California holds fifth cap-and-trade auction

California continued its pioneering program of auctioning allowances that authorize polluters to emit greenhouse gases to the atmosphere this week, holding the fifth auction in the past year on Tuesday.

Results of the auction will not be available until Friday. However, given that all the allowances for both the current year and for 2016 were sold at the last auction in August, there is reason to surmise a that Tuesday's event showcased a similar level of interest from the regulated community.

"We’re expecting participation to have been strong and that the futures are going to sell," Emily Reyna, a manager with the U.S. climate and energy program operated by Environmental Defense Fund, said. "I think that, like a lot of other folks have been saying, the price might come down a bit. That’s probably because it’s the end of the year and companies at this point know their emissions levels for 2013 and have a better sense of what their compliance obligations are going to be."

The latest auction comes on the heels of a California superior court decision that rejected a two-pronged legal attack on the state's cap-and-trade program. The plaintiffs in that case argued that it is not authorized by A.B. 32, the state's landmark 2006 climate change law, and that the auction proceeds are a tax that was not approved by a constitutionally required super-majority of state legislators.

Judge Timothy Frawley ruled on Nov. 14 that the state legislature authorized the California Air Resources Board to conduct the cap-and-trade auctions and collect money from regulated entities for emission allowances and did not violate the state constitution's taxation procedures.

"I think this case further injects confidence for participants that the market and the program is here to stay," Reyna said.

The nascent market will soon grow larger, as California regulators recently announced that the state's cap-and-trade program will be integrated with one run by Quebec authorities.

Implementation of that expansion will occur on Jan. 1, 2014.

California court upholds cap-and-trade program against industry attack

California's pioneering cap-and-trade greenhouse gas reduction program got a long-awaited and vital legal thumbs-up from a state judge this week.

Judge Timothy M. Frawley of the state's superior court in Sacramento County rejected arguments that the state legislature did not authorize the sale of emission allowances in California's 2006 comprehensive climate change legislation, AB 32.

Frawley also held that the revenues raised by the California Air Resources Board as a result of the allowance sales are not taxes subject to the super-majority requirement of the state constitution.

"The court sent a strong signal today, thoroughly affirming California’s innovative climate protection program—including the vital safeguards to ensure that polluters are held accountable for their harmful emissions” Erica Morehouse, an attorney with the Environmental Defense Fund, said in a statement.

Frawley's opinion explained that the language of AB 32 gave CARB the authority to develop and implement a system for distributing emission allowances:

Although AB 32 does not explicitly authorize the sale of allowances, it specifically delegates to [the California Air Resources Board] the discretion to adopt a cap-and-trade program and to 'design' a system of distribution of emissions allowances. The breadth of the delegation of authority to ARB supports, rather than undermines, ARB's construction of AB 32.

The court noted that a statutory phrase referring to "distribution of emissions allowances" was likely understood by legislators to include an auction system because a state research panel had provided the legislature with a report that recommended it.

On the tax issue, the plaintiffs - the California Chamber of Commerce, Morning Star Packing Company, and the National Association of Manufacturers - strenuously argued that the sale of emissions allowances is covered by California's 35-year old tax limitation law, Proposition 13.

Frawley decided the revenues amount to a fee, not a tax, and are therefore not required to have been adopted by a two-thirds majority of each legislative chamber.

"[T]he charges have some traditional attributes of a tax and some traditional attributes of a regulatory fee, but, on balance, the court finds the charges to be more like a regulatory fee/charge than a traditional tax," Frawley wrote.

Based on that holding, Frawley analyzed whether the revenues collected by CARB fit within the state's framework for "police power" fees and held that Proposition 13 is not "subverted" when the fees assessed for the privilege of polluting the atmosphere are imposed as a means of lessening that environmental damage. 

He also rejected an argument that a fee should be treated as a tax if it aims to change the fee payer's behavior.

"[A] fee is not any less a fee because it raises revenue, and a tax is not any less a tax because it has a regulatory effect," Frawley wrote. 

He went on to rule that the revenues paid to CARB are regulatory fees related to the program's goal of cutting greenhouse gas emissions and that a requisite reasonable relationship exists between the "covered entities' (collective) responsibility for the harmful effects of [greenhouse gas] emissions" and the charge for emissions allowances.

Pacific Legal Foundation, the property-rights advocacy law firm that represented the plaintiffs, said Thursday that it will appeal Frawley's decision.

Image courtesy Wikimedia.

Ninth Circuit says enviros have no standing to compel state regulation of GHG emissions from oil refineries

A panel of Republican-appointed judges on the U.S. Court of Appeals for the Ninth Circuit ruled Oct. 17 that environmentalists lack standing to challenge a state's failure to invoke the Clean Air Act to regulate oil refinery greenhouse gas emissions.

The case involves an effort by environmentalists to force Washington to develop and implement technology standards that would result in the reduced GHG pollution. Washington's state implementation plan, the program for air pollution control required by the Clean Air Act, does not reach greenhouse gases.

The environmentalists won in the federal district court.

The appeals court panel's holding rests on an assertion that the plaintiffs were unable to show a link between the harm they suffer from the emissions and the industrial activities, and consequent emissions, by the regulated entities. In other words, the panel decided that there is no legally recognizable connection between the conceded emissions and the generally accepted environmental damage they do.

"[A]ttempting to establish a causal nexus in this case may be a particularly challenging task," wrote the opinion's author, Judge Milan D. Smith.

This is so because there is a natural disjunction between [p]laintiffs’ localized injuries and the greenhouse effect. Greenhouse gases, once emitted from a specific source, quickly mix and disperse in the global atmosphere and have a long atmospheric lifetime. Current research on how greenhouse gases influence global climate change has focused on the cumulative environmental effects from aggregate regional or global sources. But there is limited scientific capability in assessing, detecting, or measuring the relationship between a certain GHG emission source and localized climate impacts in a given region.

Smith cited a May 2008 memorandum from the director of the U.S. Geological Survey to the U.S. Fish and Wildlife Service for this conclusion.

Richard Frank, a professor of law at the University of California at Davis and an expert on environmental law, said that Smith’s point is a departure from the traditional way in which courts approach pollution problems.

“The courts have pretty easily and readily dismissed the notion that one of the polluters should not be held responsible and the party could not go after one bad actor in court because of the idea that everyone is doing it,” he explained.

Janette Brimmer, an Earthjustice lawyer who represented the environmental group plaintiffs in the case, said she thought the opinion will make it harder for public interest plaintiffs to challenge regulatory inaction in court.

“There’s no doubt this decision raises the bar, and raises it pretty darn high,” she said.

Smith’s opinion relied on a narrow reading of a 2007 holding of the U.S. Supreme Court. In that case, called Massachusetts v. Environmental Protection Agency, the justices held that Massachusetts had standing to challenge EPA's failure to regulate greenhouse gases.

Smith wrote that the ability of the states in the Massachusetts v. Environmental Protection Agency case to secure standing in a challenge focused on failure to regulate rested solely on those states' status as sovereigns, a status environmentalists do not have.

This reading of the Massachusetts case, Frank said, is too narrow.

“There were a lot of people that, when the Massachusetts decision was issued in 2007, thought this opened the courthouse door at least a little bit to a lot of different parties who sought to bring climate change actions,” he said.

The Supreme Court’s opinion in Massachusetts v. Environmental Protection Agency may not have even been solely premised on a state’s status as a sovereign entity within the union. The court did not hold in that case that Massachusetts’ co-plaintiffs lacked standing to challenge the Bush administration’s refusal to use the tools provided by the Clean Air Act to limit greenhouse gas emissions.

In fact, the court said that Congress’ decision to include a citizen suit provision in the Clean Air Act meant that sovereign entities are not the only parties who can sue under the law.

“ When a litigant is vested with a procedural right, that litigant has standing if there is some possibility that the requested relief will prompt the injury-causing party to reconsider the decision that allegedly harmed the litigant," he wrote.

Nor is the other pillar of Smith’s rejection of standing for the environmental plaintiffs necessarily well-grounded in the guidance offered by the justices. Smith’s opinion for the Ninth Circuit panel also asserted that, in contrast to the higher percentage of worldwide greenhouse gas emissions at issue in the Massachusetts case, the Washington refineries account for only five percent of warming pollution emanating from the sources just in that single state.

Stevens’ opinion in the Massachusetts case dismissed a similar argument against standing.

“[The] argument rests on the erroneous assumption that a small incremental step, because it is incremental, can never be attacked in a federal judicial forum," Stevens wrote. "Yet accepting that premise would doom most challenges to regulatory action. Agencies, like legislatures, do not generally resolve massive problems in one fell regulatory swoop.

In fact, Frank said, another federal appeals court has applied the Massachusetts decision to a question of standing very similar to that in the Washington case and come out exactly opposite to the Ninth Circuit panel.

“There’s a decision in the Second Circuit, based in New York, in American Electric Power v. Connecticut that I think is pretty diametrically opposed to this,” he said.

One explanation for the Ninth Circuit decision may be judicial discomfort with the notion that courts should help fashion a societal response to climate change.

At oral argument in the Washington case, one of the judges on the panel indicated that he believed that the courts should discourage litigation as a method for dealing with it.

"Perhaps carbon dioxide causes harm, we know poverty causes harm, so why shouldn't it be a policy question decided Congressionally rather than an inch-by-inch incremental series of injunctions by district courts, each of which has no practical effect, but in your theory incrementally adds up to an effect?," Judge Andrew Kleinfeld, an Alaska-based member of the panel that decided the case, asked at oral argument July 10.

Frank explained that this response may be based on a view that climate change is too complex for courts.

“You’re talking about a global problem,” he said. “One unit of pollution emitted in Anacortes, Washington does not have more or less effect than a unit of pollution discharged in Beijing, Paris, or Johannesburg.”

The federal appeals court also held that, even if the plaintiffs had shown causality between the refinery emissions and environmental damage to Washington lands and waters and the atmosphere, a RACT requirement would not make any difference.

"Because the effect of collective emissions from the [o]il [r]efineries on global climate change is 'scientifically indiscernible,' [p]laintiffs' injuries are likely to continue unabated even if the [o]il [r]efineries have RACT controls," Smith wrote.

Smith's opinion was joined by Kleinfeld and circuit judge N. Randy Smith.

Smith was appointed to the bench by former President George W. Bush in 2006, while Smith was appointed by Bush in 2007. Kleinfeld was appointed by President George H.W. Bush in 1991.

The case is Washington Environmental Council v. Bellon, No. 12-35323.

Congressional Research Service report on carbon capture is released

The Congressional Research Service recently published a report that assesses progress in developing viable carbon capture technologies.

The report, which is dated Oct. 21, does not focus on carbon sequestration.

Carbon capture and sequestration is the idea at the core of the Obama administration's proposed regulations limiting greenhouse gas emissions from new power plants. The approach to lowering emission of warming pollutants to the atmosphere may also be central to the administration's future effort to limit greenhouse gas emissions from existing power plants.

The report, Carbon Capture: A Technology Assessment, concludes that, while carbon capture systems may be technically feasible, cost considerations dictate that "aggressive and sustained efforts" to develop them are necessary.

Pacific coast states, British Columbia agree on climate change cooperation

The three mainland Pacific coast states and the Canadian province of British Columbia have agreed on a framework for cooperative efforts to reduce greenhouse gas pollution.

The deal, which was signed Monday in San Francisco, is not binding and does not commit California, Oregon, Washington, or British Columbia to spend any public money in attempts to limit emissions of pollutants that warm the atmosphere.

Labeled the Pacific Coast Action Plan on Climate and Energy, the agreement covers three policy priorities: leading the U.S. and international responses to climate change, transition the signatory states and B.C. to transportation systems that rely on cleaner forms of energy, and invest in renewable energy infrastructure.

"California isn't waiting for the rest of the world before it takes action on climate change,” the Golden State's governor, Edmund G. Brown, said. “Today, California, Oregon, Washington and British Columbia are all joining together to reduce greenhouse gases.”

The particular steps the parties agreed to undertake are wide-ranging. For example, the first policy commitment is to "account for the costs of carbon pollution in each jurisdiction." The agreement says that Oregon will continue its effort to impose a price on carbon emissions, while Washington will "set binding limits on carbon emissions and deploy market mechanisms to meet those limits." Thus, the language seems to indicate that Oregon will begin to collect a carbon tax, while Washington will install a cap-and-trade system of greenhouse gas regulation, as California has done.

California and British Columbia agreed to continue their existing programs aimed at forcing polluters to internalize the social costs of carbon pollution.

The agreement also contemplates that the parties will link their carbon emission pricing programs: "Where possible, California, British Columbia, Oregon and Washington will link programs for consistency and predictability and to expand opportunities to grow the region's low-carbon economy."

Brown, Oregon Gov. John A. Kitzhaber, Washington Gov. Jay Inslee, and British Columbia premier Christy Clark also agreed to "[h]armonize 2050 targets for greenhouse gas reductions."

Washington already has GHG emission targets for the years 2035 and 2050. The 2008 statute that set them does not include specific programs to be used in the Evergreen State as tools for reaching the targets.

The agreement goes on to include a commitment of each state and province to implement low-carbon fuel standards, expand the use of zero-emission vehicles, and build high-speed rail systems. The parties also committed to a consistent system of appliance energy standards and integrate electricity distribution grids.

The PCACE follows an earlier attempt to coordinate policy responses to climate change among a greater number of western states and Canadian provinces. In 2007 the Western Climate Initiative, which eventually included California, Montana, New Mexico, Oregon, Utah, and Washington, along with British Columbia, Manitoba, Ontario, and Quebec, was formed. That cooperative effort has struggled to achieve consensus among its parties, with some dropping out in following years.

Together, the three U.S. states and the Canadian province that signed the PCACE have a population of 53 million people and an economy with a yearly GDP of $2.8 trillion.

Implementation of at least some of the specific steps called for in the agreement will require enactment of legislation by each of the parties' legislatures.

That will not likely pose much of a problem in California, where Democrats dominate both chambers of the state's General Assembly. However, in the Pacific Northwest there may be political obstacles to full execution of the agreement.

In Oregon, the state senate recently blocked a bill to extend the sunset date on a low-carbon fuel standard authorized in 2009. That program is set to expire in 2015, even though it has not yet been implemented. Two Democrats, including one who represents Portland, joined with the chamber's 14 Republicans to kill the measure that would have extended the sunset date.

In Washington, at least until another election affords the possibility of change, implementation bills could be held up in the state senate, which is controlled by a coalition of a few Democrats and the chamber's Republican members.

Kerry McHugh, a spokesperson for Washington Environmental Council, said that a bipartisan advisory panel required by the 2008 law that set the state's GHG emission targets is examining ways to reduce greenhouse gas emissions in the state. Inslee, along with four legislators, comprise the Climate Legislative and Executive Workgroup.

Supreme Court to take up narrow question related to EPA's greenhouse gas regulatory authority

The U.S. Supreme Court announced Oct. 15 that it will review a narrow question related to the scope of the Environmental Protection Agency's authority to regulate greenhouse gas emissions.

In its order, the court took the unusual step of crafting its own question on which certiorari was granted. The justices asked the parties to brief "whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.”

"Everybody's scratching their head about the question they took," Patrick Parenteau, a professor and senior counsel to the Natural Resources Law Clinic at Vermont Law School, said.

That question appears to be one that is well-settled. It arises from two regulations issued by EPA in the aftermath of the 2007 decision in Massachusetts v. Environmental Protection Agency.

In that case the court ruled that EPA must decide whether carbon dioxide is a pollutant subject to regulation under the Clean Air Act. The administration of former President George W. Bush had argued that EPA lacked the authority to regulate carbon dioxide emissions to the atmosphere.

Following the decision, EPA issued four rules. The first was a decision that carbon dioxide does pose a threat to public health. This endangerment finding set the stage for more specific regulations aimed at limiting emission of the greenhouse gas to the atmosphere by both mobile and stationary sources.

In June 2012, in a case called Coalition for Responsible Regulation v. Environmental Protection Agency, the U.S. Court of Appeals for the District of Columbia Circuit held that the agency had the authority to issue the endangerment finding for carbon dioxide.

The second post-Massachusetts v. Environmental Protection Agency rule limited motor vehicle emissions. This tailpipe rule was finalized in 2010 and was also upheld by the U.S. Court of Appeals for the District of Columbia Circuit in the same case that involved an attack on the carbon dioxide endangerment finding.

The Supreme Court declined to grant review of either of those two aspects of the decision in the Coalition for Responsible Regulation case.

Following the finalization of the tailpipe rule, EPA next moved to regulate carbon dioxide emissions from stationary sources. To do this, the agency first announced a timing rule that specified the chronological conditions under which sources of carbon dioxide would become subject to regulation, making clear that stationary sources of carbon dioxide pollution would not be subject to emission limits until a specific rule focused on that subject was finalized, and then issued a tailoring rule that enunciated the statutory basis of that regulation.

That basis is section 202 of the Clean Air Act, which was also the foundation for the tailpipe rule. It is that linkage that prompted the attack on this part of the Obama administration's climate change regulatory program that is now under review by the justices.

Under an interpretation of the statute that is several decades old, EPA concluded that, since carbon dioxide emissions are subject to regulation under section 202 of the Clean Air Act, stationary sources of the pollutant are likewise prone to regulation under two separate provisions of the law.

One, called the Prevention of Significant Deterioration of Air Quality program, requires state-issued permits for some stationary sources, such as steel mills and iron foundries, that discharge to the atmosphere more than 100 tons per year of "any pollutant" and other stationary sources that discharge "any pollutant" in an amount exceeding 250 tons per year.

The other is an entire section of the law that also applies to "any pollutant" and similarly imposes the 100 ton-per-year threshold.

The Coalition for Responsible Regulation court upheld this interpretation of the Clean Air Act and it is that interpretation that will now be reviewed by the Supreme Court.

"The crux of the case is going to come down to this question: Are the only sources that are covered by section 165, the requirement of a PSD permit, those that emit NAAQS pollutants?," Parenteau said.

He was referring to the statutory section of the Clean Air Act that sets forth the prevention of significant deterioration of air quality requirements and the law's classification of certain pollutants for which a particular kind of permit to discharge is required.

"That's the industry's argument," Parenteau explained. "They say that carbon dioxide is not a NAAQS pollutant and, because they are not a hazardous air pollutant, the sources that emit carbon dioxide are simply not covered by section 165. Well, if you actually look at the text of section 165, you'll see two things. One, it refers to 'any air pollutant.' Many years ago, EPA interpreted that phrase to mean 'any air pollutant regulated under the Clean Air Act.' That's a long-standing interpretation. That's not new."

In 1980 EPA said that a stationary source would be subjected to review under the Clean Air Act's PSD program if it "emit[s] any pollutant in major amounts . . . and [is] located in an area designated attainment or unclassifiable for that or any other pollutant.” The agency explained that “'any pollutant'” means “both criteria pollutants, for which national ambient air quality standards have been promulgated, and non-criteria pollutants subject to regulation under the Act.”

In 2002, during the George W. Bush administration, the agency reiterated this understanding of the Clean Air Act's reach.

The tailoring rule recognizes that, because the agency's interpretation of the statutory language could extend EPA's regulatory reach to thousands of stationary sources, a limit on the size of affected sources is necessary. The rule is limited to new sources that emit at least 100,000 tons of carbon dioxide each year and existing sources that undergo a modification that would cause at least 75,000 tons per year to be discharged to the air.

Industry advocates have argued that EPA lacks the authority to limit the reach of its regulatory program under the Clean Air Act and, moreover, that the PSD provisions of the law on which that program is based are available only if the agency has first decided that the pollutant in question - in this case, carbon dioxide - is part of the National Ambient Air Quality System. The NAAQS, in turn, is limited to the pollutants, like those that make up the components of smog, that pose a danger to an individual's health when breathed.

Parenteau thinks this argument is not likely to go very far because the language of the Clean Air Act does not limit EPA's discretion in the way industry asserts it does.

"If you drive down further into section 165, you’ll see in (a)(3), there are three subsets referred to there," he said. "One is NAAQS, but then it says 'or' any other emission standard under the act. My view is that the disjunctive gives EPA the authority."

The relevant language of section 165(a)(3) of the Clean Air Act provides that

No major emitting facility on which construction is commenced after August 7, 1977, may be constructed in any area to which this part applies unless -

. . .

(3) the owner or operator of such facility demonstrates, as required pursuant to section 7410 (j) of this title, that emissions from construction or operation of such facility will not cause, or contribute to, air pollution in excess of any

(A) maximum allowable increase or maximum allowable concentration for any pollutant in any area to which this part applies more than one time per year,

(B) national ambient air quality standard in any air quality control region, or

(C) any other applicable emission standard or standard of performance under this chapter[.]

. . .

"I think EPA’s interpretation is reasonable," Parenteau said. "I don’t see how the court can rule, as a matter of law, that this interpretation is not open to EPA as a matter of law."

Given the views of at least two of the court's conservative justices on the question whether to disregard clear statutory language in the face of contradictory or ambiguous legislative history, Parenteau's point may be well-taken.

Justice Antonin Scalia, for example, has long eschewed the practice of looking to legislative history as a tool for understanding the meaning of a statute. He has, instead, asserted in opinions and books that a record of the debate by legislators on a bill offers no assistance to a judge at all.

For example, in one 2006 case Scalia wrote a concurring opinion in which he asserted that "[t]he use of legislative history is illegitimate and ill advised in the interpretation of any statute."

Among the justices, Scalia is the most adamantly opposed to going beyond the text of a statute to decipher Congressional intent. Others, however, have also expressed caution about doing so.

For example, Justice Samuel Alito, while a circuit judge, wrote opinions on several occasions in which he explained his view that indicia of legislative intent found in committee reports and the like cannot override the plain language of a statute.

In one 1999 case, he made his view on the issue clear, writing that "even if I were convinced that Congress harbored some general purpose that was inconsistent with those specific provisions, I would follow the specific language that Congress duly enacted."

Justice Anthony Kennedy was part of the majority in Massachusetts v. Environmental Protection Agency. He also signed on to the majority opinion in the 2011 case of American Electric Power v. Connecticut, which re-affirmed EPA's authority to regulate greenhouse gases under the Clean Air Act.

Given that Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia M. Sotomayor, and Elena Kagan have generally supported federal regulatory efforts relating to environmental protection, and that Ginsburg and Breyer agreed to the Massachusetts v. Environmental Protection Agency majority opinion, few, if any, observers of the court expect them to hold that EPA exceeded its authority in issuing the tailoring rule.

Parenteau suggested that it is possible the Supreme Court acted hastily in deciding whether to review the question of EPA's authority to link regulation of stationary carbon dioxide pollution sources to the Clean Air Act's provisions relating to motor vehicle emissions.

"It’s entirely possible that they’ll look at this case, see what EPA has done, and say it’s fine," he said. "They might also say that EPA should have made a separate determination for stationary sources. To me, that’s a silly way to spend your time, to say you needed to be more clear about this."

The cases are Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146; American Chemistry Council v. Environmental Protection Agency, No.12-1248; Energy-Intensive Manufacturers Working Group on Greenhouse Gas Regulation v. Environmental Protection Agency, No. 12-1254; Southeastern Legal Foundation v. Environmental Protection Agency, No. 12-1268; Texas v. Environmental Protection Agency, No. 12-1269; and Chamber of Commerce of the United States v. Environmental Protection Agency, No. 12-1272.

A decision by the Supreme Court is expected by July 2014.



Image courtesy Wikimedia.

American carbon dioxide emissions fall, but may rise again

A new report from the federal agency that monitors energy trends in the nation shows that U.S. carbon dioxide emissions have declined to the lowest level since 1994.

The Energy Information Administration report indicates that discharges of the warming gas from their principal sources within the U.S. is also 12 percent less than it was during 2007, when they reached a high point.

In 2007, total U.S. CO2 emissions were 6,023 million metric tons, while in 2012 they were 5,290 million metric tons. The trend line since 2007 has been generally downward, though emissions bumped up in 2010 following the recession of 2008-2009.

The data for 2009 showed the biggest decline in carbon dioxide emissions in any year since 1990, most likely because of the economic downturn.

The annualized rate of decline for 2012 was 3.8 percent.

 Major drivers of the decline were improved fuel efficiency in motor vehicles, reduced use of coal as a source of electricity, and a winter that was less severe than usual, which resulted in less energy consumption for heating of homes and businesses.

The trend may not be permanent, though.

EIA also concluded that GHG emissions are on the rise again. So far in 2013, they are up by more than 2 percent over 2012. During future years, GHG emissions might keep going up because market forces could be encouraging a return to coal burning for electric power. 

In addition, more reliance on shale gas could drive carbon dioxide pollution higher. A September report from the Stanford Energy Modeling Forum predicted that emissions would increase under any expected natural gas use scenario.

The trend could prevent the Obama administration from achieving its goal of a 17 percent reduction in GHG emissions by 2020. To meet that objective it will probably be necessary for EPA to finalize and implement regulations aimed at reducing the discharge of warming gases to the atmosphere.

Graphic courtesy U.S. Energy Information Administration.

Justices do not decide whether to hear greenhouse gas cases at Supreme Court's first conference of new term

The U.S. Supreme Court did not take an opportunity presented by its Sept. 30 conference to grant review of a court of appeals decision that upheld federal authority to regulate greenhouse gas emissions under the Clean Air Act.

The justices, meeting for the first time during the 2013-14 court term, issued no orders in response to nine petitions for certiorari related to the case.

The U.S. Court of Appeals for the District of Columbia Circuit held in June 2012 that EPA acted properly in designated carbon dioxide as a threat to public health and welfare under the Clean Air Act.

That endangerment finding is one of the core issues in the various requests for review of the D.C. Circuit ruling.

A 2007 decision of the Supreme Court known as Massachusetts v. Environmental Protection Agency forced EPA into that action by holding that the nation's principal air pollution law compels the agency to impose regulations on greenhouse gas emissions.

The cases are American Chemistry Council v. Environmental Protection Agency, No. 12-1248; Coalition for Responsible Regulation v. Environmental Protection Agency, No. 12-1253; Chamber of Commerce of the United States v. Environmental Protection Agency, No. 12-1272; Energy Intensive Manufacturers Working  Group on Greenhouse Gas Regulation v. Environmental Protection Agency, No. 12-1254; Pacific Legal Foundation v. Environmental Protection Agency, No. 12-1153; Southeastern Legal Foundation v. Environmental Protection Agency, No. 12-1268; Texas v. Environmental Protection Agency, No. 12-1269; Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146 ; and Virginia v. Environmental Protection Agency, No. 12-1152.

Ninth Circuit gives green light to California low carbon fuel regulation

A federal appeals court has rejected arguments that California's pioneering low-carbon fuel standard violates the U.S. Constitution by discriminating against out-of-state ethanol and crude oil producers.

In a decision released Sept. 18 the court held that the LCFS does not transgress the Commerc Clause. Two judges on a U.S. Court of Appeals for the Ninth Circuit panel found that California law may treat fuels with different levels of carbon intensity differently because the benefits obtained for the environment outweighs that discrimination. 

"This is a great day for public health and the economy of California," Tim O'Connor, an attorney at Environmental Defense Fund and director of that organization's California Climate Initiatives, said. "The court clearly upheld a groundbreaking policy that will protect consumers and the environment by diversifying our fuel mix and providing more choices for a clean energy future."

The court's holding specifically sanctioned California's effort to take into account the greenhouse gas emission caused at all stages of a fuel's production, transportation, and distribution.

“If California is to successfully promote low carbon-intensity fuels, countering a trend towards increased [greenhouse gas] output and rising world temperatures, it cannot ignore the real factors behind GHG emissions,” the majority opinion by Judge Ronald M. Gould said.

Another noteworthy aspect of the Ninth Circuit's opinion is a recognition that states may formulate regulations that recognize the greenhouse gas emission implications of  fuel producers' entire operations:

With its long coastlines vulnerable to rising waters, large population that needs food and water, sizable deserts that can expand with sustained increased heat, and vast forests that may become tinderboxes with too little rain, California is uniquely vulnerable to the perils of global warming. The California legislature determined that [greenhouse gas] emissions from the production and distribution of transportation fuels contribute to this risk, and that those emissions are caused by the in-state consumption of fuels. Whether or not one agrees with the science underlying those views, those determinations are permissible ones for the legislature to make, and the Supreme Court has recognized that these risks constitute local threats.

The opinion also rejected a claim that the California LCFS is preempted by the federal Clean Air Act.

One of the three judges on the panel, Mary Murguia, dissented.

The LCFS is one aspect of California's multi-pronged efforts, based on the state's Global Warming Solutions Act of 2006, to reduce greenhouse gas pollution. It forces producers and distributors of fuels used in transportation systems, especially motor vehicles, to meet a gradually more rigorous schedule of reduced greenhouse gas emissions. The regulation does this by mandating a focus on the "carbon intensity" of the fuels. That term refers  to the amount of atmosphere-warming compounds produced at each stage of the process of extracting, refining, distributing, and burning the fuel.

The case is Rocky Mountain Farmers Union v. Corey, No. 12-15131.

EPA proposes carbon dioxide limits for new power plants

The Obama administration made clear Friday that it will move forward with a regulatory agenda aimed at slowing climate change as the Environmental Protection Agency announced a proposed regulation that would limit carbon dioxide emissions from new power plants.

The proposed Carbon Pollution Standard for New Power Plants was announced at the National Press Club by EPA administrator Gina McCarthy.

“The overwhelming judgment of science tells us that climate change is real, human activities are fueling that change, and we must take action to avoid the most devastating consequences of climate change,” McCarthy said, according to prepared remarks. “We know this is not just about melting glaciers. Climate change – caused by carbon pollution – is one of the most significant public health threats of our time. That’s why EPA has been called to action.”

In 2007 the U.S. Supreme Court held that EPA must regulate emissions of carbon dioxide to the atmosphere because it is a pollutant that can harm public health and the environment. EPA issued the required “endangerment” finding in Dec. 2009, a decision that was upheld by the federal appeals court in Washington, DC in June 2012.

The endangerment finding relating to carbon dioxide prevents EPA from leaving carbon dioxide pollution of the atmosphere unregulated.

“EPA has no choice but to adopt these regulations,” Patrick A. Parenteau, a professor of law at Vermont Law School, said. “What’s in the regulations is a subject of controversy and discussion. But they don’t have the ability to say ‘no, we won’t do it.’”

The rules announced Friday would, if finalized, distinguish between natural gas-fired power plants and coal-fired electricity generation facilities.

For large natural gas plants, a limit of 1,000 pounds of carbon dioxide per megawatt hour would be imposed; for smaller natural gas power plants, the cap would be 1,100 pounds of CO₂ per megawatt hour.

Coal plants would not be allowed to emit more than 1,100 pounds of CO₂ per megawatt hour. The regulation provides an avenue for coal plant operators to have some additional flexibility as to the limit by allowing them to average emissions over several years, but only if a coal plant operator agreed to accept a more stringent emissions cap.

The core of the rules, and an aspect that may serve as the prop for an expected legal attack by the affected industries, is a requirement that coal-fired power plants capture and store the carbon dioxide they now emit to the atmosphere.

Widespread adoption of the technology has been resisted by the industry on grounds that it may cause an increase in the cost of producing electricity and consume a large proportion of the energy produced by a power plant.

The environmental community generally welcomed Friday’s announcement, lauding the administration’s action as an important step toward a functional national system of greenhouse gas emission controls.

“The standard makes clear that tomorrow’s power plants won’t be built at the expense of our children’s future,” Natural Resources Defense Council president Francis Beineke said in a statement. “It signals that we’re moving, as a country, to the clean energy solutions we need. And it will help safeguard the most vulnerable among us—our children and elderly people—from smog worsened by climate change.”

Environmental Defense Fund president Fred Krupp emphasized the potential mitigation of extreme weather events that might be provided by the proposed new source performance standard.

“As communities across our country struggle with terrible floods, droughts, and wildfires, these standards will finally put a limit on the carbon pollution that new power plants emit into our skies," he said in a statement. “Cleaner power generation will protect our children from dangerous smog, extreme weather, and other serious climate impacts, and ensure that America leads the world in the race to develop cleaner, safer power technologies."

The coal and electric utility industries, meanwhile, wasted little time before expressing its displeasure.

“We intend to  make all the arguments we can against the EPA’s proposed regulation because taking away the option to build efficient new coal-fueled power plants is bad policy,” Robert M. Duncan, the president and chief executive officer of the American Coalition for Clean Coal Electricity, said in a statement.

ACCCE is a coalition of electric utility and coal interests.

Duncan also suggested that litigation challenging the proposed rules is likely.  

Parenteau said that any litigation challenging the new rules would succeed only if it convinces a panel of federal appeals court judges that an equally effective, less expensive pollution control technology is available to power plant operators.

That legal obstacle is daunting. A decision of the U.S. Court of Appeals for the District of Columbia Circuit in 1973 held that a technology-forcing rule “may fairly be projected for the regulated future, rather than the state of the art at present, since it is addressed to standards for new plants.”

That decision, in a case called Portland Cement Association v. Ruckelshaus, does constrain EPA’s discretion to some extent, as it imposes a “reasonableness” standard on the agency. A technology-forcing rule, the court said, “cannot be based on a ‘crystal ball’ inquiry.”

The proposed rule argues that CCS technology has been implemented around the nation, though several of the examples mentioned in it involve electricity generation facilities. However, none of those have actually sequestered carbon dioxide emissions.

The financial costs of compliance may prove less likely to supply a winning argument for industry. A 1999 decision of the D.C. Circuit held that EPA’s choice of a technology mandate “will be sustained unless the environmental or economic costs of using the technology are exorbitant.”

Other cases have provided some clarity to that definition, holding that a maximum achievable control technology requirement included in an emissions regulation will not be rejected unless the costs imposed by the requirement are so high as to threaten the existence of the industry.

These legal arguments will be relevant only if the Supreme Court does not re-visit its Massachusetts v. Environmental Protection Agency ruling. The justices are expected to decide, early in the new court term, whether to grant review of an appeals court decision that upheld EPA’s endangerment finding.

“It’s very unlikely that the Supreme Court would grant review,” Parenteau said. “If for some reason they ruled that the EPA endangerment finding is flawed, then the house of cards falls down. That’s the foundational finding for all these rules. Everything depends on that endangerment finding.”

Parenteau explained that he thought the odds of a reversal of Massachusetts v. EPA were quite low.

“I think it’s less than a one percent chance that the Supreme Court would get five votes to challenge EPA on that,” he said.

“If the industry wants to challenge, sure, it’s going to be expensive, but what’s going to be better?” Parenteau said. “They’re going to have come forward with a better technology.”

Some members of Congress, especially those who represent coal-producing states, are staking out a backstop in case litigation proves unable to stop EPA’s effort to regulate the CO2 emissions of new power plants.

Sen. Joe Manchin, D-W.Va., issued a blistering statement accusing the Obama administration of being an “adversary” of the coal industry.

“Today’s announcement of the EPA’s new source performance standard is direct evidence that this Administration is trying to hold the coal industry to impossible standards,” he said.

Sen. Mitch McConnell, a Kentucky Republican and the chamber’s minority leader, said Friday that he would invoke a rarely-used legislative procedure in an effort to block the rules.

“I will file a resolution of disapproval under the Congressional Review Act to ensure a vote to stop this devastating EPA rule," he said in a statement.

Assuming that a CRA resolution could get passed by the Democratic-controlled Senate, it is not likely that it would be signed into law by the president. President Barack Obama signaled his commitment to an effort to rein in power plant greenhouse gas emissions when he announced a comprehensive climate change policy earlier in the year.

EPA is also working on greenhouse gas emission standards for existing electricity generation facilities.

“[W]e are committed to act on existing plants, too,” McCarthy said Friday. “However, those proposed standards are on a longer timeline. We plan to release a proposal for public comment in June of next year.”

Photo courtesy Wikimedia. 

NOTE: This article also appears at Examiner.com.