By Gabrielle Sigel and Jennifer L. Cassel
Federal Legislative Developments
- Obama Requests Increased Funding for Climate Change
On February 1, 2010, President Obama sent to Congress a budget
request for fiscal year 2011 in which he requested increased funding
for climate change measures even as he decreased his overall budget
request.Some of the items listed in the President’s budget
request include: $54.5 billion for Dept of Energy loan guarantees for
clean energy technologies; $21 million for EPA to implement the
mandatory greenhouse gas (“GHG”) reporting rule; $56 million for EPA
and State climate change programs, including $25 million to be used to
assist EPA and the States to incorporate GHG emission restrictions into
Clean Air Act (“CAA”) permitting, $5 million to develop best available
control technology (“BACT”) for GHG emission limits in CAA permits, and
$7 million to develop new source performance standards for certain
sources that produce GHG emissions; $7 million to fund carbon capture
and sequestration (“CCS”) projects and $545 million to fund research of
CCS technologies; $6 million for EPA to implement GHG emission
standards for vehicles; and $2.6 billion to fund research related to
climate change. Unlike his budget request for FY 2010, President Obama
does not request funding to implement a cap-and-trade program in FY
2011.
- House Bill, Resolution Seek to Block EPA Regulation of GHGs
On February 3, 2010, Reps. Ike Skelton (D. Mo.), chairman of the House
Armed Services Committee, Collin Peterson (D. Minn.), chairman of the
House Agriculture Committee, and Jo Ann Emerson (R. Mo.) introduced a
bill, H.R.
4572, which would bar EPA from regulating GHGs under the CAA. The bill
also would call for amendment of the CAA to exclude six GHGs, namely
carbon dioxide, methane, nitrous oxide, hydroflourocarbons,
perflourocarbons, and sulfur hexafluoride, from the CAA definition of
air pollutant. In addition, the bill would direct EPA to exclude “any
activities relating to the inclusion of international indirect land use
change” from the CAA’s renewable fuel program; would prohibit EPA from
considering such international land use change in calculating lifecycle
GHG emissions; and would expand the definition of “renewable biomass”
under the CAA.
On February 25, 2010, the same three
Representatives introduced a resolution to disapprove of the EPA’s
finding that GHG emissions endanger public health and welfare (“the
Endangerment Finding”) and thus prevent EPA from implementing or
enforcing that Endangerment Finding. The resolution,
H.J. Res. 76, is an exact copy of the resolution (S.J. Res. 26)
introduced by Sen. Lisa Murkowski (R. Alaska) in the Senate in January
of this year, and like that resolution is proposed pursuant to the
Congressional Review Act. Under that Act resolutions such as H.J. Res.
76 require only 51, rather than 60, votes for passage in the Senate.
However, like all legislation, the resolution would have to be passed
by both the House and the Senate, as well as signed by the President,
before it could take effect.
Federal Regulatory Developments
- CEQ Issues Draft Guidance on Evaluating Climate Impact in NEPA Reviews
On February 18, 2010, the White House Council on Environmental Quality (“CEQ”) released draft guidance
for federal agencies on the evaluation of GHG emissions as part of
environmental statements and environmental impact assessments conducted
pursuant to the National Environmental Policy Act (“NEPA”). In the
draft guidance, CEQ suggests that agencies should take GHG emissions
into account in NEPA reviews when a proposed action “would be
reasonably anticipated to cause direct emissions of 25,000 metric tons
or more of CO2-equivalent GHG emissions on an annual
basis.” CEQ explains that the “reference point” of 25,000 tons per
year was selected because it “has been used and proposed in
rule-makings under the Clean Air Act,” including the GHG reporting rule
finalized in October 2009. In their evaluations, “agencies should
consider the specific effects of the proposed action…, the nexus of
those effects with projected climate change effects on the same aspects
of the environment, and the implications for the environment to adapt
to the projected effects of climate change.” Evaluations should take
into account a project’s timetable and its impacts on vulnerable lands
and populations, among other considerations. Finally, if a proposed
action subject to NEPA review “meets an applicable threshold for
quantification and reporting…, CEQ proposes that the agency should also
consider mitigation measures and reasonable alternatives to reduce
action-related GHG emissions.” Notably, CEQ proposes that federal land
and resource management actions be exempt from the guidance. CEQ
published notice of the draft guidance in the Federal Register on
February 23, 2010 (75 Fed. Reg. 8046 (Feb. 23, 2010)), and will be
accepting comments on its draft guidance until May 24, 2010. - Jackson: GHG Emissions Requirements for Stationary Sources to Begin in 2011
On February 22, 2010, EPA Administrator Lisa Jackson stated in a letter
to eight Senators that EPA plans to begin phasing in GHG emissions
requirements for stationary sources in 2011, and that, for those
sources phased in between 2011 and 2013, she “expect[s] that the
threshold for permitting will be substantially higher than the
25,000-ton limit that EPA originally proposed.” Whatever the final
threshold is, Jackson continued, “EPA does not intend to subject the
smaller sources to Clean Air Act permitting for greenhouse gas
emissions any sooner than 2016.” Jackson further clarified that she
expects to “take actions to ensure that no stationary source will be
required to get a Clean Air Act permit to cover its greenhouse gas
emission in calendar year 2010.” Jackson’s letter comes in response to
a letter submitted to her by the eight Senators, expressing concern
about the regulation of GHGs from stationary sources and the impact of
that regulation on the economy and energy security. - FWS: American Pika Not Endangered By Climate Change; Coral Species to be Considered
On
February 9, 2010, the Fish and Wildlife Service (“FWS”) published its
finding that the American pika, a small mammal which lives in the
American Rocky mountains, is not endangered at this time. 75 Fed. Reg.
6438 (Feb. 9, 2010). The finding was made in compliance with a
settlement of a Feb. 2009 lawsuit filed by the Center for Biological
Diversity (“CBD”) challenging FWS’s failure to respond to CBD’s 2007
petition to list the mammal as endangered. CBD had argued that pika
populations were declining because the pika was forced, due to rising
temperatures, to live only on more limited areas of higher, cooler
ground. In its determination, FWS found that the American pika has
adapted to higher temperatures in parts of its habitat by “using cooler
habitat below the surface” and restricting movement during the hotter
daylight hours. Nonetheless, FWS requested that the public submit any
new information concerning threats to the American pika or its
habitat.On February 10, 2010, FWS announced that it had
found “substantial scientific or commercial information” indicating
that listing under the Endangered Species Act may be warranted for 82
species of coral. 75 Fed. Reg. 6616 (Feb. 10, 2010). In response to a
petition filed by CBD in October 2009, FWS evaluated the impact on
coral species from factors including ocean acidification and increased
oceanic surface temperatures, both of which are tied to climate
change. FWS found that it is “reasonable to conclude” that the 82
species of coral “may be threatened or endangered,” citing ocean
acidification, decreased resilience of corals, and elevated sea surface
temperatures as factors which “could cause coral populations to
collapse and make it difficult for them for them to recover.” The
announcement leads to a formal status review for the 82 species of
coral, which should be completed in Oct. 2010.
Federal Litigation Developments
-
District Court: Issuance of Pipeline Permit Constitutional, NEPA Claims Viable
On
February 24, 2010, the U.S. District Court for the District of
Minnesota dismissed one count of environmental groups’ challenge of
the State Department’s issuance of a permit for a crude oil pipeline –
the “Alberta Clipper,” owned by Enbridge Energy – that would cross the
Canadian/U.S. border, holding that the State Department’s issuance of
that “Presidential permit” was Constitutional because the permit was
issued pursuant to the President’s power over foreign affairs and his
authority as Commander-in-Chief. Sierra Club v. Hillary Clinton,
No. 09-2622 (D. Minn. 2010). Explaining its holding, the Court noted
that Presidents’ authority to issue such “Presidential permits” is
“well-recognized,” and that “Congress’s inaction suggests that Congress
has accepted the authority of the President to issue cross-border
permits.” The Court also dismissed the environmentalists’ claim that
the State Department failed to properly complete an environmental
assessment under the NEPA for an already-complete pipeline, holding the
claim moot when the pipeline has been built and is operational.
Finally, the Court declined to dismiss four other claims of NEPA
violations with regard to the environmental impact statement conducted
by the State Department before issuing the permit, holding that the
environmental groups have standing to challenge the alleged procedural
violations, the Court has jurisdiction to rule on their claims pursuant
to the Administrative Procedure Act, and that there has been
insufficient factual development of those claims for the court to rule
in a motion to dismiss. -
Numerous Parties Petition for Review or Reconsideration of Endangerment Finding
In
February 2010, numerous lawsuits were filed in the U.S. Court of
Appeals for the District of Columbia, petitioning the court to review
EPA’s December 7, 2009, Endangerment Finding. Parties requesting
review of the Endangerment Finding include: the states of Alabama,
Texas and Virginia (all filed Feb. 16); the American Farm Bureau
Federation (filed Feb. 12); the American Iron and Steel Institute
(filed Feb. 16); the Competitive Enterprise Institute (filed Feb. Feb.
16); Gerdau Ameristeel (filed Feb. 16); the National Mining Association
(filed Feb. 12); the Ohio Coal Association (filed Feb. 16); Peabody
Energy Co. (filed Feb. 12); the Portland Cement Association (filed Feb.
16); the U.S. Chamber of Commerce (filed Feb. 12); the Utility Air
Regulatory Group (filed Feb. 16); and Rep. John Linder (R-Ga.), along
with 11 other Republican Representatives and 17 organizations (filed
Feb. 10). These lawsuits add to that filed by the Coalition for
Responsible Regulation and several other groups in December 2009, and
to administrative petitions for reconsideration filed with EPA by the
Pacific Legal Foundation (filed Feb. 9) and Texas (filed Feb. 16).
Most petitions allege that, in making the Endangerment Finding, EPA
relied on flawed science and paid insufficient attention to evidence
countering the conclusions made in the Finding. In its petition, the
American Iron and Steel Institute further asserted that climate change
must be addressed through the legislative process and international
negotiation, rather than regulatory measures. Commenters observe that
the petitioners may fail to establish standing to challenge the
Endangerment Finding, which itself does not impose any new regulatory
obligations and thus, the commenters claim, cannot itself cause any
injury. - Industry Groups File Challenge to California’s Low Carbon Fuel Standard
On
February 2, 2010, industry groups filed suit in the Eastern District of
California against the California Air Resource Board (“CARB”), seeking
declaratory relief and to enjoin CARB from implementing the state’s
low-carbon fuel standard (“LCFS”) because, they claim, the standard
violates the Commerce Clause and the Supremacy Clause of the U.S.
Constitution. Nat’l Petrochemical & Refiners Association (“NPRA”) v. Goldstene, No. 10-cv-163 (E.D. Cal. filed Feb. 2, 2010). The groups argue
that the LCFS violates the commerce clause by ‘directly regulating” the
“fuel pathway” of transportation fuels both inside and outside of
California and by discriminating against out-of state fuel producers.
They further assert that the LCFS violates the Supremacy Clause of the
U.S. Constitution because it conflicts with the 2007 federal Energy
Independence and Security Act (“EISA”) by “penalizing the continued
production of certain renewable fuel in existing biorefineries,” which
the EISA exempted from the requirement of cutting GHG emissions. The
NPRA’s suit is the second filed in federal court challenging the LCFS;
the first suit, Rocky Mountain Farmers Union v. Goldstene, No. 1:09-cv-02234-LJO-DLB (E.D. Cal. filed Dec. 29, 2009), based on similar arguments, was filed in December 2009.
State and Regional Developments
-
Michigan Court Refuses to Require Control of GHGs
On
February 10, 2010, in an unpublished opinion, a three-judge panel of
the Michigan Court of Appeals upheld a lower court decision refusing to
direct the Michigan Department of Environmental Quality (“DEQ”) to
promulgate regulations controlling the emissions of carbon dioxide (“CO2”) from sources within the state. Citizens for Envtl. Inquiry v. Dep’t of Envtl. Quality (Citizens), No. 286773 (Mich. Ct. App. Feb. 10, 2010). In Citizens, an environmental group and several individuals petitioned DEQ to adopt regulations controlling the emissions of CO2,
claiming that such regulations were required under the state Natural
Resources and Environmental Protection Act (“NREPA”). NREPA directs
DEQ to “‘promulgate rules for purposes of… [c]ontrolling or prohibiting
air pollution.” Id. at 1. The Michigan trial court granted DEQ’s
motion for summary disposition, holding that plaintiffs had failed to
establish that they had a “clear legal right” to mandamus relief under
state common law and denied plaintiffs’ subsequent motion for leave to
amend the complaint to seek injunctive and declaratory relief under the
Michigan Environmental Protection Act (“MEPA”).Upholding the
lower court’s decision, the Michigan Court of Appeals held, first, that
plaintiffs failed to establish that they had a clear legal right to
DEQ’s promulgation of regulations controlling CO2. Under
Michigan law, the appellate court explained, plaintiffs seeking
mandamus relief must “demonstrate some special injury beyond what would
be suffered by the public at large,” Id. at 2, and plaintiffs
– who acknowledged that climate change injures everyone in the state –
failed to demonstrate such an injury. Second, the appeals court held
that the lower court correctly denied plaintiffs’ motion for
reconsideration because plaintiffs’ proposed amended complaint failed
to state a claim under the MEPA. MEPA, the court explained, provides
for suits against actors who harm the state environment, but an
administrative agency decision is not “‘wrongful conduct’ within the
contemplation of the MEPA.” Id. at 4. - PSD Permit for California Power Plant Includes GHG Emissions Limits
On
February 3, 2010, California regulators approved a CCA Prevention of
Significant Deterioration (“PSD”) permit which includes BACT emission
limits for GHGs. The permit,
issued to Calpine Corp. for a natural gas-fired power plant, requires
that the plant limit GHG emissions from gas turbines, heat recovery
system generators, a fire pump diesel engine, and several circuit
breakers. Calpine Corp. is to meet those limits by (i) limiting heat
input to that equipment, (ii) limiting their operation, and (iii)
keeping close track of their use. For example, the permit requires
Calpine to keep a daily log of heat input to each of the gas turbines
and heat recovery system generators, and to conduct a heat rate
performance test on that equipment within 90 days of start-up.
Although EPA maintains that PSD permits need not contain GHG emission
limits, Calpine asked the Bay Area Air Quality Management District, the
San Francisco-regional body charged with issuing Clean Air Act permits,
to include such limits in the permit. In a statement
released when the permit was first proposed in June 2009, a Calpine
representative said that, “[b]y taking this historic and early action
to limit greenhouse gas emissions, Calpine demonstrates that our
long-term commitment to environmental stewardship is fundamental to our
corporate philosophy.” - South Dakota Rejects GHG Regulation; Arizona Abandons Climate Initiative Plan
On
February 17, 2010, South Dakota legislators passed a resolution that
“strongly opposes” cap-and-trade legislation currently under
consideration by the U.S. Congress. House Concurrent Resolution No.
1008. The resolution,
which passed the state House of Representatives 48-21 and the state
Senate 24-8, states that cap-and-trade provisions would (a) “have a
negative effect on agriculture, manufacturing, and small business in
South Dakota;” (b) “substantially reduc[e] South Dakotan’s disposable
income” due to higher energy costs; (c) “cost jobs,” exemplified by the
abandonment of the plan for an expansion of the Big Stone power plant
in the state “due to utility and investor uncertainty giving the
looming federal cap-and-trade threat;” and (d) would put the country
“at a competitive disadvantage.”On February 2, 2010, Arizona Governor Jan Brewer (R) signed an executive order
(Executive Order 2010-06) providing notice that the state will not
implement the Western Climate Initiative (“WCI”), at least during the
“economic downturn.” In the order, Gov. Brewer echoes sentiments
included in South Dakota’s resolution, stating that implementation of a
cap-and-trade program would “cost investment and jobs in Arizona and
put Arizona at a competitive disadvantage without effectively
addressing what is a national and global issue.” Nevertheless, the
order mandates the establishment of a Climate Change Oversight Group to
“monitor the continued work of the WCI” and any federal laws, rules or
orders addressing climate change, and to make recommendations to the
Governor regarding “how best to assert Arizona’s position on these
matters.” Moreover, the order clarifies that Arizona will continue its
membership in the WCI even while it postpones implementing the WCI
cap-and-trade program, set to begin on January 1, 2012.
International and Business Developments
-
100 Countries Declare Support for Copenhagen Accord
On
February 1, 2010, administrators of the United Nations Framework
Convention on Climate Change (“UNFCCC”) announced that they have
received declarations of support for the Copenhagen Accord from 100
countries, and that 55 countries – including nations in the European
Union, the U.S., China, India and Japan – have submitted voluntary GHG
reduction targets, either in accordance with that Accord or pursuant to
the UNFCCC agreement itself. Among the countries promising GHG cuts
under the UNFCCC treaty, but not pursuant to the Copenhagen Accord,
were the “BASIC” nations (Brazil, South Africa, India and China), all
of which agreed to formalize pledges made prior to the December 2009
UNFCCC Conference in Copenhagen. Specifically, Brazil agreed to cut
GHG emissions 36-39 percent below business as usual (“BAU”) scenarios
by 2020; South Africa promised to cut emissions 34% below BAU by 2020;
India pledged to reduce the “carbon intensity” of its economy by 20-25%
by 2020; China agreed to reduce its carbon intensity by 40-45% by
2020. These pledges were made contingent on Article 4, paragraph 7 of
the UNFCCC treaty, which states that developing countries’ compliance
with their commitments “will depend on… effective implementation by
developed country Parties of their commitments under the Convention
related to financial resources and transfer of technology….”
Notwithstanding those contingencies, UNFCCC Executive Secretary Yvo de
Boer noted that the strong showing of support for the Copenhagen Accord
and that the U.N. treaty “represents an important invigoration of the
U.N. Climate Change talks…”