EPA makes endangerment finding for greenhouse gases
In a bold move that attempts to force the Senate’s hand on climate change legislation, the U.S. EPA today announced a final rule that regulates greenhouse gases as an air “pollutant” under the federal Clean Air Act. In announcing the rule, Administrator Lisa Jackson justified the rule by stating that there is an overwhelming amount of scientific studies and evidence showing that greenhouse gas emissions are “deteriorating the natural balance in our atmosphere and hurting our climate.” EPA's decision to regulate greenhouse gases as a pollutant, however, has the potential to spin out of control, triggering other areas of the Clean Air Act, such as Prevention of Significant Deterioration and New Source Review standards, which could delay thousands of new construction projects nationally by imposing time-consuming and stringent permit requirements at a time of near historic unemployment.
In its 284-page final rule, EPA made the much disputed “endangerment” finding that current and projected concentrations of the mix of six key greenhouse gases -- carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) -- in the atmosphere threaten the public health and welfare of current and future generations. EPA also finalized its “cause or contribute” determination under the Clean Air Act for greenhouse gases from new motor vehicles and motor vehicle engines by finding that these sources contribute to the atmospheric concentrations of greenhouse gases and hence to the threat of climate change. The final rule may be challenged in the U.S. Court of Appeals for the District of Columbia within 60 days of publication in the Federal Register.
EPA’s final rule is certain to pressure the Senate to act on climate-change legislation. The House of Representatives already passed the American Clean Energy and Security Act ("ACES," H.R. 2454, Waxman-Markey) bill by a very narrow margin in June, but the outcome in the Senate is uncertain with a number of Democrats and Republicans from key energy states opposed.
API August studies indicate adoption of Waxman-Markey bill will negatively impact US refining sector and economy
American Petroleum Institute (API) published an August 21, 2009 study by EnSys Energy, entitled “Waxman-Markey Refining Sector Impact Assessment.” Based on its Refining Sector Assessment, EnSys concluded that by 2030, the US refining throughput will be reduced by 4.4 million barrels per day with refineries located in Gulf Coast and California being hardest hit. EnSys also predicts that by 2030 the US decrease in throughput will be balanced by increases of 3.3 mgd in world refining throughput. EnSys predicts that these impacts will correspond with additional negative impacts including reduced annual US refining investments by up to $89.7 billion, reduced refinery utilization (63.4% from 83.3%) and decreases in unemployment. These reductions would parallel increases in capacity, investment and employment at non-US refineries. Given these economic “translocations” a similar translocation of GHG emissions is predicted by EnSys in that the GHG emissions reductions realized in the US would be offset by increases in GHG emissions abroad.
The EnSys study comes on the heels of seven studies published earlier in August and prepared by CRA International describing the economic “hits” certain states (Colorado, Indiana, Tennessee, Ohio, North Carolina, New Mexico, and Texas) will take if the American Clean Energy and Security Act of 2009 (H.R. 2454, ACES) is adopted. API has published several statements since ACES was introduced in the House on May 15, 2009, regarding the Waxman-Markey Bill and its impact on the oil industry versus other sectors (alleging disproportionate burden on oil industry and certain consumers) and US economy, security, energy policy, and environment.
Table 1 below summarizes a couple of metrics produced by CRA’s modeling of economic impact of House of Representatives Climate Bill. A review of Table 1 shows that CRA estimated that the US would lose between 1.5 and 2.5 million jobs between 2015 and 2030, and each household would suffer an average impact to its purchasing power of $910 to $1,170 per year. Of the seven states analyzed Texas appears to take the biggest hit in terms of employment, household purchasing power, and lost tax receipts.
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Table 1 – Summary of Employment, Household Purchasing Power, and State Tax Impacts Due to H.R. 2454 as Estimated by CRA International for US and Seven States (CO, IN, TN, OH, NC, NM, TX). |
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Estimated Projected Impacts |
2015 |
2020 |
2025 |
2030 |
|
US – 2009 Total Operating Atmospheric Crude Distillation Capacity 18,300,358 (Barrels Per Stream Day) |
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|
Employment[1] |
-1,556,000 |
-1,945,000 |
-2,165,000 |
-2,435,000 |
|
Household Purchasing Power Impact [2] |
-$910 |
-$1,010 |
-$1,090 |
-$1,170 |
|
Carbon Allowance Prices[3] |
$33 |
$42 |
$53 |
$67 |
|
Colorado – 2009 Operating Atmospheric Crude Distillation Capacity 104,000 (Barrels Per Stream Day) |
||||
|
Employment1 |
-8,900 |
-12,500 |
-17,900 |
-22,200 |
|
Household Purchasing Power2 |
-$760 |
-$850 |
-$980 |
-$1,100 |
|
State Tax Receipts[4] |
-$90 |
-$130 |
-$180 |
-$240 |
|
Indiana- 2009 Operating Atmospheric Crude Distillation Capacity 446,800 (Barrels Per Stream Day) |
||||
|
Employment1 |
-51,800 |
-58,900 |
-63,300 |
-65,200 |
|
Household Purchasing Power2 |
-$770 |
-$860 |
-$950 |
-$1,050 |
|
State Tax Receipts4 |
-$260 |
-$340 |
-$420 |
-$520 |
|
Tennessee – 2009 Operating Atmospheric Crude Distillation Capacity 182,000 (Barrels Per Stream Day) |
||||
|
Employment1 |
-29,800 |
-68,200 |
-77,800 |
-80400 |
|
Household Purchasing Power2 |
-$930 |
-$1,150 |
-$1,270 |
-$1,340 |
|
State Tax Receipts4 |
-$190 |
-$290 |
-$370 |
-$440 |
|
Ohio – 2009 Operating Atmospheric Crude Distillation Capacity 589,500 (Barrels Per Stream Day) |
||||
|
Employment1 |
-79,300 |
-102,300 |
-103,900 |
-114,100 |
|
Household Purchasing Power2 |
-$850 |
-$940 |
-$990 |
-$1,070 |
|
State Tax Receipts4 |
-$470 |
-$640 |
-$770 |
-$960 |
|
North Carolina - 2009 Operating Atmospheric Crude Distillation Capacity 0 (Barrels Per Stream Day) |
||||
|
Employment1 |
-25,100 |
-65,400 |
-63,300 |
-87,000 |
|
Household Purchasing Power2 |
-$530 |
-$680 |
$730 |
$840 |
|
State Tax Receipts4 |
-$250 |
-$520 |
-$600 |
-$860 |
|
New Mexico – 2009 Operating Atmospheric Crude Distillation Capacity 144,107 (Barrels Per Stream Day) |
||||
|
Employment1 |
-14,500 |
-12,200 |
-14,600 |
-18,900 |
|
Household Purchasing Power2 |
-$920 |
-$950 |
-$1,070 |
-$1,230 |
|
State Tax Receipts4 |
-$100 |
$120 |
$150 |
$210 |
|
Texas – 2009 Operating Atmospheric Crude Distillation Capacity 4,938,300 (Barrels Per Stream Day) |
||||
|
Employment1 |
-180,700 |
-263,100 |
-282,100 |
-340,700 |
|
Household Purchasing Power2 |
-$1,430 |
-$1,600 |
-$1,670 |
-$1,790 |
|
State Tax Receipts4 |
-$1,110 |
-$1,390 |
-$1,650 |
-$2,030 |
We have also included with CRA’s estimated impacts, the 2009 refining capacity metric from the Energy Information Administration for the US (total) and each state analyzed by CRA for the purposes or comparison. On this basis, it is interesting to note that there are several states not analyzed by CRA that have significant refining capacities of near or above 1 million barrels per day, including California (2,078,500); Illinois (956,300), Louisiana (3,101,705), and Pennsylvania (819,500) that likely will be significantly impacted by adoption of HR2454.
Given that the API studies were published during the month of August and Congress is out of session, it will be interesting to see how (if at all) the Senate addresses API’s and the oil industry’s concerns when it reconvenes in September. These projections will likely put increasing pressure on those legislators whose states face increasing unemployment and budget deficits.
Economic and Allocation Advisory Committee (EAAC) established to advise CARB regarding cap and trade program
Already sporting a Climate Action Team, Environmental Justice Advisory Committee, Economic and Technology Advancement Advisory Committee, and Market Advisory Committee, on May 22 the California Air Resources Board (CARB) established another committee known as the Economic and Allocation Advisory Committee (EAAC). The EAAC was established to advise CARB regarding the implementation of the California Global Warming Solutions Act of 2006 (AB 32) and the cap and trade system to be implemented to reduce California’s greenhouse gas emissions. Per AB 32, the cap and trade program is to be developed by January 1, 2011 and implemented in beginning of 2012.
EAAC Purpose and Coordination with Others
The purpose of EAAC includes: 1) evaluating allowance allocation strategies involving free allocation, auction, or a combination of both; 2) advising CARB regarding the costs and benefits to various options involving the distribution of cap and trade allowances/auction revenue; 3) providing CARB revisions to its economic analysis; and 4) preparing a report with its findings by end of 2009.
At its first meeting on July 1, the EAAC and various stakeholders, discussed allocation approaches and including those being considered by the U.S. federal government, Regional Greenhouse Gas Initiative States (RGGI), Western Climate Initiative (WCI) and European Union. A review of the materials from the first meeting clearly indicates the EAAC is very aware that the nature of the allocations and revenue distribution will dramatically influence the program’s success and cost effectiveness.
Furthermore, because of the somewhat unique electricity market in California, which requires significant generation from outside the state, California must ensure that its cap and trade program does not lower emissions in California only to increase them elsewhere (a.k.a. leakage). Per the CARB, December 2008 Climate Change Scoping Plan the EAAC will develop a California cap-and trade program that links with the WCI to create a regional market system. The WCI has formed a Cap Setting and Allowance Distribution Committee (CSAD), and released its recommended design and regional cap and trade program in September 2008. The WCI anticipates that its preliminary budget and cap for its partners (states including California and Canadian Provinces) will be published in first quarter of 2010.
In addition to the linkage with WCI, the federal government is proposing that holders of allowances from California, WCI, and GGI before December 31, 2011 be allowed to exchange them for federal allowances under the program to be develop by the federal government. American Clean Energy and Security Act of 2009 (H.R. 2454), Section 790: Exchange for State-Issued Allowances.
CARB Funding, EAAC Coordination/Efforts, and Economy
CARB estimates that approximately $36 million per year will be needed on an ongoing basis to fund implementation of the cap and trade program. CARB is currently developing fee regulation and expects to take a regulation to the Board in mid-2009 with the aim of collecting fees in 2009/2010 year. That said, the budget, schedules, and EAAC efforts and coordination are likely to be impacted due to the recent July 1, 2009 Executive Order, S-13-09, calling for furlough for CARB employees of 3 days per month starting July 10, 2009 and ending June 25, 2010. The furloughs are due to the “unprecedented” California state budget deficit. California may look to the federal government and others (WCI/RGGI) to take the laboring oar on cap and trade while it tries to reconcile its budget.
Significance of the removal of citizen suit provision from ACES
Original HR 2454 provision differed substantially from Clean Air Act counterpart
Co-authored with Cyrus Frelinghuysen.
This post is prompted by an interesting question received in response to a previous post (Removal of "citizen suit" provisions eased passage of ACES). The commenter asks:
“Because the bill amends the Clean Air Act, wouldn't citizens be able to bring suits pursuant to the Clean Air Act's regular citizen suit provision anyway? It seems like the removal of the citizen suit provision isn't a big deal if the main citizen suit provision in the Clean Air Act can still be used.”
The question is an interesting one, and we thought the answer would merit an additional post. The short answer to your question is, yes, parties will still be able to bring lawsuits under the citizen suit provision of the Clean Air Act (CAA). However, the citizen suit provision in ACES differed from the current citizen suit provision in the CAA in several significant ways.
First, the proposed provision in ACES was broader than the citizen suit provision in the CAA. The ACES provision would have covered actual or reasonably expected harm from any effect of air pollution "currently occurring or at risk of occurring" regardless of whether a pollutant is a greenhouse gas or the effect is climate-related.
Second, the remedies available under the two provisions differ. The current CAA provision only provides for enforcement as a remedy; there is no damage remedy. The ACES provision would have provided for a damage remedy of $75,000 per lawsuit. Moreover, like the current CAA provision, the ACES provision would have allowed the recovery of costs of litigation, including reasonable attorneys fees.
Third, the ACES provision would have modified the standing requirement for a citizen suit. Standing under the CAA provision is limited to those who are actually harmed or face imminent harm. The ACES provision would have watered down the standing requirement in two significant ways. First, a plaintiff would not have needed not show imminent harm under the draft provision, only that the plaintiff "reasonably expects" to suffer harm. This subjective standard, focused on the mind of the plaintiff rather than on a more objective look at whether harm is imminent, would have made this standard difficult to apply (and more difficult for defendants to address). Second, the standard for showing "harm" would also have been diminished: the ACES provision talks about harm "at risk of occurring" (again, no notion of imminence, no measure for the significance of that risk), and states that harm includes "incremental exacerbation" of risk associated with even a "small incremental emission of any air pollutant." A final change under the ACES provision would have been that the risk need not be widely shared. As a result, the ACES provision would not have just lowered the bar for harm allegations; it would have put the bar on the ground.
The bottom line is that the ACES citizen suit provision would have been problematic for business defendants. While the provision included some limitations (e.g., citizen suit plaintiffs would have had to demonstrate violations of emission standards), even minor violations of emission standards with no actual harm could have spurred a plaintiff, encouraged by attorneys with hopes of recovering fees, to seek abatement and damages. The ACES provision likely would have spawned significant additional litigation because of the elimination of the requirement to show imminent or actual harm, which would have removed what has historically been a significant hurdle in citizen suit actions.
ACES passage assisted by 300+ pages of amendments
Facing tough opposition to its passage in the House, the American Clean Energy and Security Act’s (ACES) chief sponsor, Democratic Representative Henry Waxman (D-CA) submitted a 300-plus page amendment to H.R. 2454, which was reported out of the House Rules Committee at 3:47 a.m. – the morning of the vote – Friday, June 26, 2009.
In lieu of the amendment originally recommended by the Committee on Energy and Commerce that was printed in the bill, the House considered, debated, and passed the Act with the Waxman amendment consisting of the text of H.R. 2998.
A substantive summary of the components of the Waxman amendment follows.
(Names in parens are original sponsors of each component, with link to text of that section.)
- Provides accommodations for states using a central purchasing model for their renewable electricity standards (Waxman);
- Provides Federal Regulation and Oversight of Energy (“FERC”) authority to build interstate transmission lines in the Western Interconnection and amends the National Interest Electric Transmission Corridors (Inslee/Markey);
- Exempts forestry and agriculture industries from the Act’s emission’s caps, grandfathers existing biodiesel plants making them exempt from the Renewable Fuels Standard’s lifecycle analysis; changes the definition of “biomass”; and mandates the Secretary of Agriculture create a list of agricultural and forestry practices that reduce or avoid greenhouse gas emissions (Peterson);
- Allows states to convey allowances in a SEED account directly to renewable energy generators (Polis);
- Mandates the creation of a carbon incentives program by the Secretary of Agriculture to achieve supplemental greenhouse gas emissions reductions on private agricultural and forestland (Kratovil);
- Sets a Renewable Electricity Standard (“RES”) for Federal agencies and allows Federal agencies to enter into renewable energy power purchase agreements for up to 20 years (Titus/Giffords/Heinrich);
- Makes natural gas fueled vehicles eligible for clean vehicle incentives, the vehicle integration program, and the manufacturing incentives for alternatively fueled vehicles (Boren/Larson/Sullivan);
- Caps the cost of a permit for a license for the construction of a solar energy system and provides that noncompliance with the permit cost requirements disqualifies the entity from Community Development Block Grants (Cardoza);
- Authorizes a national education, training, and awareness program to inform building, facility, and industrial plant owners and managers, government and industry leaders of the large energy-saving potential of using of mechanical insulation and (Halvorson);
- Amends the definition of a “cluster,” as it applies to Energy Innovation Hub, and ensures that virtual connections qualify when defining a cluster (Hinchey);
- Amends the Retrofit for Energy and Environmental Performance (REEP) program so that funds provided to disaster victims through the Robert T. Stafford Disaster Relief and Emergency Assistance Act may qualify as the building owners’ contribution toward the matching requirements of the REEP program while also requiring Federal agencies administering such assistance inform disaster victims of the REEP program, and finally provides 10% of funding under the REEP program for retrofits of public and assisted housing (Loebsack);
- Creates a Community Building Code Administration Grant program, providing $100 million over five years in competitive, matching grants for local building code enforcement (Moore);
- Limits the Building Energy Performance Labeling Program in sec. 204 of the bill to new construction only (Perlmutter);
- Incentivizes lenders and financial institutions to provide lower interest loans and other benefits to consumers who build, buy, or remodel homes and businesses to improve their energy efficiency (Perlmutter);
- Directs Department of Housing and Urban Development to issue rules prohibiting private covenants that restrict or prohibit the installation of solar energy systems (Cardoza);
- Authorizes the Secretary of Energy to develop a research program studying the factors affecting whether consumers adopt energy conservation practices or make energy efficiency improvements (Holt/DeLauro/Baldwin/ Baird);
- Requires the Secretary of Energy report to Congress on a study on the use of thorium-fueled nuclear reactors for national energy needs, including a response to the IAEA study entitled “Thorium fuel cycle - Potential benefits and challenges.” (Sestak);
- Establishes a clean energy career training clearinghouse to aid institutions with Federal resources, expertise, information and points of contact when establishing and maintaining quality training programs (Polis);
- Adds provision seeking to ensure that minority-owned and women-owned businesses benefit from grants aimed at stimulating business development, and requires the Secretary of Labor monitor the potential growth of impacted and displaced workers to ensure that the necessary funding continues to support the number of workers affected (Jackson-Lee);
- Expresses the sense of Congress that the United States should work with the International Civil Aviation Organization regarding the development of a global framework for the regulation of greenhouse gas emissions (Larsen).
With the amendment, the bill passed by recorded vote: 219 - 212 (Roll no. 477). The final vote included 211 Democrats and 8 Republicans in favor with 168 Republicans and 44 Democrats opposed. Representatives Jeff Flake (R-AZ); John Sullivan (R-OK); and Alcee Hastings (D-FL) abstained.
Removal of "citizen suit" provisions eased passage of ACES
*Co-authored with Cyrus Frelinghuysen.
See also previous post: American Clean Energy and Security Act (H.R. 2454) passed by House.
Today, in what President Obama described as a “vote of historic proportions,” the House passed the American Clean Energy and Security Act (ACES). Given the slim margin with which ACES passed, it is important to note which controversial parts of the bill fell by the wayside to ensure its passage. In this case, one notable provision that was eliminated was the so-called “citizen suit” provision in the bill. Many environmental statutes contain citizen suit provisions, which empower citizens to bring lawsuits against either polluters for violations of environmental regulations or against the Administrator of the Environmental Protection Agency for failing to enforce environmental standards.
The citizen suit provision was set forth in Section 336 of the discussion draft version of ACES, and it would have given environmental groups and other activists standing under the Clean Air Act to “commence an action” when someone has “suffered, or reasonably expects to suffer, a harm attributable, in whole or in part, to a violation or failure to act referred to in subsection (a).” Harm under this section was defined as: “For purposes of this section, the term ‘harm’ includes any effect of air pollution (including climate change), currently occurring or at risk of occurring, and the incremental exacerbation of any such effect or risk that is associated with a small incremental emission of any air pollutant (including any greenhouse gas defined in Title VII), whether or not the risk is widely shared.”
The citizen suit provision in ACES generated significant controversy. A staff member in the office of Sen. Jim Inhofe (R-OK) had warned that the subsection could result in a flood of “lawsuits filed by environmental groups who perceive some risk—and they undoubtedly will perceive it” and that “this provision will further empower the eco-trial bar to fight the ravages of climate change and the businesses it dislikes, with no effect on the former and disastrous consequences for the latter.” However, supporters of the bill, such as the Center for Progressive Reform, offered a contrasting view, arguing that an “extremely positive aspect of the bill is its approach to citizen enforcement of the laws. In addition to government enforcement provisions, the bill includes strong citizen suit provisions. It reaffirms the importance of citizen enforcement of the environmental laws against both potential violators and agencies that have the responsibility to implement the regime. Citizens have traditionally had this enforcement power under the environmental laws, but it has recently been threatened by a series of judicial decisions. The Waxman-Markey bill responds to these judicial decisions and strives to ensure the vitality of citizen suits.”
Concerns about a “landslide of litigation” appear to have been behind the elimination of the citizen suit provision. In the Committee on Energy and Commerce’s Report on ACES, the Minority noted that: “If citizen suits are allowed to go forward against any person, it is likely that there would be a substantial amount of new climate change litigation brought against companies throughout the United States in all of the sectors of the economy regulated by the bill. While a windfall to lawyers, such litigation would impose significant costs and burdens on those companies in addition to the already enormous direct and indirect costs imposed by the bill. An amendment to limit citizen suits would prevent excessive or unwarranted litigation and protect US companies and ultimately US jobs and consumers.”
American Clean Energy and Security Act (H.R. 2454) passed by House
“To create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean energy economy.” Bill # H.R.2454
Today the House of Representatives debated and passed (219-212) the American Clean Energy and Security Act of 2009 (H.R. 2454, ACES), which is intended to radically redefine the way the United States uses and pays for energy. The Waxman-Markey climate change legislation centers on a renewable electricity standard, encouraging the use of renewable energy, and a cap-and-trade policy. The bill establishes a cap-and-trade system regulating carbon dioxide emissions, in which emitters will be allowed a certain allotment of permits and will be able to sell unused permits or buy more as needed.
Highlights of the American Clean Energy & Security Act include:
- Targets reduction of greenhouse gases by 17 % from 2005 levels by 2020 and 83 % by 2050 through cap-and-trade;
- Caps emissions from major industrial sources, including power plants, factories, refineries and electricity and natural gas distributors.
- Emissions from agriculture not capped.
- Places limits on carbon dioxide emissions from fossil fuel use, and six other greenhouse gases;
- Includes offset allowances to permit companies to meet emissions targets by investing in things such as tree planting and forest protection;
- Requires electric utilities to produce at least 12% of power from renewable sources such wind and solar by 2020; requiring as much as 8% in energy efficiency savings;
- Imposes stricter performance standards on new coal-fired power plants and provides $1 billion a year to fund carbon capture for such plants;
- Requires new buildings to be 30% more energy-efficient by 2012 and 50% more efficient by 2016;
- Provides for energy rebates for consumers and credits to low-income households (intended to offset anticipated increases in energy costs).
To build broader support for the bill, its chief sponsors, Democratic Representatives Henry Waxman (D-CA) and Edward Markey (D-MA), agreed during the past month to reduce the bill’s environmental mandates and increase aid to greenhouse gas emitters, including coal-fired power plants in order to help companies meet the measure’s emission regulations.
The House rejected Rep. Randy Forbes' (R-VA) substitute bill amendment, the only Republican amendment to clear the Rules Committee. Had the amendment passed, it would have replaced the current version of the bill with Forbes' proposals for the US to reach 50% energy independence in 10 years and 100% in 20 years.
Check back later with www.GlobalClimateLaw.com for additional updates and analysis.
