March 01, 2013

Regulation of air pollutants in the Obama administration

Patricia Ross McCubbin

During President Barack Obama’s first term, the U.S. Environmental Protection Agency (EPA) dedicated much of its effort to regulating air pollutants. Of all the major environmental rules promulgated from 2009 to 2012, more than 60 percent were adopted under just one statute, the Clean Air Act (CAA), according to the Congressional Research Service. In a sharp departure from the Bush administration, many of those regulations addressed greenhouse gases (GHGs). Yet while the Obama administration’s work on climate change may have generated the most media coverage, EPA also promulgated many other important rules that addressed more traditional “criteria” pollutants, like ozone and fine particles, or hazardous air pollutants (HAPs), such as mercury and arsenic.

EPA’s regulatory initiatives under the CAA were quite controversial. Operators of coal-fired power plants, for example, felt their facilities were under attack, asserting that the agency imposed costly requirements on the industry unjustified by the science or the law. More generally, critics argued the many requirements imposed by EPA, covering broad swaths of the American economy, were hampering the nation’s recovery from the recession. Indeed, House Republicans included seven air programs in a list of the “top 10 job-destroying regulations” from the federal bureaucracy, and they repeatedly introduced measures to block EPA’s rules.

Supporters, on the other hand, contended the Obama administration was simply complying with statutory mandates and court-ordered deadlines. Although many states and environmental organizations praised EPA’s work, some complained the agency and the president were not doing enough to protect air quality. Thus, from both ends of the political spectrum, EPA’s extensive air regulatory program spurred debate.

HAPs

EPA was very active on HAPs, adopting standards under CAA section 112 for everything from the production of polymers and resins, to steel pickling facilities and asphalt processing plants, along with many other industrial sectors. Some of the agency’s most controversial rules, however, addressed new and existing sources in three major industries: Portland cement manufacturing, industrial boilers, and power plants. In all three actions EPA was criticized for what industry representatives dubbed the “FrankenMACT” approach, in which the agency ostensibly cobbled together pollutant limits that reflected the “maximum achievable control technology” (MACT) at many different facilities to create a set of requirements that no single regulated plant could meet. Rather than this pollutant-by-pollutant approach, the industry believed that EPA should have identified MACT on a source-by-source basis. See, e.g., National Association of Manufacturers, Comments on National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers, 7 (Feb. 21, 2012). Environmental advocates, on the other hand, argued these latest rules were entirely consistent with EPA’s long-standing methodology for setting MACT standards.

After initially promulgating the three regulations, EPA reopened them for further consideration, either per a court order or its own choice. For the Portland cement standards, the U.S. Court of Appeals for the D.C. Circuit remanded the regulation for further consideration because EPA improperly used data from both cement kilns and solid waste incinerators in setting the MACT limits. For industrial boilers, EPA announced the reconsideration at the very moment it issued the MACT standards. The agency needed additional time to address more than a dozen issues that could not be resolved before EPA had to release the rule to meet a court-ordered deadline. Finally, as to power plants, after receiving petitions for administrative reconsideration, EPA agreed to reopen a few “technical” issues for new sources, including how to measure compliance with the mercury limits.

EPA issued the reconsidered requirements for Portland cement plants and industrial boilers in December 2012. It expects to issue the revised mercury standards for new power plants in March 2013. None of the new regulations changed the agency’s controversial practice of setting limits pollutant-by-pollutant, rather than source-by-source. That key issue—and many others on these HAP rules—will now be litigated before the D.C. Circuit.

Criteria pollutants

The Obama EPA also took significant action on national ambient air quality standards (NAAQS) for criteria pollutants under CAA section 109. It adopted more stringent “primary” NAAQS, designed to protect human health, for nitrogen dioxide (NO2) and sulfur dioxide (SO2). The nitrogen dioxide rule was upheld by the D.C. Circuit, and in a separate opinion the circuit court upheld the sulfur dioxide rule. The agency also initially proposed new “secondary” NAAQS for NO2 and SO2 designed to avoid harms to the ecosystem but later reversed course, prompting lawsuits from environmentalists. In addition, EPA chose to retain the existing NAAQS for carbon monoxide and coarse particles. For fine particles, the agency issued more stringent primary NAAQS in December 2012 that likely will be challenged in the D.C. Circuit.

Perhaps the biggest NAAQS story, however, is not the rules EPA finalized, but the agency’s proposed ozone NAAQS that eventually succumbed to political opposition. After the new administration announced in March 2009 that EPA would reevaluate the ozone standard put forth under President Bush, the agency spent months reassessing all the data and eventually proposed a stricter standard. Critics in the regulated community and in Congress used EPA’s own data to highlight the regulation’s enormous compliance costs. On September 2, 2011, after political pressure continued to mount, President Obama asked EPA to withdraw the proposal, greatly disappointing his environmental supporters. All sides will now be watching closely as the agency moves forward with a revised proposal, expected in late 2013.

Separately, the Obama administration and its allies suffered a significant defeat when EPA’s Cross-State Air Pollution Rule (CSAPR) was struck down by the D.C. Circuit. That regulation was designed to help downwind states in the eastern United States comply with the NAAQS for ozone and fine particles by limiting upwind emissions of SO2 and nitrogen oxides (NOx) from power plants. See M. Campbell & B. Kilpatrick, The Cross-State Air Pollution Rule and EPA’s Rush to Regulate, 43 Trends (Section of Env’t, Energy, & Res., Am. Bar Ass’n), No. 3, Jan./Feb. 2012. CSAPR was an attempt to replace the Bush-era Clean Air Interstate Rule (CAIR), which itself was remanded (but not vacated) by the D.C. Circuit, and so now EPA must work even more carefully to comply with the court’s various opinions on the difficult issue of interstate air pollution.

GHGs

GHGs, of course, represent one of the major areas of controversy for the Obama administration. Many of the developments over the last four years are well summarized in recent Trends articles and so will not be repeated here. See, e.g., M. Gerrard, D.C. Circuit Clears Path for GHG Rules, but Politics Remain, 44 Trends (Section of Env’t, Energy, & Res., Am. Bar Ass’n), No. 2, Nov./Dec. 2012. Highlighted here are two particular rulemakings from 2012 that are receiving great scrutiny, in part, because of their implications for future regulations.

The first is EPA’s proposal for “new source performance standards” (NSPS), under CAA section 111(b), for GHGs from new power plants burning fossil fuels. This highly contentious proposal received nearly three million comments during the public review period. The utility industry believes the rule will effectively ban the construction of new coal– and oil-fired power plants, because the agency set a GHG limit that can only be met by burning natural gas or using carbon capture and sequestration techniques that, in the industry’s view, are costly and unproven. EPA and its allies, on the other hand, believe the standards simply reflect current market conditions, in which natural gas is far cheaper than other fuels so that operators are choosing—even without the NSPS—to build only new power plants fueled with natural gas. The rule is important for both sides not only in its own right, but because it will trigger EPA’s obligation under CAA section 111(d) to adopt emission guidelines for existing power plants, which by far represent a greater source of GHGs than new plants. Hence, utilities are fighting vigorously to defeat the NSPS—even bringing legal challenges before it is final—and environmentalists will fight just as hard to protect what they view as a key to GHG policy over the coming decade.

The second rulemaking does not directly regulate GHGs and, indeed, that is one of its criticisms. For the first time, EPA issued an NSPS for hydraulic fracturing operations at new natural gas wells. While environmental advocates supported that initial step, some sued the agency for failing to directly regulate methane emissions—a powerful GHG—and instead relying on the restrictions on volatile organic compounds (VOCs) to reduce methane emissions as a co-benefit. Here, too, the real battle is about GHG emission guidelines for existing sources, because directly regulating methane from new wells would trigger EPA’s obligation to do so for existing wells also.

Air priorities in the future

In the coming years, EPA will not only be defending its recent final rules but also moving forward with new rules (and new fodder for litigation) in the pending matters noted above, including the MACT limit on mercury from power plants, a response to the CSAPR vacatur, and a revised NAAQS for ozone. The agency must also finalize the NSPS for GHGs from new power plants and consider emissions guidelines for existing plants.

The environmental community is anxious to see developments on other fronts as well. For example, EPA missed a December 2011 deadline for regulating GHG emissions at petroleum refineries, and the agency is separately considering revisions to the refinery limits for criteria pollutants and HAPs. Also of high priority for environmentalists are the “tier 3” emission standards for light duty vehicles, which would require auto manufacturers to further reduce tailpipe emissions of NOx, VOCs, and other common pollutants. To help car manufacturers comply, EPA is also expected to require oil refineries to reduce the sulfur content in gasoline.

Over the longer term, some states and environmental groups hope EPA will consider two related, overarching issues on GHGs. The first is how to coordinate federal requirements—especially for existing facilities—with state programs that already regulate GHGs in California, the Northeast states, and elsewhere. The second issue is how, if at all, EPA could create a nationwide GHG trading scheme that involves multiple industrial sectors, when its authority under the CAA may extend at most to intra-sector trading. See D. van der Vaart & J. Evans, GHG Regulation: The Siren Song of Cap-and- Trade, 43 Trends (Section of Env’t, Energy, & Res., Am. Bar Ass’n), No. 5 (May/June 2012). Some argue that EPA might be able to facilitate a national trading program if it promulgated a NAAQS for GHGs. In fact, one advocacy group, the Center for Biological Diversity, petitioned the agency in December 2009 for just such a NAAQS, but to date EPA has not responded.

In sum, EPA already has many important CAA items on its agenda for President Obama’s second term, and the number of air issues will only increase as time goes on.

Patricia Ross McCubbin

Trish McCubbin is a professor at the Southern Illinois University School of Law.