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Economic Development Corporation of Southwest Riverside Co

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					CLIMATE CHANGE –                       Monica A. Schwebs
An Overview of What is Happening in    Bingham McCutchen
Congress, the States, and the Courts    January 11, 2007
             Overview of Presentation


I.     Current Status of Federal Initiatives
II.    Regional Initiatives
III.   State-by-State Initiatives
IV.    Litigation
V.     Possible New Federal Legislation
                I. Current Status of Federal Initiatives
                Congress
•   1997 Byrd-Hagel Resolution opposing
    ratification of Kyoto Protocol
•   2003 McCain-Lieberman GHG emissions
    targets bill defeated
•   2005 Congressional GHG bills defeated
•   Current Federal laws
     • GHG emissions - only mandatory
       requirement is reporting of electric
       utility CO2 emissions
     • Federal laws that support reduction of
       GHG emissions
         • Energy efficiency standards
         • Conservation and alternative fuel
           incentives
         • Technological development incentives   Photo Source: U.S. Congress
                Executive Branch
• 2001 President repudiated Kyoto Protocol
• 2002 President called for voluntary action to
  cut GHG intensity (the amount emitted per
  unit of economic activity) by 18% by 2012,
  leading to formation of voluntary programs
  including:
     •   Climate Vision - Public-private partnership
         initiative launched by DOE to focus on energy-
         intensive industries
     •   Climate Leaders - Voluntary EPA industry-
         government partnership that works with companies
         to develop long-term comprehensive climate
         change strategies; Partners set a corporate-wide
         GHG reduction goal and inventory their emissions
•   2005 President formed Asia-Pacific Partnership
    on Clean Development and Climate Change -
    Includes Australia, China, India, Japan, Korea,
    and the U.S. who together account for 50% of            Photo Source: The White House
    GHG emissions
U.S. GHG Emission Trends




               Source: Pew Center for Climate Change
What the American Public Thinks




           Source: “Americans on Climate Change: 2005,”
           Survey by Program on International Policy Attitudes, Univ. of Md.
     Constitutional Obstacles for the States


• The Federal government
  has authority over foreign
  affairs and interstate
  commerce
• Federal law is “the supreme
  law of the land,”meaning it
  preempts conflicting state
  law
• States cannot enter into
  interstate compacts without
  the approval of Congress      The Signing of the Constitution
                                        By Howard Chandler Christy
                                        Photo Source: U.S. Senate
II.   Regional Initiatives




             Source: Pew Center on Global Climate Change
                      The West Coast
Western Governors‟ Global Warming Initiative
• California, Washington, Oregon
• In 2003, the Governors announced they
  would coordinate their states‟ policies to
  combat global warming
• Staff collaborated to produce a set of
  recommendations on strategies that the
  states can pursue cooperatively and
  individually
In Dec. 2006, PUC Commissioners from these
   states and New Mexico entered into follow-
   on regional cooperation agreement

                                               Image Source: California Energy Commission
         The Southwest
•   Southwest Climate Change Initiative
     • New Mexico and Arizona
     • In 2006 the two states agreed to
       collaborate through their
       respective Climate Change
       Advisory Groups
     • The Governors also agreed to
       advocate for regional and
       national climate policies           Governor Napolitano, Arizona
                                             Photo Source: Office of the Governor
•   Arizona and New Mexico both
    released Climate Change Action
    Plans in 2006
•   Governors of both Arizona and New             Photo Source: U. of Arizona
    Mexico have issued Executive
    Orders to implement the
    recommendations in the Plans

                                          Governor Richardson, New Mexico
                                              Photo Source: Office of the Governor
             Western Governors‟
     Clean and Diversified Energy Initiative
• Western Governors‟ Association
  covers 17 states
• In 2004, started initiative to get:
    • 30,000 megawatts of new clean
      and diverse energy generation by
      2015
    • 20 percent increase in energy
      efficiency by 2020
• Have been working together in task
  forces
• In June 2006 Governors approved
  collective policy resolution that is
  intended to enable the West to meet
  the goals
                                         Photo Source: City of Sedona, Arizona
                                  Powering the Plains
                               • Participants from eight states
                                 and one Canadian province
                               • Public-private partnership of
                                 state officials, industry
        Photo Source:            participants, agriculture
California Energy Commission
                                 representatives and renewable
                                 energy advocacy groups
                                 working on energy and
                                 agriculture initiatives that
                                 address climate change
                               • Developing an integrated
                                 energy strategy, policy
                                 recommendations, and
                                 demonstration projects
Source: Powering the Plains
     New England States (and neighbors)

• Climate Change Action Plan of New
  England Governors and Eastern
  Canadian Premiers (2001)
• The Regional Greenhouse Gas
  Initiative (“RGGI”) -
   • 7 states plus MD shortly and
     possibly MA
   • MOU, 2005; Model Rule 2006;
     implementation January 2009
   • Will be first mandatory cap-and-
     trade system for CO2 in U.S



                                         RGGI States
                                        Image Source: RGGI
               Cap-and-Trade Basics

  Setting Up A Program
1. Set cap
2. Divide cap into
   allowances
3. Distribute allowances
4. Sources report
   emissions
5. Reconciliation
6. Penalties
                            Cost Minimization with Trading
                                    Source: U.S. EPA
    Regional Greenhouse Gas Initiative Basics
•   Important limitations - Only covers CO2 and power plants
•   Caps set to meet targets: 2009-2015 - stabilize CO2 emissions at
    current levels; by 2019 - 10% reduction
•   Allocation of allowances
     • Overall cap allocated among states
     • Allocation process within each state has economic, equity, and
       political ramifications
     • All RGGI states have agreed to propose minimum of 25 % set-
       aside for public benefit or strategic energy purposes
     • For each type of power plant, states can take many factors into
       account in deciding allowances - e.g. energy output, fuel input, fuel
       source, historic emissions, early adoption, etc.
•   Distribution of allowances to be decided by States
     • States can distribute at no cost
     • States can sell through direct sale or auction - e.g. NY and
       Vermont propose to use 100% auction
• Offsets permissible:
   • Examples: energy efficiency, landfill and agricultural methane
     reduction, sequestration through reforestation, reduction in
     sulfur hexafluoride emissions
   • Are used as “safety valve” - allowance price will determine
     extent to which can be used
• Linkages: system could be linked to states outside region
   • Offsets can be from anywhere in U.S. w/agreement of state
   • Whole system can be linked with other states
• Problems?
   • Economic impact - $3 -$16 per household in 2015, but overall
     savings if take into account efficiency gains
   • Leakage - i.e. What should be done about imports of out-of-
     region power that is not subject to RGGI caps?
   • Constitutionality?
        III. State-by-State-Initiatives


• Climate Action Plans
• Climate Action Advisory Groups
• Greenhouse Gas Inventories
• Greenhouse Gas Registries and Reporting
• Emission Caps
• Power Plant Limits
States with Climate Action Plans




                  Source: Pew Center on Global Climate Change
States with Active Climate Legislative
Commissions and Executive Branch
          Advisory Groups




                    Source: Pew Center on Global Climate Change
States with Greenhouse Gas Inventories




                    Source: Pew Center on Global Climate Change
States with GHG Reporting & Registries




                   Source: Pew Center on Global Climate Change
States with Greenhouse Gas Emission Targets




                    Source: Pew Center on Global Climate Change
           Comparison of Selected
             Emission Targets

  States         Target by 2010      Target by 2020

    CA              2000 levels        1990 levels

CT, MA, NH,         1990 levels     10% below 1990
                                        levels
  RI, VT
   NY             5% below 1990     10% below 1990
                      levels            levels

 Note: Kyoto target is 7% from 1990 levels by 2012
States with a Carbon Cap or Offset
  Requirement for Power Plants




                  Source: Pew Center on Global Climate Change
        Cities and Other Local Governments


•   U.S. Mayor‟s Climate Protection
    Agreement – over 330 U.S.
    mayors have committed to
    strive meet Kyoto Protocol
    targets for U.S.
•   U.S. Conference of Mayors
    endorsed U.S. Mayor‟s Climate
    Protection Agreement in June
    2006 and urged all to join
•   More than 185 local
    government members
    participate in ICLEI‟ s Cities for
    Climate Protection program


                                                            Seattle, WA
                                         Photo Source: ICLEI, Local Governments for Sustainability
                   IV. Litigation
                A. Types of Cases

1. Clean Air Act
   Litigation
2. NEPA/CEQA
   Litigation
3. Nuisance Litigation
4. Preemption Litigation
5. Other Litigation


                             Photo Source: Courts of Minnesota
1.         Clean Air Act Litigation

     Massachusetts v. EPA
 Pending in U.S. Supreme Court
 Challenge by 12 states and others to
   EPA decision not to regulate GHGs
   as “air pollutants” from motor
   vehicles
 Issues:
 •   Do plaintiffs have standing?
 •   Does EPA have legal authority to
     regulate GHGs?
 •   If EPA has legal authority, what is
     the scope of EPA‟s discretion to
     decide not to regulate GHGs?

                                           Photo Source: U.S. Supreme Court
    Massachusetts v. EPA - Standing to Sue
•   Standing is often challenged in GHG cases
•   Stems from Constitutional requirement that courts
    hear only actual “cases and controversies”
•   Plaintiffs must how:
    •   (1) particularized injury;
    •   (2) causation by defendant‟s actions; and
    •   (3) relief will redress the plaintiff‟s injury
•   In Massachusetts v. EPA, will Court find plaintiffs
    have standing?
                   Massachusetts v. EPA
             Selected Relevant CAA Provisions
§ 302(g): “The term „air pollutant‟ means any air pollution agent or combination of
    such agents, including any physical, chemical, biological, radioactive (including
    source material, special nuclear material, and by product material) substance
    or matter which is emitted into or otherwise enters the ambient air.”
§ 202(a): “[EPA] shall by regulation prescribe (and from time to time revise) in
    accordance with the provisions of this section, standards applicable to the
    emission of any pollutants from any class or classes of new motor vehicles or
    new motor vehicle engines, which in [its] judgment cause, or contribute to, air
    pollution which may reasonably be anticipated to endanger public health or
    welfare.”
§ 302(h): “All language referring to effects on welfare includes, but is not limited to,
    effects on soils, water, crops, vegetation, manmade materials, animals, wildlife,
    weather, visibility and climate, damage to and deterioration of property, and
    hazards to transportation, as well as on economic values and on personal
    comfort and well-being, whether caused by transformation, conversion, or
    combination with other air pollutants.”
1. Clean Air Act Litigation (cont.)
• Coke Oven Environmental Task Force v. EPA - pending in D.C.
  Circuit
   • Challenge by 10 states and others to EPA failure to take into
     account GHG emissions in setting New Source Performance
     Standards for certain power plants
   • Stayed pending decision by U.S. Supreme Ct. in Massachusetts v.
     EPA
• Northwest Environmental Defense Ctr. v. Owens Corning, D.
  Or. 2006
   • Challenge to failure to obtain PSD permit for facility that would
     emit hydrochloroflurocarbon, which is both ozone-depleting and a
     greenhouse gas
   • Court granted standing, in part, because plant would increase
     GHG emissions and cause injury to plaintiffs
    2. NEPA/CEQA Litigation
•    NEPA decisions holding climate change has to be taken into
     account
      •   Border Power Plant Working Group v. Department of Energy - S.D. CA
          2003
      •   Mid States Coalition for Progress v. Surface Transportation Board - 8th Cir.
          2003 (second round regarding sufficiency of SEIS - Maho Foundation v.
          Surface Transportation Board, pending 8th Cir.)
•    Pending NEPA Cases
      •   Center for Biological Diversity v. National Highway Traffic Safety Admin. -
          pending in 9th Cir.
           • Challenge by 10 states and others to failure to prepare EIS for new Corporate
             Average Fuel Economy (“CAFE”) standards for light trucks in order to assess
             global warming implications
      •   Friends of the Earth v. Mosbacher - pending in N.D. CA
           • In 2005 court granted standing to plaintiffs to argue that NEPA requires the
             Export-Import Bank and Overseas Private Investment Corporation, that provide
             financial assistance for energy projects abroad, to assess the global warming
             implications of their actions
•   Pending CEQA Cases
    • Natural Resources Defense Council v. Reclamation Board - pending in
      Sacramento Superior Ct.
        • Challenge by several environmental groups to approval of development plan for
          island in San Joaquin Delta. Plaintiffs allege EIR is inadequate because it
          assesses the Project‟s impact on Delta in its current condition without
          considering the impact of global warming on the Delta ecosystem in the future
    • Center for Biological Diversity v. City of Banning - pending in Riverside
      Superior Court
        • Challenge to City approval of new housing development remote from City core
          on the basis of EIR that does not address impact on global warming
•   What should you tell your clients about NEPA/CEQA review and
    climate change?




                 The Judges of the California Supreme Court
                              Photo Source: CA Supreme Court
 3.         Nuisance Litigation
• Connecticut v. American Electric Power - appeal pending, 2nd Cir.
      • Suit brought by 8 states and others against 5 largest emitters of CO2 in
        the country - all of which are electric utilities
      • Suit alleges nuisance and requests abatement order
      • District Court dismissed invoking the “political question” doctrine which
        authorizes courts to decline to decide cases best resolved by the
        political branches; appeal pending
• California v. General Motors - pending N.D. CA
      • New suit by California Attorney General against 6 manufacturers of
        motor vehicles contributing to global warming
      • Suit alleges nuisance and seeks damages
• Class Actions? E.g. class action suit filed against oil and coal industry in
   S.D. Mississippi
    4. Preemption Litigation
•    Automobile Cases
      •   Central Valley Chrysler-Jeep v. Witherspoon - pending E.D. CA
           • Auto industry challenge to California “Pavley” legislation which requires CARB to
             regulate GHG emissions from motor vehicles - Now adopted by 10 other states
           • Case going forward on three preemption claims:
                 •   Under EPCA - federal government sets CAFE standards
                 •   Under CAA - CA required to get waiver for “standard related to control of emissions”
                     (and EPA has not waived);
                 •   Under Constitution - federal government controls foreign policy
      •   Green Mountain Chrysler-Plymouth-Dodge v. Torti - pending D. Vt.
      •   Lincoln Dodge, Inc. v. Sullivan - pending D. R.I.
•    CA Power Plant GHG Performance Standard Cases
      •   SB 1368 requires CPUC, CEC to set GHG performance standard for
          electric utility purchases
      •   Constitutional claims have been raised - e.g. interference with interstate
          commerce and foreign policy
    5. Other Litigation


Endangered Species Act -
•    Center for Biological Diversity v.
     Gale Norton, pending N.D. CA -
     led to recent proposed listing of
                                             Polar Bears
     polar bear as endangered             Photo Source: USFWS
     species due to impact of global
     climate change (Dec. 2006)
•    In response to petition, NMFS
     listed elkhorn and staghorn
     coral as endangered in part
     because of high atmospheric
     CO2 levels (May 2006)



                                            Elkhorn Coral
                                           Photo Source: NOAA
5. Other Litigation (cont.)

• Center for Biological Diversity v. Brennan, pending N.D. CA
    • New suit alleges that federal government has missed
      mandatory deadline for issuance of updated national
      assessment of climate change impacts
• Energy facilities
    • Environmental licensing proceedings - e.g. power plants,
      refineries, LNG terminals
    • Utility procurement prudence proceedings - esp. purchase
      of electricity produced from coal
    V. Possible New Federal Legislation


• Selected Congressional
  Climate Change
  Legislation to Date
• GHG Regulatory
  Issues Before
  Congress
• Other Climate Change
  Agenda Items


                           Photo Source: Public Broadcasting System
 Selected Congressional Legislation to Date

                   Senate - McCain-Lieberman
• Climate Stewardship Act - 2003
   • Would have used cap-and-trade mechanism to get to target of
     2000 levels by 2010 and 1990 levels by 2020
   • Would have regulated six GHGs and included electricity,
     transportation, industry and commercial sectors
   • Would have allowed for 15% to be met through offsets
   • In 2003, floor vote failed 43-55
• Climate Stewardship and Innovation Act - 2005
   • Similar, but added incentives for low carbon technologies,
     including nuclear power
   • In 2005, floor vote failed 38-60
              Senate - Bingaman Proposal and Resolution


•   Proposal - Draft “Climate and Economy Insurance Act” - 2005
     • Product of bipartisan National Commission on Energy Policy
     • Featured an emissions intensity reduction goal of 2.4% per year
       from 2010 to 2019 that would be translated into annual caps
     • Provided for pollution credit trading with a safety valve cost cap
     • Did not have enough votes to be attached to Energy Policy Act of
       2005
•   Resolution - 2005
     • Non-binding sense of the Senate resolution
     • Calls for mandatory action to slow, stop, and reverse GHG
       emissions without harming the economy and for encouraging
       action by other nations that are trading partners
     • Passed Senate in 2005 by vote of 53-44
  GHG Regulatory Issues before Congress
1. Who will be regulated and where?
  •   Sectoral v. economy-wide approaches
  •   Upstream v. downstream
               Greenhouse Gas Emissions Flow, 2004
                 (million metric tons of carbon-dioxide equivalent)
GHG Regulatory Issues Before Congress (cont.)

 2.   Cost Distribution: Should the costs of regulation be mitigated for
      any sector of the economy, through the allocation of allowances
      without cost? Or, should allowances be distributed by means of an
      auction? If allowances are allocated, what is the criteria for and
      method of such allocation?
      •   Technology R&D and incentives
      •   Adaptation assistance
      •   Consumer protection
      •   Set-asides for early movers
      •   Special considerations for fossil-fuel producers
      •   Allocations for downstream electric generators
      •   Allocations for energy-intensive industries
GHG Regulatory Issues Before Congress (cont.)


 3. International Trading? Should a U.S. system be designed to
    eventually allow for trading with other greenhouse gas cap-
    and-trade systems being put in place around the world?
 4. International collective action? How should the U.S.
    encourage comparable action by other nations that are major
    trading partners and key contributors to global emissions?
 How long will it take to resolve these difficult issues?
           Other Climate Action Agenda Items
• Invest in science and technology research
• Drive the energy system toward greater efficiency, lower-carbon fuels
  and carbon capture technologies
    •   Energy Efficiency - Production, distribution, and usage
    •   Lower Carbon Fuels - Natural gas, renewables, and nuclear
    •   Coal - Advanced generation coal plants, separation and capture, and carbon
        sequestration
• Stimulate innovation across key economic sectors
    •   Transportation: Change CAFE program and support low-GHG fuel alternatives
    •   Manufacturing: Improve industrial efficiency and low-GHG technologies
    •   Agriculture: Raise the priority and funding levels on carbon sequestration
• Begin now to adapt to the consequences of climate change
• Negotiate to strengthen the international climate effort
                         Conclusion
• The States have done a great deal to
  address global warming
• To the extent to which the States‟
  efforts run up against Constitutional
  limits to thinking globally, acting
  locally, the federal government must
  become engaged
• In the next few years we will be
  making, as a nation, the difficult
  choices required of us to address
  global warming
• Questions? Contact me at
  Monica.Schwebs@bingham.com


                                          Picture Source: BLM

				
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