Former general counsel Martella discusses endangerment, vehicle emissions

The Obama EPA has been moving with unprecedented speed, releasing a proposed endangerment finding, proposed renewable fuels standard and proposed vehicle emissions standard, all within its first five months. During today's OnPoint, Roger Martella, former general counsel at EPA and now a partner at Sidley Austin, analyzes these key actions taken by the new EPA. Martella talks about the implications of the vehicle emissions proposal and the legal issues associated with the timing of the announcement. He also gives his take on the pace at which the Obama EPA has been moving and discusses how the Waxman-Markey climate bill addresses EPA pre-emption.


Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Roger Martella, former general counsel at EPA and now a partner at Sidley Austin. Roger, it's great to have you back on the show.

Roger Martella: Thanks for inviting me back again.

Monica Trauzzi: Roger, there have been several interesting, aggressive developments coming out of EPA in the last several weeks. So I wanted to sort of break them down and discuss what the implications of each action might be. The move that got the biggest headlines was the administration's announcement on vehicle emission standards and they moved on this prior to the close of public comment period on endangerment. What are the issues of legality that arise there due to the fact that they moved on this prior to hearing the public's comments?

Roger Martella: Well, you're right. The Obama EPA has been sprinting out of the gate for the last 60 days with the announcement of three very significant rule makings that lay the foundation for years if not decades to come on climate change regulations. And in addition to those three rule makings, President Obama announced during these rule-making processes that they would be coming up with a fourth rule making this summer to regulate greenhouse gases from cars. And at the outset a lot of people applauded the policy. I think they should in that the president announced they're trying to reconcile both Department of Transportation, EPA, and states to come up with a uniform car standard, but it raises a number of legal issues at the same time. First, once they regulate greenhouse gases for cars under the Clean Air Act are they prepared for the ramifications on other sectors such as stationery sources? Are they prepared for the ramifications of permitting for PSD? And then the issue that you raised, which is are they pre-judging what is the prerequisite, the endangerment finding by announcing this rule? It sounds like they're thinking about this very strategically. They're going to try to sequence these rules so that it doesn't appear they're pre-judging endangerment. And what we're hearing they plan to do is to propose the car rule that you're referencing before they finalize the endangerment finding, but have them come together at the end. Have them sync up together so that the car rule is not finalized before they finalize the endangerment finding.

Monica Trauzzi: And so your sense of things, I mean have they prejudged this? Have they already essentially made the endangerment finding?

Roger Martella: It seems it's not a surprise that they would find the endangerment finding at the end of the day. The question is whether they've created any legal questions along the way. At a minimum they've given some ammunition to people who might want to challenge these decisions six months or a year from now.

Monica Trauzzi: The public comment period on the proposed endangerment finding closes in just a couple of weeks, June 23.

Roger Martella: Although a request has been made by a coalition of about 15 trade associations for a 60-day extension and people are anxiously looking to see whether EPA will grant that extension.

Monica Trauzzi: OK, so what do we know about when we might see a final decision and what kind of strategy is EPA going to have to employ to time it correctly with what's happening in Congress?

Roger Martella: It sounds like what's going to happen is EPA is not going to wait for the final endangerment determination before they propose the car rule. They're going to work on the final endangerment determination at the same time people are commenting on the car rule. So, the strategy there seems to be have them both out there at the same time, but resolve them close to the end, maybe sometime later this year or early the following year. In terms of strategy with Congress there's many ways where the new proposed legislation interacts with EPA. In many cases the legislation preempts EPA under the Clean Air Act and if the legislation is enacted many of the provisions, under the Clean Air Act won't apply anymore to greenhouse gases. At the same time, and what's a little less common from reading the legislation, the legislation also authorizes EPA to proceed on certain sources under the Clean Air Act. For example, Section 811 explicitly instructs EPA to regulate stationary sources below 25,000 tons per year under Section 111 of the Clean Air Act.

Monica Trauzzi: So, a question that's come up in recent weeks is does an endangerment finding necessarily mean regulation?

Roger Martella: Once EPA finalizes the endangerment finding it's going to be crossing a threshold that's going to be hard to turn back from. Once they finalize endangerment there's a mandatory duty to regulate greenhouse gases. Now, we can debate the timing of that regulation. EPA has significant discretion regarding the timing of its regulations, but environmental groups clearly will argue once the endangerment determination is finalized EPA has a duty to regulate greenhouse gases from virtually every sector of the economy.

Monica Trauzzi: Separately EPA released draft rules to implement the expanded national biofuels mandate. What's at issue there concerning ethanol's impacts on climate change?

Roger Martella: The renewable fuel standard proposal, which is going through hearings this week, is very important both to traditional fuel providers and also people who are pursuing renewable and alternative energy like ethanol, like cellulosic biofuels, advanced biofuels and sugarcane, those types of products. And it's been an interesting debate where the White House itself has been involved. There's always been tension between the environmental benefits of ethanol and what some people perceive to be the environmental consequences of ethanol. In this case the president himself stepped in and wrote a letter saying I recognize that there's some concern that's been raised about the environmental consequences of ethanol. But at the same time we have to accept those concerns right now so we can move towards advanced biofuels and the next generation of biofuels. So it's been interesting how the White House itself has gotten involved to say we're going to accept whatever debate is going on with ethanol right now to pursue a longer-term goal, to pursue environmentally favorable biofuels.

Monica Trauzzi: There was a sense when Obama was elected that his administration would usher in an era of regulation and he seems to be moving faster than expected, particularly when you consider the vehicle emissions proposal, what's your sense on the pace at which EPA is moving?

Roger Martella: I think the pace has been unprecedented, even from people who were expecting the administration to be aggressive. It might even be perhaps the most aggressive pace for promulgating regulations of such significance in the history of the agency. I think they're sending a clear message they're not going to slow down for Congress; they're not going to slow down really for anything because they believe these regulations are important. At the same time they're saying we would prefer Congress to do this, but we can't wait any longer and they seem to want to move forward as quickly as possible.

Monica Trauzzi: So, what are the key events that you're looking at for the rest of the year with EPA?

Roger Martella: We know what's going to happen with cars at this point. The president's made that announcement. I think the big question mark is where do they go from here? What do they do with the other mobile source sectors, for example airplanes, marine vessels, off-road vehicles? There's a number of petitions that are outstanding from last year that said to EPA you have to start regulating these greenhouse gases from those sources right now. How will EPA respond to those? We're hearing that, in fact, EPA is looking very closely at those petitions and will have a response out by the end of the summer. For other people the big question mark is where do they go on coal-fired power plants, petroleum refineries, stationary sources? And that's been the one thing that's been pretty unclear. We've heard that perhaps they'll consider those issues later this year or they might put those off to 2010, focus on mobile sources this year and address stationary sources in 2010.

Monica Trauzzi: Final question here. Sonja Sotomayor was recently announced as Obama's pick for the Supreme Court. What could she mean for the future of the court relating to environmental cases? I mean we saw the importance of the court in the Massachusetts v. EPA decision and the impacts that that's having now. What could she bring to the court on environment issues?

Roger Martella: From an environmental perspective we know not much about how she might view them. We know basically two focus points and one is she was the lead author in the decision River Keepers, which held that under a term called best technology available, a term that normally implies consideration of costs, she held that she could not consider costs, EPA could not consider costs in a cost-benefit analysis. So that would suggest she might not be one to favor balancing costs with benefits when it comes to environmental issues. The Supreme Court reversed her on that decision. The second issue is something we don't know she would come out. She has one of the four most important climate change common-law cases in the country before her right now. It was argued three years ago and there's been no decision, three years ago this month, and so we don't know how she would be addressing climate change issues given the lack of a decision on that subject.

Monica Trauzzi: OK, we'll end it right there. Thanks for coming on the show again.

Roger Martella: Thank you, Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]



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