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As Legal Fight Looms, EPA Shields Small Carbon Emitters As Legal Fight Looms, EPA Shields Small Carbon Emitters

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As Legal Fight Looms, EPA Shields Small Carbon Emitters

The Obama administration on Monday reaffirmed its plans to control greenhouse-gas emissions from new power plants and new oil refineries but not smaller polluters such as restaurants and farms.

The announcement was not surprising, but its timing seemed deliberate: It came one day before the administration’s authority to regulate emissions that contribute to climate change is challenged in federal court.


The Environmental Protection Agency said in a notice published on its website that it will not—for now, anyway—increase the number of sources it regulates under its so-called “tailoring rule.” This rule, which EPA finalized last year, allows the agency to start controlling greenhouse-gas emissions under the Clean Air Act from the largest sources first and, potentially, phase in rules for small emitters later on. Stationary sources emit greenhouse gases at much higher levels than other traditional pollutants like mercury. In order to avoid regulating nearly all stationary sources, EPA drafted the tailoring rule.

The EPA is expected to propose draft rules controlling carbon emissions from new power plants in the coming weeks. Timing of similar rules for new oil refineries is less certain. The agency has said tht regulations to control greenhouse gases from existing power plants and refineries are still in the early draft stages.

Agency officials have continually said they won’t consider regulating smaller polluters until at least 2016. But Congress and courts have historically interpreted the Clean Air Act to impose strict threshold limits on traditional air pollutants, so the law would not allow for a phased-in approach based on the size of emission sources.


EPA said in its notice on Monday that if the agency were to regulate carbon-emitting sources under the same levels that apply for other pollutants, it “would bring so many sources into the programs as to overwhelm the capabilities of state permitting authorities to issue permits and potentially impede the ability of sources to construct or modify their facilities.”

That unmanageable result is the crux of the argument put forth by lawyers representing roughly a dozen organizations, companies, and states that are challenging EPA’s tailoring rule in a federal Appeals Court this week. The legal challenge against the tailoring rule is one of four regulatory issues to be reviewed by a three-judge panel during two days of oral arguments beginning on Tuesday. A decision is expected by the summer.

Legal experts generally agree that EPA is most vulnerable on its tailoring rule and on more solid ground with its other three rules, including its “endangerment finding” in 2009 that opened the door to EPA regulation of greenhouse gases.

“If I were a betting man, I would say that EPA loses on [the tailoring rule], in part, because two of the three judges have in the past chastised EPA for not following the clear language in the rule,” said Jeff Holmstead, a lawyer for Bracewell & Giuliani, which represents coal companies such as Duke Energy and Southern Company.


John Cruden, president of the Environmental Law Institute, said that the legal fight over EPA’s tailoring rule is the most interesting—and challenging.

“I still think EPA will prevail on that, but this is going to be the heart of that case: The statutory language versus the sources that EPA is actually regulating,” said Cruden, a former deputy attorney general in the Justice Department’s Environment and Natural Resources Division.

If the court strikes down EPA's tailoring rule but leaves in place the other three rules, it would essentially force Washington policymakers to act, because it would put EPA in the court-ordered position of regulating virtually every stationary source in the country that emits even small levels of carbon emissions. That’s a situation no one—especially the plaintiffs suing EPA—wants.

Indeed, some legal experts say that the industry litigants are seeking to overturn EPA’s tailoring rule just to create regulatory chaos that would force Congress to act in place of EPA. Legally, that strategy is suspect. Cruden and environmental lawyers supporting EPA say that the plaintiffs must show how they have legal standing—in other words, that EPA’s tailoring rule is detrimental to them.

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