<h4><em>Under review</em></h4>
<p>Air quality in the United States is largely ensured through the federal Clean Air Act, which establishes a regulatory framework designed to prevent and curtail air pollution. The Act divides duties between the federal and state governments, and while the federal government has the ultimate authority, most of the Act is implemented by <a href="http://www.eli.org/keywords/governance#role-of-states-and-tribes">state agencies</a>.</p>
<p>This regulatory framework largely revolves around EPA setting <a href="#air-quality-standards">ambient air quality standards</a> that states must achieve. States create <a href="#state-implementation-plans">implementation plans</a> that direct efforts to maintain or attain these standards. To help reduce pollution, the Act also provides <a href="#pre-construction-review-programs">pre-construction review</a> programs and categorical (for categories of sources like power plants, refineries, etc.) <a href="#categorical-emission-standards">emissions limitations</a> for new and modified stationary sources and also provides for a single, <a href="#permits">federal air permit</a>. Finally, the Act regulates <a href="#mobile-sources">vehicles</a>, <a href="#acid-rain-program">acid rain</a>, and <a href="#stratospheric-ozone">stratospheric ozone</a> separately. Taken as a whole, the regulatory framework seeks to maximize reliance on state regulation of air pollutants that harm human health and the environment only from major sources of pollution.</p>
<blockquote>
<p>Watch or listen to and download materials from the ELI Summer School Seminar <a href="http://www.eli.org/summer-school-clean-air-1">Clean Air</a>. For a detailed discussion of the Clean Air Act and how it works, see Arnold Reitze, <a href="http://www.eli.org/eli-press-books/air-pollution-control-and-climate-ch… Pollution Control and Climate Change Mitigation Law 2d. ed.</a></p>
</blockquote>
<blockquote>
<p>ELI members can listen to and download materials from a recent ELI seminar on the Clean Air Act, <a href="http://www.eli.org/seminars/past_event.cfm?eventid=592">Recent Air Regulations: What Picture Will the Jigsaw Pieces Create?</a></p>
</blockquote>
<h2><a name="air-quality-standards"></a>Air Quality Standards</h2>
<p>The Clean Air Act charges the Environmental Protection Agency (EPA) with setting “<a href="#" title="42 U.S.C. § 7408(a)(1).">national ambient air quality standards</a>” or NAAQS for <a href="#" title="Air pollutants are “any air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive . . . substance or matter which is emitted into or otherwise enters the ambient air. Such term includes any precursors to the formation of any air pollutant…. 42 U.S.C. § 7602(g).">air pollutants</a> that are widespread, emitted by numerous sources, and harmful to human health or welfare.</p>
<p>A NAAQS is the <a href="http://www.epa.gov/air/criteria.html&quot; title="For existing NAAQS values, see www.epa.gov/air/criteria.html.">average concentration</a> of a pollutant in the outdoor air over a specified time period sufficient to ensure an absence of adverse effects on human health or <a href="#" title="Under the Clean Air Act, “welfare” includes environmental effects. See 42 U.S.C. § 7602(h).">welfare</a>. As the name implies, NAAQS are national standards: they are uniform nationwide and do not vary by region or state. Courts have <a href="#" title="See Whitman v. American Trucking Ass’ns, 531 U.S. 457 (2001).">read</a> the statute to require EPA only to consider health effects and not costs or technological feasibility of achieving limits when setting a NAAQS. Once EPA has determined that a pollutant is widespread, emitted by numerous sources, and harmful to human health or welfare, it has a nondiscretionary <a href="#" title="See NRDC v. Train, 411 F. Supp. 864, 868 (S.D.N.Y. 1976), aff’d 545 F. 2d 320 (2d Cir. 1976).">duty</a> to regulate it.</p>
<blockquote>
<p>ELI members can listen to and download materials from the ELI seminar <a href="http://www.eli.org/setting-secondary-naaqs-protect-environment">Setting Secondary NAAQS to Protect the Environment</a>.</p>
</blockquote>
<p>EPA has <a href="#" title="40 C.F.R. § 50.">determined</a> that six pollutants or classes of pollutants are so-called “<a href="http://epa.gov/air/criteria.html&quot; target="_blank">criteria pollutants</a>” for which NAAQS should be set:</p>
<ul>
<li><a href="http://epa.gov/airquality/particlepollution/&quot; target="_blank">Particulate matter</a> (dust, soot, or other particles small enough to remain suspended in the air);</li>
<li><a href="http://epa.gov/airquality/sulfurdioxide/&quot; target="_blank">Sulfur oxides</a>;</li>
<li><a href="http://epa.gov/airquality/ozonepollution/&quot; target="_blank">Ozone</a>;</li>
<li><a href="http://epa.gov/airquality/nitrogenoxides/&quot; target="_blank">Nitrogen dioxide</a>;</li>
<li><a href="http://epa.gov/airquality/carbonmonoxide/&quot; target="_blank">Carbon monoxide</a>; and</li>
<li><a href="http://epa.gov/airquality/lead/&quot; target="_blank">Lead</a>.</li>
</ul>
<p>EPA must <a href="#" title="42 U.S.C. § 7409(d).">update</a> NAAQS every five years, but political and regulatory delays and litigation often delay these mandated updates.</p>
<blockquote>
<p>For articles on NAAQS, see Ami Grace, <a href="http://elr.info/news-analysis/35/10115/clean-air-act-2005-severe-ozone-… Clean Air Act 2005 Severe Ozone Nonattainment Deadline: A Prime Opportunity to Realize the Goals of the Clean Air Act</a> and Craig Oren, <a href="http://elr.info/news-analysis/34/10687/supreme-court-forces-u-turn-fate… Supreme Court Forces a U-Turn: The Fate of <em>American Trucking</em></a></p>
</blockquote>
<h2><a name="state-implementation-plans"></a>State Implementation Plans</h2>
<p>The Clean Air Act requires all areas in the United States to meet the national ambient air quality standards. Once EPA sets a NAAQS, states then <a href="#" title="See generally 42 U.S.C. § 7407.">designate</a> areas within each state, on roughly a county basis, as either in attainment or not in attainment of the standard. Areas not in attainment are called nonattainment areas, while areas that meet the standard are called attainment areas. States must submit a plan to the EPA, called a <a href="http://epa.gov/airquality/urbanair/sipstatus/overview.html&quot; target="_blank">state implementation plan</a> or SIP, describing how nonattainment areas will come into attainment and how attainment areas will remain in compliance as the area grows and changes. The <a href="#" title="See 42 U.S.C. §§ 7502(a)(2) and 7511.">deadline</a> for NAAQS attainment is generally five years, but this can vary and is frequently not met.</p>
<p>SIP development is a complicated process. States must determine not only how much pollution is in the air at the time, but also <a href="#" title="40 C.F.R § 51.112.">project</a> the impact on emissions of economic growth in the future. It then has to use air quality models to prove that the proposed SIP actions will result in attainment and maintenance of NAAQS, taking into account future growth. SIPs can contain a variety of control and policy measures (see the EPA's <a href="http://epa.gov/airquality/urbanair/sipstatus/overview.html">SIP Status and Information</a> and <a href="http://epa.gov/air/pdfs/MenuOfControlMeasures.pdf">Menu of Control Measures</a>) to reduce and prevent air pollution, ranging from requiring new or modified facilities to meet certain emission standards to transportation planning.</p>
<p>Every time EPA issues a new or updated NAAQS, states have to submit a new SIP for EPA approval. Failure to do so can lead to <a href="#" title="See 42 U.S.C. § 7509.">sanctions</a>, such as a cut in <a href="http://www.eli.org/keywords/governance#role-of-congress">federal funding</a>. Further, EPA must also step in and develop a federal implementation program if a state fails to write an acceptable SIP.</p>
<blockquote>
<p>For a discussion of the contentious interaction between a state and EPA on air permitting issues, listen to and download materials from the ELI seminar <a href="http://www.eli.org/seminars/past_event.cfm?eventid=578">Texas Commission on Environmental Quality and EPA Air Permitting: A Way Forward</a>.</p>
</blockquote>
<p>Many of the criteria pollutants easily move from state to state, yet states cannot regulate out-of-state pollution sources. For example, some of the chronic pollution in Baltimore results from emissions in Virginia, Washington, DC, and even Midwestern states. Therefore, the Clean Air Act has so-called <a href="#" title="See, e.g., 42 U.S.C. §7410(a)(2)(D)(i)(I).">transport provisions</a> that allow state agencies and EPA to address such <a href="http://www.epa.gov/airtransport/&quot; target="_blank">pollution transport</a>.</p>
<blockquote>
<p>ELI members can listen to and download materials from a recent ELI seminar on the Clean Air Act’s transport provisions, <a href="http://www.eli.org/clean-air-transport-cross-state-air-pollution-epas-n… Clean Air Transport to Cross-State Air Pollution: EPA’s New Rule</a>.</p>
</blockquote>
<blockquote>
<p>State Implementation Plans are discussed in detail in the Law of Environmental Protection, §§12:8-12:58.</p>
</blockquote>
<h2><a name="pre-construction-review-programs"></a>Pre-Construction Review Programs</h2>
<p>In order to help states control air pollution through their SIPs, pre-construction review programs require new or modified sources of air pollutants to receive permission from the state before commencing construction.</p>
<p>The most prevalent of these programs is called <a href="http://www.epa.gov/nsr/info.html&quot; target="_blank">new source review</a> or NSR. NSR applies to new or modified sources that will create significant emissions of criteria pollutants. States must implement a procedure requiring anyone who plans to build a new major source to show prior to construction that the project complies with the SIP emissions limits and to give the public advance notice of the project.</p>
<p>New source review helps with both maintenance in attainment areas and progress towards achievement of NAAQS in polluted areas. New or modified major sources in NAAQS attainment areas must comply with the applicable emission limits designed to prevent deterioration in air quality—hence the program is known as <a href="http://www.epa.gov/nsr/psd.html&quot; target="_blank">prevention of significant deterioration</a> or PSD. Such sources in <a href="http://www.epa.gov/nsr/naa.html&quot; target="_blank">nonattainment areas</a>, on the other hand, must satisfy “offset” requirements. The specific requirements vary greatly by state, but the core requirement is the same: any proposed new or modified major source must be able to <a href="#" title="42 U.S.C. § 7503(c).">show</a> that total emissions from all sources in the region will be less than they were prior to application for a permit. The notion is that it forces a non-attainment area’s total stock of pollution producing facilities to become progressively cleaner over time, thus helping to bring the area into attainment with the NAAQS.</p>
<blockquote>
<p>New Source Review has been discussed and explained widely in these ELR articles: Rolf von Oppenfeld, <a href="http://elr.info/news-analysis/32/11091/primer-new-source-review-and-str… Primer on New Source Review and Strategies for Success</a>, Arnold Reitze, <a href="http://elr.info/news-analysis/34/10673/new-source-review-should-it-surv… Source Review: Should it Survive?</a> and Shi-Ling Hsu, <a href="http://elr.info/news-analysis/36/10095/real-problem-new-source-review">… Real Problem with New Source Review</a>.</p>
</blockquote>
<h2><a name="categorical-emission-standards"></a>Categorical Emission Standards</h2>
<p>In order to help control air pollution, EPA and the states also implement categorical emission standards to ensure that new facilities and modifications of existing facilities result in lower or acceptable levels of air pollution.</p>
<p>The <a href="http://www.epa.gov/region07/air/nsps/nsps.htm&quot; target="_blank">new source performance standards</a> (NSPS) require certain newly built or modified facilities to meet specified emissions limitations. <a href="#" title="42 U.S.C. § 7411(f).">Section 111</a> of the Clean Air Act directs EPA to <a href="#" title="See 40 CFR Part 60.">list</a> categories of industries that create pollution, such as petroleum refining, textile mills, or power plants, including all “major sources.” EPA determines the appropriate NSPS by first identifying the best adequately demonstrated technologies for cutting pollution, accounting for cost, energy use, and other environmental side effects. Then EPA determines the amount of pollution reduction that can be achieved by using that technology and then uses that amount as the basis for the NSPS limit. Although an NSPS is calculated by considering pollution reduction technology, the Act itself does not require new sources to adopt any particular technology; compliance is still determined by measuring emissions. States may adopt the NSPS calculated by EPA or adopt their own NSPS standards, provided they are equivalent to or more stringent than the EPA standard.</p>
<p>With the 1990 amendments to the Clean Air Act, Congress <a href="#" title="42 U.S.C. § 7412.">added</a> a second categorical emissions limitation—the national emission standards for hazardous air pollutants or <a href="http://www.epa.gov/ttn/atw/mactfnlalph.html&quot; target="_blank">NESHAPs</a>. The NESHAPs require <a href="http://www.epa.gov/ttn/atw/area/arearules.html&quot; title="The Act regulates all major sources (those that emits greater than 10 tons per year of any single hazardous air pollutant or 25 tons of a combination of such pollutants) but only certain area sources (those that emit less than major sources).">major and area sources</a> to install maximum achievable control technology (MACT) on certain sources of <a href="http://www.epa.gov/ttn/atw/pollsour.html&quot; target="_blank">hazardous air pollutants</a>. The MACT program is not tied to ambient air quality standards because hazardous air pollutants are not criteria pollutants and there are no NAAQS for them. For the <a href="#" title="Some familiar examples include asbestos, benzene, and methanol. § 7412(b)(1). Although Congress listed almost 190 hazardous air pollutants, EPA may add to or subtract from this list.">187 hazardous pollutants</a> designated by the Act, EPA surveys existing pollution control technologies and sets emission limits for each pollutant at the lowest achievable level, also taking into consideration costs and other health and environmental impacts.</p>
<blockquote>
<p>NSPS is discussed and critiqued in these ELR articles: Arnold Reitze, <a href="http://elr.info/news-analysis/42/10606/epa%E2%80%99s-proposed-new-sourc…’s Proposed New Source Performance Standards to Control Greenhouse Gas Emissions From Electric Utility-Generating Units</a> and Scott Segal, <a href="http://elr.info/news-analysis/41/10312/new-source-performance-standards… Source Performance Standards for Global Greenhouse Gas Emissions From the Power and Refining Sectors: Wrong Mechanism at the Wrong Time</a>.</p>
</blockquote>
<h2><a name="acid-rain-program"></a>Acid Rain Program</h2>
<p>The <a href="http://www.epa.gov/airmarkets/progsregs/arp/index.html&quot; target="_blank">acid rain program</a> is one of the most well-known successes of the <a href="#" title="See 42 U.S.C. §§ 7651-7651.">Clean Air Act</a>. This program applies only to fossil-fuel fired utility power plants, which produce the bulk of the two classes of chemicals that cause acid rain—sulfur dioxide (SO2) and nitrogen oxides (NOx). The 1990 amendments to the Act implemented an <a href="http://www.epa.gov/captrade/&quot; target="_blank">emissions trading</a> approach to reduce these compounds. Although this is a “market-based” approach, it is important to understand that the market here, like many markets, is created by and made possible by government regulation. EPA sets a nationwide limit on the total pollutant emissions allowable, and then assigns transferrable emissions <a href="http://www.epa.gov/airmarkets/trading/basics.html">allowances</a&gt; to power plants so that the allowances add up to the national cap. The plants are only permitted to emit up to their allowance, but are allowed to purchase additional allowances from other plants if they cannot reduce emissions. In this way power plants are that can more easily mitigate their SO2 and NOx emissions benefit financially from the reduction by being able to sell their allowances. The innovative program has achieved <a href="http://www.epa.gov/airmarkets/progsregs/arp/program-results.html&quot; target="_blank">large reductions</a> in SO2 and NOx emissions and helped combat acid rain at an economically efficient cost.</p>
<blockquote>
<p>For a free report on how the acid rain program informs greenhouse gas controls, see <a href="http://www.eli.org/research-report/implementing-emissions-cap-and-allow… an Emissions Cap and Allowance Trading System for Greenhouse Gases: Lessons from the Acid Rain Program</a>. For a review of EPA’s acid rain program, see Dallas Burtraw, <a href="http://elr.info/news-analysis/26/10411/new-standard-performance-analysi… New Standard of Performance: An Analysis of the Clean Air Act's Acid Rain Program</a> and Curtis Moore, <a href="http://elr.info/news-analysis/34/10366/1990-clean-air-act-amendments-fa… 1990 Clean Air Act Amendments: Failing the Acid Test</a>.</p>
</blockquote>
<h2><a name="stratospheric-ozone"></a>Stratospheric Ozone</h2>
<p>Unlike ground-level ozone, which can harm human health and the environment, ozone in the stratosphere helps deflect some ultraviolet light from the sun and offers a protective effect. When it was learned that some chemicals were destroying stratospheric ozone, the United States joined other nations by ratifying the <a href="http://ozone.unep.org/new_site/en/index.php&quot; target="_blank">Montreal Protocol on Substances that Deplete the Ozone Layer</a>. This obligated the nation to reduce production of various classes of ozone-destroying chemicals.</p>
<p>The <a href="#" title="42 U.S.C. §§7671-7671q.">Clean Air Act</a> contains provisions to implement this treaty and control ozone-depleting substances. EPA has implemented a <a href="http://www.epa.gov/ozone/title6/index.html&quot; target="_blank">regulatory program</a> to identify ozone-depleting substances, track them, and reduce or eliminate their use. The statute sets timetables for the total phaseout of all nonessential uses of listed compounds and encourages finding replacement substances. EPA, the National Aeronautics and Space Administration, and the National Oceanic and Atmospheric Administration also monitor stratospheric ozone and report to Congress on the effectiveness of the Clean Air Act in stopping depletion.</p>
<blockquote>
<p>For a discussion of stratospheric ozone depletion, the chemicals that cause it, and climate change, see chapter 10 of <a href="http://www.eli.org/eli-press-books/reporting-on-climate-change%3A-under… on Climate Change: Understanding the Science</a>. For ELR articles on stratospheric ozone, see Theodore Garrett, <a href="http://elr.info/news-analysis/22/10316/chapter-13-stratospheric-ozone-p… Ozone Protection</a>” and Cass Sunstein, <a href="http://elr.info/news-analysis/38/10566/montreal-and-kyoto-tale-two-prot… Montreal and Kyoto: A Tale of Two Protocols</a>.</p>
</blockquote>
<h2><a name="permits"></a>Permits</h2>
<p>The 1990 <a href="#" title="42 U.S.C. §§7661-7661f.">Clean Air Act</a> amendments provided for a single, comprehensive <a href="http://www.epa.gov/air/oaqps/permits/&quot; target="_blank">operating permit</a> under the Act called a Title V permit. The permitting requirements apply to a <a href="http://www.epa.gov/air/oaqps/permits/obtain.html&quot; target="_blank">wide variety</a> of major, area and other sources depending on the type of source, whether the source is in an attainment area, and the locally-applicable regulations. Congress incorporated operating permits in the Act following the model of the Clean Water Act as a streamlining measure to make it easier for polluters, regulators, and the public to determine which emissions limits apply to any given source and to eliminate duplicative or conflicting requirements under the various programs. As with most of the Clean Air Act’s provisions, operating permits are usually issued by states, not federal EPA.</p>
<blockquote>
<p>Title V is discussion in the Law of Environmental Protection, §§ 12:86-:87. For an ELR article summarizing EPA’s implementation of Title V, see David Novello, <a href="http://elr.info/news-analysis/23/10080/new-clean-air-act-operating-perm… New Clean Air Act Operating Permit Program: EPA’s Final Rules</a>.</p>
</blockquote>
<h2><a name="mobile-sources"></a>Mobile Sources</h2>
<p>Title II of the Clean Air Act deals with air pollution caused by <a href="http://www.epa.gov/air/caa/peg/carstrucks.html&quot; target="_blank">mobile sources</a>: cars, trucks, and other vehicles. Like those for stationary sources, the Act creates areas for federal and for state control aimed at achieving NAAQS and <a href="http://www.epa.gov/oms/climate/regulations.htm&quot; title="For efforts to control greenhouse gas emissions from vehicles, see http://www.epa.gov/oms/climate/regulations.htm.">other air pollution objectives</a>. Mobile sources are a major source of criteria pollutants in many nonattainment areas. EPA is authorized to set <a href="http://www.epa.gov/otaq/standards/basicinfo.htm&quot; target="_blank">emissions standards</a> for newly manufactured vehicles. The standards are <a href="#" title="See 42 U.S.C. § 7521.">based</a> on available technology, environmental factors, cost-effectiveness, and other factors.</p>
<p>California has traditionally been a <a href="http://www.arb.ca.gov/msprog/consumer_info/advanced_clean_cars/consumer…; target="_blank">leader</a> in controlling motor vehicle pollution. In recognition of this, Congress <a href="#" title="42 U.S.C. § 7543.">allows</a> California to set its own mobile source standards, provided they are <a href="http://epa.gov/oms/climate/ca-waiver.htm&quot; target="_blank" title="For a recent example regarding California greenhouse gas standards for new motor vehicles, see http://epa.gov/oms/climate/ca-waiver.htm ">approved</a> by EPA. Other states must adopt either the federal or California mobile source standards—they may not adopt their own.</p>
<blockquote>
<p>Listen to an ELI seminar <a href="http://www.eli.org/seminars/event.cfm?eventid=409">Ports, Shipping and Air Emissions</a>.</p>
</blockquote>
<blockquote>
<p>Mobile source regulation is discussed in detail in Law of Environmental Protection, §§ 12:120-:163. For ELR articles on mobile sources and fuels, see Jocelyn D’Ambrosio, <a href="http://elr.info/news-analysis/37/10615/alternative-fuels-evaluation-cor… Fuels: An Evaluation of Corn Ethanol, Cellulosic Ethanol, and Gasoline</a> and Jonathan Martel, <a href="http://elr.info/news-analysis/25/10538/explosion-clean-air-act-regulati… Explosion of Clean Air Act Regulation of Fuel</a>.</p>
</blockquote>
<p>The Act also <a href="#" title="42 U.S.C. § 7445.">provides</a> for federal regulation of <a href="http://www.epa.gov/otaq/fuels/index.htm&quot; target="_blank">fuels</a> and fuel additives because they can significantly affect vehicle emissions. EPA requires registration of a fuel before it can be marketed and may prohibit or limit those that cause or contribute to air pollution or health problems.</p>
<p>With respect to state regulation of mobile sources, the Act requires that each state implementation plan include a transportation control plan (TCP). TCPs can include programs like the creation of dedicated bus or carpool lanes, toll roads, or other schemes designed to reduce the amount of pollution caused by driving. Heavily polluted areas are also required to implement vehicle inspection and maintenance programs. Inspection and maintenance programs identify existing, older vehicles that might need repairs to their emissions control components.</p>

The Limitations of Existing Statutes
Author
Jeff Holmstead - Bracewell LLP
Bracewell LLP
Current Issue
Issue
2
Parent Article
Jeff Holmstead

The high court’s decision in West Virginia v. EPA has been the subject of great debate, but it rests upon the undisputed proposition that federal regulatory agencies are entirely “creatures of Congress.” An agency may not take any action unless Congress has given it authority to do so.

In its decision, the Supreme Court embraced the “major questions doctrine,” holding that, if a federal agency wants to create an “extraordinary” new regulatory program, it must show that Congress clearly authorized it to do so. In such cases, the Court held, it is not enough for an agency to show that its regulation is based on a “textually plausible” interpretation of an authorizing statute. In a term more familiar to administrative lawyers, even a “reasonable interpretation” would presumably not be sufficient.

There has been much debate about the extent to which the decision will curtail the regulatory ambitions of agencies across the federal government on a variety of issues. Certainly, it does not bode well for the Biden administration’s “whole-of-government” approach for dealing with climate change, which has encouraged federal agencies and departments to use existing statutes to find new ways to reduce GHG emissions from companies that fall within their purview.

In particular, it seems likely that the Supreme Court may be skeptical of recent proposals to require government contractors to set “science-based targets” for reducing their GHG emissions; to allow the Federal Energy Regulatory Commission to reject applications for natural gas pipelines based on climate change concerns; and to require public companies to make extensive disclosures about their emissions. If these proposals are finalized and pass muster with lower courts, they may well be important enough to attract the Supreme Court’s attention.

Some environmental advocates have argued that the Clean Air Act provides EPA with broad authority to regulate GHG emissions by setting “national ambient air quality standards” for them. To be sure, clever lawyers have developed a textually plausible interpretation of Clean Air Act provisions to support the idea, but if EPA officials have ever seriously considered it (which I doubt), they have certainly abandoned it in the wake of West Virginia.

The Biden EPA has made it clear that it has three priorities for regulating GHG emissions under the Clean Air Act—from power plants, from oil and gas operations, and from the transportation sector.

For power plants, EPA officials are reportedly considering whether carbon capture and sequestration—CCS—is a “system of emission reduction” on which they can base their regulations. Some claim that this is defensible because of the generous tax subsidies for CCS that Congress recently enacted. However, even with subsidies, any reasonable analysis would show that the costs are so high that most existing fossil fuel power plants would shut down before they would install the technology. In this case, a CCS mandate would look like a pretext for the kind of generation shifting that the Supreme Court rejected in West Virginia.

For oil and gas operations, this decision is not likely to have any impact. EPA’s regulatory approach—requirements to reduce methane leaks from many different operations—is squarely within the agency’s regulatory authority. This is not to say that EPA’s regulations won’t be vulnerable in court. The agency must still show that its requirements are based on demonstrated and cost-effective approaches for reducing emissions, but these issues are unrelated to the major questions doctrine.

What about EPA’s efforts to regulate greenhouse gas emissions from the transportation sector? The agency’s GHG vehicle standards are designed to shift new cars, trucks, and other heavy-duty vehicles from petroleum fuels to electricity. The Supreme Court may well believe that an attempt by a regulatory agency to phase out the fuels and technologies that have powered U.S. transportation for more than one hundred years is the sort of major question that necessitates explicit authority from Congress.

Is WV v. EPA a Landmark?
Author
Stan Meiburg - Wake Forest University
Scott Schang - Wake Forest University
Wake Forest University
Wake Forest University
Current Issue
Issue
2
Clean Air Act Hall of Fame Cover Image

Upon its release, the Supreme Court’s decision last term in West Virginia v. EPA was trumpeted as a watershed moment in environmental law. The Sierra Club described it as a “dangerous decision . . . that deals a major blow to the government’s ability to tackle the climate crisis.” Another progressive group said that the Court’s majority justices “could not contain their zeal to hollow out EPA’s ability to lessen suffering from climate change in ways that impinge the profits of entrenched fossil fuel interests.” A common sentiment was that this was only an opening salvo in an attempt by the Court’s new conservative majority to greatly restrain the agency.

Our purpose in this article is not to relitigate whether West Virginia was rightfully decided, but to put it into the context of the Clean Air Act and the Supreme Court’s approach to that statute and, with the benefit of several months’ reflection, consider the merits of these alarms.

We agree that West Virginia is a landmark case, but we doubt it will have the force and effect that some fear. In fact, our reading of the case is that it very narrowly defines the new “major questions doctrine” to help sequester that doctrine’s effect. In addition, Chief Justice Roberts’ approach may signal that attempts of some justices to significantly restrict EPA authority have not found fertile ground in the new Court. In light of the unique circumstances that led to the decision, we caution against overstating the case’s likely long-term impacts on environmental law.

West Virginia has to be read and understood in context. The Clean Air Act is a complex, highly technical statute that has been the subject of continuous litigation, both as a bold effort that affected the entire economy and as a pioneering new approach to legislation. The 1970 amendments were the first substantive media statute enacted by Congress to clean up the environment by creating a system of cooperative federalism in an area that had traditionally been the primary responsibility of states.

As such, the new CAA contained features, such as agency- and state-forcing deadlines, citizen suits, federal enforcement authority, and delegation authorities, that were later adopted in other environmental laws. In addition, the law set the table for the new Environmental Protection Agency, formed one month before the act passed. While members of Congress and their staffs in the 1970s showed a remarkable degree of expertise in clean air regulation, some issues necessarily had to be decided by EPA and state technical staff based upon industry-specific or even facility-specific factors.

The West Virginia case is the latest in a long series of litigation that stems from the simple fact that many of EPA’s major actions under the CAA involve the utility sector. Coal and other fossil fuels are massive sources of ambient, hazardous, and climate-warming pollutants. As a result, the agency’s actions often impact this industry, which is not shy about taking EPA to court or lobbying Congress and the agency.

When EPA started to implement the CAA, virtually all of its major regulatory actions wound up in front of reviewing courts. The D.C. Circuit, which received many of these cases, initially struggled with how to oversee the act, but over time developed expertise in handling many complex cases under the statute.

However, the Supreme Court did not let the D.C. Circuit have all the fun. Over the past 50 years, the high court has reviewed CAA cases over a dozen times. The cases line up like a row of paintings on an art gallery wall, and many of them created significant law far beyond environmental law. In Chevron v. NRDC, decided in 1984, the Court upheld EPA’s bubble approach to deciding what a stationary source was. In the process, it explained that judges should not subject expert agencies’ authorized rulemakings to death by judicial parsing of words and should instead defer to reasonable interpretations of the act. The Court found more expansive standing principles in Massachusetts v. EPA, a 2007 case, and clarified displacement of federal common law around climate change in the 2011 case American Electric Power v. Connecticut.

Despite the number of CAA cases the Supreme Court has reviewed, it is probably fair to say that such cases are not the favorite flavor for many justices. After being corrected about a scientific term, Justice Scalia famously remarked during one air case: “I told you before I’m not a scientist. That’s why I don’t want to have to deal with global warming, to tell you the truth.” Yet over time, the Supreme Court’s opinions on the act favored EPA and/or environmental protection by roughly a three-to-one margin.

More recently, however, the agency has run into strong headwinds on air issues, losing three straight cases including West Virginia at the high court. Two of these losses involved EPA’s attempt to use the CAA to address greenhouse gas emissions, which most seasoned observers understand is a challenging proposition no matter how much one might want to take action on climate change. The result in West Virginia is a consequence of the agency’s trying to use the act, the most obvious tool available to it, to undertake a task for which the tool is a poor fit—like using a Phillips screwdriver to tighten a flat-head screw. Representative John Dingell (D-MI), one of the act’s stewards across 45 years in Congress, predicted that using the CAA to address climate change would result in “a glorious mess.” Using the act to reduce greenhouse gas emissions indeed resulted in complex regulatory paths that led to the Court’s recent decisions.

For example, when EPA in 2009 found that greenhouse gases as mobile source pollutants did endanger public health under the CAA, it triggered a series of related steps based on the act’s stationary source provisions. One such step was requiring permits for new or modified sources that would emit more than 100 or 250 tons per year of greenhouse gases. This would have brought untold numbers of smaller sources into the coverage of the act.

EPA sought to curtail this effect in 2010 by creating the Tailoring Rule to note that the statutory limits of 100 or 250 tons would be regulatorily replaced with limits of 75,0000 to 100,000 tons. Even though one could appreciate the agency’s pragmatism, directly contradicting statutory language is a bold move for any agency in front of any court. Not surprisingly, in UARG, a case decided in 2014, the Supreme Court required EPA to read the statute in such a way that it did not contradict the plain language of the law. Perhaps surprisingly, under Justice Scalia’s reinterpretation of the statute for EPA, his opinion retained agency jurisdiction over the vast majority of sources it in fact did want to regulate.

A second, more consequential element in the Obama administration’s clean air regulatory approach to greenhouse gases rested on finding a way to quickly reduce carbon emissions from existing coal-fired electric utilities, at that time the largest category of emitting sources. But the act lacked a clear hook for achieving this goal until EPA concluded that it could use Section 111(d) to require existing fossil-fired plants to use the “best system of emissions reduction” to reduce greenhouse gases, a strategy that the agency issued in 2015 as the Clean Power Plan. This was possible because greenhouse gases are neither criteria pollutants nor hazardous pollutants under the act.

EPA’s usual, but not exclusive, approach under Section 111(d) was to use cost and technology considerations in identifying emissions reductions that would be required of individual existing sources subject to the rule. For coal-fired utilities, this approach would have resulted in minimal carbon reductions. So EPA decided that under the CPP, in addition to the technology fixes, it would also calculate the emissions reductions achievable if states took two other steps. First, the agency calculated statewide GHG emissions limits that would have the effect of compelling the placement into service of natural gas-fired plants over coal-fired plants when being dispatched by the grid operator. Normally, plants are dispatched based upon cost to the system, not this regulatory innovation. Second, EPA assumed states would require replacement of fossil fuel plants with renewable energy plants. Adding these two so-called “building blocks” to the first building block of technology fixes at the plants allowed the agency to find a “best system of emission reduction” that would result in a 32 percent reduction in utility greenhouse gas emissions by 2030, to assist in meeting the administration’s Paris Agreement climate pledges.

While EPA’s approach under the Clean Power Plan was a master class in using existing regulatory language to meet urgent and vitally important needs, many clean air experts saw it as substantial departure from past practice. The agency’s actions relied upon a portion of the act that was meant to fill gaps in other parts of the statute. Greenhouse gas emissions from existing sources fell into precisely this kind of gap, but it was another thing to use this provision to calculate potential emissions reductions by invoking utility dispatch rules that are not under EPA’s control and to project the replacement of the very plants being regulated by the agency with renewable power plants. Although EPA was merely calculating how much greenhouse gas reduction could be attained using “the best system” and not strictly requiring adoption of either building block, this approach was quite novel.

The dramatic nature of the agency’s action was not lost on the judiciary. In an unprecedented step, the Supreme Court stayed the plan in 2016 before any judicial review by a lower court. The D.C. Circuit then took two full days to hear oral arguments en banc on challenges to the CPP. Yet the circuit court never issued an opinion because the Trump administration repealed the CPP and promulgated its own rule, the Affordable Clean Energy plan. In turn, the Affordable Clean Energy plan was remanded and vacated by the D.C. Circuit, and that action was the source of the West Virginia case.

When the Supreme Court accepted the case in 2021, there were many questions about the Court’s intent in taking it. Some thought the Court would find that the case was moot, because there was no rule in effect for parties to challenge. The Trump administration had replaced the CPP with its own rule, which had been struck down, and the Biden administration indicated it would not revive the CPP, which technically remained in abeyance before the D.C. Circuit. Others thought that the Court would use this case to overturn the landmark Massachusetts vs. EPA ruling, a 5-4 decision that held that greenhouse gases could be regulated as pollutants under the CAA if the agency found that they endangered public health or welfare. The high court did neither of these things.

Instead, it offered an opinion on the legality of the CPP, even though that plan was not in effect at the time the case was brought and, ironically, the stated 2030 goals of the plan for carbon reductions in the utility sector had already been achieved. The Court held that the language of Section 111(d) of the CAA, specifically the phrase “best system of emission reduction,” did not authorize a regulatory scheme that relied upon large scale generation shifting between different types of power plants. The opinion concluded that if EPA were to exercise such authority, there would have to have been a clearer indication from Congress that it intended the agency to have that authority than the language contained in Section 111(d).

In doing so the Court invoked the “major questions doctrine,” which marked the first time a majority Supreme Court opinion invoked this doctrine and provided some explanation of its application and limits. Although past concurrences and dissents had hinted at the doctrine, it had never been invoked by name before. In authoring the majority opinion, the chief justice explained that EPA had asserted in the Clean Power Plan “a highly consequential power beyond what Congress could reasonably be understood to have granted” in Section 111(d). As a result, the Court required “clear congressional authorization” for the claimed authority.

The chief justice went out of his way to stress the narrowness of the major questions doctrine as limited to “extraordinary cases.” His opinion outlines several factors that appear to be required to invoke the doctrine, including, first, discovery of a new power in a long-existing regulatory regime that, second, represented a “transformative expansion” in regulatory authority that, third, Congress had considered and rejected. The opinion also notes that EPA was seeking to regulate the energy mix of the U.S. power grid, which as a fourth factor the chief justice sees as far outside EPA’s remit. Similarly, last summer during the Covid pandemic, the Court was critical of the Centers for Disease Control involving itself in housing policy and OSHA involving itself in vaccination policy.

Chief Justice Roberts appears to have been providing some guardrails to keep jurists from riding roughshod over regulatory agencies with the new doctrine. While lawyers and law students have been quick to invoke the new doctrine, it is hard to find factual scenarios that match what the Court faced in reviewing the CPP and that meet the criteria above. Deciding what constitutes a “water of the United States” comes nowhere near meeting these requirements for invoking the doctrine, for example.

Would EPA’s finding that greenhouse gases can be regulated under the CAA have survived this doctrine if it existed at the time of Massachusetts? Maybe. A skeptical Court might have bridled at the agency’s expanded CAA authority under the first three factors, but the fourth, an agency acting outside of its remit, was not satisfied. EPA had been clearly and fully charged with addressing emissions of pollutants like greenhouse gases from mobile sources, which was the issue under consideration in Massachusetts.

It is also important to note that the Court’s framing of the doctrine is far narrower than the explanation of the doctrine provided by the Trump EPA when it repealed the CPP. There, EPA said major rules could be identified by “the amount of money involved for regulated and affected parties, the overall impact on the economy, the number of people affected, and the degree of congressional and public attention to the issue.” This framing would have brought a far broader swath of cases into the doctrine, which Roberts did not accept.

Another critical aspect of the West Virginia opinion is that the major questions doctrine is not framed as a constitutional principle based on separation of powers, a path down which Gorsuch, Alito, and Thomas are itching to take the Court. These three justices have a very narrow view of the kind of authority and discretion that Congress may delegate to agencies, one that might nullify many EPA rulemakings based on the agency’s expert interpretation of congressional delegations of power. The fact that only Alito joined Gorsuch’s concurrence may bode poorly for future attempts to promote this view.

We do not mean to downplay the importance of the major questions doctrine, but instead to put it in context. Litigants are certain to seize upon the doctrine to parry EPA’s and other agencies’ attempts to regulate, particularly on major issues of national importance. Yet the degree to which the Obama EPA was stretching the text of the CAA to meet a modern imperative for which it had no other good alternative is likely why the chief justice cautioned about overreacting to this single case or framing of the doctrine.

The decision will certainly cause EPA and other agencies to very clearly and carefully consider where they find their regulatory authority and to explain why the factors the chief justice set forth for application of the doctrine are found only in the most extreme cases. On the topic of climate change, the recently adopted Inflation Reduction Act gives EPA and other federal agencies a new range of tools that are manifestly intended to address climate change through incentives. For the first time in black letter law, the IRA defines the term “greenhouse gases.” This would seem to forestall any further effort to overturn this aspect of Massachusetts.

In addition to carrying out its responsibilities under the new Inflation Reduction Act, EPA may now consider other rulemaking options consistent with the West Virginia opinion to address GHG emissions. Any such actions will doubtless be controversial and will be debated on their merits, but this is business as usual.

The West Virginia opinion seems to have little effect on states or the cooperative federalism relationship. Nothing in the opinion affects strategies such as the carbon market in California, or the actions of the RGGI states in adopting carbon limits under their own state authorities. Although some state courts might adopt the opinion’s formulation of the major questions doctrine into their jurisprudence, it is not clear that would have a major impact either. California’s legislature granted the Air Resources Board significant discretion in crafting the state’s greenhouse gas trading market. But the doctrine would not apply because the legislature was clear in granting the authority to undertake this effort—it is not a power the board had to stretch statutory language to discover. Had the Supreme Court in West Virginia taken the separation of powers approach called for by Gorsuch, then authority such as that granted to the board would be under serious threat of nullification.

States have to continue to decide what they want to do in areas that lie within their sole jurisdiction. If that jurisdiction shifts, as it may in the Sackett case this term, states have to decide what they want to do with areas no longer subject to Clean Water Act jurisdiction. Indeed, that is exactly what our own state of North Carolina did when the Trump WOTUS rule removed some areas from jurisdiction. Similarly, the North Carolina state legislature adopted its own state law, H.B. 951, setting carbon-reduction targets and a mechanism for achieving them. That said, if federal authority over environmental issues continues to be narrowly interpreted by courts, laws in many states that provide that state regulatory provisions may be no more stringent than federal provisions or otherwise limit state regulation may come under sharper scrutiny.

On the federal side, however, this decision will have three effects, all of which will pose real challenges.

It will make it harder for agencies to undertake rulemaking to address exigent circumstances and emergencies such as climate change and the pandemic. Even though agency lawyers will give the same careful scrutiny to the statutory underpinnings of rules, culturally, lawyers are risk averse. This generally delays decisionmaking. Further, in the inevitable litigation on such rules, even if major questions claims are spurious, it still takes time and effort to deal with them. Thus, the doctrine may well have the effect likely intended by the majority of justices that endorsed it by cooling and restraining federal regulatory authority.

West Virginia will also make it harder for Congress to legislate. Strategic ambiguity is an essential part of the legislative process. When members cannot agree on the details of an important issue, one of the most useful tools is to write in general language that everyone can agree on, language that contains studied ambiguity. The purpose of this is to postpone the resolution of very contentious matters to a later time and a later forum. This serves many congressional interests. But West Virginia’s injunction that language has to more clearly direct agencies will make it harder to use this tool, thus hindering rapid legislating.

Under this new doctrine, Congress may find that it needs to start declaring affirmatively that it is leaving certain issues in the expert hands of agencies to decide and regulate. This will likely inflame the debate at the Court around the degree to which, if any, the legislature can entrust agencies with what looks like legislative authority.

Perhaps the Court’s insistence on clear congressional action might provoke exactly that. Perhaps Congress could address unclear or imprecise statutory language and delegations of authority. With a few exceptions, Congress has not undertaken a full review and update of the core environmental laws since the passage of the CAA Amendments of 1990. Any urging that could get Congress to step up to its stewardship duties over this body of law would be welcome, though we may be slipping into the realm of wishful thinking.

Still, disclaimers of intent to the contrary notwithstanding, it is clear that this decision gives more power to the courts and represents a shift in the balance of power among the three branches. Even if it acts in a restrained way, the Court has reserved for itself the power to determine what is a “major question.” The West Virginia majority seems to see no role for Congress when an agency oversteps its legislative authority. Yet it is Congress’s job to make the law, and it has full powers of oversight and control over agency budgets. It is hardly some weakling branch in need of the Court’s protection.

The irony is that we have been to this movie before, and the CAA was the theater. Few now remember the litigation over the Prevention of Significant Deterioration program in the late 1970s, where the centerpiece was the 1979 decision Alabama Power vs. Costle. The D.C. Circuit in that case issued an opinion that went over every detail of the regulations in excruciating detail, and the opinion was so long and complex that they had to issue it in two parts that were written piecemeal by three judges. Essentially, it was the D.C. Circuit who decided what Part C of the 1977 Amendments said.

From this perspective, the Chevron decision in 1984, an enduring legacy of the Anne Gorsuch era at EPA, was a useful corrective to what had been judicial overreach. Today, with Chevron deference under attack, we may be looking back to the future, and it’s not pretty. Under West Virginia, agencies will need to be able to point to clear congressional authorizations to act when addressing major issues not previously addressed. And if Chevron weakens or is overturned, agencies’ interpretation of the statutes authorizing their action will likely come under increasing court scrutiny. Even if the West Virginia dissent’s claim that the Court has now appointed itself as the decisionmaker on climate policy seems a little over the top, the idea that federal authority has shifted toward judicial dominance is not one that should enable believers in democratic governance, whether conservative or progressive, to sleep better at night. TEF

COVER STORY In light of the unique circumstances that led to the Supreme Court’s decision last term in reviewing an agency rulemaking, and the chief justice’s careful caveats on “major questions,” we caution against overstating the case’s likely long-term impacts on environmental law.

Staying on Course for Justice for All
Author
Suzi Ruhl - Yale Medical School
Yale Medical School
Current Issue
Issue
5
Staying on Course for Justice for All

Navigating through the tail end of Hurricane Oscar in the North Atlantic two years ago, the international crew of our cutter fought off seasickness as we battled to stay on course toward the finish line off Madeira. “If we make it to Faro,” we shouted to each other during lulls in the gale, “we will be fine.” When my turn came at the helm, I held to a compass heading that would bring us down to latitude 37 and calmer water off the Portuguese port city, where we could lay in a course for the finish line. Instead of pressing on dangerously under a full suit of canvas, risking sails and spars for greater speed, we kept the main reefed and thus were able to safely make good headway in the rough seas. It was a good decision.

I have found through a lifetime of experience that sailing is an excellent metaphor for the adventures in reaching my longtime professional goal of “justice for all,” the central promise of the Pledge of Allegiance but a destination still beyond the horizon after all these years of environmental law. Everybody uses metaphors to organize their thinking, often drawing from sports like football and baseball. Making it to Faro by harnessing the wind no matter how it blows has become the destination in my professional life. Only from there can you actually set a course toward your goal.

The analogy between the environmental profession and the job of the mariner is a useful one. Ever resilient, sailors are constantly adjusting the rigging to get the most from the wind while avoiding unnecessary risk to the crew and ship. Staying on an even keel is important. They are careful to preserve and allocate food and water resources sustainably and manage waste responsibly. Safety is constantly in force underway. Both skipper and crew know their destination at all times. And they know how to make port even under contrary winds.

Indeed, I learned at the outset of my career in the 1980s that sailing the waters of environmental law and justice can be rough. As founder and president of the Legal Environmental Assistance Foundation, based in Tallahassee, I took to court EPA and other government agencies and multinational corporations as well. LEAF worked with communities burdened by pollution, disease, poverty, and crime. I learned from those most impacted by harmful emissions and discharges, as we made significant yet insufficient progress on our great circle course to environmental equity and justice.

Then, in 2009, when newly elected President Obama declared he wanted change, I joined EPA’s Office of Environmental Justice to become senior counsel. My professional mantra upon leaving public interest practice to join government — my sea chanty so to speak — started with, “For 20 years, I sued EPA,” and concluded on an up note, “Now I am going to work for them.” The lighthouse beacon guiding my government service became the personal voices of those who literally live and die as a result of agency decisions and actions. Their flashing signal patterns illuminated government systems and their actions that foster healthy, equitable, and sustainable communities and those that either intentionally or unintentionally perpetuate environmental injustices. The people we worked with who were affected by pollution were the first to know there was a problem and what was needed to solve that problem.

Yes, my metaphor helped me to see that and gave the point of sail to best capture the wind. That heavy weather sailing along the coast of Spain and Portugal to the northern coast of Africa, along with bareboating around equatorial islands, has taught me that in fact sailing has many lessons for professionals. My lifelong mission has been to work with those who in effect are finding environmental, health, and economic storms crashing over their decks with insufficient means of altering the set of the sails to make headway. Gaining a navigator’s skills in the law and in the science of epidemiology, including degrees in both, has enabled me to act as a pilot, helping citizens steer their communities toward greater equity and justice.

Now, as the challenges facing overburdened, underserved, and underrepresented communities escalate in horrific, relentless waves of heartbreak, especially as seen in the context of Black Lives Matter and the simultaneous COVID-19 crisis, I am again changing vessels, joining the research, service, and teaching crew at the Yale School of Medicine, Child Study Center and Elevate Policy Lab.

At this new waypoint in life, I am pulling together my collective experiences to reset my compass heading, prepare my passage plan, aiming always for the same destination: justice for all. All I know at the outset of this voyage is that it will require leveraging the lessons of the sea and of the men and women who venture out regardless of the weather conditions or a gloomy forecast, for resilience and sustainability are their working tools too.

The first lesson in sailing is to appraise the state of the sea — the wind, the waves, the swell, and weather patterns — when embarking on a voyage and during the passage. This lesson clearly applies to the trajectory of my career in environmental justice, a timeline of constant appraisals and course changes.

If there were a logbook on environmental protection and regulation of pollution since the 1980s, it would be revealing in its constant changes. The log would be a story of denial — a hesitancy to consider the real state of the sea and a rejection of that primary lesson. The first entries show the existence of pollution being denied. When pollution became acknowledged, exposure to people was denied. When pollution and exposure were acknowledged, impact to human health was denied. When pollution, exposure, and impact were acknowledged, the consequences to vulnerable populations — including communities of color, poor neighborhoods, and tribal-indigenous groups — were denied.

This phenomena of ignoring sea states and weather patterns is illustrated through a LEAF lawsuit whose resolution spanned four decades. In 1983, the Department of Energy admitted that it had released two million pounds of mercury from the Y-12 Plant at Oak Ridge between 1950 and 1977. The pollution flowed into the Tennessee River. Unknowingly, low-income rural families swam and fished in the river and a polluted tributary, East Fork Poplar Creek. In the period of denying pollution, elemental mercury was carried from the Y-12 plant by workers into their homes, exposing their families to harmful vapors. While government denied exposure, children who swallowed water during play in the brook were exposed to levels of inorganic mercury that could cause kidney damage, and residents ate fish from the polluted brook, risking the health of their brains.

When pollution, exposure, and impact could no longer be denied, children born to or nursing from women who ate certain species of fish from Poplar Creek were revealed as at increased risk of subtle neurodevelopmental health effects. When LEAF sued 37 years ago, arguing that DOE must comply with the Resource Conservation and Recovery Act, the department argued in court that application of RCRA to Y-12 was inconsistent with the Atomic Energy Act of 1954, which restricted dissemination of classified information pertaining to nuclear weapons and material. Action under RCRA, the department argued, would subject this information to public disclosure. In LEAF v. Hodel, the court held that the plant indeed is subject to RCRA, ruling that DOE had failed to demonstrate that compliance with the landmark statute would result in the disclosure of classified material.

Surprisingly, as an early porthole view into the operation of the federal government that would carry me through my time with EPA, most of the DOE managers and staff supported the decision and embraced the programmatic result: establishment of DOE’s Hazardous Waste Remedial Action Program to address dangerous materials at all of its facilities. This attitude toward the decision is also reflected in the department’s published “Nuclear Energy Timeline”: for the decade of the 1980s, DOE highlighted LEAF v. Hodel along with the “Berlin Wall is torn down. Many communist governments in Eastern Europe collapse.” To have LEAF recognized in the same space with the fall of communism instilled the same pride as does finding the island in the middle of the ocean.

Yet, as ocean currents flow year after year at the same speed and direction, so has been the DOE environmental challenge. Indeed, when joining EPA 26 years after we sued, the first environmental impact statement I reviewed was for the disposal of the hazardous waste from the Y-12 plant.

Invoking environmental justice, I raised the issue that one of the primary site locations was a few miles from a town in Texas that was predominantly Latino, and where the English proficiency was lower than 40 percent. Because Texas is a majority-minority state, the site was not considered to be an environmental justice community. We nonetheless proposed mitigation measures to address these disproportionate impacts, including translating critical documents into Spanish. The lessons learned from this decades-long legal action informed the development of an environmental justice analytical methodology for National Environmental Policy Act reviews.

Favorable sailing conditions were in play due to the leadership of the federal Interagency Working Group on Environmental Justice, or IWGEJ. In 2011, its 17 federal departments and agencies signed the “Memorandum of Understanding on Environmental Justice” and were included under Executive Order 12898, promulgated by President Clinton to establish environmental justice as a goal of the federal government.

The EO identifies NEPA as one of four areas of focus. As founding co-chair (along with the Department of Transportation and then DOE) of the NEPA Committee created in 2012, I worked with NEPA and EJ practitioners across the federal family. Our membership grew from 12 to 200 members, and we produced “Promising Practices for Environmental Justice Methodologies in NEPA Reviews.” This sea chart, along with the “Community Guide for Environmental Justice” and “NEPA Methods (2018),” advance consistent, effective, and efficient consideration of environmental justice under the foundational statute. Through the NEPA Committee, we now had a fleet of vessels recommitted to addressing environmental justice through a more collaborative, comprehensive, and efficient process.

Just as there are always more storms, rulemaking on NEPA now threatens to overwhelm progress. But, a boat sailing in a massive storm cannot stop, and we must call all hands-on-deck to get to a safe destination for all — to get to Faro.

Sailing lesson number two counsels that when underway in a storm, remember that the sea takes no prisoners. When sailing, failure to prepare and to account for real people, real places, and real conditions can kill you. Tragically, failure to account for unique conditions experienced by low-income, people of color, and tribal-indigenous populations is deadly. Pollution, natural and man-made disasters, unhealthy built environments, and lack of access to essential services are killing these populations at disproportionate rates.

At the outset of my career, I challenged the demand for a “dead body count approach” to justify environmental regulation of pollution. Acknowledging only mortality while ignoring morbidity and disability sets the stage for environmental devastation. Decades later, with COVID-19 on the loose, my greatest fear has come to fruition — we have the dead bodies as evidence of disproportionate impact and failure to protect health and the environment of overburdened, underserved, and underrepresented populations. COVID-19 cases by race and ethnicity show the incidence of the virus out of proportion to the percentage of the overall U.S. population — it is almost double for Hispanic, black, and American Indian/Alaskan Native populations.

A closer look by Centers for Disease Control and Prevention researchers shows that people with underlying health conditions were six times more likely to be hospitalized than those with no such conditions, and deaths were 12 times higher. Communities disproportionately burdened by pollution have long experienced higher rates of chronic disease. Now we see higher rates of COVID-19 hospitalizations and higher deaths as a result.

Many of the pre-existing conditions that increase the risk of death in those with the virus are the same diseases that are affected by long-term exposure to air pollution. A small increase in long-term exposure to the fine particles produced by burning fossil fuels, known as PM2.5, leads to a large increase in the coronavirus death rate. Thus, the virus, through the same vicious cycle of denial and the dead-body-count approach experienced with environmental degradation, is thrust on the same overburdened, underserved, and underrepresented population. Now, my integrated law and public health degrees allow me to heave to under a storm sail and help rescue the multitudes drowning in this deathly sea. More rescue boats in the water would be a huge help. There are thousands of communities needing assistance.

The faces of this nightmare are made real in Lowndes County, Alabama, in the so-called Black Belt, where I have worked on environmental justice across the decades. Reading the horrific news that the rates of COVID-19 are higher in this rural, poor, African American population than in New York City, I recalled our long-ago community victory in stopping the permitting of a fly-by-night hazardous waste disposal facility when I was at LEAF. I see the face of the elderly African American farmer who was more knowledgeable about the conditions of the soil and groundwater than the Ph.D. experts representing the hazardous waste company. I remember this early lesson that the people impacted by pollution should be at the table from the beginning and throughout the decisionmaking process — they should be at the forefront in diagnosing the problems and designing the solutions, and should be part of the cross-training of all stakeholders.

While at EPA, I met families in Lowndes County who step outside their trailers into their own excrement because they lack effective decentralized sewer capacity. I hear the voice of government officials dismissing these health and environmental concerns, callously claiming that “these people would rather get sick twice a year and spend their money on cell phones then pay for the maintenance of a septic tank.”

But, from heartbreak to hope, we reef our sails to avoid the winds of injustice while rapidly propelling progress through the choppy waves. Recognizing that environmental challenges in rural communities were distinct from those faced by urban communities, the EJIWG established the Rural Communities Committee in 2015. With Lowndes County in mind, the working group advanced brownfields-to-healthfields and urban-to-rural agriculture as destinations for communities across Appalachia, Southern California, coastal Georgia, and the Black Belt.

The EJIWG recruited a crew of environmental justice bosuns across the federal family to join the impacted communities and a courageous state public health captain. Together, we navigated the waves of environmental, technical, financial, health, and governance challenges to overcome the underlying currents that had become excuses. As 100 families were on the verge of getting safe sewer systems, we began to celebrate. And then, the county that wanted a health clinic and truck stop but got only the truck stop started dying faster and faster from COVID-19. The huge swell of institutional racism buttressing the denial and the dead-body-count approach to environmental protection crashes over our deck. It is time for a better course to get us to Faro.

The third lesson all sailors must learn is that on ocean passages, carefully choose your vessel and know your coordinates and compass heading to get all passengers and crew safely to port. When I first opened LEAF in the early 1980s, there was no such thing as environmental public health protection. Regulation of pollution was a concept reserved for tree huggers. Ultimately, during my LEAF days and continuing throughout my career at EPA, my EJ colleagues taught me that environmental protection means “people impacted by pollution should live, learn, work, play, and pray in homes and communities where the air is safe to breath, water safe to drink, and land safe to touch.” Ultimately, they want their children and families to be healthy, their homes and neighborhoods to be safe from pollution and crime, and yet they also want to keep their jobs.

Fortunately, during my passage with EPA, I have crewed on voyages seeing significant progress along the rhumb line toward environmental justice that responds to the well-being of vulnerable children, adults, families, and communities. It has been inspirational to work with career and political leaders under multiple administrations to bust the myth that protection of the population in general is sufficient. A rising tide lifts all boats only works if everybody has a boat.

The notion that environmental protection only addresses natural resources such as air, water, and land has been debunked. Environmental assessments and related decisions that do not consider vulnerable subpopulations are no longer sufficient. That consideration includes multiple exposures and body burdens of those facing pollution, poverty, disease, and crime.

Because environmental statutes mandate protection of human health and the population as a whole, EJ professionals have expanded our focus to consider the built environment and access to essential services. We also have come to recognize that access to health care (physical, mental, social, spiritual), food security, transportation options, and physical activity are essential components of environmental protection. Natural disasters are escalating, wreaking disproportionate havoc on vulnerable and overburdened populations. Disaster response, recovery, and preparedness have thus become an environmental justice issue as well.

The trip to the far off but welcoming port of justice for all is far from over. Disastrously, now our progress is being rolled back with a return to denial and the dead-body-count approach for the most vulnerable of society. In such chaotic seas I have made a safe port on Long Island Sound and am embarking on a new ship to the same destination. It will be a challenging voyage under changing conditions.

The fleet comprising Yale Med’s Child Study Center and Elevate Policy Lab includes a stellar ship and crew making a direct impact for real people and real places through innovation and rigorous, evidenced-based approaches. That’s my newest vessel. Our compass heading aims for healthy children, mothers, and families living in communities safe from pollution and violence, as a pathway to economic and social mobility. Our passage plan is to disrupt the current against progress of intergenerational poverty, disease, and environmental degradation.

Getting to this destination comports with my life’s course thus far, given that psychosocial stressors are recognized as a fundamental environmental justice disproportionate-impact factor. Yale’s Elevate Policy Lab, which operates the Mental Health Outreach for Mothers Partnership, provides mental health care to disadvantaged mothers as heads of households and fosters collaboration with community organizations, health care providers, and government partners for systemic change.

Mariners are charged with ensuring that each sail on the vessel is drawing maximally at the same time, knowing that the set of each affects the other. At this point in my career, my course now requires achieving the best trim for each of three goals at the same time. We are simultaneously aiming at health, economic, and environmental challenges facing disadvantaged populations. In my triple-bottom-line justice approach, we are working with women experiencing toxic stress from food insecurity, transportation limitations, and domestic violence, helping to increase their capacity to improve their maternal mental health and help them meaningfully engage in government decisions that affect their lives.

We seek to dislodge the anchors that are the root causes of disparities, strengthen meaningful engagement of impacted populations, and improve measurable, cost-effective outcomes. We rely on the community-based experience that fills my entire career now, trusting that meaningful engagement of underserved, overburdened, and underrepresented individuals via all levels of government improves the health also of their communities as measured by the triple bottom line.

As we knew sailing from the northwest tip of Spain to an island off the coast of Africa, and as I know now after a lifetime’s experience, a boat making way in a massive storm cannot stop. In our metaphorical quest to extract from the law of the sea lessons to achieve environmental justice for all people, and for all communities, we must ensure that we first get to the calmer waters off Faro. Only when we get there can we shake out a reef and put the helm over for a course to the finish line. TEF

Environmental and health professionals can benefit by learning the story the sea has to tell about knowing your destination, bringing the whole crew on board, and making port despite stormy seas and contrary winds. What’s your metaphor for managing your career?

Discounting Benefits of Saving Human Life
Author
Stephen R. Dujack - Environmental Law Institute
Environmental Law Institute
Current Issue
Issue
5

Environmental Protection Agency chief Andrew Wheeler proudly details the administration’s deregulatory record in a Newsweek opinion article published in late July. He frames his success story within President Trump’s January 2017 executive order requiring agencies to eliminate two regulations for each new one. While Wheeler touts the avoided costs, he doesn’t mention the avoided benefits the repealed rules would have provided.

EPA has surpassed the two-for-one goal, Wheeler writes. The agency has taken “five cost-saving deregulatory actions for every one regulation implemented. To date, we have finalized an estimated 64 deregulatory actions, saving an estimated up to $94 billion in regulatory costs, with an additional 39 actions in development projected to save billions more.”

But by definition eliminating rules will “reduce the regulatory burden” by saving on compliance costs. What Wheeler doesn’t mention is that the vast majority of environmental regulations provide benefits that exceed the expenditures. As former EPA Administrator Christie Whitman likes to point out by taking the long view, our system of environmental protection, expensive as it may be on the cost side, has provided immense benefits via improvements to public health and environmental quality while allowing the U.S. economy to prosper hugely in the half century since modern regulation began, making the measures exceedingly popular to the American public.

Wheeler as much agrees that regulation hasn’t undercut growth. His argument is that what might be called the missed benefits of reducing compliance costs haven’t been added to the calculus. However, he leaves out the fact that the benefits of reducing pollution also get eliminated by EPA’s new math.

Wheeler notes that criteria pollutants plunged seven percent in the president’s first three years, but those cuts occurred under existing authorities. In fact, Wheeler turned down the opportunity to lower ambient standards for PM10, which is the most deadly criteria pollutant and which has not declined under Trump. Further, Wheeler’s policies for power plants and cars mean more PM10 compared with the regulatory environment he inherited.

PM10 has in fact been subject to a half century of tightening federal and state requirements, and considerable business and consumer spending to achieve gains in public health that Americans overwhelmingly enjoy.

Similarly, Wheeler takes credit for the fact that “92 percent of community water systems meet all health-based standards, all the time” without noting the achievement is the result of huge taxpayer investment at the federal, state, and local government levels. That investment hasn’t bankrupted America. Instead it has created cheap and safe drinking water as a basic civil right.

Let’s take the Clean Power Plan as an example of what the Trump administration opposes. The CPP “has public health and climate benefits worth an estimated $34 billion to $54 billion per year in 2030, far outweighing the costs of $8.4 billion” according to an Obama EPA fact sheet. The agency notes that if it could better monetize attributes of lessened climate impacts, the cost-benefit ratio would be even more appealing.

Nonetheless, Trump chose to toss out the CPP, justifying the action by reducing the benefits calculations. One way was to increase the discount rate. Economists use the discount rate as a homeowner uses a borrowing rate: to calculate the present-day value (as in a mortgage payment) of a future benefit (a house free and clear, typically in 30 years). By ramping up the rate, the worth of that house in 2050 loses significant dollar value when compared to present-day costs to finance it. The same applies to regulatory benefits achieved that year, coincidentally the target of many deep decarbonization proposals.

Another way was to not count the benefits to other nations due to reductions in emissions on U.S. soil. But why should the value of our actions to reduce a global threat not include all global beneficiaries? It makes no sense when the release of a ton of carbon dioxide spreads to all corners of the planet, causing worldwide effects, to only count the benefits of avoiding that ton that accrue to Americans.

Studying EPA’s revised estimates produced under the new administration, the Congressional Research Service found “the analysis reduced some estimates of the human health ‘co-benefits’ — that is, the benefits resulting from pollutant reductions not directly targeted by the Clean Power Plan.”

These co-benefits include valuable cuts in smog and particulates that the Trump EPA considers invalid inputs into climate change regulatory impact analyses. Thousands of Americans die every year from these pollutants. Reducing this number would provide billions in benefits that the Trump EPA ignores, even though the Clean Air Act requires the agency to reduce dangerous emissions. But pursuing those benefits would take the type of creative rulemaking — and public expenditure — that the administration is eliminating.

The benefits of reduced mortality seemingly don’t count these days. An article in The Hill commenting on EPA’s research into replacing the CPP notes that “a detailed examination of the analysis revealed that the [Trump replacement] regulation would lead to 1,400 more deaths per year than the CPP.” The agency then argued that since the CPP never went into effect, the real baseline is no rule at all, making the replacement automatically appealing. Like magic, the benefits of the Obama rule have disappeared.

Notice & Comment is written by the editor and represents his views.

 

Green Infrastructure Often More Effective, Less Expensive

Hundreds of studies on nature-based solutions to extreme events show that “green infrastructure” is often cheaper and more effective than engineered projects like dams, levees and sea walls, according to a new analysis.

Experts say federal and state governments should heed those findings and increase funding for natural landscapes and systems to reduce climate disaster risk. Solutions include floodplain restoration and “living shorelines” along vulnerable coasts and rivers.

The 44-page “Protective Value of Nature” report released this morning is a joint effort between the National Wildlife Federation and Allied World, a global insurance and reinsurance firm.

“The science is clear — both model-based studies and empirical evidence from around the world show that natural infrastructure can provide significant, quantifiable levels of protection for communities from natural hazards, and is often more cost-effective than structural infrastructure,” said Jessie Ritter, a study co-author and NWF’s director of water resources and coastal policy.

E&E News

“Federal employees across multiple agencies said the administration was racing to complete a half-dozen significant [regulatory] rollbacks over the coming month. . . . Several agency officials said they were surprised that political leaders had shown no sign of letting up amid the pandemic.”

New York Times, March 25

 

“Carbon taxes boost jobs”

A picture is said to be worth a thousand words, a metaphor that we are going to put to the test right now.

The picture in question is a page from the March issue of Scientific American, with the headline quoted above. Those four words are counterintuitive and bound to be irritating to opponents of regulation of greenhouse gases, who predict economic calamity if restrictions are made on firms’ ability to pollute. They have long argued that cutbacks will harm employment while bringing little environmental or public health benefit.

To test that thesis, two researchers put the details of the Green New Deal into the U.S. Energy Information Administration’s National Energy Modeling System to see what it projects on emissions and the employment market. The result is a series of tiny graphs whose message, despite helpful slugs and captions, takes some time to puzzle out.

A series of graphs show that “carbon dioxide emissons go down,” according to a subhead belying the critics. The first shows tons of emissions per year going out to 2050. The data demonstrate that under business as usual, emissions remain flat. But under a $25 per ton carbon tax, they plunge by more than two thirds. The magazine also shows a line representing a $60 tax. It parallels the $25 line but only offers a relatively small additional improvement compared to the lower tax. But the higher tax does result in roughly half the emissions compared with the lower tax, albeit at substantially higher cost to consumers. One can draw different conclusions depending on the choice of baseline.

The magazine then shows emissions at those two tax levels for four sectors. The message remains the same: the higher tax offers little in the way of additional tons negated, but either tax reduces emissions. For homes and businesses, a tax knocks emissions roughly in half. In industry, emissions are down by a quarter. Transportation, however, offers little improvement by 2050 with the $25 tax and strongly suggests that the higher rate is in order, as it will double reductions, modest as they may be.

The remaining images take up the analysis of what the two tax rates would do to the employment market, under the subhead “Jobs Go Up.” According to a caption, “Under a $25 tax, traditional energy-supply jobs, such as fuels or power generations, would decrease, but energy-efficency jobs — construction, manufacturing — would more than compensate, creating a net gain . . . of 4.2 million job years in 2050.” While energy supply jobs remain flat under a $25 tax, they fluctuate markedly at the higher tax rate, showing at first an increase in jobs and then a decrease. Energy-efficiency jobs, however, go up about the same — substantially — under either assumption.

A map of the United States introduces two final graphs, showing the gains or losses in jobs by region at each of the two tax rates. At either level, they present a daunting picture to government because the results vary widely. While under the $25 tax job gains in West South Central and East North Central zoom up, representing the Mississippi/Ohio River basin, gains are only roughly half as much in the rest of the country. And under the $60 tax, while those two regions remain the job leaders, employment is flat in East South Central and actually declines in the West North Central and Pacific regions.

According to another caption summarizing jobs by region, “A $25 carbon tax would add an extra 72 million job years . . . across all nine U.S. Census divisions, compared with business as usual. A $60 tax would add jobs, though not as many.”

Discounting Benefits of Saving Human Life.

Seeing Supplemental Environmental Projects in Light of the Coronavirus Pandemic
Author
Amanda Leiter - American University
American University
Current Issue
Issue
5
Amanda Leiter

Occasionally, the puzzle pieces of history snap neatly together to make a past policy choice appear prescient. The story of the Volkswagen settlement is one example. In 2016, the Department of Justice and others charged Volkswagen with scheming to defeat EPA and California Air Resources Board emissions testing by installing sophisticated cheating devices in over half a million VWs sold in the United States — and by lying and obstructing justice to advance that plan. The defeat devices, which turned off emissions controls except during testing, enabled VW passenger cars to achieve better gas mileage and driving performance, but turned the cars into the NOx-emissions equivalents of tractor-trailer trucks.

In partial settlement of these charges, VW pledged to create an almost $3 billion environmental mitigation trust to fund NOx-emissions-reduction projects around the country. The aim of the trust is twofold: to mitigate the harmful impacts of VW’s scheme, and to focus those mitigation efforts in communities that face the most serious air pollution threats. Potential beneficiary states, tribes, and territories must propose projects to reduce NOx emissions and indicate how the projects will “impact . . . air quality in areas that bear a disproportionate share of the air pollution burden within [the] jurisdiction.” To identify such areas, beneficiaries may consider either air quality or health metrics.

This arrangement illustrates an approach that federal environmental agencies often use to settle enforcement actions: rather than making an alleged polluter pay a fine into the general treasury, why not encourage investment of a larger sum in environmental improvement projects in the community affected by the emissions violation. In theory, funding these supplemental environmental projects or SEPs enables the offender to improve its public image while also mitigating the harmful effects of its actions on the affected community.

However, SEPs have fallen out of favor with the Trump administration. In a March memorandum, the administration banned them, noting that fines for environmental violations are meant to be paid to the U.S. government, for Congress to allocate as it sees fit. In the administration’s view, allowing a polluter to fund a SEP rather than pay a fine “allocate[s] budgetary discretion to officials who are not specifically designated to make such decisions.”

The general legality and wisdom of SEPs are topics for another day; there may well be situations in which it is unwise or even unlawful for federal officials to negotiate workarounds rather than collecting statutory fines. My sole claim is that sometimes SEPs work uncannily well, and the VW settlement offers a case in point.

In order to complete that particular puzzle, we need two more pieces: the onset of the corona-virus pandemic is the first; the second is a recent study of COVID-19 outcomes that suggests long-term exposure to NOx “may be one of the most important contributors to fatality caused by the . . . virus.” To see the relevance of these events, consider one beneficiary of the VW environmental mitigation trust — my hometown, the District of Columbia. The district plans to invest its $8.125 million in VW trust funds in a few key project areas, including replacement of city buses and trash trucks with low-emission electric and natural gas alternatives, and subsidization of private fleets’ efforts to retrofit diesel vehicles with idling reduction or exhaust control technologies.

The majority of these investments will benefit Washington’s two most polluted wards (out of a total of eight). More than half of the bus stops visited by the new low-emission buses, for instance, will be located in those wards. According to the plan the District submitted to managers of the VW trust, investing the funds in this way will provide a cost-effective means of significantly reducing NOx emissions in D.C. neighborhoods where asthma rates are almost three times higher than in the least-polluted wards, and where (not coincidentally) the median household income is less than half of the district-wide median, and the population is more than 90 percent black — and, importantly, where COVID-19 mortality per capita is almost four times higher than in the city’s wealthiest, whitest, and least-polluted wards.

In short, years before the onset of the coronavirus pandemic, negotiators of the VW settlement reached an agreement under which dollars that could have gone into the general treasury to be allocated by politically hamstrung legislators will instead fund numerous projects to mitigate NOx pollution — the very type of pollution that we’ve since learned may be a leading cause of COVID-19 mortality. And the majority of those funds will be spent in the communities hardest hit by NOx pollution and, now, by the virus. There may be good arguments against the use of SEPs in some cases, but subsequent events make this particular application of the approach seem downright visionary.

Amanda Leiter is senior associate dean for faculty and academic affairs at American University. Email her at leiter@wcl.american.edu.

Seeing Supplemental Environmental Projects in Light of the Coronavirus Pandemic.

Benefits Are Benefits — Regardless of How They Are Legally Obtained
Author
Joseph E. Aldy - Harvard Kennedy School
Harvard Kennedy School
Current Issue
Issue
3
Joseph E. Aldy

Over the past year, the Environmental Protection Agency has proposed actions that call into question whether it would fully account for the public health benefits of environmental regulations.

It started when EPA solicited public comment on proposals to exclude any studies whose underlying data are not in the public domain; that would target in particular the reports establishing the relationship between fine particulate pollution and mortality, an emerging field of concern that relies on health data of individuals whose privacy needs to be protected. The agency also suggested generally weighing what it labeled as pollutant-reduction “co-benefits” differently from the benefits of “directly regulated” emissions. In this regard, EPA proposed to exclude consideration of co-benefits such as particulate reductions in the Mercury and Air Toxics Standards.

But whether a pollutant is directly regulated or not has no bearing on whether society is better off. Untargeted emissions may be reduced along with the substance of legal concern because it can be impossible to engineer control equipment for one kind without reducing others. The economist’s perspective reflects the fact that the atmospheric chemistry — a complex mix of emissions and local meteorology — does not distinguish between whether a pollutant is directly regulated or not. The epidemiology of pollutant exposure — characterized by the likelihood someone may fall ill or die prematurely — also does not depend on how a pollutant is regulated.

In evaluating the benefits of a proposed regulation, an economist integrates the insights from these other disciplines with an understanding of how much people are willing to pay to prevent premature mortality and improve their health. We compare the public health outcomes expected under the proposed regulation with what would be expected in the absence of the rule, and monetize this difference.

Economists are able to calculate how much people are willing to pay to reduce their risk of dying in many market contexts. Examples are the wage premium required for working in a risky job or a price premium for a safer automobile. We then apply those findings to the context of regulation. In many Clean Air Act contexts the largest benefits category is the reduction in premature mortality. For the MATS rule, aimed at reducing the toxin that mainly harms the nervous system but does not markedly increase mortality, that shows up principally in the co-benefits of reduced particulates.

In general, premature mortality benefits of a proposed rule, along with other public health benefits, are then compared to its costs. If the benefits exceed the costs, then the proposal would be expected to increase the economic well-being of our population. Economists often refer to this as having positive net social benefits, because the accounting of the benefits goes beyond simply looking at companies’ financial statements and consumer spending to include public health.

Consider this thought experiment in your own evaluation of the MATS rule. Suppose that you could go to a drug store to buy a bottle of Improved Air Quality that includes a mix of reduced mercury and fine particulate pollution. If the benefits you derive from the lower pollution exceed the price on the bottle, then you would buy it. It would not matter how the benefits might be divided between mercury and particulates — it’s the fact that the sum of the benefits across these categories exceeds the price that motivates you to make the purchase.

This isn’t some arcane hypothetical. In our everyday market transactions, we account for the full bundle of benefits when making a purchase decision. If you walk into a restaurant because you are hungry, would you only enjoy the benefits associated with the nutrition level of the food? After all, that’s why you are hungry. Or would you also calculate in the taste, aroma, ambience, and other characteristics of eating a well-presented meal? They may not be primary to meeting your physiological need, but these benefits would likely influence your decision of how much to pay.

Absent regulation, businesses in the private market don’t have to pay for the costs of the pollution they emit. This market failure justifies the public intervention that aims to internalize these costs so that firms have the incentive to reduce their pollution. When we evaluate a regulatory proposal, we aim to mimic how the private market would allocate resources if it were not suffering from the market failure.

In private markets, individuals and corporations account for the whole suite of benefits when deciding on a purchase or investment. Likewise, a rigorous benefit-cost analysis should incorporate all social improvements of the proposal and compare them to the full social costs. Failing to consider the full suite of benefits simply amounts to distorting analysis with the end objective of relaxing regulatory burdens.

Benefits are benefits—regardless of how they are legally obtained.

States Drive Carbon Policy Forward by Electrifying Transportation Sector
Author
Kathleen Barrón - Exelon Corporation
Exelon Corporation
Current Issue
Issue
2
Kathleen Barrón

Over half of our nation’s carbon emissions are produced by the electricity and transportation sectors. In the Northeast and Mid-Atlantic, nine states have worked collaboratively to reduce emissions in generation through the Regional Greenhouse Gas Initiative, now in its 10th year. With a modest impact on consumer bills, RGGI has raised well over $2 billion to invest in energy efficiency, clean energy, and other programs, produced net economic benefits of $4 billion, created 44,000 jobs, and reduced emissions by over 50 percent.

A number of states are looking to build on RGGI’s success through a first-of-its kind emissions allowance program for transportation, responsible for over 40 percent of carbon emissions in the Northeast and Mid-Atlantic. Collaborating through the Transportation Climate Initiative, the states include Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C. New York is actively participating and might officially join later this year.

TCI states could raise a meaningful amount of revenue for investment in clean transportation by requiring wholesale gasoline and diesel distributors to purchase allowances for the embedded emissions of the vehicle fuels they sell in participating states. Even a minimal fee in line with natural price variability would raise a significant amount. As with RGGI, these targeted investments could reduce emissions through investments accelerating deployment of electric vehicles and supporting infrastructure as well as electrifying public transit and other fleets, such as school buses.

Of course, the cost-effectiveness of the TCI program, like RGGI, will depend on how the resulting funds are invested. The regional program’s cap-and-invest structure resulted in economic benefits that well exceeded costs, even before accounting for the significant health and climate benefits of the emissions reductions themselves. A cost-effective program will ensure maximum investment where it is needed the most. Given the scale of the climate challenge, every dollar must be spent wisely to leverage further investment in safe, reliable, and clean transportation for everyone.

Such investments would (and should) vary according to local needs; a notable characteristic of the TCI program is the flexibility it provides for each jurisdiction to focus on programs with the greatest need by the public. Proceeds could be used, for example, on transit and other fleets that bring clean transportation options to low-income and other marginalized communities that may be less able to purchase personal EVs. Further, by cleaning up bus and other depots that tend to concentrate in low-income communities, TCI could have an amplified benefit by improving local air quality. The initiative represents the all-too-rare instance where disadvantaged communities may realize a meaningful share of benefits from clean energy investments.

During 2019, the TCI jurisdictions will dig into policy design, including the identification of regulated entities and fuels and the development of emissions cap levels, monitoring and reporting guidelines, and cost containment and compliance flexibility mechanisms. As with the implementation of RGGI, reaching consensus on many of these issues will be challenging, but is critically important for the region. Given the continued lack of federal action on climate issues, the leadership of the states in pursuing innovative emissions reductions programs like TCI and RGGI is essential in the fight to protect our environment.

TCI and RGGI are notable for another reason: they are examples of states coming together on a regional basis to address a problem. Like electrons in the power grid, people using the nation’s transportation infrastructure cross local and state lines without regard to boundaries. Indeed, the very purpose of a vibrant transportation system is to allow the smooth movement of people and goods across large areas. A system wherein multiple modes of clean transportation “work” across state boundaries is just as essential as a reliable, resilient, and clean power system.

It is exciting to see states bring to the transportation sector the creativity they have used to achieve emissions reductions in the electricity sector. As other jurisdictions consider opportunities to address our climate challenges, they should look to the regional, market-based approaches being used in the Northeast and Mid-Atlantic states — vibrant examples of how to do things right.

States drive carbon policy forward by electrifying transportation sector.

Verification, Accreditation Provide Assurance
Author
Ann Howard - American National Standards Institute
American National Standards Institute
Current Issue
Issue
6
Parent Article

President Reagan famously said, “Trust but verify.” What applied to negotiations with a nuclear-armed and sometimes hostile Soviet Union may apply to today’s situation with verification of carbon reductions by countries and by companies, all of which are in competition with each other. It is also necessary to ensure the competency of third-party verification bodies, a process called accreditation.

Verification bodies evaluate the accuracy of an emission claim. Accreditation ensures that verification bodies are up to the task. Recent history with both mandatory and voluntary systems shows that this double layer of accountability can provide the assurance needed to meet Reagan’s dictum.

There is already a rich array of experiences implementing carbon reduction programs. The World Bank’s Carbon Pricing Dashboard, which provides information on existing and emerging carbon pricing initiatives, lists 51 globally. As a result, we already have several lessons learned about what frameworks work best.

A central lesson is you need a system that builds capacity. Many programs have made improvements over time in response to stakeholder feedback, analysis of results, and, frankly, mistakes. Continual improvement harmonizes processes and cultivates best practices, which strengthens the institutions involved with the carbon abatement scheme. Efforts undertaken by organizations such as the International Organization for Standardization, the UN climate convention, and the World Resources Institute harmonize reporting and verification frameworks globally, improving the overall system of accountability.

Another lesson is that to achieve credible reductions, a coherent framework of clear rules and oversight is essential. For example, the Kyoto Protocol’s Clean Development Mechanism provides for Certified Emission Reductions generated by projects located in developing countries. CERs are based on approved methodologies, and validated and verified by an accredited third party.

Similarly, in Canada, provinces with GHG reporting requirements for industry require third-party verification. The majority of provinces require verification by a body accredited by an International Accreditation Forum member against international standards.

In California, a state program has had great success with similar components. The EU’s Emissions Trading Scheme has continued to improve with the implementation of program reforms and harmonization of accredited verification. Countries such as Kazakhstan and Singapore are establishing similar programs and supporting institutions.

What these programs all have in common are clear rules for reporting GHG emissions and supporting layers of quality assurance. This includes clearly defined roles and responsibilities for participating institutions.

As an example, the International Civil Aviation Organization Council recently adopted reporting and verification rules for the Carbon Offsetting & Reduction Scheme for International Aviation. CORSIA is a global system to address annual increases (above 2020 levels) in total CO2 emissions from international civil aviation. Airlines will be required to calculate emissions from flights and offset them. Doing so will require third-party accredited verification, competent to carry out assurance of GHG estimates.

ICAO recognizes that “capacity building efforts and partnerships must be strengthened in order for ICAO member states to implement what is needed in a short amount of time.” Capacity building here helps not only the aviation sector but also efforts to strengthen national reporting programs.

While assurance that the verifying is done well is sometimes lost in the larger picture, it also plays a leading role. Ensuring that there are sufficient accredited verification bodies in emission trading schemes is an essential first step.

There are over forty accreditation bodies operating GHG programs against international standards and many in development. While the GHG schemes they work with vary from one region to the next, the approach to third-party verification is harmonized and focused on continual improvement.

This quality is achieved through Multilateral Recognition Arrangements. An MLA provides confidence that verification bodies and their activities are assessed equally and consistently by accreditation bodies against international standards and GHG scheme requirements. Such schemes are increasingly interested in utilizing this framework to ensure quality and drive continual improvement.

Climate change is a collective-action program. Without cooperation and coordination, effective mitigation cannot be achieved. Luckily there is an existing framework already established to help.

A Voluntary Federal Framework
Author
Charles Hernick - Citizens for Responsible Energy Solutions
Citizens for Responsible Energy Solutions
Current Issue
Issue
6
A Voluntary Federal Framework

States and local governments have established their own policies to shift toward clean energy for over a decade, and the private sector is providing customers with more clean energy solutions in every part of the economy each new year. Hybrid cars are commonplace, electric vehicles are on the rise, homes and businesses are more energy efficient than ever, and utilities across America are providing renewable power on demand to corporate and residential customers.

As a result, U.S. greenhouse gas emissions have fallen to their lowest levels since 1991, and power-sector emissions are 28 percent below their 2005 peak. Thousands of companies and municipalities now calculate their emissions and have taken measurable steps to reduce their carbon footprint. Green bonds — financial tools often used to reduce greenhouse gas emissions — attracted over $150 billion of investment last year, double what it was the year before.

While these are encouraging signs, there is opportunity to harness these decisions in a more comprehensive way. Currently, these actions are not reported to a single system where they can be aggregated, and their collective impact better understood and optimized. Beyond making reductions on their own, many businesses pay someone else to reduce, avoid, or sequester carbon because it’s cost effective. In the United States alone, a $28 billion a year offset credit market has grown to meet this demand.

Instead of superseding these actions and actors, federal policymakers should build on the achievements of states and momentum inside the private sector by creating a voluntary reporting and offset exchange system that empowers additional actors and actions. A voluntary greenhouse gas emissions registry and standards for carbon offsets will mainstream emissions reductions efforts and increase capital investment in clean energy.

The pressure faced by Congress to address climate change — especially from millennials — and the Trump administration’s simultaneous proposals to replace the Clean Power Plan call for pragmatic policy solutions. Focusing on reporting and offset exchanges is consistent with the market-based mechanisms that states have been using to reduce greenhouse gases for over a decade. Currently, 10 states use compliance-driven cap-and-trade markets; it’s expected that 12 will do so within the next year.

Carbon capture and storage offsets may be a particularly important approach for CPP replacement rulemaking. It is more cost effective than ever since Congress established “45Q” tax credits for this type of voluntary offset early in 2018. However, there must be systems for accounting and transferability to assure American taxpayers of the value and longevity of this approach.

While a voluntary federal reporting and offset accountability system will not satisfy the proponents of firm-handed federal caps and mandates, it is the most politically viable approach to supporting states’ rights and local action and guiding the invisible hand of free markets to further drive down emissions and mitigate climate change.

Rapid adoption of corporate social responsibility practices, sustainability and even shareholder demands are causing many companies to voluntarily report and reduce their emissions. These private efforts are notable and shouldn’t just be applauded—those emissions reductions should be counted.

There is substantial money flowing into these voluntary reductions. The market for green bonds has grown significantly. Green bonds are issued to finance projects — like wind and solar power installation, or capital investments in energy efficiency — with specific environmental outcomes, namely reducing carbon emissions. To date, these bonds have been issued by corporations like Apple and Starbucks, universities, and municipalities across the United States. The doubling of investment in green bonds in just one year happened in part because they are being bundled into mutual funds.

A strictly voluntary federal registry would assist organizations in measuring, reporting, and verifying the carbon in their operations so they can better manage and reduce emissions. As a voluntary approach, there would be no federal mandate, but there would be a national tracking mechanism that could link to, or build off, the existing mandatory federal carbon registry for power plants. A centralized reporting mechanism could be very helpful to the leaders of over 400 cities and municipalities joined together as The Climate Mayors to reduce their own emissions. Additionally, more than 3,500 mayors, governors, CEOs, college presidents, faith organizations, and tribal leaders have moved to similarly track and reduce emissions.

Sometimes it is more cost effective to reduce emissions elsewhere rather than cut emissions on your own. To that end, offset credits can be purchased voluntarily to compensate for emissions that occur elsewhere. Offset credits are generated by certified projects or activities that reduce, avoid, or sequester carbon — for example, by switching to cleaner fuel sources, by planting trees that pull carbon dioxide from the air, or by injecting carbon dioxide into the ground. These are offset markets in which a voluntary transaction takes place because the seller has a business interest in developing offset credits and the buyer is either seeking to reduce its own emissions or is regulated and finds it more cost effective to purchase offsets.

The buyers of voluntary offset credits typically represent for-profit organizations from the energy, finance and insurance, consumer goods, and events and entertainment industries. General Motors is a top voluntary offset buyer, offsetting 8 million tons of carbon dioxide equivalent over five years, with a budget of $40 million. Other top-offsetting U.S. corporations include Delta Airlines and Pacific Gas and Electric Company.

In the United States, dozens of businesses and organizations develop and sell offset credits totaling 10 million tons of carbon dioxide equivalent valued at $28 million in 2016. Offset projects are spread across the U.S. Methane capture projects make up over 40 percent of the offset market and have been developed in every state. Many forestry projects take place in the Southeast and rice projects are common in the South.

To facilitate growth in offset markets, the federal government should develop guidelines for the voluntary exchange of carbon offset credits — it could, for example, establish common trading units for offsets. A federal standard could result in lower costs for local and state governments to meet emissions-reduction goals. By creating market standards, barriers for small businesses to engage these markets will be reduced and the door to additional markets that have emissions trading systems in Europe and China could someday open.

Creating a framework for common accounting could make local markets more efficient — and assure that voluntary developers of offset credits are accountable for the products they are selling. It may also be particularly important and useful for transparency, since Congress established a tax credit for carbon capture and storage as the first mechanism for voluntary offsets purchases by the American taxpayer.

Focusing on a voluntary reporting and offset exchange is consistent with the market-based mechanisms to control pollution that states have been using for reducing greenhouse gases for over a decade. Indeed, it would preserve states’ rights and leadership in this space. Market-based instruments encourage behavior change — they guide the invisible hand through changes in prices, rather than through explicit directives regarding pollution-control levels or methods. Market-based approaches encourage businesses or individuals to undertake pollution-control efforts that are in their own interests and that collectively meet policy goals if they are well designed and properly implemented.

As they relate to limiting carbon emissions, market-based instruments can be grouped into three categories: government subsidies to clean energy generation, carbon taxes, and tradable carbon emissions permits or allowances. Consistent with the first approach, states have provided subsidies to zero or low-carbon power sources through renewable portfolio standards. RPSs require the increased production of energy from sources such as wind, solar, biomass, and geothermal. In practice, this has created an economic incentive to develop solar and wind projects in particular. Roughly half of all growth in U.S. renewable electricity generation and capacity since 2000 is associated with state RPS requirements. However, these systems can be complex and vary state by state. For example, 29 states use 10 different systems for accounting for RPSs, complicating trading across the country.

A subsidy through direct clean energy tax cuts, however, has never been implemented in any state or at the federal level. While tax credits for solar and wind investment and production are in place, they are scheduled to phase out over the next few years because these subsides were originally intended to help a nascent market get off the ground. Mature markets don’t need help from Uncle Sam. It’s possible to go further and pursue supply-side clean tax cuts. Basic logic dictates that if you want more of something, tax it less. Tax cuts linked to carbon emissions would put a price on carbon by rewarding capital flows to carbon-conserving solutions. This approach requires accounting for carbon reductions, monitoring, and enforcement.

The second type of market-based approach is a carbon tax, which would limit emissions by increasing business costs for carbon-intensive industries. In economic terms, the tax shifts the marginal private cost curve; it is a Pigouvian tax. While carbon taxes have been proposed in various formations at the state, regional (via PJM Interconnection), and federal level, to date no carbon taxes have been implemented in the United States. A key challenge is establishing the level. Any schedule for tax increases must be set by one-time legislation, since Congress will have a hard time adjusting the tax once it is established. The federal gas tax for highway funding — which hasn’t changed since 1993 — is an indication of how hard it is to adjust taxes once they have been established.

Setting the tax escalation rate depends on difficult-to-make assumptions about technological innovation over the period of the policy. If the tax is too high, a rapid shift in the energy market could displace workers and shock the economy. If the tax is too low, the policy won’t achieve emissions reductions goals. There are also major questions about what to do with the revenue collected from a carbon tax. Some have suggested carbon dividends, which would provide direct payments to Americans. But other carbon tax proposals would direct cuts to the corporate tax rate to assure revenue-neutrality and eliminate any additional government bureaucracy needed to administer the program and calculate dividends. However, an additional significant challenge is that a federal carbon tax would need to be wedded with the state-level efforts to decrease emissions through carbon trading.

Carbon trading — more formally tradable carbon emissions permits or allowances — is the third type of market-based approach. While in the halls of Congress, cap-and-trade has been out of favor for years, at the state-level this market-based approach has firmly taken root. Just last year, nine northeastern and mid-Atlantic states renewed their participation in the Regional Greenhouse Gas Initiative, and California, America’s most populous state, extended its cap-and-trade system too. These are compliance-driven cap-and-trade markets. Businesses participate by buying a limited number of emissions allowances sold at auction or by trading unused credits among each other. Right now, nearly one-third of the U.S. economy is already under a compliance-based cap-and-trade program. RGGI states plus California make up 30 percent of our national gross domestic product. If Virginia and New Jersey join the initiative, as their governors anticipate, then over 35 percent of the U.S. economy will be within one of two cap-and-trade systems.

Concerns that a regional cap-and-trade system would create a costly bureaucracy and that markets could be manipulated have proved unfounded. RGGI held the program’s initial auction in September 2008 — the very same month the stock market crashed, bringing on the Great Recession. The RGGI model focused on accountability and transparency, and carbon prices have been lower than expected and the auctions and trades worked as planned. The long-term commitment to RGGI provided enough business certainty for industry to justify investing in clean energy resources, research and development, and updated infrastructure.

The results speak for themselves. Since RGGI was established in 2005, carbon dioxide emissions are down 45 percent and ratepayers have saved billions on their utility bills. The new goal agreed to in 2017 is to reduce the carbon emissions cap by another 30 percent between 2020 and 2030.

This growth is important because cap-and-trade systems become more economically efficient with more states and businesses participating. Larger carbon markets with more competition and options help keep the costs of compliance down.

A voluntary reporting and offset exchange system could make sense of the myriad approaches by states and the private sector by consolidating data and making it more publicly accessible. The benefit to opting into a voluntary system is federal assurance of full public disclosure. A limited federal effort could help protect investors and maintain fair and orderly functioning of voluntary carbon markets. State-level compliance markets would still need their own enforcement mechanisms. But for private actors in the voluntary space, the federal stamp of recognition could crowd-in investment. Perhaps most importantly, a voluntary greenhouse gas emissions registry and standards for carbon offsets will not invent a new federal system that attempts to supersede state progress.

Establishing consistent rules for measurement and exchange could be the missing piece to magnify the impact of the free enterprise system and avoid the legal challenges certain to continue following the Clean Power Plan and its proposed replacement.

Last August, EPA proposed the next regulatory steps to limit carbon emissions from existing power plants. To avoid lawsuits, the Trump administration’s final Affordable Clean Energy rule must both stay within the limitations of the Clean Air Act as defined by Congress and must be responsive to the Environmental Protection Agency’s 2009 endangerment finding. EPA’s approach is constrained by CAA Section 111(a)(1). This part of the law limits the scope of regulation to technologies that can be applied to a single stationary source — the power plant. This is also known as an inside the fence approach that regulates each power plant and smokestack individually. EPA’s mandate under Section 111(d) is limited to writing guidelines for states, so that state-level plans can be approved by the federal government. To inform this guidance, EPA’s rule will focus on the definition of a standard of performance or Best System of Emission Reduction. In other words, how much can emissions be reduced with an acceptable level of financial strain on the power plant?

This type of technology- and performance-based standard is classic command-and-control policymaking. These standards prescribe uniform requirements allowing relatively little flexibility in terms of how goals will be achieved. Although standards may be effective, forcing all businesses to resort to equally expensive means of controlling pollution can lead to relatively high total compliance costs. Because the costs of controlling emissions may vary greatly among power plants, and even among sources within a single plant, the appropriate technology in one situation may not be cost-effective in another. Control costs can vary enormously due to production design, physical configuration, age of assets, or other factors.

Experts say it is not entirely clear how much more can be done to improve coal plant efficiency, at least not without dramatically raising plants’ costs. For example, heat rate improvements were one of the proposed emission-reduction strategies described in the final version of the Obama CPP; but even regional targets may prove too costly to achieve. Plant-by-plant emissions targets are possible but represent a very heavy-handed approach.

A narrow reading of the act and an inside-the- fence power plant standard of performance is sound from a legal and technical standpoint, but it’s not the most cost-effective means for precise emissions reductions. Indeed, it risks ignoring a decade of policy leadership and capital investment by states and businesses. It could bring us back to command-and-control methods for reducing pollution. Only allowing reductions to occur within the fence is unnecessarily narrow. Carbon dioxide and other greenhouse gases are global pollutants. From a global climate change viewpoint, reducing emissions at the power plant is the same as reducing emissions anywhere else. In other words, as far as carbon in the atmosphere goes, avoiding a ton of emission from a power plant is the same as sequestering a ton of carbon through a forestry project. That’s why market-based approaches make the most sense for carbon.

Considering the opportunity for offsets and the use of compliance-based cap-and-trade by 10 states, EPA should focus on creating a flexible approach to limiting carbon. States possess — and must be guaranteed — considerable flexibility in developing their plans. EPA should create options for limiting emissions reductions inside the fence and establish a mechanism for purchasing verified offsets outside the fence. Furthermore, allowing for a broad definition of how the cost calculations can be developed may allow third-party investment via offsets or green bonds to minimize costs to ratepayers. This represents a key opportunity for enabling carbon capture and storage. CCS involves turning the smokestack on a power plant upside down so that emissions are stored underground instead of released into the atmosphere. While there are numerous geologic conditions that need to be just right, the technology exists and works but thus far isn’t cost effective outside of enhanced oil recovery operations.

Establishing consistent rules for measurement and exchange will make market-based solutions more transparent and unleash the free enterprise system to achieve emissions reductions goals. A voluntary greenhouse gas emissions registry and guidelines for the exchange of carbon offset credits will help raise the profile of existing voluntary actions that take place absent government regulation and help crowd in investment. The federal government should encourage buyers in this market motivated by self-defined environmental goals and sellers motivated by environmental interests and economic gain.

Several certification processes and non-governmental organizations verify offsets. Demand has been consistent for years. But the market could be bigger and offsets could play a larger role in driving down emissions if offsets were allowed by EPA’s new rule. Allowing offsets would create technical options for minimizing the cost of carbon emissions reductions.

An era with blossoming financial instruments, multiple means of measurement, and poor market coordination is not unprecedented. Before the stock market crash of 1929, most investors gave little thought to the systemic risk that arose from poor information and the need for basic market rules. The crash was a devastating way to learn a lesson about the need to protect investors and maintain orderly, functioning markets. Out of the ashes, the Securities and Exchange Commission was established to protect investors and markets and to facilitate capital formation. The result has been an economy that remains the envy of the world. With a plethora of market-based approaches being implemented to limit carbon across the United States, a similar approach based on coordination and protection could be helpful to meet today’s challenges.

By establishing a voluntary federal greenhouse gas emissions registry and a system for the voluntary exchange of carbon offset credits, the federal government won’t dictate how carbon emissions will be reduced. It will establish a reliable economic and environmental framework that could help unleash the market’s potential to solve the problem. By promoting public disclosure and a common accounting system for carbon trades, private and public actors at all levels will get credit for emissions reductions that are already taking place. And there will be a bigger spotlight on those actors who are leading emissions reductions. Improved information and clear market signals will help guide finance, including green bonds, to clean energy. The result could be very powerful. And make the United States’ market-based approach the model for how to solve the climate change problem. TEF

CENTERPIECE ❧ Establishing a nationwide system for carbon reporting and an offset exchange will empower states, municipalities, and businesses to decrease emissions while increasing investment in clean energy and improving transparency and accountability.