EPA Issues Carbon Guidance to Help States Enforce Rules

The Obama administration said states will decide how power plants and other big polluters should cut emissions when the first U.S. greenhouse-gas regulations take effect in January.

The Environmental Protection Agency issued guidance today letting states determine on a case-by-case basis the “best available control technology” that companies should use to limit the carbon-dioxide pollution that contributes to climate change. Energy efficiency, an approach backed by the U.S. Chamber of Commerce, probably will emerge as the most cost- effective approach, the agency said in an e-mailed statement.

U.S. lawmakers including Senator Jay Rockefeller, a West Virginia Democrat, and states such as Texas have sought to delay or block the EPA’s carbon rules, arguing they will hurt the economy. Environmentalists say the guidelines underscore the agency is seeking to craft practical rules.

“EPA is showing that dealing with greenhouse-gas emissions is not the bogeyman portrayed by opponents of clean-air controls,” said Frank O’Donnell, president of the Washington- based environmental group Clean Air Watch.

The EPA is moving forward with plans to regulate carbon emissions after Congress failed to pass climate-change legislation. A bill putting a cap on carbon pollution stalled this year in the U.S. Senate after a “cap-and-trade” measure passed the House in June 2009. President Barack Obama pledged to regulate carbon using the EPA should Congress fail to act.

Photographer: Jamie Rector/Bloomberg

An Exxon Mobil refinery in Torrance, California. The EPA’s carbon regulations under the Clean Air Act are set to begin Jan. 2. Close

An Exxon Mobil refinery in Torrance, California. The EPA’s carbon regulations under the... Read More

Photographer: Jamie Rector/Bloomberg

An Exxon Mobil refinery in Torrance, California. The EPA’s carbon regulations under the Clean Air Act are set to begin Jan. 2.

‘Threat to Regulate’

“The Obama administration must now carry out its threat to regulate,” Kevin Book, managing director of ClearView Energy Partners LLC in Washington, said today in a research note.

The administration may be rushing to complete rules before Republicans take control of the House next year, a move likely to spur hearings questioning the scientific basis for new regulations, Book said.

Rockefeller, who wrote legislation to delay the EPA’s carbon regulations for two years, said the agency’s case-by-case approach will make it harder for companies to build or expand their operations and today called on the Senate to pass his bill.

“Such an unstable regulatory environment prevents companies from making long range investment decisions," Rockefeller said in an e-mail.

Howard Feldman, director of regulatory and scientific affairs for the Washington-based American Petroleum Institute, which represent oil and gas companies, said the rules will hurt business.

‘‘The EPA is railroading job-killing regulations onto states, localities and America’s businesses, during a time of uncertain economic recovery,’’ Feldman said in a statement.

Carbon Capture Unlikey

The environmental agency said it’s unlikely companies will have to install expensive technologies aimed at capturing and storing carbon-dioxide emissions.

The EPA’s guidelines say that emissions from producing ethanol or other fuels made from plants will be treated differently than greenhouse gases from oil refineries or coal- burning power stations. The agency said it will issue further guidance in January on how to assess the environmental and economic benefits of biomass.

‘‘Certain biomass feedstocks may be considered carbon- neutral,” the agency said today. The EPA may “partially or wholly” exclude emissions from bioenergy and other biogenic sources in analysis of best control technologies.

The EPA’s carbon regulations are set to begin Jan. 2 and will apply to new or modified industrial sources of pollution.

Pending Lawsuits

The Obama administration is facing lawsuits over the pending rules, which were crafted after EPA Administrator Lisa Jackson declared greenhouse gases a public threat last year. The “endangerment finding” followed a 2007 Supreme Court ruling stating that EPA had the power to regulate carbon emissions as a pollutant under the 1970 Clean Air Act.

Texas has challenged the EPA’s rules and told the agency in August that it doesn’t plan to comply with them.

“We are disappointed that Texas hasn’t engaged in this process,” EPA Assistant Administrator Gina McCarthy told reporters today on a conference call.

McCarthy rejected claims that the first-ever nationwide U.S. limits on carbon pollution will hurt businesses.

“The Clean Air Act for 40 years has found a way to issue permits in a way that allows the economy to grow,” she said. “We aren’t going to stop that with the greenhouse-gas” best- available process.

The National Association of Clean Air Agencies, which represents state and local environmental regulators, praised the EPA’s guidance.

‘Greater Certainty’

The agency is providing industry “greater certainty, quicker permitting decisions and a smoother path toward greenhouse-gas implementation,” Bill Becker, the Washington- based group’s executive director, said in a statement. “This should put to rest the exaggerated claims of some stakeholders that greenhouse-gas permitting will have disastrous economic consequences.”

The difficulty of crafting the carbon regulations was evident earlier this year when the panel advising the EPA on the issue became deadlocked over what pollution-cutting technology power plants, factories and other sources should be required to use.

After almost a year of talks, the working group couldn’t reconcile “divergent points of view,” according to a copy of its September report to the EPA. Companies represented on the panel included utilities American Electric Power Co. and Southern Co. It also included officials from national environmental groups and state regulatory agencies.

Under the Clean Air Act, the EPA’s definition of best- available technology is a guidance document, not a rulemaking, for the state and local authorities. The Clean Air Act requires states to implement EPA rules through a permitting process.

To contact the reporters on this story: Kim Chipman in Washington at Kchipman@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at LLiebert@bloomberg.net.

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