White House Blocks EPA Emissions Draft

Fight Tests Reach Of Clean Air Act, Agency's Autonomy
By IAN TALLEY and SIOBHAN HUGHES
June 30, 2008; Page A3
WASHINGTON -- The White House is trying to prevent the Environmental Protection Agency from publishing a document that could become the legal roadmap for regulating greenhouse-gas emissions in the U.S., said people close to the matter.
The fight over the document is the latest development in a long-running conflict between the EPA and the White House over climate-change policy. It will likely intensify ongoing Congressional investigations into the Bush administration's involvement in the agency's policymaking.
The draft document, which has been viewed by The Wall Street Journal, outlines how the government, under the Clean Air Act, could regulate greenhouse-gas emissions from mobile sources such as cars, trucks, trains, planes and boats, and from stationary sources such as power stations, chemical plants and refineries. The document is based on a multimillion-dollar study conducted over two years.
The White House's Office of Management and Budget has asked the EPA to delete sections of the document that say such emissions endanger public welfare, say how those gases could be regulated, and show an analysis of the cost of regulating greenhouse gases in the U.S. and other countries.
The OMB instead wants the document to show that the Clean Air Act is flawed and that greenhouse-gas regulations should be developed under new legislation, several people close to the matter said. The EPA needs to clear a final draft with the White House in order to release the document.
"This is a collision course between the agency and the OMB," said one person familiar with the document. The OMB "had in mind to lay out a different story that the Clean Air Act is broken and can't be used to regulate emissions." The Clean Air Act was originally enacted in 1970 to clean up air pollution and was amended in 1990.
EPA spokesman Jonathan Shradar said, "Work on the [document] continues in earnest and it will be published soon." He declined to comment further.
Neither the White House nor the Office of Management and Budget responded to requests for comment.
The document would be the agency's formal response to an April 2007 Supreme Court decision that found greenhouse gases such as carbon dioxide are pollutants under the Clean Air Act, and that the EPA can regulate them.
The court's ruling centered on emissions from automobiles. But it set the stage for regulations affecting the entire U.S. economy -- from power plants to factories and ships -- by ordering the EPA to determine whether greenhouse gases endanger public health or welfare, the legal criteria for regulating greenhouse gases under the Clean Air Act.
In recent weeks, the Bush Administration warned that regulatory havoc would result if the EPA were to regulate greenhouse gases under the act. The White House argues the act restricts the EPA from considering costs when imposing regulations and could ultimately mean the agency would have to regulate nearly everything that created emissions, including hospitals, schools and apartment buildings.
The EPA draft document concludes that motor vehicles could be even more fuel efficient than currently required by law. Based on advanced technologies such as plug-in hybrid vehicles, fuel efficiency could be improved to well above 35 miles per gallon between 2020 and 2025, it says. A 2007 energy law that has been supported by the Bush administration mandates an average vehicle fuel-efficiency of 35 miles per gallon by 2020.
For other sectors, the EPA draft document shows how emissions such as carbon dioxide could be regulated through the government-permit process and through a cap-and-trade system similar to the programs the agency administers for acid rain and mercury.
"The net benefit to society could be in excess of $2 trillion," according to the draft document.
Administration supporters say projecting the future benefits of regulation is fraught with uncertainty, and that some degree of debate over what the document should say is to be expected. "Any time you're trying to monetize benefits, there's a controversy," said Jeffrey Holmstead, a former EPA assistant administrator for air and radiation.
"Clearly [White House officials] don't want to leave behind a blueprint that suggests that the Clean Air Act could offer a potential pathway in a cost-effective way to reduce greenhouse-gas emissions," said one of the people close to the matter who supports the EPA document's analysis. "Leaving a blueprint behind could leave the next administration a document they could work from, and that's not in their interest," the person said.
If the agency establishes a policy direction in this phase of the rule-making but later changes direction in the proposed rule, it could create opportunities for legal challenges under the Administrative Procedures Act, said Peter Robertson, a former deputy administrator at the EPA and a partner at the Pillsbury law firm specializing in environmental public policy.
"There wouldn't be a reason for OMB to monkey with this document if it weren't going to be an important step in the process now and later on," Mr. Robertson said.
Two people familiar with the matter said that although EPA Administrator Stephen Johnson originally supported much of the White House cuts from the draft, he felt that the edits became too aggressive. A spokesman for Mr. Johnson declined to comment.
The internal battle has delayed the publishing of the document, which was originally due out June 23. The document could now be released later in the week.
This isn't the first time that the White House has intervened in the process of setting emissions regulations. Mr. Johnson and the administration's role in blocking emission regulations has come under intense scrutiny by Congress.
--Stephen Power contributed to this article.
Write to Ian Talley at ian.talley@dowjones.com and Siobhan Hughes at siobhan.hughes@dowjones.com