Weekly Climate Change Policy Update - May 17, 2010

Article by Kyle Danish, Shelley Fidler, Kevin Gallagher, Megan Ceronsky and Tomás Carbonell

Commentary

The long-anticipated Kerry-Lieberman bill came out last week, taking the form of a discussion draft. (For more information, see May 13, 2010 Issue Alert). Majority Leader Reid will caucus with committee chairmen after the Memorial Day recess to determine whether the American Power Act comes to the Senate floor in June; the Majority Leader already has said that consideration of an energy-only bill is an alternative . . . On the day following the release of the K-L text, EPA issued its final version of the Tailoring Rule, which outlines emission thresholds and a schedule for phasing in certain permitting requirements for stationary sources of GHG emissions under the Clean Air Act. (For more information, see May 14, 2010 Issue Alert ). . . Sen. Murkowski plans to bring her Resolution of Disapproval of EPA's "endangerment finding" for GHGs to the Senate floor by the June 7^th cut-off date. Passage of the resolution by Congress and signature by the President would remove the legal basis for EPA's regulation of GHGs under the Clean Air Act.

Executive Branch

• President Obama Voices Support for American Power Act. President Barack Obama greeted the release of the draft Kerry-Lieberman climate change bill, the American Power Act, with a supportive statement expressing a desire to see legislation enacted this year. The President said the bill "will create American jobs building the solar panels, wind blades and the car batteries of the future," and would also benefit national security by reducing U.S. dependence on imported oil.
• EPA Releases Final "Tailoring Rule." The Environmental Protection Agency finalized its long-awaited "Tailoring Rule," which establishes a phased timetable for implementing Clean Air Act permitting requirements for greenhouse gas (GHG) emissions from large stationary sources. The rule provides that Prevention of Significant Deterioration (PSD) requirements will first apply to GHG emissions as of January 2, 2011. This initial phase will apply only to new and modified facilities that that would already be required to obtain PSD permits as a result of their non-GHG emissions, and whose construction will result in an increase in GHG emissions of at least 75,000 tons CO2-equivalent per year. A second phase of the program will commence on July 1, 2011, and will impose PSD requirements on new facilities that emit at least 100,000 tons CO2-e per year, as well as modified facilities whose emissions will increase by at least 75,000 tons CO2-e per year. According to the rule preamble, EPA will initiate a new rulemaking next year to establish emission thresholds and permitting requirements to take effect beginning in 2013. In addition to these PSD requirements, the Tailoring Rule sets comparable emission thresholds and timetables for new and existing facilities to obtain operating permits under Title V of the Clean Air Act. The text of the Tailoring Rule is available at http://www.epa.gov/nsr/documents/20100413final.pdf . (For more information, see May 14, 2010 Issue Alert ).

Congress

• Kerry, Lieberman Release Climate Bill. Senators John Kerry (D-MA) and Joseph Lieberman (I-CT) released the long-awaited draft of their energy-climate legislation, flanked by religious leaders and representatives from industry and major environmental groups. (For more information, see May 13, 2010 Issue Alert ). Describing the bill as a "reduce and refund" plan, Sen. Kerry told the audience that: "despite Washington conventional wisdom, we are closer than we've ever been to a breakthrough." Reactions from other Senators were generally reserved:
• • Senator Lindsey Graham (R-SC), who withdrew from efforts to negotiate support for the bill citing disagreements with the Senate Democratic leadership, described the concepts in the bill as "transformational" and "the most consumer- and business-friendly effort to date in dealing with carbon pollution. Most importantly, they can serve as a framework in allowing America to lead in the creation of alternative-energy jobs and significantly reduce our dependency on foreign oil." Sen. Graham said that he would carefully review the details of the proposal with these goals in mind, but that "it's just a bad environment right now, no matter how worthy the merits of the bill."
  • Majority Leader Harry Reid (D-NV) said that the oil spill in the Gulf of Mexico demonstrated the need to pass legislation to end dependence on oil and create new clean energy technologies. Majority Leader Reid also called for other senators, especially Republicans, to come forward with ideas "to strengthen this proposal" so that it can pass this year. Majority Leader Reid also said that he could advance a more limited energy bill if Republicans are not willing to support an energy-climate package. He told reporters that he would meet with the relevant committee chairmen the week after Senators return from the Memorial Day recess to decide what the Senate will do on energy this year.
  • Sen. Olympia Snowe (R-ME) said she remains concerned about "taxes" and rising costs of home heating oil and gasoline due to the carbon price.
  • Sen. Bill Nelson (D-FL) said he was glad the legislation includes his proposal that Congress consider a moratorium on new offshore drilling until the cause of the current oil spill is understood. He opposed, however, provisions allowing state legislatures to decide to allow drilling even in military training areas.
  • Sen. Mark Begich (D-AK) said he was pleased with the state preemption provisions and new incentives for natural gas production, but wants changes to the bill's treatment of oil refineries and he seeks more money for adaptation.
  • Sen. Mary Landrieu (D-LA) was happy with the provisions increasing revenue sharing from drilling with coastal states, but said that "there need to be some changes" in the provisions allowing states to veto offshore drilling if the Interior Department finds that their coastlines might be at risk in the event of a spill.
  • Sen. George Voinovich (R-OH) said the proposal was put forward "in good faith and with much thought." He said that he would look closely at the proposal, but that his inclination was to use more targeted policies than placing a price on carbon throughout the economy.
  • Sen. Sherrod Brown (D-OH) said that there are "a lot of things I like" about the bill, but that it does not do enough to help manufacturers or to protect against trade competitiveness concerns.
  • All six West Coast Senators called for a permanent ban on any new leases for offshore drilling off their coastlines, and said that they will push to have a ban included in any energy or jobs bill that moves in the Senate.
• Pelosi Offers to Take Senate Bill to House for Vote. Speaker of the House Nancy Pelosi (D-CA) told reporters that if the Senate passes a climate bill this year that creates new jobs and strengthens national security, then the two chambers could come to agreement. In reference to the Kerry-Lieberman bill, Speaker Pelosi said that "I see the makings in their bill of something where we could come to agreement, and if we do, yes, then we would take it up."
• Murkowski to Seek Vote on Disapproval Resolution. Sen. Lisa Murkowski intends to seek a vote on her Resolution of Disapproval of EPA's finding that GHG emissions endanger public health and welfare. Under the Congressional Review Act, the vote must take place by June 7^th. The resolution currently has 41 cosponsors in the Senate, including three Democrats, and would require 51 votes to pass. If passed by both chambers of Congress and signed by President Obama, the resolution would reverse EPA's finding, which is the basis for regulation of GHG emissions under the Clean Air Act, and prevent EPA from taking any similar actions to regulate GHGs unless explicitly authorized by Congress.
• Lautenberg Introduces Offshore Drilling Fee for Clean Energy, Oil Independence. Senator Frank Lautenberg (D-NJ) introduced the "Beyond Petroleum Act" (S. 3343) which would establish a $10/acre/year fee on offshore areas leased for oil or natural gas extraction. The revenue would be deposited in fund that would be used to support development and deployment of renewable technologies or programs that decrease oil usage and reduce GHG emissions.
• House Bill Would Prohibit Agency Climate Rules. Reps. Dennis Rehberg (R-MT) and Stephanie Herseth Sandlin (D-SD) introduced legislation (H.R. 5294) that would prohibit federal agencies from taking any administrative action to regulate GHG emissions to address climate change without express statutory authorization.

Judicial

• Industry Groups File Legal Challenge to EPA's Vehicle GHG Standards. The Coalition for Responsible Regulation and several companies and industry associations lodged a petition for review of EPA's recently-finalized GHG emissions standards for light duty vehicles. Filed in the United States Court of Appeals for the District of Columbia Circuit, the suit is the first legal challenge to be brought against the new standards. According to the trade press, the petitioners – who have also filed a suit challenging the EPA's December 2009 "endangerment finding" ­­– plan to argue that the court should stay the vehicle standards until the court has had an opportunity to rule on the validity of the endangerment finding. Under the Clean Air Act, the endangerment finding is a necessary legal predicate for the issuance of the vehicle GHG standards.

Industry and NGOs

• Industry Stakeholders Respond Favorably to American Power Act... The release of the American Power Act met with favorable reactions from some influential members of industry. Tom Kuhn, President of the Edison Electric Institute ­– the leading trade association of investor-owned utilities – was present at the press conference announcing the bill, and later called the bill a "historic achievement." The CEOs of Duke Energy and FPL Group, Jim Rogers and Lew Hay, also attended the event and commented favorably on provisions of the bill assisting consumers with increases in energy prices. Lastly, the oil companies Shell and ConocoPhillips both issued statements offering praise for the bill's treatment of emissions from the transportation sector. The American Petroleum Institute and the U.S. Chamber of Commerce refrained from taking a position on the bill, saying that the bill required further study.
• ...But the Bill Draws Criticism From Other Quarters. Representatives of the natural gas industry argued that the bill should do more to encourage use of natural gas to reduce emissions. The American Public Gas Association, for example, argued that gas local distribution companies should be excluded from the bill's emissions cap, while the American Gas Association called for the bill to include natural gas research and development provisions as well as "carbon labeling" for appliances. Vocal opposition to the American Power Act came from the American Truckers Association, which issued a statement claiming that "the climate bill clearly imposes a tax on transportation fuels and reallocates revenue from that tax for non-transportation purposes." In addition, the Associated General Contractors of America stated that "the legislation leaves our aging and inefficient roads, airways and transit systems vastly underfunded" by providing less revenue to transportation sector projects than would be collected as a result of allowance requirements imposed on transportation fuels.

Studies and Reports

• Climate Change May Make Large Areas Uninhabitable by 2300. Research published in the Proceedings of the National Academy of Sciences projects that if global average temperatures rise by approximately 11-12ºC, heat stress would make the majority of the currently inhabited regions of the world too hostile for humans. Lead author Steven Sherwood said that there was a 50:50 chance that this would occur in the long term, potentially by 2300. The researchers concluded that based on their results, current cost projections for climate change are too low unless temperature rises of this extent can be ruled out. The abstract of this article is available at http://www.pnas.org/content/early/2010/04/26/0913352107.abstract?sid=27816e49-a573-42f7-8cb9-4de7faff956f .
• Polls Show Support for Action on Energy and Carbon. Three recently released polls found support for congressional action on domestic energy development and controlling carbon pollution. A poll released by the Natural Resources Defense Council found that 71 percent of voters support legislation that would increase renewable energy and reduce U.S. oil dependence. In a poll released by Republicans for Environmental Protection, 52 percent of Republicans stated support for an energy policy that would increase domestic energy production and cap carbon emissions. A poll released by the Clean Energy Works campaign found that 61 percent of voters support a bill that would "limit pollution, invest in domestic energy sources and encourage companies to use and develop clean energy" by "charging energy companies for carbon pollution in electricity or fuels like oil." Fifty-four percent of respondents said they would be more likely to reelect their Senator if he or she voted for such a bill; 30 percent said they would be less likely. The polls are available at http://switchboard.nrdc.org/blogs/wwarren/the_catastrophic_gulf_oil_spil.html ; http://www.rep.org/opinions/press_releases/release10-5-6.html ; and http://cleanenergyworks.us/press/05-10-10-climate-poll.html .

Erratum: Last week's Weekly Update erroneously described an action brought by Virginia Attorney General Ken Cuccinelli against climate change scientist Michael Mann as a lawsuit. Attorney General Cuccinelli has to date only issued a civil investigative demand. Under Virginia law, a civil investigatory demand may be issued when the Attorney General has reason to believe that a person may be in possession, custody, or control of documentary material or information relevant to a false claims law investigation. The party served with the demand is required to produce any demanded documents, respond to any interrogatories issued, or provide oral testimony on the documentary material or information.

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