Greenhouse Gas Permits Won’t Be Required Until 2011

By / 4.1.2010

The Environmental Protection Agency (EPA) this week announced that it would not require greenhouse gas emitters to get permits until 2011, a decision that sets the stage for the administration’s regulation of greenhouse gases in the absence of climate change legislation. posted recently on the EPA’s reconsideration of the “Johnson Memo,” a piece of regulatory arcana that determines when pollutant emitters have to get permits under the Clean Air Act for new plants or major upgrades to existing plants. The EPA’s final version of the memo (cheat sheet here) shows an agency that’s attempting to juggle several imperatives: congressional concerns, industry pressure, and its own mandate to regulate greenhouse gases as a pollutant.

Under the Clean Air Act, major emitters — those that release more than 250 tons of pollutants into the atmosphere — have to get permits that include analysis of all the pollutants they emit. With the EPA’s endangerment ruling — which classified carbon dioxide as a dangerous pollutant — big emitters will soon have to include greenhouse gas analysis in their permit applications. These permits are time-consuming and expensive, and industry is very concerned about their impact.

As always, politics plays a role. Strictly interpreted, the Clean Air Act would impose big burdens on lots of emitters through a permit process that isn’t really set up to deal with the scale and volume of greenhouse gas permits required. Industry is spooked by the process, but so are the state regulators who would have to issue many of the permits. The EPA itself also doesn’t think a full-scale, immediate permit requirement is workable.

The result is a series of compromises. The most well-known is the “tailoring rule,” in which the EPA is limiting the permit requirement to big emitters (really big emitters, according to the EPA’s latest statements). The Johnson memo revision strikes another compromise by delaying the permit requirement until 2011, when the EPA claims its new mobile-source rules will enter into effect.*

I think these recent moves are partly in response to pressure from Congress. Congress, in proposals by Sens. Lisa Murkowski (R-AK) and Jay Rockefeller (D-WV), has threatened to take away the EPA’s authority to regulate greenhouse gases (for mobile sources, stationary sources, or both). Part of this is driven by fears among industry and on the Hill that the EPA would wreak havoc on the economy with greenhouse gas permit requirements. By moderating the impact of these requirements, the EPA is trying to comply with the Clean Air Act and achieve its environmental goals while appeasing the congressional dragon. To be sure, the EPA and state agencies are probably concerned about their own ability to handle the permit requirements and would benefit from more time, but I think congressional pressure is a big factor. One piece of evidence is that EPA Administrator Lisa Jackson announced these moves first in a letter to Sen. Rockefeller.

You could characterize this series of events as influence by special interests behind the scenes, undermining an EPA regulatory program without a congressional vote. I think there’s a more benign balance-of-powers story, though. In regulating air pollution the EPA has used Clean Air Act powers delegated from Congress, and it has now followed the Supreme Court’s Massachusetts v. EPA decision affirming that those powers extend to greenhouse gases. This has led to a problem, however: it was hardly realistic to regulate every single emitter of carbon in the economy. The agency realized that to do so would create problems for itself and would be a political non-starter. Congress aside, it’s unlikely even Administrator Jackson or her boss, President Obama, would find much value in a draconian permit scheme, so the EPA proposed a solution — the tailoring rule. Congress continued to push back with some legislative saber-rattling, and the EPA moderated its approach a little further by expanding the tailoring rule and delaying the permit requirement. Time will tell whether that is enough to forestall congressional action against EPA, but it appears to be sufficient for now.

This isn’t ideal, but it’s regulatory government at work. In a real way, however awkward, politicized and bureaucratic, the three branches of government have had a conversation of sorts on climate policy. A compromise seems to have been reached. Of course, new climate legislation would be much better not only because of its Schoolhouse Rock clarity but because of the superior policy mechanisms that Congress has the power to implement.

* This is because the rules apply to model-year 2012 cars and trucks. A 2010 rule applies in 2011 to 2012 vehicles. Only in Washington…