Can EPA set up a cap-and-trade system for the transportation sector? If so, can it be forced to do so?The Institute for Policy Integrity, an (excellent) policy research and advocacy outfit affiliated with NYU, today announced it plans to sue EPA, aiming to find out. This is a provocative and interesting move, but I doubt it will have much short-term effect on EPA's policy decisions.
Specifically, IPI is asking EPA to use its powers under the Clean Air Act to set up a cap-and-trade system covering vehicle fuels and emissions from aircraft. This would first require the agency to make an endangerment finding for GHG emissions from "nonroad" vehicles and aircraft (as it did for motor vehicles in 2009). This process is relatively straightforward, though whether the agency has discretion over the process has been legally controversial. The more complex and ambitious second step is for the agency to use its standard-setting powers for fuels and aircraft emissions to propose actual regulations that would put cap-and-trade in place.
I'm not an expert on the agency's powers over fuels, but just this year I wrote a paper (coming out in the Columbia Environmental Law Journal) and short briefing on its authority to regulate aviation emissions. My reading of the statute is that EPA has a lot of authority and flexibility in this area, perhaps enough to create an emissions trading system. Perhaps not coincidentally, I agree with IPI that doing so would be a good idea (though I think congressional action to set a carbon price including aviation emissions would be better).
This fight isn't new. California and (separately) some environmental groups petitioned EPA back in 2007 to regulate aviation emissions - though not specifically to do so with a trading system. When EPA failed to respond to the petitions, the green groups sued (Center for Biological Diversity v. EPA), . That case was not resolved until this year, when a DC circuit judge granted summary judgment to EPA. The greens scored an important victory in the case, however, when the judge ruled that EPA is required to make an affirmative decision one way or the other on whether emissions from aircraft endanger health and welfare (if they do, then EPA must regulate). IPI cites this ruling in their notice of intent to sue.
But EPA has a lot of duties, and cannot do everything at once. In granting summary judgment to EPA, the court found that EPA had not "unreasonably delayed" making an endangerment finding. After the case, EPA (finally) responded to the petitions, very tentatively committing to a 22-month timeframe for an endangerment finding. It refused to show its hand on how it might regulate (much less whether it would consider trading), arguing - I think correctly - that doing so would be premature without an endangerment finding. IPI's notice of intent to sue doesn't mention either the final ruling in the case or EPA's response to the petitions. As far as I can tell EPA's response satisfied the green groups - they may not be happy with 22-month delay but they finally have a commitment from EPA.
That brings us to today, and IPI's notice of intent to sue the agency. I'm not sure what else IPI thinks their threat will compel EPA to do. It's true that IPI also has an outstanding petition to the agency from 2009 seeking the same result it is pushing for now. Notice of intent to sue may inspire EPA to dig that petition out of a file cabinet and respond to it. (I am not sure why EPA finds writing a nice memo so difficult.) But any response would be similar to that the agency gave to the green groups - "we'll eventually get to an endangerment finding, but don't rush us, and until then we have nothing to say about how we'll regulate".
Maybe IPI thinks legal pressure will inspire EPA to speed up the endangerment process, but that seems unlikely. IPI's focus (admirable, I think) and what separates them from the other petitioners is their desire for flexible, market-based regulation. But EPA isn't talking about regulatory details now, and IPI's threat won't change their minds. If IPI does sue, it's hard to see why the result of that case would be any different from the green groups' earlier suit - dismissal on summary judgment on the grounds that EPA's delay is not yet unreasonable.
In short, EPA should have responded to IPI's 2009 petition and the group is well within their rights to demand that response. They're also fighting the good fight for flexible, cost-effective regulation. But I don't think their threat of litigation (or any actual suit) will change EPA's plans.