by Hannah Chang
A revised draft of the American Power Act (APA), a bill that was introduced by Senators Kerry and Lieberman in May 2010, surfaced earlier this week, on July 13. Although neither Senator Kerry nor Senator Lieberman have confirmed the validity of the circulating draft, it is thought that the 667-page discussion draft, which would establish a cap on greenhouse gases (GHGs) for utilities only, will be considered as part of a larger package to be introduced by Senate Majority Leader Reid that will include provisions on oil spill response and renewable energy.
CCCL previously analyzed the preemptive effects of the original APA on the Environmental Protection Agency’s (EPA’s) authority under the Clean Air Act and on state authority to regulate GHGs. Since that last writing, the stakes have only risen in the controversy over possible preemption of EPA authority. Senator Lisa Murkowski’s proposed resolution of disapproval that would have overturned EPA’s endangerment finding and effectively blocked EPA regulation of GHGs was rejected by a 53-47 vote in the Senate on June 10, 2010. On July 6, 2010, EPA released its proposed Transport Rule, which would establish stringent limitations on nitrous oxide and sulfur dioxide emissions from power plants. Utilities are reportedly demanding relief from these proposed regulations, and from other regulation of conventional pollutants, as a concession for supporting a climate bill that would establish a utilities-only cap on GHGs.
If the revised, utilities-only APA discussion draft is to be considered by the Senate, it is worth understanding the proposal’s effect on EPA and state authority. The following summarizes preemption under the revised draft and how it compares with preemption under the original APA. Generally, most of the preemptive language in the two versions is substantially similar – that is to say, the revised APA significantly weakens EPA authority, much like the original APA. The revised APA may have even more far-reaching preemptive effects, however, as a result of the placement of brackets around certain sections that indicate reconsideration and possible future omission of these sections.
Title II, Subtitle D (§§ 2301-07) of the revised APA (beginning on page 428), entitled “Ensuring Regulatory Predictability for Greenhouse Gases,” is the principal section addressing preemption of existing Clean Air Act authority. These sections mirror the same Title II, Subtitle D (§§ 2301-07) of the original APA (beginning on page 619 of that version). Like the original APA, the revised APA would:
- bar EPA from establishing any GHG as a criteria pollutant on the basis of the pollutant’s effect on climate change or ocean acidification (§ 2301),
- bar EPA from designating any GHG as a hazardous air pollutant on the basis of the pollutant’s effect on climate change or ocean acidification (§ 2303),
- bar EPA from applying § 115 of the Clean Air Act regarding international air pollution to any air pollutant with respect to that pollutant’s contribution to climate change or ocean acidification (§ 2304),
- prohibit any state, locality, or Indian tribe from implementing a cap-and-trade program effective January 1 of the first year the EPA allocates allowances pursuant to the APA cap-and-trade program (§ 2305, referencing the newly-added § 805(c) of the Clean Air Act),
- (Like the original APA, the revised APA only preempts state cap-and-trade programs and does not preempt other state regulation of GHGs. Moreover, like the original APA, the revised APA would allow exchange of allowances issued by California, the Regional Greenhouse Gas Initiative, and the Western Climate Initiative for federal allowances (Revised APA § 2101 adding § 786 to the Clean Air Act, p. 321). And like the original APA, the revised APA would recognize the early action of these cap-and-trade programs by awarding a certain number of allowances (Revised APA § 2101 adding § 788 to the Clean Air Act, p. 324).)
- bar EPA from applying the Clean Air Act’s Title V operating permit program to stationary sources that are being regulated under the Clean Air Act solely because of GHG emissions (§ 2307).
One difference between the original and revised APA lies in the preemption of New Source Review provisions (§ 2306). The original APA amended the definition of “major emitting facility” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) program to exempt from this definition “any facility” initially permitted or modified after January 1, 2009 that would be regulated because of its GHG emissions (Original APA, p. 623). Rather than amend the definition of “major emitting facility,” the revised APA, by contrast, adds a new section that exempts from PSD regulation “a major emitting facility that is a covered entity” under the APA and that is initially permitted or modified after January 1, 2009 and would be regulated on the basis of its GHG emissions (Revised APA, p. 433). Both the original and revised APA would have the same effect of exempting new sources and sources modified after January 1, 2009 from PSD regulation for their GHG emissions. The language of the revised APA has a more narrow preemptive effect, however, as it exempts only major emitting facilities that are covered by the cap, rather than redefining “major emitting facilities” to exclude any new source that would be regulated on the basis of GHG emissions.
A more significant difference between the two versions is the insertion of brackets in one subsection of § 2302 relating to preemption of the Clean Air Act’s § 111 new source performance standards. Under § 2302, the revised APA, like the original APA, would:
- bar EPA from establishing performance standards for capped GHG emissions from a capped source except for a reason unrelated to climate change or ocean acidification, and
- bar EPA from establishing new source performance standards before 2020 that would apply to uncapped GHG emissions from an eligible offset project.
Significantly, however, the original APA included an exception that effectively excluded existing capped coal-fired power plants from the preemption of performance standards for capped sources (§ 2302(2), amending Clean Air Act to add § 111(k)(2)(B)). In other words, the original APA carved out an exception from its prohibition against performance standards for capped sources on the basis of climate change or ocean acidification. The exception would effectively preserve EPA’s authority to apply performance standards to capped, existing coal-fired power plants when those plants make modifications.
The one-sentence exception is now bracketed in the revised APA (Revised APA, p. 430). If this exception is eliminated, as the revised APA appears to contemplate, EPA would be stripped of its authority to apply performance standards for GHGs to existing coal-fired power plants that are subject to the cap.
Relatedly, the revised APA brackets the entire § 802 “Coal-Fueled Fleet Transition Program” that the original APA would have added to the Clean Air Act (Revised APA, p. 74). Section 802 would have established tax incentives to encourage replacements or retrofits of existing coal-fired power plants, and would have established a task force to consider avenues and incentives for encouraging early retirement of existing coal-fired power plants. Although the task force provision had previously drawn the ire of environmental and public health advocates who considered it a giveaway to industry – a potential weakening of existing Clean Air Act regulations in exchange for retirement of old coal plants – the complete elimination of a program to encourage transition of the aging fleet of coal-fired power plants may be the ultimate giveaway to industry.
In short, as much as the original APA tied EPA’s hands in regulating GHGs on the basis of climate change and ocean acidification, the revised APA is poised to do even more harm to EPA’s existing Clean Air Act authority. The potential excision of an entire section devoted to incentivizing retirement of existing coal-fired power plants does not bode well for a clean energy future. Moreover, the potential elimination of the proposed § 111(k)(2)(B) exception, which would prevent EPA from establishing performance standards for old coal plants, would remove one of the few remaining pieces of authority EPA does have to regulate GHGs under the Clean Air Act.
 One minor change is that the revised APA prohibits Indian tribes, in addition to states and political subdivisions of states, from implementing cap-and-trade under this section. See Revised APA, p. 477. The original APA did not reference Indian tribes and only prohibited states and political subdivisions of states from implementing cap-and-trade programs. See Original APA, p. 667.
 The revised APA references § 806(c) (see Revised APA, p. 432), as does the original APA (see Original APA, p. 622). But given revisions to the original version, the referenced § 806(c) (see Original APA, p. 667) is actually now § 805(c) (see Revised APA, p. 476). The revised APA’s reference to § 806 rather than § 805 is therefore likely a typo.