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EPA questions on carbon authority raise red flag for Sierra Club

The U.S. Environmental Protection Agency's request for information on a replacement rule for the Clean Power Plan opens with an evaluation of the agency's authority to regulate greenhouse gases through the lens of the new administration. The explanation does not suggest the EPA should review its authority, but it does raise questions about how that authority was applied to carbon dioxide emissions from power plants.

For the Sierra Club's Joanne Spalding, the language about the endangerment finding jumped out as she read through the EPA's 44-page advance notice of proposed rulemaking, which was officially issued late Dec. 18. That 2009 finding underpinned the EPA's authority to regulate greenhouse gases by declaring them a threat to public health and welfare. Whether the EPA can apply that determination to regulate greenhouse gases from power plants, as it did when promulgating the Clean Power Plan in 2015, has been the subject of much debate.

EPA Administrator Scott Pruitt thus far has declined to take up a review of the endangerment finding, despite ongoing pressure for the agency to do so from industry, some politicians and other interest groups. In the advance NOPR, the EPA provided its current thinking on the 2009 finding, starting with a history lesson on the Clean Air Act.

When Congress passed the Clean Air Act in 1970 and further amended it in 1977 and 1990, carbon had not yet been determined to be a threat. In the years following the law's passage, federal courts have determined that the act was written broadly enough to allow the EPA to update it with the most recent science. The U.S. Supreme Court in the seminal 2007 case Massachusetts vs. EPA affirmed that greenhouse gases could be considered a pollutant under the Clean Air Act so long as the EPA made a finding of endangerment.

The agency followed up in 2009 by doing just that and issued a determination that greenhouse gases from motor vehicles cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. While the finding applied only to motor vehicles, the agency soon moved to extend it to fossil fuel-fired power plants — specifically, steam generating units and combustion turbines.

To do so, the EPA exercised its authority under Clean Air Act Section 111(b) to issue performance standards for new fossil fuel-fired power plants in August 2015. That rule was paired with the Clean Power Plan, which similarly addressed carbon but from existing power plants under Section 111(d). The Clean Air Act states that once the agency issues standards for a new source, existing sources must also be regulated.

'A twisted reading'

Spalding does not dispute any of that history. But what does give her pause, is the portion of the advance NOPR where the EPA delves into its discretionary use of Clean Air Act Section 111.

The advance NOPR explained that the administrator is required to list a category of stationary sources and adopt regulations establishing standards of performance for that category if, in the administrator's judgement, the category "causes, or contributes significantly to, air pollution" that may be a threat to the public.

The notice goes on to explain that the Obama EPA essentially justified its approach to the endangerment finding by arguing that because a finding had been made for motor vehicles, a separate or new finding related to power plants was not needed. Power plants had long been regulated, and an endangerment finding only had to be made when a new source was to be added under the Clean Air Act, not when a new pollutant was to be listed, according to the agency. Nevertheless, the EPA at the time hedged its bets, noting that if such a finding were required, the text of the new source rule "should be considered to constitute the requisite endangerment finding."

Spalding said the EPA appears to be signaling that because it chose to explain that no new endangerment finding was needed; covering a new pollutant through the Clean Power Plan was not mandatory.

"Adding carbon dioxide, they are saying, was essentially a discretionary act by the EPA," Spalding said. If regulating carbon dioxide for a previously listed source is discretionary, the EPA could determine that the emissions guidelines they eventually adopt will not be binding on states. "It's clearly illegal. It's a twisted reading of the Clean Air Act," she added.

That idea originates from a 2008 rule for oil refineries from the George W. Bush administration, Spalding said. The Sierra Club's request that the EPA include greenhouse gases in that rule was rebuffed, with the agency explaining that it did not have any obligation to add another pollutant for regulation. That matter has been held in abeyance by a federal appeals court ever since, leaving the questions it raised unanswered.

"There is no logic" to the assertion that adding additional pollutants should be off limits or discretionary once a source has been listed, which "it is quite obvious ... would completely violate the purposes of the Clean Air Act," Spalding said.

An open question

Jeff Holmstead, an attorney for Bracewell LLP who was assistant administrator for the EPA's Office of Air and Radiation under Bush, said the EPA's advance NOPR held no real surprises with respect to the endangerment finding.

"The position the EPA is taking in this notice is basically the same position that they've taken for a number of years now, which is that they don't need to make a separate endangerment finding every time they regulate a new pollutant from the source category," Holmstead said.

Holmstead believes that asking whether regulating carbon from power plants was a discretionary action is reasonable and is a question that has been raised as part of ongoing litigation against the Clean Power Plan. The administrator has wide discretion to choose which pollutants are regulated once a source is listed, he added.

"They really have kind of danced around the issue of whether they have a legal obligation to do this," Holmstead said. "That question is unaddressed."

Given intense pressure from the public, environmental groups and even industry for the EPA to regulate greenhouse gases and climate change, Holmstead does not see the agency's current leadership opting not to replace the rule. Pruitt in recent weeks has signaled as much. "At least when it comes to the power sector, virtually everyone in the industry also agrees that EPA should regulate CO2 emissions from power plants," Holmstead said.

As for whether any replacement rule will be binding on states, Holmstead sees that as yet another open question. "If you look at the language in 111(d), there's nothing in there to suggest that EPA can set minimum standards for states. In fact, it's clear that states are entitled to a lot of discretion in terms of how they regulate existing sources under Section 111(d)."

If the EPA chooses to adopt that view, Spalding vowed the Sierra Club would sue, just as it did nearly 15 years ago in an attempt to force the EPA to address carbon pollution from power plants.