Regulating Greenhouse Gas Emissions Under the Clean Air Act

Note: EPA no longer updates this information, but it may be useful as a reference or resource.
 
PDF Version (50 pp, 5177K, About PDF)

[Federal Register: July 30, 2008 (Volume 73, Number 147)]
[Proposed Rules]
[Page 44353-44402]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jy08-36]
[[Page 44354]]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY
40 CFR Chapter I
[EPA-HQ-OAR-2008-0318; FRL-8694-2]
RIN 2060-AP12

Regulating Greenhouse Gas Emissions Under the Clean Air Act

AGENCY: Environmental Protection Agency (EPA).
ACTION: Advance Notice of Proposed Rulemaking.

-----------------------------------------------------------------------

SUMMARY: This advance notice of proposed rulemaking (ANPR) presents
information relevant to, and solicits public comment on, how to respond
to the U.S. Supreme Court's decision in Massachusetts v. EPA. In that
case, the Supreme Court ruled that the Clean Air Act (CAA or Act)
authorizes regulation of greenhouse gases (GHGs) because they meet the
definition of air pollutant under the Act. In view of the potential
ramifications of a decision to regulate GHGs under the Act, the notice
reviews the various CAA provisions that may be applicable to regulate
GHGs, examines the issues that regulating GHGs under those provisions
may raise, provides information regarding potential regulatory
approaches and technologies for reducing GHG emissions, and raises
issues relevant to possible legislation and the potential for overlap
between legislation and CAA regulation. In addition, the notice
describes and solicits comment on petitions the Agency has received to
regulate GHG emissions from ships, aircraft and nonroad vehicles such
as farm and construction equipment. Finally, the notice discusses
several other actions concerning stationary sources for which EPA has
received comment regarding the regulation of GHG emissions.
    The implications of a decision to regulate GHGs under the Act are
so far-reaching that a number of other federal agencies have offered
critical comments and raised serious questions during interagency
review of EPA's ANPR. Rather than attempt to forge a consensus on
matters of great complexity, controversy, and active legislative
debate, the Administrator has decided to publish the views of other
agencies and to seek comment on the full range of issues that they
raise. These comments appear in the Supplemental Information, below,
followed by the June 17 draft of the ANPR preamble prepared by EPA, to
which the comments apply. None of these documents represents a policy
decision by the EPA, but all are intended to advance the public debate
and to help inform the federal government's decisions regarding climate
change.

DATES: Comments must be received on or before November 28, 2008.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2008-0318, by one of the following methods:
     www.regulations.gov: Follow the on-line instructions for
submitting comments.
     E-mail: a-and-rDocket@epa.gov.
     Fax: 202-566-9744.
     Mail: Air and Radiation Docket and Information Center,
Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460. In addition, please mail a copy of
your comments on the information collection provisions to the Office of
Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725 17th St., NW., Washington, DC
20503.
     Hand Delivery: EPA Docket Center, EPA West Building, Room
3334, 1301 Constitution Ave., NW., Washington DC, 20004. Such
deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2008-0318. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or e-mail.
The www.regulations.gov Web site is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through www.regulations.gov
your e-mail address will be automatically captured and included as part
of the comment that is placed in the public docket and made available
on the Internet. If you submit an electronic comment, EPA recommends
that you include your name and other contact information in the body of
your comment and with any disk or CD-ROM you submit. If EPA cannot read
your comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. For additional
information about EPA's public docket visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm. For additional
instructions on submitting comments, go to Section VII, Public
Participation, of the SUPPLEMENTARY INFORMATION section of this
document.
    Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in www.regulations.gov or in hard copy at the Air and Radiation Docket
and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution
Ave., NW., Washington, DC. The Public Reading Room is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is (202) 566-1744, and the
telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Joe Dougherty, Office of Air and
Radiation, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone
number: (202) 564-1659; fax number: (202) 564-1543; e-mail address:
Dougherty.Joseph-J@epa.gov.

SUPPLEMENTARY INFORMATION:

Preface From the Administrator of the Environmental Protection Agency

    In this Advanced Notice of Proposed Rulemaking (ANPR), the
Environmental Protection Agency (EPA) seeks comment on analyses and
policy alternatives regarding greenhouse gas (GHG) effects and
regulation under the Clean Air Act. In particular, EPA seeks comment on
the document entitled ``Advanced Notice of Proposed Rulemaking:
Regulating Greenhouse Gas Emissions under the Clean Air Act'' and
observations and issues raised by other federal agencies. This notice
responds to the U.S. Supreme Court's decision in Massachusetts v. EPA
and numerous petitions related to the potential regulation of
greenhouse gas emissions under the Clean Air Act.
    EPA's analyses leading up to this ANPR have increasingly raised

[[Page 44355]]

questions of such importance that the scope of the agency's task has
continued to expand. For instance, it has become clear that if EPA were
to regulate greenhouse gas emissions from motor vehicles under the
Clean Air Act, then regulation of smaller stationary sources that also
emit GHGs--such as apartment buildings, large homes, schools, and
hospitals--could also be triggered. One point is clear: The potential
regulation of greenhouse gases under any portion of the Clean Air Act
could result in an unprecedented expansion of EPA authority that would
have a profound effect on virtually every sector of the economy and
touch every household in the land.
    This ANPR reflects the complexity and magnitude of the question of
whether and how greenhouse gases could be effectively controlled under
the Clean Air Act. This document summarizes much of EPA's work and lays
out concerns raised by other federal agencies during their review of
this work. EPA is publishing this notice today because it is impossible
to simultaneously address all the agencies' issues and respond to our
legal obligations in a timely manner.
    I believe the ANPR demonstrates the Clean Air Act, an outdated law
originally enacted to control regional pollutants that cause direct
health effects, is ill-suited for the task of regulating global
greenhouse gases. Based on the analysis to date, pursuing this course
of action would inevitably result in a very complicated, time-consuming
and, likely, convoluted set of regulations. These rules would largely
pre-empt or overlay existing programs that help control greenhouse gas
emissions and would be relatively ineffective at reducing greenhouse
gas concentrations given the potentially damaging effect on jobs and
the U.S. economy.
    Your input is important. I am committed to making the data and
models EPA is using to form our policies transparent and available to
the public. None of the views or alternatives raised in this notice
represents Agency decisions or policy recommendations. It is premature
to do so. Rather, I am publishing this ANPR for public comment and
review. In so doing, I am requesting comment on the views of other
federal agencies that are presented below including important legal
questions regarding endangerment. I encourage the public to (1)
understand the magnitude and complexity of the Supreme Court's
direction in Massachusetts v. EPA and (2) comment on the many questions
raised in this notice.
BILLING CODE 6560-50-P

[[Page 44356]]

[GRAPHIC] [TIFF OMITTED] TP30JY08.000


[[Page 44357]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.001


[[Page 44358]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.002


[[Page 44359]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.003


[[Page 44360]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.004


[[Page 44361]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.005

Department of Transportation

    The Department of Transportation (``the Department'' or ``DOT'')
hereby submits the following preliminary comments on the Environmental
Protection Agency (``EPA'') staff's draft Advance Notice of Proposed
Rulemaking ``Regulating Greenhouse Gas Emissions under the Clean Air
Act,'' which was submitted to the Office of Management and Budget on
June 17, 2008 (``June 17 draft'' or ``draft''). In view of the very
short time the Department has had to review the document, DOT will
offer a longer, more detailed response by the close of the comment
period.

[[Page 44362]]

General Considerations

    In response to Massachusetts v. EPA and multiple rulemaking
petitions, the EPA must consider whether or not greenhouse gases may
reasonably be anticipated to endanger public health or welfare, within
the meaning of the Clean Air Act. Such a determination requires the
resolution of many novel questions, such as whether global or only U.S.
effects should be considered, how imminent the anticipated endangering
effects are, and how greenhouse gases are to be quantified, to name
just a few. Without resolving any of these questions, let alone
actually making an endangerment finding, the June 17 draft presents a
detailed discussion of regulatory possibilities. In other words, the
draft suggests an array of specific regulatory constructs in the
transportation sector under the Clean Air Act without the requisite
determinations that greenhouse gas emissions endanger public health or
welfare and that regulation is feasible and appropriate. In fact, to
propose specific regulations prejudices those critical determinations
and reveals a predilection for regulation that may not be justified.
    Policymakers and the public must consider a broader question: even
if greenhouse gas regulation using a law designed for very different
environmental challenges is legally permissible, is it desirable? We
contend that it is not. We are concerned that attempting to regulate
greenhouse gases under the Clean Air Act will harm the U.S. economy
while failing to actually reduce global greenhouse gas emissions. Clean
Air Act regulation would necessarily be applied unevenly across
sources, sectors, and emissions-causing activities, depending on the
particular existing statutory language in each section of the Act.
Imposing Clean Air Act regulations on U.S. businesses, without an
international approach that involves all of the world's major emitters,
may well drive U.S. production, jobs, and emissions overseas, with no
net improvement to greenhouse gas concentrations.
    The Department believes that the Nation needs a well considered and
sustainable domestic climate change policy that takes into account the
best climatological, technical and economic information available. That
policy--as with any significant matter involving Federal law and
regulation--should also reflect a national consensus that the actions
in question are justified and effective, and do not bring with them
substantial unintended consequences or unacceptable economic costs.
Reducing greenhouse gas emissions across the various sectors of our
economy is an enormous challenge that can be met effectively only
through the setting of priorities and the efficient allocation of
resources in accordance with those priorities.
    It is an illusion to believe that a national consensus on climate
policy can be forged via a Clean Air Act rulemaking. Guided by the
provisions of a statute conceived for entirely different purposes--and
unconstrained by any calculation of the costs of the specific
regulatory approaches it contemplates--such a rulemaking is unlikely to
produce that consensus.
    Administrator Johnson of the EPA said in a recent speech, ``now is
the time to begin the public debate and upgrade [the Clean Air Act's]
components.'' Administrator Johnson has called for fundamental changes
to the Clean Air Act ``to consider benefits, costs, risk tradeoffs and
feasibility in making decisions about how to clean the air.'' This, of
course, is a criticism of the Clean Air Act's ability to address its
intended purposes, let alone purposes beyond those Congress
contemplated. As visualized in the June 17 draft, the U.S. economy
would be subjected to a complex set of new regulations administered by
a handful of people with little meaningful public debate and no ability
to consider benefits, costs, risk tradeoffs and feasibility. This is
not the way to set public policy in an area critical to our environment
and to our economy.
    As DOT and its fellow Cabinet departments argue in the cover letter
to these Comments, using the Clean Air Act as a means for regulating
greenhouse gas emissions presents insurmountable obstacles. For
instance, Clean Air Act provisions that refer to specific pollutants,
such as sulfur dioxide, have been updated many times over the past
three decades. In contrast, the language referring to unspecified
pollutants, which would apply to greenhouse gases, retains, in fossil
form, the 1970s idea that air pollution is a local and regional scale
problem, with pollution originating in motor vehicles and a few large
facilities, for which ``end of pipe'' control technologies exist or
could be invented at acceptable cost. Greenhouse gas emissions have
global scale consequences, and are emitted from millions of sources
around the world. If implemented, the actions that the draft
contemplates would significantly increase energy and transportation
costs for the American people and U.S. industry with no assurance that
the regulations would materially affect global greenhouse gas
atmospheric concentrations or emissions.

Transportation-Related Considerations

    As the Nation's chief transportation regulatory agency, the
Department has serious concerns about the draft's approach to mobile
sources, including, but not limited to, the autos, trucks, and aircraft
that Section VI of the draft considers regulating.
    Title II of the Clean Air Act permits the use of technology-forcing
regulation of mobile sources. Yet Section VI of the draft appears to
presume an endangerment finding with respect to emissions from a
variety of mobile sources and then strongly suggests the EPA's intent
to regulate the transportation sector through an array of source-
specific regulations. Thus, much of Section VI is devoted to describing
and requesting information appropriate to setting technology-forcing
performance standards for particular categories of vehicles and engines
based on an assessment of prospective vehicle and engine technology in
each source category.
    In its focus on technology and performance standards, the draft
spends almost no effort on assessing how different regulatory
approaches might vary in their effectiveness and compliance costs. This
despite the fact that picking an efficient, effective, and relatively
unintrusive regulatory scheme is critically important to the success of
any future program--and far more important at this stage than
identifying the cost-effectiveness of speculative future technologies.
    The draft fails to identify the market failures or environmental
externalities in the transportation sector that regulation might
correct, and, in turn, what sort of regulation would be best tailored
to correcting a specific situation. Petroleum accounts for 99 percent
of the energy use and greenhouse gas emissions in the transportation
sector. Petroleum prices have increased fivefold since 2002. Rising
petroleum prices are having a powerful impact on airlines, trucking
companies, marine operators, and railroads, and on the firms that
supply vehicles and engines to these industries. Petroleum product
prices have doubled in two years, equivalent to a carbon tax of $200
per metric ton, far in excess of the cost of any previously
contemplated climate change measure. Operators are searching for every
possible operating economy, and capital equipment manufacturers are
fully aware that fuel efficiency is a critical selling point for new
aircraft, vehicles, and engines. At this point, regulations could
provide no

[[Page 44363]]

more powerful incentive for commercial operators than that already
provided by fuel prices. Badly designed performance standards would be
at best non-binding (if private markets demand more efficiency than the
regulatory standard) or would actually undermine efficient deployment
of fuel efficient technologies (if infeasible or non-cost-effective
standards are required).
Light Duty Vehicles
    On December 19, 2007, the President signed the Energy Independence
and Security Act (``EISA''), which requires the Department to implement
a new fuel economy standard for passenger cars and light trucks. The
Department's National Highway Traffic Safety Administration (``NHTSA'')
has moved swiftly to comply with this law, issuing a Notice of Proposed
Rulemaking (``NPRM'') on April 22, 2008. The comment period for this
NPRM closed on July 1, 2008. If finalized in its present form, the rule
would reduce U.S. carbon dioxide emissions by an estimated 521 million
metric tons over the lifetime of the regulated vehicles.
    This NPRM is only the latest in a series of NHTSA Corporate Average
Fuel Economy (``CAFE'') program rules proposed or implemented during
this Administration. Indeed, these proposals together represent the
most aggressive effort to increase the fuel economy (and therefore to
reduce the emissions) of the U.S. fleet since the inception of the CAFE
program in 1975.
    In enacting EISA, Congress made careful and precise judgments about
how standards are to be set for the purpose of requiring the
installation of technologies that reduce fuel consumption. Although
almost all technologies that reduce carbon dioxide emissions do so by
reducing fuel consumption, the EPA staff's June 17 draft not only
ignores those congressional judgments, but promotes approaches
inconsistent with those judgments.
    The draft includes a 100-page analysis of a tailpipe carbon dioxide
emissions rule that has the effect of undermining NHTSA's carefully
balanced approach under EISA. Because each gallon of gasoline contains
approximately the same amount of carbon, and essentially all of the
carbon in fuel is converted to carbon dioxide, a tailpipe carbon
dioxide regulation and a fuel economy regulation are essentially
equivalent: they each in effect regulate fuel economy.
    In the draft's analysis of light duty vehicles, the external
benefits of reducing greenhouse gas emissions account for less than 15
percent of the total benefits of improving vehicle efficiency, with the
bulk of the benefits attributable to the market value of the gasoline
saved. Only rather small marginal reductions in fuel consumption or
greenhouse gas emissions would be justified by external costs in
general, and climate change benefits in particular. Thus, the draft
actually describes fuel economy regulations, which generate primarily
fuel savings benefits, under the rubric of environmental policy.
    Though it borrows an analytical model provided by NHTSA, the draft
uses differing assumptions and calculates the effects of the Agency's
standard differently than does the rule NHTSA proposed pursuant to
EISA. The draft conveys the incorrect impression that the summary
numbers such as fuel savings, emission reductions, and economic
benefits that are presented in the draft are comparable with those
presented in NHTSA's NPRM, when in fact the draft's numbers are
calculated differently and, in many cases, using outdated information.
    The draft does not include the provisions of EISA or past, current,
or future CAFE rulemakings in its baseline analysis of light duty
vehicle standards. Thus, the draft inflates the apparent benefits of a
Clean Air Act light duty vehicle rulemaking when much of the benefits
are already achieved by laws and regulations already on the books. The
draft fails to ask whether additional regulation of light duty vehicles
is necessary or desirable, nor gives any serious consideration how
Clean Air Act and EISA authorities might be reconciled.
    The draft comprehensively mischaracterizes the available evidence
on the relationship between safety and vehicle weight. In the draft,
EPA asserts that the safety issue is ``very complex,'' but then adds
that it disagrees with the views of the National Academy of Sciences
(NAS) and NHTSA's safety experts, in favor of the views of a two-person
minority on the NAS panel and a single, extensively criticized article.
    Much of the text of this portion of the draft is devoted to a
point-by-point recitation and critique of various economic and
technological assumptions that NHTSA, the Office of Management and
Budget, and other Federal agencies--among them EPA--painstakingly
calculated over the past year, but that EPA now unilaterally revises
for this draft. It is not clear why it is necessary or desirable to use
one set of analytical assumptions, while the rest of the Federal
Government uses another.
    The public interest is ill-served by having two competing
proposals, put forth by two different agencies, both purporting to
regulate the same industry and the same products in the same ways but
with differing stringencies and enforcement mechanisms, especially
during a time of historic volatility in the auto industry and mere
months after Congress passed legislation tasking another agency with
regulation in this area. The detailed analysis of a light duty vehicle
rule in the draft covers the same territory as does NHTSA's current
rulemaking--and is completely unnecessary for the purposes of an
endangerment finding or for seeking comment on the best method of
regulating mobile source emissions.
Setting Air Quality Standards
    The discussion of the process for setting National Ambient Air
Quality Standards (``NAAQS'') and development of state/Federal
implementation plans for greenhouse gases is presented as an option for
regulating stationary sources, and is placed in the discussion of
stationary sources. The draft describes a scenario in which the entire
country is determined to be in nonattainment.
    Such a finding would reach beyond power plants and other
installations to include vital transportation infrastructure such as
roads, bridges, airports, ports, and transit lines. At a time when our
country critically needs to modernize our transportation
infrastructure, the NAAQS that the draft would establish--and the
development of the implementation plans that would follow--could
seriously undermine these efforts. Because the Clean Air Act's
transportation and general conformity requirements focus on local
impacts, these procedures are not capable of assessing and reducing
impacts of global pollutants without substantial disruption and waste.
    If the entire Nation were found to be in nonattainment for carbon
dioxide or multiple greenhouse gases, and transportation and general
conformity requirements applied to Federal activities, a broad range of
those activities would be severely disrupted. For example, application
of transportation conformity requirements to all metropolitan area
transportation plans would add layers of additional regulations to an
already arduous Federal approval process and expand transportation-
related litigation without any assurance that global greenhouse gas
emissions would be reduced. Indeed, needed improvements to airports,
highways and transit systems that would make the transportation system
more efficient, and thus help reduce greenhouse gas and other
emissions, could be precluded due to

[[Page 44364]]

difficulties in demonstrating conformity. Though the potential for such
widespread impact is clear from even a cursory reading of the draft, it
ignores the issue entirely.
    For these reasons, we question the practicality and value of
establishing NAAQS for greenhouse gases and applying such a standard to
new and existing transportation infrastructure across the Nation.
Heavy Duty Vehicles
    The draft contemplates establishing a greenhouse gas emissions
standard for heavy duty vehicles such as tractor-trailers. The draft's
discussion of trucks makes no mention of the National Academy of
Sciences study required by Section 108 of EISA that would evaluate
technology to improve medium and heavy-duty truck fuel efficiency and
costs and impacts of fuel efficiency standards that may be developed
under 49 U.S.C. Section 32902(k), as amended by section 102(b) of EISA.
This section directs DOT, in consultation with EPA and DOE, to
determine test procedures for measuring and appropriate procedures for
expressing fuel efficiency performance, and to set standards for
medium- and heavy-duty truck efficiency. DOT believes that it is
premature to review potential greenhouse gas emission standards for
medium- and heavy-duty trucks in light of this study and anticipated
future standard-setting action under EISA, and, in any event, that it
is problematic to do so with no accounting of the costs that these
standards might impose on the trucking industry.
    In the case of light duty vehicles, it can be argued that consumers
do not accurately value fuel economy, and regulation can correct this
failure. Heavy-duty truck operators, on the other hand, are acutely
sensitive to fuel costs, and their sensitivity is reflected in the
product offerings of engine and vehicle manufacturers. The argument for
fuel economy or tailpipe emissions regulation is much harder to make
than in the case of light duty vehicles.
    The medium and heavy truck market is more complex and diverse than
the light duty vehicle market, incorporating urban delivery vans, on-
road construction vehicles, work trucks with power-using auxiliaries,
as well as the ubiquitous long-haul truck-trailer combinations.
Further, a poorly designed performance standard that pushes operators
into smaller vehicles may result in greater and not fewer of the
emissions the draft intends to reduce. Because freight-hauling
performance is maximized by matching the vehicle to the load, one
large, high horsepower truck will deliver a large/heavy load at a lower
total and fuel cost than the same load split into two smaller, low
horsepower vehicles.
Railroads
    The Clean Air Act includes a special provision for locomotives,
Section 213(a)(5), which permits EPA to set emissions standards based
on the greatest emission reduction achievable through available
technology. The text of the draft suggests that EPA may consider such
standards to include hybrid diesel/electric locomotives and the
application of dynamic braking.
    As in other sectors, it is hard to imagine how a technology-forcing
regulation can create greater incentives than provided by recent oil
prices. And sensible public policy dictates caution against imposing
unrealistic standards or mandating technology that is not cost-
effective, not reliable, or not completely developed.
Marine Vessels
    The International Maritime Organization (``IMO'') sets voluntary
standards for emissions from engines used in ocean-going marine vessels
and fuel quality through the MARPOL Annex VI (International Convention
for the Prevention of Pollution from Ships, 1973, as modified by the
Protocol of 1978 relating thereto (``MARPOL''), Annex VI, Prevention of
Air Pollution from Ships). Member parties apply these voluntary
standards through national regimes. The IMO is also working to consider
ways to address greenhouse gas emissions from vessels and marine
transportation, including both vessel-based and operational measures.
The U.S. is a participant in these discussions. We believe that the
discussion of ways to reduce greenhouse gas emissions from vessels and
marine transportation should reference the IMO voluntary measures and
discussions, and need not address detailed technological or operational
measures.
Aviation
    The draft includes a lengthy discussion of possible methods by
which to regulate the greenhouse gas emissions of aircraft. For all its
detail, however, the draft does not provide adequate information (and
in some instances is misleading) regarding aviation emissions related
to several important areas: (1) The overwhelming market pressures on
commercial airlines to reduce fuel consumption and therefore carbon
dioxide emissions and the general trends in aviation emissions growth;
(2) expected technology and operational improvements being developed
under the interagency Next Generation Air Transportation System
(``NextGen'') program; (3) the work and role of the International Civil
Aviation Organization (``ICAO'') in aviation environmental matters; (4)
limits on EPA's ability to impose operational controls on aviation
emission; and (5) the scientific uncertainty regarding greenhouse gas
emissions from aircraft.
    First, the draft does not provide the public an accurate picture of
aviation emissions growth. Compared to 2000, U.S. commercial aviation
in 2006 moved 12 percent more passengers and 22 percent more freight
while burning less fuel, thereby reducing carbon output. Further, the
draft's projections of growth in emissions are overstated because they
do not reflect technology improvements in aircraft or air traffic
operations and apparently do not take into account the industry's
ongoing contraction or even the sustained increase in aviation jet fuel
prices in 2007 and 2008. That increase (in 2008, U.S. airlines alone
will spend $60 billion for fuel, compared to $16 billion in 2000)
provides an overwhelming economic incentive for a financially troubled
industry to reduce fuel consumption. Because reduction of a gallon of
jet fuel displaces about 21 pounds of carbon dioxide, that incentive is
the single most effective tool for reducing harmful emissions available
today. Yet the draft makes no note of the trend.
    Second, the draft does not adequately address the multi-agency
NextGen program, one of whose principal goals is to limit or reduce the
impact of aviation emissions on the global climate. This includes
continued reduction of congestion through modernization of the air
traffic control system, continued research on aircraft technologies and
alternative fuels, and expanded deployment of operational advances such
as Required Navigation Performance that allow aircraft to fly more
direct and efficient routes in crowded airspace. Through NextGen, the
Department's Federal Aviation Administration (FAA), in cooperation with
private sector interests, is actively pursuing operational and
technological advances that could result in a 33 percent reduction in
aircraft fuel burn and carbon dioxide emissions.
    Third, the draft gives short shrift to the Administration's efforts
to reduce aviation emissions through a multilateral ICAO process, and
it contemplates regulatory options either never analyzed by EPA or the
aviation community for aircraft (``fleet

[[Page 44365]]

averaging''\1\) or previously rejected by ICAO itself (flat carbon
dioxide standards). The FAA has worked within the ICAO process to
develop guidance for market-based measures, including adoption at the
2007 ICAO Assembly of guidance for emissions trading for international
aviation. ICAO has established a Group on International Aviation and
Climate Change that is developing further recommendations to address
the aviation impacts of climate change.\2\ The FAA's emphasis on
international collaboration is compelled by the international nature of
commercial aviation and the fact that performance characteristics of
engines and airframes--environmental and otherwise--work best when they
maximize consistency among particular national regulations.\3\
---------------------------------------------------------------------------

    \1\ The concept of ``fleet averaging,'' though used for
automobiles, has never been applied to aviation or considered by
either ICAO or FAA as a basis for standard setting. The draft offers
little indication of why the concept would be worth serious
consideration, and it is difficult to understand how that could be,
given that manufacturers turn out only several hundred commercial
airplanes for ``averaging'' annually, compared to over a million
light duty vehicles per year built by large manufacturers. In any
event, if further analysis supports the viability of fleet
averaging, the appropriate venue for pursuing this would be through
ICAO--so that aviation experts from around the world can assess the
concept.
    \2\ In this context, we note that the draft invites comment on
proposals in the European Union regarding an emissions trading
scheme to be imposed by the EU on all Europe-connected commercial
operations. The U.S. Government, led by the Department of State, has
repeatedly argued that any of these proposals, if enacted, would
violate international aviation law and has made clear its opposition
to the proposals in ICAO and other international fora. It is curious
that the EPA would solicit comments on the benefits of proposals
that the United States (along with numerous other nations) opposes
as unlawful and unworkable.
    \3\ The draft is potentially misleading in suggesting that the
fuel flow rate data reported for the ICAO landing and takeoff cycle
engine emissions certification process, and the carbon dioxide
emissions concentrations data collected for calculation and
calibration purposes may be used as the basis for a carbon dioxide
standard.
---------------------------------------------------------------------------

    Fourth, the draft invites comments on potential aviation
operational controls that might have emissions benefits. But proposals
for changes to airspace or air traffic operational procedures usurp the
FAA's responsibility as the Nation's aviation safety regulator and air
traffic manager. It is inappropriate for the EPA to suggest operational
controls without consideration of the safety implications that the FAA
is legally required to address.
    Finally, the draft does not accurately present the state of
scientific understanding of aviation emissions and contains misleading
statements about aviation emissions impacts. The report of the
Intergovernmental Panel on Climate Change (cited in the draft but often
ignored) more clearly conveys cautions about underlying uncertainties
associated with regulating aviation emissions. For instance, the IPCC
specifically concludes that water vapor is a small contributor to
climate change, yet the draft focuses on condensation trails produced
by water vapor and includes an inaccurate statement that carbon dioxide
and water vapor are ``the major compounds from aircraft operations that
are related to climate change.'' Further, the draft does not convey the
significant scientific uncertainty associated with measuring
particulate matter (PM) emissions from aircraft engines. That
understanding needs to be significantly improved before any
``tailpipe'' PM standard could sensibly be considered.

Conclusion

    The EPA has made an enormous effort in assembling the voluminous
data that contributed to the draft as published today. However, because
the draft does not adequately identify or discuss the immense
difficulties and burdens, and the probable lack of attendant benefits,
that would result from use of the Clean Air Act to regulate GHG
emissions, DOT respectfully submits these preliminary comments to point
out some of the problematic aspects of the draft's analysis regarding
the transportation sector. We anticipate filing additional comments
before the close of the comment period.

Department of Energy

I. Introduction

    The U.S. Department of Energy (Department or DOE) strongly supports
aggressively confronting climate change in a rational manner that will
achieve real and sustainable reductions in global greenhouse gas (GHG)
emissions, promote energy security, and ensure economic stability. In
support of these goals, DOE believes that the path forward must include
a comprehensive public discussion of potential solutions, and the
foreseeable impacts of those proposed solutions--including impacts on
energy security and reliability, on American consumers, and on the
Nation's economy.
    The Department supports the actions taken by the United States to
date to address global climate change and greenhouse gas emissions, and
believes these efforts should be continued and expanded. These actions
have included a broad combination of market-based regulations, large
increases in funding for climate science, new government incentives for
avoiding, reducing or sequestering GHG emissions, and enormous
increases in funding for technology research. The Department has played
a significant role in implementing many of these initiatives, including
those authorized by the Energy Policy Act of 2005 and the Energy
Independence and Security Act of 2007.
    The Department believes that an effective and workable approach to
controlling GHG emissions and addressing global climate change should
not simply consist of a unilateral and extraordinarily burdensome Clean
Air Act (CAA or the Act) regulatory program being layered on top of the
U.S. economy, with the Federal Government taking the position that
energy security and indeed the American economy will just have to live
with whatever results such a program produces. Rather, the United
States can only effectively address GHG emissions and global climate
change in coordination with other countries, and by addressing how to
regulate GHG emissions while considering the effect of doing so on the
Nation's energy and economic security. Considering and developing such
a comprehensive approach obviously is enormously difficult.
    Unfortunately, and no doubt due in part to the limitations of the
Clean Air Act itself, the draft Advance Notice of Proposed Rulemaking
prepared by the staff of the Environmental Protection Agency (EPA) does
not take such an approach. That draft Notice, entitled ``Regulating
Greenhouse Gas Emissions under the Clean Air Act'' (``draft''), which
was submitted to the Office of Management and Budget on June 17, 2008,
instead seeks to address global climate change through an enormously
elaborate, complex, burdensome and expensive regulatory regime that
would not be assured of significantly mitigating global atmospheric GHG
concentrations and global climate change. DOE believes that once the
implications of the approach offered in the draft are fully explained
and understood, it will make one thing clear about controlling GHG
emissions and addressing global climate change--unilaterally proceeding
with an extraordinarily burdensome and costly regulatory program under
the Clean Air Act is not the right way to go.
    DOE has had only a limited opportunity to review the June 17 EPA
staff draft, and therefore anticipates providing additional comments at
a later date. Based on the limited review DOE has been able to conduct
so far, it is apparent that the draft reflects extensive work and
includes valuable information, analyses and data that

[[Page 44366]]

should help inform the public debate concerning global climate change
and how to address GHG emissions.
    However, DOE has significant concerns with the draft because it
lacks the comprehensive and balanced discussion of the impacts, costs,
and possible lack of effectiveness were the United States, through the
EPA, to use the CAA to comprehensively but unilaterally regulate GHG
emissions in an effort to address global climate change. The draft
presents the Act as an effective and appropriate vehicle for regulating
GHG emissions and addressing climate change, but we believe this
approach is inconsistent with the Act's overarching regulatory
framework, which is based on States and local areas controlling
emissions of air pollutants in order to improve U.S. air quality.
Indeed, the Act itself states that Congress has determined ``air
pollution prevention * * * and air pollution control at its source is
the primary responsibility of States and local governments,'' CAA Sec. 
101(a)(3); that determination is reflected in the Act's regulatory
structure. The CAA simply was not designed for establishing the kind of
program that might effectively achieve global GHG emissions controls
and emissions reductions that may be needed over the next decades to
achieve whatever level of atmospheric GHG concentration is determined
to be appropriate or necessary.
    Although the draft recognizes that the CAA does not authorize
``economy-wide'' cap and trade programs or emission taxes, it in
essence suggests an elaborate regulatory regime that would include
economy-wide approaches and sector and multi-sector trading programs
and potentially other mechanisms yet to be conceived. The draft has the
overall effect of suggesting that under the CAA, as it exists today, it
would be possible to develop a regulatory scheme of trading programs
and other mechanisms to regulate GHG emissions and thus effectively
address global climate change. It is important to recognize, however,
that such programs have not yet been fully conceived, in some cases
rely on untested legal theories or applications of the Act, would
involve unpredictable but likely enormous costs, would be invasive into
virtually all aspects of the lives of Americans, and yet would yield
benefits that are highly uncertain, are dependent on the actions of
other countries, and would be realized, if at all, only over a long
time horizon.
    The draft takes an affirmative step towards the regulation of
stationary sources under the Act--and while it is easy to see that
doing so would likely dramatically increase the price of energy in this
country, what is not so clear is how regulating GHG emissions from such
sources would actually work under the CAA, or whether doing so would
effectively address global climate change. Other countries also are
significant emitters of GHGs, and ``leakage'' of U.S. GHG emissions
could occur--that is, reduced U.S. emissions simply being replaced with
increased emissions in other countries--if the economic burdens on U.S.
GHG emissions are too great. In that regard, CAA regulation of GHG
emissions from stationary sources would significantly increase costs
associated with the operation of power plants and industrial sources,
as well as increase costs associated with direct energy use (e.g.,
natural gas for heating) by sources such as schools, hospitals,
apartment buildings, and residential homes.
    Furthermore, in many cases the regulatory regime envisioned by the
draft would result in emission controls, technology requirements, and
compliance costs being imposed on entities that have never before been
subject to direct regulation under the CAA. Before proceeding down that
path, EPA should be transparent about, and there should be a full and
fair discussion about, the true burdens of this path--in terms of its
monetary cost, in terms of its regulatory and permitting burden, and in
terms of exactly who will bear those costs and other burdens. These
impacts are not adequately explored or explained in the draft. What
should be crystal clear, however, is that the burdens will be enormous,
they will fall on many entities not previously subject to direct
regulation under the Act, and all of this will happen even though it is
not clear what precise level of GHG emissions reduction or atmospheric
GHG concentration level is being pursued, or even if that were decided,
whether the CAA is a workable tool for achieving it.
    In the limited time DOE has had to review the draft, DOE primarily
has focused on the extent to which the draft addresses stationary
sources and the energy sector. Based on DOE's review, we briefly
discuss below (1) the inadequacy of CAA provisions for controlling
greenhouse gas emissions from stationary sources as a method of
affecting global GHG concentrations and addressing global climate
change; (2) the potential costs and effects of CAA regulation of GHG
emissions on the U.S. electric power sector; and (3) considerations for
U.S. action to address GHG emissions from stationary sources in the
absence of an effective global approach for addressing climate change
and worldwide GHG emissions.

II. The Ineffectiveness and Costs Associated with CAA Regulation of
Greenhouse Gas Emissions from Stationary Sources

    The draft states that it was prepared in response to the decision
of the United States Supreme Court in Massachusetts v. EPA, 549 U.S. --
----, 127 S. Ct. 1438 (2007). In that case, the Court held that EPA has
the authority to regulate GHG emissions from new motor vehicles because
GHGs meet the Clean Air Act's definition of an ``air pollutant.'' Id.
at 1460. As a result, under section 202(a) of the Act, the EPA
Administrator must decide whether, ``in his judgment,'' ``the emission
of any air pollutant from any class or classes of new motor vehicles or
new motor vehicle engines'' ``cause, or contribute to, air pollution
which may reasonably be anticipated to endanger public health or
welfare.'' If the EPA Administrator makes a positive endangerment
finding, section 202(a) states that EPA ``shall by regulation prescribe
* * * standards applicable to the emission of'' the air pollutant with
respect to which the positive finding was made.
    The Supreme Court stated that it did not ``reach the question
whether on remand EPA must make an endangerment finding, or whether
policy concerns can inform EPA's actions in the event that it makes
such a finding.'' Instead, the Court said that when exercising the
``judgment'' called for by section 202(a) and in deciding how and when
to take any regulatory action, ``EPA must ground its reasons for action
or inaction in the statute.''
    As a result, and based on the text of section 202(a) of the Clean
Air Act, any EPA ``endangerment'' finding must address a number of
issues that involve interpretation of statutory terms and the
application of technical or scientific data and judgment. For example,
an endangerment determination must involve, among other things, a
decision about the meaning of statutory terms including ``reasonably be
anticipated to,'' ``cause, or contribute to,'' ``endanger,'' and
``public health or welfare.'' Moreover, because the Act refers to ``air
pollutant'' in the singular, presumably EPA should make any
endangerment finding as to individual greenhouse gases and not as to
all GHGs taken together, but this also is a matter that EPA must
address and resolve. There are other issues that must be resolved as
well, such as: whether the ``public health and welfare'' should be
evaluated with respect to the United States alone or, if foreign
impacts can or

[[Page 44367]]

should or must be addressed as well, what the statutory basis is for
doing so and for basing U.S. emissions controls on foreign impacts;
what time period in the future is relevant for purposes of determining
what is ``reasonably anticipate[d]''; whether and if so how EPA must
evaluate any beneficial impacts of GHG emissions in the United States
or elsewhere in making an endangerment determination; and whether a
particular volume of emissions or a particular effect from such
emissions from new motor vehicles must be found before EPA may make a
``cause or contribute'' finding, since the Act explicitly calls for the
EPA Administrator to exercise his ``judgment,'' and presumably that
judgment involves more than simply a mechanistic calculation that one
or more molecules will be emitted.
    If EPA were to address these issues and resolve them in favor of a
positive endangerment finding under section 202(a) of the Act with
respect to one or more greenhouse gases and in favor of regulating GHG
emissions from new motor vehicles, then the language similarities of
various sections of the CAA likely would require EPA also to regulate
GHG emissions from stationary sources. A positive endangerment finding
and regulation of GHGs from new motor vehicles likely would immediately
trigger the prevention of significant deterioration (PSD) permit
program which regulates stationary sources that either emit or have the
potential to emit 250 tons per year of a regulated pollutant or, if
they are included on the list of source categories, at least 100 tons
per year of a regulated pollutant. Because these thresholds are
extremely low when considered with respect to GHGs, thousands of new
sources likely would be swept into the PSD program necessitating time
consuming permitting processes, costly new investments or retrofits to
reduce or capture GHG emissions, increasing costs, and creating vast
areas of uncertainty for businesses and commercial and residential
development.
    In addition to the PSD program, it is widely acknowledged that a
positive endangerment finding could lead to three potential avenues of
stationary source regulation under the CAA: (1) The setting of national
ambient air quality standards (NAAQS) under sections 108 and 109; (2)
the issuance of new source performance standards (NSPS) under section
111; and/or (3) the listing of one or more greenhouse gases as
hazardous air pollutants (HAP) under section 112. Each of these
approaches, and their associated deficiencies with respect to GHG
emissions and as a method of addressing global climate change, are
briefly discussed below.
a. Sections 108-109: NAAQS
    Section 108 of the CAA requires EPA to identify and list air
pollutants that ``cause or contribute to air pollution which may
reasonably be anticipated to endanger public health or welfare.'' For
such pollutants, EPA promulgates ``primary'' and ``secondary'' NAAQS.
The primary standard is defined as the level which, in the judgment of
the EPA Administrator, based on scientific criteria, and allowing for
an adequate margin of safety, is requisite to protect the public
health. The secondary standard is defined as the level which is
requisite to protect the public welfare. Within one year of EPA's
promulgation of a new or revised NAAQS, each State must designate its
regions as non-attainment, attainment, or unclassifiable. Within three
years from the NAAQS promulgation, States are required to adopt and
submit to EPA a State implementation plan (SIP) providing for the
implementation, maintenance, and enforcement of the NAAQS.
    At least three major difficulties would be presented with respect
to the issuance by EPA of a NAAQS for one or more greenhouse gases: (1)
The determination of what GHG concentration level is requisite to
protect public health and welfare; (2) the unique nature of GHGs as
pollutants dispersed from sources throughout the world and that have
long atmospheric lifetimes; and (3) GHG concentrations in the ambient
air are virtually the same throughout the world meaning that they are
not higher near major emissions sources than in isolated areas with no
industry or major anthropogenic sources of GHG emissions.
    While much has been said and written in recent years about the need
to reduce greenhouse gas emissions to address climate change, there is
far less agreement on the acceptable or appropriate atmospheric
concentration level of CO₂ or other GHGs. As the draft
states, ``[d]etermining what constitutes `dangerous anthropogenic
interference' is not a purely scientific question; it involves
important value judgments regarding what level of climate change may or
may not be acceptable.'' While the Department agrees with this
statement, the courts have held that when setting a NAAQS, EPA cannot
consider important policy factors such as cost of compliance. This
limitation inhibits a rational balancing of factors in determining and
setting a GHG NAAQS based on the science available, the availability
and cost of emission controls, the resulting impact on the U.S.
economy, the emissions of other nations, etc.
    Unlike most pollutants where local and regional air quality, and
local and regional public health and welfare, can be improved by
reducing local and regional emissions, GHGs originate around the globe,
and are mixed and dispersed such that there is a relatively uniform
atmospheric GHG concentration level around the world. There is little
or nothing that a single State or region can do that will appreciably
alter the atmospheric GHG concentration level in that particular State
or region. Thus, it is hard to see how a GHG NAAQS, which required
States to take action to reduce their emissions to meet a particular
air quality standard, would actually work. A GHG NAAQS standard would
put the entire United States in either attainment or non-attainment,
and it would be virtually impossible for an individual State to control
or reduce GHG concentrations in its area and, thus, to make significant
strides towards remaining in or reaching attainment with the NAAQS.
    Whatever level EPA might eventually establish as an acceptable
NAAQS for one or more GHGs, EPA's setting of such a level would
immediately implicate further issues under the NAAQS regime, including
the ability of States and localities to meet such a standard. If the
GHG NAAQS standard for one or more gases is set at a level below the
current atmospheric concentration, the entire country would be in
nonattainment. All States then would be required to develop and submit
State Implementation Plans (SIPs) that provide for meeting attainment
by the specified deadline. And yet, as the draft states, ``it would
appear to be an inescapable conclusion that the maximum 10-year horizon
for attaining the primary NAAQS is ill-suited to pollutants such as
greenhouse gases with long atmospheric residence times * * * [t]he long
atmospheric lifetime of * * * greenhouse gases * * * means that
atmospheric concentrations will not quickly respond to emissions
reduction measures * * * in the absence of substantial cuts in
worldwide emissions, worldwide concentrations of greenhouse gases would
continue to increase despite any U.S. emission control efforts. Thus,
despite active control efforts to meet a NAAQS, the entire United
States would remain in nonattainment for an unknown number of years.''
    As the draft also recognizes, if the NAAQS standard for GHGs is set
at a

[[Page 44368]]

level above the current atmospheric concentration, the entire country
would be in attainment. In a nationwide attainment scenario, the PSD
and new source review (NSR) permitting regimes would apply and States
would have to submit SIPs for the maintenance of the primary NAAQS and
to prevent interference with the maintenance by other States of the
NAAQS; tasks, that as applied to GHGs, are entirely superfluous given
the inability of any single State to change through its own unilateral
action the global or even local concentration level of GHGs.
    As the difficult choices and problematic results outlined above
demonstrate, the inability of a single State to appreciably change
atmospheric GHG concentrations in its own area through its own emission
reduction efforts is inconsistent with a fundamental premise of the
Clean Air Act and of the NAAQS program--that States and localities are
primarily responsible for air pollution control and maintaining air
quality, and that State and local governments can impose controls and
permitting requirements that will allow the State to maintain or attain
air quality standards through its own efforts.
b. Section 111: NSPS
    Section 111 of the CAA requires the EPA Administrator to list
categories of stationary sources if such sources cause or contributes
significantly to air pollution which may reasonably be anticipated to
endanger public health or welfare. The EPA must then issue new source
performance standards (NSPS) for such sources categories. An NSPS
reflects the degree of emission limitation achievable through the
application of the ``best system of emission reduction'' which the EPA
determines has been adequately demonstrated. EPA may consider certain
costs and non-air quality health and environmental impact and energy
requirements when establishing NSPS. Where EPA also has issued a NAAQS
or a section 112 maximum achievable control technology (MACT) standard
for a regulated pollutant, NSPS are only issued for new or modified
stationary sources. Where no NAAQS has been set and no section 112 MACT
standard issued, NSPS are issued for new, modified, and existing
stationary sources.
    Regulation of GHGs under section 111 presents at least two key
difficulties. First, EPA's ability to utilize a market system such as
cap and trade has not been confirmed by the courts. EPA's only attempt
to establish a cap and trade program under section 111, the ``Clean Air
Mercury Rule,'' was vacated by the U.S. Court of Appeals for the
District of Columbia Circuit, though on grounds unrelated to EPA's
authority to implement such a program under section 111. DOE believes
EPA does have that authority, as EPA previously has explained, but
there is legal uncertainty about that authority, which makes a GHG
market-oriented program under section 111 uncertain.
    Second, EPA's regulation of small stationary sources (which account
for a third of all stationary source emissions) would require a
burdensome and intrusive regulatory mechanism unlike any seen before
under the CAA. If EPA were to determine that it cannot feasibly issue
permits to and monitor compliance for all of these sources, a section
111 system presumably would cover only large stationary sources, which
would place the compliance burden completely on electric generators and
large industrial sources, and reduce any overall effect from the GHG
control regime.
    However, there are questions about whether it would be permissible
for EPA to elect not to regulate GHG emissions from small stationary
sources. Section 111(b)(1) indicates that the Administrator must list a
category of sources if, in his judgment, it causes, or contributes
significantly to, air pollution which may reasonably be anticipated to
endanger public health and welfare. Given the volume of greenhouse
gases that are emitted from small stationary sources in the aggregate,
it is uncertain whether, if EPA makes a positive endangerment finding
for emissions of one or more GHGs from new motor vehicles, EPA could
conclude that small stationary sources do not cause ``or contribute
significantly'' to air pollution that endangers the public health or
welfare. This might well turn on the interpretation and application of
the terms in CAA section 202(a), noted above. Regardless, it is
uncertain whether, and if so where, EPA could establish a certain GHG
emission threshold for determining what sources or source categories
are subject to GHG regulations under section 111. What does seem clear
is that regulating GHG emissions under section 111 would entail
implementation of an enormously complicated, costly, and invasive
program.
c. Section 112: HAP
    Section 112 contains a list of hazardous air pollutants subject to
regulation. A pollutant may be added to the list because of adverse
health effects or adverse environmental effects. DOE believes it would
be inappropriate for greenhouse gases to be listed as HAPs given, among
other things, EPA's acknowledgment that ambient GHG concentrations
present no health risks. Nevertheless, if one or more GHGs were listed
under section 112, EPA would have to list all categories of ``major
sources'' (defined as sources that emit or potentially emit 10 tons per
year of any one HAP or 25 tons per year of any combination of HAPs).
For each major source category, EPA must then set a maximum available
control technology (MACT) standard.
    It is entirely unclear at this point what sort of MACT standard
would be placed on which sources for purposes of controlling GHG
emissions, what such controls would cost, and whether such controls
would be effective. However, complying with MACT standards with respect
to GHG emission controls likely would place a significant burden on
States and localities, manufacturing and industrial facilities,
businesses, power plants, and potentially thousands of other sources
throughout the United States. As the draft explains, section 112
``appears to allow EPA little flexibility regarding either the source
categories to be regulated or the size of sources to regulate * * * EPA
would be required to regulate a very large number of new and existing
stationary sources, including smaller sources * * * we believe that
small commercial or institutional establishments and facilities with
natural gas fired furnaces would exceed this major source threshold;
indeed, a large single family residence could exceed this threshold if
all appliances consumed natural gas.''
    Compliance with the standards under section 112 is required to be
immediate for most new sources and within 3-4 years for existing
sources. Such a strict timeline would leave little to no time for
emission capture and reduction technologies to emerge, develop, and
become cost-effective.
d. Effects of CAA Regulation of GHGs on the U.S. Energy Sector
    While the Department has general concerns about the portrayal of
likely effects of proposals to regulate GHGs under the CAA on all
sectors of the U.S. economy, DOE is particularly concerned about the
effects of such regulation on the energy sector. The effects of broad
based, economy-wide regulation of GHGs under the CAA would have
significant adverse effects on U.S. energy supplies, energy
reliability, and energy security.
    Coal is used to generate about half of the U.S. electricity supply
today, and the Energy Information Administration (EIA) projects this
trend to continue

[[Page 44369]]

through 2030. (EIA AEO 2008, at 68) At the electricity generating plant
itself, conventional coal-fired power stations produce roughly twice as
much carbon dioxide as a natural gas fired power station per unit of
electricity delivered. Given this reality, the effect of regulating
emissions of GHGs from stationary sources under the CAA could force a
drastic shift in the U.S. power sector. As Congressman John D. Dingell,
Chairman of the U.S. House of Representatives Committee on Energy and
Commerce, explained in a statement issued on April 8, 2008:

    ``As we move closer to developing policies to limit and reduce
emissions, we must be mindful of the impact these policies have on
the price of all energy commodities, particularly natural gas. What
happens if efforts to expand nuclear power production and cost-
effectively deploy carbon capture and storage for coal-fired
generation are not successful? You know the answer. We will drive
generation to natural gas, which will dramatically increase its
price tag. We don't have to look too far in the past to see the
detrimental effect that high natural gas prices can have on the
chemical industry, the fertilizer industry, and others to know that
we must be conscious of this potential consequence.''

Chairman Dingell's view is supported by studies of the climate bill
recently considered by the United States Senate. EIA's analysis of the
Lieberman-Warner bill stated that, under that bill, and without
widespread availability of carbon capture and storage (CCS) technology,
natural gas generation would almost double by 2030. See Energy
Information Administration, Energy Market and Economic Impacts of S.
2191, the Lieberman-Warner Climate Security Act of 2007 at 25.\4\
---------------------------------------------------------------------------

    \4\ DOE's Energy Information Administration (EIA) prepared an
analysis of the proposed Lieberman-Warner Climate Security Act of
2007 and projected that if new nuclear, renewable and fossil plans
with carbon capture and sequestration are not developed and deployed
in a time frame consistent with emissions reduction requirements,
there would be increased natural gas use to offset reductions in
coal generation, resulting in markedly higher delivered prices of
natural gas. See Energy Market and Economic Impacts of S. 2191, the
Lieberman-Warner Climate Security Act of 2007 (EIA, April 2008) EIA
estimated price increases from 9.8 cents per kilowatthour in 2020 to
14.5 cents per kilowatthour in 2030, ranging from 11 to 64 percent
higher by 2030. Id., p. 27, Figure 16. EPA's analysis of the
proposed legislation similarly projected electricity prices to
increase 44% in 2030 and 26% in 2050 assuming the growth of nuclear,
biomass or carbon capture and storage technologies. See EPA Analysis
of the Lieberman-Warner Climate Security Act of 2008 (March 14,
2008), pp. 3, 57. If the growth of nuclear, biomass, or carbon
capture and storage technologies was constrained, EPA projected that
electricity prices in 2030 would be 79% higher and 2050 prices would
be 98% higher than the reference scenario prices. Other analyses of
the legislation also projected substantial increases in energy costs
for consumers. See, e.g. Analysis of the Lieberman-Warner Climate
Security Act (S. 2191) Using the National Energy Modeling System (A
Report by the American Council for Capital Formation and the
National Associate of Manufacturers, conducted by Science
Applications International Corporation (SAIC))(study finding
increases in energy prices for residential consumers by 26% to 36%
in 2020, and 108% to 146% in 2030 for natural gas, and 28% to 33% in
2020, and 101% to 129% in 2030 for electricity). Further, in its
analysis o the bill the Congressional Budge Office estimated that
costs of private sector mandates associated with the legislation
would amount to more than $90 billion each year during the 2012-2016
period, most of which cost would ultimately be passed on to
consumers in the form of higher prices for energy and energy-
intensive goods and services. See Congressional Budget Office Cost
Estimate, S. 2191 (April 10, 2008), pp. 2, 19.
---------------------------------------------------------------------------

    If CAA regulation of GHG emissions from stationary sources forces
or encourages a continued move toward natural gas fired electric
generating units, there will be significantly increased demand for
natural gas. Given the limitations on domestic supplies, including the
restrictions currently placed on the production of natural gas from
public lands or from areas on the Outer Continental Shelf, much of the
additional natural gas needed likely would have to come from abroad in
the form of liquefied natural gas (LNG). This LNG would have to be
purchased at world prices, currently substantially higher than domestic
natural gas prices and generally tied to oil prices (crude or product).
To put this into perspective, natural gas closed on June 27, 2008, at
about $13.20/mcf for August delivery, about twice as high as last year
at this time, despite increasing domestic natural gas production. The
reason is that unlike last year, the U.S. has been able to import very
little LNG this year, even at these relatively high domestic prices.
United States inventories of natural gas in storage currently are about
3% below the five year average, and are 16% below last year at this
time. Among other effects, a large policy-forced shift towards
increased reliance on imported LNG would raise energy security and
economic concerns by raising domestic prices for consumers (including
electricity prices) and increasing U.S. reliance on foreign sources of
energy.
    In order for coal to remain a viable technology option to help meet
the world's growing energy demand while at the same time not addressing
GHG emissions, CCS technologies must be developed and widely deployed.
While off-the-shelf capture technologies are available for coal power
plant applications, current technologies are too costly for wide scale
deployment for both new plant construction and retrofit of the existing
fleet of coal-fired power plants. DOE studies (e.g., DOE/NETL Report:
``Cost and Performance Baseline for Fossil Energy Plants,'' May 2007)
show that capturing and sequestering CO₂ with today's
technology is expensive, resulting in electricity cost increases on the
order of 30%-90% above the cost of electricity produced from new coal
plants built without CCS.
    The impact of a policy that requires more production of electricity
from natural gas will be felt not just in the United States but in
worldwide efforts to reduce GHG emissions. Unless U.S. policy supports
rapid development of CCS technologies to the point that they are
economically deployable (i.e., companies are not forced to switch to
natural gas fired electric generating facilities), CCS will not be
installed as early as possible in the China or other developing
nations. In a global climate sense, most of the benefit from new
technology installation will come from the developing countries, and
much of the international benefit would come from providing countries
like China and India with reasonable-cost CCS options for development
of their massive coal resources, on which we believe they will continue
to rely.

III. Energy Policy Considerations for Addressing Climate Change

    The Department is concerned that the draft does not properly
acknowledge collateral effects of using CAA regulation to address
global climate change, particularly in the absence of a regime that
actually will effectively address global climate change by addressing
global GHG emissions. DOE strongly supports efforts to reduce GHG
emissions by advancing technology and implementing policies that lower
emissions, but doing so in a manner that is conscious of and that
increases, rather than decreases, U.S. energy security and economic
security. With these goals in mind, DOE believes policymakers and the
public should be mindful of the considerations briefly described below
as the United States seeks to effectively address the challenge of
global climate change.
    Secretary Bodman has stated that ``improving our energy security
and addressing global climate change are among the most pressing
challenges of our time.'' This is particularly true in light of the
estimate by the International Energy Agency that the world's primary
energy needs will grow by over 50% by 2030.
    In order to address these challenges simultaneously and
effectively, the United States and other countries must make pervasive
and long-term changes. Just as the current energy and environmental
situation did not develop

[[Page 44370]]

overnight, neither can these challenges be addressed and resolved
immediately.
    To ensure that we both improve energy security and reduce GHG
emissions, rather than address one at significant cost to the other,
DOE believes that a number of actions must be taken. None of these
actions is sufficient in itself, and none of these actions can be
pursued to the exclusion of the others.
    Specifically, the United States and other nations must: Bring more
renewable energy online; aggressively deploy alternative fuels; develop
and use traditional hydrocarbon resources, and do so in ways that are
clean and efficient; expand access to safe and emissions-free nuclear
power, while responsibly managing spent nuclear fuel and reducing
proliferation risks; and significantly improve the efficiency of how we
use energy. In all of these things, the Department believes that
technological innovation and advancement is the key to unlocking the
future of abundant clean energy and lower GHG emissions. Therefore,
this innovation and advancement--through government funding, private
investment, and public policies that promote both of these--should be
the cornerstone of any plan to combat global climate change.
    In recent years, DOE has invested billions of dollars to advance
the development of technologies that advance these objectives. For
example, in 2007 DOE funded the creation of three cutting-edge
bioenergy research facilities. These facilities, which are already
showing progress, will seek to advance the production of biofuels that
have significant potential for both increasing the Nation's energy
security and reducing GHG emissions. Since the start of 2007, DOE has
invested well over $1 billion to spur the growth of a robust,
sustainable biofuels industry in the United States.
    DOE also has promoted technological advancement and deployment in
other renewable energy areas such as wind, solar and geothermal power,
and these advancements and policies are producing results. For example,
in 2007, U.S. cumulative wind energy capacity reached 16,818
megawatts--more than 5,000 megawatts of wind generation were installed
in 2007 alone. The United States has had the fastest growing wind power
capacity in the world for the last three years in a row. In addition,
DOE recently issued a solicitation offering up to $10 billion in
federal loan guarantees, under the program authorized by Title XVII of
the Energy Policy Act of 2005, to incentivize the commercial deployment
of new or significantly improved technologies in projects that will
avoid, reduce or sequester emissions of GHGs or other air pollutants.
    DOE strongly believes that nuclear power must play an important
role in any effective program to address global climate change. Indeed,
we believe that no serious effort to effectively control GHG emissions
and address climate change can exclude the advancement and development
of nuclear power. DOE continues to seek advancements in nuclear power
technology, in the licensing of new nuclear power facilities, and in
responsibly disposing of spent nuclear fuel. With respect to new
nuclear power plants, DOE has put in place a program to provide risk
insurance for the developers of the first new facilities, and recently
issued a solicitation offering up to $18.5 billion in federal loan
guarantees for new nuclear power plants.
    Significant advancements have been made in recent years toward the
development of new nuclear facilities. There now are pending at the
Nuclear Regulatory Commission several applications, all of which have
been filed in 2007 or 2008, to license new nuclear generating
facilities. DOE views the filing of these applications and the interest
in licensing and building new nuclear power facilities as very positive
developments from the perspectives of the Nation's electric reliability
and energy security, as well as the effort to control greenhouse gas
emissions. But there still is much to be done, and it will take a
sustained effort both by the private sector and by federal, State and
local governments, to ensure that these facilities are licensed, built
and placed into service.
    As noted above, DOE believes that coal can and must play an
important role in this Nation's energy future. Moreover, regardless
what decisions about coal U.S. policy officials may wish to make, it
seems clear that coal will continue to be used by other countries to
generate electricity for decades to come. It has been noted that China
is building new coal power plant capacity at the incredible rate of one
per week. As a result, it is critically important that we develop and
deploy cost-effective carbon capture and sequestration technology, both
to ensure that we can take advantage of significant energy resources
available in the United States, but also to help enable the control of
emissions in other countries as well.
    DOE believes that cost effective CCS technology must be developed
over the next 10-15 years that could be deployed on new plants built to
meet increasing demand and to replace retiring capital stock, and
retrofitted on existing plants with substantial remaining plant life.
DOE is helping to develop technologies to capture, purify, and store
CO₂ in order to reduce GHG emissions without significant
adverse effects on energy use or on economic growth. DOE's primary CCS
research and development objectives are: (1) Lowering the cost and
energy penalty associated with CO₂ capture from large point
sources; and (2) improving the understanding of factors affecting
CO₂ storage permanence, capacity, and safety in geologic
formations and terrestrial ecosystems.
    Once these objectives are met, new and existing power plants and
fuel processing facilities in the U.S. and around the world will have
the potential to deploy CO₂ capture technologies. Roughly
one third of the United States' carbon emissions come from power plants
and other large point sources. To stabilize and ultimately reduce
atmospheric concentrations of CO₂, it will be necessary to
employ carbon sequestration--carbon capture, separation and storage or
reuse. The availability of advanced coal-fired power plants with CCS to
provide clean, affordable energy is essential for the prosperity and
security of the United States.
    The DOE carbon sequestration program goal is to develop at R&D
scale by 2012, fossil fuel conversion systems that offer 90 percent
CO₂ capture with 99 percent storage permanence at less than
a 10 percent increase in the cost of energy services from new plants.
For retrofits of existing facilities, the task will be much harder, and
the penalties in terms of increased cost of power production from those
plants likely will be much higher. We expect that these integrated
systems for new plants will be available for full commercial
deployment--that is, will have completed the demonstration and early
deployment phase--in the 2025 timeframe. Of course, there are inherent
uncertainties in these projections and long-term research, development,
demonstration and deployment goals.
    In line with the Department's CCS R&D goals, DOE is working with
regional carbon sequestration partnerships to facilitate the
development of the infrastructure and knowledge base needed to place
carbon sequestration technologies on the path to commercialization. In
addition, DOE recently restructured its FutureGen program to accelerate
the near-term deployment of advanced clean coal technology by equipping
new integrated gasification combined cycle (IGCC) or other clean coal
commercial power

[[Page 44371]]

plants with CCS technology. By funding multiple projects, the
restructured FutureGen is expected to at least double the amount of
CO₂ sequestered compared to the concept that previously had
been announced in 2003. The restructured FutureGen approach also will
focus on the challenges associated with avoidance and reduction of
carbon emissions and criteria pollutants through sequestration.
    In order to reduce the demand on our power sector and the
associated emissions of GHGs and other pollutants, we must continue to
support expanded efforts to make our society more efficient, from major
power plants to residential homes. DOE has helped lead this effort
with, among other things, its Energy Star program, a government-backed
joint effort with EPA to establish voluntary efficiency standards that
help businesses and individuals protect the environment and save money
through greater energy efficiency. By issuing higher efficiency
standards for an increasing number of products, the Energy Star program
helps consumers make fully-informed and energy-conscious decisions that
result in reduced emissions of GHGs and other pollutants. Last year
alone, with the help of the Energy Star program, American consumers
saved enough energy to power 10 million homes and avoid GHG emissions
equivalent to the emissions from 12 million cars--all while saving $6
billion in energy costs.

IV. Conclusion

    The Department believes the draft does not address and explain in
clear, understandable terms the extraordinary costs, burdens and other
adverse consequences, and the potentially limited benefits, of the
United States unilaterally using the Clean Air Act to regulate GHG
emissions. The draft, while presenting useful analysis, seems to make a
case for the CAA being the proper vehicle to meaningfully combat global
climate change, but we believe it understates the potential costs and
collateral adverse effects of attempting to regulate GHG emissions and
address climate change through a regulatory scheme that is forced into
the Clean Air Act's legal and regulatory mold.
    Any effective and workable approach to controlling GHG emissions
and addressing global climate change should not simply consist of a
unilateral and extraordinarily burdensome CAA regulatory program that
is placed on top of the U.S. economy with all other existing mandates,
restrictions, etc. simply remaining in place and the Government taking
the position that U.S. energy security and indeed the American economy
will just have to live with whatever results the GHG control program
produces. Rather, the Nation can only effectively address GHG emissions
and global climate change in coordination with other countries, and by
addressing how to regulate GHG emissions while considering the effect
of doing so on the Nation's energy and economic security. Considering
and developing such a comprehensive approach obviously will be very
difficult. But what seems clear is that it would be better than the
alternative, if the alternative is unilaterally proceeding with the
enormously burdensome, complex and costly regulatory program under the
Clean Air Act discussed in the draft, which in the end might not even
produce the desired climate change benefits.

U.S. Department of Commerce

Analysis of Draft Advanced Notice of Proposed Rulemaking

''Regulating Greenhouse Gas Emissions Under the Clean Air Act''
    Overview: This analysis reviews some of the implications of
regulating greenhouse gas (GHG) emissions under the Clean Air Act (CAA)
as outlined in the draft Advance Notice of Proposed Rulemaking
submitted to the Office of Management and Budget on June 17, 2008 (the
draft). The Department of Commerce's fundamental concern with the
draft's approach to using the CAA to regulate GHGs is that it would
impose significant costs on U.S. workers, consumers, and producers and
harm U.S. competitiveness without necessarily producing meaningful
reductions in global GHG emissions.
    Impact on U.S. Competitiveness and Manufacturing: The draft states
that competitiveness is an important policy consideration in assessing
the application of CAA authorities to GHG emissions. It also
acknowledges the potential unintended consequences of domestic GHG
regulation, noting ``[t]he concern that if domestic firms faced
significantly higher costs due to regulation, and foreign firms
remained unregulated, this could result in price changes that shift
emissions, and possibly some production capacity, from the U.S. to
other countries.'' \5\ This is a real issue for any domestic regulation
implemented without an international agreement involving the world's
major emitters.
---------------------------------------------------------------------------

    \5\ EPA draft, pg. 36.
    \6\ EIA International Energy Outlook 2008, http://
www.eia.doe.gov/oiaf/ieo/highlights.html.
---------------------------------------------------------------------------

    However, the draft does not detail the shift in global emissions
that is currently taking place. As the chart below shows, the emissions
of countries outside of the Organization of Economic Cooperation and
Development (OECD) already exceed those of OECD countries. By 2030,
non-OECD emissions are projected to be 72 percent higher than those of
their OECD counterparts.\6\
BILLING CODE 6560-50-P

[[Page 44372]]

[GRAPHIC] [TIFF OMITTED] TP30JY08.006

    Any climate change regulation must take this trend into account.
Greenhouse gas emissions are a global phenomenon, and, as documented in
the draft, require reductions around the world in order to achieve
lower concentrations in the atmosphere. However, the costs of emissions
reductions are generally localized and often borne by the specific
geographic area making the reductions. As a result, it is likely that
the U.S. could experience significant harm to its international
competitiveness if GHGs were regulated under the CAA, while at the same
time major sources of emissions would continue unabated absent an
international agreement.
    Because the draft does not specify an emissions target level, the
implications of national regulation for the U.S. economy as a whole and
for energy price-sensitive sectors in particular are difficult to
forecast. However, recent analysis of emissions targets similar to
those cited in the draft provides a guide to the estimated level of
impacts.
    In April 2008, the Energy Information Administration (EIA) released
an analysis of legislation that set emission reduction targets of 30
percent below 2005 levels by 2030 and 70 percent below 2005 levels by
2050. The EIA estimated that in the absence of international offsets
and with limited development of alternatives, achieving those emission
targets would reduce manufacturing employment by 10 percent below
currently projected levels in 2030. Under the same scenario, the EIA
estimate indicated the emission targets would reduce the output of key
energy-intensive manufacturing industries, such as food, paper, glass,
cement, steel, and aluminum, by 10 percent and the output of non-energy
intensive manufacturing industries by nine percent below currently
projected levels in 2030.\7\
---------------------------------------------------------------------------

    \7\ Energy Market and Economic Impacts of S. 2191, Figure 28 &
29, http://www.eia.doe.gov/oiaf/servicerpt/s2191/economic.html.
---------------------------------------------------------------------------

    The European Union's experience with implementation of its cap-and-

[[Page 44373]]

trade system is also instructive from a competitiveness standpoint. Key
energy intensive industries in Europe have raised concerns about the
competitiveness impacts of the emissions trading system (ETS), arguing
that the ETS would force them to relocate outside of Europe. EU leaders
have responded to these concerns by considering the possibility of
awarding free emissions permits to certain industries, provided the
industries also agreed to reduce emissions.\8\ This illustrates one of
the challenges of crafting an effective national or regional solution
to a global problem.
---------------------------------------------------------------------------

    \8\ Financial Times, ``Brussels softens line on carbon
permits,'' Andrew Bounds, Jan. 22, 2008.
---------------------------------------------------------------------------

    International Trade: In order to address the concern that GHG
regulation in the United States will lead to emissions leakage and
movement of certain sectors to countries without strict carbon
regulations, the draft requests comment on ``trade-related policies
such as import tariffs on carbon or energy content, export subsidies,
or requirements for importers to submit allowances to cover the carbon
content of certain products.'' \9\
---------------------------------------------------------------------------

    \9\ EPA draft, pg. 37.
---------------------------------------------------------------------------

    Applying tariffs to imports from countries without carbon
regulations would have a number of significant repercussions. In
addition to exposing the United States to World Trade Organization
challenges by our trading partners, unilateral U.S. carbon tariffs
could spark retaliatory measures against U.S. exporters, the brunt of
which would fall on U.S. workers, consumers, and businesses. For
example, a World Bank study found that carbon tariffs applied to U.S.
exports to Europe ``could result in a loss of about 7 percent in U.S.
exports to the EU. The energy intensive industries, such as steel and
cement * * * could suffer up to a 30 percent loss.'' \10\
---------------------------------------------------------------------------

    \10\ The World Bank, International Trade and Climate Change:
Economic, Legal, and Institutional Perspectives, 2008, pg. 12.
---------------------------------------------------------------------------

    Moreover, carbon tariffs would actively undermine existing U.S.
trade policy. The U.S. Government has consistently advocated for
reducing tariffs, non-tariff barriers, and export subsidies.
Introducing new tariffs or export subsidies for carbon or energy
content would undermine those efforts with respect to clean energy
technologies specifically and U.S. goods and services more broadly, as
well as invite other countries to expand their use of tariffs and
subsidies to offset costs created by domestic regulations.
    Two examples of U.S. efforts to reduce tariffs or enhance exports
in this area: The United States Trade Representative is actively
engaged in trade talks to specifically reduce tariffs on environmental
technologies, which will lower their costs and encourage adoption,
while the Department of Commerce's International Trade Administration
is currently planning its third ``Clean Energy'' trade mission to China
and India focused on opening these rapidly developing economies to U.S
exporters of state-of-the-art clean technologies. Rather than raising
trade barriers, the U.S. Government should continue to advocate for the
deployment of clean energy technologies through trade as a way to
address global GHG emissions
    The issue of emissions leakage and the potential erosion of the
U.S. industrial base are real concerns with any domestic GHG regulation
proposal outside of an international framework. Accordingly, the proper
way to address this concern is through an international agreement that
includes emission reduction commitments from all the major emitting
economies, not by unilaterally erecting higher barriers to trade.
    Realistic Goals for Reducing Carbon Emissions: Establishing a
realistic goal of emissions reduction is an essential aspect of
designing policies to respond to climate change. Although the draft
does not ``make any judgment regarding what an appropriate [greenhouse
gas] stabilization goal may be,'' the document cites, as an example,
the Intergovernmental Panel on Climate Change's projection that global
CO2 emissions reductions of up to 60 percent from 2000 levels by 2050
are necessary to stabilize global temperatures slightly above pre-
industrial levels.\11\
---------------------------------------------------------------------------

    \11\ EPA draft, pg. 14.
---------------------------------------------------------------------------

    To provide context, it is useful to note that a 60 percent
reduction in U.S. emissions from 2000 levels would result in emissions
levels that were last produced in the United States during the 1950s
(see chart on next page). In 1950, the population in the United States
was 151 million people--about half the current size--and the Gross
Domestic Product was $293 billion.\12\ Without the emergence of
technologies that dramatically alter the amount of energy necessary for
U.S. economic output, the reduction of energy usage necessary to
achieve this goal would have significant consequences for the U.S.
economy.
---------------------------------------------------------------------------

    \12\ U.S. Census Bureau, 1950 Decennial Census; Bureau of
Economic Analysis, National Income and Product Accounts Table.
---------------------------------------------------------------------------

BILLING CODE 6560-50-P

[[Page 44374]]

[GRAPHIC] [TIFF OMITTED] TP30JY08.007

BILLING CODE 6560-50-C
    Moreover, as the draft acknowledges, initial emissions reductions
under the CAA or other mechanism ``may range from only [a] few percent
to 17% or more in some cases. Clearly, more fundamental technological
changes will be needed to achieve deeper reductions in stationary
source GHG emissions over time.'' \13\ But the inability, at this time,
to identify either a realistic emissions target or the technical
feasibility of achieving various levels of reduction is one of the
major flaws of using the draft to assess policy changes of this
magnitude.
---------------------------------------------------------------------------

    \13\ EPA draft, pg. 209.
---------------------------------------------------------------------------

    The draft also notes that ``[a]n economy-wide, market-oriented
environmental regulation has never been implemented before in the
U.S.'' \14\ This point is worth underscoring: The CAA has never been
applied to every sector in the U.S. economy. Instead, the CAA is
generally applied to specific sectors (such as the power sector) or
sources of emissions, and it has included initiatives to address
regional and multi-state air quality issues. While these examples
clearly provide valuable experience in addressing air pollution issues
across state boundaries, using the CAA to regulate GHGs is
significantly more ambitious in scope than anything previously
attempted under the CAA.
---------------------------------------------------------------------------

    \14\ EPA draft, pg. 32.
---------------------------------------------------------------------------

    Accountability and Public Input: The draft contemplates a dramatic
regulatory expansion under the CAA. However, climate policies of this
magnitude are best addressed through legislative debate and scrutiny.
Examining these issues in the legislative context would ensure that
citizens, through their elected representatives, have ample opportunity
to make their views known and to ensure accountability for the
decisions that are made.
    Economic Implications of Applying CAA Authorities: The draft noted
numerous issues of economic significance in analyzing the potential
application of the CAA to stationary sources of GHGs. The Department of
Commerce highlights below some of the most important issues raised in
the draft that could impact U.S. competitiveness, innovation, and job
creation.
    Compliance Costs of Multiple State Regulations Under the CAA: The
draft describes the various authorities under the CAA that could be
applied to GHGs. One such mechanism involves the development of
individual state implementations plans (SIPs) in order to meet a
national GHG emissions reduction standard. As the draft notes, ``[t]he
SIP development process, because it relies in large part on individual
states, is not designed to result in a uniform national program of
emission controls.'' \15\ The draft also raises the potential
implications of this approach: ``[u]nder the traditional SIP approach,
emissions controls on specific source categories would flow from
independent state-level decisions, and could result in a patchwork of
regulations requiring different types and levels of controls in
different states.'' \16\ If this were the result, it could undermine
the benefit of having a national standard and significantly raise
compliance costs. The implications of this approach should be examined
further.
---------------------------------------------------------------------------

    \15\ EPA draft, pg. 181.
    \16\ EPA draft, pg. 187.
---------------------------------------------------------------------------

    Viability of Technological Alternatives: The draft notes that some
of the authorities in the CAA could impose requirements to use
technology that is not commercially viable. For example, when
discussing Standards of Performance for New and Existing Sources, the
draft notes that ``the systems on which the standard is based need only
be `adequately demonstrated' in EPA's view * * * The systems, and
corresponding emission rates, need not be actually in use or achieved
in

[[Page 44375]]

practice at potentially regulated sources or even at a commercial
scale.'' \17\ Similarly, in examining the potential application of the
New Source Review program to nonattainment areas, the draft outlines
the program's required use of the Lowest Available Emissions Rate
(LAER) technology which ``does not allow consideration of the costs,
competitiveness effects, or other related factors associated with the
technology * * * New and modified sources would be required to apply
the new technology even if it is a very expensive technology that may
not necessarily have been developed for widespread application at
numerous smaller sources, and even if a relatively small emissions
improvement came with significant additional cost.'' \18\
---------------------------------------------------------------------------

    \17\ EPA draft, pg. 196.
    \18\ EPA draft, pg. 232.
---------------------------------------------------------------------------

    If CAA requirements such as these were used to regulate GHGs, it
would impose significant costs on those required to adopt the
technology.
    Expanding CAA Regulation to Cover Small Businesses and Non-Profits:
The draft notes that the use of some CAA authorities could extend
regulation to small and previously unregulated emissions sources. For
example, the draft states that the use of one authority under the CAA
could result in the regulation of ``small commercial or institutional
establishments and facilities with natural gas-fired furnaces.'' \19\
This could include large single family homes, small businesses,
schools, or hospitals heated by natural gas. If the CAA was applied in
ways that extended it beyond those traditionally regulated under the
Act, it could have significant economic impacts, and the costs of such
an application should be further analyzed. To put this potential
expansion in context, in 2003 there were 2.4 million commercial non-
mall buildings in the United States that used natural gas, and an
estimated 54 percent of these buildings were larger than 5,000 square
feet.\20\ According to the EIA's 2003 Commercial Building Energy
Consumption Survey, a building between 5,001 to 10,000 square feet
consumes 408,000 cubic feet of natural gas per year.\21\ Based on
preliminary calculations using the EPA's Greenhouse Gas Equivalencies
Calculator, this translates into annual CO₂ emissions of 21
metric tons, which would exceed the allowable threshold under one
provision of the CAA.\22\
---------------------------------------------------------------------------

    \19\ EPA draft, pg. 215.
    \20\ Energy Information Agency, 2003 Commercial Buildings Energy
Consumption Survey-Overview of Commercial Buildings Characteristics,
Table C23.
    \21\ 2003 Commercial Buildings Energy Consumption Survey.
    \22\ Calculation done by converting cubic feet of gas consumed
to therms, and the number of therms then inserted into the EPA
calculator. According to the EPA draft (pg. 214): If GHGs were
listed as a Hazardous Air Pollutant (HAP) under the CAA, the HAP
standard's ``major source thresholds of 10 tons for a single HAP and
25 for any combination of HAP would mean that very small GHG
emitters would be considered major sources.''
---------------------------------------------------------------------------

    The table below taken from the EIA's 2003 Commercial Building
Energy Consumption Survey shows the number and size of U.S. buildings,
providing more detail on the type of structures that could be regulated
if the CAA was applied to GHGs. Based on the estimate of 21 metric tons
of annual emissions from a building 5,000-10,000 square feet in size,
it is likely that schools, churches, hospitals, hotels, and police
stations heated by natural gas could be subject to the CAA. Clearly,
the costs and benefits of such an approach should be examined in
greater detail.

                                      Non-Mall Buildings Using Natural Gas
                          [Number and Floorspace by Principal Building Activity, 2003]
----------------------------------------------------------------------------------------------------------------
                                                                Number of     Total floorspace  Mean square feet
                                                                buildings       (million sq.      per building
                                                               (thousand)           ft.)           (thousand)
----------------------------------------------------------------------------------------------------------------
All Buildings.............................................             2,391            43,468              18.2
Education.................................................               213             7,045              33.1
Food Sales................................................                98               747               7.6
Food Service..............................................               226             1,396               6.2
Health Care...............................................                72             2,544              35.5
    Inpatient.............................................                 7             1,805             257.0
    Outpatient............................................                65               739              11.4
Lodging...................................................                86             4,256              49.7
Mercantile................................................               245             2,866              11.7
Office....................................................               488             8,208              16.8
Public Assembly...........................................               146             2,723              18.6
Public Order and Safety...................................                36               637              17.7
Religious Worship.........................................               220             2,629              11.9
Service...................................................               281             2,496               8.9
Warehouse and Storage.....................................               187             5,494              29.4
Other.....................................................                45             1,252              27.9
Vacant....................................................                49             1,176              24.2
----------------------------------------------------------------------------------------------------------------
Source: from Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey, Table C23.
  (http://www.eia.doe.gov/emeu/cbecs/cbecs2003/detailed_tables_2003/2003set11/2003excel/c23.xls)

    Cost of CAA Permitting: As the draft states, ``the mass emissions
[of CO₂] from many source types are orders of magnitude
greater than for currently regulated pollutants,'' which could result
in the application of the CAA's preconstruction permitting requirements
for modification or new construction to large office buildings, hotels,
apartment building and large retail facilities.\23\ The draft also
notes the potential time impacts (i.e., the number of months necessary
to receive a CAA permit) of applying new permit requirements to
projects and buildings like those noted above that were not previously
subject to the CAA.\24\ The potential economic costs of applying the
CAA permitting regimes to these areas of the economy, such as small
businesses and commercial development, merit a complete assessment of
the costs and benefits of such an approach.
---------------------------------------------------------------------------

    \23\ EPA draft, pg. 224, 225.
    \24\ EPA draft, pg. 227.
---------------------------------------------------------------------------

    Conclusion: Climate change presents real challenges that must be
addressed through focused public policy

[[Page 44376]]

responses. However, the draft raises serious concerns about the use of
the CAA to address GHG emissions. The CAA is designed to reduce the
concentration of pollutants, most of which have a limited lifetime in
the air, while climate change is caused by GHG emissions that linger in
the atmosphere for years. The CAA uses regulations that are often
implemented at the state and regional level, while climate change is a
global phenomenon. The CAA is designed to regulate major sources of
traditional pollutants, but applying those the standards to GHGs could
result in Clean Air Act regulation of small businesses, schools,
hospitals, and churches.
    Using the CAA to address climate change would likely have
significant economic consequences for the United States. Regulation of
GHG emissions through the CAA would mean that the United States would
embrace emissions reductions outside of an international agreement with
the world's major emitters. This would put U.S. firms at a competitive
disadvantage by raising their input costs compared to foreign
competitors, likely resulting in emissions leakage outside of the
United States and energy-intensive firms relocating to less regulated
countries. Such an outcome would not be beneficial to the environment
or the U.S. economy.

Department of Agriculture

    Americans enjoy the safest, most abundant, and most affordable food
supply in the world. Our farmers are extraordinarily productive, using
technology and good management practices to sustain increased yields
that keep up with growing populations, and they are good stewards of
the land they depend upon for their livelihoods. Because of their care
and ingenuity, the United States is projecting an agricultural trade
surplus of $30 billion in 2008.
    Unfortunately, the approach suggested by the Environmental
Protection Agency (``EPA'') staff's draft Advance Notice of Proposed
Rulemaking ``Regulating Greenhouse Gas Emissions under the Clean Air
Act,'' which was submitted to the Office of Management and Budget on
June 17, 2008 (``June 17 draft'' or ``draft ANPR''), threatens to
undermine this landscape. If EPA were to exercise a full suite of the
Clean Air Act (``CAA'') regulatory programs outlined in the draft ANPR,
we believe that input costs and regulatory burden would increase
significantly, driving up the price of food and driving down the
domestic supply. Additionally, the draft ANPR does not sufficiently
address the promise of carbon capture and sequestration, and how a
Clean Air Act regulatory framework could address these issues.

Input Costs

    Two of the more significant components of consumer food prices are
energy and transportation costs, and as these costs rise, they will
ultimately be passed on to consumers in the form of higher food prices.
As the past several months have demonstrated to all Americans, food
prices are highly sensitive to increased energy and transportation
costs. From May 2007 to May 2008, the price of crude oil has almost
doubled, and the price consumers in the United States paid for food has
increased by 5.1%.
    We do not attempt here to address the effects on energy and
transportation costs that would likely flow from a Clean Air Act
approach to regulating greenhouse gases. The expert agencies--the
Department of Energy and the Department of Transportation--have each
included their own brief assessments of such effects. Our analysis
begins with the assumption that these input costs would be borne by
agricultural producers.
    United States commercial agriculture is a highly mechanized
industry. At every stage--field preparation, planting, fertilization,
irrigation, harvesting, processing, and transportation to market--
modern agriculture is dependent on technically complex machinery, all
of which consume energy. Direct energy consumption in the agricultural
sector includes use of gas, diesel, liquid petroleum, natural gas, and
electricity. In addition, agricultural production relies on energy
indirectly through the use of inputs such as nitrogen fertilizer, which
have a significant energy component associated with their production.
    Crop and livestock producers have been seeing much higher input
prices this year. From June 2007 to June 2008, the prices paid by
farmers for fertilizer are up 77%, and the prices paid for fuels have
risen 61%. The prices paid by farmers for diesel fuel alone have
increased by 72% over the past year. In practical terms, these figures
mean that it is becoming far more costly for the producer to farm.
Currently, USDA forecasts that expenditures for fertilizers and lime,
petroleum fuel and oils, and electricity will exceed $37 billion in
2008, up 15% from 2007.
    Depending on the extent to which the Clean Air Act puts further
pressure on energy prices, input costs for indispensible items such as
fuel, feed, fertilizer, manufactured products, and electricity will
continue to rise. A study conducted by USDA's Economic Research Service
(Amber Waves, April 2006) found the impact of energy cost changes on
producers depends on both overall energy expenditures and, more
importantly, energy's share of production costs, with the potential
impacts on farm profits from changes in energy prices greatest for feed
grain and wheat producers. The study also found that variation in the
regional distribution of energy input costs suggests that changes in
energy prices would most affect producers in regions where irrigation
is indispensable for crop production. Less use of irrigation could mean
fewer planted acres or lower crop yields, resulting in a loss of
production. In addition to potential financial difficulties, farmers
fear that future tillage practices could be mandated and livestock
methane management regulated.
    However, the impact of higher energy prices on farmers is only part
of the story. Only 19% of what consumers paid for food in 2006 went to
the farmer for raw food inputs. The remaining 81% covered the cost of
transforming these inputs into food products and transporting them to
the grocery store shelf. Of every $1 spent on U.S.-grown foods, 3.5
cents went toward the costs of electricity, natural gas, and other
fuels used in food processing, wholesaling, retailing, and food service
establishments. An additional 4 cents went toward transportation costs.
This suggests that for every 10 percent increase in energy costs,
retail food prices could increase by as much as 0.75 percent if fully
passed onto consumers. The resulting impact to the consumer of higher
energy prices will be much higher grocery bills. More important,
however, will be the negative effect on our abundant and affordable
food supply.
Regulatory Burden on Agriculture
    In its draft ANPR, EPA contemplates regulating agricultural
greenhouse gas (GHG) emissions under the three primary CAA programs--
National Ambient Air Quality Standards (``NAAQS''), New Source
Performance Standards (``NSPS''), or Hazardous Air Pollutant (``HAP'')
standards. Like the Act itself, these programs were neither designed
for, nor are they suitable to, regulation of greenhouse gases from
agricultural sources. If agricultural producers were covered under such
complex regulatory schemes, most (except perhaps the largest
operations) would be ill-equipped to bear the costly

[[Page 44377]]

burdens of compliance, and many would likely cease farming altogether.
    The two common features of each CAA program are permitting and
control requirements:
    Permitting: Operators who are subject to Title V permitting
requirements--regardless of which CAA program is applicable--are
required to obtain a permit in order to operate. These Title V permits
are subject to a public notice and comment period and contain detailed
requirements for emission estimation, monitoring, reporting, and
recordkeeping. Title V permits may also contain control requirements
that limit the operation of a facility. If a producer desired, or were
compelled by changed circumstances (e.g., changing market demand,
weather events, or pest infestation) to modify his operational plans,
he would be required to first seek a permit modification from EPA or
the State.
    If GHG emissions from agricultural sources are regulated under the
CAA, numerous farming operations that currently are not subject to the
costly and time-consuming Title V permitting process would, for the
first time, become covered entities. Even very small agricultural
operations would meet a 100-tons-per-year emissions threshold. For
example, dairy facilities with over 25 cows, beef cattle operations of
over 50 cattle, swine operations with over 200 hogs, and farms with
over 500 acres of corn may need to get a Title V permit. It is neither
efficient nor practical to require permitting and reporting of GHG
emissions from farms of this size. Excluding only the 200,000 largest
commercial farms, our agricultural landscape is comprised of 1.9
million farms with an average value of production of $25,589 on 271
acres. These operations simply could not bear the regulatory compliance
costs that would be involved.
    Control: Unlike traditional point sources of concentrated emissions
from chemical or manufacturing industries, agricultural emissions of
greenhouse gases are diffuse and most often distributed across large
open areas. These emissions are not easily calculated or controlled.
Moreover, many of the emissions are the result of natural biological
processes that are as old as agriculture itself. For instance,
technology does not currently exist to prevent the methane produced by
enteric fermentation associated with the digestive processes in cows
and the cultivation of rice crops; the nitrous oxide produced from the
tillage of soils used to grow crops; and the carbon dioxide produced by
soil and animal agricultural respiratory processes. The only means of
controlling such emissions would be through limiting production, which
would result in decreased food supply and radical changes in human
diets.
    The NAAQS program establishes national ambient concentration levels
without consideration of specific emission sources. The determination
of which source is required to achieve emission reductions and how to
achieve those reductions is specified in the State Implementation Plans
(``SIPs'') developed by each State. Under a NAAQS regulatory program,
agricultural sources may need to employ Reasonably Available Control
Measures (``RACM'') or, at a minimum, include the use of Reasonably
Available Control Technologies (``RACT''). In the past, such control
measures were established with a national focus for typical industrial
sources. In previously regulated sectors, these control measures and
technologies have typically been associated with improved engineering
or chemical processes; however, agriculture is primarily dependent upon
biological processes which are not readily re-engineered. Given the
nature of many agricultural source emissions, RACM and RACT may not
exist or may be cost prohibitive.
    The NSPS program regulates specific pollutants emitted from
industrial categories for new, modified, or reconstructed facilities.
EPA, rather than individual States, determines who is regulated, the
emission reductions that must be achieved, and the associated control
technologies and compliance requirements. Should EPA choose to regulate
agriculture under NSPS, control requirements would be established at
the national level using a ``one-size-fits-all'' approach. Differences
in farming practices make it difficult to comply with this approach, as
variability exists between types of operations and between similar
operations located in different regions of the United States.
    In addition, regulation of the agricultural sector under a NSPS
program would likely trigger the added challenge of compliance with the
pre-construction permitting process under the Prevention of Significant
Deterioration (``PSD'') program. Triggering pre-construction permits
could result in a requirement to utilize Best Available Control
Technologies (``BACT'') or technologies that achieve the Lowest
Available Emission Reductions (``LAER''). Given the state of available
control methods for agricultural area sources, compliance with these
requirements may not currently be achievable in many instances. Should
BACT or LAER technologies exist, the ability to utilize them across the
variety of farming operations is questionable, and the costs to employ
these technologies would be high since they would be relatively new
technologies.
    Similar to the NSPS program, the HAP program focuses on industrial
categories. EPA must list for regulation all categories of major
sources that emit one or more HAP at levels that are very low (i.e., 10
tons per year of a single HAP or 25 tons per year of a combination of
HAP). Under a HAP program, EPA can regulate both major sources and
smaller (i.e., area) sources. In addition to the Title V permit
requirement, this program would result in emission control requirements
for all agricultural sources regardless of the size of the operation.
These requirements are driven by the best-performing similar sources,
with EPA determining the similarity between sources. This approach does
not lend itself to compliance by agricultural sources whose practices
vary farm-by-farm and locality-by-locality. In addition, the cost of
controls used by the best-performing sources would increase the
operating expenses for all farms regardless of size.
    While this discussion only begins to address the practical
difficulties that agricultural producers will face if EPA were to
regulate GHGs under the CAA, these questions have not been raised in
the draft ANPR in the context of agriculture. USDA believes that these
issues must be thoroughly considered before a rule is finalized.
Capture and Sequestration
    The draft ANPR does not sufficiently address the promise of carbon
capture and sequestration, or how a Clean Air Act regulatory framework
could address these issues. In describing emissions by sector, the
draft ANPR does contain the following brief introductory statement:

    Land Use, Land-Use Change, and Forestry: Land use is not an
economic sector per se but affects the natural carbon cycle in ways
that lead to GHG emissions and sinks. Included in this category are
emissions and sequestration of CO₂ from activities such
as deforestation, afforestation, forest management and management of
agricultural soils. Emissions and sequestration depend on local
conditions, but overall land use in the United States was a net sink
in 2006 equivalent to 12.5 percent of total GHG emissions.

    Thus, the United States Government, as well as private landowners
throughout the country, possess land resources that hold potentially

[[Page 44378]]

tremendous economic and environmental value in a carbon-limited
environment.
    Unfortunately, in the draft ANPR's extensive discussion of
regulatory alternatives, the EPA staff does not even attempt to make
the case that the Clean Air Act could or should be used to ensure that
a regulatory scheme maximizes opportunities and incentives for carbon
capture and sequestration. Had the draft ANPR raised these issues, it
would become evident that there are substantial questions as to whether
the CAA could provide an effective vehicle to account for such
beneficial actions.
    Additionally, any regulatory program should avoid needless
duplication and conflict with already existing efforts. The recently
enacted Food, Conservation and Energy Act of 2008 (``Farm Bill'')
requires the Secretary of Agriculture to establish technical guidelines
to create a registry of environmental services benefits from
conservation and land management activities, including carbon capture
and sequestration. USDA is including EPA and other Federal agencies as
participants in this process, which we believe holds substantial
promise.

BILLING CODE 6560-50-P

[[Page 44379]]

[GRAPHIC] [TIFF OMITTED] TP30JY08.008


[[Page 44380]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.009


[[Page 44381]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.010


[[Page 44382]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.011


[[Page 44383]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.012


[[Page 44384]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.013


[[Page 44385]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.014


[[Page 44386]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.015


[[Page 44387]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.016


[[Page 44388]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.017


[[Page 44389]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.018


[[Page 44390]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.019


[[Page 44391]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.020


[[Page 44392]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.021


[[Page 44393]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.022


[[Page 44394]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.023


[[Page 44395]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.024


[[Page 44396]]


[GRAPHIC] [TIFF OMITTED] TP30JY08.025

BILLING CODE 6560-50-C

General Information

What Should I Consider as I Prepare My Comments for EPA?

A. Submitting CBI
    Do not submit this information to EPA through www.regulations.gov
or e-mail. Clearly mark the part or all of the information that you
claim to be confidential business information (CBI). For CBI
information in a disk or CD ROM that you mail to EPA, mark the outside
of the disk or CD ROM as CBI and then identify electronically within
the disk or CD ROM the specific information that is claimed as CBI. In
addition to one complete version of the comment that includes
information claimed as CBI, a copy of the comment that does not contain
the information claimed as CBI must be submitted for inclusion in the
public docket. Information so marked will not be disclosed except in
accordance with procedures set forth in 40 CFR part 2.
B. Tips for Preparing Your Comments
    When submitting comments, remember to:
     Explain your views as clearly as possible.
     Describe any assumptions that you used.
     Provide any technical information and/or data you used
that support your views.
     If you estimate potential burden or costs, explain how you
arrived at your estimate.
     Provide specific examples to illustrate your concerns.
     Offer alternatives.
     Make sure to submit your comments by the comment period
deadline identified.
     To ensure proper receipt by EPA, identify the appropriate
docket identification number in the subject line on the first page of
your response. It would also be helpful if you provided the name, date,
and Federal Register citation related to your comments.

Outline of This Preamble

I. Introduction
II. Background Information
III. Nature of Climate Change and Greenhouse Gases and Related
Issues for Regulation
IV. Clean Air Act Authorities and Programs
V. Endangerment Analysis and Issues
VI. Mobile Source Authorities, Petitions and Potential Regulation
VII. Stationary Source Authorities and Potential Regulation
VIII. Stratospheric Ozone Protection Authorities, Background, and
Potential Regulation

I. Introduction

    Climate change is a serious global challenge. As detailed in
section V of this notice, it is widely recognized that greenhouse gases
(GHGs) have a climatic warming effect by trapping heat in the
atmosphere that would otherwise escape to space. Current atmospheric
concentrations of GHGs are significantly higher than pre-industrial
levels as a result of human activities. Warming of the climate system
is unequivocal, as is now evident from observations of increases in
global average air and ocean temperatures, widespread melting of snow
and ice, and rising global average sea level. Observational evidence
from all continents and most oceans shows that many natural systems are
being affected by regional climate changes, particularly temperature
increases. Future projections show that, for most scenarios assuming no
additional GHG emission reduction policies, atmospheric concentrations
of GHGs are expected to continue climbing for most if not all of the
remainder of this century, with associated increases in average
temperature. Overall risk to human health, society and the environment
increases with increases in both the rate and magnitude of climate
change.
    Today's notice considers the potential use of the CAA to address
climate change. In April 2007, the Supreme Court concluded in
Massachusetts v. EPA, 127 S. Ct. 1438 (2007), that GHGs meet the CAA
definition of ``air pollutant,'' and that section 202(a)(1) of the CAA
therefore authorizes regulation of GHGs subject to an Agency
determination that GHG emissions from new motor vehicles cause or
contribute to air pollution that may reasonably be anticipated to
endanger public health or welfare. The Court also ruled that in
deciding whether to grant or deny a pending rulemaking petition
regarding section 202(a)(1), EPA must decide whether new motor vehicle
GHG emissions meet that endangerment test, or explain why scientific
uncertainty is so profound that it prevents making a reasoned judgment
on such a determination. If EPA finds that new motor vehicle GHG
emissions meet the endangerment test, section 202(a)(1) of the CAA
requires the Agency to set motor vehicle standards applicable to
emissions of GHGs.
    EPA is also faced with the broader ramifications of any regulation
of motor vehicle GHG emissions under the CAA in response to the Supreme
Court's decision. Over the past several months, EPA has received seven
petitions from states, localities, and environmental groups to set
emission standards under Title II of Act for other types of mobile
sources, including nonroad vehicles such as construction and farm
equipment, ships and aircraft. The Agency has also received public
comments seeking the addition of GHGs to the pollutants covered by the
new source performance standard (NSPS) for several industrial sectors
under section 111 of the CAA. In addition, legal challenges have been
brought seeking controls for GHG emissions in

[[Page 44397]]

preconstruction permits for several coal-fired power plants.
    The interrelationship of CAA authorities and the broad array of
pending and potential CAA actions concerning GHGs make it prudent to
thoroughly consider how the various CAA authorities would or could work
together if GHG controls were established under any provision of the
Act. Since regulation of one source of GHG emissions would or could
lead to regulation of other sources of GHG emissions, the Agency should
be prepared to manage the consequences of CAA regulation of GHGs in the
most effective and efficient manner possible under the Act.
    Today's notice discusses our work to date in response to the
Supreme Court's decision regarding an endangerment finding and vehicle
standards under section 202 of the Act. It also includes a
comprehensive examination of the potential effects of using various
authorities under the Act to regulate other sources of GHG emissions.
In addition, this notice examines and seeks public comment on the
petitions the Agency has received for GHG regulation of additional
mobile source categories. In light of the interrelationship of CAA
authorities and the pending CAA actions concerning GHGs, the notice
identifies and discusses possible approaches for controlling GHG
emissions under the Act and the issues they raise.
    Today's notice is also part of broader efforts to address the
climate change challenge. Since 2001, President Bush has pursued a
broad climate change agenda that has improved our understanding of
climate change and its effects, spurred development of needed GHG
control technologies, increased our economy's energy efficiency, and
engaged other nations in efforts to foster sensible solutions to the
global challenge of climate change. Building on that success, the
President recently announced a new national goal: to stop the growth of
U.S. GHG emissions by 2025. New actions will be necessary to meet this
goal.
    The President has identified several core principles for crafting
any new GHG-specific legislation. EPA believes these principles are
also important in considering GHG regulation under the CAA, to the
extent allowed by law. These principles include addressing GHG
emissions in a manner that does not harm the U.S. economy; encouraging
the technological development that is essential to significantly
reducing GHG emissions; and recognizing that U.S. efforts to reduce GHG
emissions could be undermined if other countries with significant GHG
emissions fail to control their emissions and U.S. businesses are put
at a competitive disadvantage relative to their foreign competitors.
Throughout this notice we discuss and seek comment on whether and how
these principles can inform decisions regarding GHG regulation under
the CAA.
    In Congress, both the House and Senate are considering climate
change legislation. A number of bills call for reducing GHG emissions
from a wide variety of sources using a ``cap-and-trade'' approach. Many
of the sources that would be subject to requirements under the bills
are already subject to numerous CAA controls. Thus, there is potential
for overlap between regulation under the CAA and new climate change
legislation.
    This ANPR performs five important functions that can help inform
the legislative debate:
     First, in recognition of the Supreme Court's decision that
GHGs are air pollutants under the CAA, the ANPR outlines options that
may need to be exercised under the Act.
     Second, this notice provides information on how the GHG
requirements under the CAA might overlap with control measures being
considered for climate change legislation.
     Third, the notice discusses issues and approaches for
designing GHG control measures that are useful in developing either
regulations or legislation to reduce GHG emissions.
     Fourth, the ANPR illustrates the complexity and
interconnections inherent in CAA regulation of GHGs. These complexities
reflect that the CAA was not specifically designed to address GHGs and
illustrate the opportunity for new legislation to reduce regulatory
complexity. However, unless and until Congress acts, the existing CAA
will be applied in its current form.
     Fifth, some sections of the CAA are inherently flexible
and thus more capable of accommodating consideration of the President's
principles. Other sections may not provide needed flexibility, raising
serious concerns about the results of applying them. EPA believes that
the presentation in this notice of the various potential programs of
the CAA will help inform the legislative debate.
    EPA is following the Supreme Court's decision in Massachusetts v.
EPA by seriously considering how to apply the CAA to the regulation of
GHGs. In light of the CAA's interconnections and other issues explored
in this notice, EPA does not believe that all aspects of the Act are
well designed for establishing the kind of comprehensive GHG regulatory
program that could most efficiently achieve the GHG emission reductions
that may be needed over the next several decades. EPA requests comment
on whether well-designed legislation for establishing a broad GHG
regulatory framework has the potential for achieving greater
environmental results at lower cost for many sectors of the economy,
with less concern about emissions leakage and more effective, clearer
incentives for development of technology, than a control program based
on the CAA alone.

II. Background Information

A. Background on the Supreme Court Opinion

    On October 20, 1999, the International Center for Technology
Assessment (ICTA) and 18 other environmental and renewable energy
industry organizations filed a petition with EPA seeking regulation of
GHGs from new motor vehicles under section 202 (a)(1) of the CAA. The
thrust of the petition was that four GHGs--carbon dioxide
(CO₂), methane (CH₄), nitrous oxide
(N₂O), and hydrofluorocarbons (HFCs)--are air pollutants as
defined in CAA section 302(g), that emissions of these GHGs contribute
to air pollution which is reasonably anticipated to endanger public
health or welfare, that these GHGs are emitted by new motor vehicles,
and therefore that EPA has a mandatory duty to issue regulations under
CAA section 202(a) addressing GHGs from these sources.
    EPA denied the petition in a notice issued on August 8, 2003. The
Agency concluded that it lacked authority under the CAA to regulate
GHGs for purposes of global climate change. EPA further decided that
even if it did have authority to set GHG emission standards for new
motor vehicles, it would be unwise to do so at this time. More
specifically, EPA stated that CAA regulation of CO₂ emitted
by light-duty vehicles would interfere with fuel economy standards
issued by the Department of Transportation (DOT) under the Energy
Policy and Conservation Act (EPCA), because the principal way of
reducing vehicle CO₂ emissions is to increase vehicle fuel
economy. The Agency also noted in the 2003 notice that there was
significant scientific uncertainty regarding the cause, extent and
effects of climate change that ongoing studies would reduce. EPA
further stated that regulation of climate change using the CAA would be
inappropriate given the President's comprehensive climate

[[Page 44398]]

change policies, concerns about piecemeal regulation, and implications
for foreign policy.
    EPA's denial of the ICTA petition was challenged in a petition for
review filed in the U.S. Court of Appeals for the D.C. Circuit.
Petitioners included 12 states, local governments, and a variety of
environmental organizations. Intervenors in support of respondent EPA
included 10 states and several industry trade associations.
    The D.C. Circuit upheld EPA's denial of the petition in a 2-1
opinion (Massachusetts v. EPA, 415 F.3d 50 (D.C. Cir. 2005)). The
majority opinion did not decide but assumed, for purposes of argument,
that EPA had statutory authority to regulate GHGs from new motor
vehicles and held that EPA had reasonably exercised its discretion in
denying the petition.
    In a 5-4 decision, the Supreme Court reversed the D.C. Circuit's
decision and held that EPA had improperly denied ICTA's petition
(Massachusetts v. EPA, 127 S. Ct. 1438 (2007)). The Court held that
GHGs are air pollutants under the CAA, and that the alternative denial
grounds provided by EPA were ``divorced from the statutory text'' and
hence improper.
    Specifically, the Court held that CO2, CH4, N2O, and HFCs fit the
CAA's definition of ``air pollutant'' because they are `` `physical
[and] chemical * * * substances which [are] emitted into * * * the
ambient air.' '' Id. at 1460. The Court rejected the argument that EPA
could not regulate new motor vehicle emissions of the chief GHG,
CO₂, under CAA section 202 because doing so would
essentially regulate vehicle fuel economy, which is the province of DOT
under EPCA. The Court held that EPA's mandate to protect public health
and welfare is ``wholly independent of DOT's mandate to promote energy
efficiency,'' even if the authorities may overlap. Id. at 1462. The
Court stated that ``there is no reason to think the two agencies cannot
both administer their obligations and yet avoid inconsistency.'' Id.
    Turning to EPA's alternative grounds for denial, the Court held
that EPA's decision on whether to grant the petition must relate to
``whether an air pollutant `causes, or contributes to, air pollution
which may reasonably be anticipated to endanger public health or
welfare.' '' Id. Specifically, the Court held that generalized concerns
about scientific uncertainty were insufficient unless ``the scientific
uncertainty is so profound that it precludes EPA from making a reasoned
judgment as to whether greenhouse gases contribute to global warming.''
Id. at 1463. The Court further ruled that concerns related to piecemeal
regulation and foreign policy objectives were unrelated to whether new
motor vehicle GHG emissions contribute to climate change and hence
could not justify the denial.
    The Court remanded the decision to EPA but was careful to note that
it was not dictating EPA's action on remand, and was not deciding
whether EPA must find there is endangerment. Nor did the Court rule on
``whether policy concerns can inform EPA's actions in the event that it
makes such a finding.'' Id. The Court also observed that under CAA
section 202(a), ``EPA no doubt has significant latitude as to the
manner, timing, content, and coordination of its regulations with those
of other agencies.'' The Supreme Court sent the case back to the D.C.
Circuit, which on September 14, 2007, vacated and remanded EPA's
decision denying the ICTA petition for further consideration by the
Agency consistent with the Supreme Court's opinion.

B. Response to the Supreme Court's Decision to Date

1. The President's May 2007 Announcement and Executive Order
    In May 2007, President Bush announced that he was ``directing the
EPA and the Departments of Transportation and Energy (DOT and DOE) to
take the first steps toward regulations that would cut gasoline
consumption and GHG emissions from motor vehicles, using my 20-in-10
plan as a starting point.'' The 20-in-10 plan refers to the President's
legislative proposal, first advanced in his 2007 State of the Union
address, to reduce domestic gasoline consumption by 20% by 2017 through
the use of renewable and alternative fuels and improved motor vehicle
fuel economy.
    On the same day, President Bush issued Executive Order (EO) 13432
``to ensure the coordinated and effective exercise of the authorities
of the President and the heads of the [DOT], the Department of Energy,
and [EPA] to protect the environment with respect to greenhouse gas
emissions from motor vehicles, nonroad vehicles, and nonroad engines,
in a manner consistent with sound science, analysis of benefits and
costs, public safety, and economic growth.''
    In response to the Supreme Court's Massachusetts decision and the
President's direction, EPA immediately began work with DOT and the
Departments of Energy and Agriculture to develop draft proposed
regulations that would reduce GHG emissions from motor vehicles and
their fuels. In particular, EPA and DOT's National Highway Traffic
Safety Agency (NHTSA) worked together on a range of issues related to
setting motor vehicle GHG emission standards under the CAA and
corporate average fuel economy (CAFE) standards under EPCA. As a
prerequisite to taking action under the CAA, the Agency also compiled
and reviewed the available scientific information relevant to deciding
whether GHG emissions from motor vehicles, and whether GHG emissions
from the use of gasoline and diesel fuel by motor vehicles and nonroad
engines and equipment, cause or contribute to air pollution that may
reasonably be anticipated to endanger public health or welfare.
    Sections V and VI of this notice provide further discussion and
detail about EPA's work to date on an endangerment finding and new
motor vehicle regulation under section 202 of the CAA.
 2. Passage of a New Energy Law
    At the same time as EPA was working with its federal partners to
develop draft proposed regulations for reducing motor vehicle and fuel
GHG emissions, Congress was considering broad new energy legislation
that included provisions addressing the motor vehicle fuel economy and
fuel components of the President's 20-in-10 legislative plan. By the
end of 2007, Congress passed and the President signed the Energy
Independence and Security Act (EISA). Title II of EISA amended the CAA
provisions requiring a Renewable Fuels Standard (RFS) that were first
established in the Energy Policy Act of 2005. EISA also separately
amended EPCA with regard to the DOT's authority to set CAFE standards
for vehicles.
    With regard to the RFS, Congress amended section 211(o) of the CAA
to increase the RFS from 7.5 billion gallons in 2012 to 36 billion
gallons in 2022. There are a number of significant differences between
the RFS provisions of EISA and the fuels program EPA was developing
under the President's Executive Order. As a result, EPA is undertaking
substantial new analytical work as part of its efforts to develop the
regulations needed to implement the new RFS requirements. These
regulations are subject to tight statutory deadlines.
    With regard to motor vehicle regulations, EISA did not amend CAA
section 202, which contains EPA's general authority to regulate motor
vehicle emissions. However, EISA did substantially alter DOT's
authority to set CAFE standards under EPCA. The

[[Page 44399]]

legislation directs the Department to set CAFE standards that achieve
fleet-wide average fuel economy of at least 35 miles per gallon by 2020
for light-duty vehicles, and for the first time to establish fuel
economy standards for heavy-duty vehicles after a period of study.
    In view of this new statutory authority, EPA and DOT have reviewed
the previous regulatory activities they had undertaken pursuant to the
President's May 14 directive and EO 13432. While EPA recognizes that
EISA does not change the Agency's obligation to respond to the Supreme
Court's decision in Massachusetts v. EPA or the scientific basis for
any decision, the new law has changed the context for any action EPA
might take in response to the decision by requiring significant
improvements in vehicle fuel economy that will in turn achieve
substantial reductions in vehicle emissions of CO2.\25\
---------------------------------------------------------------------------

    \25\ The Current Unified Agenda and Regulatory Plan (Regulatory
Plan) available in May 2008 reflects that EPA is addressing its
response to Massachusetts v. EPA as part of today's notice. The
latest Regulatory Plan also contains a new entry for the renewable
fuels standard program EPA is undertaking pursuant to Title II of
EISA (RIN 2060-AO81). The current Regulatory Plan is available at
http://www.reginfo.gov/public/do/eAgendaMain.
---------------------------------------------------------------------------

3. Review of CAA Authorities
    As part of EPA's efforts to respond to the Supreme Court's
decision, the Agency conducted a thorough review of the CAA to identify
and assess any other CAA provisions that might authorize regulation of
GHG emission sources. That review made clear that a decision to control
any source of GHG emissions could or would impact other CAA programs
with potentially far-reaching implications for many industrial sectors.
In particular, EPA recognized that regulation of GHG emissions from
motor vehicles under section 202(a)(1) or from other sources of GHG
emissions under many other provisions of the Act would subject major
stationary sources to preconstruction permitting under the CAA. As
discussed later in this notice, the Prevention of Significant
Deterioration (PSD) program established in Part C of Title I of the Act
requires new major stationary sources and modified stationary sources
that significantly increase their emissions of regulated air pollutants
to apply for PSD permits and put on controls to reduce emissions of
those pollutants that reflect the best available control technology
(BACT). Because CO2 is typically emitted in much larger quantities
relative to traditional air pollutants, CAA regulation of CO2 would
potentially extend PSD requirements to many stationary sources not
previously subject to the PSD program, including large buildings heated
by natural gas or oil, and add new PSD requirements to sources already
subject to the program. This and other CAA implications of regulation
of GHG emissions under the Act are explored later in this notice.

C. Other Pending GHG Actions Under the CAA

1. Additional Mobile Source Petitions
    Since the Supreme Court's Massachusetts decision, EPA has received
seven additional petitions requesting that the Agency make the
requisite endangerment findings and undertake rulemaking under CAA
sections 202(a)(3), 211, 213 and 231 to regulate GHG emissions \26\
from (1) fuels and a wide array of mobile sources including ocean-going
vessels; (2) all other types of nonroad engines and equipment, such as
locomotives, construction equipment, farm tractors, forklifts, harbor
crafts, and lawn and garden equipment; (3) aircraft; and (4) rebuilt
heavy-duty highway engines. The petitioners represent state and local
governments, environmental groups, and nongovernmental organizations.
Copies of these seven petitions can be found in the docket for this
notice.
---------------------------------------------------------------------------

    \26\ While petitioners vary somewhat in their definition of
GHGs, taken together they seek regulation of CO2, CH4, N2O, HFCs,
PFCs, and SF6, water vapor, and soot or black carbon.
---------------------------------------------------------------------------

    These petitions have several common elements. First, the
petitioners state that climate change is occurring and is driven by
increases in GHG emissions; that the mobile sources described in the
petitions account for a significant and growing portion of these
emissions; and that those mobile sources must therefore be regulated
under the CAA. Second, the petitioners assert that EPA should
expeditiously regulate GHG emissions from those mobile sources because
they are already harming the petitioners' health and welfare and
further delay by the Agency will only increase the severity of future
harms to public health and welfare. Lastly, the petitioners contend
that technology is currently available to reduce GHG emissions from the
mobile sources for which regulation is sought.
    Section VI of this notice provides a brief discussion of these
petitions. The section also summarizes information on the GHG emissions
of each of the three mobile source categories, technologies and other
strategies for reducing GHG emissions from those categories, and
potential approaches for EPA to address their emissions. We request
comment on all issues raised by the petitioners.
2. New Source Performance Standards
    The Massachusetts decision also impacts several stationary source
rulemakings. A group of state and local governments and environmental
organizations petitioned the U.S. Court of Appeals for the D.C. Circuit
to review a 2006 decision by EPA not to regulate the GHG emissions of
several types of steam generating units when the Agency conducted the
periodic review of the new source performance standard (NSPS) for those
units as required by CAA section 111. EPA based its decision on the
position it announced in denying the ICTA petition that the CAA does
not authorize regulation of GHG emissions. After the Supreme Court
ruled that the CAA does provide authority for regulating GHG emissions,
the Agency filed a request with the D.C. Circuit to have the NSPS rule
remanded to us for further actions consistent with the Supreme Court's
opinion. Our motion was granted, and this ANPR represents the next step
in our efforts to evaluate and respond to the court's decision.
    Another NSPS affected by the Supreme Court's decision is the
standard applicable to petroleum refineries. Pursuant to a consent
decree deadline, EPA proposed revisions to the NSPS on April 30, 2007,
less than one month following the Supreme Court decision. During the
comment period for the review, EPA received comments calling for the
NSPS to be revised to include limits on GHG emissions. In our final
rule on April 30, 2008, we declined to adopt standards for GHGs at that
time. First, we noted that, in the context of statutorily mandated 8-
year reviews for NSPS, EPA has discretion regarding the adoption of
standards for pollutants not previously covered by an NSPS. We also
explained that the significant differences between GHGs and the other
air pollutants for which we have previously established standards under
section 111 require a more thorough and deliberate process to identify
and fully evaluate the implications of a decision to regulate under
this and other provisions of the CAA before deciding how to regulate
GHGs under the Act. We pointed to this notice as the means for
providing that process. We further noted that the time period available
for proposing NSPS was too short for EPA to evaluate and develop
proposed standards in light of the Massachusetts decision.
    EPA also recently issued proposed revisions of the Portland cement
NSPS in accordance with the schedule of a

[[Page 44400]]

consent decree. In its May 30, 2008 notice, EPA decided not to propose
adding GHG emission requirements to the Portland cement NSPS for
essentially the same reasons the Agency gave in deciding against adding
GHG controls to the refinery NSPS.
3. Prevention of Significant Deterioration Permitting
    As noted previously, the CAA's PSD program requires new major
stationary sources and modified major stationary sources that
significantly increase emissions to obtain air pollution permits before
construction can begin. As part of the permit issuance process, the
public can comment on drafts of these permits. Since the Massachusetts
decision, the number and scope of issues raised by public comments on
draft permits has increased.\27\ The main issue that has been raised is
whether EPA should be establishing facility-specific emission limits
for CO2 in these permits as a result of the Court's decision. EPA's
interpretation, discussed in more detail later in this notice, is that
CO2 is not a regulated pollutant under the Act and that we therefore
currently lack the legal authority to establish emission limits for
this pollutant in PSD permits. That interpretation has been challenged
to EPA's Environmental Appeals Board, and we anticipate a decision in
this case later this year.\28\ The Appeals Board's decision could also
affect several other permits awaiting issuance by EPA, and may have
significant implications for the entire PSD program. The broader
consequences of CO2 and other GHGs being classified as a regulated
pollutant are discussed later in this notice.
    EPA has also received other GHG related comments related to other
elements of the PSD program, such as the consideration of GHG emissions
in establishing controls for other pollutants, the consideration of
alternatives to the proposed project, and related issues. EPA is
currently considering these comments in the context of evaluating each
PSD permit application on a case-by-case basis, applying current law.
---------------------------------------------------------------------------

    \27\ Most PSD permits are issued by states under EPA-approved
state rules. Other states without approved rules can also issue
permits on behalf of EPA under delegation agreements. EPA is the
permitting authority in New York, Massachusetts, Washoe Co (Nevada),
Puerto Rico, Guam, American Samoa, and the Virgin Islands. EPA also
issues PSD permits for sources on tribal lands.
    \28\ See, In Re Deseret Power Electric Cooperative, PSD Appeal
No. 07-03 (http://www.epa.gov/region8/air/permitting/deseret.html).
---------------------------------------------------------------------------

4. GHG Reporting Rule
    In EPA's most recent appropriations bill, Congress called on EPA to
develop and issue a mandatory GHG emissions reporting rule by the
middle of 2009.\29\
---------------------------------------------------------------------------

    \29\ The fiscal year 2008 Consolidated Appropriations Act states
that ``not less than $3,500,000 shall be provided for activities to
develop and publish a draft rule not later than 9 months after the
date of enactment of this Act, and a final rule not later than 18
months after the date of enactment of this Act, to require mandatory
reporting of greenhouse gas emissions above appropriate thresholds
in all sectors of the economy * * *.''
---------------------------------------------------------------------------

    Accordingly, EPA is now developing a proposed rule that would
collect emissions and emissions-related information from stationary and
mobile sources. The overall purpose of the rule is to obtain
comprehensive and accurate GHG data relevant to future climate policy
decisions, including potential regulation under the CAA. EPA expects
the rule to provide valuable additional information on the number and
types of U.S. GHG sources and on the GHG emission levels of those
sources.

D. Today's Action

    In view of the interrelationship of CAA authorities and the many
pending CAA actions concerning GHGs before the Agency, EPA decided to
issue this ANPR to elicit information that will assist us in developing
and evaluating potential action under the CAA. In this ANPR, we review
the bases for a potential endangerment finding in the context of the
pending petition concerning new motor vehicles, explore
interconnections between CAA provisions that could lead to broader
regulation of GHG emissions, and examine the full range of potential
CAA regulation of GHGs, including a discussion of the issues raised by
regulation of GHG emissions of mobile and stationary sources under the
Act. The ANPR will help us shape an overall approach for potentially
addressing GHG emissions under the CAA as part of a broader set of
actions to address GHG emissions taken by Congress, EPA, other federal
departments and agencies, state and local governments, the private
sector, and the international community.

III. Nature of Climate Change and Greenhouse Gases and Related Issues
for Potential Regulation

    Much of today's notice is devoted to a detailed examination of the
various CAA authorities that might be used to regulate GHG emissions
and the scientific and technical bases for potentially exercising those
authorities. A key question for EPA is whether and how potentially
applicable CAA provisions could be used to regulate GHG emissions in an
effective and efficient manner in light of the terms of those
provisions. The global nature of climate change, the unique
characteristics of GHGs, and the ubiquity of GHG emission sources
present special challenges for regulatory design. In this section of
the notice, we identify and discuss these and several other important
considerations that we believe should inform our examination and
potential use of CAA authorities. Throughout this notice we ask for
comment on whether particular CAA authorities would allow EPA to
develop regulations that address those considerations in an effective
and appropriate manner.

A. Key Characteristics of Greenhouse Gases

    The six major GHGs of concern are those directly emitted by human
activities. These are CO2, CH4, N2O, HFCs, perfluorocarbons (PFCs), and
sulfur hexafluoride (SF6). GHGs have a climatic warming effect by
trapping heat in the atmosphere that would otherwise escape to space.
    Global emissions of these six GHGs have grown since pre-industrial
times and particularly over recent decades, having increased by 70%
between 1970 and 2004.\30\ In 2000, U.S. GHG emissions accounted for
approximately 21% of the global total. Other major emitting countries
include China, the Russian Federation, Japan, Germany, India and
Brazil. Future projections show that, for most scenarios assuming no
additional GHG emission reduction policies, global atmospheric
concentrations of GHGs are expected to continue climbing for most if
not all of the remainder of this century and to result in associated
increases in global average temperature. The Intergovernmental Panel on
Climate Change (IPCC) projects an increase of global GHG emissions by
25 to 90% between 2000 and 2030 under a range of different scenarios.
For the U.S., under a business as usual scenario, total gross GHG
emissions are expected to rise 30 percent between 2000 and 2020.\31\
---------------------------------------------------------------------------

    \30\ The data provided here come from ``Contribution of Working
Group III to the Fourth Assessment Report of the Intergovernmental
Panel on Climate Change (IPCC)''--Summary for Policymakers.
    \31\ Fourth U.S.Climate Action Report, 2007. http://
www.state.gov/g/oes/rls/rpts/car/.
---------------------------------------------------------------------------

    A significant difference between the major GHGs and most air
pollutants regulated under the CAA is that GHGs have much longer
atmospheric

[[Page 44401]]

lifetimes.\32\ Once emitted, GHG can remain in the atmosphere for
decades to centuries while traditional air pollutants typically remain
airborne for days to weeks. The fact that GHGs remain in the atmosphere
for such long periods of time has several important and related
consequences:
---------------------------------------------------------------------------

    \32\ Some pollutants regulated under the CAA have long
atmospheric lifetimes, including those regulated for protection of
stratospheric ozone and mercury.
---------------------------------------------------------------------------

    (1) Unlike most traditional air pollutants, GHGs become well mixed
throughout the global atmosphere so that the long-term distribution of
GHG concentrations is not dependent on local emission sources. Instead,
GHG concentrations tend to be relatively uniform around the world.
    (2) As a result of this global mixing, GHGs emitted anywhere in the
world affect climate everywhere in the world. U.S. GHG emissions have
climatic effects not only in the U.S. but in all parts of the world,
and GHG emissions from other countries have climatic effects in the
U.S.
    (3) Emissions of the major GHGs build up in the atmosphere so that
past, present and future emissions ultimately contribute to total
atmospheric concentrations. While concentrations of most traditional
air pollutants can be reduced relatively quickly (over months to
several years) once emission controls are applied, atmospheric
concentrations of the major GHGs cannot be so quickly reversed. Once
applied, GHG emission controls would first reduce the rate of build-up
of GHGs in the atmosphere and, depending on the degree of controls over
the longer term, would gradually result in stabilization of atmospheric
GHG concentrations at some level.
    (4) GHG emissions have long-term consequences. Once emitted, the
major GHGs exert their climate changing effects for a long period of
time. Past and current GHG emissions thus lead to some degree of
commitment to climate change for decades or even centuries. According
to the IPCC, past GHG emissions have already resulted in an increase in
global average temperature and associated climatic changes. Much of
those past emissions will continue to contribute to temperature
increases for some time to come, while current and future GHG emissions
contribute to climate change over a similarly long period. See section
V for a fuller discussion of the effects of GHG emissions as they
relate to making an endangerment finding under the CAA.\33\
---------------------------------------------------------------------------

    \33\ Another important difference between CO₂ and
traditional air pollutants is the high volume of CO₂
emissions relative to other pollutants for most sources. The
significance of this difference is discussed later in this section
and in section VII of this notice.
---------------------------------------------------------------------------

    The large temporal and spatial scales of the climate change
challenge introduce regulatory issues beyond those typically presented
for most traditional air pollutants. Decision makers are faced with
many uncertainties over long time frames and across national
boundaries, such as population and economic growth, technological
change, the exact rate and magnitude of climate change in response to
different emissions pathways, and the associated effects of that
climate change. These uncertainties increase the complexity of
designing an effective long-term regulatory strategy.
    Acknowledging that overall risk increases with increases in both
the rate and magnitude of climate change, the United Nations Framework
Convention on Climate Change (UNFCCC), signed and ratified by the U.S.
in 1992, states as its ultimate objective the ``* * * stabilization of
greenhouse gas concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the climate system.''
In 2007, the U.S. and other Parties to the UNFCCC recognized that ``* *
* deep cuts in global emissions will be required to achieve the
ultimate objective of the Convention * * *'' and emphasized ``* * * the
urgency to address climate change as indicated * * *'' by the IPCC.
    Determining what constitutes ``dangerous anthropogenic
interference'' is not a purely scientific question; it involves
important value judgments regarding what level of climate change may or
may not be acceptable. It is not the purpose of this ANPR to make any
judgment regarding what an appropriate stabilization goal may be. In
the absence of further policy action, the IPCC notes that, ``With
current climate change mitigation policies and related sustainable
development practices, global GHG emissions will continue to grow over
the next few decades.''
    As indicated above, to stabilize GHGs at any level in the
atmosphere, emissions would need to peak and decline thereafter. A
decision to stabilize at lower concentrations and associated
temperature increases would necessarily advance the date by which
emissions would need to peak, and would therefore require greater
emissions reductions earlier in time. According to the IPCC, mitigation
efforts over the next two to three decades will have a large impact on
the ability of the world to achieve lower stabilization levels. For
illustration, IPCC projected that, in order to prevent long-term global
temperatures from exceeding 2.8 [deg]C (approximately 5 [deg]F)
relative to pre-industrial temperatures, atmospheric CO₂
concentrations would need to be stabilized at 440 parts per million
(ppm) (current levels stand at about 379 ppm), translating into global
CO₂ emission reductions by 2050 of up to 60% (relative to
emissions in the year 2000). Stabilization targets that aim to prevent
even more warming would require steeper and earlier emission
reductions, whereas stabilization targets that allow for more warming
(with higher associated risks and impacts) would require less steep and
later emission reductions.

B. Types and Relative Emissions of GHG Emission Sources

1. Background
    Each year EPA prepares a complete inventory of the anthropogenic
emissions and sinks of all six major GHGs in the United States.\34\
Anthropogenic in this context means that emissions result from human
activities. ``Sinks'' are the opposite of emissions in that they are
activities or processes that remove GHGs from the atmosphere (e.g.,
CO₂ uptake by plants through photosynthesis). EPA prepares
the inventory in cooperation with numerous federal agencies as part of
the U.S. commitment under the UNFCCC.\35\ This inventory is derived
largely from top-down national energy and statistical data. As
mentioned previously, EPA is currently developing a proposed GHG
reporting rule that will provide bottom-up data from covered reporters
and thus provide greater detail on the emissions profile of specific
source categories.
---------------------------------------------------------------------------

    \34\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2006, (April 2008) USEPA #430-R-08-005. http://www.epa.gov/
climatechange/emissions/usinventoryreport.html.
    \35\ See Articles 4 and 12 of the UNFCCC treaty. http://
www.unfccc.int. Parties to the Convention ``shall develop,
periodically update, publish and make available * * * national
inventories of anthropogenic emissions by sources and removals by
sinks of all greenhouse gases not controlled by the Montreal
Protocol, using comparable methodologies * * *''
---------------------------------------------------------------------------

2. Emissions by Gas
    In 2006, total U.S. GHG emissions were 7,054 million metric tons of
CO₂ equivalent (MMTCO₂e).\36\ Overall, total U.S.
GHG emissions have risen by 14.7% from 1990 to 2006. GHG emissions
decreased from 2005 to 2006 by 1.1 percent (or 76 MMTCO₂e).
Figure III-1 illustrates the relative share of each

[[Page 44402]]

gas, and trend since 1990, weighted by global warming potential.\37\
All GHG units and percentage changes provided in this section are based
on CO₂-equivalency.
---------------------------------------------------------------------------

    \36\ International standards for reporting are established by
the IPCC, which uses metric units. 1 MMTCO₂e is equal to
1 teragram (Tg) or 10 12 grams. 1 metric ton is equal to
1.1023 short tons.
    \37\ Emissions of different GHGs are compared using global
warming potentials (GWPs). The GWP of a GHG is the ratio of heat
trapped by one unit mass of the GHG compared to that of one unit
mass of CO₂ over a specified time period, which is 100
years for the GWPs estimated by the IPCC used here. The reference
gas is CO₂, and therefore GWP-weighted emissions are
measured in teragrams of CO₂ equivalent (Tg
CO₂ Eq.). The GWP values used in this analysis come from
the IPCC Second Assessment report, consistent with the UNFCCC
reporting requirements for Parties listed in Annex I.
[GRAPHIC] [TIFF OMITTED] TP30JY08.026

    Carbon Dioxide: The primary GHG emitted as a result of human
activities in the United States is CO2, representing approximately 85%
of total GHG emissions. CO2 results primarily from fossil fuel
combustion to generate electricity, power vehicles and factories, heat
buildings, etc. Fossil fuel-related CO2 emissions accounted for
approximately 79% of CO2 emissions since 1990, and increased at an
average annual rate of 1.1% from 1990 to 2006. Changes in CO2 emissions
from fossil fuel combustion are influenced by many long-term and short-
term factors, including population and economic growth, energy price
fluctuations, technological changes, and seasonal temperatures.
    Methane: According to the IPCC, CH4 is more than 20 times as
effective as CO2 at trapping heat in the atmosphere. By 2006, CH4
emissions had declined from 1990 levels by just under 9%, and now make
up approximately 8% of total U.S. GHG emissions. Enteric fermentation
(22.7%) is the largest anthropogenic source of CH4 emissions in the
United States, followed by landfills (22.6%), natural gas systems
(18.4%), coal mining (10.5%), and manure management (7.5%). Smaller
sources such as rice cultivation and incomplete fossil fuel combustion
account for the remainder.
    Nitrous Oxide: While total N2O emissions are much lower than CO2
emissions in terms of mass, N2O is approximately 300 times more
powerful than CO2 at trapping heat in the atmosphere. U.S. emissions of
N2O are just over 5% of total U.S. GHG emissions, and have declined by
4% since 1990. The main anthropogenic activities producing N2O in the
United States are agricultural soil management (72%), and fuel
combustion in motor vehicles (9%). A variety of chemical production
processes and liquid waste management sources also emit N2O.
    HFCs, PFCs, and SF6: These GHGs are often grouped together because
they contain fluorine, typically have large global warming potentials,
and are produced only through human activities (there are no natural
sources), either intentionally for use or unintentionally as an
industrial byproduct. HFCs and some PFCs are increasingly being used--
and therefore emitted--as substitutes for the ozone depleting
substances controlled under the Montreal Protocol and Title VI of the
CAA. The largest source is the use of HFCs in air conditioning and
refrigeration systems. Other sources include HFC-23 emitted during the
production of HCFC-22, electrical transmission and distribution systems
(SF6), and PFC emissions from semiconductor manufacturing and primary
aluminum production. U.S. HFC emissions have increased 237% over 1990
levels, while emissions of PFCs and SF6 have decreased by 71 and 47%,
respectively, from 1990 levels. Combined, these GHGs made up 2.1% of
total U.S. GHG emissions in 2006.
3. Emissions by Sector
    An alternative way to look at GHG emissions is by economic sector.
All U.S. GHG sources can be grouped into the electricity, industrial,
commercial, residential, transportation and agriculture sectors.
Additionally, there are changes in carbon stocks that result in
emissions and sinks associated with land-use and land-use change
activities. Figure III-2 illustrates the relative contributions and
historical trends of these economic sectors.
    Electricity Generation: The electricity generation sector includes
all facilities that generate electricity primarily for sale rather than
for use on site (e.g., most large-scale power plants). Electricity
generators emitted 33.7% of all U.S. GHG emissions in 2006. The type of
fuel combusted by electricity generators has a significant effect on


[[Continued on page 44403]]
Notices For
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Regulating Greenhouse Gas Emissions Under the Clean Air Act

Local Navigation
