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

The environmental groups allege that reducing emissions of major pollutants from these CAFOs can improve human health, reduce suffering of farm animals, protect habitat for wildlife, and reduce the effects of climate change and other environmental problems. The petition contends that regulating air pollution from CAFOs will create an incentive for new CAFOs to reduce emissions through alternate means of production. A report by the Food and Agriculture Organization of the United Nations (FAO) found that animal farms were responsible for contributing 18 percent of all greenhouse gas emissions—more than even the transport sector. 

Currently the EPA does not require that CAFOs meet any emissions standards under the Clean Air Act. However, some scientific surveys, including the US Inventory Report adopted by the EPA, establish that CAFOs meet the standards for regulation under section 111 of the Clean Air Act as a source that causes or contributes significantly to air pollution. Despite this evidence, agriculture maintains a strong constituency in Congress, including House Agriculture Chairman Collin Peterson (D-Minn.), who has been vocal about the need to exempt farms from new climate change legislation.

In addition the the Humane Society, petitioners include the Association of Irritated Residents; Center on Race, Poverty and the Environment; Clean Air Task Force; Dairy Education Alliance; El Comité para el Bienestar de Earlimart; Environmental Integrity Project; Friends of the Earth; and Waterkeeper Alliance.

The Association of Irritated Residents and similar groups allege that CARB chose an emissions trading program on the basis of political feasibility, and ignored data suggesting such programs do not reduce emissions and do not improve air quality. They also claim that CARB has failed to meet procedural review and public participation standards required under California law.

CARB has strongly disputed the allegations: according to CARB Chairman Mary D. Nichols, “Our process for developing the Scoping Plan was unprecedented in its openness and transparency, including many opportunities for substantive comment and interaction as the plan went through the draft process and through the final adoption.” She also noted that “Ironically, some of the plaintiffs sit on ARB's Environmental Justice Advisory Committee (established by AB 32) and enjoyed unparalleled access to ARB staff and board members throughout the plan preparation.” Nichols expressed concern over an attack on the emissions trading program in its early stages, writing, “Now is the time to begin focusing on mechanisms to assure that the program is designed to assure that the communities that are most negatively impacted by industrial pollution receive a proportionately greater share of the benefits, including direct co-benefits from cleanup of existing sources.”

California had first asked for a waiver to impose its own, more stringent limits on greenhouse gas emissions in December 2005. The EPA at that time took the position that it did not have the authority to regulate those emissions under the terms of the Clean Air Act. That argument was rejected by the Supreme Court in 2007 in the case of Massachuetts v EPA, in which the Supreme Court ruled that EPA has the authority to regulate GHGs under the Clean Air Act if they cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. In that case, twelve states and several cities had brought suit against the EPA to force the agency to regulate carbon dioxide and other greenhouse gases as "pollutants" under the Clean Air Act. EPA had taken the position that it did not have the authority to regulate carbon dioxide and green house gases under the CAA because they were not "pollutants" pursuant to the terms of the Act. The Supreme Court disagreed, and required EPA to evaluate whether greenhouse gas emissions from cars – as "pollutants" under the Act – should be regulated.

After the Supreme Court's ruling, EPA reconsidered the issue and again refused to regulate carbon dioxide and greenhouse gas emissions. It also denied at that time California's petition for a waiver to set its own tailpipe emission standards.

In May 2009, the Obama Administration announced new national auto emissions standards that will require automakers to boost the average fuel efficiency of cars sold in the US from their current level of 25.1 miles per gallon to 35.5 miles per gallon starting in 2012. California's new auto emission standards, which are effective immediately, will apply for car models for the years 2009 to 2011. Subsequently, from 2012 to 2016, all carmakers that comply with the new national program will be considered to be in compliance with California's requirements. After 2016, California may again be able to set more stringent limits than the national limits existing at that time.

In the interview, Maples declares the scientific debate about climate change “over” – relying on the Intergovernmental Panel on Climate Change‘s conclusion that the emission of greenhouse gases from human activities has resulted in a measurable increase in temperature, which in turn has significant local, national and global health and environmental effects. He asserts that this scientific certainty has driven a shift in litigation defense strategy away from the science to the standing/political question defense. According to Maples “that’s essentially what the ‘standing’ defense is about. It’s too great of an issue for the courts. It has to be handled by the political leaders.”

But as noted in other posts and articles, the regulatory and quasi-regulatory conclusions that climate change is influenced by human activities do not address the specific causation questions that must be addressed in a tort case like Comer, which seeks to hold corporations responsible for damage caused by climate change. The fact that those battles have not occurred in Comer may not represent a shift in defense strategy – those battles have simply been unnecessary because the complaint was dismissed for lack of standing (“the Court finds that Plaintiffs do not have standing to assert claims against Defendants and that Plaintiffs’ claims are non-justiciable pursuant to the political question doctrine”).

The interview cites Maples’ view on proximate cause as follows: “Proximate cause is not simply cause in fact. We know what the cause in fact is – the science has told us that. But proximate cause has to do more with who could have prevented it.” While this definition doesn’t track Black’s Law Dictionary – which uses phrases like “[t]he last negligent act contributory to an injury, without which such injury would not have resulted,” and “[t]he dominant, moving or producing cause” – it does identify clear causation hurdles that the Comer plaintiffs must overcome if the dismissal of their case is reversed. In establishing cause in fact, plaintiffs would have to establish that Hurricane Katrina would not have occurred without defendant’s emissions. In other words, if Comer is reversed, causation looms large as an obstacle to plaintiffs’ success on the merits.

Causation problems notwithstanding, Maples states that, if Comer is reversed, new work done by Oxford University will help make his case and spur “massive litigation”:

It’s been tracked with great precision, as far as what each corporation’s contribution is, and that can now be extrapolated – especially based on some of the work, the computer modelling that’s coming out of Oxford University – that can now be extrapolated to a percentage of fault. It’s fantastic work that’s been done. Apparently it’s even more sophisticated than the work out of the University of Colorado.

They now can model the effect of man-made carbon contributions to the atmosphere, and the contribution that it has to global weather events. A (newspaper) article was sent to me a few weeks ago - it’s worth a story in and of itself probably - because the comment made was that it was going to lead to massive litigation.

While it is not clear what computer modelling Maples refers to, it may be that he is commenting on a “summary report” stating “preliminary findings” of B. Müller, Ch. Ellermann, M. Friman, N. Höhne, and R. Verheyen, entitled Differentiating (Historic) Responsibilities for Climate Change, available on the website of a company called Oxford Climate Policy. This preliminary report does not appear to be the kind of peer reviewed analysis that might support specific causation claims and is in large part focused on the philosophical questions of how responsibility should be shared for addressing climate change on an ongoing basis (not on the question of apportioning liability, based on cause, for climate change in general or specific weather events). Indeed, the report states as much in its conclusion: “The aim of this Report was to put forward and discuss a methodology for the numerical differentiations of responsibilities for climate change as opposed to calculating causal contributions to climate change.”

Still, Maples predicts “massive litigation” in the future from “big farming interests” who suffer droughts, to “communities ravaged by wildfires,” to “ski resorts that have no snow.” Maples says that the strategic model for the litigation will be based on tobacco litigation: “What’s good about the approach that I’m taking is that the tobacco litigation – and before that the asbestos litigation – demonstrates that one case can cause a gigantic litigation problem for corporations. It’s pretty much accepted history that asbestos and tobacco are the role models for climate change litigation now.”

The proposed rule has been viewed as a precursor to GHG controls and a possible glimpse into the structure of President Obama’s cap-and-trade program. In the proposed rule preamble, the Agency stated that the annual reporting requirement “would provide comprehensive and accurate data which would inform future [policy] …. includ[ing] research and development initiatives, economic incentives, new or expanded voluntary programs, adaptation strategies, emission standards, a carbon tax, or a cap-and-trade program.”

Under the proposed rule, the annual emission report would be signed by a designated representative of the owner or operator, certifying under penalty of law that the report has been prepared in accordance with the requirements of the rule, and would include: 1) total facility emissions in metric tons of CO₂ aggregated for all source categories; 2) total emissions in metric tons of CO₂ aggregated for all supply categories; 3) emissions from each source category and supply category expressed in metric tons of each GHG; 4) onsite electricity generation in kilowatt-hours; 5) total pounds of synthetic fertilizer produced and total nitrogen contained in the fertilizer; and 6) any additional information, including unit – or process-level emissions, activity data (e.g., fuel use, feedstock inputs), or quality assurance/quality control data that are specified in an applicable subpart.

The rule would apply to the emission of what the Agency described as the “major GHGs”: (1) carbon dioxide (CO₂); (2) methane (CH₄); (3) hydrofluorocarbons (HFCs); (4) nitrous oxide (N₂O); (5) perfluorocarbons (PFCs); (6) sulfur hexafluoride (SF₆); and (7) other “fluorinated compounds” (e.g., HFEs (hydrofluoroethers) and NF₃ (nitrogen fluoride)).

Facilities would start collecting data on January 1, 2010, submit the first report on March 31, 2011, and maintain certain data records for five years. The reporting requirement would apply to GHG emitters (reporting per facility), GHG and fossil fuel suppliers (reporting at the corporation level), and vehicle and engine manufacturers (also reporting at the corporation level). Facility emissions would be monitored and calculated – at varying levels of exactitude and complexity – using sector-specific, tiered methodologies.

Some question the effect this rule will have on small businesses. EPA officials say most small businesses would fall below the threshold and would not be required to report. However, the rule names specific source categories (e.g., aluminum, ammonia, cement, electronics, lime, petrochemical, petroleum refining, certain underground coal mines, manufacturers of engines and municipal landfills) that are covered by mandatory reporting regardless of whether they exceed the threshold. Others criticize the rule for “double counting” by applying the reporting requirement to both upstream and downstream sources of GHG emissions.

Federal register publication of the proposed rule and preamble – slated to occur in the near term under Docket ID No. EPA-HQ-OAR-2008-0508 – will mark both the start of a 60-day public comment period as well as three public hearings: April 6 and 7 (Washington DC), April 16 (Sacramento, California) regarding the rulemaking.

If EPA were going to regulate greenhouse gases under the Clean Air Act, Section 115 offers several practical benefits. First, an endangerment finding under Section 115 for greenhouse gases would not automatically implicate other onerous sections of the Clean Air Act. This is because of the unique Section 115 endangerment finding – an endangerment outside of the United States. However, an endangerment finding within the United States is required if EPA were to regulate greenhouse gases under any other relevant section of the Clean Air Act. A domestic endangerment finding made under any relevant section of the Clean Air Act other than Section 115 could have the effect of imposing an overwhelming cascade of serious regulatory consequences under other sections of the Clean Air Act. For example, regulating greenhouse gases under Section 109 (National Ambient Quality Standard) would require an endangerment finding and could require Prevention of Significant Deterioration permitting for all major sources in an attainment area. This would stifle project development at a time when policymakers are attempting to stimulate the economy. In fact, Martella and Paulson cite a US Chamber of Commerce study that estimates that more that one million sources could become newly subject to the Clean Air Act requirements based upon greenhouse gas emissions.

Other practical benefits include regulatory flexibility that is commensurate with the international nature of air pollution. The rigidity and specific command and control requirements that accompanies a domestic endangerment finding under the Clean Air Act do not make other provisions of the Clean Air Act suitable for regulating greenhouse gases. Section 115 would allow states to provide flexible solutions with federal oversight and approval required and would allow international input. As summed up by the authors, “Section 115 provides significant flexibility in crafting programs to achieve greenhouse gas emissions reduction while also allowing for consideration of international efforts to combat this global challenge.” As the policy debate rages over whether new legislative or existing tools are best to combat climate change, these authors have brought a creative idea to the debate.

The announcement comes on the heels of several years of opposition to the project on the grounds that the proposed coal-fired plant would emit too much climate changing greenhouse gases and fine particulate. Environmental groups such as the Montana Environmental Information Center and Earthjustice filed multiple lawsuits challenging the permitting of the project, the rezoning of the site where the proposed project is to occur, and even the funding of the project by the federal government.

Tim Gregori, SME’s General Manager and CEO explained that the proposed coal-fired plant had been considerably delayed by the opposition from environmental groups and that there is an “immediate need for base load electric generation” that needs to be addressed. The new plans will ensure that energy will be available in 2011 and also allow SME additional time to sort through the regulatory uncertainty of the new federal leadership.

Environmental groups view SME’s change of fuelbase as directly related to the new administration in Washington. President Obama has pledged to reduce greenhouse gas emissions 80% by the year 2050. This includes ensuring that utilities turn to cleaner and renewable sources of energy like natural gas and wind. Environmental groups are optimistic that other proposed coal fired power plants like Sunflower in Kansas and Desert Rock in New Mexico will soon follow SME’s lead.

The Clean Air Act Section 209 – State Standards states that the waiver should be granted unless the EPA finds that California:

• was arbitrary and capricious in its finding that its standards are in the aggregate at least as protective of public health and welfare as applicable federal standards;
• does not need such standards to meet compelling and extraordinary conditions; or
• has proposed standards not consistent with Section 202(a) of the Clean Air Act.

The public comment period on the waiver request will last 60 days and will close on April 6, 2009. There also will be a public hearing on March 5 held by EPA.

As part of California’s aggressive effort to reduce greenhouse gas emissions, California passed a law to regulate vehicle emissions in the state, but enforcement of the regulations implementing the law was blocked by years of litigation, ultimately concluding that California could move forward only with a waiver from the EPA. Under the Bush administration, the EPA denied the waiver, contending that allowing states to set their own pollution rules would create an unenforceable and unworkable patchwork of regulations.

Last week, California Governor Arnold Schwarzenegger sent a letter to President Obama requesting reconsideration of the waiver denial, while California Air Resources Board (CARB) Chairwoman Mary Nichols appealed directly to new EPA administrator Lisa Jackson to open a “reconsideration process.”

While Obama’s directive does not explicitly demand that the EPA grant the waiver request, it is widely assumed that the agency will do so. At her Senate confirmation hearing earlier this month, Jackson indicated that she would reconsider the request and hinted that she would grant a waiver. A final decision from the EPA, however, is expected to take several months, and will likely face additional legal challenges.

Meanwhile, the auto industry is faced with the prospect of being forced to spend billions of dollars to comply with the stricter California emissions rules. Currently, only two mass-produced vehicles, the Toyota Prius and the hybrid Honda Civic, average at least 42 mpg. To reach that level fleetwide would require significant investment in new technologies, including hybrid vehicle technology. Auto industry estimates claim that the cost of compliance with the California standard could be as high as $5,000 per-vehicle. These costs and their impact are the subject of multiple lawsuits. (See Green Mountain Chrysler v. Crombie (D. Vt. 2007); Central Valley Chrysler v. Goldstene (E.D. Cal. June 2008); and Lincoln Dodge, Inc. v. Sullivan (D. R.I. Nov. 2008).)

The quick action the Obama administration on this issue – coming less than a week into his term in office – suggests an aggressive stance on climate change and could signal more far-reaching policy shifts to come.

According to the October 23, 2008 Assurance of Discontinuance Pursuant to Executive Law § 63(15), Dynegy's disclosures will include an analysis of material financial risks to the company from the physical impacts of climate change, "including the impact of an increase in sea level and changes in weather conditions", as well as material financial risks associated with present and probable future greenhouse gas legislation and regulations.  Dynegy has also agreed to a broad climate-change litigation disclosure covering

[a] description of any litigation related to climate change involving the Company the outcome of which will likely have a material financial effect on the Company and any climate change-related decisions issued by the United States Supreme Court, any United States Court of Appeals, or any court in any jurisdiction in which the Company operates that the Company concludes are likely to have a material financial effect on its business.

In addition, to the extent that Dynegy's greenhouse gas ("GHG") emissions materially affect its financial exposure from climate-change risk, Dynegy will disclose

• current and projected increases in GHG emissions,
• corporate strategies to reduce the company's climate-change risk,
• the role of the company's board of directors in Dynegy's corporate governance process as it applies to climate-change issues, and
• the extent (if any) to which "environmental performance factors" are incorporated into officer compensation.

Mr. Cuomo lauded the agreement with Dynegy, noting that it will help “protect investors by ensuring disclosure of potential financial risks that climate change may pose,” and adding:

Today we raise the bar in the industry and ensure transparency and disclosure in the marketplace.  Investors have the right to know all the material financial risks faced by coal-fired power plants associated with global warming and I hope and expect that other companies will follow the lead of Dynegy and Xcel.

Much as former New York Governor Eliot Spitzer used the Martin Act’s broad powers to fight Wall Street fraud when he was New York Attorney General, Mr. Cuomo has used that tool to investigate a range of securities-related issues including subprime mortgages and other financial industry practices.  In addition to drawing public attention to his political accomplishments, Mr. Cuomo’s efforts to obtain climate-change-related disclosures from operators of coal-fired power plants may also spur the Securities and Exchange Commission to act as it considers climate-change disclosure requirements.

The October 23, 2008 Dynegy agreement came one day after a group of institutional investors sent a letter to the SEC asking that it require improved climate-risk disclosure in SEC filings.  In their October 22, 2008 letter, the Ceres-sponsored investor group -- the Investor Network on Climate Risk ("INCR") -- also asked the SEC to consider how material environmental, social and governance (sometimes referred to as "ESG") risks, including "environmental issues such as water-related risks and social issues such as labor and supply chain risks," can be integrated into the SEC's disclosure requirements.  The INCR letter was sent in response to the SEC's request for public comment on its 21st Century Disclosure Initiative, announced by Chairman Christopher Cox in June 2008.  (Public comments on the SEC initiative are available on the SEC's Web site.)

While the final plan includes steps designed to reach these reductions goals – notably including a cap-and-trade program for businesses – the specific implementing regulations have yet to be drafted, leaving significant hurdles to clear in order to achieve AB 32’s GHG emission reduction goals, particularly in a time of such serious economic challenges in the state.

AB 32 set a goal of reducing California GHG emissions to 1990 levels by 2020, and reducing them to 80% below 1990 levels by 2050. The implementation plan seeks to achieve these reductions by, among other things, reducing leakage of harmful air conditioning and refrigeration gases, expanding commercial recycling programs, and establishing greenhouse gas reduction targets for local governments.

One of the key aspects of the plan, however, is a cap-and-trade program, designed to enable companies who need to use greater emissions to operate to purchase emissions credits from companies who are able to reduce emissions. Such a trading program would cover about 85 percent of the state's emissions, from sectors such as electricity production, transportation and industry, according to CARB’s press release announcing the plan.   

Final decisions regarding the regulations needed to put the implementation plan into action are likely several years away. Debate over all aspects of the final implementation plan, and lobbying by all parties concerned, is sure to fill the intervening time.