David Bookbinder

EPA “Tailoring Rule” confirms Mass v. EPA set the stage for administrative quagmire and economic disaster

by Marlo Lewis on October 1, 2009 · 1 comment

in Features, Global Warming, Legal, Zeitgeist

Updated at 10/1/09 4:47 PM

I’ve just begun reading EPA’s proposed Tailoring Rule to establish a new 25,000 tons per year (TPY) ”major stationary source” applicability threshold for greenhouse gas (GHG) emissions under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. I’ll blog about this again later on, but for now I just want to say, “We told ya so!”

Attorney Peter Glaser, the U.S. Chamber of Commerce, CEI and a host of other free market groups warned repeatedly that regulating GHG emissions from new motor vehicles — the immediate policy objective of plaintiffs in the Supreme Court global warming case, Massachusetts v. EPA – would have the following consequences:

  1. CO2 would automatically become an air pollutant “subject to regulation” under the PSD and Title V programs.
  2. Millions of previously unregulated entities — big box stores, enclosed malls, hotels, apartment complexes, mid-sized office buildings, even commercial kitchens — would be vulnerable to new controls, paperwork, penalties, and litigation.
  3. The volume of permit applications would create an administrative quagmire for EPA and state environmental permitting agencies.
  4. The new costs, uncertainties, and delays would create an unprecedented roadblock to new construction and economic development, turning the Clean Air Act into a gigantic Anti-Stimulus program.

Predictably, global warming activists, such as Sierra Club climate council David Bookbinder, a plaintiff in Massachusetts v. EPA, derided these concerns as a “bugaboo,” a “red herring,” and a “pure scare tactic” by industry foes of regulatory climate policy. (See segments 1:47 – 1:48 and 2:03 – 2:05 of the Senate Environment and Public Works Committee’s Archived Webcast).

EPA’s July 30, 2008 Advanced Notice of Proposed Rulemaking: Regulating Greenhouse Gas Emissions under the Clean Air Act (ANPR) acknowledged that applying PSD to CO2 might increase the volume of permit applications by an “order of magnitude” (p. 44499), might “overwhelm” the administrative resources of permitting authorities (p. 44507), and might subject sources to new costs, uncertainties, and delays (p. 44502). However, the ANPR considerably understated the risks, Glaser, the Chamber, and CEI argued.

Well, you can now get the lowdown straight from the horse’s mouth.  Here’s what EPA’s Tailoring Rule says:

If PSD and Title V requirements apply at the applicability levels provided under the CAA, state permitting authorities would be paralyzed by permit applications in numbers that are orders of magnitude [not a mere "order of magnitude," as in the ANPR] greater than their current administrative resources could accomodate [p. 1].

* * *

If PSD and Title V requirements apply at the applicability levels provided under the CAA, many small sources would be burdened by the costs of individualized PSD control technology requirements and permit applications. In addition, state permitting authorities would be paralyzed by enormous numbers of these permit applications; the numbers are orders of magnitude greater than the current inventory of permits and would vastly exceed the current administrative resources of the permitting authorities [pp. 15-16]

* * *

In short, without this tailoring rule, the administrative burdens would be immense, and they would immediately and completely overwhelm the permitting authorities. Without this tailoring rule, permitting authorities would receive approximately 40,000 PSD permit applications each year — currently, they receive approximately 300 — and they would be required to issue Title V permits for approximately some six million sources — currently, their Title V inventory is some 15,000 sources [p. 19].

* * *

Based on our GHG threshold data analyis, we estimate that almost 41,000 new and modified facilities per year would be subject to PSD review, based on the current rate of modifications at major sources, if a GHG major sourcee threshold of 250 TPY CO2e [carbon dioxide equivalent] were applied. Compared to the 280 PSD permits currently issued last year, this would be an increase in permits of more than 140-fold [p. 50].

* * *

Based on these assumptions [permitting agency costs in time and money to process a PSD permit for a commercial or residential GHG source would be only 20% of the time and money required to process a permit for an industrial GHG source], the additional annual permitting burden for permitting authorities, on a national basis, is estimated to be 3.3 million hours at a cost of $257 million to include all GHG emitters above the 250-TPY threshold [pp. 51-52].

* * *

Most significant [of new Title V obligations triggered by GHG regulation of new motor vehicles] are the more than six million sources of GHGs that would become newly subject to Title V requirements because they exceed the 100-TPY threshold for GHG but did not for previously regulated pollutants. Although there are generally not applicable requirements for GHGs that apply to such sources [a gross understatement -- although there are generally no Clean Air Act requirements, period, that apply to such sources], these six million sources would be required to submit a Title V permit application within 1 year [pp. 56-57].

* * *

Obviously, this massive influx of permit applications would overwhelm permitting authorities’ administrative resources. Indeed, permitting authorities report that they currently are having difficulty keeping up with their existing permit workloads. The Tite V Operating Permits System database, which tracks permit issuance, confirms that issuance of many permits is already delayed. By increasing the volume of permits by over 400 times, the administrative burden would be unmanageable [p. 58].

* * *

We estimate that for permitting authorities, the average new commercial or residential [Title V] permit would require 43 hours to process, which is 10 percent of the time needed for the average industrial permit . . . We estimate that the total nationwide additional burden for permitting authorities for Title V permits from adding GHG emissions at the 100-TPY threshold would be 340 imllion hours, which would cost over $15 billion [p. 59].

These burdens are “absurd,” EPA argues, because they are “inconsistent” with “congressional intent,” indeed would “undermine congressional purposes” (p. 19). Hence, EPA concludes, it is justified in effectively amending the statute, upping the PSD and Title V applicability thresholds for major sources from 100/250 TPY to 25,000 TPY.

Well, somebody needs to point out the obvious. The looming threat of an economy-chilling administrative quagmire didn’t just happen. The absurdity of agencies spending 340 million hours and $15 billion to process hollow operating permits didn’t suddenly spring forth from the text of Title V. Nothing in the Clean Air Act has changed since it was amended in 1977 and 1990 to turn it into an economic wrecking ball. Congress is still debating cap-and-trade, and never signed off on EPA using the Clean Air Act to control CO2 emissions from stationary sources. No, the absurd results are entirely a product of Mass. v. EPA. So is the necessity for EPA now to amend clear and unambiguous statutory language, violating the separation of powers.

When a court decision leads to absurd results, there are only two possibilities. (1) The absurdity was lurking in the statute all along and the court simply brought it to light; or (2) the court messed up, manufacturing absurdity in an otherwise sane and reasonably coherent law. My comment on EPA’s proposed endangerment finding (especially pp. 28-33) argues the blame lies with the Court, not those who drafted and enacted the Clean Air Act.

EPA proposes illegal rule

by Marlo Lewis on September 2, 2009 · 2 comments

in Global Warming

Yesterday, the U.S. Environmental Protection Agency (EPA) sent a draft proposed rule to the Office of Management and Budget (OMB) that would exempt small emitters of carbon dioxide (CO2) from Clean Air Act (CAA) pre-construction permitting requirement, Greenwire reports.

The proposed rule, as described in Greenwire, is blatantly illegal. It is a tacit admission that the Supreme Court decision in Massachusetts v. EPA set the stage for an economic disaster. It is additional evidence that Mass v. EPA was wrongly decided. It confirms CEI’s warning that the Court’s ruling imperils a core constitutional principle — the separation of powers.

In Mass. v. EPA, the Supreme Court, by a narrow 5-4 majority, decided that CO2 and other greenhouse gases (GHG) are “air pollutants” within the meaning of CAA, and gave EPA three options: (1) issue a finding that GHG-related “air pollution” “may reasonably be anticipated to endanger public health or welfare,” (2) issue a finding of no endangerment, or (3) provide a “reasonable explanation” why the agency cannot or will not exercise its discretion to make such a determination.

The Court further held that if EPA makes a finding of endangerment, then it has a duty, under CAA Sec. 202, to develop and adopt GHG emission standards for new motor vehicles.

EPA picked option (1), and last month, it sent OMB a draft proposed rule to establish GHG emission standards for new motor vehicles.

Although the Court majority asserted that an endangerment finding could not lead to “extreme measures” and would only require a cost-constrained adjustment of existing federal fuel-economy standards (see. p. 28 of the decision), in fact the endangerment finding will trigger a chain reaction throughout the CAA — a regulatory cascade potentially exceeding in cost, scope, and intrusiveness the Kyoto Protocol and many other GHG-control schemes Congress has never seen fit to pass.

For starters, establishing GHG emission standards for new motor vehicles will by definition make CO2 a CAA-regulated air pollutant. As such, CO2 would automatically be ”subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program (CAA Sec. 165). Under the CAA, any firm that plans to build a new “major” stationary source, or modify an existing major source in a way that would significantly increase emissions, must first obtain a PSD permit from EPA or a state environmental agency.

A PSD source is “major” if it is in one of 28 listed categories and has a potential to emit 100 tons per year (TPY) of an air pollutant, or if it is any other type of establishment and has a potential to emit 250 TPY (CAA Sec. 169). 

And there’s the rub. Whereas only large industrial facilities have a potential to emit 250 TPY of air contaminants such as sulfur dioxide or particulate matter, an immense number and variety of entities – office buildings, hotels, big box stores, enclosed malls, small manufacturing firms, even commercial kitchens – have a potential to emit 250 TPY of CO2. A September 2008 report commissioned by the U.S. Chamber of Commerce  estimates that 1.2 million buildings and facilities – most of them currently unregulated under the CAA – actually emit 250 TPY of CO2. All would be vulnerable to new PSD regulation, controls, paperwork, penalties, and litigation.

To obtain a PSD permit, firms must document their compliance with ”best available control technology” (BACT) standards. Even apart from any technology investments needed to comply with BACT, the PSD permitting process is costly and time-consuming.  In a recent year, each permit on average cost $125,120 and 866 burden hours for a source to obtain,  EPA estimates. No small business could operate subject to the PSD administrative burden.

The costs, uncertainties, and delays from applying PSD and BACT to CO2 would have a chilling effect on economic development and construction activity. It would turn the CAA into a gigantic Anti-Stimulus Package in a period of financial crisis and high unemployment. Definitely not something the Obama administration wants on its record in the 2010 election season.

EPA’s July 2008 Advanced Notice of Proposed Rulemaking (ANPR) outlined several administrative remedies to shield small entities from PSD requirements, all of doubtful legality. But if the Greenwire article is accurate, EPA is opting for the most brazenly illegal option of all. It proposes to revise, on its own authority, the PSD threshold from 250 TPY to 25,000 TPY.

Now friends, under the 1984 Supreme Court case of Chevron v. NRDC, EPA has considerable discretionary authority in interpreting the CAA where the statute is “silent or ambiguous with respect to the specific issue.” But there is nothing ambiguous about the number 250. No matter how you squint at the page, 250 is 100 times smaller than the threshold EPA proposes to put in its place.

According to Greenwire, Sierra Club’s David Bookbinder, a counsel for petitioners in Mass. v. EPA, “said the rule would also deflect claims from Republican lawmakers and industry groups that the Obama administration is seeking to regulate small emission sources such as doughnut shops, schools, and nursing homes.” But the Obama administration’s intent is not the issue. The issue is whether EPA, as a matter of law, must apply PSD requirements to doughnut shops, etc. once it starts regulating CO2 under Sec. 202.

Greenwire then quotes Bookbinder: “Putting this rule in place deflates a lot of political rhetoric about regulating CO2.” Well, I hope industry and the GOP are not so naive as to put their trust in an illegal rule. A rule that flouts clear statutory language of the CAA can provide no durable protection from the regulatory cascade that an endangerment finding and EPA adoption of motor vehicle GHG emission standards would unleash.

EPA’s proposed draft rule is a tacit admission of what CEI has said all along: EPA cannot regulate CO2 under the CAA without endangering the U.S. economy — unless EPA plays lawmaker, amends the Act, and violates the separation of powers. When the Supreme Court handed down the Mass. v. EPA decision, it set the stage for a constitutional crisis.

Of course, the bigger constitutional crisis stemming from Mass. v. EPA is that we could end up with an energy suppression regime far more costly than Kyoto or Waxman-Markey, yet without the people’s elected representatives ever voting on it.

For the gory details, see my blog post on MasterResource.Org and my comment (pp. 28-56) on EPA’s proposed endangerment finding.

How long will Sen. Barrasso’s “hold” on Regina McCarthy hold?

by Marlo Lewis on May 11, 2009

in Global Warming

Maybe forever! 

On April 30, Sen. John Barrasso (R-WY) placed a hold on the nomination of Regina McCarthy as Assistant Administrator of the EPA Office of Air and Radiation. “The nominee has failed to address serious concerns” about how the EPA would regulate greenhouse gases (GHGs) under the Clean Air Act, once the Agency finalizes its endangerment finding, Barrasso stated. 

The endangerment finding will compel EPA to establish GHG standards for new motor vehicles. This will make carbon dioxide (CO2) a pollutant “subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. An estimated 1.2 million previously unregulated buildings and facilities emit enough CO2 each year (250 tons) to qualify as “major stationary sources” under the PSD program. All would become vulnerable to new controls, monitoring, paperwork, penalties, and litigation. In 2003, the average PSD permit cost each applicant $125,120 and 866 burden hours to obtain.

Last week, Sen. Barrasso asked Ms. McCarthy how she would protect small businesses from PSD lawuits. The nominee replied that she will “request that I be informed if any such notice is filed with regard to a small source, and I will follow up with the potential litigants.” Barrasso commented: “The solution to this problem is not to have government officials go around asking litigants not to sue. That is not a solution and entirely unrealistic. I expect more.”

Short of amending the Clean Air Act, however, there may be no solution–which means Sen. Barrasso may have to keep the “hold” on for a very long time. The law clearly states that an entity must obtain a PSD permit before it builds or modifies a facility with the potential to emit 250 tons per year (TPY) of a regulated air pollutant, and all kinds of non-industrial facilities–office buildings, big box stores, apartment complexes, enclosed malls, heated warehouses, even commercial kitchens–actually emit 250 TPY of CO2.

In his press release, Barrasso cites a Wall Street Journal article stating that Kassie Siegel, Director of the Center for Biological Diversity’s Climate Law Institute, plans to sue EPA if the Agency does not apply PSD requirements to small sources. Siegel denied this in an email to Greenwire (subscription required): “The Center for Biological Diversity is not going to sue the EPA to regulate small sources of carbon dioxide, nor is anyone else.” But she cannot possibly know that no NIMBY activist somewhere will not file a PSD suit to block or delay construction of new Wal-Mart stores, strip malls, fast food restaurants, etc.

Besides, as Borrasso pointed out in a press release last Friday, in its comment on EPA’s Advanced Notice of Proposed Rulemaking, the Center for Biological Diversity lauds the PSD program as “an effective tool for reducing GHG emissions” precisely because ”it applies to a wide array of sources that will emit in excess of the applicable statutory thresholds of 250 or 100 tons per year.”

The Center further comments that, “the asserted belief of EPA officials that the statutory requirements are burdensome or not ‘efficient’ as they should be simply does not excuse the agency from following the law. The EPA has no authority to weaken the requirements of the statute simply because political appointees don’t like the law’s requirements.”

The Center files lots of lawsuits, and they just established a $17 million litigation fund to ensure that U.S. environmental statutes are “fully implemented” to reduce GHG emissions. In keeping with this, the Center’s ANPR comment argues that EPA “must” establish National Ambient Air Quality Standard (NAAQS) for CO2 of no more than 350 parts per million. Even outright de-industrialization of the United States would likely be insufficient to meet that standard. Maybe that’s why the Center has no plan to sue EPA to regulate small sources. If the Center successfully sues EPA to set NAAQS for CO2 at 350 ppm, there won’t be many businesses left to regulate.

David Bookbinder, chief climate council for the Sierra Club, similarly dismissed Borrasso’s concerns about PSD regulation of small sources. Asked what his response to Borrasso would be, Bookbinder told BNA (subscription required): “Nothing you could print.”

Yet earlier this year, the Sierra Club decided not to put a stay on Bush EPA Administrator Stephen Johnson’s interpretative rule limiting PSD to air pollutants currently subject to emission controls–a category that does not include CO2. Bookbinder acknowledged to Greenwire that if Johnson’s rule were simply overturned, EPA would have to regulate small sources of CO2. He explained: ”The Clean Air Act has language in there that is kind of all or nothing if CO2 gets regulated, and it could be unbelievably complicated and administratively nightmarish for both EPA and the states if they were to yank the Johnson memo and not have something in place that makes it clear that we’re going after only the very large sources.”

The real nightmare would be for the firms regulated, not the regulators. Like Siegel, Bookbinder presumes to speak for all potential litigants. In reality, neither Sierra Club nor Center for Biological Diversity has a monopoly on Clean Air Act litigation. The law is clear–250  tons is the threshold for regulation. And all it takes is one NIMBY activist to file the citizen suit that forces EPA to follow the law.

President Obama could quickly fix the whole problem if he wanted to. All he’d have to do is offer legislation to preclude EPA regulation of greenhouse gases under the Clean Air Act. Nearly all Republicans and many Democrats in Congress would vote for it, because it would protect our ailing economy from litigation-driven regulatory excess.

But Obama will not do this, because he wants to use the threat of EPA regulation under the Clean Air Act as a legislative hammer to beat opponents of the Waxman-Markey cap-and-tax bill into submission. This is too clever by half, however, as I argue here and here. If EPA does bring the might and fury of the Clean Air Act down upon CO2 emitters, Obama will have to take major responsibility for the increase in energy prices, the lost jobs, and the shuttered businesses.

Will Lisa Jackson turn the Clean Air Act into a gigantic de-stimulus package?

by Marlo Lewis on February 19, 2009

in Deregulate to Stimulate, Energy, Global Warming, Legal

Earlier this week, in a letter to Sierra Club climate council David Bookbinder, EPA Administrator Lisa Jackson said the Agency would reconsider, via a notice-and-comment rulemaking, a Bush-EPA memorandum interpreting regulations that determine whether carbon dioxide (CO2) is currently subject to emission controls under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. [click to continue…]