A Free-Market Energy Blog

EPA’s Tailoring Rule: Temporary, Dubious, Incomplete Antidote to Massachusetts v. EPA’s Legacy of Absurd Results (Part 2)

By -- January 8, 2010

This post is Part 2 of my examination of EPA’s Tailoring Rule — the Agency’s attempt to amend the Clean Air Act’s (CAA) Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program so that they can be applied to carbon dioxide (CO2) and other greenhouse gases (GHGs) without spawning an economically-chilling administrative morass. Yesterday’s post argued that the Supreme Court’s decision in Massachusetts v. EPA set the stage for an administrative disaster that EPA rightly describes as “unprecedented” and “absurd.” Today’s post examines the adequacy of the Tailoring Rule as a regulatory relief measure, finds it woefully inadequate, and advises EPA not to oppose legislative action to protect the economy from Mass. v. EPA‘s regulatory fallout.

V. Tailoring Rule: Small Business Protection Is Temporary, Dubious, and Incomplete

Industry is unlikely to challenge the Tailoring Rule, since it aims to shield substantial numbers of small entities from PSD and Title V regulation of CO2 for a period of six years. However, the business community would be unwise to rely on the Tailoring Rule for protection from the regulatory fallout of Mass v. EPA.

First, as noted earlier, the Tailoring Rule is actually an Amending Rule and, hence, is legally dubious. The Tailoring Rule proposes sweeping “categorical exemptions” from the PSD and Title V programs, and, as EPA acknowledges, courts generally have looked with disfavor upon such broad carve-outs in previous administrative necessity cases (TR, 55313).

Second, the “categorical exemptions” proposed in the Tailoring Rule are by design temporary, expiring after six years. EPA envisions the Tailoring Rule as phase one of a “step-by-step process” whereby PSD and Title V apply to smaller and smaller entities (TR, 55305, 55319).  EPA picked 25,000 TPY to be the “major” source applicability threshold for CO2 regulation under PSD and Title V, because any lower threshold would overwhelm the administrative resources of permitting agencies (TR, 55330).  But over the next five years, EPA proposes to develop “streamlined” permitting procedures, expanding the number of firms permitting agencies can regulate. Moreover, agencies will lobby for additional staff and other resources to accommodate larger and larger workloads (TR, 55296).

Even during the initial six-year period, the Tailoring Rule would not shield small entities from other types of CO2 regulation EPA is contemplating:

While EPA is proposing that during the first phase, GHG sources less than 25,000 TPY of CO2e will not be subject to PSD and Title V requirements for purposes of applicability, there are feasible, cost-effective opportunities for reductions from these sources through means other than PSD and Title V during the first phase. The tailoring proposal does not restrict our ability to explore these opportunities during the first phase. EPA has strong interest in pursuing such opportunities and therefore requests your comments on the practicability of near-term regulatory and non-regulatory programs to address smaller sources. [TR, 55325]

Third, most of the “streamlining” procedures EPA is considering after the six-year exemption expires are of questionable legality and effectiveness. Redefining “potential to emit” (PTE) to mean actual emissions would allow many sources to avoid the classification as “major” emitting facilities (TR, 55296).  But the statute specifically defines the PSD and Title V applicability thresholds in terms of PTE. Moreover, as a study by Mark and Portia Mills for the U.S. Chamber of Commerce shows, approximately 1.2 million small entities actually emit 250 TPY of CO2.   All would be vulnerable to new PSD-related regulation, paperwork, penalties, and litigation. There is no explicit authority in the Act’s PSD provisions for “general permits” or “presumptive BACT” determinations. In fact, as EPA acknowledges, these options would appear to conflict with the CAA Sec. 165, which requires a “public hearing” on each PSD permit, and Sec. 169, which requires BACT to be determined for each major source on a “case-by-case” basis (TR, 55321-55323).  At best, these makeshifts would reduce irrational regulatory burden on small entities, not eliminate them.

Fourth, the Tailoring Rule and the future streamlined permitting procedures, even if upheld by courts, would do nothing to shield the U.S. economy from the compliance burdens and market impacts of a NAAQS rulemaking for CO2 and other GHGs. The next section explores this key issue.

VI. NAAQS for CO2: Mass v. EPA‘s Most Absurd Result

Plaintiffs in Mass v. EPA (Brief for Petitioners, August 31, 2006, p. 28) claimed the case dealt solely with emissions from new motor vehicles, arguing, for example, that, “The NAAQS [National Ambient Air Quality Standards] program is entirely separate from the mobile source program at issue in this case.”  That is incorrect.

GHG regulation of motor vehicles would trigger PSD regulation of CO2, and PSD is an essential adjunct of the NAAQS program. The PSD program’s basic purpose is to prevent “significant deterioration” of air quality in areas that comply with NAAQS (CAA Sec. 160).

More importantly, the endangerment finding prerequisite to establishing GHG emissions standards for new motor vehicles would set a precedent for similar endangerment findings under other CAA provisions, including CAA Sec. 108, which governs the first phase of a NAAQS rulemaking.

CAA Sec. 108 requires EPA to begin a NAAQS rulemaking if emissions of an air pollutant from “numerous or diverse mobile or stationary sources” cause or contribute to “air pollution” that “may reasonably be anticipated to endanger public health or welfare.” New motor vehicles – the emission sources at issue in Mass. v. EPA – obviously qualify as numerous mobile sources under CAA Sec. 108. In addition, EPA’s endangerment finding argues that GHG emissions as such, whether from mobile or stationary sources, endanger public health and welfare. Logically, EPA has already made the substantive case for economy-wide GHG regulation under the NAAQS program.

A NAAQS is an allowable pollution concentration standard. It determines how many parts per million (ppm) or billion of a targeted pollutant are permissible in the ambient air. Petitioners in Mass v. EPA asserted that current GHG levels already harm public health and welfare: “Petitioners injuries are not ‘some day’ injuries as respondents contend…; they are injuries in the here and now” (Petitioners’ Final Reply Brief, Nov. 15, 2006, p. 2). Similarly, several endangerment petitions filed since Mass v. EPA (to regulate GHG emissions from aircraft, marine vessels, off-road engines, and heavy-duty trucks) claim that GHG-related “air pollution” already harms public health and welfare (ANPR, 44399).

More importantly, EPA is now on record affirming that “elevated concentrations of greenhouse gases in the atmosphere may reasonably be anticipated to endanger the public health and to endanger the public welfare of current and future generations” (Final Endangerment Finding, 66516). By “elevated concentrations,” EPA means elevated above pre-industrial concentrations, which includes current concentrations. Moreover, EPA says elevated concentrations endanger “current” as well as “future” generations. To repeat, EPA has already affirmed the substance of a CAA Sec. 108 endangerment determination.

Numerous environmental organizations and activists now argue that climate policy in general and NAAQS regulation in particular should aim to lower CO2 concentrations from today’s level (roughly 387 ppm) to 350 ppm.  In December 2009, two eco-litigation groups, the Center for Biological Diversity and 350.org, petitioned EPA to initiate a rulemaking to establish NAAQS for CO2 at 350 ppm and NAAQS for methane and nitrous oxides at pre-industrial levels.

Attaining such NAAQS would definitely require “extreme measures” — exactly what the  Massachusetts Court assured us its decision would not entail. Even stabilization of CO2 concentrations at 450 ppm may not be attainable at an acceptable cost, as Newsweek reporter Sharon Begley learned when she interviewed Cal Tech chemist Nathan Lewis:

Lewis’s numbers show the enormous challenge we face. The world used 14 trillion watts (14 terawatts) of power in 2006. Assuming minimal population growth (to 9 billion people), slow economic growth (1.6 percent a year, practically recession level) and—this is key—unprecedented energy efficiency (improvements of 500 percent relative to current U.S. levels, worldwide), it will use 28 terawatts in 2050. (In a business-as-usual scenario, we would need 45 terawatts.) Simple physics shows that in order to keep CO2 to 450 ppm, 26.5 of those terawatts must be zero-carbon. That’s a lot of solar, wind, hydro, biofuels and nuclear, especially since renewables kicked in a measly 0.2 terawatts in 2006 and nuclear provided 0.9 terawatts. Are you a fan of nuclear? To get 10 terawatts, less than half of what we’ll need in 2050, Lewis calculates, we’d have to build 10,000 reactors, or one every other day starting now. Do you like wind? If you use every single breeze that blows on land, you’ll get 10 or 15 terawatts. Since it’s impossible to capture all the wind, a more realistic number is 3 terawatts, or 1 million state-of-the art turbines, and even that requires storing the energy — something we don’t know how to do — for when the wind doesn’t blow. Solar? To get 10 terawatts by 2050, Lewis calculates, we’d need to cover 1 million roofs with panels every day from now until then. “It would take an army,” he says. Obama promised green jobs, but still.

Note also that under the CAA, states could not wait until 2050 to attain a NAAQS for CO2. Rather, all areas in non-attainment with a “primary” or health-based CO2 NAAQS must come into attainment within five years, or at most 10 years if EPA grants an extension (CAA Sec. 192). Because GHGs tend to be long-lived in the global atmosphere, even if the entire world somehow magically reduced annual emissions to the level prevailing in 1970, when the global economy was only one-third its current size, global CO2 concentrations would still increase to 483 ppm by 2100.  Not even complete collapse of the global economy would be enough to lower CO2 concentrations to 350 ppm in ten years.

If courts agree with CBD and 350.org that EPA is logically committed to find endangerment for GHGs under CAA Sec. 108, what will EPA do? Will the Agency propose another Tailoring Rule to re-imagine the five- and 10-year NAAQS deadlines to mean 50 or 100  years?

Even if courts allow EPA to amend the NAAQS attainment deadlines, a protracted period of NAAQS non-attainment would impose substantial burdens on the economy. EPA would have to regulate major stationary CO2 sources under the Non-Attainment New Source Review (NNSR) pre-construction permitting program, which is more restrictive than PSD. The NNSR cutoff for regulation as a major source is 100 TPY, not 250 TPY as would be the case for most PSD-regulated CO2 sources. To avoid an NNSR administrative debacle, EPA would have to issue yet another tailoring rule.

NNSR-regulated entities must comply with Lowest Achievable Emission Rate (LAER) standards, which are more stringent than BACT because EPA may not take compliance costs into account. Moreover, major sources would have to “offset” any emissions increase from a new or modified source by reducing emissions from an existing source somewhere else (CAA Sec. 173). Roughly speaking, no facilities could be built or expanded anywhere in the nation unless something else shuts down. NNSR would function as a de-facto moratorium on growth.

Although states may take costs into account when developing their plans to implement NAAQS, EPA may not consider costs when setting NAAQS (Whitman v. American Trucking Associations, Inc., 531 U.S. 457, 465, 2001).  Establishing NAAQS for CO2 would turn the CAA into an economy-killer and EPA into a rogue agency. Public outrage would be intense, and pleas that “The Court made us do it!” would likely fall on deaf ears.

VII. Conclusion

EPA is taking an enormous gamble. The Agency is betting that, through the Tailoring Rule, it can control the regulatory cascade set in motion by its endangerment finding. But the Tailoring Rule is legally dubious, and even if courts allow EPA to amend the PSD and Title V permitting programs, the endangerment finding is precedent for a NAAQS rulemaking, which could damage the economy even more than would a PSD/Title V administrative morass.

Having sown the wind, EPA risks reaping a whirlwind of angry opposition from governors, mayors, congressional appropriators, small business, unions, talk radio, etc. No agency likes to surrender power, and for EPA there is no power more seductive than the power to regulate CO2, which would expand the Agency’s reach to virtually every nook and cranny in the economy. Once unleashed, however, the coveted power is subject to the vagaries of litigation. EPA may find itself responsible a regulatory chain reaction it cannot control.

The road EPA has made for itself is fraught with political peril. As noted in yesterday’s post, Rep. Marsha Blackburn (R-TN) has introduced legislation that would overturn Mass. v. EPA by exempting GHGs from regulation under the CAA; Rep. Joe Barton (R-TX) plans to introduce a resolution of disapproval that would overturn EPA’s endangerment finding; and Sen. Lisa Murkowski (R-AK) has introduced a debt ceiling bill amendment that would prohibit EPA from expending funds to regulate CO2 from stationary sources for one year. It is in the Agency’s best interest not to oppose these congressional initiatives.


  1. Roy  

    Pardon me in advance if these points are either off-track or obtuse, but for all the internal flaws with the proposed regulations I see three significant external flaws:

    1. The EPA regs rely in large part on a use of models that would be barred in court — incomplete or inaccessible base data, undisclosed programming, and unreliable experts. Models, after all, are only cartoons to illustrate data and analysis, not conclusions in themselves. If you can’t examine and validate (or repudiate) the data or its analysis, and if the experts are shown to be less than honest or competent, then the models should be excluded from admission. Yes, rule making is not governed by the rules of evidence (I didn’t get my JD from a cereal box!), but the rationale for the evidentiary rule should apply to this process.

    2. If some “greenhouse” gasses are to be regulated because of their potential to impact global climate, how can the EPA avoid regulating the single largest driver — water vapor? Everything I read indicates that there is no better understanding of the hydrological cycle (generation and activity of many kinds of clouds) in general than of the influence GHG’s may have on it. So, if CO2 might increase H2O levels, then shouldn’t “we” strive to reduce all manner of introducing water vapor into the atmosphere? No more cooling towers, no happy acceptance of H2O as a combustion product, no heated, open-air swimming pools, except as permitted under a comprehensive regulatory regime…

    3. And what about the sourcing of CO2 emissions? If a building houses 10,000 persons during a work day, or if 50,000 people are at a sporting event, shouldn’t the aggregate of their CO2 emissions (from breathing) count just as much as the CO2 produced by heating or lighting the facility? As I understand the CLA (from law school a few years ago), the issue is the pollutant, not the source. That’s why (some) people gave President Reagan such a tough time when he pointed to the high ozone levels in national forests as a flaw in the regulation of ozone in general — whether it comes from an industrial activity or nature itself, the law required us to look only at the pollutant itself.

    4. And I guess there is no point in asking the EPA to determine why CO2’s value as the essential nutrient for all plant life on the surface and in the upper seas of the planet, and its value in supporting increases to the health and vitality of all living ecosystems, is not considered in determining whether it is even a “pollutant” for purposes of the CAA…

    I spent a lot of time as a military lawyer trying to get some commanders to think before they make decisions, even though I could take the lazy path of just making sure they didn’t actually break a rule (that someone higher cares about). If the EPA lawyers had a bit more gumption to tell their bosses to pull their collective heads out of the digital haze, instead of enabling them to pull us all into their delirium, then the rest of the world could get along with more important issues…


  2. Jon Boone  

    Apropos Roy’s comment here: Amen! And thanks for posting it.


  3. Marlo Lewis  


    Thanks for your comment. I’ll respond to each of your points in turn.

    1. EPA’s endangerment finding rests on many dubious and murkey assumptions. It is not fit to be a basis for far-reaching regulatory requirements. Several organizations have filed petitions along those lines.

    * On June 23, 2009, and again on August 25 (http://www.uschamber.com/assets/env/uscocpetendangerment.pdf), the U.S. Chamber of Commerce petitioned EPA to conduct an on-the-record hearing to examine various claims made in EPA’s endangerment finding. A key point of their argument is that EPA relies on highly uncertain climate model projections of warming trends and impacts.

    On October 5, 2009, my organization, the Competitive Enterprise Institute (CEI), petitioned EPA to reopen its endangerment proceeding in light of the Climate Research Unit’s (CRU) disclosure that CRU had no longer possessed the original data underpinning its influential global temperature record (http://cei.org/cei_files/fm/active/0/Petition%20Final%20CV.pdf). EPA’s endangerment finding relied on the IPCC reports, which in turn incorporated the CRU record. Absent the original data, the CRU record cannot be reproduced, and non-reproducible research is not science, CEI argued.

    * On December 2, 2009, CEI again petitioned EPA to reopen its endangerment proceeding in light of the Climategate scandal, which casts doubt on all research products emanating from the CRU (http://cei.org/rcandtestimony/2009/12/02/amended-petition-epa-proposed-endangerment-finding-greenhouse-gases).

    * On December 23, 2009, the Southeastern Legal Foundation petitioned EPA for a reconsideration of its endangerment finding, arguing that Climategate undermines EPA’s endangerment finding in three ways: “First, Climategate reveals a serious lack of integrity in the underlying data and models, such that it is doubtful that any process can be trusted until the data and models are validated and their integrity assured. Second, Climategate shows that the processes of peer review, consensus building, and scientific evaluation were fundamentally corrupted to the point that EPA should reconsider its reliance on the reports and analyses that led to the Endangerment Finding. Third, Climategate reveals a disturbing, anti-scientific compulsion for mandatory orthodoxy” (http://www.epalawsuit.com/storage/pdfs/legaldocs/20091223-Petition-for-Reconsideration.pdf).

    2. Your second point is, in my opinion, unpersuasive. There’s a key difference between long-lived greenhouse gases such as CO2, methane, and nitrous oxide, which accumulate in the atmosphere from decades to centuries, and water vapor, which gets rained out in days to weeks. In the climate science debate, enhanced atmospheric moisture is viewed as a feedback, not a primary forcing agent. Supposedly, the warmth from rising levels of CO2 and other long-lived greenhouse gases increase water vapor in the upper troposphere, which traps more outgoing long-wave radiation, creating a positive feedback.
    Nobody knows how to control global water vapor levels, even in principle, except by mitigating the primary forcing agents that supposedly lead to water vapor feedback. Moreover, CO2-induced, H2O-amplified warming supposedly increases the frequency and severity of drought. So the last thing people worried about global warming would want to do, is go out and drain the nearest lake.

    3. I don’t recall the exact figures, but the amount of CO2 that we humans exhale as carbon-based lifeforms is trivial compared to the amount we emit as consumers of carbon-based energy.

    4. Actually, EPA’s endangerment finding does make
    bows of deference to the ecological and health benefits of CO2, acknowledging that higher CO2 levels will boost forest productivity and that warmer temperatures will reduce cold-related mortality. As you’d expect, EPA assumes the negatives will far outweigh the positives. For a different perspective, see the Center for the Science of Carbon Dioxide and Global Change reviews of the scientific literature on CO2 and health (http://www.co2science.org/subject/h/subject_h.php) and CO2 and agriculture (http://www.co2science.org/subject/a/subject_a.php).

    Regards, Marlo


  4. Robert R. Reynolds  

    The EPA is hardly the agency to enforce greenhouse gases because of the critical role played by GHG in keeping our world warm enough to support life. Contrary to claims of Global Warming zealots, our planet has never been too warm for life to thrive. We are at preset in a cooler than normal mode and have been since ice formed at our poles several million years ago. We have had five 100,000 years or more glacial epochs separated by interglacial periods of 10,000 years or more during just the last 1 3/4 million years. No one can say that our present warm spell (Holocene) is permanent. As I see it, the odds are against it.


  5. major  

    Global Warming religion is becoming increasingly dangerous. Theres evidence that Global Warming is linked with several other extremist environmental groups and many other Socialist organizations.

    The GW movement ( I like to refer to it as a bowel movement) is not interested in a dialog or debate, hence not truth. It wants to mop up as many weak minded kool aid drinkers as they can to use as a Ghestapo to go against their oponents, America and Democracy.

    Their current strategy to avoid admitting or recognizing scientific fact, is to stare straight ahead and repeat their environmentalist mantra repeatedly and rapidly; continue to demonize legitimate science without engaging in a rational dialogue or interface; set up their own conferences and meetings only inviting true believers, so they can reinforce their pseudo scientifc belief system.

    The number of organizations that have crossed over to never, never land are startling; NASA, Scientific American, The Weather Channel, Nature, to name a couple…..these, in the paste, were bastions of science, have now adopted the vacant stare of zombies, and repeat endlessly their mindless monologue. This indicates to me that they werent converted en masse but were slowly infiltrated by Gore’s Ghestapo at the leadership level.

    This is a war and people need recognize it as a war, a propaganda war that will soon become a fighting war. To nullify this invasion of the body snatchers, we need to carry out missions into the enemies camp, we need to infiltrate and gather intel to protect ourselves and our Country from these new nazi’s. Climategate is the first sign of the intelligence war against global irrationalism.


  6. Cooler Heads Digest 8 January 2010 | GlobalWarming.org  

    […] EPA’s Legacy of Absurd Results Marlo Lewis, MasterResource.org, 8 January 2010 […]


  7. Cooler Heads Digest 15 January 2010 | GlobalWarming.org  

    […] will not become final until March. To learn more about this regulatory morass, read posts (here and here) from CEI’s Marlo […]


  8. Disapproving of EPA’s CO2 Regulations | The Foundry: Conservative Policy News.  

    […] Air Act. Known as the tailoring rule, the change not only stands on shaky constitutional ground, it also stands on shaky legal ground – floods of lawsuits are likely to come from environmental groups that believe the EPA should […]


  9. Disapproving of EPA’s CO2 Regulations | Conservative Principles Now  

    […] Air Act. Known as the tailoring rule, the change not only stands on shaky constitutional ground, it also stands on shaky legal ground – floods of lawsuits are likely to come from environmental groups that believe the EPA should […]


  10. Did Congress Intend for EPA to Regulate CO2 through the Clean Air Act? | OpenMarket.org  

    […] the Clean Air Act to carbon dioxide leads to “absurd results” — regulatory consequences that conflict with and undermine congressional intent, as […]


  11. Stopping the EPA’s CO2 Regulations | The Foundry: Conservative Policy News.  

    […] entities by raising the pollution thresholds in the Clean Air Act. Known as the tailoring rule, the change stands on shaky legal ground – floods of lawsuits are likely to come from environmental groups that believe the EPA should […]


  12. Rockefeller Bill - Is It Good Enough? | OpenMarket.org  

    […] must now take sole responsibility for EPA’s endangerment rule and the ensuing regulatory cascade. Waxman-Markey and most other cap-and-trade bills contained language preempting EPA regulation of […]


  13. TCEQ to EPA: Don’t Mess with Texas | OpenMarket.org  

    […] the Clean Air Act to greenhouse gases thus produces what EPA itself describes as “absurd results.” For example, EPA and its State counterparts would have to process an estimated 41,000 PSD […]


Leave a Reply