Posted on July 12, 2016
Events this year have made me wonder how important a corporation’s reputation is to its officers, customers and shareholders. One example is Exxon’s climate travails with the New York Attorney General and other state AGs along with their much publicized climate laced 2016 annual shareholder meeting in May.
In the Harvard Business Review on April 3, 2015, Allen Freed and Dave Ulrich stated “in recent years, investors have learned that defining the market value of a firm cannot just be based on finances. GAAP and FASB standards require financial reporting of earnings, cash flow, and profitability – all measures that investors have traditionally examined. But recently, these financial outcomes have been found to predict only about 50% of a firm’s market value.”
Their conclusion is bolstered by another Harvard Business Review article on April 28, 2010 when Ron Ashkenas said “nobody knows how much a reputation is really worth, although many would say that it’s priceless. The one thing we do know, however, is that once a reputation is tarnished, it takes a lot of hard work, and a long period of time, to regain its luster.”
The Telegraph in January, 2016 said that “the total value of corporate reputation for all UK-listed companies topped £1.7 trillion at the close of last year. The recent emissions scandal wiped some €20bn (£15bn) off the value of Volkswagen in the weeks following the revelations.” How much more loss will come from the June 28, 2016 Volkswagen AG’s $14.7 billion settlement with the U.S. government and consumers. Deputy Attorney General Sally Yates said the settlement is only a “significant first step” toward holding Volkswagen accountable for its actions. “Let me be clear: It is by no means the last step.” Civil lawsuits and criminal investigations are still pending.
Fortune Magazine March 1, 2016 in a story headlined “Bitter Sweets” said that “for a decade and a half, the big chocolate makers have promised to end child labor in their industry—and have spent tens of millions of dollars in the effort. But as of the latest estimate, 2.1 million West African children still do the dangerous and physically taxing work of harvesting cocoa. What will it take to fix the problem?”
The main company engaged in the cocoa industry is Nestlé. Fortune went on to state “the multinational chocolate makers are heavily dependent on West Africa. More than 70% of the world’s cocoa is grown in the region, and the vast majority of that supply comes from two countries: Ivory Coast and Ghana, which together produce 60% of the global total. The two nations have a combined GDP of around $73 billion, according to the World Bank—or significantly less than Nestlé’s $100 billion in sales last year. The price of cocoa surged 13% in 2015 even as prices for most raw materials were dropping. Meanwhile the average farmer in each country still lives well below the international poverty line.”
In its defense Nestlé’s website states “Nestlé opposes all forms of child exploitation. We are committed to preventing and eliminating child labour in our supply chain, working with stakeholders to develop and implement meaningful solutions. We conduct comprehensive monitoring, implement remediation activities and provide targeted support to local communities.”
How one gauges and/or measures reputation is uncertain, but eating prunes and driving an electric vehicle would seem like a good first step.
Posted on June 23, 2016
In April, I reported on Supreme Court Judge Julio Mendez’ 65-page Opinion upholding the authority of the New Jersey Department of Environmental Protection (“NJDEP”) to construct dunes along the shoreline in Margate City, New Jersey – “absent an appeal.”
Well, after three years of legal challenges, the fat lady has finally sung and Margate’s Commissioners have unanimously thrown in the proverbial beach towel by deciding not to appeal Judge Mendez’ opinion. The US Army Corps of Engineers has announced its plan to award a contract in July and commence construction in the fall. Once completed, the “missing link” will complete Absecon Island’s 8.1 mile dune project and finally respond to Hurricane Sandy’s damage to New Jersey’s beachfront.
Posted on June 21, 2016
In January my Columbia University colleague Jeffrey Sachs told me that the Pontifical Academy of Social Sciences (with which he had worked for several years) was organizing a conference at the Vatican to be comprised of judges, prosecutors and legal scholars from around the world to discuss how the law could address the scourge of human trafficking, and that Pope Francis would attend. He asked my help in identifying some individuals who should be invited, and I was happy to help.
I was not certain that I would be able to go until I received a letter in April from the Academy’s Chancellor, Monsignor Marcelo Sanchez Sorondo, which began, “Following Pope Francis’ wish, it is my pleasure to invite you” to this meeting on June 3-4. Though the dates conflicted with another commitment, this was an invitation I could not decline, so I found a substitute for that and booked a room in the Crowne Plaza St. Peter’s, as recommended by the Vatican. I also found a web site with the protocol for addressing certain personages, including the Pope, the Queen of England, and various heads of state. (The Pope should be addressed as Your Holiness. Catholics should kiss his ring if it is offered; non-Catholics like me should simply shake his hand.)
On the first morning of the conference, I joined other dark-suited men and women in their 50s and older in boarding a bus at the hotel. After we passed through a side entrance to Vatican City, we traversed narrow tree-lined streets (passing numerous priests in long robes walking to work) and parked at Casina Pio IV, which was completed in 1562 as the summer residence of Pope Pius IV. The dome of St. Peter’s Basilica loomed behind. Inside was a conference hall with rows of benches and desks; each desk had a plaque with the name of the person assigned to sit there, a headset for simultaneous translations in several languages, and a microphone that was remotely switched on when it was time to speak. A bust of Pope John Paul II sat above the podium. Throughout the building were original paintings and sculptures, and many of the ceilings had frescoes from the 16th century. Our meals were served on an outdoor elliptical courtyard. The buffet featured, along with less surprising fare, many plates of matzo.
The program was opened by Monsignor Sorondo, and then chaired by Valeria Mazza, an Argentinian supermodel from the 1990s and 2000s who did an excellent job of keeping all the speakers to 15 minutes. The speakers were judges and prosecutors from around the world (including several U.S. federal district court and court of appeals judges) and a few academics like Jeff Sachs and myself. Many of the judges told stories of the horrific cases of human trafficking they had handled in their courtrooms.
When my time came to speak, I discussed how increases in trafficking and smuggling often follow large-scale natural disasters; how climate change (such as drought, desertification and sea level rise) will likely cause a massive increase in the number of people displaced from their homes in the decades to come; and that therefore considerably more trafficking and smuggling will ensue, and the nations of the world should begin considering how to cope with these conditions. I quoted several passages in Pope Francis’s landmark Encyclical on Climate Change and Human Inequality, Laudato Si’, including its declarations there “there has been a tragic rise in the number of migrants seeking to flee from the growing poverty caused by environmental degradation,” and that “the establishment of a legal framework which can set clear boundaries and ensure the protection of ecosystems has become indispensable, otherwise the new power structures based on the techno-economic paradigm may overwhelm not only our politics but also freedom and justice.” (My paper is posted here.)
About two hours before the Pope’s scheduled arrival at the meeting, several large men appeared in and outside the room wearing wires going into their ears. About five minutes before schedule, I heard someone say “he’s here!” A door opened in front of the room, and Pope Francis walked in, wearing his white cassock and skull cap. He took a seat at the head table. Everyone in the room stood and applauded, and many took out their phones and cameras and started taking pictures.
The Pope gave a talk in Spanish. He thanked the participants and then discussed how important it is to halt the worldwide scourges of human trafficking and smuggling. He urged judges “to carry out their vocation and their essential mission of establishing that justice without which there can be no order, or sustainable and integral development, or social peace.” He spoke of a need to end “the globalization of indifference.” He also stated, “The Enlightenment slogan that the Church must not be involved in politics has no application here, for the Church must be involved in the great political issues of our day. For, as Pope Paul VI pointed out, ‘political life is one of the highest forms of charity.’”
Entering into another current debate, the Pope stated, “[t]here are those who believe that the [Pontifical] Academy would do better to be involved with pure science and theoretical considerations, which would certainly be consonant with an enlightenment vision of the nature of an academy. An academy must have roots, concrete roots; otherwise, it risks encouraging a free-flowing reflection which dissipates and amounts to nothing. The divorce between ideas and reality is clearly a bygone cultural phenomenon, an inheritance of the Enlightenment, but its effects are still felt today.”
After his talk, all were invited to join the Pope in front of the building for a joint photo. A swarm of photographers was waiting outside. After the photos, the Pope shook the hands of many of the participants, including myself, and gave each of us a friendly gaze and a warm smile. He posed for several selfies. He was jostled around a fair amount by those seeking to say a few words with him, but he seemed to enjoy the scene; indeed his whole demeanor was one of a person who believes strongly that he is doing important work and takes joy in doing it. Finally he climbed into a small sedan, sat in the front seat, and waved as he was driven away.
As we returned to the meeting hall, there was a collective glow for having spent time with someone who all present, regardless of faith, regard as a great man, and also a renewed commitment to use the law to address some of society’s greatest ills to the extent that our positions and abilities allow.
Posted on June 17, 2016
If you needed any further proof that energylaw is very complicated, Wednesday’s decision in North Dakota v. Heydinger should convince you. The judgment is simple – the 8th Circuit Court of Appeals struck down a Minnesota statute which provides in part that:
"no person shall . . . (2) import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or (3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions."
Why, you ask?
- The panel opinion, by Judge Loken, stated that the Minnesota statute violates the dormant Commerce Clause, by regulating purely “extraterritorial” economic activity.
- Judge Murphy, in the first concurrence, disagreed with Judge Loken’s conclusion that the statute violates the dormant Commerce Clause, but joined the judgment, because she concluded that the statute is preempted by the Federal Power Act.
- Judge Colloton, in the second concurrence, agreed with Judge Murphy that the statute does not violate the dormant clause, but also concurred in the judgment. Judge Colloton concluded that, to the extent that the “statute bans wholesale sales of electric energy in interstate commerce,” it is preempted by the Federal Power Act. However, Judge Colloton wrote separately, because he at least partially disagrees with Judge Murphy (as well as with Judge Loken) and does not believe that the Minnesota statute constitutes a complete ban on wholesale sales of energy that increase CO2 emissions. However, Judge Colloton concluded that, to the extent that the statute is not preempted by the Federal Power Act, it is preempted by the Clean Air Act.
Is that sufficiently clear?
I do feel compelled to add two final notes. First, I don’t understand why Judge Loken wrote the panel opinion, when his rationale did not command a majority. Indeed, as Judge Colloton pointed out, the Court should not even have reached the constitutional issue, since a panel majority existed that was prepared to strike down the Minnesota statute on statutory grounds. (Preemption is considered a statutory, not a constitutional, rationale.)
Second, don’t analogize the electric energy transmission to the flow of water in a pipe, at least before Judge Murphy. Here’s your electricity and magnetism primer for the day, courtesy of the Judge.
"In the electricity transmission system, individual electrons do not actually “flow” in the same sense as water in a pipe. Rather, the electrons oscillate in place, and it is electric energy which is transmitted through the propagation of an electromagnetic wave.
Certainly brought me back to course 8.02 at MIT. Not one of my favorites.
Posted on June 16, 2016
On Earth Day 2016, the Environmental Law Institute presented to the public a collection of 24 videotaped interviews conducted over the past five years to record the career experiences of many pioneers of environmental law. The men and women profiled were active in the environmental movement in the sixties and early seventies. They served as Democratic and Republican legislators, organizers and advocates for public interest organizations, administrators of national and state environmental agencies, academics producing new ideas and educating new lawyers, and legal counsel to business and government agencies contending with a host of new environmental laws. ELI’s interviewers wanted to learn why these pioneers chose to enter the field of environmental law, what they see as its major successes and shortcomings, and how they view the health of environmental activism and public commitment today.
Among other things, the oral histories provide interesting insight into the roots of activism for early environmental lawyers and what different life experiences and motivations may influence today’s new environmental lawyers. Practically every pioneer spoke of enjoyment of nature and the out of doors experienced through growing up on a farm or in rural areas or visiting campsites and parks on family vacations and scouting trips. They witnessed both the beauty and the degradation of natural and scenic resources and were inspired to seek ways to protect them. The other factor mentioned most often was the example and energy of other social movements in the sixties and seventies, first and foremost the civil rights struggle. Personal experience and the climate of social activism combined to motivate many environmental pioneers to become leaders in the new environmental movement.
Most of the pioneers express optimism that new generations of young women and men will take up activism and environmental law to attack today’s agenda of complex and serious problems. But many worry that the communications technology building young people’s impressive expertise may also be keeping them glued to their screens and disconnected from the natural world. Robert Stanton, former Director of the National Park Service and the first African American to hold the position, comments in his interview that we should not be unduly critical of young people who spend so much time inside. He observes that when he was growing up, there were only a few black and white TV channels to compete with going outdoors! Still, a lifelong activist like Gloria Steinem believes that excessive dependence on electronic connections can weaken the interpersonal qualities of empathy that depend on face-to-face communication and can dilute the emotional drivers for action in concert with others. Activism means more than making a statement and pressing “send.” The impact of technology is just one of many issues discussed in an engaging set of interviews available to all. Visit ELI’s website at http://www.eli.org/celebrating-pioneers-in-environmental-law for a unique source of perspective on the evolution of environmental law and the prospects for further progress on pressing problems in today’s very different social and political setting.
Posted on June 1, 2016
Since 2010, EPA and other federal agencies have used the Federal Social Cost of Carbon (“FSCC”) to estimate the climate benefits of federal rulemakings. The FSCC is an estimate of the monetized damages associated with an incremental increase in carbon dioxide (“CO2”), conventionally one metric ton, in a given year. The FSCC was developed by a group of federal agency representatives known as the Interagency Working Group on Social Cost of Carbon (“IWG”). In developing the FSCC, the IWG relied on three Integrated Assessments Models – the DICE model (“Dynamic Integrated Climate and Economy”) developed in 1990 by William Nordhaus, the PAGE model (“Policy Analysis of Greenhouse Effect”) developed in 1992 by Chris Hope, and the FUND model (“Climate Framework for Uncertainty, Negotiation and Distribution) developed by Richard Tol in the early 1990s. The primary virtue of the DICE, PAGE, and FUND integrated assessment models is that all contain simplified representations of economic models, climate models, and impact models that allow integration of climate processes, economic growth, and interaction between climate and economy.
The IWG has described the purpose of the FSCC as allowing federal agencies to incorporate the social benefits of reducing CO2 emission into cost-benefit analyses of regulatory actions that have small or marginal impacts on cumulative global emissions. The purpose of the FSCC process is to ensure that federal agencies are using the best available information and to promote consistency in the way agencies quantify the benefits of reducing CO2 emissions, or costs from increasing emissions, in federal regulatory impact analyses. The issue that is now coming up before some regulatory agencies is whether the FSCC can be employed in site-specific policy decision-making, such as state utility integrated resource planning.
In Responses to Comments issued in 2015, the IWG stated that it has not addressed the use of FSCC outside the federal regulatory context, such as in NEPA analysis, state-leveling resource planning, or “pricing” carbon in the marketplace. The IWG itself has acknowledged the large degree of uncertainty and imprecision in the estimates derived from the use of the integrated assessment models, especially as the time horizon for damage estimates reaches out to the year 2300. The IWG has observed that any such assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past and future emissions on the climate system, (3) the impact of changes in climate on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages. As a result, the IWG has stressed that decision makers should be very cautious in their reliance on the integrated assessment models. The proponents of the FSCC do not dispute the uncertainty and imprecision of the integrated assessment model process but they contend that there is no viable alternative.
Regardless of whether the FSCC is appropriate for federal regulatory impact analysis, it is simply too uncertain and speculative to be used in site-specific resource planning, including in NEPA analysis or utility resource planning. The values generated by the FSCC are highly uncertain and have serious weaknesses. These weaknesses are likely to be more significant in site-specific resource planning where the use of damage estimates demands greater precision than in regulatory impact analysis. This issue has been raised before the Minnesota Public Utilities Commission (“MPUC”) in a proceeding to establish environmental cost values for carbon dioxide emissions from electric generating units. As Nicholas F. Martin, environmental policy manager for the public utility Xcel Energy, testified, “whether the ‘correct’ value is $12 or $120 matters a great deal in integrated resource planning[, because] these two values could point to dramatically different resource mixes ….”
The Administrative Law Judge hearing the Minnesota case recently recommended the MPUC adopt a modified version of the FSCC. The two modifications involved (1) re-calculating the FSCC to reflect a shortened time horizon extending to the year 2200 (rather than 2300, as set by the IWG), and (2) excluding the value derived from the 95th percentile at a 3 percent discount rate (a value intended by the IWG to account for the high-end of the potential damage range). Both of these modifications were intended to reduce the level of uncertainty and speculation associated with the FSCC estimates. The MPUC is expected hold a hearing to address the ALJ’s report later this year.
Posted on May 23, 2016
On Tuesday, the Supreme Judicial Court of Massachusetts (SJC) ruled that MassDEP had violated the Global Warming Solutions Act by failing
"To promulgate regulations that address multiple sources or categories of sources of greenhouse gas emissions, impose a limit on emissions that may be released, limit the aggregate emissions released from each group of regulated sources or categories of sources, set emissions limits for each year, and set limits that decline on an annual basis."
The SJC gets the final word, so I won’t spend much time explaining why the SJC got it wrong, though I will note that to suggest that the legislature’s use of the phrase “desired level” of GHG emissions unambiguously requires MassDEP to establish hard targets was at best overenthusiastic.
The bigger question at this point is what the decision means. First, it’s clear that MassDEP must establish hard declining emissions limits for more than one, but less than all, categories of GHG emitting sources.
Second, MassDEP must promulgate regulations that limit total emissions – not emission rates.
Third, the regulations must truly control Massachusetts sources. The SJC specifically found that RGGI doesn’t satisfy the GWSA requirement, in part because Massachusetts sources can purchase allowances from out of state facilities.
But where does this leave MassDEP? In a deep hole, for sure. Unless it wants to ditch RGGI, it can’t regulate power generation, because the type of program that the SJC said is required would simply be incompatible with RGGI.
How about mobile sources? They are the largest growing source of GHG emissions. Unfortunately, we come back to the SJC’s injunction that MassDEP must regulate total emissions, not emission rates. You tell me how MassDEP is going to issue regulations setting a cap on mobile source emissions.
The only obvious candidates I see are buildings and industrial sources other than power generation.
I don’t envy MassDEP – and the nature of the task only emphasizes the extent of the SJC’s overreach here – but I said I wouldn’t get into that.
Posted on May 20, 2016
August 25, 2016 is the 100th anniversary of the National Park Service. The many planned celebrations and observances provide an opportunity for everyone to become reacquainted with these great outdoor spaces and reflect on the world around us. As your summer plans take shape, be sure to visit FindYourPark.com and try to visit at least one national park. I invite you to share photos of your travels in the comments section of this post, and perhaps ACOEL can find a place for the collection of images of its members enjoying these national treasures.
As I reflect on the Park Service’s anniversary, I observe that it presents a chance for me – and for all environmental lawyers – to take stock of where we have been as a profession. Why – and how – we do what we do? What challenges will the next 100 years hold?
I issue this charge, in part, to carry on the conservation legacy of Henry L. Diamond. Henry was a founder of my firm, Beveridge & Diamond, and a great environmental lawyer and mentor to many (including myself). Sadly, we lost Henry earlier this year.
Henry and many others like him paved the way for our generation to be stewards of the planet and the environmental laws that govern our interactions with it. We have made progress, but new challenges have emerged. Easy answers, if they ever existed, are fewer and farther between. So what, then, does the future hold for the next generation of environmental lawyers?
Future generations of lawyers would do well to focus on the funding mechanisms that are critical but often overlooked components to achieving our most important environmental and sustainability goals. As an example, we can look to the past. Early in his career, Henry Diamond assisted the Chairman of the Outdoor Recreation Resources Review Commission, Laurance Rockefeller, in editing the Commission’s seminal report, Outdoor Recreation for America, that was delivered to President John F. Kennedy in 1962. Among the Commission’s more significant recommendations was the idea to use revenues from oil and gas leasing to pay for the acquisition and conservation of public lands. Congress took action on this recommendation, creating the Land & Water Conservation Fund in 1965 as the primary funding vehicle for acquiring land for parks and national wildlife refuges. While the fund has been by all accounts a success in achieving its goals, much work remains to be done and the fund is regularly the target of budgetary battles and attempts to reallocate its resources to other priorities. Today, the four federal land management agencies estimate the accumulated backlog of deferred federal acquisition needs is around $30 billion.
I expect climate change will dominate the agenda for the young lawyers of our current era. They will need to tackle challenges not only relating to controlling emissions of greenhouse gases, but also adaptation resulting from climate change. Sea level rise, altered agricultural growing seasons, drought and water management, and other issues will increase in prominence for this next generation.
We can expect our infrastructure needs to continue to evolve – not only replacing aging roads, bridges, tunnels, railroads, ports, and airports, but also the move to urban centers and the redevelopment of former industrial properties. Autonomous vehicles and drones also pose novel environmental and land use issues. These trends will require us to apply “old” environmental tools in new ways, and certainly to innovate. As my colleague Fred Wagner recently observed on his EnviroStructure blog, laws often lag developments, with benefits and detractions. Hopefully the environmental lawyers of the future will not see – or be seen – as a discrete area of practice so much as an integrated resource for planners and other professions. Only in this way can the environmental bar forge new solutions to emerging challenges.
The global production and movement of products creates issues throughout the supply chain, some of which are just coming to the fore. From raw material sourcing through product end-of-life considerations, environmental, natural resource, human rights, and cultural issues necessitate an environmental bar that can nimbly balance progress with protection. As sustainability continues its evolution from an abstract ideal to something that is ever more firmly imbedded in every aspect of business, products, services, construction, policymaking and more, environmental lawyers need to stay with their counterparts in other sectors that are setting new standards and definitions. This area in particular is one in which non-governmental organizations and industry leaders often “set the market,” with major consequences for individuals, businesses, and the planet.
Finally, as technology moves ever faster, so do the tools with which to observe our environment, to share information about potential environmental risks, and to mobilize in response. With limited resources, government enforcers are already taking a page from the playbooks of environmental activists, who themselves are bringing new pressures for disclosures and changes to companies worldwide. With every trend noted above, companies must not underestimate the power of individual consumers in the age of instantaneous global communication, when even one or two individuals can alter the plans and policies of government and industry.
Before Henry Diamond passed away, he penned an eloquent call to action that appeared in the March/April edition of the Environmental Law Institute’s Environmental Forum (“Lessons Learned for Today”). I commend that article to you. It shares the story of the 1965 White House Conference on Natural Beauty and how a diverse and committed group of businesspeople, policymakers, and conservationists (some of whom were all of those things) at that event influenced the evolution of environmental law and regulation for the decades to come. Laws such as the National Environmental Policy Act, the Clean Air Act, the Clean Water Act, and others have their roots in that Conference. In recognition of his lifetime of leadership, Henry received the ELI Environmental Achievement Award in October 2015. The tribute video shown during the award ceremony underscores Henry’s vision and commitment to advancing environmental law. I hope it may inspire ACOEL members and others to follow Henry’s lead.
These are just a few things I think the future holds for environmental lawyers. What trends do you predict? How should the environmental bar and ACOEL respond?
Posted on April 20, 2016
Last month when the Ocean County, NJ challenge to the New Jersey Department of Environmental Protection’s (“NJDEP”) authority to implement dunes for shore protection was dismissed, I wrote that the decision could very well be precedential for similar challenges in other New Jersey counties.
And so it was. In a 65-page opinion, Superior Court Judge Julio Mendez also upheld the DEP’s authority to construct dunes in the City of Margate (Atlantic County) as being neither “arbitrary or capricious” nor an “abuse of power.” The opinion recognized the US Army Corps of Engineers’ (“Corps”) 6-year study and the need to be better prepared for coastal storms such as Hurricane Sandy in 2012. With this ruling – absent an appeal – the DEP will proceed to obtain the necessary easements through the eminent domain process (a prior attempt to do so via an administrative order having failed) with the appropriate compensation paid to the affected beachfront owners.
Judge Mendez acknowledged that the dunes on the oceanfront would not resolve flooding concerns to the bayfront properties nor obviate some protection afforded by seawalls and bulkheads. Interestingly, he found that the dunes in the adjacent City of Ventnor had not only protected Ventnor’s beaches but also expanded the beaches in Margate, and that the dunes in Margate would be protective of its coastal properties and was therefore not arbitrary or capricious.
Posted on April 19, 2016
Last month, while New Jersey Superior Court Judge Julio Mendez was considering Margate’s challenge to the authority of the New Jersey Department of Environmental Protection (“DEP”) to condemn City-owned lots on which to build dunes, New Jersey Superior Court Judge Marlene Lynch Ford dismissed a similar challenge by 28 oceanfront property owners in Ocean County, NJ.
In her decision, she ruled that (1) DEP’s condemnation activities were authorized to “protect the state’s fragile coastal system and [afford] public access” and (2) the taking of the requisite coastal acreage to do so was as a lawful use of that authority, provided that the eminent domain process of compensating affected property owner was followed, which she found to be the case in this instance.
Although it would appear likely that this decision should have significant precedential effect on the other pending challenges, it should be pointed out that the theory in other cases includes not only a challenge to DEP’s authority, but the reasonableness of constructing dunes on the beachfront as opposed to other “shore protection projects.” In fact, although she dismissed the challenge to DEP’s authority to condemn, Judge Ford granted a hearing to other homeowners who claim that DEP acted arbitrarily because their sea walls eliminated the need for dunes.
And so, although the authority of DEP to use eminent domain for shore protection would appear to be judicially blessed, the manner in which it is does so remains subject to challenge.
So, as always, stay tuned.
Posted on April 18, 2016
As reported by Seth Jaffe in this space, a federal magistrate judge in Oregon has kept alive the dreams of a group of young plaintiffs—aided by environmental advocacy groups—to compel government action against climate change. Like a similar case brought by the same plaintiffs a few years ago in state court, discussed below, the federal case seeks a declaration that government inaction violates the public trust. But in the federal case, plaintiffs added claims that their constitutional rights to life, liberty and property also are being violated.
The judge denied the government’s motion to dismiss on the basis that the matter is a political question better left to Congress. Magistrate Judge Thomas M. Coffin reasoned that the pleadings were adequate on their face and that the substantive issues raised by the defendants should await motions for summary judgment or trial. Still, the judge gave hope to the plaintiffs, which, I think will be short lived. Climate change is simply too big, diffuse and complex an issue for the courts to try to fashion a remedy around.
This same group of plaintiffs has had mixed success in pursuing its objectives at the state level. In June 2014 I posted about the Oregon Court of Appeals reversing and remanding a trial court’s dismissal of a similar claim against the state. The appellate court concluded that the plaintiffs were entitled to a determination whether the atmosphere is a public trust resource and whether Oregon state government had breached its fiduciary responsibility by not adequately protecting it. On remand, Lane County Circuit Court Judge Karsten H. Rasmussen granted the state summary judgment and dismissed the suit with prejudice. The case is now again pending before the Court of Appeals.
In his 19-page opinion, Judge Rasmussen concluded that the public trust does not extend to the atmosphere. The contours of the public trust are a matter of state common law, and Oregon law ties the public trust to title and restraints on alienation. The court concluded that there could be no title in the atmosphere and therefore public trust fiduciary obligations do not exist. The court also noted that traditional public trust resources, such as submerged lands, are exhaustible, which under Oregon law confers a fiduciary responsibility on the state. While the atmosphere may be altered or even damaged, the court found that it is not exhaustible.
The court added the following thought, which I think will guide the U.S. District Court when it hears the current case:
The Plaintiffs effectively ask the Court to do away with the Legislature entirely on the issue of GHG emissions on the theory that the Legislature is not doing enough. If "not doing enough" were the standard for judicial action, individual judges would regularly be asked to substitute their individual judgment for the collective judgment of the Legislature, which strikes this Court as a singularly bad and undemocratic idea.
Watch this space for further developments in Oregon state and federal courts.
Posted on April 13, 2016
Late last week, Magistrate Judge Thomas Coffin concluded that the most recent public trust case, which seeks an injunction requiring the United States to take actions to reduce atmospheric CO2 concentrations to 350 parts per million by 2100, should not be dismissed.
The complaint here is similar to, but broader than, others of its ilk. As we noted previously, at least one federal court has already held that there is no public trust in the atmosphere. Perhaps in response to that case, the plaintiffs here appear to have focused their arguments on the government’s public trust responsibilities with respect to various waters of the United States, though the opinion does not make clear precisely what the complaint alleges to be the subject of the public trust obligation.
The plaintiffs not only allege that the United States has violated its public trust obligations, but that that violation in turn constitutes a violation of the plaintiffs’ substantive due process rights. Magistrate Judge Coffin takes pains to make clear that this is only about a motion to dismiss, but I still think he got it wrong.
Indeed, I think that Magistrate Judge Coffin ignored that well known latin maxim: “Oportet te quasi ludens loqui.” (Which is how the on-line translator I used translated “You must be joking.” I hereby disclaim any warranty that this is even close to correct.)
Call me old-fashioned, but I believe in judicial restraint. And that applies to everyone. Traditionally, conservatives have accused liberals of judicial activism. To my totally objective mind, in recent years at least, it is the conservative judges who could more fairly be called activist. For one case, at least, the shoe seems to be back on its original foot. I just cannot see this decision standing. The District Judge should reject Magistrate Judge Coffin’s Findings and Recommendation. If he or she doesn’t, this case is sufficiently novel and important to warrant interlocutory appeal, and the 9th Circuit should reverse. And if that doesn’t happen, it will be up to the eight (oops, I meant nine) members of the Supreme Court to get it right. One of them surely will.
Posted on March 7, 2016
A recent BBC report about the enormous Aliso Canyon Gas Storage Facility gas well leak in California caught my eye. It compared the huge volume of methane emitted from this leak to other greenhouse gas sources, including tons of methane emitted by a large number of cows. Cows? A 2006 United Nations’ Food and Agricultural Organization report claims that the livestock sector, most of which is comprised of cattle, “generates more greenhouse gas emissions as measured in CO2 equivalent – 18 percent – than transport.” According to a Danish study, the average cow produces enough methane per year to do the same greenhouse damage as four tons of carbon dioxide. EPA’s Inventory of U.S. Greenhouse Gas Emissions and Sinks contains a statement that, on a global basis the Agriculture sector is the primary source of methane emissions.
This got me thinking about industries and lifestyles as yet largely untouched by the need to address global climate change. Agriculture, including ranching, may be a mainstay of the US economy but we can no longer ignore its impacts on the planet. It is not environmental elitism to require farting cows – a fertile source of humor - be given serious attention in the climate change debate.
Throughout the history of environmental regulatory legislation and enforcement in the United States, conventional agriculture has, by and large, been given a pass. For example, section 404 F of the Clean Water Act exempts from the requirement to obtain a permit the discharge of dredged or fill material into waters of the United States discharges from “normal farming … ranching activities”, from “construction or maintenance of farm or stock pond or irrigation ditches”, and, with some limitations, from construction of “farm roads”. In large commercial agricultural operations “normal” farming activities are of a large industrial scale. Non-point source runoff of pesticide and fertilizer residues from huge farming operations is largely ignored and where farming activities are regulated, such as storm water discharges from concentrated animal feeding operations, regulation is largely by general permits instead of individual permits. Spreading of manure on open fields is, by and large, unregulated. It took EPA nearly forty years to impose regulatory requirements to protect farm workers from exposure to herbicides and other pesticides used in large agricultural operations. Do we see a pattern here? Quite clearly the large commercial agricultural sector has enjoyed a not inconsiderable status of environmental regulatory laissez faire for a very long time.
This brings me back to the farting cows. Bovine source methane emissions are not presently regulated under the Clean Air Act. While cows are mobile, the Supreme Court clearly didn’t have livestock in mind when it addressed greenhouse gas emissions from mobile sources in Massachusetts v. EPA, and at present EPA is having great difficulty justifying regulation of even conventional stationary sources of greenhouse gasses. Nevertheless, if the governments that signed the recent Paris Accords remain serious about reducing the precursors of global warming it would seem that they, including the USA, must deal with the bovine methane problem. Quite clearly individual point source emission controls are not the answer to controlling the emission of methane from cows. Collecting the emissions under a roof for rooftop capture and treatment as has been advocated by environmental advocates is not only impractical given the nature of ranching in the US, but attempts to do so would pit environmental regulators against animal rights advocates who argue strenuously and effectively that sequestering animals in tight containments is inhumane treatment.
The only means of reducing this source of greenhouse gas is to reduce the global dependence on meat and cow milk as a primary source of protein in the human diet, that is, significantly reduce the global population of cattle. This will require a far more significant human cultural re-adaptation than will be required to reduce greenhouse gas emissions from transportation and industrial greenhouse gas sources. That being said, there is yet another reason why such a cultural change is necessary. There is simply not enough land on the planet to sustain a meat and cow milk consuming culture as we have now with even the current global population of humans. I don’t have enough space in this blog post to give you the numbers, but suffice it to say that beef and milk are among the most inefficient sources of protein in terms of the number of acres of land required to sustain a single cow. Sorry, all you lovers of good cheese and a great steak, it looks like you are part of the climate change equation.
Posted on February 17, 2016
For us gray hairs, the phrase used to be “Dateline”, now it’s “Tweetline” . . . Flash!. . . President Obama @POTUS “. . . Addressing climate change takes all of us, especially the private sector going all-in on clean energy worldwide."
Apparently “all of us” didn’t include five Supreme Court Justices, led by its Chief Justice, John Roberts. Indeed, it was SCOTUS going “all out” for climate change. As in, going “all out” to frustrate one of the EPA’s and President Obama’s signature efforts to respond to and act upon climate change challenges to the global environment. What EPA and the President got (by a split decision) instead was a stay that some have characterized as the quashing of the biggest environmental regulatory change in United States history.
That body blow to regulatory appropriation of the climate change debate was instigated by the challenge of virtually every major coal power company to the EPA’s issuance of binding emission reduction requirements for existing domestic power plants. The coal, fired power industry argued that EPA’s action was “draconian” and would cause the “shutting down or curtailing generation from existing plants and shifting that generation to new sources”. That, of course, was the precise intent of POTUS and other signatories of the Paris climate change accord last year.
SCOTUS’s stay was unprecedented and terse. Not a word of explanation about why the stay was issued. The proponents of the stay were modestly baffled. In the words of Basin Power’s legislative rep, Dale Niezwaag, the decision came as a surprise . . . "The supreme court has never issued a stay on a rule that hasn't been ruled on by a lower court. So this is precedent, setting from our point. When we put it in, we figured it was going to be a long shot, so we were very surprised that the Supreme Court ruled in our favor”.
There are takeaways galore. However, two are most intriguing to me. Was this unprecedented stay an unwarranted and thinly disguised, reach into the realm of executive branch constitutional authority? Second, did the Supreme Court simply muscle its way into a social and scientific debate that begs any legal or factual question of “irreparable harm” to either the power industry or the citizenry of the republic. In short, was the stay an expression of SCOTUS climate change denial?
The stay makes EPA’s rules unenforceable and will undoubtedly limit their intended goal of achieving emissions cuts to (ostensibly) slow global warming. More importantly, the ruling, in effect, invalidated POTUS’s pledge on climate agreement made in Paris last spring. How should one construe the interjection of the Supreme Court into a case that would have, under normal circumstances, been taken up by the Court of Appeals for the District of Columbia Circuit as soon as early 2017? Was a signal being sent to that court to heed the antipathy some believe certain SCOTUS justices have towards the global warming debate altogether?
In keeping with my “newsflash” metaphor, since I started writing this post, the country mourns the unexpected passing of Justice Antonin Scalia. The lack of a tie breaker justice for the foreseeable future could throw the question of the right of the EPA to forge ahead on the POTUS’s climate change agenda into months or years of limbo. Will the D.C. Circuit’s decision answer the question next spring? Will certain senators relent and vote in a replacement for Justice Scalia this year? Will the eight remaining justices do something other than call things a tie until they have a full complement on the bench?
Stay tuned to this blogspot for more breaking news.
Posted on February 12, 2016
The Supreme Court's unexplained stay of the clean power plan was "one of the most environmentally harmful judicial actions of all time," writes Michael Gerrard of Columbia Law School in a recent, excellent blog. Rather than venting outrage, Gerrard quickly moves on to explain that the Clean Power Plan isn’t the only way to cut carbon pollution.
Ramping up efforts like fuel efficiency standards for cars and trucks, and building efficiency standards, he notes, will also help reduce carbon pollution. Gerrard mentions a couple of points about agriculture, but often, this sector is overlooked when it comes to climate solutions. It’s worth taking a closer look at some of the opportunities to reduce climate pollution from our food system.
Food waste is the second largest component of most landfills. As it rots, it releases methane, a potent greenhouse gas. A recent report by the UN Conference on Trade and Development estimates that 2 percent to 4 percent of all manmade climate pollution arises simply from food rotting in landfills.
Keeping food waste out of landfills can help reduce methane pollution. Massachusetts, California, Connecticut, Rhode Island, Vermont, and some cities have enacted laws to manage organic waste disposal in landfills. The idea is to create incentives to reduce food waste and divert it to other purposes, such as animal feed or composting. Instead of being thrown away and becoming a source of pollution, this “waste” can be put to good use. Landfill gas collection systems can be further incentivized. And the nascent effort to reduce food waste from businesses and households can be significantly ramped up.
Another major source of greenhouse gases is the over application of fertilizer. Excess nitrogen fertilizer causes two big problems. The first is water pollution. Nitrogen that isn’t taken up by crops runs off farms and enters larger waterways, where it stimulates the growth of algae and creates “dead zones” deprived of oxygen. The second, and less frequently discussed issue, is the volatilization of nitrogen into nitrous oxide, a greenhouse gas about 300 times more potent than CO2. The IPCC estimates that 12 percent of all non-CO2 greenhouse gas emissions come from synthetic fertilizer application.
A number of techniques can reduce these emissions while also providing a cost benefit to farmers. Farm policies could encourage practices like cover cropping, which reduces the need for fertilizer by making soils more rich and fertile. Crop rotations can do the same, yet current crop insurance programs actually discourage the use of these practices. Precision application technologies for fertilizers are getting ever better, but their uptake on farms is slow.
Manure from animals, and the "enteric emissions" from cattle (more commonly thought of as belching) are two more significant sources of climate pollution. Enteric fermentation alone may account for as much as 40 percent of all non-CO2 greenhouse gas emissions, according to the IPCC. Changes in diet might help with these emissions, but this is an area that needs more research.
Some of the emissions from manure can be captured if manure lagoons were covered and better managed. As it stands, these pits are only slightly regulated and are major sources of water pollution sources as well as odor nuisances. An even better practice is to raise cows on rotating pastures, where their waste can enhance soils and help store carbon. And, of course, if Americans did shift to a diet lower in red meat, as per the recommendation of the Dietary Guidelines Advisory Committee, we could further reduce climate pollution from cattle.
Agriculture is one of our nation's most important economic sectors, and is especially vulnerable to the extreme weather impacts of climate change. Its product -- food -- is critical not only for our economy, but is an integral and uniquely personal part of our everyday lives. When we think about how to address climate change, it makes sense to think about food and agriculture. The food we choose to produce, and how we produce it, use it, and dispose of it, all have an impact on climate pollution—and therefore have the potential to become climate solutions.
Posted on February 11, 2016
I am a terrible predictor of what cases the Supreme Court will hear and what the Court will decide on those matters it chooses to hear. For example, I wrongly predicted that the Supreme Court would never consider reviewing the D.C. Circuit’s decisions in cases involving other recent EPA regulations, but the Supreme Court chose to hear those cases, which led to its decisions in Utility Air Regulatory Group v. EPA and Michigan v. EPA. And if asked to guess whether the Court would issue a stay of EPA’s Clean Power Plan under section 111(d) of the Clean Air Act, I might well have said that the odds were greatly against that happening – despite the merits of the arguments being raised by those seeking the stay.
Perhaps, though, my poor predictive abilities are the result of my looking at each case in isolation instead of looking at them in combination and considering whether the Supreme Court’s February 9, 2016 stay decision is an outgrowth of the combined knowledge gained by the Court in its recent reviews of those other Clean Air Act cases. Specifically, as pointed out by State Petitioners in their briefs in support of a stay of the Clean Power Plan (see here and here,) EPA has touted its Plan as being one that will completely transform the way energy is created and delivered in this country even though – argued State Petitioners – the plain statutory language (of Clean Air Act section 111(d)) does not authorize such Agency action, and the approach of the Clean Power Plan is at odds with EPA’s 45-year history of implementing section 111(d). Maybe such claims struck a chord with the Court, which – in UARG – told EPA that the Agency cannot make “decisions of vast ‘economic and political significance’” under a long-extant statute, like the Clean Air Act, without “clear congressional authorization.”
And then there was Michigan, where the Court determined that EPA had proceeded unlawfully in adopting another extensive and expensive Clean Air Act regulatory program. State Petitioners in the Clean Power Plan litigation made sure that the Court was aware that by the time the Court issued its decision in Michigan – a case where the underlying rule was not stayed during the pendency of litigation – the affected parties had spent billions of dollars to meet the terms of the underlying, un-stayed rule. In other words, justice delayed in Michigan was justice denied.
None of this is to say what the Court will or will not do if and when it reviews arguments on the lawfulness of the Clean Power Plan. I make no predictions on that. But I believe the Court acted appropriately in calling for the completion of litigation before requiring affected parties to make the massive, unprecedented, costly, and transformative changes to the energy industry that the Clean Power Plan demands.
Posted on February 10, 2016
The Supreme Court’s unprecedented, unexpected and unexplained action yesterday staying implementation of the Clean Power Plan is one of the most environmentally harmful judicial actions of all time. However, the damage it does to the United States’ ability to meet its Paris pledge is less than it might seem. But that is not because the Clean Power Plan wasn’t important; it is because the Plan didn’t do nearly enough.
The Intended Nationally Determined Contribution (INDC) that the U.S. submitted in advance of COP21 reiterated the prior goal of achieving a 17% reduction below 2005 levels in 2020, and conveyed a new pledge of a 26% to 28% reduction by 2025. The INDC cited the Clean Power Plan as one of the actions being taken to meet those pledges, but did not present any numbers on what actions would lead to what reductions.
More detail was presented in the Second Biennial Report of the United States under the Framework Convention on Climate Change, submitted by the Department of State in January 2016. As the report makes clear, the Clean Power Plan’s actual emissions reductions do not begin until 2022, and thus have no bearing on achievement of the 2020 goal. From 2020 to 2025, the Report expects carbon dioxide emissions to fall from 5,409 to 5,305 MtCO2e (Table 4) with implementation of the Clean Power Plan, energy efficiency standards, fuel economy standards, and numerous other measures that are already on the books, and down to 5,094 in 2030. (The report does not separately specify how much of this is due to the Clean Power Plan alone; the numbers result from a complex modeling exercise that included numerous interrelated actions.)
That is not nearly enough of a reduction to meet the 26% target (much less the 28% aspiration) for 2025. Instead, a host of additional measures are also needed. The Biennial Report lists these as possibilities to reduce carbon dioxide emissions:
- Full implementation of Phase II heavy-duty vehicle fuel economy standards.
- Finalization of proposed, new, or updated appliance and equipment efficiency standards.
- Increased efficiency of new and existing residential and commercial buildings.
- Reduction in industrial energy demand in several subsectors.
- Additional state actions in the electricity sector.
- Enhanced federal programs that lead to greater efficiencies in industry and transportation, including greater biofuel deployment and commercial aviation efficiency.
To address other greenhouse gases, the Biennial Report lists these possible added measures:
- An amendment (already in the works) to the Montreal Protocol on Substances that Deplete the Ozone Layer to phase down production and consumption of hydrofluorocarbons.
- Measures to reduce methane emissions from landfills, coalmining, agriculture, and oil and gas systems.
- More efficient nutrient application techniques that reduce nitrous oxide emissions
Even all of the above is not enough to meet the 2025 goals. The Biennial Report puts heavy reliance on the land-use sink – on the ability of forests and other vegetated areas to absorb a considerable amount of the greenhouse gases that are emitted. And even with an “optimistic sink” scenario and a number of other favorable assumptions, the key summary graph in the Biennial Report (Figure 6) shows a reduction of about 27% in 2025.
In sum, while the Clean Power Plan is the biggest game in town in terms of achieving the Paris goals, it is by no means the only game in town. While we express our justifiable fury over the Supreme Court’s action, we need to bear in mind that there are many other things that the U.S. must do in the next several years to control greenhouse gas emissions.
Posted on February 10, 2016
Yesterday, the Supreme Court stayed EPA’s Clean Power Plan rule. No matter how much EPA and DOJ proclaim that this says nothing about the ultimate results on the merits, the CPP is on very shaky ground at this point.
Everyone, supporters and opponents alike (and yours truly), thought that there was no possibility that the Court would grant a stay. And it is precisely because a Supreme Court stay of a rule pending judicial review is such an “extraordinary” – to use DOJ’s own word – form of relief that one has to conclude that five justices have decided that the rule must go.
This isn’t just a preliminary injunction; it’s a preliminary injunction on steroids. First, everyone seems to acknowledge that it’s unprecedented for the Supreme Court to stay a rule pending judicial review. Second, the standards in DOJ’s own brief make pretty clear that a stay will only issue if the Court is pretty convinced on the merits. Finally, it’s worth noting that the Court implied that it does not even trust the Court of Appeals, because the stay will remain in force, even if the D.C. Circuit affirms the rule. The stay will only terminate either: (1) if the Court of Appeals upholds the CPP and the Supreme Court denies certiorari or (2) if the order is upheld and the Supreme Court also upholds it.
Back to the drawing board for EPA. Perhaps § 115 of the Clean Air provides a way out!
Posted on February 3, 2016
In my last blog, I summarized the substantive arguments made by the City of Margate’s attorneys in their countersuit against the New Jersey Department of Environmental Protection’s eminent domain proceedings, which were filed in state court—the federal court overturned DEP’s attempts to proceed via administrative orders. The court will have to consider: (a) is dune construction a reasonable use of the state’s “taking” powers; or (b) were alternative storm protections – e.g., sea walls and wooden bulkheads – more reasonable?
While awaiting a ruling by the court after the upcoming February 4th hearing, there have been two new developments:
1. Seventeen residents of Point Pleasant Beach in Ocean County have filed a suit against DEP, claiming the agency’s taking of their beaches was a “land grab” of the residents’ private property destined to require future maintenance expenses and possible development of boardwalks, public restrooms, etc. These cases are scheduled for hearings next month.
2. The super storm/blizzard over the January 22-24th weekend again left Margate’s streets flooded. Governor Christie took a “serves you right” position, whereas Margate officials blamed the flooding on the bay, not the ocean.
As I “go to press,” we’ll soon see whether the plaintiffs’ “we don’t need dunes” position “holds water” (pardon the pun).
Posted on February 1, 2016
New York participates in the cap-and-trade system operated by 9 northeastern and mid-atlantic states known as the Regional Greenhouse Gas Initiative that limits carbon dioxide (CO2) emissions from fossil-fuel burning power plants. These plants must purchase allowances at auction for each ton of CO2 they emit. An efficient gas-fired plant that produces 225 MWs of electricity emits approximately 1.2 million tons of CO2 a year.
During the adoption process for New York’s final RGGI rule in 2008, power generators predicted serious adverse consequences. These included increased electricity costs for consumers, added operating costs for generators who would never recoup all CO2 allowance costs from the sale of electricity, and concerns about longer term energy transactions due to the uncertainty of allowance prices.
In comments on a draft RGGI rule, generators requested the State to establish a price cap of $0.75 on the cost of a CO2 allowance to protect consumers from significant price increases and a sunset provision in the event a federal cap-and-trade program were established. The generators also expressed concern about the lack of available control technology for CO2 emissions.
Fast forward: at the last allowance auction in December 2015, the cost of a CO2 allowance was $7.50. New York generators purchased almost 6 million allowances reaping revenue of more than $44 million for the New York RGGI fund. At the previous auction in September, almost 10 million allowances were purchased at a cost of $59 million. Despite these high allowance costs, the lights are still on in New York. According to data published by the New York State Energy Research and Development Authority, updated as of January 16, the monthly average retail prices of electricity in the residential, commercial and industrial sectors have decreased between 2008 and 2015, attributable to the success of energy conservation and efficiency programs, the availability of more renewable energy, and the low price of natural gas and oil.
CO2 emissions from the power sector have decreased by more than 40% in the RGGI states since 2009 due to reductions in the regional CO2 cap. New York has been a significant contributor to those reductions. Revenue from the program of over $1 billion has been invested by the RGGI states in energy conservation and efficiency efforts, clean and renewable energy, direct bill assistance to households and greenhouse gas abatement. Importantly, RGGI also has the potential to assist states in meeting the CO2 reduction goals in EPA’s Climate Action Plan.
However, a report issued on January 20, 2016 by Synapse Energy Economics and the Sierra Club, entitled The RGGI Opportunity, states that RGGI's current requirements are not enough to get the RGGI states to their climate goals in 2030 and beyond (40% reduction in carbon pollution from 1990 levels) and it encourages more energy efficiency programs, increased levels of wind and solar projects, and adding 10 million battery electric vehicles, all of which will result in job creation.
The RGGI program has been a clear revenue and greenhouse gas reduction success, but there is potential in New York for RGGI funds to be diverted to the general fund. This last occurred in 2015 when the legislature approved a budget that moved $41 million of RGGI revenue to the general fund to be used for other environmental programs. Environmentalists considered this action a threat to the program. Since RGGI was adopted by executive action, not by statute as was the case in the other RGGI states, the environmentalists’ view is that RGGI funds can only be used for program purposes. The 2015 transfer of RGGI funds to the general fund could subject the program to challenge as a tax on electricity levied without the legislature’s approval. In contrast, the State’s 2016 budget does not include a raid on RGGI funds.
Would similar cap-and-trade programs work as well in other regions of the country? Yes, but the political will to establish such programs will depend in part on a region’s fuel mix. Since coal-fired power plants emit almost twice as much CO2 as gas-fired plants, the allowance costs for coal plants will be higher, thereby increasing the cost of the electricity they produce and making such facilities less competitive in regions that also have more efficient facilities. That said, if the programs’ revenues are pumped into energy conservation and efficiency programs, consumers could use and pay for less electricity.
Posted on January 26, 2016
In 2010 the U.S. Securities and Exchange Commission issued interpretive guidance titled Commission Guidance Regarding Disclosure Related to Climate Change on how to apply existing SEC disclosure requirements concerning the risks of climate change to public companies, material climate-related trends, legal proceedings, legislation and other climate associated matters that could affect those companies. Specifically, the SEC's interpretative guidance highlighted the following areas as examples of when climate change may trigger SEC disclosure requirements:
- Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.
- Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.
- Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.
- Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.
Although the SEC advised it would “monitor” the impact of its interpretive guidance on company filings, the SEC has yet to engage in any significant enforcement actions regarding climate change disclosures in light of its 2010 guidance. However, the New York Attorney General Eric T. Schneiderman has taken up the charge. On November 8, 2015, Peabody Energy Corporation, the world’s largest private-sector coal company, entered into a settlement agreement with the Attorney General with respect to Peabody’s statements regarding climate change in its SEC filings and other public statements. This settlement may well mark the first chapter in greater scrutiny of the substance of the climate change disclosures by companies.
Using the Martin Act (a New York state securities law that grants the Attorney General broad authority to investigate financial fraud and misleading disclosures) the Attorney General, in 2013, commenced an investigation into Peabody’s climate change disclosures. The November 8th settlement found that Peabody made two misleading public statements. First, Peabody’s statement in its annual reports filed with the SEC that it could not “reasonably predict the future impact of any climate change regulation on its business” was found to be misleading to investors. Peabody, in conjunction with its consultants, had prepared market projections of the potential impact of certain proposed climate change regulations and failed to disclose such projections. The market projections forecasted that “certain potential regulatory scenarios could materially and adversely impact Peabody’s future business and financial condition.”
Second, in several of Peabody’s SEC filings, Peabody’s disclosure regarding the International Energy Agency’s (“IEA”) projections of future coal demand failed to note the IEA’s less-favorable projections. Peabody’s discussion of the IEA’s projections misled investors by cherry picking the high case for coal usage, which “assumes that governments do not implement any recent commitments that have yet to be backed-up by legislation and will not introduce other new policies bearing on the energy sector in the future, even those that are likely to be implemented by various nations.” The IEA’s projections also include a low case for coal usage and a central position and, while the IEA does not endorse any particular scenario, Peabody omitted both the low case and central position in several of its SEC filings.
Pursuant to the settlement agreement, Peabody agreed (i) to include specific disclosures in its next quarterly report with the SEC and (ii) that in future SEC filings or communications with shareholders, the financial industry, investors, the general public and others (a) it will not represent that it cannot reasonably project or predict the range of impacts that any future laws, regulations and policies relating to climate change would have on Peabody’s markets, operations, financial condition or cash flow or (b) any citation to the IEA’s projections will include an explanation of the IEA’s various scenarios.
The NY Attorney General is also reported to be investigating ExxonMobil, under the Martin Act, over its climate change statements. While the Peabody settlement agreement reflects the Attorney General’s increased attention to climate change disclosures by energy companies, the effect may well ripple into other industries. In addition, members of the House and Senate have requested an update on the SEC’s efforts to implement the SEC’s 2010 guidance. Nonetheless, questions remain as to whether the obligation to disclosure climate change associated risks will, in fact, be action-forcing so as to result in a change in the behavior of public companies. Will those companies and the public take substantive steps to address the root causes and impacts of climate change or just continue to write detailed disclosures of the potential risks that pass muster with the regulators? Will those enhanced disclosures result in increased investor pressures sufficient to cause those companies to undertake serious, significant, and potentially costly, measures to reduce greenhouse gas emissions and become low-carbon?
Posted on January 7, 2016
The Paris Agreement on climate change reached on December 12, 2015 has a heavily negotiated sentence that, when closely read, seems to call for the virtual end of fossil fuel use in this century unless there are major advances in carbon sequestration or air capture technology. That, in turn, has important legal implications.
Article 4 Par. 1 says, “In order to achieve the long-term temperature goal … Parties aim to reach global peaking of greenhouse gas emissions as soon as possible … and to achieve rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.”
In other words, what goes up should be taken back down: for every ton of greenhouse gases (GHGs) emitted from a smokestack, tailpipe or chopped tree, a ton should be removed.
According to the Intergovernmental Panel on Climate Change’s Fifth Assessment Report (2014), fossil fuel use emits about 32 gigatons of carbon dioxide per year. Other sources, such as methane leakage, cement manufacture, and other industrial processes add another 5-7 gigatons carbon dioxide equivalent. Deforestation and other agriculture, forestry and other land use changes (but subtracting emissions sequestered by forest growth) add yet another 10-12 gigatons a year. This all adds up to about 49 gigatons. However, global carbon sinks remove only about 18 gigatons per year (8.8 to the oceans, 9.2 to land, not including land use changes).
Thus the sinks take up about the equivalent of the non-fossil sources. In order to achieve a “balance” between emissions and sinks, we need to just about end the release of GHGs from fossil fuels, though a radical increase in sinks or reduction on non-fossil fuel emissions would provide some slack.
Assuming that some kind of balance between emissions and sinks can be achieved, would we actually have until 2099 to decarbonize the economy, as these numbers imply is needed? Not really. Kelly Levin, Jennifer Morgan and Jiawei Song at the World Resources Institute provide here an illuminating overview of what is required to achieve the long-term temperature goal in Article 2 of the Paris Agreement (“holding the increase in global average temperature to well below 2° C above pre-industrial levels and to pursue efforts to limit temperature increase to 1.5° C”). As the WRI post notes, a recent paper in Nature Climate Change suggests that carbon dioxide from electricity would have to be brought close to zero by 2050, and by then around 25 per cent of energy required for transportation would also need to come from electricity (up from less than one per cent now).
There seem to be only three ways to continue to use fossil fuels for electricity in the second half of the century (and for transport by the end of the century) and still meet the temperature goal:
- Capture the carbon before it escapes into the air, and sequester it
- Devise, and deploy on a massive scale, technologies to remove the carbon from the air, and sequester it
- Create new sinks, such as through the immediate halt to deforestation and a worldwide program of tree planting
All three of these raise a question of how long the carbon will be stored; we do not know how long carbon will stay in reservoirs, and we do know that trees do not live forever, and when they burn or die they release their carbon. Moreover, the technologies of carbon capture and sequestration, and of removing carbon from the ambient air, are developing slowly and are nowhere near large scale deployment. (A price on carbon would create an economic incentive to develop and use these technologies, but politicians in most places are unwilling to impose such a price. A large-scale government-funded research effort, such as the ones that put human beings on the moon, could also produce the necessary innovation, but there has been little visible support for such an effort.) Most of the industrial carbon sequestration that now occurs goes toward “enhanced oil recovery” – squeezing oil out of depleted reservoirs – but extracting more oil is not compatible with stopping fossil fuel use.
Finding the land for large scale tree planting would face its own challenges in a world where sea level rise, persistent drought, and extreme heat will be rendering much land unsuitable for growing food.
So meeting the demands of society for energy means a combination of aggressive energy efficiency and conservation programs, the installation of renewable energy (and, perhaps, nuclear), and the substitution of electric or hydrogen vehicles for those using petroleum at an unprecedented pace. The Deep Decarbonization Pathways Project has set forth the colossal amount of new facility construction that would be required worldwide to achieve this.
The Paris Agreement calls on all countries to strengthen their pledges to reduce GHG emissions, and to monitor their progress and report it to the world. It also says that “all parties should strive to formulate and communicate long-term low greenhouse gas emission development strategies.” (Article 4 Par. 19) That looks like strategies under which every country must show how it is controlling its fossil fuel use.
These provisions are not legally enforceable. However, many domestic laws are, and they will become a powerful tool to force early planning, or at least disclosures. One key example is the securities disclosure requirements for publicly traded companies. On January 27, 2010, the U.S. Securities and Exchange Commission issued guidance for the disclosure of climate-related risks. It specifically calls on companies to “consider, and disclose when material, the impact on their business of treaties or international accords relating to climate change.” The Paris Agreement is clearly such an accord, and (if it is vigorously implemented) it will have material impact on many companies in the business of extracting, processing and using fossil fuels, or making things that rely on fossil fuels (such as motor vehicles, ships and airplanes). The SEC’s guidance makes clear that management’s discussion and analysis should explore known trends and uncertainties concerning climate regulation. This includes regulation outside the U.S. that can affect the operations abroad of U.S. companies. Therefore, disclosure can be expected of the effect of severe restrictions here or in other countries on fossil fuel use, including the possibility that most fossil fuel reserves will need to stay in the ground.
Climate disclosures have received increased attention since it was reported in November that New York Attorney General Eric Schneiderman is investigating ExxonMobil under the New York securities law, the Martin Act, over its statements about climate change, and had reached a settlement with Peabody Energy.
This is not necessarily limited to U.S.-registered companies. For example, in April 2015 the G20 finance ministers and central bank governors asked the U.K. Financial Stability Board for advice on the financial stability implications of climate change. In November 2015 this Board proposed the establishment of a disclosure task force to develop voluntary disclosures for several climate-related risks, including “the financial risks which could result from the process of adjustment towards a low-carbon economy.”
Going forward, impact review of energy projects under the National Environmental Policy Act and its counterparts in many states and most other developed countries should consider the phase-out of fossil fuels that is inherent in the Paris Agreement. For example, a proposal to build or finance a coal mine, a coal-fired power plant, or a coal port should consider whether the facility would need to be closed before the end of its otherwise useful life, and whether the project would be inconsistent with the Agreement.
Systematic analysis and disclosure of these risks will lead responsible boards of directors to undertake serious planning to effect an orderly transition to the low-carbon world that 188 countries agreed to in Paris. These disclosures will also help investors decide what companies will thrive in such a world (such as developers of technologies for renewable energy and efficiency), and what companies are failing to prepare for the transition and thus will themselves become fossils.
Posted on January 5, 2016
The Paris Agreement resulting from the COP21 Climate Conference was extraordinary, far better than any of the pundit “experts” expected (indeed most were predicting gloom and doom until the very last minute). That the conference organizers could get 190 countries that had been quarreling with each other through 20 prior unsuccessful conferences, and many of which have little mutual respect, to come together to unanimously support an agreement of substance on a subject as complex, huge, costly and politically difficult as tackling climate change, is nothing less than a miracle.
Christiana Figuerez and the French negotiating team were brilliant in asking only that countries submit voluntary Independently Nationally Determine Contributions (INDCs) rather than a repeat of conference mandated so-called “binding” carbon reductions as required in the unsuccessful Kyoto Protocol, binding only on developed countries that ratified (and even then signatory Canada simply withdrew). Their pre-conference preparatory work and skillful conference conduct was critical to its success.
The momentum that was built up as virtually all the countries, large and small, rich and poor, made meaningful submissions was such that it would have been very difficult for any of one nation to spoil the broth.
Indeed, the momentum was so great that even previously very reluctant China, India, S. Africa and Brazil agreed to mandatory verification provisions, extremely important to the effectiveness of the Agreement.
That the INDCs were not sufficient to meet the IPCC scientists’ assessment of need to reduce global temperature increases to no more than below a 2.5 Celsius degrees above pre-industrial revolution levels was to be expected. But that the parties agreed to meet every 5 years to make further contribution pledges, again despite powerful country reluctance, was a vital success.
One little touted success was a provision to have the Agreement recognize the climate mitigation contributions of non-national organizations, states, provinces, cities, businesses and NGOs, a provision on which I and a group from Yale dubbed The Yale Dialogue, worked very hard to get included. Their inclusion is very important since many of them have already achieved much more than their national governments have been able to pledge. Perhaps most importantly, it is they that ordinarily are the key actors in establishing energy efficiency standards and often renewable energy incentives. The Paris Agreement doesn’t call for ratification until 2020, and progress before then will fall largely on their shoulders.
While the task before all the countries of the world to achieve the goals sought through the Agreement is daunting, the Paris Agreement has gotten the world off to a wonderfully good start.
Posted on December 21, 2015
In his December 16 ACOEL post Professor Robert Percival concludes that President Obama’s Paris GHG reduction pledges are most likely “legally durable.” Two of his key points: (1) EPA’s Clean Power Plan (CPP) – from which the bulk of the Obama pledges are comprised – will likely survive judicial review; and (2) any effort by a new President to undo the CPP would require a lengthy rulemaking process that could be rejected on judicial review.
The CPP may ultimately survive judicial review, and any attempt by a new President to undermine the CPP may ultimately fail. But with due respect to Professor Percival, I submit the GHG reduction pledges may be far less “legally durable” than he suggests.
Judicial Review Prospects.
Professor Percival notes that the Supreme Court has “repeatedly upheld EPA’s authority to regulate GHG emissions.” But EPA’s authority to regulate GHG emissions is not at issue in the challenges now pending in the D.C. Circuit. (Consolidated under the lead case West Virginia v. EPA.)
Rather, the issues relate to how far can EPA go with the words of the Clean Air Act (CAA) to regulate GHG emissions. I think most would agree that EPA seeks to go pretty far with a few words in CAA 111. One key issue is whether the words authorizing imposition of “best system” emission limits upon “stationary sources” confer authority to require owners of coal-fired stationary sources to replace their plants with solar and wind energy sources.
In my view, whether the CPP will survive in the D.C. Circuit may well depend upon the composition of the 3-judge panel selected by lot. The 17 active and senior judges on that Court represent an amazingly wide spectrum of philosophies. But the cases will probably then go to the Supreme Court – and there, I think EPA will have a pretty tough (but maybe not impossible) time. Last year, the Court rejected parts of EPA’s GHG regulatory scheme in its UARG opinion. The Court expressed strong distaste for EPA regulations with questionable grounding in the CAA’s words – particularly “where an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy.”
A New President’s Prospects.
Virtually every Republican Presidential candidate has vowed to undo most or all of the CPP (assuming it has not been rejected on judicial review). I take no position on whether he or she should do this. But I do believe it could be done fairly quickly and in a manner likely to survive judicial review.
I direct your attention to Nat'l Ass'n of Home Builders v. EPA. Writing for a unanimous panel in an EPA case, Chief Judge Garland (an Obama appointee – joined by Judge Rodgers, a Clinton appointee) quoted extensively from recent Supreme Court opinions. In Part II(A) of Judge Garland’s opinion (pages 1036-38) and Part IV (page 1043), the following points come through strong and clear:
a. A new administration is free to reverse rules issued by a prior administration based entirely upon policy preferences, even where there are no new facts or information, so long as the new administration adequately explains the basis for the reversal;
b. There is no heightened standard of judicial review when an agency reverses course; and an agency need not convince the court that the reasons for the new policy are better than the reasons for the rejected one.
Thus the “lengthy rulemaking process” envisioned by Professor Percival need not be so lengthy. A new administration would not need to develop a new factual record – it would merely have to carefully explain in its rulemaking the legal and policy reasons why it was undoing parts or all of the CPP. There is no reason this could not be accomplished within a year or two, and reductions required under the CPP do not begin kicking in until 2022.
Posted on December 16, 2015
As part of a global agreement on climate change, the US has pledged, among other things, to reduce its greenhouse gas (GHG) emissions by 26%-28% compared to 2005 levels by the year 2025. But opponents of President Obama argue that he cannot keep his promises made at the Paris climate summit.
The Obama administration is confident that the US can meet its promise based on the regulatory actions already taken by the US Environmental Protection Agency (EPA) and other federal agencies to reduce GHG emissions, part of a broad Climate Action Plan announced by President Obama in June 2013.
In transportation, US fuel economy standards set by the EPA have been raised dramatically. And earlier this year the EPA issued regulations to control GHG emissions from power plants, which led to a final rule known as the Clean Power Plan.
The Clean Power Plan will require states to reduce GHG emissions from existing power plants by 32% by the year 2030. It is expected to accelerate the retirement of coal-fired power plants as electric utilities increasingly shift to natural gas and renewable sources of energy.
Yet even as US negotiators arrived in Paris for the climate summit, Obama's political foes were questioning his authority to sign an international agreement on climate change.
Senate Majority Leader Mitch McConnell argued that the US cannot meet its promises to the global community because the Clean Power Plan is "likely illegal" and will either will be struck down in court or be revoked by a new Republican president.
So how strong is the legal defense of Obama's signature climate initiatives?
Going to the Supreme Court?
Having the Clean Power Plan struck down in court seems unlikely for a number of reasons. These include the fact that the US Supreme Court repeatedly has upheld EPA's authority to regulate GHG emissions under the Clean Air Act, beginning in 2007 with its decision in Massachusetts v EPA.
On the other hand, a new president working with congressional opponents of climate action could undermine the US commitment. Let's consider the legal possibilities.
The Congressional Review Act provides special fast-track procedures that allow Congress to veto regulations issued by federal agencies within 60 legislative days of their issuance. But before such a joint resolution of disapproval can take effect, it requires either presidential approval or the override of a presidential veto by a two-thirds majority in each house of Congress.
The signature policy of Obama's climate strategy is the EPA Clean Power Plan to regulate CO2 from power plants. Opponents are already challenging it in court. haglundc/flickr, CC BY-NC
As a result, the only time this procedure has been used successfully was shortly after a change of administration. In March 2001 new President George W Bush signed a disapproval resolution blocking regulations issued at the end of the Clinton administration to protect workers from repetitive motion injuries.
Congress is trying to use the Congressional Review Act to disapprove EPA's greenhouse gas regulations, but such a vote is entirely symbolic because President Obama has promised to veto the disapproval resolution and the 60 legislative day period will end long before the 2016 election. Thus, as long as a president committed to climate action remains in office, the Congressional Review Act is not a promising option.
Dramatic versus piecemeal attacks
A new president opposed to climate action could direct EPA to repeal its regulations, but this would require the agency to undertake a lengthy rulemaking process to comply with the Administrative Procedure Act that governs how agencies adopt regulations. Any agency decision to revoke the regulations would be challenged in court and could be overturned.
The courts have played a role before in attempts to reverse regulations. When President Reagan's Department of Transportation rescinded its air bag regulations, the Supreme Court held that it had acted arbitrarily and capriciously because the decision was not supported by the factual record showing that air bags save lives.
There will be legal challenges to the EPA Clean Power Plan, but the Obama administration thinks it's on solid legal ground. vagueonthehow/flickr, CC BY
And when the Supreme Court in 2011 rejected state efforts to hold electric utilities liable for climate change under the federal common law of nuisance, it pointedly noted that any future EPA decision not to regulate GHG emissions would be subject to judicial review.
Working with a new president sympathetic to opponents of environmental regulation, Congress could repeal or amend the Clean Air Act, the legal foundation for EPA's regulations of GHG emissions. However, the Clean Air Act has been remarkably resistant to past legislative onslaughts. It is, after all, thanks to the Clean Air Act that the "airpocalypses" choking major cities in China and India right now do not happen in the US.
Another option for a future Congress would be to adopt targeted amendments to deprive EPA of authority to implement the Clean Power Plan and other GHG regulations if there are enough votes in the Senate to overcome a filibuster. Congress also could use the power of the purse to withhold funds for actions necessary to implement any Paris agreement, including US promises of financial aid to help poor countries adapt to climate change.
The Paris climate conference is being conducted pursuant to the UN Framework Convention on Climate Change, a treaty signed by President George H W Bush in June 1992 and ratified unanimously by the US Senate on October 7 1992. President Obama believes he already has sufficient legal authority to implement any agreement made in Paris and thus he does need not to ask Congress for new approval.
There is precedent for this. In 2013 the US was able to accede to the Minimata Convention on Mercury without congressional approval because existing law already provides the president with sufficient legal authority to implement its requirements.
For decades, the principal argument by opponents of US climate action has been that the US should not act until developing countries agreed to control their GHG emissions. That argument was dramatically undermined in November 2014 when China agreed to control its emissions, in a joint announcement with the White House.
The claim that other countries will not control their emissions has now been laid to rest in Paris with a new global agreement requiring all countries to do so. Now that the entire world has recognized that all nations must act to combat climate change, it would be the height of folly for a new president and Congress to reverse course.
This article was originally published on The Conversation. Read the original article.