This past weekend, the White House announced that President Obama will instruct new EPA Administrator Jackson to vigorously review the request by the State of California to enforce more stringent greenhouse gas emissions standards on automobile manufacturers.  While much of the attention is focused on what impact this ruling may have on the struggling domestic automobile industry, the ruling could also lead to considerably more widespread  regulatory impact.  Indeed, one such impact could be to require EPA and their state counterparts to consider whether new and modified stationary sources must install Best Available Control Technology (”BACT”) for carbon dioxide.

Since December 2005, California has sought EPA’s permission to enforce a state law that would require automakers to reduce carbon dioxide emissions from new vehicles by 30 percent by 2016.  Under the Clean Air Act, EPA may not approve such a “waiver” request if it finds that the proposed state standards are not needed “to meet compelling and extraordinary conditions.” 42 U.S.C. § 7543(b)(1)(B).  Former EPA Administrator Johnson ruled last year that California did not make the required showing.  73 Fed. Reg. 12156 (March 6, 2008).  Last week, Mary Nichols, Chairman of the California Air Resource Board (”CARB”) petitioned EPA to reconsider that decision.

Then late last year, former Administrator Johnson issued another controversial decision—an interpretive rule—concluding that a “regulated NSR pollutant,” as used in 40 C.F.R.§ 52,21(b)(50), excluded pollutants for which EPA regulations required only monitoring or reporting, but not actual control of emissions.  As a result, according the Johnson memorandum, EPA Regions did not have to consider whether a new or modified stationary source had to install BACT for CO₂.

A ruling by EPA Administrator Jackson allowing California and other states to impose GHG emissions standards on automobiles could be considered “actual control of emissions” under the Clean Air Act.  If so, environmental groups and others seeking to require coal-fired power plants (and other stationary sources) to install BACT would have a new weapon in that effort.  Many questions remain unanswered and will likely continue to be unanswered until, at least, EPA rules on the CARB petition.  But, today’s memorandum from the President seems to represent an important step toward requiring BACT for CO₂.

For further information about this topic, please contact Akin Gump.