Carbon Emissions Regulations: A Hemline Debate?

No tinkering with the “tailoring” rule — the policy designed to exempt small emitters from new requirements for reducing greenhouse gas emissions.

The Environmental Protection Agency’s tailoring rule may seem fairly obscure, but it is central to the debate about proposed regulations on the emissions of carbon dioxide (CO2) and other heat-trapping gases. And it was front and center recently in both a hearing in the House of Representatives and a federal appeals court ruling.

A Closer Look at the Tailoring Rule

Our story of tailoring begins in 2007 with the Supreme Court’s Massachusetts vs. EPA ruling, which essentially compelled EPA to regulate emissions of heat-trapping gases (e.g., carbon dioxide) under its authority in the Clean Air Act to control air pollution to protect human health and welfare. While Lisa Jackson, the EPA administrator, stated a clear preference that new legislation rather than the Clean Air Act address climate change, the agency was left with no choice but to proceed when Congress failed to pass a climate change bill.

Of the two major types of CO2 emissions in the United States, emissions from mobile sources (such as cars and trucks and the like) are a bit easier to reduce because of a successful track record for doing so: EPA has proposed to limit CO2 emissions by ramping up the fuel economy standards on vehicles.

In the case of emissions from so-called point sources (such as power plants), it’s a little more complicated. The Clean Air Act requires that facilities that emit more than 100–250 tons of criteria pollutants per year must be regulated. Now, for traditional pollutants like nitrogen oxides or sulfur dioxide or lead, a 250-ton threshold makes sense. But not in the case of carbon dioxide where emissions of any import to the atmosphere are orders of magnitude larger.

And so EPA devised the tailoring rule [pdf]: only point sources that emit more than 75,000–100,000 tons of CO2 per year will initially be subject to regulations, leaving “small sources,” those emitting less than 50,000 tons per year, exempt for the next six years — which, says Administrator Jackson, “should be more than enough time for Congress to pass a law with permanent exemptions” for small, inconsequential sources. As reported by Greenwire, without the tailoring rule some 6 million facilities would be required to get permits to operate; with the rule the total number is about 14,000.

A Battleground with an Odd Alignment

There’s a world of difference between 6 million and 14,000 — it’s arguably the difference between a workable and unworkable regulation. And for that reason, the tailoring rule has become a battleground for those in support of and those opposed to action on climate change.

In principle you might expect environmental groups to oppose the tailoring rule, since it relaxes controls on certain emissions, and industrial groups to favor it for the same reason. Not so. Environmental groups, including some who initially opposed the rule, are now supporting it. As reported by Greenwire, the Sierra Club, Environmental Defense Fund, Natural Resources Defense Council et al have reasoned that “a phased approach allows the agency to begin regulating the largest sources of [greenhouse gas] GHG emissions as soon as possible while collecting more information about emissions from various categories of smaller sized stationary sources.”

On the other hand a number of industry and right-leaning groups along with nine states have called the rule “unconstitutional,” arguing in a lawsuit [pdf] brought against EPA that it “amounts to a unilateral rewriting of the Clean Air Act” and that “it must be vacated as a violation of the act.”

Were the tailoring rule to be overturned, it would put EPA, indeed the whole country, in the awkward position of either deciding to not go forward with CO2 regulations —- an action that would be in violation of U.S. law, according to the nation’s highest court — or proceed with regulations, something that in
the words of Senator James Inhofe (R-OK) “will destroy thousands of jobs and punish small businesses all across the country.”

A World With No Tailoring

Seems if you were worried about the economy and jobs you’d do everything in your power to preserve the tailoring rule. And yet I had the distinct impression
at a recent House hearing that those who professed an overriding concern for the economy looked forward to seeing the tailoring rule nixed.

The subject of the hearing was EPA’s proposed regulations on CO2, and among the witnesses called by the Republican members on the Energy and Commerce Subcommittee on Energy and Power were Carl T. Shaffer, president of the Pennsylvania Farm Bureau, and Robb MacKie, president and CEO of the American Bakers Association — odd bedfellows at first blush, as the regulations in question would not affect their industries. But once they testified, it became clear why they were there: to provide a “what if” scenario. Without the tailoring rule, both testified, the businesses they represent — dairy farms, ranches, and bakers — would be put out of business.

Most of the subcommittee’s Republicans seemed to relish this scenario, asking repeated questions about its consequences as if it were reality and prima facie evidence that EPA must be stopped.

To his credit, Representative Joe Barton (R-TX) pointed out that one sensible solution to the problem was for Congress to get about the business of simply amending the Clean Air Act to exempt or raise the threshold of emissions for regulations in the case of CO2. Alternatively, he argued, “if we don’t have the votes to do that, we should at least give some guidance in statute to what the standard should be based on greenhouse gases.” Fixing the problem through legislation, exactly the approach that’s been suggested by Administrator Jackson — how’s that for more strange bedfellows?

Tailoring Rule Not Cut Up by Courts Yet

So it seems that a key argument against EPA’s proposed rules in carbon emissions is the certainty that courts will find the tailoring rule unconstitutional. Such a finding would make EPA’s regulations highly problematic. But is such a finding that certain?

A week after the House hearing, the U.S. Circuit Court of Appeals for the District of Columbia weighed in on the four rules that form the basis of EPA’s authority to regulate greenhouse gases, the tailoring rule included, finding that EPA’s approach in responding to the 2007 Supreme Court decision has been
“unambiguously correct.”

With regard to the states’ challenge to the tailoring rule as well as the timetable for enforcement of the regulation, the court said the plaintiffs lacked standing.

And so for now at least, EPA’s basis for regulating greenhouse gases, as well as its tailoring rule for exempting small sources, will soldier on without a tinker in sight.

Correction 7/2/2012

This post was updated to correct the state that Rep. Joe Barton represents.

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