The Senate's Refinements to Climate Change Legislation: Tailoring the Clean Air Act for Greenhouse Gases

The latest version of the Senate climate bill, released by Senator Boxer on Friday, October 30, retains EPA’s authority to establish meaningful facility regulations under the Clean Air Act (CAA) while freeing EPA of the obligation to implement CAA provisions that are ill-suited to controlling greenhouse gases (GHG). (Section 128(g): Amendments Clarifying Regulation of Greenhouse Gases under Clean Air Act (at page 867). The Friday version of the bill is available by E&E subscription here.) The Senate bill’s continuing preservation of core regulatory authority is superior to the House bill’s sweeping preemption of traditional regulation (see my previous analysis). Ultimately, however, Congress should give EPA regulatory authority in a manner uniquely suited to the character of GHG emissions, rather than continuing to refine existing CAA authority.

The Senate bill limits EPA authority to require pollution controls to large facilities: those that emit more than 25,000 tons per year of carbon-dioxide equivalent. In so doing, EPA will have authority over roughly the same “major” facilities that it has traditionally regulated. The Clean Air Act defines a facility as major, and subject to controls, if it emits 100 or 250 tons per year of a pollutant (depending upon the industry). With that standard, many small facilities would have been drawn into the regulatory net, overwhelming EPA with the duty to develop standards for relatively minor contributors. EPA has attempted to address this risk through administrative action: last month the agency proposed to apply the Clean Air Act only to the large sources covered under the Senate’s recent revision. But that administrative action risked legal challenge since it was inconsistent with the statute’s plain language triggering regulatory requirements at much lower levels. By codifying EPA’s administrative efforts, the agency is on safer ground. Although direct regulation of small sources is worth considering seriously, the Clean Air Act provisions at issue would have provided a poor mechanism for doing so.

The Senate bill also relieves EPA of the obligation to set a National Ambient Air Quality Standard (NAAQS) for GHGs. The NAAQS are public-health based standards that EPA sets for ubiquitous pollutants. Since most GHGs do not, by themselves, have local health consequences and the concern is the accumulation of emissions in the global atmosphere, setting ambient air quality standards for local GHG concentrations does not make a lot of sense.

The unfortunate side effect of the Senate bill’s elimination of the NAAQS requirement is that it simultaneously eliminates the associated state implementation planning process for achieving the NAAQS. While the CAA’s existing NAAQS provisions are ill-suited to a global pollutant like carbon, the state implementation planning process would be a highly useful tool for achieving reductions in light of the states’ on-going jurisdiction over many key GHG emissions sources. The Senate should consider a NAAQS alternative: it could require EPA to set emission reduction targets for each state, and then require each state to develop state implementation plans demonstrating the required emissions reduction. I discussed this proposal in a paper last year ("A Cooperative Federalism Proposal for Climate Change Legislation: The Value of State Autonomy in a Federal System").

There's no doubt that the Senate’s retention of key CAA authority is superior to the Waxman-Markey bill’s elimination of it. At the same time, however, the Clean Air Act’s regulatory authority is not, in truth, sufficient for the task. The provisions at issue cover only new sources, not existing sources, unless existing sources make major changes. If a cap-and-trade program does not prove stringent enough to induce fundamental change, firms are likely to continue operating their more polluting existing sources since they are free of controls that new sources must confront. Nor would the states be expected to impose limitations on existing sources without the prod of the state implementation planning process, a process that currently pushes them to impose controls on existing sources to reach national standards. Regulatory authority is an important backstop in the event that the cap-and-trade program, like some of the prior trading programs before it, does not reduce emissions.

The Clean Air Act is also, in some respects, too inflexible. If a cap-and-trade program succeeds, regulatory standards may be unnecessary in sectors that are responding with real reductions in emissions and technological transformations. Since the CAA requires EPA to set standards for all sources meeting the threshold emissions requirements, EPA could find itself engaging in time-consuming regulatory proceedings that are not necessary. A preferable approach would be to give EPA the discretion to determine when regulatory standards are a necessary complement to a trading program, rather than requiring EPA to develop standards in all cases.

The politics of creating new regulatory programs are, no doubt, complex. Sooner or later, however, I suspect that policymakers will recognize the need to provide EPA with multiple legal tools, including both market and regulatory mechanisms, to achieve the necessary GHG reductions.