Magazine | December 31, 2009, Issue

Air Power

In which the EPA mistakes itself for Congress

While on the surface it seems to be a simple matter of environmental policy, the finding by the Environmental Protection Agency that greenhouse gases endanger human health and welfare actually represents a massive power grab by the Obama administration. Not only does it give the EPA a radically expanded role in permitting and licensing economic activity, but the way in which it was arrived at shows that this president is not concerned about constitutional niceties such as the separation of powers. If Congress lets him get away with it, President Obama will have a significant precedent for expanding the powers of his office. On the other hand, the whole thing could blow up in his face and cripple the economy, putting millions out of work. This power grab therefore represents a gamble by Obama, possibly one as important for his presidency as President Bush’s invasion of Iraq was for his.

The “endangerment finding” comes under the terms of the Clean Air Act, which empowers the EPA to regulate any “pollutant” that it finds endangers human health and welfare. The act lays down extremely complicated rules for how these pollutants are to be controlled, but they are for the most part appropriate for those substances that are generally regarded as pollutants. Carbon dioxide, however, the main greenhouse gas covered by the endangerment finding, is a slightly different kettle of fish. It is an essential component of the atmosphere and is present in much higher concentrations than other “pollutants.” Regulating CO2 emissions through the Clean Air Act would constitute a radical expansion of the act’s scope.

This problem was at the heart of discussions in 2006 during the Supreme Court’s hearings in the case Massachusetts v. EPA, in which the plaintiffs argued that the EPA needed to come to a judgment over whether CO2 was a pollutant under the Clean Air Act. Attorney Peter Glaser, the U.S. Chamber of Commerce, the Competitive Enterprise Institute, and a host of other free-market advocates warned repeatedly that EPA regulation of greenhouse emissions from new motor vehicles — the immediate policy objective of the plaintiffs in Massachusetts v. EPA — would have the following consequences:

• CO2 would automatically become an air pollutant “subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) permitting rules, which cover new construction, and under its Title V permitting rules, which cover existing operations.

• Millions of previously unregulated entities — big-box stores, enclosed malls, hotels, hospitals, apartment complexes, mid-sized office buildings, even commercial kitchens — would be vulnerable to new controls, paperwork, penalties, and litigation, because the Clean Air Act’s threshold for requiring action is very low when it comes to CO2.

• The volume of permit applications would create an administrative quagmire for the EPA and state agencies.

• 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.

This argument concluded that the Clean Air Act, a product of the early Seventies, could not plausibly have been considered by Congress an appropriate vehicle for the regulation of substances like carbon dioxide. These objections were called, variously, a “bugaboo,” a “red herring,” and a “pure scare tactic” by proponents of regulation such as David Bookbinder, chief climate counsel for the Sierra Club.

After the Supreme Court found for the plaintiffs, it was obvious that the EPA was going to issue an endangerment finding. The Bush administration punted its decision into 2009 by issuing an “Advance Notice of Proposed Rulemaking,” but the EPA by its very nature was never going to do other than find greenhouse gases a threat.

At this point, however, the EPA was forced to consider the reality of the “bugaboo” objections. The plain words of the Clean Air Act say that thresholds above which emitters must obtain permits should be 250 tons per year under PSD, and, under Title V, 100 tons per year. Anything that is larger than a mansion and possesses a furnace will tend to breach these thresholds in terms of carbon-dioxide emissions.

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 2007, each permit on average cost $125,120 and took 866 man-hours for an applicant to obtain. (Those applications in turn cost the EPA or a state agency $23,280 and 301 man-hours to process, the EPA estimates.) No small business could operate subject to the PSD administrative burden.

An even larger number of entities could be swept into the Title V operating-permits program. This defines as “major” any emission source with a potential to emit 100 tons per year of a Clean Air Act–regulated pollutant. Title V permits typically do not impose new obligations on sources, because the program’s purpose is to facilitate compliance with other CAA provisions. Most of the entities potentially subject to Title V for CO2, however, have no other CAA obligations. They would be filling out pointless paperwork. For their sins, they’d also have to pay emission fees (the going rate is $43.30 per ton) for CO2 emissions in excess of 100 tons.

The EPA now recognizes the problems that regulating CO2 under the Clean Air Act involves. It admits:

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 greater than their current administrative resources could accommodate . . . [because] . . . 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 [sic] six million sources — currently, their Title V inventory is some 15,000 sources.

In order to get around this problem, the EPA took upon itself the powers of the legislature. The above quotations come from a draft “tailoring rule” that effectively amends the Clean Air Act for greenhouse gases so that the EPA has to deal only with facilities emitting more than 250,000 tons of CO2 per year.

How does the EPA justify its usurpation of the legislature’s privilege to amend legislation? It argues that the literal reading of the Clean Air Act in this case is “absurd,” because it would be “inconsistent” with “congressional intent” and would “undermine congressional purposes” (p. 19 of the draft tailoring rule). In other words, the EPA will alter Congress’s expressed intentions for the purpose of not undermining Congress’s intentions. This is, to put it mildly, a questionable rationale. So why does the EPA think it can get away with it?

This is the president’s gamble. He is assuming that no one will sue to have such action enforced: No sensible trade association, for instance, is going to sue to have the literal meaning of the Clean Air Act inflicted on its members. The president simply assumes he is going to brazen it out.

Nor are his supporters in the mainstream environmental groups going to cause trouble, at least not yet. They have been waiting for years for the EPA to get its foot in the door to  carbon-dioxide regulation, and pushing too hard could be counterproductive at this stage. In fact, the president and the environmental groups may well be using the endangerment finding to put pressure on Congress to enact a potentially less damaging measure that will supersede the Clean Air Act in regulating greenhouse gases. That way, they can have their cake and eat it too. The EPA finding also must have looked good at the gathering of the world’s environmental elite in Copenhagen.

So, from Obama’s point of view, the endangerment finding appears to be all upside. This analysis, however, ignores the presence of a radical environmental fringe that would be only too happy to see the Clean Air Act enforced as it stands. The Center for Biological Diversity (CBD) and the climate crusaders at 350.org have petitioned the EPA to establish National Ambient Air Quality Standards (NAAQS) limiting atmospheric carbon dioxide to 350 parts per million. The CBD is the group that successfully petitioned to have the thriving polar bear added to the endangered-species list on the grounds of supposed threats from melting ice.

CO2 concentrations currently stand at around 387 parts per million (ppm). Not even a global economic depression sustained over many decades would be enough to stabilize atmospheric CO2 levels at 350 ppm. For example, even if the world’s governments could somehow reduce global CO2 emissions to their level in 1957 — when the world’s economy was less than one-third its present size — and then hold them constant for the next nine decades, global concentrations would still increase to 455 ppm by 2100.

None of this matters to groups like CBD and 350.org, of course. Nor to the EPA: Indeed, under long-established precedent, it is forbidden to consider economic consequences when making a NAAQS rule. What is most interesting about the environmentalists’ petition is that an endangerment finding such as the one the EPA recently made could also trigger the much more restrictive NAAQS rules. This is the real sword of Damocles that the endangerment finding has set hanging above us.

As its stands, the EPA’s endangerment finding is a triple threat. It is an expression of the administration’s contempt for the Constitution, an act of legislative thuggery, and an economic suicide note, all in one package. The best response would not be to pass a watered-down version like the Waxman-Markey bill that squeaked through the House last summer, but to repudiate the administration directly by passing a bill like Rep. Marsha Blackburn’s H.R. 391, which exempts greenhouse gases from regulation under the Clean Air Act. Otherwise, the president’s gamble will lead to devastating losses for the rest of us.

– Mr. Murray is vice president for strategy at the Competitive Enterprise Institute and author of The Really Inconvenient Truths.

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