E2 Law Blog : Environmental Lawyers & Attorneys : Greenberg Traurig Law Firm : Climate Change, Energy Legislation

Sen. Jay Rockefeller and several other coal state Democrats sent a letter to EPA's Lisa Jackson dated February 19, expressing concern regarding the economic impact of GHG regulation. Jackson responded on February 22, stating no permits would be required in 2010 and detailing an aggressive "Five Year Plan" for regulating CO2 sources.  The same day, Sen. Rockefeller issued a press release saying the Plan was "good progress" but that he remained "concerned" and that Congress needed to "set in stone through legislation enough time" to consider a "comprehensive energy bill" (the new euphemism for legislative GHG controls via cap and trade).

Was this all just political kabuki, choreographed to fog the optics and protect exposed Democrats from "cap and tax" backlash in the November elections?  And what should be made of a statement by an environmental group operative, about a week before Jackson's letter was issued, revealing the Five Year Plan?  Well, it could be the Rockefeller - Jackson letters likely were "worked out" by both parties ahead of time.  This would explain why EPA responded as quickly as it did.  Also, the White House makes EPA policy and the White House is working hand in glove with the environmental special interests.  Therefore, it should not surprise anyone that EPA's Plan was "put out there" by one of these groups - in fact, they likely helped write that Plan in the first place.

Or so some people say. 

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Texas has joined the climate change "Data Wars".

 The gravamen of the petition is:

EPA’s Administrator…outsourced the actual scientific study, as well as her required review of the scientific literature necessary to [determine endangerment and]…relied primarily on the conclusions of outside organizations, particularly the United Nations International Panel on Climate Change (“IPCC”).   EPA’s reliance on the IPCC’s assessment to make a decision of this magnitude is not legally supported. Since the Endangerment Finding’s public comment period ended in June, 2009, troubling revelations about the conduct, objectivity, reliability, and propriety of the IPCC’s processes, assessments, and contributors have become public. Previously private email exchanges among top IPCC climatologists reveal an entrenched group of  activists focused less on reaching an objective scientific conclusion than on achieving their desired outcome. These scientists worked to prevent contravening studies from being published, colluded to hide research flaws, and collaborated to obstruct the public’s legal right to public information under open records laws.

Real Climate defends the IPCC from attack asserting:

[T]he IPCC assessment reports reflect the state of scientific knowledge very well. There have been a few isolated errors, and these have been acknowledged and corrected. What is seriously amiss is something else: the public perception of the IPCC, and of climate science in general, has been massively distorted by the recent media storm. All of these various “gates” – Climategate, Amazongate, Seagate, Africagate, etc., do not represent scandals of the IPCC or of climate science. Rather, they are the embarrassing battle-cries of a media scandal, in which a few journalists have misled the public with grossly overblown or entirely fabricated pseudogates, and many others have naively and willingly followed along without seeing through the scam.

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The FY2011 Budget is out.  The numbers provide useful indications of key Obama Administration environmental and energy policies.   Highlights include an aggressive EPA rule-making agenda to control GHGs and more money for DOE 's renewable energy research but huge cuts in DOE's fossil fuel programs.

To begin with, the term "cap and trade", which was prominently featured in the FY2010 Budget (see for example page 21) is missing entirely from the FY2011 Budget.   The new and apparently improved euphemism for mandatory GHG emission controls is "comprehensive market-based policy that will reduce greenhouse gas emissions."  While the Administration has apparently jettisoned "cap and trade" as a political liability, it remains committed to regulating GHG emissions and has requested significant funding for EPA to do so through command and control regulations. The Administration allocates "$56 million– including $43 million in new funding – for the EPA and states to address climate change effectively through regulatory initiatives to control greenhouse gas emissions."   The budget is $25 million for states to regulate GHG emissions under the New Source Review and Title V operating permits programs, $7 million for New Source Performance Standards (NSPS) to regulate GHG emissions from major stationary sources, $6 million to implement the 2010 auto emissions rule and to develop regulations for large mobile sources, and $5 million to develop guidance regarding the best available practices and technologies to control GHG emissions through command and control permits.   My suggestion here that key Administration policymakers viewed GHG legislation as a mere side-show and were instead committed to administrative rule-makings seems to have been on the mark. 

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A new Federal climate change agency is announced.  The website is up and running.   Yet another Federal bureaucracy - what could be better?   

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As we noted here, law suits by environmental groups, often asserting claims based on the National Environmental Policy Act (NEPA), are a major barrier to clean energy generation and transmission.  Thus, the U.S. Supreme Court's grant of certiori in the case of Monsanto v. Geertson, notwithstanding the Obama Administration's objection, may prove to be good news for utilities and for clean energy generation and transmission companies. In Geertson, the Court is considering whether NEPA claims are exempt from the general rule that a likelihood of irreparable harm must be shown to obtain an injunction, whether a district court may enjoin a NEPA violation without conducting an evidentiary hearing, and whether the lower court erred by affirming an injunction based on an arguably remote possibility of harm. 

Historically, the rule has been a NEPA violation, even without evidence of substantive environmental harm, generally triggers an injunction blocking project development.  In Winter v. Natural Resources Defense Council, 129 S. Ct. 365 (2008), the Court began to limit this rule, holding plaintiffs seeking injunctive relief under NEPA must in fact demonstrate that they are likely to suffer irreparable harm in the absence of the requested injunction, just as they would be required to do in any other case in which an injunctive remedy is requested.  Should the Court extend Winter and rule for Monsanto on any of the three issues presented, then special treatment for NEPA cases will cease and environmentalists' and others' ability to employ NEPA for blocking projects may be functionally terminated.  Clean energy companies and consumers stand to benefit a great deal from such a ruling.  

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The Cleantech Group LLC and Deloitte report cleantech venture investment totaled approximately $5.6 billion in 2009.  This was a big drop of 33% from 2008. Key trends are strong Asian M&A and IPO activity and more VC investment in Israel and Europe.  62% of cleantech investment was in the U.S. (down from 72% in 2008), 29% in Europe/Israel (as noted here Israel, with a total population of about 7 million, is a world cleantech powerhouse) then 9% in China and India combined.   Solar  attracted 21%, transportation 20% and energy efficiency businesses 18% of total investment.  Solar was down 64% from 2008, but  transportation and efficiency investment reached record levels.  

So what conclusions can be drawn from the data?  Well, to begin with, absent some unexpected technological breakthrough, U.S. solar, wind, and biomass industries are substantially (entirely?) tied to favorable government regulations and mandates.  Utilities under renewable mandates are behind many solar and wind projects.  However, for the reasons highlighted here, mandates are not enough - renewable power generators need regulatory relief from the web of federal and state requirements used by environmentalists and competitors to stop projects. Transportation and energy efficiency businesses, on the other hand, may cash-flow without government subsidy and could be an easier short-term lift for investors.   

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Special thanks to John S. "Chip" Rainey, a shareholder in GT's Austin, Texas office, for this post.

Although cap and trade legislation is stalled, the SEC has determined public companies are nonetheless required to consider "climate change" disclosures in their public filings. In a 3-2 party line vote, the SEC adopted a “Guidance Regarding Disclosures Related To Climate Change.”   Notably, the guidance requires reporting companies to consider both “reputational risks” and the "impact of physical events from climate change."   Click here for GT’s in-depth Alert and analysis.

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The new Federal budget is out.  For starters, Superfund taxes are reinstated ($20 billion) and the cellulosic biofuel producer credit ($24 billion) appears to have been modified.  We'll have a more extensive analysis out shortly.

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As I noted here, EPA's leadership has targeted the nanotechnology industry for regulation.  The Agency's December Action Initiation List reflects this, stating EPA is developing a significant new use rule under TSCA section 5(a)(2) "for nanoscale materials."  The rule will require "persons who intend to manufacture, import, or process" nanomaterials to "notify EPA at least 90 days before commencing that activity" so EPA may "prohibit or limit that activity before it occurs" to prevent "unreasonable risk to human health or the environment." 

EPA's intentions, particularly given the massive methodological and data quality problems of nanomaterial risk assessment, need to be better understood.  Inter-agency coordination between EPA and the rest of the Federal Government on nanotechnology regulation should be a priority, yet it seems EPA is moving forward without substantive consultation.  As a first step, the industry should request more transparency from the Agency, especially with respect to the data it relies on to support this regulatory initiative.     

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