What if Congress can’t pass climate legislation? Many have pointed to the existing Clean Air Act (CAA) as a source of authority for the president to act (through the EPA) without waiting for Congress. Some have further suggested that CAA regulation of greenhouse gases (GHGs) wouldn’t be a bad second option—these analyses suggest we might not lose much in terms of emissions cuts and efficiency over the plans being discussed in Congress. (Exactly how much we could expect GHG emissions to be cut under the CAA, and at what cost, is still an open question – and one we are currently working on here at RFF.) However, almost all analyses of GHG regulation under the CAA (including the EPA’s own) rely on a key assumption: the EPA has discretion to choose among a variety of schemes in the statute for regulation of the “stationary sources”—power plants and industrial facilities—that are responsible for most U.S. GHG emissions.
In a new RFF Discussion Paper, I argue that this assumption is likely false. Under current law, the EPA does not have this discretion and will likely be forced to regulate GHGs under one scheme in particular—the National Ambient Air Quality Standards, NAAQS. Today the EPA released its official endangerment finding for mobile source (vehicle) emissions—a process that was set into motion by the Supreme Court’s Massachusetts v. EPA decision in 2007. In that finding, the EPA said GHGs endanger public health or welfare and are emitted from “diverse” sources. The triggering language for the NAAQS program in §108 of the CAA contains the same requirements, and once that process is started, the EPA cannot stop it (though it may be able to take its time. More on that later).
While the NAAQS scheme has been effective at regulating traditional air pollution, it is viewed by most as a poor fit for GHG regulation. This is partly due to conceptual problems. It is hard to set a “safe” national standard for GHGs, and it is hard for states (who are charged with doing the actual regulation under the NAAQS) to come up with effective policies for a global problem. The NAAQS program also precludes use of other CAA schemes that most people believe would be more effective, such as performance standards for existing sources. One of the best pieces of evidence that the NAAQS are widely viewed as a poor option for regulating GHGs is that the Waxman-Markey bill would explicitly take NAAQS authority for GHGs away from the EPA, while leaving authority under other programs intact.
The EPA currently has no plans to issue NAAQS for GHGs, but a lawsuit could force the agency to examine the issue. Some had claimed that such a lawsuit would never be filed since neither industry nor most environmental groups favor a GHG NAAQS. All it takes is one plaintiff, however, and indeed last week the Center for Biological Diversity petitioned the EPA to issue a GHG NAAQS. Even environmental groups that would rather not force the EPA’s hand on this issue may end up getting involved since, if the EPA were to prevail, it would have broad new discretion that these groups would rather the agency didn’t have in the long run.
When and if the issue of EPA discretion does reach the courts, the reviewing court will have to confront a 33-year-old Second Circuit case, NRDC v. Train, which decided this exact issue. The Train court held that the language of the CAA, its structure, and its legislative history together compelled a nondiscretionary interpretation of the §108 language. In a suit over a GHG NAAQS, the EPA would have to overturn this result. The agency claims that the deference granted to agency interpretations of statutes in the intervening Chevron decision gives them another bite at the apple. This is right as a procedural matter. For this and other reasons, the precedent set by Train is not controlling. In the discussion paper I argue, however, that the substantive result is unlikely to be any different. The same criteria used by the Train court to interpret the statute—canons of construction, statutory structure, and legislative history—are likely to be used by the DC Circuit today to determine that the CAA is not ambiguous in this regard. Chevron deference is available only in situations where there is some statutory ambiguity (this is commonly referred to Chevron having two “steps”—I argue that the EPA would be unlikely to survive Step 1 analysis).
What does this mean for climate policy? A few things: first, it presents another challenge to GHG regulation under current laws. Those who have been following the EPA’s moves to regulate GHGs under the CAA are familiar with the agency’s proposed “tailoring rule” which, if it passes legal scrutiny, would avoid a situation in which millions of small GHG emitters would have to undergo a permitting process. Even if the agency can dodge this oncoming train, another one lies behind it—a suit over a NAAQS for GHGs. This is the suit that I predict the EPA would ultimately lose, resulting in what most analysts believe would be a relatively inefficient regulatory regime. It is true that the EPA might have a lot of flexibility on timing of NAAQS regulation, both because the court process is slow and because the NAAQS program itself can be delayed significantly. This is as much a curse as a blessing, however, not only would there be no NAAQS regulation during the delay, but regulation under other programs in the CAA would in many cases be blocked as soon as the initial steps in the NAAQS process are taken. With no legislation and stationary source regulation blocked by courts and EPA inaction, CAFE standards and other mobile-source regulations would be the only GHG policy in place. This would be a true disaster—each of the three branches of government would have played a part in American failure to take any real action on GHG emissions.
Congress can fix this problem either by passing comprehensive climate legislation that supersedes EPA authority over stationary source GHGs (as Waxman-Markey would do), or by passing a “rifle shot” law that grants the EPA the discretion it seeks. Unfortunately, prospects for passing either type of legislation with any speed seem slim.
Therefore, more study of what a GHG NAAQS might look like is needed. If I’m right about the EPA’s chances of success in a re-run of Train, we are likely to see a GHG NAAQS in the near future—or at least the initial stages of that regulatory process. While there are lots of conceptual and practical difficulties with regulating GHGs this way, the NAAQS have been pretty successful at regulating other pollutants. Despite the program’s roots in 1970s-vintage command-and-control approaches to environmental regulation, the NAAQS programs have evolved over time and become more efficient. NOx is regulated through the NAAQS using a state-administered cap-and-trade system that has been effective and relatively efficient. Could something similar be done with GHGs? How much could we expect to cut emissions, and at what cost? Would such a program encounter legal problems? Instead of rejecting the NAAQS out of hand, the policy community would do well to consider these questions.
Nathan Richardson is a Visiting Scholar at RFF.
