• EPA Carbon Dioxide Rules on the Move
  • August 31, 2009 | Authors: Peter S. Glaser; Carroll "Mack" W. McGuffey
  • Law Firms: Troutman Sanders LLP - Washington Office; Troutman Sanders LLP - Atlanta Office
  • The U.S. Environmental Protection Agency has completed draft rules for imposing the first-ever greenhouse gas regulations under the Clean Air Act and has submitted those rules to the White House Office of Management and Budget for review.  The proposed rules would set greenhouse gas emission standards for new motor vehicles and would be issued jointly with rules by the Department of Transportation imposing new vehicle fuel economy standards, known as CAFE (corporate average fuel economy) standards.  The rules implement a deal struck between the Obama Administration, the state of California, environmental parties and the major U.S. automakers and announced at a Rose Garden press conference on May 19, 2009.  The OMB review precedes formal issuance of the proposed rule and could take several weeks or possibly longer to complete. 

    The proposed rules would apply beginning with model year 2012 vehicles and, by model year 2016, would require all new cars and light trucks to achieve an average of 35.5 miles per gallon, a much more stringent goal than the 35 mpg by 2020 target established by law in 2007.  In addition, EPA’s portion of the draft rules would require automakers to ensure their vehicles do not exceed 250 grams of greenhouse gas emissions per mile by model year 2016.  In reality, EPA’s portion of the draft rules largely duplicate DOT’s, since achieving the greenhouse gas standard predominately involves improving vehicle fuel economy.

    Before EPA can impose its proposed emissions standards, however, it must finalize its pending “endangerment finding” for automobiles – essentially a determination that the greenhouse gas emissions from automobiles have the potential to endanger human health and welfare.  Without a final “endangerment finding,” EPA will not have the authority to regulate greenhouse gases under the Clean Air Act.  EPA must also move quickly because new CAFE standards must be on the books for at least 18 months prior to the applicable model year to allow automakers time to prepare for compliance.  Since model year 2012 begins on October 11, 2011, it is assumed that EPA and DOT will finalize their joint regulations by March 31, 2010.  Although the endangerment finding must be finalized by that time, it is possible that EPA will do so more quickly, perhaps this year.

    EPA’s proposed regulations, when finalized, will affect much more than the automobile industry.  The regulation of greenhouse gases under any provision of the Clean Air Act will automatically trigger air quality permit requirements for both large and small emitters of greenhouse gases.  Fossil fuel electric generators and other large industrial facilities will definitely be affected, as will, at least potentially, hundreds of thousands of smaller emitters as well.

    Although the automobile regulations will be the first EPA regulations for greenhouse gases, they will not be the last.  EPA finalization of the endangerment finding will open the door to EPA regulations in other sectors.  Almost certainly, the next proposed greenhouse gas regulations will be performance standards for coal-fired generators and other large industrial sources. 

    The prospect of EPA regulation of greenhouse gases has been used as a lever by the Administration and supporters of cap-and-trade legislation in Congress to induce industry to negotiate a bill.  The fact that EPA is now proceeding with proposed regulations will not be lost in the congressional debate.