Senate EPW hearing on CA waiver ignores core issue

Today, as I write, the Senate Environment and Public Works Committee is holding a hearing on the Environmental Protection Agency’s denial of a waiver allowing California to set the first-ever CO2 emission standards for new motor vehicles. Chairman Barbara Boxer (D-Calif.) alleges that the EPA denied the waiver at the behest of industry special interests to the neglect of its duty to protect public health and the environment. EPA Administrator Stephen Johnson is defending the agency’s decision on the grounds that global warming is by definition not exceptionally concentrated in California, unlike bad air quality from traditional pollutants like smog-forming emissions.

Alas, neither Boxer nor Johnson even touch on the core issue. EPA could not authorize California and other states to regulate CO2 emissions under the auspices of the Clean Air Act without creating a regulatory morass that will hinder economic and environmental progress.

If the EPA had granted the waiver, allowing California and other states to adopt CO2 emission standards for new motor vehicles, CO2 would arguably become a pollutant “subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) program. That, in turn, could compel EPA and its state-level counterparts to regulate CO2 from hundreds of thousands of stationary sources, spawning a red-tape nightmare as detrimental to the environment as it to the economy.

Attorneys Peter Glaser and John Cline provide an eye-popping analysis of the economic and administrative burdens that would be created by extending the PSD program to CO2 in a November 8, 2007 testimony before the House Oversight and Government Reform Committee.

Under the PSD program, no new or existing “major” stationary source may be built or modified (if the modification increases emissions) unless the source first obtains a PSD permit. A source is defined as “major” if it is either in one of 28 listed industrial categories and emits at least 100 tons per year of an air pollutant, or is any other type of establishment and emits at least 250 tons per year. “This latter category is particularly troublesome,” warns the U.S. Chamber of Commerce and 18 other business associations in a December 12, 2007 letter to Congress, because hundreds of thousands of small-to-mid-size firms emit 250 tons of CO2 per year.

Two hundred and fifty tons may sound like a lot of “pollution.” It certainly would be for traditional pollutants like sulfur dioxide and particulates. But 250 tons is a miniscule amount of CO2 — roughly the quantity emitted each year by two dozen average homes.

“Major” CO2 sources would include “most large buildings heated by furnaces using fossil fuels (office and apartment buildings, even some very large homes), or buildings of any size using natural gas as a cooking source in a commercial kitchen (such as restaurants, hotels, for-profit hospitals and nursing homes, malls, sports arenas), or businesses that generate or use CO2 naturally as a component of its operations (soda manufacturers, bakers, breweries, wineries),” notes the Chamber letter. All such establishments “may exceed the 250-ton-per year threshold for CO2 emissions.”

The PSD permitting process is costly and time-consuming. As the Chamber letter observes, “It is not uncommon for PSD permits for major sources to cost hundreds of thousands or even millions of dollars and take years to complete.” Glaser and Cline caution that, “No small business requiring a moderate-sized building or facility heated with fossil fuel could operate subject to the PSD permit administrative burden.”

To obtain a PSD permit, a regulated entity must install “best available control technology” (BACT). Nobody knows yet what BACT for CO2 entails. States enforce BACT through case-by-case determinations based on their Clean Air Act State Implementation Plans (SIPs). It could be years before states adopt and EPA approves SIPs with new BACT requirements for CO2.

In the meantime, every major source would operate in regulatory limbo, creating what Glaser and Cline describe as “considerable, and perhaps fatal, uncertainty for businesses.” Indeed, “since BACT determinations for CO2 have no regulatory history at this time, and can vary by type of facility and from state-to-state, businesses wishing to construct new sources or modify existing ones would have no basis for planning what the regulatory requirements will be.”

The real “California Adventure” — what Glaser calls “PSD Hell” — begins once states start making BACT determinations for CO2. The flood of permit applications from potentially hundreds of thousands of “major” stationary sources would overwhelm the state agencies that administer the PSD program. As already noted, determining whether a major source complies with BACT and merits a PSD permit is done on a case-by-case basis and can take years to carry out. Regulating CO2 under PSD would likely not only shut down most construction activity in the United States. It would also cripple the state agencies that enforce the Clean Air Act.

In a December 17, 2007 letter to President Bush, CEI and 20 other free-market advocates pointed out the obvious fact that the Clean Air Act’s motor vehicle provisions are not a mandate to debilitate either the economy or environmental enforcement.

Congress did not intend for provisions dealing solely with emissions from new motor vehicles to suppress construction activity throughout the land. Nor did Congress intend for the California waiver provision to squander state agency resources on inconsequential CO2 emission reductions to the detriment of high-priority, statutorily-prescribed Clean Air Act responsibilities.

Chairman Boxer should applaud, not scold, EPA for following the real will of Congress and protecting both the economy and environment of California and the nation.

Sadly, you won’t ever hear EPA make this compelling defense in its own behalf.