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					Will litigants and courts ―enact‖
two, three, many Kyotos?

Marlo Lewis, Senior Fellow
Competitive Enterprise Institute
202-669-6693; mlewis@cei.org
Heartland Institute Conference
NYC, March 4, 2008
Outline
   Cap and trade isn‘t the only game in town
   ESA Polar Bear listing--will it endanger fossil energy
    use?
   Mass v EPA -- a spectre haunting the U.S. economy
   PSD -- Regulatory Limbo, Regulatory Hell
   NAAQS for CO2?
   Does EPA have to make an endangerment finding?
   What should we do?
   A legislative fix?
   Policy terrorism alert!
Cap-and-trade ain’t the only game
in town

   In climate politics, cap-and-trade
    bills and Kyoto negotiations occupy
    center stage
   However, the chief threat to
    affordable energy may come from
    ―left field‖--litigation under federal
    common law, NEPA, Endangered
    Species Act, Clean Water Act, and,
    especially, the Clean Air Act (CAA)
Some Pending CAA Cases (Sierra Club alone
involved in 25 lawsuits against coal power plants)

   New York v. EPA, No. 06-1322 (D.C. Cir. 2006) (remand from Court case seeking to
    review EPA’s refusal to set new source performance standards for GHGs from electric
    generating units and other large stationary sources)
   Petition for Rulemaking under the Clean Air Act to Reduce the Emission of Air
    Pollutants from Marine Shipping Vessels that Contribute to Global Climate Change
    (Oct. 3, 2007), brought by Oceana, Friends of the Earth, Center for Biological Diversity
    and Earth Justice
   Petition for Rulemaking Seeking the Regulation of Greenhouse Gas Emissions from
    Ocean-Going Vessels (Oct. 3, 2007), brought by the State of California
   Petition for Rulemaking Seeking the Regulation of Greenhouse Gas Emissions from
    Nonroad Vehicles and Engines (Jan. 29, 2008), brought by the States of California,
    Connecticut, Massachusetts, New Jersey and Oregon
   Petition for Rulemaking under the Clean Air Act to reduce the Emission of Air
    Pollutants from Aircraft that Contribute to Global Climate Change (Dec. 31, 2007),
    brought by Friends of the Earth, Oceana, NRDC and Earth Justice
   Petition to require BACT (best available control technology) limits on CO2 emissions
    from Bonanza coal electric plant in Utah under the CAA’s Prevention of Significant
    Deterioration (PSD) program (Oct. 1, 2007), brought by Sierra Club.
Other CO2 litigation
Filed
    Complaint against Exxon-Mobil, BP, Conoco, Chevron, Duke, etc. for damages from
     global warming (Feb. 26, 2008), brought by Native Village of Kivlanina, Alaska.
    Petition for Revised pH Water Quality Criteria under Section 304 of the Clean Water
     Act (Dec. 18, 2007), brought by the Center for Biological Diversity
    Open Space Institute, et al. v. American Electric Power; Connecticut et al. V. AEP
     (July 6, 2007), litigation under federal common law to require 3% annual CO2
     reductions from nation’s five largest coal-burning utilities
    Petition to require OPIC and Ex-Im Bank to conduct NEPA environmental
     assessments of CO2 emissions from projects they fund (August 22, 2002), brought by
     Friends of the Earth, Greenpeace, Boulder, Co., Oakland, Santa Monica, and Arcata,
     CA.
In Development
    Inuit Circumpolar Confererence v Bush Administration (ICC claims U.S. failure to ratify
     Kyoto violates their fundamental human rights and jeopardizes their very existence).
    Litigation under World Heritage Convention (GW allegedly destroys natural heritage
     areas--reefs, glaciers, Everglades)
ESA Polar Bear listing -- Will it
endanger fossil energy use?
   Kyoto Day (Feb. 16, 2005), Center for Biological Diversity (CBD) petitioned
    FWS to list polar bear as threatened species under ESA.
   ―Whether GHG emissions can be halted to protect polar bears will be a test
    of the statute‘s continuing relevance in the 21st century.‖ -- Brendan
    Cummings & Kassie Siegel (CBD)
   ―There is no reason GHG emissions, which jeopardize polar bears, should
    be treated any differently than pesticides that harm salmon or logging that
    harms owls.‖ -- Cummings & Siegel
   Section 7 prohibits agencies from taking actions that ―appreciably‖ reduce
    species‘ survival prospects. Agency actions potentially subject to Sec 7:
        Setting of fuel economy standards
        Off shore oil and gas leasing
        Approval of new coal plants, and
        ―dozens, perhaps hundreds of other [federally-permitted] projects are individually
         and cumulatively having an appreciable effect‖ on GHG levels and, hence, polar
         bear habitat
   ―Any legally adequate recovery plan must…include mandates to reduce
    such emissions.‖ -- Cummings & Siegel
A Spectre is haunting the U.S.
economy--ever since Mass v EPA




                   The specter of an EPA
                    empowered by courts and
                    litigants to ―enact‖ Al Gore‘s
                    climate agenda, on George
                    Bush‘s watch, but without any of
                    Gore‘s allies on the Hill having to
                    vote for it or take responsibility
                    for the costs.
Brief Chronology – How we got here
   Tom Delay asks Carol Browner for legal opinion about EPA‘s CAA
    authority with respect to CO2. (March 1998)
   EPA Gen. Council Joseph Z. Cannon memorandum: Several regulatory
    provisions ―potentially applicable,‖ though EPA has not made an
    endangerment finding and has no plans to regulate CO2 ―at this
    time.‖ (April 10, 1998)
   CTA + 18 other groups petition EPA, under CAA §202, to set GHG
    emission standards for new motor vehicles (Oct 20, 1999)
   EPA issues request for information (Jan 12, 2001)
   EPA denies petition for rulemaking (Aug 23, 2003)
   CTA + 12 other groups; Mass. + 11 other states, 3 cities, and
    American Samoa petition for review of EPA denial (Oct 23, 2003)
   D.C. Appeals Court 2-1 finds denial within EPA‘s lawful discretion but
    does not address key issue: Does CAA authorize GHG regulation?
   Supreme Court 5-4 overturns, finds CO2 is air pollutant under CAA.
    EPA must determine whether GHGs endanger public health and
    welfare, or explain why the science is too uncertain to make such
    determination. EPA must ground its action or inaction in the statute
    (April 2, 2007).
Chronology since Mass v EPA
   Admin saw endangerment finding as only way to obtain
    statutory authority for 20-10 program (Corn is King!)
   Reports (rumors?) that EPA sent an endangerment
    finding to OMB along with drafts of proposed
    regulations. (Dec 08)
   Congress passes, Bush signs, energy bill. CAA authority
    no longer needed to implement new fuel economy,
    renewable fuel standards. (Dec 08)
   Warning from U.S. Chamber-led business groups and
    conservative non-profit groups: Endangerment will
    create regulatory chaos. (Dec 08)
   Sen. Feinstein‘s requests EPA ―timeline‖ with
    ―deadlines‖ for responding to Mass v EPA (Jan 25, 08)
   Conservative non-profits respond to Feinstein letter
    (Feb 20, 08)
PSD -- Regulatory Cascade
   §202 applies only to new motor vehicles.
   But, an endangerment finding would also
    make CO2 a pollutant ―subject to
    regulation‖ under other provisions.
   First and foremost, §165: Prevention of
    Significant Deterioration (PSD) program.
   PSD is a pre-construction permitting
    program for ―major‖ stationary sources.
   No company may build a new ―major‖
    stationary source of a regulated pollutant
    (or modify an existing source if this
    increases emissions) unless the source first
    obtains a PSD permit.
PSD – Regulatory Thresholds

   A source is defined as ―major‖ if it is in one
    of 28 listed categories and emits at least
    100 tons per year of an air pollutant, or is
    any other type of establishment and emits
    at least 250 tons (§169).
   250 tons may be a reasonable regulatory
    threshold for smog- and soot-forming
    emissions.
   It is a miniscule amount of CO2--roughly
    the amount emitted by two dozen average
    homes.
Regulatory Sprawl under 250 TPY
threshold
   Buildings of ~100,000 square feet, if heated by fossil fuel,
    including many office and apartment buildings; hotels;
    enclosed malls; large retail stores and warehouses;
    colleges, hospitals and large assisted living facilities; large
    houses of worship; product pipelines; food processing
    facilities; large heated agricultural facilities; indoor sports
    arenas and other large public assembly buildings;
    commercial kitchens that use natural gas to cook food; and
    many others.
   None of these types of sources has ever been subject to
    PSD permitting requirements before because they emit so
    little traditional air pollution; but they would be now if CO2 is
    deemed to be a regulated CAA pollutant.
PSD administrative burden on
regulated entities
   PSD permit can take years to obtain. The paperwork alone
    can cost hundreds of thousands to millions of dollars.
   To obtain a permit, a ―major‖ source must install ―best
    available control technology‖ (BACT)--additional costs.
   Administrative burden alone – putting aside any BACT
    requirements – would create an overwhelming and unprecedented
    roadblock to new investment for a host of previously unregulated
    buildings and facilities:
        ―No small business requiring a moderate-sized building or
         facility heated with fossil fuel could operate subject to the
         PSD permit administrative burden.‖ – Peter Glaser and John
         Cline, Nov 8, 07 testimony before House Gov Oversight and
         Reform Committee
PSD for CO2—Regulatory Limbo
   Nobody knows what BACT means for CO2.
   BACT determinations are made case-by-case, mostly
    by state agencies.
   Before states can make CO2 BACT determinations,
    they‘ll have to modify their SIPs to adopt new BACT
    requirements. That could take years.
   ―Since BACT determinations for CO2 have no
    regulatory history at this time, and can vary by type
    of facility and from state to state, businesses
    wishing to construct new sources or modify existing
    ones would have no basis for planning what the
    regulatory requirements will be.‖ This will create
    ―considerable, and perhaps fatal, uncertainty for
    businesses.‖– Glaser and Cline
Or Regulatory Hell?
   Once a source is classified as ―major‖ for one
    pollutant, it is considered a major source for all
    other regulated pollutants under the CAA.
   Potentially hundreds of thousands of small to mid-
    size entities would have to install BACT not only
    for CO2 but also for NOX, PM, lead, mercury,
    SO2, and other pollutants prior to construction.
       ―The regulatory burden is so enormous, and the
        number of required PSD permits so staggering, that
        construction in cities across the country will literally
        stop the minute CO2 is ‗regulated‘ under the Act.‖ –
        U.S. Chamber and 18 business groups, Dec 12,
        2007 letter to Congress.
Environmental Consequences: Equally
Unsavory

   EPA and its state level counterparts would
    be flooded with permit applications from
    myriads of new ―major‖ sources.
   These permitting agencies would be
    forced to squander administrative
    resources pursuing inconsequential CO2
    reductions to the neglect of more critical,
    statutorily required CAA responsibilities.
NAAQS for CO2?
   An endangerment finding under §202 could also compel
    EPA to set NAAQS for CO2 under §108 (both provisions have
    the same endangerment language).
   NAAQS specifies allowable atmospheric pollution
    concentrations
   Mass v EPA plaintiffs claimed current levels harm public
    health and welfare.
   In 2003, three plaintiffs, including AG Mass, filed notice of
    intent to sue EPA for ―failing‖ to initiate a NAAQS
    rulemaking for CO2. We know their end-game.
   What would it take to reduce CO2 levels?
        Kyoto would barely slow the increase.
        Even outright de-industrialization might not be enough.
        EPA must take compliance costs into account when setting
         tailpipe standards under §202, but is forbidden to consider
         costs when setting NAAQS.
   In principle, there is no limit to the economic sacrifices
    that could be required of the American people.
Does EPA have to make an
endangerment finding?

   ―We need not and do not reach the
    question whether on remand EPA must
    make an endangerment finding, or whether
    policy concerns can inform EPA‘s actions in
    the event that it makes such a finding….We
    hold only that EPA must ground its reasons
    for action or inaction in the statute.‖ --
    Mass v. EPA
On what scientific grounds could EPA
decline to make an endangerment finding?

   EPA could find that GHG emissions from
    new motor vehicles do not ―cause or
    contribute to air pollution that may
    reasonably be anticipated to endanger
    public health or welfare.‖
      Unlikely. EPA would have to disavow a
       decade or more of alarmist statements
       and publications.
   EPA could say the science is too uncertain
    to make an endangerment finding.
      Also unlikely. EPA would have to break
       with the IPCC ―consensus.‖
On what statutory grounds might EPA
decline to make an endangerment finding?

   Congress never intended for §2O2, which deals solely
    with motor vehicle emissions, to instigate a massive
    expansion of stationary source regulation.
   Never intended for §202 to spawn an administratively
    crippling paperwork nightmare for EPA and its state-
    level counterparts.
       EPA has considerable discretion how to allocate its own
        administrative resources.
   Never intended §202, which requires EPA to consider
    compliance costs when setting tailpipe standards, to
    leverage money-is-no-object regulation under the
    NAAQs program.
   Above all, Congress never intended for §202 to allow
    litigants and courts to set climate policy for the nation.
       Yet an endangerment finding could trigger a regulatory
        cascade many times more costly than Kyoto or
        Lieberman-Warner without Congress ever voting on it!
If EPA is sued again...
   Mass v. EPA probably not a good predictor
    of outcome
       CO2 emission standards for motor vehicles are
        fuel economy standards by another name
       It‘s one thing to get 5-4 majority to make EPA
        play in NHTSA‘s fuel economy sandbox;
        another to impose PSD Hell, CO2 NAAQS,
        Kyoto-Plus as a requirement of §202, a cost-
        constrained provision dealing solely with
        emissions from new motor vehicles, enacted in
        1970.
What will EPA do?
   Nobody knows at this point how or when EPA will
    respond to the Court. The Admin is still weighing
    its options.
What should we do now?
   Talk this up (op-eds, blog posts, talk radio)!
   Get prepared to submit public comment, file amicus
    briefs
   Force the other team to take ownership of the
    regulatory morass:
      Why didn‘t you mention PSD Hell when you
       litigated Mass v EPA? When were you going to tell
       us about endangerment setting the predicate for
       NAAQS? Were you ignorant of how the CAA
       works, or did you hide your agenda from the
       Court?
      If you pressure EPA to do this, we will hold you
       responsible for the consequences!
A Legislative Fix?
   If EPA makes an endangerment finding, we
    will need a legislative fix.
   Plaintiffs said Mass v EPA dealt just with
    EPA‘s authority to regulate emissions of
    new motor vehicles under §202.
       Hence, CAA should be amended to clarify that
        any endangerment finding and associated
        regulation of motor vehicle emissions ―shall not
        be construed to require pollution control
        requirements for CO2 and other GHGs under any
        other provision of this Act.‖
Policy Terrorism Alert!
   What if they say, okay, we‘ll agree to a legislative fix--but
    only as part of a comprehensive cap-and-trade bill?
   This is the legislative equivalent of hijacking and hostage
    taking, to wit:
      ―We‘ll let EPA blow up the economy unless you come
         along quietly and endorse Kyoto II, Lieberman-
         Warner, etc.‖
   Denounce this as ―policy terrorism.‖ PSD Hell should be
    rejected on its own merits. Cap-and-trade should stand or
    fall on its own merits.
   Remember, no elected official or judge wants to take
    ownership of PSD Hell or CO2 NAAQS. It seems like a neat
    idea only if you can make George Bush take the rap for it.
APPENDIX A: Thoughts on Mass v
EPA -- What’s in a name?
   Plaintiffs‘ whole case rested on a selective reading of the
    CAA‘s most abstract provision—the definition of air pollutant.
   ―The term ‗air pollutant‘ means any air pollution agent or
    combination of such agents, including any physical, chemical,
    biological, radiative…substance or matter which is emitted
    into or otherwise enters the ambient air. Such term includes
    any precursors to the formation of any air pollutant…‖
   Following plaintiffs, the Court treated ―air pollution agent‖ as
    synonymous with ―air pollutant‖ rather than as a criterion for
    distinguishing pollutants from non-pollutants. On this reading,
    anything in the air--‖from frisbees to flatulence‖ (Scalia)--is
    ipso facto an air pollutant for regulatory purposes.
   To reach this conclusion, the majority had to:
        Ignore a key term of the first sentence (making the definition
         circular—‘an air pollutant is an air pollutant‘); and
        Ignore all of the second sentence. If anything emitted is
         automatically an air pollutant, Congress would not have had to
         specify that precursors are also air pollutants.
CAA authority to regulate CO2:
Conspicuously Absent
   No climate protection title, section, or subsection
    in the CAA.
   Words ―greenhouse effect‖ and ―greenhouse gas‖
    do not occur.
   Global warming and CO2 occur only once, each
    time in non-regulatory provisions (§§ 103g and
    602e), which conclude by admonishing EPA not to
    infer authority for pollution control requirements
    or additional regulation.
   These caveats would be pointless if, as plaintiffs
    argued, the definition of ―air pollutant‖ already
    authorizes EPA to regulate CO2 for global
    warming purposes.
Ignoring legislative and regulatory
history
   In 20 years of debate, Congress has never enacted
    CO2 control legislation.
   When CAA amended in 1990, Congress considered and
    rejected:
       a new title on stratospheric ozone and climate protection;
       provisions to regulate motor vehicle CO2 emissions.
   The Court said such ―post-enactment legislative
    history‖ cannot repeal EPA‘s pre-existing authority.
    Nobody ever suggested it did.
       The point: It is unreasonable to believe that when
        Congress enacted and amended §202 in 1970 and 1977,
        it implicitly adopted the Kyoto Protocol, or Lieberman-
        Warner, but just forgot to tell anybody!
   For ~ 30 years, EPA regulation under §202 has aimed
    to make auto engines so clean burning that, ultimately,
    nothing comes out of the tailpipe except two
    greenhouse gases—CO2 and H2O!
Ignoring the Big Picture
   Congress never intended for §2O2, which deals solely
    with motor vehicle emissions, to instigate a massive
    expansion of stationary source regulation.
   Never intended §202 to spawn an administratively
    crippling paperwork nightmare for EPA and its state
    counterparts.
   Never intended §202, which requires EPA to consider
    compliance costs, to leverage money-is-no-object
    regulation under the NAAQs program.
   Above all, Congress never intended for §202 to allow
    litigants and courts to set climate policy for the nation.
   Yet those are likely consequences of regulating CO2
    under §202.
   Conclusion: When Congress enacted and amended
    §202 in 1970 and 1977, it did not delegate to EPA the
    power to regulate CO2.

				
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