EPA Greenhouse Gas Regulation FAQ

Does EPA have legal authority to regulate greenhouse gas emissions?
EPA’s authority to regulate greenhouse gas emissions through the Clean Air Act (the Act) was clarified in the U.S. Supreme Court decision in Massachusetts v. EPA (2007). The decision was a result of 12 states in 1999 petitioning EPA to regulate greenhouse gases from new motor vehicles. The Supreme Court ruled that greenhouse gases meet the definition of air pollutants under the existing Clean Air Act and must be regulated if these gases could be reasonably anticipated to endanger public health or welfare. Responding to the Court’s ruling, EPA finalized an endangerment finding in December 2009. Based on overwhelming scientific evidence it found that six greenhouse gases constitute a threat to public health and welfare. Thus, it is the Supreme Court’s interpretation of the existing Act and EPA’s assessment of the scientific evidence that form the basis for EPA’s regulatory actions. EPA adopted greenhouse gas emission standards for new cars and light-duty vehicles in April 2010.

How do greenhouse gas motor vehicle regulations affect regulation of stationary sources?
Once any substance becomes a regulated pollutant under the Clean Air Act, then certain other provisions under the Act automatically kick in. Greenhouse gases first became regulated under the Act with EPA’s rule setting new standards for light-duty vehicles. Since the light-duty vehicle rule began regulating mobile sources on January 2, 2011, that date also triggered the requirement that major new or modified stationary sources with greenhouse gas emissions automatically be subject to new source review.

Shouldn’t regulation of greenhouse gases be done by Congress and not by EPA?
Based on the Supreme Court’s decision and EPA’s assessment of scientific evidence concerning the risks of climate change, the agency has a legal obligation to regulate greenhouse gases under the Clean Air Act. It began regulating greenhouse gases in 2009 with greenhouse gas standards for cars and light-duty vehicles. It has also issued guidance for states to use in deciding what to require as “best available control technology” (BACT) from the largest new sources and major modifications of existing sources. In the absence of Congressional action to pass new climate legislation, the existing Clean Air Act provides a statutory framework under which EPA must begin to regulate the largest sources of greenhouse gases. These regulations will begin to provide at least some degree of investment certainty for new and existing sources.

Would EPA regulations affect small sources, such as office buildings or small businesses?
No. EPA’s greenhouse gas regulations of sources will not impact small stationary sources. To ensure this, EPA issued the “tailoring rule,” which raises the emission thresholds for what would qualify as a major new source or modification and therefore be subject to regulation for greenhouse gases. Under the Clean Air Act, major new or modified stationary sources are required to get air permits if they emit more than 100 or250 tons per year (depending on the type of source) of a regulated pollutant. However, applying such a threshold to greenhouse gases would greatly increase the number of facilities covered and the cost of these regulations. As a result, EPA’s tailoring rule substantially increases the size of the thresholds in the Act for greenhouse gases specifically, with the goal that only the largest sources would be subject to new source review requirements.

What is the scope of EPA’s new source permitting requirements?
Unmodified existing sources are not covered by these regulations. Only major new sources or major modifications to an existing source are covered. Under the first phase of EPA’s tailoring rule, which started January 2, 2011, permitting requirements for greenhouse gas emissions applied to only new sources that must obtain an air permit anyway based on their emission of other pollutants and will emit at least 75,000 tons per year of greenhouse gas emissions. In the second phase of the rule, which started July 1, 2011, permit requirements apply only to new stationary sources that emit at least 100,000 tons per year of greenhouse gas emissions or to major modifications emitting more than 75,000 tons per year of greenhouse gases. EPA estimates 1,600 of the largest sources would be covered annually under this program, of which 700 sources would have been required to get new source permits for other pollutants.

How will EPA regulate greenhouse gas emissions from new or modified major stationary sources?
A key new source review requirement is the use of “best available control technologies” (BACT) to limit emissions. The use of BACT to limit emissions of regulated pollutants from facilities has been part of the Clean Air Act for decades. Generally, EPA issues BACT guidance for implementation by states on a case-by-case basis. Cost and technological feasibility are taken into consideration when determining what standards should serve as the basis for BACT. EPA issued its greenhouse gas BACT guidance for major new or modified stationary sources in November 2010. This guidance emphasizes the use of energy efficiency control technologies for making individual BACT determinations for greenhouse gases.

Will requirements for new source review delay the construction of major stationary sources?
The Clean Air Act, and permitting of stationary sources under it, is primarily implemented directly by states. In August 2009, EPA issued its review of state authority to implement this new source permitting program. The vast majority of states were ready to implement permitting by the January 2, 2011 start date. For the minority of states that need new authority or otherwise weren’t ready, EPA is using a Federal Implementation Plan to directly permit these sources. Texas was the only state that refused to revise its implementation plan or accept EPA’s role to directly permit sources on an interim basis. EPA has since taken additional steps to ensure that major new or modified facilities in Texas can get legally valid permits directly from EPA. Texas and Wyoming lost a court challenge to EPA’s authority to regulate greenhouse gas emissions in those states, leaving EPA directly responsible until adequate state plans are developed.

What is EPA doing to regulate existing sources?
EPA announced on December 23, 2010 that under Section 111 of the Clean Air Act, it will establish New Source Performance Standards (NSPS) for fossil fuel fired power plants and refineries – two of the largest sources of the nation’s greenhouse gas emissions. Much like with new source review, NSPS has been used since the 1970s for various industrial sources of air pollution that endangers public health and welfare. After a considerable delay, EPA is actively developing guidelines for states to follow as they develop standards for existing power plants. According to a schedule presented by President Obama, EPA will issue proposed guidelines on June 1, 2014, and final guidelines on June 1, 2015. States will then have until June 30, 2016, to submit plans of how they will implement EPA’s guidelines. EPA will also soon release a proposal for an NSPS for carbon dioxide emissions from new power plants. EPA has not indicated when it will develop NSPS guidelines for other source categories.

How will EPA’s greenhouse gas regulations affect our industrial competiveness?
EPA must consider costs and economic impacts when setting any emissions standards, including those related to greenhouse gas emissions. Section 111 of the Clean Air Act makes it clear that EPA must take into account technologies that have been “adequately demonstrated,” and “the cost of achieving such reduction” in determining a level for setting the level of emission standards. Concerns about compliance costs are an important consideration, but can be difficult to project at the time regulations are being prepared. For example, according to an MIT study, the actual costs of implementing the acid rain program under the Act was about 80 percent lower than originally predicted. Analysts frequently overestimate the costs in part because they do not account for the innovative compliance solutions that emerge in response to EPA regulations.