Group Signals Plan To Sue EPA To Force Cap-And-Trade Scheme For Vehicle Emissions

FILE - In this May 28, 2010 file photo, the rush hour commute starts in early afternoon and with greater intensity as traffic
FILE - In this May 28, 2010 file photo, the rush hour commute starts in early afternoon and with greater intensity as traffic is jammed in both directions on Interstate 405 on the Westside of Los Angeles as commuters and vacationers hit the road. More Americans will hit the road this holiday weekend than a year ago. And they'll have a little extra money to spend thanks to lower gas prices. About 30.7 million people will drive more than 50 miles on vacation for Memorial Day, according to auto club AAA. That's 400,000 more than a year earlier, a jump AAA attributes to improvement in the economy and consumer sentiment. The number of holiday travelers grows to 34.8 million when you throw in planes, trains and other means of transportation, a 1.2 percent increase from 2011.(AP Photo/Reed Saxon, file)

Another in what will likely be many legal maneuvers aimed at either expanding or contracting the regulatory reach of the Environmental Protection Agency over the next four years is expected to land Wednesday morning, as a New York-based policy reform group files notice of intent to sue the agency to force it to create a market for carbon emissions tied to cars, planes and other mobile sources.

The Institute for Policy Integrity, part of the New York University School of Law, had first filed a petition in July of 2009 requesting that such a cap-and-trade market be created under the EPA's existing authority, but no action has been taken by the agency on that front to date.

The group noted that while the EPA has, during the first term of President Barack Obama, pursued a number of measures aimed at curbing planet-warming emissions from stationary sources like power plants, and even introduced tougher fuel efficiency standards for new cars and trucks over the next decade, these moves are not commensurate with the scope of global warming.

The transportation sector accounts for approximately 27 percent of total greenhouse gas emissions in the United States, according to federal data. It also accounts for roughly 45 percent of the net increase in total U.S. greenhouse gas emissions over the last two decades.

"For the kind of efficiency standards EPA has been setting, the statute only lets EPA cover new models of cars and trucks," said Jason Schwartz, the group's legal director. "But compared to the 10 million new cars and trucks sold every year, there are over 250 million total vehicles on the road. A cap on vehicle fuels is the best way to cover emissions from those older, less efficient models."

Efficiency standards alone, Schwartz said, also risk generating a rebound effect. "As cars can drive further on a tank of gas, each vehicle mile travelled becomes cheaper," he said, "and consumers respond by driving more, and so emitting more. That eats into the benefits of the efficiency standard in the first place. By comparison, a market-based mechanism like a cap builds a price of emissions into the cost of vehicle fuel, which stays the same no matter how many miles the consumer can travel on that gallon of gas. So there’s no rebound effect."

Cap-and-trade schemes in general have met stiff resistance in the past, but the notion is being cautiously revisited as the need to address global warming emissions grows more acute. Despite lawsuits seeking to block it, California successfully launched a statewide cap-and-trade scheme last week.

The California Chamber of Commerce called the system a $70 billion tax on ordinary Californians -- echoing longstanding assertions by many businesses nationally that cap-and-trade schemes would increase costs that would ultimately be passed on to consumers. Such costs would be felt most intensely by the poor, critics charge.

But Schwartz said the cap-and-auction model proposed by his organization would avoid this.

"In this model, fuel manufacturers and distributors will have to bid on emissions credits to cover the greenhouse gases that the fuel they sell will generate when combusted," he explained. "They will purchase those credits in a national auction. The revenue of that auction can then be redistributed in such a fashion that will fully compensate low-income citizens from any increased prices they experience at the pump."

A 2010 report from the nonpartisan Congressional Research Service noted that regulation of fuels could be an effective way to obtain greenhouse gas reductions in the millions of cars, trucks, planes, and other vehicles that are already in the fleet and will remain in service for many years to come. "As noted earlier, the slow turnover of the vehicle fleet means that emission reductions from new vehicles will only gradually affect emission levels from the fleet as a whole," the report said.

A cap-and-trade scheme would ultimately require that the carbon content of fuels be measured -- a tack that is "more complicated than it may seem," the CRS report said, "particularly if one considers the life-cycle emissions, including indirect impacts of production."

Still, expectations are high that the EPA will act swiftly in Obama's second term to more aggressively promulgate a variety of new rules and regulations aimed at all forms of pollution, including greenhouse gases. These will almost certainly meet legal challenges of their own.

The Institute's notice of intent to sue comes on the heels of a lawsuit filed Monday against the EPA by the American Petroleum Institute, a trade group. The API is challenging the agency's mandate that diesel fuel manufacturers include at least 1.28 billion gallons of biomass-based diesel in the fuel stream beginning next year.