Regulatory: Environmental Regulation Under the Obama Administration

The Obama Administration has undertaken a herculean effort to issue environmental regulations to control green house gas (GHG) emissions. The costs and health benefits of these rules will exceed many tens of billions of dollars over the next decade.

In December 2009, EPA determined under the Clean Air Act that GHG emissions endanger human health and welfare. This conclusion required EPA to issue regulations restricting GHG emissions from mobile sources (cars and trucks) and stationary sources (industrial facilities).

In April, EPA and the National Highway Traffic Safety Administration (NHTSA) issued a joint "tailpipe" rule to regulate GHG emissions from automobiles and light trucks. EPA established GHG emissions standards, and NHTSA raised the Corporate Average Fuel Economy standards to 35.5 miles per gallon.

In October 2009, EPA required companies in the industrial sectors with the largest emissions to begin reporting their GHG discharges on a periodic basis. Additional rules will be issued to extend these rules to other industrial sectors. These data will provide the raw material from which future GHG control rules will be fashioned.

EPA will impose restrictions on stationary source emissions on the largest emitters first. EPA will issue a "tailoring rule" to determine the order and the time when industrial facilities will be required to obtain permits to limit GHG emissions. These restrictions will be phased in starting in 2011 for the largest industrial facilities. The threshold emission controls for the GHG permitting initially will be set at a high level and thereafter will be lowered in steps, while the permit requirement is extended to other industrial sectors.

EPA also has taken a series of actions that will alter the economics of using coal as a fuel to produce electricity. They include (1) issuance of guidance under the Clean Water Act for use in the permitting process for new surface coal mines, which will make it more difficult to locate future mines; (2) a rule to lower the permissible short-term emissions of sulfur dioxide from industrial facilities, which will require substantial reductions in emissions from coal-fired power plants, at a cost of $1.5 billion through 2020; (3) a proposed rule to govern the disposition of coal ash from coal-fired power plants, which may cost between $3 billion and $20 billion in future years.

In sum, EPA is attempting to develop pollution controls that will alter the incentives for industrial production and the country's choice of fuels at enormous cost but with the promise of enhanced health and life expectancy for millions of people.

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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John Cooney

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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