With U.S. EPA announcing its endangerment finding earlier this week, what's next for the agency as it moves to regulate greenhouse gas emissions? During today's OnPoint, Roger Martella, a partner at Sidley Austin and former general counsel at EPA, explains the significance of EPA's endangerment determination. Martella discusses Congress' options for pre-empting EPA's regulation and gives his take on how the endangerment finding will affect the Copenhagen meeting.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Roger Martella, a partner at Sidley Austin and former general counsel at EPA. Roger, wonderful to have you here as always.
Roger Martella: Thank you, it's good to be back.
Monica Trauzzi: Roger, big news coming out of EPA this week. They've made their endangerment determination for greenhouse gases. How significant is this?
Roger Martella: It's probably, in my view, perhaps the most significant regulatory decision by the agency in the last 15 to 20 years. It's really going to open up a new era for the agency come 2010, where, for the first time, it's going to be able to address global greenhouse gases, but also for the first time, when we think about the agency's history it's always controlled air pollution, pollution coming out a tailpipe or a smokestack. But now this decision will give EPA the authority to regulate the energy going into a process and be able to regulate energy for the industry that it controls.
Monica Trauzzi: Does this mean that we're going to start seeing the wheels turning on regulation or is there still a long way to go before the Clean Air Act is used to regulate greenhouse gases?
Roger Martella: Well, the decision is both significant and insignificant in that way. It's the first step of two steps the agency needs to go through, so from that regard it's not that legally significant. Nothing has changed overnight; sources aren't all of the sudden subject to greenhouse gas controls. If you wanted to build a coal-fired power plant today and if you could do it fast enough, you could actually do it without greenhouse gas controls, even though that's an exaggerated example. But it's also significant because it does open the universe, opens this new era for EPA to have the authority to address greenhouse gas controls as it chooses to do so. And we anticipate it will choose to do so as early as March of next year.
Monica Trauzzi: So, what will we see happening coming out of EPA now that the endangerment finding has been done, sort of what is the timeline that we're looking at?
Roger Martella: Sure, we're going to see, first of all, EPA take that second step. It's taken the first step of endangerment, come March it will take the second step and actually start to control greenhouse gases. It's going to start with cars and will finalize a regulation in March that will control greenhouse gases for cars. At the same time, the finalization of that regulation, according to EPA, will impact stationary sources immediately. And the impact will be once the EPA finalizes that regulation, if you have a new stationary source or if you're going to modify your existing stationary source, EPA, for the first time, will regulate your greenhouse gases, regulate your use of energy through the permitting process and require greenhouse gas controls on stationary sources through permitting.
Monica Trauzzi: Congress has a few options here in terms of pre-emption. So, what can Congress do leading up to that March 2010 date?
Roger Martella: Sure, a year ago I thing most people would have assumed that Congress would have enacted legislation by now that would have pre-empted much of this. Now it looks like legislation is thus likely and we think as we get closer to the March date Congress is going to be considering how does it want EPA to proceed given the likelihood or unlikelihood of legislation. One option is it could allow EPA to proceed with the mobile sources, but wall it off, give EPA more time, give Congress more time before it impacts stationary sources. Another option is it could decide to pre-empt entirely or another option on the other extreme is it could endorse would EPA is doing and actually give it the legislative authority to move ahead and address stationary sources without the legal vulnerability it currently faces.
Monica Trauzzi: Once EPA regulation begins though, how would a cap and trade interact with that if Congress to decide to pass legislation down the line?
Roger Martella: And that's been a changing ball over the last six months. Up until early in the summer we always assumed that legislation would pre-empt EPA and, as a matter of fact, the Waxman proposal largely did that. Since then the debate has evolved, where now Congress is looking to leave EPA authority intact. I think by anyone's analysis, once EPA starts to regulate it will be harder to pre-empt them after the fact, even if Congress does enact a cap-and-trade legislation say a year from now. And that's why there's focus at the moment about whether to pre-empt some of this or delay some of this to give Congress the time it needs to finish the legislation.
Monica Trauzzi: There does seem to be pretty broad consensus that the Clean Air Act is not the best vehicle for regulating greenhouse gas emissions. So, do you get the sense that there's confidence within the Obama administration that this will sort of force Congress's hand to act and to pass legislation?
Roger Martella: It seems like at this point EPA is moving forward with an agenda wanting to regulate greenhouse gases, not really paying attention to Congress. I think it believes it has a mandate to do so under the law and under Massachusetts v. EPA. If Congress steps in it will respond to Congress, but the impression the administration is giving is we have to do this, we're obligated to do this, and we can't wait for Congress to decide this. We're going to move forward in any event.
Monica Trauzzi: The timing of the announcement was planned to coincide with the beginning of the Copenhagen meeting. Does it help with the Copenhagen negotiations or is the international community really looking for legislation coming out of the U.S.?
Roger Martella: I think theme there for the administration is it wanted to have the biggest accomplishment it could point to and given that legislation hasn't passed, it turned to this. I imagine the message we're going to be hearing in Copenhagen is we can achieve the same goals through EPA that we can achieve through legislation. It might look different, it might work in a different way, but we can get to the same place. Now, I think there's a lot of debate about whether that's actually true, but I imagine the administration will be pointing to this authority to say we can achieve the same goals, just through this different mechanism.
Monica Trauzzi: But it still doesn't help getting a treaty passed through the Senate in the long run.
Roger Martella: It seems like at this point people are operating in independent spheres.
Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show again.
Roger Martella: Great, Monica, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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