Global Climate Law Blog : Global Climate Law Blog : Published by Howrey Law Firm : Climate Attorneys and Environmental Lawyers

The debate over whether the patent system adequately promotes the development of technology to manage climate change is related to the ongoing debate over the role of technology transfers in any future climate change treaty. Under the U.N. Framework Convention on Climate Change and the Kyoto Protocol, developed countries have undertaken obligations to promote the development and transfer of environmentally sound technologies to developing countries. Indeed, the draft negotiating text for the UN Climate Change Conference in Copenhagen contains provisions for “compulsory licensing for specific patented technologies,” as well as “pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price.”

Though meant to encourage the development and spread of green technology, such obligations may paradoxically reduce incentive for technological innovation because private parties or the governments of developed countries will balk at devoting resources to the research and development of technology that may be expropriated or subject to a compulsory license under a future climate change treaty. In an apparent effort to ease such concerns, the House of Representatives recently passed legislation that opposes any global climate change treaty that weakens intellectual property rights. Within the context of these debates over how to promote technological innovation and how to structure technology transfers, the growth of green patents suggests that the patent system continues to provide at least part of the necessary incentive for the development of technology to combat climate change.

Leading environmental groups such as Natural Resources Defense Council (NRDC) have recognized for the need for “Developing the Technology of the Future” to address the problem of climate change. In a brief issued earlier this year, NRDC argued that the federal government must take action to spur research and development with regard to clean energy technology because “[t]he private sector tends to under-invest in new low-carbon technologies because of the risk of ‘innovation spillovers’ -- that other companies will benefit from their initial research investment.” Others have offered so-called “inducement prizes” offered to anyone who can develop the technology to counter the effects of greenhouse gas emissions. In September of 2007, Sir Richard Branson and Al Gore launched the Virgin Earth Challenge, pledging to award $25 million to the developer of “a viable technology which will result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without countervailing harmful effects.” Similarly, during the 2008 presidential race, Senator John McCain proposed a $300 million prize for “the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”

Plato famously wrote that “necessity is the mother of invention.” Arguably, however, neither “necessity” nor the prospect of “inducement prizes” has been as effective as the patent system in providing the crucial incentive for technological innovation. As Abraham Lincoln (who was granted a patent of his own) once remarked, the creation of patent laws encouraged innovation by adding “the fuel of interest to the fire of genius.”

EPA provides for a sixty (60) day public comment period on its legal, scientific and policy choices and has scheduled two public hearings, one to be held May 18 in Arlington, VA and the other to be held May 21 in Seattle, WA. Among EPA’s legal and policy choices ripe for public comment are:

1. Determination that the Section 202 (a) requires EPA to protect public health and welfare and that the Administrator cannot “wait until harm has occurred but instead must be ready to take regulatory action to prevent harm before it occurs.”
    
2. Determination that EPA must “exercise judgment by weighing risks… and making reasonable projections of future trends and possibilities.”
    
3. Determination that the “Administrator is to consider the cumulative impact of sources of a pollutant … and is not to look at the risks attributable to a single source or class of sources.”
    
4. Determination that the “Administrator is to consider risks to all parts of our population, including those who are at greater risk for…increased susceptibility to adverse health effects.”
    
5. The proposal interprets Section 202 (a) as requiring that emissions from a source need only contribute to air pollution, not that “emissions from any one sector or group of sources are the sole or even the major part of an air pollution problem.”

EPA’s proposal also rejects certain comments submitted in response to the Bush Administration’s July 30, 2008 Advanced Notice of Proposed Rulemaking (ANPR) on the regulation of greenhouse gases. For example, EPA rejected one industry group’s contention that EPA is limited to considering only those impacts that can be traced to the amount of air pollution directly attributable to the greenhouse gases emitted by new motor vehicles and engines. The proposal also rejects the arguments of another ANPR commenter that no “endangerment” or “contribution” finding is permissible unless the standard imposing emissions reductions would “effectively mitigate” the impacts underlying the endangerment finding. By rejecting these arguments, EPA is contending in the proposal that the endangerment finding stands separately from whether greenhouse gases contribute to climate change.

The Administration obviously believes that its proposal to regulate greenhouse gases under the Clean Air Act will motivate Congress into legislative action on climate change. The maneuver will surely lead to a test of political will that in the end could either spawn thoughtful, common sense climate change legislation that balances environmental protection with economic realities of our time or it could result in the “glorious mess” that Rep. Dingell has warned against. Stay tuned!

Because of New York’s current financial crisis, the Task Force “concentrated on action items that it expects will either save money because of their energy cost savings or will have, at worst, a modest cost to State and local government.” According to targets set by the preliminary report, New York can reduce greenhouse gas emissions by 80% below 1990 levels by 2050. New York is especially vulnerable to climate disruptions due to its hundreds of miles of coastline and its large population in dense low-lying urban areas such as New York City. As the report points out, New York City is ranked third on a list of world cities most at risk for potential economic damage due to coastal flooding by the 2070’s.

Established in June 2008 by New York State Bar President Bernice L. Leber, the Task Force on Global Warming includes experts from the fields of climate change, law, academia, business and government advocacy. The preliminary report is scheduled to be voted on for adoption by the Association’s House of Delegates in April 2009.

• Obama’s energy secretary, Steven Chu, is an advocate of reducing carbon emissions and foraying into alternate energy sources. Mr. Chu received a Nobel Prize for his work on super cooled atoms. As energy secretary, he will be in charge of the United States’ nuclear weapons stockpile, and will update the nationwide electric power system.
   
• Nancy Sutley is the new head of the White House Council on Environmental Quality. As Los Angeles’ deputy mayor for energy and the environment, she implemented construction rules to maximize energy efficiency, and she has been at the forefront of California’s climate change legislation.
   
• Todd Stern, the new Special Envoy on Climate Change, coordinated the Clinton Initiative on Global Climate Change from 1997-1999, and negotiated in the major global discussions at Kyoto and Buenos Aires. His goals include transforming the country to a low-carbon energy base, and freeing the US from dependence on foreign oil.
   
• Lisa Jackson, who led President Obama’s transition team, will serve as the new head of the US Environmental Protection Agency (EPA). She previously served as head of the Department of Environmental Protection of New Jersey, and served for almost two decades as a top EPA enforcement officer. Among her accomplishments in New Jersey were her support of an energy efficiency investment stimulus plan, and a “Master Plan” for cutting energy use. She also established the Regional Greenhouse Gas Initiative (RGGI) to reduce carbon emission from power plants. Ms. Jackson also has a strong scientific background – she earned a Masters in chemical engineering.
   
• Ms. Jackson, in turn, has named former Georgetown Law Professor Lisa Heinzerling, who authored the winning brief in the landmark Massachusetts v. EPA climate change lawsuit, as her chief climate change advisor.
   
• Another key Obama appointment, Carol Browner, will be the “Energy Csar”, which means she will coordinate energy and climate policy. She was the head of the EPA under President Clinton, and her most recent position was head of the Audubon board. She is known for her innovative ways of finding low-cost solutions to problems. Because she has much support from members of Congress such as Nancy Pelosi and Barbara Boxer, she may be spending much time on the Hill trying to implement new environmental policies.
   
• Other appointments include Henry Waxman as chairman of the House Energy and Commerce Committee, and Bill Richardson* as head of the Department of Commerce. Richardson will be charged with overseeing the National Oceanic and Atmospheric Administration (NOAA), which could have implications for international oceanic issues. John Holdren will serve as director of the White House Office of Science and Technology Policy. Deemed an expert in climate change, he is also a Harvard physicist. Last, Jane Lubchenco will be the head of NOAA.

*Update: Bill Richardson nomination has been withdrawn due to federal investigation of contract awarded to campaign contributor.

Among other things, the draft legislation proposes limits on state and regional emissions-control programs.  For example,

• Section 403(c)(1) would provide the Federal Energy Regulatory Commission with

exclusive jurisdiction over accounts, agreements, and transactions involving a regulated instrument [defined to include emission allowances, offset credits and allowance derivatives], whether inside or outside the United States, that are not subject to the jurisdiction of the Securities and Exchange Commission.

• Section 733(b) would limit the ability of states to implement their own emissions caps:

[N]o State, local, or regional authority may adopt or enforce a program that caps the amount of greenhouse gases that may be emitted or sold, and that uses tradable emission allowances for the purpose of meeting that cap.

• One of two proffered options for Section 816(b) preempts state motor vehicle standards:

(b) [OPTION B] PREEMPTION OF STATE STANDARDS FOR MOTOR VEHICLES.— Notwithstanding sections 177 and 209(b) of this Act, or any other provision of law, no State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of greenhouse gas emissions from new motor vehicles or new motor vehicle engines for which greenhouse gas standards have been established under title II of this Act or for which corporate average fuel efficiency standards have been established under chapter 329 of title 49 of the United States Code.  No State shall require certification, inspection, or any other approval relating to the control of greenhouse gas emissions from any new motor vehicle or new motor vehicle engine as condition precedent to the initial retail sale, titling (if any), or registration of such motor vehicle, motor vehicle engine or equipment.

The legislation was not warmly received in all quarters.  Fred Krupp, president of the Environmental Defense Fund, cautioned that

[t]he unbending science demands that we reduce global warming pollution far enough — and fast enough — to protect us from the worst consequences of climate change.  The near-term targets and timetables in the current draft of the proposal fall far short of that goal.  

The potentially preclusive effect of the legislation on existing and prospective state and regional initiatives — among them the Regional Greenhouse Gas Initiative ("RGGI") and the Western Climate Initiative ("WCI") — remains to be seen.  Meanwhile, existing initiatives continue to move forward: 

• The WCI (a collaboration of seven U.S. states, including California, and four Canadian provinces) released its “Design Recommendations for the WCI Regional Cap-and-Trade Program” on September 23, 2008, followed by the September 30, 2008 release of its "Essential Requirements of Mandatory Reporting for the Western Climate Initiative, Second Draft."
   

• The week before the House cap-and-trade draft was released, six states participating in the RGGI announced that allowances for the right to emit carbon dioxide from power plants in the northeastern U.S. sold for $3.07 per allowance in the first U.S. greenhouse gas auction.  The $38,575,783 in proceeds from the September 25, 2008 auction, operated by World Energy Solutions, Inc., will be distributed to Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont, the six RGGI states that participated in the auction. (The RGGI also includes Delaware, New Jersey, New Hampshire and New York.) 
   

• On October 14, 2008, all ten states of the RGGI initiated the bidding process for the next RGGI allowance auction, set for December 17, 2008. 
   

• The California Air Resources Board ("CARB") released its final draft of a plan designed to reduce emissions to 1990 levels.  The “Climate Change Proposed Scoping Plan”, issued on October 15, 2008, includes plans to "develop a cap-and-trade program for California that will link with the programs in the other WCI Partner jurisdictions to create a regional cap-and-trade program."

The release of the draft House bill highlights a looming legislative (and probably judicial) jurisdictional battle over cap-and-trade and other emissions-control programs. 

The jury verdict in favor of the protestors illustrates how a U.S. jury might respond to similar protests. According to a recent Pew Research global warming survey, 73% of respondents said that global warming was a serious problem. Forty-seven percent said that human activity was the cause of warming. If a case like the one in Britain came to trial before a U.S. jury, about half of the seated jurors are likely to enter the trial with attitudes and opinions favorable to defendants.

Canada has already staked its claim, requiring foreign ships to report when entering waters within 200 miles of its northern shores. The previous limit was 100 miles. Canada is also backing a new search to find the Erebus and Terror — Sir John Franklin’s ships, which were lost during a 19th-century British expedition to the Arctic — in order to “take ownership of the history of this place,” as one historian put it.

Meanwhile, the United States, Canada and Russia are all busily mapping the underwater continental shelf in order to bolster claims to what are believed to be vast mineral deposits, including oil and gas.

In May 2006, American University's Inventory of Conflict & Environment published a useful case study entitled Canadian Sovereignty at the Northwest Passage. Polarwarming, which gives a Canadian perspective on these disputes, recently noted that "Prime Minister Harper has announced two key measures intended to bolster Canada’s Arctic sovereignty claim: mandatory registration for commercial shipping and a $100 million fund to generate a detailed geomapping of possible minerals and hydrocarbons deposits."

Beyond the disputes over territory and mineral deposits, some suggest that the Northwest Passage ecosystem faces a double threat from climate change and the economic development that is resulting from the open waters.

The legal issues relating to climate change and the Northwest Passage are the subject of an international symposium this week in Iceland. The 3-day Polar Law symposium, entitled: "Looking beyond the International Polar Year. Emerging and re-emerging issues in international law and policy in the Polar Regions," will cover issues including:

1. What are the main emerging and re-emerging issues in international law and policy relating to the Polar Regions warranting international action? 
    
2. Are the current international legal and policy systems able to address these issues? 
    
3. What issues require immediate action by the international community? 
    
4. What issues will require action by the international community in the longer term? 
    
5. What steps should countries take to address these issues? 
    
6. Which of these issues warrant further detailed research by legal scholars and other disciplines?

While much of the discussion of future climate change litigation and dispute resolution focuses on anticipated harm from climate change, these emerging issues of sovereignty, economics, and environmental governance are reminders that climate change will create opportunity for some which will, in turn, lead to "fierce disputes."

The Senate Appropriation Committee’s request to the SEC is set against a backdrop of several years of efforts to expand climate and other environmental risk disclosure obligations.  Among the developments in the last 12 months:

• The New York Times reported in a September 16, 2007 article that on September 14, 2007, the New York Attorney General’s office subpoenaed carbon emission information from five of the nation’s largest energy companies, AES Corporation, Dominion Resources, Xcel Energy, Dynegy and Peabody Energy.  The subpoenas were accompanied by letters from the New York AG's office expressing concerns that the energy companies had not adequately disclosed to investors the financial risks related to their carbon dioxide emissions.
  
   
• On September 18, 2007, a group of state pension funds and institutional investors collectively representing over $1.5 trillion in assets under management joined with environmental groups to petition the SEC to clarify that existing law requires a company to disclose material climate change-related risks to the company’s business.  (Public comments on the rulemaking petition are available at SEC File No. 4-547.)
  
   
• In a December 6, 2007 letter to SEC Chairman Christopher Cox, Senator Christopher Dodd (Chairman of the Senate Banking, Housing and Urban Affairs Committee) and Senator Jack Reed (Chairman of the Subcommittee on Securities, Insurance and Investment) reported on an October 31, 2007 Committee hearing on “Climate Disclosure: Measuring Financial Risks and Opportunities”.  The letter requested that the SEC issue an interpretive release to clarify a registrant’s obligations to disclose climate change-related risks.
  
   
• A May 21, 2008 press release from California State Senator Dean Florez announced the approaching California Senate vote on Senate Bill 1550, “Corporations: Climate Risk Disclosure,” introduced by Sen. Florez.  According to the press release,

  Efforts to get the Securities and Exchange Commission to establish a set of guidelines institutional investors can use to evaluate the environmental policies of companies they put money into have been unsuccessful.  Through this measure, California is now looking to lead the nation in encouraging more environmentally responsible investments.

According to a statement released on May 22, 2008 by Ceres, a coalition of investors, environmental groups and other public interest organizations, S.B. 1550 "was approved on the floor of the California State Senate today and now moves to the California Assembly for consideration."

• On June 5, 2008, FASB released for public comment Proposed Statement of Financial Accounting Standards, Disclosure of Certain Loss Contingencies, which if adopted would expand disclosure requirements for contingent losses – including environmental contingencies – under SFAS 5 and 141(R).
  
   
• The coalition that filed the September 18, 2007 petition with the SEC submitted a supplemental filing on June 12, 2008 identifying legislative, regulatory and other developments subsequent to the filing of their petition that they consider relevant to their request for interpretive guidance.

In a recent radio interview, Steve Susman was asked about the Kivalina litigation, in which he represents plaintiffs alleging that the Alaskan village of Kivalina is sinking as a result of climate change allegedly caused by defendant oil, power and coal companies.  The Susman interview supports the conclusion that the conspiracy allegation -- that defendants conspired to mislead the public on the causes and effects of global warming -- was intended to overcome a political question defense:  “we are the only case that has a conspiracy allegation, and we think that makes our case different, because courts all the time—there are criminal trials going on throughout this country every week about whether someone participated in a criminal conspiracy. So that's the stuff of which courts are made, to decide whether there was a conspiracy, and did it harm someone.” 

Likewise, Matt Pawa, whose firm filed the first climate-based public nuisance claim against power plants, noted that Kivalina “includes a claim that certain defendants conspired to mislead the public about global warming.  There were no such conspiracy claims in the other cases.  Courts routinely decide such conspiracy claims.” 

But the inclusion of a civil conspiracy claim may not be a silver bullet against a political question defense.  If the public nuisance claims are non-justiciable (as three district court’s have concluded, all now on appeal), there is a real question of whether the court can decide a stand-alone conspiracy claim.  For example, in the public nuisance cases brought by the state of Rhode Island against former manufacturers of lead pigment, the district court dismissed the civil conspiracy claim finding that it “cannot stand in isolation” without an “underlying intentional tort theory.”  Rhode Island v. Lead Industries Association, Inc.