Carbon Dioxide Regulations

On March 6, 2019, a bill was introduced in the Washington Senate, SB 5981, to establish a cap and trade program linked to the existing California-Québec program, which is implemented under the auspices of the Western Climate Initiative (WCI).  The bill mirrors many of the design elements from the California program, as amended pursuant to a 2017 law that authorizes its extension beyond 2020, and also borrows from legislation currently under consideration by the neighboring State of Oregon, HB 2020, which would establish a similar “cap and invest” program, also intended to be linked with the WCI jurisdictions.

If both the Washington and Oregon bills were enacted, it would represent a significant step forward in the development of North American carbon markets and would help realize the original WCI vision of a broad, economy-wide trading program embracing a significant share of the North American economy.
Continue Reading Legislation Introduced in Washington Senate Would Establish Linked Cap and Trade Program

Yesterday the Supreme Court of the United States again delved into the world of climate change and greenhouse gas regulation, hearing oral argument in Utility Air Regulatory Group v. EPA.  It is perhaps fitting that the Court’s consideration happened on the very same day that Congressman John Dingell announced that he would be retiring after nearly sixty years in the House of Representatives and having taken up the mantle of a balanced approach to environmental regulation during his tenure as the longest serving House Member in history. For it was Congressman Dingell who presciently warned back in 2008 of the “glorious mess” that could ensue if Congress did not take on and create a customized legislative approach to addressing climate change, but instead left these issues to regulatory action.  All sides in yesterday’s argument would likely agree that the issues under consideration are indeed somewhat “messy”,  due in large measure to the difficult challenge of fitting existing Clean Air Act authorities to crafting a comprehensive and reasonable solution to the unique problems posed by climate change.

The Court examined the planned next steps by the U.S. Environmental Protection Agency (EPA) in its efforts to regulate greenhouse gases.  Building upon its 2009 finding that greenhouse gases endanger public health and the environment and its consequent regulation of automotive sector emissions, EPA in 2010 developed a suite of permitting rules for stationary sources of carbon emissions, such as refineries, manufacturing facilities, and power plants.  Yesterday’s argument focused on whether EPA permissibly concluded that stationary sources of such emissions had to be regulated through state-administered permit programs under the Clean Air Act as a necessary consequence of this prior treatment of greenhouse gases as pollutants.  The challenge facing EPA, though, is that the statute is designed with conventional sources of pollution in mind, and contains explicit thresholds reflecting those kinds of pollutants in requiring that larger emitting new facilities install the “best available control technology.”  In the case of greenhouse gases, however, those thresholds could subject potentially millions of facilities to permitting requirements due to the high rate and pervasive character of greenhouse gas emissions — an admittedly unworkable outcome.  So EPA crafted an administrative approach to “tailor” the permitting requirements to a more manageable and focused number of sources — those emitting 100,000 tons of carbon each year, rather than the statutory limits of 100 or 250 tons per year, depending on the affected industry.

A range of petitioners challenged the decision of the Court of Appeals for the District of Columbia Circuit that upheld EPA’s predicate finding that greenhouse gases endanger public health and the environment, EPA’s and the Department of Transportation’s regulation of motor vehicle emissions, and EPA’s Prevention of Significant Deterioration (PSD) permitting rules.  The en banc Court of Appeals likewise did the same, although that consideration yielded a dissent focused on EPA’s lack of authority to rewrite the permitting thresholds.  Despite a broad challenge to the Court of Appeals’ holdings, the Supreme Court allowed much of EPA’s construct to stand by declining to grant certiorari on most of the issues raised.  The question for argument yesterday was limited to whether the EPA permissibly determined that its regulation of motor vehicles necessarily triggered new permitting requirements for greenhouse gases from stationary sources.

Having seen this issue unfold over many years during my tenure at the White House Counsel on Environmental Quality and earlier at EPA, upon hearing yesterday’s oral argument I was particularly struck by several features, including:Continue Reading U.S. Supreme Court Explores the “Glorious Mess” — Can the Clean Air Act Provide a Comprehensive and Orderly Solution to Climate Change?

Tonight’s State of the Union highlighted that energy and environmental issues will continue to play a central role in the Washington agenda over the next year.  From the President’s early reference to workers building fuel efficient cars, to his extensive discussion of next steps on energy and the environment, it is clear that the President