President Barack Obama's new environmental regulator said
Tuesday her agency would reconsider a memorandum issued under the
previous administration that guides authorities on how to consider
carbon dioxide emissions in permitting.
Environmental Protection Agency chief Lisa Jackson's decision to
review the memo and start the rule-making process for a final
ruling on how CO2 should be considered is a partial victory for
environmental groups and fits into the President's strategy to
aggressively cut greenhouse gas emissions.
Specifically, Jackson said her agency would reconsider a
memorandum by prior administrator Stephen Johnson on the federal
Prevention of Significant Deterioration, or PSD, program under the
Clean Air Act.
The decision puts pressure on Congress to legislate on
greenhouse gas regulations if it wants to avoid EPA action, which
industry fears would be much more heavy handed.
Johnson wrote his memo after an EPA appeals board decision
required EPA's Denver office to consider including CO2 emissions
regulation as part of a permit for a proposed expansion of the
Deseret Power Electric Cooperative's coal-fired power plant in
Bonanza, Utah. The memo reversed the appeals board decision, which
could have set a precedent for any power plant or other emitters in
the country.
Jackson said permitting authorities "should not assume that the
memorandum is the final word on the appropriate interpretation of
Clean Air Act requirements."
"Today's action is the latest in a series of steps intended to
ensure EPA policies and procedures are consistent with EPA's
overall mission to protect human health and the environment," the
agency said later in a press release.
The memo published by Johnson was one of a number of "midnight"
rules issued in the waning days of President George W. Bush's
administration that environmentalists allege benefit industry and
created obstacles for a new regulatory environment under
President-elect Obama.
The Deseret decision was a blow to oil, coal and manufacturing
groups fearing new regulation under the Clean Air Act's PSD
program, which requires that new and upgraded power plants be
subject to the best technology for controlled pollutants emitted in
significant amounts.
"If the environmental groups succeed in having this policy
overturned, the number and types of facilities requiring EPA
permits would explode," said Quentin Riegel, the National
Manufacturing Association's deputy general counsel. That, said
Riegel, would result "in an impassable regulatory gridlock that
would overwhelm permitting authorities and bring new permits to a
halt."
Groups such as the Environmental Defense Fund estimate around
eight gigawatts of new coal-fired power plants seeking EPA approval
could be affected by the challenge of Johnson's memo, including
projects owned by Duke Energy Corp. (DUK) and American Electric
Power Co. (AEP).
Jackson made the decision on the memo after a group of
environmental organizations, including the Sierra Club, petitioned
the EPA to reconsider Johnson's ruling and put on hold the memo's
mandate.
But Jackson, in a letter viewed by Dow Jones Newswires, said the
agency declined to put the Johnson memo's policy on hold. Instead,
she would soon start the agency process for drafting a new rule for
a final decision on how to consider carbon dioxide in the
permitting process.
The new EPA chief noted, however, that the memorandum doesn't
bind states from issuing permits under their own State
Implementation Plan, which could leave the door for state
governments to enact more stringent permitting policies.
Environmental groups applauded Jackson's decision, saying it was
the first step toward controlling carbon dioxide.
"Jackson...is clearly choosing a new, more responsible direction
for the EPA," said Patrice Simms, a senior attorney for the Natural
Resources Defense Council, one of the groups that filed the
petition.
"The EPA is putting coal plants and other new large polluters on
notice that the policy of ignoring CO2 emissions is coming to an
end," she said.
Jeff Holmstead, head of environment policy at Bracewell &
Guiliani LLP and a former EPA air administrator, called Jackson's
decisions "a clever procedural move" that allows the Obama
administration to distance itself from the Bush administration
without actually changing how CO2 is regulated.
Any new regulations have to go through the rule-making procedure
that Obama's EPA chief said she would soon initiate.
But the decision does put Congress on notice to start drafting
legislation to regulate greenhouse gases such as CO2.
Industry and many lawmakers say they would prefer Congress to
write greenhouse gas legislation rather than the Executive branch
write rules under the Clean Air Act, saying that using current law
is too blunt of an instrument that could devastate the economy and
force business overseas.
Obama officials have used the threat of regulating carbon
dioxide under the Clean Air Act to try and light a fire under
Capitol Hill lawmakers, many of whom are wary of voting for
legislation that would likely raise costs across the economy.
"This reminds Congress that (climate legislation) needs to be at
the top of the agenda," said John Stowell, Duke's environmental
policy chief. Duke has two coal-fired power plants under
construction, one of which is designed to later capture and store
greenhouse gases, when the technology becomes commercially
available.
-By Ian Talley, Dow Jones Newswires, 202-862-9285;
ian.talley@dowjones.com