Legislative and Litigation Prospects
Last June, we published our inaugural
Energy and Environment Practice Team electronic newsletter with a focus on a
Climate Change Primer. In today's Executive Alert, Washington DC partner Darin Bartram has summarized pending legislation and litigation concerning climate change. While the prospects for passage of this legislation this election year are uncertain, it is very clear that climate change will be addressed in multiple formats by whatever new administration and Congress that may be in place next year.
We hope that you are finding our Executive Alerts helpful and informative.
LEGISLATION
It is very unlikely that the 110th Congress will enact comprehensive climate change legislation. However, with both houses of Congress under the control of the Democratic Party, and with the three top presidential contenders all supporting climate change legislation, the prospects are more likely in 2009 than ever before. Any successful legislative vehicle will likely be based on one of the competing models currently before the legislature.
S. 2191: America's Climate Security Act of 2007 (Lieberman-Warner)
The "Lieberman-Warner" bill, as the America's Climate Security Act of 2007, S. 2191, has been known, is the climate change bill that is widely considered the most likely to pass into law. Senators Joseph Lieberman (I-Conn.) and John Warner (R-Va.), along with nine cosponsors, introduced the bill on October 18, 2007, and it was reported out of the Senate Environment and Public Works Committee in December. While Senator Harry Reid (D-Nev.) has promised to bring the bill before the full Senate this spring, it will likely need to receive 60 votes to avoid a filibuster.
The Lieberman-Warner bill would reduce greenhouse gas levels to 2005 levels by 2012, and then would gradually reduce to 75% below 2005 levels by 2050. This is a much steeper decline than the sponsors had previously committed to. The bill uses a cap-and-trade system, and provides significant flexibility for companies to meet their targets, with reductions coming from domestic offset credits, certain international carbon markets, and possible borrowing against future years' allowances. Another feature of the bill would direct the President to work with other countries on climate action, and if major trading partners do not adopt suitable GHG reduction policies the President would be authorized to require importers of GHG intensive products to submit allowances commensurate with those required by domestic manufacturers.
Interestingly, the three leading contenders for president, Senators McCain, Clinton, and Obama, co-sponsored the predecessor bill to S.2191, the Climate Stewardship and Innovation Act, S.280. Unlike S.2191, which reduces emissions by a set amount annually between 2012 and 2050, S.280 would have achieved reductions at four major milestones, in 2011, 2019, 2029, and 2049. It would have vested EPA with far greater authority to allocate emissions allowances than the more prescriptive S.2191. To the extent that S.2191 has been reported out of its Senate Committee and S.280 has not advanced, it appears that, while the presidential contenders support climate change legislation, it will not be as they would prefer it to be.
S. 1766: Low Carbon Economy Act of 2007
(Bingaman-Specter)
This bill also uses a cap-and-trade system, and is directed at reducing greenhouse gas emissions to 1990 levels by 2030. This bill draws on recommendations from the National Commission on Energy Policy, a bi-partisan group of energy experts from industry, government, labor, academia, environmental and consumer groups. The bill creates a "safety valve," which allows the regulated community to purchase emission allowances if their cost exceeds a certain amount, with the revenue from these purchases going towards the development of greenhouse gas emissions reducing technologies.
H.R. 5642: Safe Climate Act (Waxman)
On the House side, Rep. Henry Waxman (D-CA) has introduced a bill to set emissions targets through a cap-and-trade system, but which also includes measures to advance technology and reduce emissions through renewable energy, energy efficiency, and cleaner cars. It is directed at reducing emissions to 1990 levels by 2020, and achieving an 80% reduction from 1990 levels by 2050.
Legislative Summary
The climate bills that are pending have as a unifying feature the adoption of a cap-and-trade system to achieve greenhouse gas emissions reductions through a flexible and efficient regulatory system. The competing bills differ mostly in the overall level of reductions sought and the options available if the reductions are costly and if developing countries do not undertake similar reductions. Lastly, while a comprehensive carbon-reduction strategy is not on the immediate horizon, Congress has enacted some moderate, preliminary measures. Congress quietly included a significant provision in an appropriations bill late last year that will require EPA to develop a rule in the next 18 months to require the mandatory reporting of greenhouse gas emissions. (Some electric utilities already must report, and other industries have voluntarily undertaken reporting.) Long a maxim of environmental regulation that first you measure and then you regulate, this reporting provision is significant.
LITIGATION
The last year was a significant year for climate change litigation. The trend that emerged indicates that courts are going to interpret existing statutes to require federal agencies to address aspects of global warming, under the Clean Air Act and the National Energy Policy Act. However, those same courts are not receptive to interpreting federal or state common law to require that the courts themselves provide any relief or remedy for climate change. The latter types of claims, brought by state attorneys general and individual litigants, are dismissed either on justiciability grounds or for lack of standing.
In the most significant case of last year, Massachusetts v. EPA, the Supreme Court decided that the Clean Air Act gave EPA the authority to regulate greenhouse gas emissions from new motor vehicles, and that EPA could only rely on statutory, and not political, grounds to refuse to regulate these emissions.
Federal courts, in California v. General Motors and Comer v. Murphy Oil, dismissed claims by the litigants that greenhouse gas emissions constituted a common law nuisance that the courts had the obligation to remedy. In both cases, the judge found that the cases raised "nonjusticiable claims" that are reserved to the political branches of government for resolution, and in the second case, the judge found in addition that the private litigants did not have standing to press the claims. Both cases have been appealed. Another common-law suit is ripe for a decision by the Second Circuit Court of Appeals. In 2005, a federal judge in New York dismissed a case brought by the attorneys general from several Northeastern states and a handful of environmental groups, which argued that greenhouse gas emissions from several electric utilities contributed to global warming. The court found those claims to be reserved to the political branches of government. The briefing in the case was concluded last summer, and a decision from this court could come at any time.
Notwithstanding their inability to compel reductions from the private sector through nuisance litigation, states have been emboldened by their success in enacting and defending legislation to compel reductions, most notably from vehicle manufacturers. In the Supreme Court's decision in Massachusetts v. EPA, and in two district court decisions, one in California and one in Vermont, states have argued successfully that they may enact more stringent greenhouse gas emissions standards for motor vehicles without unduly interfering with the federal government's fuel economy standards or with its ability to seek climate change agreements from other countries. While EPA ultimately denied California the waiver that it had to obtain before moving forward with these standards, that denial has already been appealed, and many environmental lawyers feel that EPA's decision is on thin legal grounds.
States and environmental groups are likely to press EPA in 2008 for further progress on the stationary source side of regulations, most immediately with respect to coal-burning power plants and refineries. A threshold determination in regulating carbon emissions from these sources is whether greenhouse gases present a danger to human health and the environment under section 108 of the Clean Air Act. If EPA does not make an affirmative endangerment determination in the early part of 2008, there will likely be additional litigation.
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