by Gabrielle Sigel and Jennifer L. Cassel
Federal Legislative Developments
- Obama Calls for Comprehensive Energy and Climate Bill in Address to Nation
On January 27, 2010, in his first State of the Union
address, President Obama reiterated his desire to see a comprehensive
energy and climate bill adopted in the coming year. In his speech,
Obama tied such legislation to job creation, providing examples of
“green jobs” and emphasizing that, “to create more of these clean
energy jobs, we need more production, more efficiency, more
incentives.” Among the programs Obama espoused are the construction of
new, “safe, clean” nuclear power plants; “continued investment in
advanced biofuels and clean coal technologies,” and the passage of a
“comprehensive energy and climate bill with incentives that will
finally make clean energy the profitable kind of energy in America.”
While Obama did not mention the words “cap and trade” in his speech, he
supported his plea for climate legislation by stating that “providing
incentives for energy-efficiency and clean energy are the right thing
to do for our future—because the nation that leads the clean energy
economy will be the nation that leads the global economy.” Obama also
indicated that he would be willing to make “tough decisions about
opening new offshore areas for oil and gas development,” but only as
one component of his energy plan for the country.
- Murkowski Resolution Seeks Disapproval of EPA Endangerment Finding
On January 21, 2010, Sen. Lisa Murkowski (R-Alaska) introduced a resolution (S.J. Res. 26)
to disapprove both the endangerment finding and the cause-or-contribute
finding that EPA issued under Section 202(a) of the Clean Air Act
(“CAA”), with respect to greenhouse gas (“GHG”) emissions. EPA’s
findings, published in the Federal Register on December 15, 2009,
allows EPA to control GHG emissions under the CAA. Senator Murkowski’s
resolution would render those findings without “force or effect.”
Importantly, under the 1996 Congressional Review Act such resolutions
require only 51, rather than 60, votes for passage. However, like all
legislation, the resolution would have to be passed by both the Senate
and the House — which, unlike the Senate, is not required to follow
expedited procedures for such resolutions — as well as signed by the
President, before it could take effect. Under the Congressional Review
Act, Sen. Murkowski has 60 session days from the time EPA sent the
findings to the House and Senate to move for consideration and vote on
the resolution by the full Senate. If the Senate committee with
jurisdiction over the resolution (the Committee on Environment and
Public Works) fails to submit the resolution for consideration by the
full Senate within 20 days after receiving it, Senator Murkowski may
force consideration of the resolution by the full Senate if she can
obtain the signatures of 30 senators. Because the Senate was in recess
from December until January 20, the 60-day period will expire in
mid-March. The resolution remains under review by the Senate Committee
on Environment and Public Works.
Federal Regulatory Developments
- SEC Votes to Issue New Guidance Concerning Climate Change Disclosures
On January 27, 2010, the Securities and Exchange Commission (“SEC”) voted to issue an interpretive release (“the release”)
to provide guidance on existing climate change disclosure obligations,
focusing on four categories of information that companies should
consider disclosing: (a) the impact of legislation and regulation;
(b) the impact of international accords; (c)indirect consequences of
regulation or business trends; and (d) the physical impacts of climate
change. Although the release is not yet available, a press release
discussing the SEC vote reveals what the release will state. First,
with regard to (a), management should evaluate the impact of present,
and some pending, legislation and regulation on such factors as
liquidity, cash flow, and operations. Second, as to (b), companies
should consider any international treaties or protocols that may
develop and any resulting risks or effects on its business in
determining what information to disclose. Third, concerning (c),
companies should consider legal, technological, political and
scientific developments regarding climate change that may create new
opportunities or risks for companies. Notably, the SEC counts
reputational harm as potentially material information, observing that
the public’s perception of a company’s practices with respect to GHGs
may affect business operations and financial condition. Finally, with
regard to (d), companies should disclose material information about the
physical consequences of climate change, including, for example,
disruptions caused by changing weather patterns and varying sea levels.In
the press release, the SEC indicated that the release is not intended
to affect existing rules concerning company reporting requirements nor
is it intended to affect existing tests of materiality for determining
whether disclosure is required. Rather, the SEC merely aims to clarify
disclosure requirements that already apply. Thus, information falling
into the four categories identified by the SEC should be evaluated for
materiality under the current standard of materiality set forth in TSC Industries v. Northway, 426 U.S. 438 (1976).Additional SEC interpretive releases available at http://www.sec.gov./rules/interp.shtml.
- Obama: Federal Agencies Will Aim to Cut GHG Emissions 28% by 2020
On
January 29, 2010, President Obama announced that his administration has
set a target reduction in GHG emissions for federal agencies: 28% by
2020. Some of the measures that federal agencies will take to meet that
target include increased use of renewable energy sources, including
solar, wind, and geothermal sources, and reduced energy use, achieved
through mechanisms such as energy management systems and increased use
of fuel-efficient vehicles. The emission reductions will be achieved
pursuant to agency sustainability plans, which each agency will create
and submit to the White House Office of Management and Budget for
review. According to a White House press release,
achieving the 28% target will cut federal energy use by 646 billion
BTUs, the equivalent of 205 million barrels of oil or taking 17 million
cars off the road for one year, and will equal $8 to $11 billion in
avoided energy costs through 2020. Announcing the target, President
Obama stated, “As the largest energy consumer in the United States, we
have a responsibility to American citizens to reduce our energy use and
become more efficient. Our goal is to lower costs, reduce pollution,
and shift Federal energy expenses away from oil and towards local,
clean energy.” - Navy, USDA Agreement Directs Navy to Consider Energy Efficiency in Acquisitions
On
January 21, 2010, the Navy and the Department of Agriculture signed a
Memorandum of Understanding (“MOU”) to advance the development of
biofuels and other types of renewable energy. According to Secretary of
the Navy Ray Mabus, quoted in a Navy press release,
the goal of the MOU is to assist the Navy to meet “aggressive” targets
Secretary Mabus set in order to “secure the strategic energy future of
the United States, create a more nimble and effective fighting force
and protect our planet from destabilizing climate changes.” Those
targets include: (a) consideration of energy efficiency and energy
footprint in acquisition decisions; (b) by 2012, establish a “Green
Strike Group,” composed of biofuel-powered nuclear ships and vessels,
and expand that group to include aircraft and surface combatants by
2016; (c) by 2015, reduce by half the petroleum used in the 50,000
non-tactical commercial fleet, replacing that petroleum with flex fuel,
electric and hybrid vehicles; (d) by 2020, obtain at least half of
shore-based Navy installations energy from alternative sources, and
make 50% of all shore installations net-zero energy consumers; and (e)
by 2020, obtain half of all energy consumed by ships, tanks, vehicles,
aircraft and shore installations from alternative sources. In a
statement, Agriculture Secretary Tom Vilsack stated that the MOU “is
part of President Obama’s vision of a coordinated federal effort to
build a clean energy economy, create new jobs, and reduce our
dependence on foreign oil.”
Federal Litigation Developments
- EPA To Consider Petition To Object to Colorado CAA Permit For Lack of GHG Limits
On
January 13, 2010, EPA published a proposed consent decree in the
Federal Register under which EPA would agree to respond, by either
March 25 or 20 days after the entry of the consent decree (whichever is
later), to a 2009 petition
from environmental group WildEarth Guardians requesting that the agency
object to a Colorado Title V CAA Permit for failure to evaluate whether
GHG limits were required under the state’s State Implementation Plan
(“SIP”). Proposed Consent Decree, Clean Air Act Citizen Suit, 75 Fed.
Reg. 1770 (Jan. 13, 2010). In the March 10, 2009, petition, WildEarth
Guardians argued that the Colorado Department of Public Health and
Environment, Air Pollution Control Division (“Colorado”) improperly
issued a December 9, 2008, Title V permit for the Hayden coal-fired
power plant because, in issuing the permit, Colorado “failed to assess
whether [CO2] is subject to regulation in accordance with
Prevention of Significant Deterioration (“PSD”) requirements and
therefore failed to ensure compliance with PSD under the [CAA], PSD
regulations, and the Colorado SIP.” WildEarth Guardians contended that
the Colorado SIP includes several provisions that regulate CO2,including provisions requiring monitoring of CO2emissions and a definition of air pollutants under which, WildEarth Guardians argues, CO2
meets. Thus, the petition continues, Colorado was not entitled to rely
on EPA’s interpretations of which air pollutants are “subject to
regulation” under the CAA for purposes of determining whether pollutant
controls were required to be evaluated for CO2; rather, Colorado was obliged to evaluate whether CO2
is regulated under the state’s own regulatory scheme, which it failed
to do. The proposed consent decree would settle a suit filed by
WildEarth Guardians in Augus 2009 after EPA failed to respond to the
March 2009 petition.
State and Regional Developments
- Wisconsin Enacts Clean Energy Jobs Legislation
On
January 7, 2010, Wisconsin Governor Jim Doyle (D) signed energy
legislation which state agency personnel claim will create 1,800 jobs
in the state within one year of enactment and a minimum of 15,000 jobs
in the state by 2025. The legislation, titled the Clean Energy Jobs Act (formerly
S.B. 450), requires numerous energy efficiency and conservation
measures, some of which include: (a) requiring a 2% decrease in energy
consumption in the state by 2015, (b) setting renewable energy
standards of 20% by 2020 and 25% by 2025, (c) directing state agencies
to perform GHG emission assessments and take measures to reduce GHG
emissions and energy use; (d) establishing metropolitan planning
organizations to develop goals for reducing GHG emissions from local
transportation; and (e) incentives for growth of crops for biofuel. In
a statement released by the Governor upon signing the bill into law,
Gov. Doyle stated that the legislation “offers new standards to help accelerate Wisconsin’s green economy.”The environmental assessment performed by state agencypersonnel is available at http://www.wisgov.state.wi.us/docview.asp?docid=18757.
- State Senators, Others Challenge NM Board’s Authority to Adopt Emissions Cap
On January 13, 2010, several state senators, industry associations, and energy companies filed a complaint
in New Mexico state court seeking a declaratory judgment that the
state’s Environmental Improvement Board (“EIB”) lacks statutory
authority to consider a petition requesting that the agency adopt a GHG
emissions cap. Leavell v. New Mexico Envtl. Improvement Bd.,
No. D-506-CV-201000050 (N.M. Dist. Ct. filed Jan. 13, 2010). The
plaintiffs further seek injunctive relief to halt EIB consideration of
the petition. The suit stems from a petition filed with the EIB in
December 2008 by a New Mexico-based nonprofit organization, New Energy
Economy, seeking the adoption of GHG caps in the state, as well as the
April 2009 determination by the EIB that GHGs are air pollutants under
state law. The Leavell plaintiffs argue that the EIB may only
act pursuant to its delegation of authority under the state’s Air
Quality Control Act, which authorized the EIB to “attain and maintain
national ambient air quality standards” and “to prevent or abate air
pollution…within the geographic area of the [agency’s] jurisdiction.”
Because no ambient air quality standard has been adopted for GHGs,
plaintiffs assert, and because “[a]doption of an ambient air quality
standard setting the level at which GHG is considered ‘air pollution’
is…a necessary prerequisite to the exercise of EIB’s authority to
promulgate regulations limiting GHG,” plaintiffs claim that the EIB
lacks authority to consider the petition. - CBD Sues California Agency Over Analysis of GHG Impacts in Logging Plans
On
January 27, 2010, the Center for Biological Diversity (“CBD”) sued the
California Department of Forestry and Fire Protection (“CAL FIRE”) in
seven California state courts, alleging that CAL FIRE violated the
California Environmental Quality Act and the Forest Practice Act by
approving logging plans without properly analyzing the GHG emissions
impacts from those plans. Center for Biological Diversity v. California Dep’t of Forestry and Fire Prot., No. CI63123 (Cal. Super. Ct. filed Jan. 27, 2010). In a press release
about the suits, CBD claims that, rather than correctly calculating the
carbon emissions that would be produced by the 15 logging plans, under
which 5,000 acres of California forest would be clear-cut, CAL FIRE
improperly asserted that regrowth of trees over a 100-year period would
“render the logging carbon neutral.” The suits were filed in the
California counties of Amador, Calaveras, El Dorado, Modoc, Shasta,
Tehama, and Trinity.
International and Business Developments
- U.S., EU Notify UNFCCC of GHG Reduction Goals Under the Copenhagen Accord
On
January 28, 2010, the Obama administration notified United Nations
Framework Convention on Climate Change (“UNFCCC”) Director Yvo de Boer
that the U.S. will commit to cutting GHG emissions approximately 17%
below 2005 levels by 2020, “recognizing that the final target will be
reported to the Secretariat in light of enacted legislation.” The January 28 letter,
sent to Director de Boer from U.S. Special Envoy for Climate Change
Todd Stern, was created pursuant to the non-binding December 2009
Copenhagen Accord, under which developed nations were to determine
“quantified economy-wide emissions targets for 2020” and submit those
targets to the UNFCCC by January 31, 2010. In the letter, Stern informs
Director de Boer of the U.S. “desire to be associated with the
Copenhagen Accord,” but notes that the U.S. target “is provided on the
assumption” that developed countries and “the more advanced” developing
countries have also associated with the Copenhagen Accord and have
“submitted mitigation actions for compilation in accordance with
paragraph 4 or paragraph 5 of the Accord…” by January 31, 2010.Also
on January 28, 2010, the European Commission (“the Commission”)
notified the UNFCC of the European Union’s (“EU”) desire to be
associated with the Copenhagen Accord and of its associated GHG
reduction target: 20% below 1990 levels by 2020, with an offer to
increase that target to 30% below 1990 levels if other “major emitters”
agree to “take on their fair share of a global reduction effort,”
according to a press release from the EU. The press release
reports a statement by Commission President Jose Manuel Barroso that
“[t]he EU is determined to move ahead rapidly with implementing the
Copenhagen Accord in order to make progress towards the agreement that
we need to hold global warming below 2oC….” The press release also
notes that the Commission’s letter to the UNFCCC emphasizes the EU’s
position that “developed countries as a group should reduce their
emissions by 25-40% below 1990 levels by 2020 and developing countries
should achieve a substantial deviation below the currently predicted
emissions growth rate, in the order of 15-30% by 2020,” in order to
keep global average temperature less than 2oC above pre-industrial
averages. - Investor Groups Demand Prompt Climate Change Regulation
On
January 14, 2010, several groups of investors from the U.S., Europe,
Australia and New Zealand, as well as the United Nations Environment
Programme (“UNEP”) Finance Initiative, released a statement
calling on national governments to enact GHG regulations in the wake of
the failed attempt at Copenhagen to develop a new climate treaty. In
the statement, the Investor Network on Climate Risk (U.S.), the
Investor Group on Climate Change (Australia and New Zealand), and the
Institutional Investors Group on Climate Change (Europe), which
represent over 130 companies and manage over $12 trillion in assets,
urge policy makers worldwide to take “rapid action at national,
regional, and international levels,” including the following “critical”
measures: (a) “short- and long-term emission reduction targets;” (b)
“policies that put an effective price on carbon such that businesses
and investors reassess investment value and redirect their
investments;” (c) “energy and transportation policies to vastly
accelerate deployment of energy efficiency, renewable energy, green
buildings, clean vehicles and fuels, and low-carbon transportation
infrastructure;” (d) “financing mechanisms that can mobilize
private-sector investment on a large scale, particularly in developing
countries;” (e) “measures and financing to support adaptation in
developing and developed countries;” and (f) “policies requiring
corporate disclosure to investors of material climate-related risks and
programs to manage those risks.”