On December 23, 2010, EPA entered into a settlement with a number of states and environmental groups that is likely to profoundly affect emissions of greenhouse gases.

In the settlement, reached in New York v. EPA, a case pending before the U.S. Court of Appeals for the D.C. Circuit, EPA has agreed to promulgate emissions standards covering greenhouse gases from both new and existing electric generating units under Section 111 of the Clean Air Act by July 26, 2011. Under that section, EPA may establish standards representing “the degree of emissions limitation achievable through the application of the best system of emissions reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.”

The underlying litigation involved challenges by states and environmental groups to EPA’s promulgation of Section 111 standards for the utility sector, which lacked emissions standards for greenhouse gases. Following the U.S. Supreme Court’s 2007 decision in Massachusetts v. EPA, the Court of Appeals remanded the issue to EPA for reconsideration in light of that decision.

The settlement requires EPA to develop these emissions standards. Although it is unclear what standards EPA will impose, the Agency noted in its 2008 Advance Notice of Proposed Rulemaking that it is authorized to establish a sectoral cap and trade program for existing sources under Section 111(d). Entry of this settlement by the D.C. Circuit after a 30-day public comment period would establish a defined route to regulations that would serve as a basis for putting a price on carbon without action by Congress and with a judicial imprimatur. Regulation of other sectors will follow.

If you have any questions about the effect of the EPA settlement on your operations, please feel free to contact Brendan K. Collins at 215.864.8106 or collins@ballardspahr.com or Lorene L. Boudreau at 215.864.8245 or boudreaul@ballardspahr.com. Please click here for information on Ballard Spahr's Environmental practice.   

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