USEPA GHG Finding Triggers Reviews and Reconsiderations of Global Warming Science

Over ten years have passed since EPA was petitioned, in October 1999, by 19 private organizations asking EPA to regulate greenhouse gas emissions from new motor vehicles. A decade later, the issue continues to be fraught with controversy. The 1999 petition culminated in the 2007 US Supreme Court closely decided decision (5 to 4) in Massachusetts v. EPA (549 U.S. 497 ERC 2057 (2007)) requiring the EPA to make a finding on whether greenhouse gas emissions endanger public health. On December 7, 2009, EPA signed its finding that greenhouse gas emissions do endanger public health and welfare, and that cars and light trucks cause or contribute to the emissions

Reviewing the majority and dissenting opinions associated with the Supreme Court Mass v. EPA case reveals that the court relied on much of the same information that EPA relied upon in its finding. However, the majority and dissenting opinions indicate that the justices in favor of requiring EPA to make a finding viewed the evidence for global warming quite differently than those that dissented. In Mass v. EPA, the majority “attached considerable significance to EPA’s espoused belief that global climate change must be addressed” and reviewed the study of the history of climate change from the late 1950s. Justice Stevens, who delivered the opinion of the court, highlighted the progress of the scientific understanding of climate change as reported by the Intergovernmental Panel on Climate Change (IPCC) in its “comprehensive reports” published in 1991 and 1995. The 1995 IPCC report concluded that there is a discernible human influence on global climate change. The court in its majority opinion asserted that, “The harms associated with climate change are serious and well recognized,” and referred to Michael MacCracken’s declaration and his statement that, “qualified scientific experts involved in climate change research have a ‘strong consensus’ that global warming threatens (among other things) a precipitate rise in sea level by the end of the century.”

In the court’s dissenting opinion, Chief Justice Roberts stated, “If petitioners’ particularized injury is loss of coastal land, it is also that injury that must be actual or imminent, not conjectural or hypothetical.” Chief Justice Roberts continued, “Thus, aside from a single conclusory statement, there is nothing in petitioner’s 43 standing declarations and accompanying exhibits to support an inference of actual loss of Massachusetts coastal land from 20th century global sea level increases. It is pure conjecture.” 

 

Since EPA published its finding in the Federal Register on December 15, 2009, the agency has come under fire from industry, public interest groups and legislators regarding the process and information EPA used to make its finding. This scrutiny has come under CAA section 307(b)(1), where various parties have requested a judicial review of the finding by filing a petition for review in the US Court of Appeals for the District of Columbia Circuit before February 16, 2010. (see earlier blog post re EPA endangerment finding and petition for review - the court battle over GHG regulation begins)   

 

The Clean Air Act also provides a mechanism for a proceeding for reconsideration, stating, ‘‘ ‘If the person raising an objection can demonstrate to EPA that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of this rule. 

 

The petitions for reconsideration can be found here. By example, on February 11, 2010, seven petitioners (Coalition for Responsible Regulation, Inc., Industrial Minerals Association – North America, Great Northern Project Development, L.P., National Cattlemen’s Beef Association, Rosebud Mining Company, Massey Energy Company, and Alpha Natural Resources) filed a Petition for Reconsideration of the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act. The petitioners argued that the University of East Anglia’s Climate Research Unit (CRU) in England fudged and fabricated temperature data, the IPCC’s peer review process was not independent, and that the IPCC assessments reflect the IPCC policy priorities. The petitioners stated that the CRU disclosures document fundamental flaws in the science and processes upon which EPA relied to make its finding. The petition for reconsideration presents evidence that the CRU fudged the data; created false temperature stations; cherry picked data to create a warming bias; and destroyed data so that it cannot be recreated. The petition for reconsideration stated that, “Consistent with its responsibilities under the Clean Air Act, EPA must make its own independent assessment and scientific judgment." Review of the other petitions for reconsiderations reveals that the petitioners believe that EPA abdicated its responsibility by relying on the IPC summary reports. The petitions also provide the petitioners’ extensive analysis of the reported global warming claims by the IPCC and certain climatologists. 

CEQA and Senate Bill 97 will require agencies to consider greenhouse gas emissions in evaluating projects

The role of the California Environmental Quality Act ("CEQA"), if any, in addressing climate change and greenhouse gas emissions ("GHGs") was the subject of debate in California after the passage in 2006 of the California Global Warming Solutions Act, often referred to as Assembly Bill 32 (“AB 32”). CEQA is a public disclosure law that requires public agencies to identify "significant environmental effects" of discretionary projects that they intend to carry out or approve, and to mitigate such significant effects when it is feasible to do so. AB 32 provided that GHG emissions can cause significant environmental effects, but did not address how public agencies in carrying out their duties pursuant to CEQA in approving projects should evaluate those emissions. For example, how does a public agency determine whether GHG emissions relating to a project meets a threshold of "significant impact"?

AB 32, in brief, provides that California is the source of substantial amounts of GHG emissions and establishes a state goal of reducing GHG emissions to 1990 levels by the year 2020 – a reduction of approximately 25% from predicted emission levels. (The law requires the California Air Resources Board to establish a program to track and report GHG emissions and to undertake numerous other regulatory actions and measures to ensure that the required reductions are implemented.)

In 2007, the California legislature passed a "companion" bill – Senate Bill 97 – to amend the CEQA statute to specifically establish that GHG emissions and their impacts are appropriate subjects for CEQA analysis. But the law does not address the evaluation and determination of "significance." The law simply directs the state's Office of Planning and Research ("OPR") to develop draft CEQA guidelines "for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions" by July 1, 2009 and directs the state Resources Agency to certify and adopt the CEQA guidelines by January 1, 2010. Until that time, the OPR has issued a Technical Advisory (“Addressing Climate Change through CEQA Review”) to help guide agencies through the process by providing suggested standards on calculating GHG emissions, determining potential significance, and implementing mitigation measures, if necessary and feasible.

New York AG uses Martin Act to reach climate-risk disclosure agreement with Xcel Energy

In an August 27, 2008 press release, the Office of New York State Attorney General Andrew M. Cuomo announced an agreement with Xcel Energy, one of the country’s largest owners of coal-fired power plants, that would require Xcel to disclose to investors the financial risks posed by global warming.  According to an August 27, 2008 New York Times article, the agreement is “the first of its kind in the country" and "could open a broad new front in efforts by environmental groups to pressure the energy industry into reducing emissions of greenhouse gases that contribute to global warming.”  (The terms of the agreement can be found in the Assurance of Discontinuance Pursuant to Executive Law § 63(15).)

The Xcel agreement traces its roots back to Attorney General Cuomo’s September 14, 2007 letter to Xcel and accompanying subpoena seeking information about Xcel’s analyses of its climate risks and its disclosures of those risks to investors.  At that time, Attorney General Cuomo also sent similar letters and subpoenas to four other U.S. energy companies -- AES Corporation, Dominion Resources, Dynegy Inc., and Peabody Energy -- and the August 27, 2008 press release notes that the "Attorney General’s investigation of the remaining companies is ongoing."

The agreement with Xcel results from the New York Attorney General’s use of New York’s Martin Act as an environmental enforcement tool.  Using this tool, the Attorney General claims jurisdiction over any company that issues securities on Wall Street.  As the New York Times explained:

The agreement represents another novel use by Mr. Cuomo of the Martin Act, a powerful tool that allows the attorney general to bring criminal as well as civil charges.  Mr. Cuomo’s predecessor, Eliot Spitzer, used the law to vastly expand the office’s investigations of suspected Wall Street malfeasance.

Now Mr. Cuomo has turned it into a de facto form of environmental enforcement, too.  For energy companies, including those based far from New York, he is able to claim jurisdiction because they issue securities on Wall Street.

Climate risk disclosure requirements: Senate Appropriations Committee seeks guidance from SEC

Investors, legislators and others continue their efforts to require that publicly-traded companies enhance their disclosure of material business risks posed by climate change.  In one of the most recent examples, the Senate Appropriations Committee’s July 14, 2008 report on the 2009 Financial Services and General Government Appropriations Bill (S. 3260) included language calling on the Securities and Exchange Commission to provide guidance on the appropriate disclosure of climate risk:

The Committee is aware that a petition was filed with the Commission on September 18, 2007, calling for the issuance of an interpretative release clarifying the application of existing law to the disclosure of risks associated with climate change.  The Commission is encouraged to give prompt consideration to this petition and to provide guidance on the appropriate disclosure of climate risk. 

Report at 108.

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."