The following is an interview with Jason Burnett, who worked in the EPA under President GW Bush. In it, we discuss efforts by the EPA to regulate greenhouse gases. Burnett quit the EPA in protest in June 2008, alleging interference from the Office of the Vice President.

The interview is meant as a supplement to the story, “Everything you always wanted to know about EPA greenhouse gas regulations, but were afraid to ask.”

What was your job at EPA?

I was brought in to lead the response to the Mass v. EPA Supreme Court case, and to develop the first federal GHG regulations.

Did you work on both the endangerment finding and the rules?

Traditionally, EPA has collapsed both of those into one rulemaking — they have, in the preamble to the rule, the discussion about endangerment. That’s the sequencing we were planning to have. We were, at least initially, on a very fast clock. There was political desire to get everything done by the end of the administration’s time [in office].

So you felt like you could get the rules out the door fairly quickly?

There was a pretty large, impressive team put on this, up to 100 people.

There’s no question there was a change of course — for an understandable, if not justifiable, reason: Congress was in the process of passing the Energy Independence & Security Act (EISA), which did much of what we were planning on doing through regulations.

There was never a strong desire — I daresay, in many quarters outside of EPA, any desire — to move on to the stationary sources, but the way the CAA works, after you touch the mobile sources you automatically and immediately have to deal with stationary sources. From the political perspective at the White House, it was an unfortunate side effect — worth doing only because it advanced the goal of increasing fuel economy of cars and trucks and creating more volume for renewable and alternative fuels. After passage of the EISA, there was another way of accomplishing those same goals, and they didn’t then need to deal with the stationary source ramifications, — namely, the PSD/NSR challenge.

Did the Bush administration ever really think they could get out of it, or were they just kicking the can down the road?

There were some people who thought they could make an argument, which ultimately would lose. And other people who said, “we don’t want to make superfluous legal arguments, we’ll just figure some other way of delaying.” Fortunately for the integrity of our court system, they did the latter, basically by saying, “this is really complicated and interconnected, and would benefit from public input, and therefore we’re going to go out and talk about all the complications and interconnections.”

How do you think the Obama EPA’s rules will differ from what your team came up with?

I think they’ll be different in two fundamental ways. One is, they’re going to be more aggressive. Two, they’re going to deal with the California waiver, because the Obama admin has now granted it, whereas the Bush administration denied it. Whether the California program is in force will affect how you design the federal program. So EPA need to make at least those two adjustments.

I’m not surprised we still haven’t seen the proposed rule. They probably could have pushed it a little faster, but they probably wanted to give Congress time to work through legislation. Virtually everyone believes that legislation will be better.

I keep hearing that. Is it true?

It entirely depends on how good the legislation is. It would be very easy to improve upon what the CAA would do. I have at times pushed for very narrow CAA fix. You could address the most problematic or challenging parts of the CAA in a very surgical way. At the other extreme is to pass the comprehensive, 1000-plus page bill.

How could the CAA be made more suited to the challenge of regulating CO2?

EPA certainly has discretion, and I’m confident it’s being quite aggressive in pursuing ways of making GHGs fit within the CAA. But that will be challenged in court. Pretty much regardless of what they propose, there will be legal vulnerabilities. Trying to make GHGs fit within the CAA, you’re going to have to be fairly creative in how you interpret certain terms and how you sequence the program.

Can lawsuits stop the regulations?

They may not delay the effectiveness of the regulations but they may make it pretty messy. Parts of the regulations may be passed back to EPA — either left in force and passed back to EPA to rectify legal deficiencies, or taken off the books and passed back to EPA.

Exhibit A in the challenges of the CAA is the Prevention of Significant Deterioration (PSD) / New Source Review (NSR) program. EPA has a proposed rule over at OMB for review on how to work through PSD — I haven’t seen it. I’m sure EPA’s trying to deal with the volume thresholds in the CAA, which say that a “significant” source of pollution emits either 100 tons or 250 tons, depending on the type of source.

The Supreme Court gave the definition of pollutant such broad range, but the volume thresholds are weirdly specific. How could Congress know how many tons of some future pollutant would be significant?

The original ICTA petition and later the Commonwealth of Mass were smart to focus on Section 202 of the CAA, which works quite well for regulating GHGs. In fact most of Title II, the mobile sources title, works quite well. There wasn’t much attention paid in that case to the other dominoes that would fall upon issuing a S202 regulation. Also, there was the view that if this is what a plain reading indicates, what Congress had in mind — you’re going to regulate sources that emit 100 tons — then you’ve got to find a way to make it work. And if GHGs meet the definition of air pollutants, they meet the definition of air pollutants, no matter how inconvenient that may be for the regulators and the regulated community.

Conservative advocacy group CEI says that EPA either obeys the thresholds and destroys the economy or, unilaterally and illegally, changes them.

That is something we foresaw years ago. It’s a legal question.

There is a huge advantage to Congress raising that threshold. It would be a one-sentence amendment: For the purposes of greenhouse gases, the CAA threshold shall be 25,000 tons. That would solve a large fraction of the challenges.

I wouldn’t be surprised if the court put EPA on some kind of schedule, where they are allowed to start out with a higher threshold, but over time that threshold had to move down to 250 or 100 tons. I hope EPA is successful in defending its proposal to lower the thresholds There are very good policy reasons not to try to apply PSD to the very smallest sources.

CEI is wants to turn this into a regulatory nightmare, so they can then stand back and say, I told you so, EPA ruins everything they touch.

Explain PSD. Why is it such a problem?

PSD applies to either new or major modifications — it requires any new or modified facility to install Best Available Control Technology (BACT). For other pollutants, there’s a long history of determining what BACT is. So we understand for a petroleum refinery, BACT today is a low-NOX burner, for instance. But right now we don’t have any precedent for what constitutes BACT for greenhouse gases. So that’s one problem, but it’s one we can get around. EPA can start establishing this precedent.

The NSR program has been hugely contentious as it applies to regular pollutants, because there’s this question as to what constitutes a major modification. That issue would come back with a vengeance when greenhouse gases come into play. A very small modification can increase GHG emissions by 100 tons. Take a coal-fired power plant that is emitting several million tons of CO2 a year — if they increase their operations by, say, 20 minutes over the coarse of a year, that emits a huge amount of CO2, more than 100 tons, certainly. If you do something that increases your emissions a fraction of 1%, that arguably could trigger PSD and require you to install BACT. The scare story is that that will cause facility managers for any large source of pollution to really just freeze up and not make any modifications at all.

What kind of modification would entail 25,000 tons?

It’s in the eye of the beholder whether it’s big or small. If you think of something emitting 2.5 million tons a year, then 25,000 tons is 1%. Doesn’t seem all that large. On the other hand, from the perspective of the environment, 25,000 is in and of itself a large source. The challenge we’re dealing with is, these large emitters just emit so, so much CO2.

There have been pollution control exemptions. So if you’re going in and making a modification for the purposes of pollution control, that in itself doesn’t trigger NSR for all the other pollutants. It’s a mechanism to reduce that perverse incentive — the incentive to do nothing at all.

There’s no question that will be litigated.

Say more about the BACT problem. Could IGCC be BACT for a new coal-fired plant?

The question will be, what constitutes BACT for a new coal-fired power plant? Is it carbon capture and storage (CCS) or something else?

In fact, environmental groups have petitioned EPA to find that IGCC is BACT. One of the counter-arguments will be, the baseline analysis of BACT does not include modifying the source. So if you if you propose a coal-fired power plant, BACT can’t tell you to build a gas-fired plant. The argument that industry will likely make is, if I’m coming in proposing a pulverized coal plant, BACT shouldn’t switch types of sources over to IGCC.

The whole issue of what constitutes BACT will itself be litigated. There will be people arguing that CCS is not commercially available and therefore can’t constitute BACT. Others will argue that IGCC is modifying the source and therefore can’t be considered BACT. We’ve yet to really even start that debate in earnest — it will be an ongoing area of employment for lawyers.

Also, BACT is supposed to be a case-by-case review, where you’re looking at the best technology at that point in time. Even if we decide today that something doesn’t yet meet the threshold, someone will argue tomorrow, well, now we do.

Can a cap-and-trade system for GHGs be set up under the CAA?

I may have as much experience as anybody in that question: My first assignment when I came to EPA was to develop a cap-and-trade system under Section 111 and 111d of the CAA.

Sec. 111 is new source performance standards (NSPS), but 111d applies to existing sources. I’ve been of the view that if you are going to move forward with the CAA, the way to do it is to cover stationary sources — as much as you decide, largely as a policy matter, you want to — under 111 and 111d. Whether or not you put in place a cap-and-trade system depends on how much legal risk you want to take.

When I was at EPA we developed a cap-and-trade system under 111d. It was the mercury emissions rule, much-maligned by environmentalists because they were worried about hotspots. But no one’s concerned about hotspots for CO2.

You dust off the legal argument EPA made for using 111d for a cap-and-trade system, and you search and replace mercury with CO2. You’d put both environmental groups and industry in an awkward position. Environmental groups would want to support the rule, presumably. Industry would not want to but they’re already on record saying EPA has authority to issue a cap-and-trade system under 111 — they wanted to have that for mercury.

It would be, in some ways, a more cumbersome cap-and-trade system than what Congress, at least in theory, could do. 111d is fundamentally a partnership between EPA and the states; EPA can’t set a national program, period, whether it’s cap-and-trade or some other program. Rather, EPA sets out the overall goals and tells the states to figure out how to regulate to meet those goals. The way it would presumably work is, EPA would strongly encourage states to opt in to the national cap-and-trade system — or whatever it develops. But there’s no requirement for states to do that.

Would the US regional cap-and-trade systems qualify under that kind of program?

I think that’s exactly what would happen. EPA would set emission reduction criteria for existing sources and states would be in charge of designing programs to meet those, and the states that already have cap-and-trade programs, like the RGGI states or the Western states, would either be able to argue that their program already meets the EPA requirement, or would have to modify their program in some relatively minor ways to fit the EPA program. But what it would do is force all the other states to develop something, or essentially opt in to the federal program.

The threat of EPA regs was supposed to drive conservatives and business to the table. It doesn’t really seem to be happening.

Not to the degree I might have expected. Part of the issue is that groups like the Chamber of Commerce are positioning themselves as, Just Say No. They’re going to Just Say No up to the bitter end. Then they’re going to complain about the regulations EPA moves forward with, even though any rational person looking forward can see that this is a natural outgrowth of their strategy.

The US Chamber is doing a disservice to their own members, for two reasons: one, many of their members stand to do quite well in a carbon-constrained world; two, they are pretending they can say no to both, when in fact the choice is one or the other.

Is there anything conservatives or business could do to stop the EPA going forward, or put roadblocks in the way?

I don’t think so, because there was a lot of work in the previous administration to figure out what that road block could be, and they didn’t come up with it. And that was when they had a receptive administration.

This is after we had completed our work and then it was rejected. Then, all attention was paid to, how do we relieve EPA of its obligation to respond to this? CEI and the Chamber were putting a huge amount of effort into figuring out legal theories, because if they’d come up with a plausible legal theory, it would have been forced on EPA. No theory came forward that was even plausible, and I heard a lot of theories. None passed the laugh test. If there is one out there I think it would have been discovered during that process.

More and more you’re going to see the Chamber and EEI and CEI trying to figure out either how to make this a real big mess that will then cause political backlash, or at least dragging in smaller businesses that realize their industry is going to be regulated and just want others to be in the boat with them.

Do you think EPA can do it?

What EPA will face is a very large challenge and some inefficiencies, but they’ll make it work. It won’t be what anyone would design if starting with a blank sheet of paper, but it won’t cause the US economy to come to a grinding halt.

There will be cases where there’s clearly unnecessary regulatory red tape, and those will be well-publicized by the Chamber and their allies, but by and large EPA has a lot of tools it can use and a lot of creative people that can come up with systems for getting around the big problems.

One of the problems people have been talking about is, this is going to require a mom-and-pop business to get a PSD permit. Well, one, EPA may successfully raise the threshold to 25K tons. Two, even if the program is applied to sources that emit 250 tons, EPA may be able to figure out a very simple way for people to comply — for example, instead of needing a formal permit application, you send in a post card that says, for instance, if you’re building a new building, you’ve used an Energy Star label HVAC. Some people would complain because they didn’t want to use an Energy Star system — but that’s hardly regulatory red tape, it’s just a regulatory burden some businesses don’t want to face. It may make good policy sense to move small businesses toward using more Energy Star equipment.

What do you think of the progressive push to preserve EPA authority in the climate bill.?

It’s my general understanding that EPA authority is preserved in certain areas, modified in others, eliminated in others. It’s preserved by and large in the mobile source sections and eliminated in the case of the PSD nightmare scenario. Those are reasonable decisions.

Environmental groups need to be careful what they ask for. You have to make sure you’re not going to create the sorts of problems that the US Chamber and CEI are looking for. You don’t want to play into their hands. You don’t want to create a political backlash 5, 10, 20 years from now. Presumably you want this legislation to be in force for a long, long time rather than only being in force when you have the votes on Capitol Hill.