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Climate Change

Will the Federal GHG Tailoring Rule Extend To Cap and Trade?

Marc Karell   By Marc Karell, Founder and Principal, Climate Change & Environmental Services

Earlier this year the World Resources Institute and other organizations issued a report providing ways for the federal government to implement a cap and trade program to reduce greenhouse gas (GHG) emissions independent of Congress, through Section 111 of the Clean Air Act (§111), New Source Performance Standards. This report states that cap and trade regulations are legally-defensible and allow states to implement carbon reductions in a more efficient manner than standard USEPA rules.

While the Clean Air Act generally focuses on geographical areas and maintaining attainment with the National Ambient Air Quality Standards (NAAQS), §111 grants the USEPA the authority to regulate emissions by the type of source, rather than the location or attainment status of pollutants. §111 applies to any compound that has been determined to endanger public health and welfare, but for whom no NAAQS has been issued; a situation that pertains to GHGs. The section provides the states the right to be flexible in how they design these rules, whether they be traditional "command and control" limits or more flexible mechanisms.

Parts of the U.S., of course, are already on the path to cap and trade to reduce GHG emissions, namely RGGI in the Northeast and AB-32 in California. Can these be models to apply §111?

The Tailoring Rule currently tailors PSD and Title V Permitting to GHG emissions. The USEPA may extend this to NSPS by issuing draft performance standards for GHG and other emissions for new and modified power plants and for refineries later this year. At the same time, the USEPA may mandate states develop plans for existing facilities. Final performance standards for these industrial categories under §111 are expected in 2012. With the purported success of RGGI in the Northeast (reduced GHG emissions and revenue for the money-tight affected states), cap and trade may be considered a viable option, although in some areas it may be politically untenable. Many believe that §111 would allow the USEPA to permit states to implement such programs.

Although politics and court challenges are a reality, look at more states to take a more serious evaluation of cap and trade for GHG reductions in the future.


CCES technical experts can help your facilities prepare for the Tailoring Rule and how they currently impact future facility expansions and your Title V Permit.

Reprinted with permission by CCES.

Climate Change & Environmental Services subscribers can access Section 111 of the Clean Air Act, 42 U.S.C. § 7411, with annotations and Shepard's. subscribers can utilize these Matthew Bender resources:

The Clean Air Act (CAA), 5-120 Energy Law and Transactions § 120.06.

New Source Performance Standards (NSPS), 3-17 Environmental Law Practice Guide § 17.05. 

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