prices to those charged elsewhere, with (3) the effect of raising costs for out-of-state consumers or rival businesses.”

As the court explained, “[w]hile Colorado’s mandate surely regulates the quality of a good sold to in-state residents, it doesn’t directly regulate price in-state or anywhere for that matter.” Although the court recognized that “[i]n today’s interconnected national marketplace” regulations such as the Renewable Energy Mandate impact out-of-state prices, the court explained that there must be “a regulation more blatantly regulating price and discriminating against out-of-state consumers or producers” before Baldwin’s “near per se rule” would apply. Instead, the court noted that “if anything, Colorado’s mandate seems most obviously calculated to raise price for in-state consumers.”

Conclusion

The Tenth Circuit’s decision only directly addresses the rarely-cited Baldwin test, and its reasoning suggests that future attempts to challenge state renewable mandates on Dormant Commerce Clause grounds would stand a better chance of succeeding if they could show the out-of-state burdens are not commensurate with the in-state benefits under the balancing test articulated in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).

Posted by Corinne Snow at 07/21/2015 10:40 AM

EPA’s Report Concludes That Global Action on Climate Change Would Save Lives, Reduce Damages and Costs

(Federal GHG Regulations, Climate Change Science) Permanent link

On June 22, 2015, EPA released a report, entitled Climate Change in the United States: Benefits of Global Action, which attempts to detail the physical and monetary benefits to the U.S. of reducing Greenhouse Gas (“GHG”) emissions on a global level. The report concludes that limiting the global temperature increase to about 2 degrees above the pre-industrial levels would prevent thousands of U.S. deaths and save billions of dollars in electricity costs and damages associated with extreme temperatures, sea level rise, and other climate change impacts.  

The report summarizes results from the EPA Climate Change Impacts and Risks Analysis (“CIRA”) project. EPA undertook the CIRA project to estimate the degree to which climate change impacts in the U.S. are avoided or reduced in the twenty-first century under significant GHG mitigation. The project assesses the risks of inaction (e.g. unchecked GHG emissions) and benefits to the U.S. of global GHG mitigation across twenty different climate change impacts, categorized within six broad sectors:

  • water resources
  • electricity
  • infrastructure
  • health
  • agriculture and forestry
  • ecosystems

When examining the impacts across these sectors, the EPA report identifies several common themes. Below are examples of these themes and the impacts discussed in the report. 

1) EPA reports that Global GHG Mitigation Reduces the Frequency of Extreme Weather Events and Associated Impacts

According to the report, extreme heat, sea level rise, storm surges, floods, heavy downpours, prolonged rains, and melting snowpack are examples of extreme weather events predicted to increase in frequency over time if climate change goes unmitigated. These events may impact agriculture and forest production, damage coastal property, roads, bridges and other transportation infrastructure, and cause weather related mortalities, among other things. The report predicts that by the end of the century, global GHG mitigation measures are likely to substantially reduce the occurrences of extreme temperatures and precipitation events and mitigate the associated impacts from these events on human health and the environment. According to the report, mitigation would result in the following benefits:

  • By 2100, global GHG mitigation would likely prevent annually approximately 12,000 deaths associated with extreme temperatures in 49 major U.S. cities. 
  • Global GHG mitigation is estimated to substantially reduce the number of bridges that will become vulnerable by reducing the projected increase in peak river flows, according to the report. Mitigation would provide benefits of $3.4-$4.2 billion from 2010-2050 and $10-$15 billion from 2051-2100.
  • The report claims additional benefits in the following chart, which is found on page 78 of the Report:



2) EPA reports that Global GHG Mitigation Avoids Costly Damages in the U.S.

The report projects that global GHG mitigation will prevent or substantially reduce the costly adverse impacts of climate change across virtually all sectors. For example: 

  • EPA projects that global GHG mitigation will save $4.2-$7.4 billion associated with avoided road maintenance in 2100 and would avoid 230,000-360,000 lost acreage of coldwater fish habitat across the country. 
  • EPA estimates that mitigation will result in a reduction of flood damages associated with increased intensity of precipitation events of approximately $2.9 billion in 2100. 
  • EPA projects that the greatest damages will occur in the eastern U.S. and Texas, with damages ranging from $1-$3.7 billion in these regions in 2100 if climate change goes unmitigated. The chart below, which is found on page 52 of the report, shows EPA’s estimated flood damages throughout the contiguous U.S. if climate change goes unmitigated.



3) EPA Reports that Adaptation Can Reduce Overall Damages in Certain Sectors

EPA concludes that although global GHG mitigation would reduce or prevent many of the negative impacts associated with climate change, the report states that adaptation can also substantially reduce certain impacts regardless of the future GHG levels. 

  • The damages EPA estimated to coastal property from sea level rise and storm surge in the contiguous U.S. would be reduced by over $4 trillion through 2100 just by implementing cost-effective adaptation measures along the coast. The study determined cost-effective responses for at-risk areas based on projected sea level rise, storm surge height, property value, and costs of protective measures at each coastal area.
  • Adaptation measures the study took into account include beach nourishment, property elevation, shoreline armoring, and property abandonment.

4) Impacts Vary Across Time and Space

The EPA report explains that climate change impacts are not evenly applied across all regions. Some regions of the U.S. are more vulnerable to climate change than others. The report provides these examples:

  • The national trend of increasing wildfire activity over time is actually driven primarily by the projected changes in the Southwest and Rocky Mountain regions. 
  • If climate change goes unchecked, California will face the greatest increased risk of drought. 
  • All impacts will not occur uniformly and gradually over time, with some exhibiting threshold responses such as a tipping point where large changes occur over a short period of time. One instance of this type of tipping point response is the high-temperature bleaching events that are projected to occur by 2025, which is estimated to severely affect coral reefs in the Caribbean.

5) EPA Reports that the Benefits of GHG Mitigation Increase over Time

The CIRA project identified a delay in the benefits realized with GHG mitigation measures. According to EPA, this is attributable to inertia in the climate system. As a result, EPA projects that the benefits of GHG mitigation will be greater in 2100 than in 2050 for the majority of the sectors analyzed. The report urges that delaying action will likely increase the risks of significant and costly impacts in the future and any actions taken today can have long-term effects on our climate. Thus, the report concludes that delaying action on climate change now will likely reduce EPA’s projected future benefits.

Posted by Michael Malfettone at 07/17/2015 12:30 PM

Administration Revises Figures and Responds to Comments on Social Cost of Carbon Estimates

(Federal GHG Regulations) Permanent link

In response to public comments, the Interagency Working Group (IWG) and Office of Management and Budget (OMB) have slightly reduced the estimate for the social cost of carbon (SCC) used by federal agencies for the years 2010-2050. Under the new calculations, the value of a metric ton of CO2 that will be used by most federal agencies to evaluate their actions has been reduced from $37 to $36 per for 2015. OMB reports that this adjustment is in response to “some minor technical revisions to the SCC.” While the IWG did not discuss the impact of this change, the minor decrease is unlikely to have significant impacts on most projects; it could, however, lower the estimated value of regulations like the proposed Clean Power Plan that will greatly decrease Greenhouse Gas emissions. The IWG also responded to a number of public comments on its updated figures. 

Background


Economists have developed the SCC tool over the past two decades in an attempt to quantify the global costs associated with incremental changes in GHG emissions on a macro-level. In theory, an SCC model could capture all of the changes, both positive and negative, that each additional unit of CO2 would have on various regions of the globe and result in a single resulting monetary value for the impact of that unit of emissions. For more background on the SCC, please see this previous post.

In 1993, President Clinton issued Executive Order 12866, which requires federal agencies, to the extent permitted by law, “to assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” By 2008, federal agencies had begun using SCC as part of their cost-benefit analysis. Originally, these agencies relied on differing models and estimates to assess SCC. These estimates ranged anywhere from approximately $0-150/ton CO2.

In 2010, the IWG released a report which created a uniform SCC value for federal agencies to use in assessing the impacts of their actions. The stated purpose of the SCC value was to “incorporate the social benefits from reducing carbon dioxide emissions into cost-benefit analyses of regulatory actions that have small, or ‘marginal,’ impacts on cumulative global emissions.” The IWG revised its report in 2013, increasing the SCC estimates at the various discount rates for 2020 from $7, $26, $42 to $81 to $12, $43, $65, and $129/ton CO2 (in 2007 dollars) depending on the discount rate applied. For practical purposes, this meant federal agencies were valuing the SCC at about  $37/ton CO2 for 2015, which was based on a 3 percent discount rate. OMB explained that these upward adjustments in the estimates reflect changes in the three models’ (known as IAMs) underlying the calculation of the SCC. The IWG’s explanation of its key changes in these models are summarized below.

Table 1
Chart produced by the IWG

OBM sought public comments on this revised 2013 report. In response it received “about 150 substantive comments, some quite lengthy and technical, as well as about 39,000 form letters that expressed support for [OMB’s] efforts to establish a harmonized SCC.”

Reduction in SCC could impact the estimated value of air emission programs

In a July 2, 2015 post on OMB’s website, Office of Information and Regulatory Affairs Administrator Howard Shelanski and Maurice Obstfeld, a member of the Council of Economic Advisers, reaffirmed their support for the use of SCC as a tool for measuring the costs associate with climate change. The post linked to the IWG’s technical document for the 2013 report, which has been updated to include the new figures that agencies will use to calculate the SCC for various actions for 2010-2050. The OMB post describes the rate adjustment as a response to “some minor technical revisions to the SCC.” The rate changes, which are summarized in the charts below, average about $1-2 (depending on the year) at the 3% discount rate employed by federal agencies. 

While neither the OMB nor the IWG discussed the impact of this modification, the slight decrease is unlikely to have much effect on the valuation for most projects, because an individual project is unlikely to have GHG emissions on a magnitude where a single $1/ton of CO2 with materially impact the costs and benefits of the project. However, federal agencies also use the IWG’s SCC calculation to determine the costs and benefits of their regulatory programs. For regulatory programs like the EPA’s proposed Clean Power Plan, which will cut GHG emissions from domestic power plants by and estimated 30 percent, this small decrease in the cost per ton of CO2 could dramatically reduce the estimated current benefits of implementing the Plan.  The IWG charts below summarize the new figures at different discount rates (shown in the first chart), followed by the previous 2013 discount rates (in the second chart).

Revised Social Cost of CO2
  Previous 2013 IWG figures
Previous 2013 IWG figures
Charts produced by the IWG

Responses to Public Comments

The IWG divided the comment it received into nine major categories and published a detailed response to each category. 
1. Choice of Integrated Assessment Models and Damage Functions
2. Climate Science 
3. Socio Economic and Emissions Scenarios
4. Discount Rates
5. Aggregation of Results and Selection of Final Estimates 
6. Use of Global vs. Domestic SCC Estimates 
7. Consideration of Uncertainty 
8. Use of Global vs. Domestic SCC Estimates 
9. Process by which the SCC Estimates were Developed

The IWG reaffirmed the decision to use an amalgamation of three IAMs (DICE, FUND, and PAGE) to calculate the SCC, explaining that they are the most widely used and widely cited models in the economic literature that link physical impacts to economic damages for the purposes of estimating the SCC. While the IWG recognizes that none of the three IAMs “fully incorporates all climate change impacts, either positive or negative,” the IWG has decided to “accept[] the models as currently constituted, and omitted any damages or beneficial effects that the model developers themselves do not include.” IWG also argued that “[u]sing three models rather than one helps address, but does not eliminate, uncertainty associated with model choice.”

The IWG also noted that there is further room for improvement in the calculation of the SCC, explaining that the 2013 revision to the SCC figures was “limited in scope to those improvements available in more recent versions of the IAMs. As such, there remain additional opportunities for technical improvements to the SCC estimates that should be considered for future updates.” 

The commenters were also divided on whether it is appropriate for the SCC to take into account climate change damages experienced outside U.S. borders, given its use in domestic regulatory analysis. Critics of the IWG’s approach of including global costs argue that the use of a global figure may overstate the net benefits to the U.S. of reducing emissions, because global benefits are compared to domestic costs.

The IWG concluded that a focus on global SCC estimates is appropriate because “greenhouse gases contribute to damages around the world’s economies are now highly interconnected.”  The IWG also argued that if all countries set policies based only on the domestic costs and benefits of carbon emissions, it would lead to an economically inefficient level of emissions reductions because each country would be underestimating the full value of its own reductions. According to the response, the IWG “believes that accounting for global benefits can encourage reciprocal action by other nations, leading ultimately to international cooperation that increases both global and U.S. net benefits relative to what could be achieved if each nation considered only its own domestic costs and benefits when determining its climate policies.”

Conclusion

The IWG’s responses to public comments suggest that it is open to continuing to modify the figures and models used for its SCC estimates. The IWG’s responses suggest, however, that it continues to firmly support many of the more controversial aspects of its method for determining the appropriate SCC to use for federal regulatory analysis. Decreasing the SCC by single dollar per ton/CO2 is unlikely to impact the cost benefit analysis for most individual projects, but could decrease the estimated value of large regulatory programs designed to limit GHG emissions.

Posted by Corinne Snow at 07/14/2015 10:00 AM

New Study Reports that Europe is Increasing Coal Use as Nations Prepare for Climate Change Talks

(International) Permanent link

In a sensationally-titled briefing paper (“Let Them Eat Coal”), Oxfam reports that five of the G7 nations have increased their coal consumption over the past five years, and are burning more coal now than they did in 2009—the year of the Copenhagen climate summit. Further coverage of this issue indicates that G7 nations Britain, Germany, Italy, Japan, and France collectively burned 16% more coal in 2013 than in 2009 and are planning to increase construction of coal-fired power stations. Oxfam reports that the U.S. and Canada are the only G7 countries that reduced their coal consumption in the past few years. Oxfam published its paper as 193 nations prepare to meet in Paris to discuss a new international climate change agreement at the end of the year.

G7 nations

In the paper, Oxfam argues that coal is the single biggest driver of climate change, and encourages the G7 nations to commit to transitioning away from the use of coal in the upcoming decades. According to Oxfam, G7 coal power stations emit twice as much fossil fuel CO2 as the whole of Africa, and ten times as much as the 48 least developed countries. The report recommends different timelines for specific G7 countries to cut coal use, including a deadline to complete the transition off of coal for the U.S. by 2030.  

As discussed in this previous post, coal-fired power plants have been retiring at an unprecedented rate in the U.S., and current projections suggest that this rate may increase further if additional regulations on air emissions, such as the Clean Power Plan, are finalized. The Oxfam briefing paper notes this trend.  The paper explains that the U.S. is still the world’s second-biggest coal consumer, but notes that grassroots opposition has led to the “closure or scheduled retirement of 189 existing plants since 2010 (one-third of the size of the US coal fleet).”  

According to the report, while the U.S. has “reduced its coal consumption by 8% [between 2009 and 2013] largely because of fracking for shale gas,” the total reduction from the G7 countries during that same time period has been less than 1%. Meanwhile, developing nations and groups like Oxfam are putting pressure on developed nations to cut their emissions as part of the anticipated Paris Agreement on climate change.

Posted by Corinne Snow at 07/09/2015 10:00 AM

Washington State Judge Issues Order Directing State Agency to Reconsider Recommending Revised GHG Emissions Limits

(Federal GHG Regulations, Litigation) Permanent link

On June 23, 2015, a Washington State judge issued an order directing the State’s Department of Ecology to reconsider its decision to deny the petition of a group of young people who wanted the state agency to recommend that the legislature limit Greenhouse Gas (“GHG”) emissions. In the original petition the petitioners’ attempted to extend the public trust doctrine to encompass global climate as part of a so-called “atmospheric trust.” This is the most recent decision in a string of actions where plaintiffs have sought to expand the public trust doctrine in an attempt to create a new common law tool to seek GHG emission limitations. The order does not require the agency to lower Washington’s statutory GHG emissions limits, does not mention the public trust doctrine, and does not create state common law extending the public trust doctrine to the atmosphere.

Background on the Public Trust Doctrine

The public trust doctrine arises from the traditionally observed rights of the public to access the water for particular purposes. Inherited from British common law, the public trust doctrine as observed in the United States provides the public the right to access the water for the purposes of navigation, fishing, and commerce. While the common law of many states has expanded the public trust doctrine to include additional rights associated with the traditional right to access the water (e.g., access to the dry sand beach, scientific study), the common law typically recognizes the public trust doctrine as being confined to resources with a nexus to its aquatic origins. The public trust doctrine requires the government to preserve and reasonably maintain those resources covered by the public trust in a manner that benefits the public as a whole. 

Recently, environmental groups and others have sought to expand the doctrine to cover “atmospheric trust” claims related to climate change. The “atmospheric trust” argument suffered a significant set-back in December 2014 when the Supreme Court denied certiorari in Alec L. v. McCarthy. In Alec L., the Court of Appeals for the D.C. Circuit found that such claims do not give rise to federal subject matter jurisdiction. The D.C. Circuit emphasized that the public trust is a creature of state common law and concluded that there is not a federal public trust doctrine recognized under the federal common law. The Alec L. decision is limited to federal common law so plaintiffs may still seek to bring atmospheric trust claims in state courts in an attempt to expand the public trust doctrines of the states.

Petition to the Washington Department of Ecology

Washington State law requires the Washington Department of Ecology to report to the Legislature periodically regarding anthropogenic climate change and make appropriate recommendations regarding the GHG emissions reductions required by State law. In June 2014, the petitioners, who are eight teenagers and allied environmental groups, asked the Department to adopt a proposed rule recommending GHG emissions limits that, according to the order, would “stem the tide of global warming.”

The petition argued that the “State of Washington has an affirmative and mandatory duty to protect its natural resources under the Public Trust Doctrine” from “the harmful impacts of climate change and ocean acidification.” The petition continued that the “Department must adopt carbon dioxide emission reductions” “to protect youth petitioners’ inherent and constitutional rights.” The Department denied the petition in August 2014, and instead recommended that the Legislature make no changes to the State’s statutory emissions limits in December 2014. The Washington state court’s order requires the agency to reconsider this decision to deny the petition in light of a report the agency filed with the Legislature noting the risks of climate change to Washington State, and a declaration submitted with the petition.

The Department of Ecology’s response to the order, and whether the order will influence suits in other states, remains to be seen. The Department must respond to the order by July 8, 2015. It is important to note that the order merely requires the Department to reconsider its decision not to recommend changes to the State’s GHG emissions limits. The order does not require the Department to lower those limits, and it does not mention the public trust doctrine. Instead, the order based its conclusion on a provision of Washington State law. This means that the order and the Department’s upcoming decision do not create state common law expanding the public trust doctrine from traditional subjects like fishing, navigation, and commerce to the atmosphere. It does, however, suggest that groups such as the petitioners are continuing to look for ways to use the public trust doctrine to push government entities to take action to limit GHG emissions.


Posted by Corinne Snow and Ross Woessner at 07/07/2015 4:25 PM

What does EPA’s Aircraft Engine Endangerment Finding Mean for the Clean Power Plan?

(Federal GHG Regulations, Litigation) Permanent link

On July 1, 2015, the Environmental Protection Agency (“EPA”) published a proposed finding that greenhouse gas (“GHG”) emissions from certain classes of aircraft engines contribute to the air pollution that endangers the public health and welfare, within the meaning of § 231(a) of the Clean Air Act (“CAA”). 

The EPA issued the proposed finding as a precursor to creating aircraft emissions standards under § 231 of the CAA.  The proposed endangerment finding was issued in response to a 2011 order in which the District Court for the District of Columbia concluded that § 231(a)(2)(A) creates a mandatory duty on the part of EPA to conduct endangerment finding.  In contrast, when it proposed performance standards for GHG emissions from new and existing fossil fuel-fired power plants under CAA § 111 (“the Clean Power Plan”), without first making a formal endangerment finding EPA was acting of its own volition and determined that the existing 2009 endangerment finding for motor vehicles and a “rational basis” finding were sufficient to justify the rulemaking.

Aircraft Emissions Endangerment Finding

EPA’s proposed endangerment finding comes in response to a citizen suit filed by a coalition of environmental petitioners in 2010, seeking to compel EPA to issue GHG emissions standards for aircraft engines under CAA § 231. Section 231 of the CAA requires EPA to study the extent to which aircraft emissions affect air quality and the technological feasibility of controlling aircraft emissions. Section 231(a)(2)(A) provides that “[t]he Administrator shall, from time to time, issue proposed emission standards applicable to the emission of any air pollutant from any class or classes of aircraft engines which in [her] judgment causes, or contributes to, air pollution which may reasonably be anticipated to endanger public health or welfare.”

The plaintiffs, who had petitioned EPA to conduct rulemaking regarding aircraft GHG emissions on several occasions between October 2007 and January 2008, alleged that EPA had unreasonably delayed a response to their petitions. EPA moved to dismiss the claim on the grounds that § 231 did not create a statutory duty to evaluate endangerment that could give rise to plaintiff’s unreasonable delay claim. In particular, EPA argued that although § 231’s use of the mandatory verb “shall” created a duty to regulate an emissions source once EPA found that the source caused or contributed to endangerment, it did not create an obligation to conduct an evaluation of endangerment in the first place. Instead, EPA argued that the CAA gave it the discretion to determine whether an evaluation of endangerment was necessary.

The District Court disagreed and found that § 231 imposes a nondiscretionary duty on the EPA to make a finding with respect to endangerment from aircraft GHG emissions. The court concluded that “Congress’s use of ‘shall’ throughout subsection 231(a) suggests that it intended to mandate a certain outcome—the regulation of harmful aircraft emissions. That purpose would be defeated by allowing EPA to avoid triggering its obligation to regulate in the first place.”  The court further held that “Congress intended the predicate endangerment finding to be a compulsory step.”

In accordance with the Court’s ruling, the EPA’s proposed endangerment finding explains that, before issuing emissions standards under § 231, the Agency must “satisfy a two-step test. First, the Administrator must decide whether, in her judgment, the air pollution under consideration may reasonably be anticipated to endanger public health or welfare.  Second, the Administrator must decide whether, in her judgment, emissions of an air pollutant from certain classes of aircraft engines cause or contribute to this air pollution.”  Only if the Administrator answers both questions in the affirmative can the Agency proceed to issue aircraft emissions standards under § 231.

In conjunction with the proposed endangerment finding, EPA issued an Advance Notice of Proposed Rulemaking (“ANPR”) detailing the process for setting international emissions standards for aircraft engines underway at the International Civil Aviation Organization. The ANPR explores the possibility of using CAA § 231 to adopt the international aircraft engine emission standard domestically. The public will have 60 days from July 1, 2015 to comment on the proposed finding and the ANPR.

Emissions Standards for Power Plants 

EPA’s proposed two-step approach to regulating GHG emissions from aircraft engines stands in stark contrast to its approach to endangerment under the Clean Power Plan.  In the Clean Power Plan proposal, EPA concluded that a formal endangerment finding was not required for the power plant standards.

Instead, EPA argued that CAA § 111 did not require a formal endangerment finding, and that even if it did, EPA had a rational basis for regulating GHG emissions from fossil fuel-fired power plants and that rational basis for regulation qualified as such a finding. According to EPA, its rational basis for regulation stemmed from the fact that the Agency had previously found that GHG emissions endanger the public health and welfare, and power plants emit significant amounts of GHGs.

The Agency’s reference to an earlier finding that GHG emissions endanger the public health and welfare relates to the Agency’s 2009 Endangerment Finding under CAA § 202(a). Section 202(a) addresses “the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, which in [the Administrator’s] judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” After the Supreme Court concluded in Massachusetts v. EPA, 549 U.S. 497 (2007), that GHGs qualify as air pollutants under the CAA, the Administrator was required to determine whether emissions of GHGs from new motor vehicles caused or contributed to air pollution which, in turn, endangers public health and welfare. 

In the 2009 Endangerment Finding the Agency concluded: (1) concentrations of the six key well-mixed GHGs—CO2, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride—in the atmosphere threaten the public health and welfare; and (2) emissions of these GHGs from new motor vehicles contribute to the air pollution which threatens the public health and welfare.  

In other words, EPA argued that its endangerment finding for GHG emissions from mobile sources is sufficient to establish endangerment from GHG emissions from power plants because GHG emissions threaten public health and welfare and the magnitude of GHGs from power plants is comparable to that emitted from motor vehicles.   

Analysis

The language in CAA § 111 relating to the Administrator’s obligation to make an endangerment finding mirrors that of § 231:  

§ 111(b)(1)(A) provides “[t]he Administrator shall … publish a list of categories of stationary sources […] [which] in his judgment it causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare.”

§ 231(a)(2)(A) provides “[t]he Administrator shall … issue proposed emission standards applicable to the emission of any air pollutant from any class or classes of aircraft engines which in his judgment causes, or contributes to, air pollution which may reasonably be anticipated to endanger public health or welfare.”
Opponents of the Obama Administration’s Clean Power Plan may eventually challenge the Agency’s decision to proceed with the rulemaking for that proposal without conducting a formal endangerment finding first. Such a challenge would likely point to the similarly in the language in § 111 and §231, as well as the District Court’s 2011 Order in support of the argument that EPA was required to issue a separate endangerment finding as a precursor to its proposed rule. 
Posted by Margaret Peloso and Lauren Sidner at 07/01/2015 2:20 PM