EPA to Reconsider Emissions Ruling

By IAN TALLEY
WASHINGTON -- The Obama administration said Tuesday it will reconsider the question of whether carbon dioxide emissions should be a factor when the Environmental Protection Agency grants permits for power plants, refineries and other facilities, in a partial victory for environmental groups that want the agency to enforce tougher curbs on greenhouse gases.
Environmental Protection Agency chief Lisa Jackson's decision doesn't change current rules, but it raises the possibility that the Obama administration could move in the future to officially regulate carbon dioxide as a pollutant under the Clean Air Act -- an outcome that many business groups want to avoid. The EPA's action could put pressure on Congress to act on broad, new greenhouse gas regulations.
Jeff Holmstead, head of environment policy at Bracewell & Giuliani LLP and a former EPA air administrator, called Ms. Jackson's decisions "a clever procedural move" that allows the new administration to distance itself from the previous Administration without actually changing how CO2 is regulated.
"This reminds Congress that (climate legislation) needs to be at the top of the agenda," said John Stowell, environmental policy chief for Duke Energy. Duke has two coal-fired power plants under construction, one of which is designed to later capture and store greenhouse gases, when the technology becomes commercially available.
The issue revolves around a finding by an EPA appeals board last year that required EPA's Denver office to consider including carbon dioxide emissions regulation as part of a permit for a proposed expansion of the Deseret Power Electric Cooperative's coal-fired power plant in Bonanza, Utah.
Mr. Johnson, shortly before he left his post as EPA administrator last month, issued a decision that the agency should disregard the appeals board's action -- in effect saying the agency shouldn't weigh carbon dioxide emissions as a factor in approving the power plant.
A group of environmental organizations, including the Sierra Club, petitioned the EPA to reconsider Mr. Johnson's ruling and in the meantime to base its policy for reviewing new power plants and other facilities on the appeals board decision that required consideration of carbon dioxide output.
Ms. Jackson, in a letter viewed by Dow Jones Newswires, said that the agency will "vigorously review" Mr. Johnson's decision to determine whether it is "consistent with the Obama administration's climate change strategy." The agency will soon start the process of seeking public comment on a new rule that will govern how the agency regulates carbon dioxide emissions as part of the permitting process.
The new EPA chief also said that current EPA policy doesn't stop states from issuing permits under their own State Implementation Plan, which could leave the door for state governments to enact more stringent permitting policies.
Environmental groups applauded Ms. Jackson's decision, saying it was the first step toward controlling carbon dioxide.
"Jackson...is clearly choosing a new, more responsible direction for the EPA," said Patrice Simms, a senior attorney for the Natural Resources Defense Council, one of the groups that filed the petition.
Industry and many lawmakers say they would prefer Congress to write greenhouse gas legislation rather than the executive branch writing rules under the Clean Air Act, saying that using current law is too blunt of an instrument that could devastate the economy and force business overseas.
"If the environmental groups succeed in having this policy overturned, the number and types of facilities requiring EPA permits would explode resulting in an impassable regulatory gridlock," the National Association of Manufacturers said in a statement.
Write to Ian Talley at ian.talley@dowjones.com