The Environmental Protection Agency (EPA) on Tuesday agreed to reconsider a memorandum issued by the Bush administration’s EPA chief that directed agency officials not to consider carbon dioxide emissions when weighing applications for new coal power plants. The decision could portend the potential reversal of that Bush policy.

EPA Administrator Lisa Jackson granted a petition filed on Jan. 6 by environmental groups, including the Sierra Club, for reconsideration of an interpretive memo (PDF) put forward by then-EPA Administrator Stephen Johnson on Dec. 18, 2008. That memo excluded carbon dioxide from the defined pollutants subject to the federal Prevention of Significant Deterioration (PSD) program under the Clean Air Act.

In her letter Tuesday to David Bookbinder, chief climate counsel at the Sierra Club, Jackson granted the petition for reconsideration in order to allow for public comment on the issues raised in the memorandum. She declined to stay the effectiveness of the memo, as was requested by the petitioners, but she added that the memo should not restrict states weighing air pollution permits for new coal plants, nor should permitting authorities “assume the memo is the final word on the appropriate interpretation of Clean Air Act requirements.”

Jackson said that the agency would soon start a rule-making process to make a final determination on the issue. The EPA would adhere to three core principles to make that determination, she said: “overwhelming transparency, adherence to the rule of law, and science-based policies and regulations.”

“I am granting this petition because we must learn more about how this memo affects all relevant stakeholders impacted by its provisions,” Jackson said in a statement to the news media. “This will be a fair, impartial, and open process that will allow the American public and key stakeholders to review this memorandum and to comment on its potential effects on communities across the country. EPA’s fundamental mission is to protect human health and the environment and we intend to do just that.”

Johnson’s memo followed a Nov. 13, 2008, decision by the EPA’s Environmental Appeals Board, which rejected a permit issued by a regional office that would have authorized Deseret Power Electric Cooperative to build a new 110-MW waste coal–fired facility at its existing 468-MW Bonanza Power Plant in Utah.

The three-judge panel at the board then concluded that the statutory provision defining the scope of the PSD program was ambiguous. It also ruled that the EPA had not adequately explained why the program did not apply to carbon dioxide as a consequence of monitoring and reporting requirements imposed by current law. It encouraged the EPA to address the interpretive question “in the context of an action of nationwide scope.”

The board’s decision, widely hailed by environmentalists, was in line with the 2007 Massachusetts v. EPA Supreme Court ruling that carbon dioxide, identified as a source of global warming, is a pollutant and could be regulated by the EPA as a pollutant under the federal Clean Air Act.

In his Dec. 18 memo, Johnson wrote that only newly constructed or modified sources that emit one or more “regulated NSR pollutants” are subject to the requirements of the PSD program, including the requirement to install the best available control technology.

“As of the date of this memorandum, EPA will interpret this definition of ‘regulated NSR pollutant’ to exclude pollutants for which EPA regulations only require monitoring or reporting but to include each pollutant subject to either a provision in the Clean Air Act or regulation adopted by EPA under the Clean Air Act that requires actual control of emissions of that pollutant,” he wrote.

The EPA’s decision was hailed by environmental groups. “Today’s announcement should cast significant further doubt on the approximately 100 coal-fired power plants that the industry is trying to rush through the permitting process without any limits on carbon dioxide,” said Bookbinder, the Sierra Club’s chief counsel. “New coal plants were already a bad bet for investors and ratepayers and today’s decisions make them an even bigger gamble.”

Coal power proponents, meanwhile, found hope in Jackson’s decision not to stay the effectiveness of Johnson’s memo. “It’s kind of a clever procedural move that allows the Obama folks to say that they are distancing themselves from the Johnson memo without changing anything,” Washington lawyer Jeffrey R. Holmstead, a former EPA official in the Bush administration, told the Washington Post. “It says they need to go through a rulemaking process to figure out how they are going to regulate carbon.”

Sources: EPA, Sierra Club, Washington Post