EPA Issues Proposed "Endangerment Finding" for GHGs

May 8, 2009
Client Alert Newsletter May 2009

On April 24, 2009, the U.S. Environmental Protection Agency ("EPA") published a proposed “endangerment finding” for six greenhouse gases ("GHGs") pursuant to Section 202(a) of the Clean Air Act ("CAA"). The proposed finding sets the stage for EPA regulation of GHGs not only under Title II of the CAA, which concerns mobile sources, but also under Title I and other sections of the CAA applicable to stationary sources. The proposed endangerment finding does not impose any regulations, and it is unclear if and when EPA intends to issue additional GHG regulation based on the endangerment finding. The finding, however, sends a clear signal that EPA believes it possesses the authority to regulate GHGs under the current provisions of the CAA and that it is prepared to do so in the absence of any Congressional action or climate change legislation in the near term. Whether the proposed endangerment finding results in pushing Congress towards passing climate change legislation, or results in EPA in fact exercising its regulatory authority to address climate change issues is something that will likely unfold over the rest of 2009.

The EPA's proposed endangerment finding is the agency's response to the U.S. Supreme Court's 2007 landmark decision in Massachusetts v. EPA. In that case, the Supreme Court remanded EPA's denial of a petition by nineteen environmental and renewable energy industry organizations arguing that EPA was required to regulate GHGs under Section 202(a) of the CAA because they are air pollutants that are reasonably anticipated to endanger public health or welfare. In its initial denial of the petition in 2003, EPA concluded that GHGs did not constitute "air pollutants" under the CAA and thus EPA lacked authority to regulate GHGs. EPA also argued that even if it possessed authority to regulate GHGs, it was not inclined to do so for various policy reasons. The Supreme Court disagreed with EPA on both counts, holding that GHGs were air pollutants under the CAA, and that EPA's alternative reasons for not regulating GHGs were not sufficiently grounded in the provisions of Section 202(a), i.e., they did not relate to a determination as to whether GHGs "may reasonably be anticipated to endanger public health or welfare."

Despite the Supreme Court's remand, the EPA under the Bush Administration did not take any specific action to respond to the decision until the end of July 2008, when it issued a lengthy Advance Notice of Proposed Rulemaking ("ANPR") that sought comment on the potential regulation of GHGs under the CAA. The ANPR was controversial in that prior versions supposedly contained conclusions supporting regulation of GHGs under the CAA, but the published version included statements from the EPA administrator and other agency heads outlining their reasons as to why regulation of GHGs under the CAA would be unworkable.

The proposed endangerment finding issued by the Obama administration's EPA Administrator, Lisa Jackson, represents a reversal of the Bush administration's view of EPA’s regulatory authority under the CAA with respect to GHGs. The proposed finding methodically proceeds through the legal framework and current scientific evidence associated with the regulation of GHGs under Section 202(a) and ultimately concludes that the six key GHGs—carbon dioxide ("CO2"), methane ("CH4"), nitrous oxide ("N2O"), hydrofluorocarbons ("HFCs"), perfluorocarbons ("PFCs"), and sulfur hexafluoride ("SF6")—meet the standard for regulation under Section 202(a), in that emission of these GHGs are reasonably anticipated to pose a danger to public health and welfare as a result of their impact on climate change.

While the proposed endangerment finding specifically concerns the regulation of mobile sources under Title II of the CAA, a final endangerment finding could affect the regulation of GHGs emitted by stationary sources because the "endangerment" standards triggering action under those stationary source programs are very similar if not identical to the analogous mobile source standards. Thus, this endangerment finding could result in EPA action on GHGs under the National Ambient Air Quality Standards ("NAAQS") framework, the Prevention of Significant Deterioration ("PSD") programs, or the New Source Performance Standards ("NSPS") regulations.

Nevertheless, based on statements by Administrator Jackson and others indicating a preference for comprehensive climate change legislation passed by Congress over new CAA regulations promulgated by EPA, it is unclear whether EPA is, in fact, poised to begin regulating GHGs from a variety of sources. Indeed, it is widely speculated that this endangerment finding is intended to ratchet up the pressure on Congress to pass climate change legislation by raising the prospect of EPA regulation under the current CAA framework in the absence of new legislation. Whether this pressure will, in fact, result in new legislation from Congress, or whether it will result in increased pressure upon EPA to devise its own regulatory programs for GHGs under the CAA will likely play out over the rest of 2009. It also remains to be seen how this potential federal involvement in the regulation of GHG emissions will affect the many regional, state and local programs, such as the Regional Greenhouse Gas Initiative ("RGGI"), Pennsylvania's Act 70, or New Jersey's Global Warming Response Act, all of which were developed at a time when the federal government was on the sidelines with respect to GHG regulation.