This post was also written by Larry Demase, Jennifer Smokelin, and David Wagner.

In the weeks that have passed since our previous article on climate change activity in Congress and the Environmental Protection Agency, it has become evident that Washington is more likely to see a snowstorm this summer than congressional passage of a cap-and-trade measure for greenhouse gas emissions. Passage was never considered to be easy – something we noted in our previous alert. For example, the House of Representatives passed climate legislation in 2009 (H.R. 2454, sponsored by Congressmen Waxman (D-CA-30) and Markey (D-MA-7), but by only a six-vote margin. Still, the 2009 legislation, combined with the impact of the Gulf of Mexico Oil Spill, indicated to some that there was some momentum for a bill passing the Senate and reaching the President this year. But that momentum ran smack into the 60-vote requirement in the Senate, which all measures must clear before receiving a final vote. And the 60 votes were just not there – not for the Waxman-Markey measure or for the industry-specific compromise floated by Senators Kerry (D-MA) and Lieberman (I-CT) during the end of negotiations. It remains possible that the Senate could still take up a cap-and-trade measure, either when it meets from September 13 through October 8 or during its “lame-duck” session, set to begin November 15. But we would not recommend anyone holding their breath.

While action on cap-and-trade in the 111th Congress fizzled in the Senate, EPA has continued on its course of regulating greenhouse gas (GHG) emissions.  As reported in Reed Smith’s Environmental Law Resource blog, in response to EPA’s “Endangerment Finding,” a number of petitions for reconsideration were filed by various industry and special interest groups. These petitions challenge the validity of EPA conclusions that global warming is currently at an all-time high and assert that other geologic periods – e.g., the Medieval Warm Period and the Holocene period – were in fact warmer than present.  Specifically, the groups challenge data supporting reconstruction of historical earth temperatures and assert that certain e-mails involving scientists at the Climate Research Unit of the University of East Anglia in the United Kingdom demonstrate a deliberate and inappropriate manipulation of the data.  The petitioners also challenge the process by which EPA developed the scientific support for the Endangerment Finding; that is, they are claiming that EPA did not independently judge the underlying science and thus did not convene a truly independent external peer review.  Petitioners also claim EPA violated the Information Quality Act by failing to post the underlying data and scientific studies in the docket.  Finally, the petitioners assert that new scientific studies refute evidence supporting the Endangerment Finding.

On July 29, 2010, EPA denied all of the petitions for reconsideration and found, inter alia, that there were no significant errors in the Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report, and that there was no conspiracy to manipulate the data. EPA also rejected the claim by petitioners that new scientific studies refuted evidence supporting the Endangerment Finding. The court challenges to the Endangerment Finding can now proceed. These challenges, however, are not as likely to be successful as the challenges to the Tailoring Rule, discussed next.

There are significant challenges to the Tailoring Rule, EPA’s rule that “tailors” permitting programs to limit the number of facilities that would be required to obtain New Source Review and Title V operating permits based on their greenhouse gas emissions. If there is a chink in EPA’s armor, it rests in these challenges. The crux of these challenges focus on the threshold and timing determination in the final Tailoring Rule, in which EPA sets a threshold of regulation at 75,000 tons GHGs. This effectively leaves major industrial sources under that threshold unregulated until at least 2016, and perhaps beyond. In the draft regulation, EPA had proposed a 25,000-ton GHG threshold. Challengers to the Tailoring Rule argue that this switch from 25,000 to 75,000 tons is arbitrary and capricious with no scientific basis in the record to support it. And they may be right. Last week, 20 of the lawsuits against EPA’s tailoring rule were consolidated by the U.S. Court of Appeals for the District of Columbia Circuit. The case’s court date has not yet been set.

On the regulatory front, EPA continues to press its authority under the Endangerment Finding. Following up on its Tailoring Rule, on August 12, 2010, EPA proposed two rules regarding GHG emission permitting under the Clean Air Act . In the first rule, EPA proposed to require permitting authorities in 13 states to make changes in their implementation plans to ensure that GHG emissions will be covered. Other states are to inform EPA if their existing permitting authority does not allow them to address GHG emissions. In the second rule, EPA is proposing a federal implementation plan that would allow EPA to issue permits for covered GHG sources located in states not able to develop and submit revisions to their implementation plans before the Tailoring Rule becomes effective. Neither of the rules has been published in the Federal Register yet. Once they are published, EPA will schedule a public hearing on the federal implementation plan rule likely in Arlington, Va., in September.

This summer, EPA also issued its proposed “Transport Rule” to provide for the attainment and maintenance of the 1997 and 2006 fine particulate matter National Ambient Air Quality Standards and the 1997 ozone NAAQS. While targeting only reductions in emissions of NOx and SO2 transported between the states, many believe this rule will have a dramatic impact on the viability of coal-fired electric generating capacity in the eastern United States.  The Transport Rule is discussed in more detail at the Environmental Law Resource.

Finally, the Obama Administration is also considering a variety of actions it can take without Congress. In a report entitled, “Plan B: Near Term Presidential Actions for Energy and Environmental Leadership,” the Presidential Climate Action Project concluded that President Obama could implement the following ideas prior to the United Nations 16th Conference of the Parties in Cancun:

  • Work with states and local governments to create a national roadmap to the clean energy economy
  • Declare war on energy waste
  • Begin reinventing national transportation policy
  • Eliminate fossil energy subsidies under the Administration’s control
  • Establish ecosystem restoration as a climate action strategy