Jenner & Block

Climate Change Update Resource Center

As a service to Jenner & Block's clients and the greater legal community, the Firm's Climate and Clean Technology Law practice maintains this online resource center that offers the latest case law and other developments in climate change.

Please also visit the Firm's Environmental, Energy and Natural Resources Law practice website for information about our capabilities, and our Corporate Environmental Lawyer Blog for current developments in this area.

Jenner & Block will update this web  page with new developments and items of interest as they become available.  For further information, please contact Partner Gabrielle Sigel.

Federal Legislative Developments

Democratic Senators Introduce Bill to Set Levels of Electricity Generated from Renewable Resources

On April 6, 2011, Senators Tom Udall (D-N.M) and his cousin Mark Udall (D-Colo.) introduced a bill that would require retail electric suppliers that sell at least one million megawatt hours of electricity to generate at least 6% of it from renewable resources, with that proportion gradually rising to 25% by 2025.  The bill, S.741, would establish a program under which covered electrical suppliers would submit to the Secretary of Energy one federal renewable-energy credit for each kilowatt hour of electricity that must be generated from renewable resources.  The Secretary of Energy would issue renewable-energy credits to suppliers based on the renewable energy they generate, but the credits would be tradable.  Thus, suppliers who cannot generate sufficient renewable energy to meet the standard could still comply by purchasing credits from those whose renewable-energy quotient exceeds the standard.  Suppliers could also meet the standard by borrowing up to three years worth of credits from the Secretary of Energy based on plans showing the anticipated future credits that the supplier will earn.  Finally, suppliers may comply by submitting outright payment for any shortfall in federal renewable-energy credits at a rate equal to the lesser of 200% of the market value of federal renewable energy credits or three cents per kilowatt hour.  Publicly owned utilities and rural electric cooperatives would be exempt from the standard but may voluntarily participate (thus enabling them to enter the market for credits).

Limits on Greenhouse Gas Regulation Voted Down in Senate, but Bill Passes House

On April 6, 2011, the Senate rejected a series of amendments to the Small Business Reauthorization Act that would have blocked or limited EPA’s authority to regulate greenhouse gas (“GHG”) emissions.  The amendment offered by Senator Mitch McConnell (R-Ky.), which would have prohibited EPA from regulating GHG emissions under the Clean Air Act, garnered 50 votes but failed to pass under Senate rules that effectively require 60 votes for legislation to clear the chamber.  The McConnell amendment was identical to a house bill authored by Rep. Fred Upton (R-Mich.), H.R. 910, that passed the House by a vote of 255-172 on April 7, 2011. 

The amendment submitted by Senator Jay Rockefeller (D-W.Va.), which would have delayed for two years EPA’s regulation of GHG emissions from stationary sources, was defeated by a vote of 88-12.  Falling by a margin of 93-7 was the amendment offered by Senator Debbie Stabenow (D-Mich.), which would have similarly suspended EPA’s GHG authority for two years, additionally exempted the agricultural sector from regulations of GHG emissions, and authorized $5 billion to revitalize the Advanced Energy Manufacturing Tax Credit program, or Section 48C credit, that was created by the American Recovery and Reinvestment Act.  Finally, again on a vote of 93-7, the Senate rejected the amendment from Senator Max Baucus (D-Mont.), which would have exempted the agricultural sector from GHG rules and limited EPA regulation to only the largest power plants and other stationary sources.

Climate and Clean Energy Funding Cut for Fiscal Year 2011

On April 15, 2011, President Obama signed a continuing resolution, H.R. 1473, that will fund the federal government through September 30, 2011, the end of fiscal year 2011.  The new budget cuts funding for energy efficiency and renewable energy programs run by the Department of Energy by $400 million, 18% below 2010 levels.  It also cuts climate change funding across all agencies by $49 million, and it prohibits the National Oceanic and Atmospheric Administration from creating a Climate Service to host the Administration’s various climate initiatives.  The budget act also bars the White House from appointing an assistant to the president on energy and climate change.

Federal Litigation Developments

Justices Question States’ Ability to Pursue Reduction in GHG Emissions Under Tort Theory

On April 19, 2011, the Supreme Court heard oral argument in American Electric Power Co. v. Connecticut, No. 10-174.  The case involves the attempt by eight states and New York City to enjoin power companies from emitting GHGs on the ground that the emissions constitute a public nuisance by contributing to climate change.  In 2009, the U.S. Court of Appeals for the Second Circuit ruled that plaintiffs had standing to bring the lawsuit, that the nuisance remedy was not displaced by federal air pollution laws, and that allowing the suit to proceed would not require a judge to set national policy on GHG emissions and address questions committed to the political branches of government.  Attorneys for the power companies and the federal government (on behalf of the Tennessee Valley Authority) took issue with each conclusion.  They argued that:  1) the states lacked standing because a favorable court ruling would only incrementally decrease global GHG emissions and so would not redress the injury the plaintiffs claimed, i.e., global warming; 2) EPA’s authority to regulate GHG emissions displaces tort remedies (which might be inconsistent with regulatory standards); 3) allowing a tort suit to proceed would require a district judge who lacks the expertise and accountability of an agency to determine a reasonable level of GHG emissions; and 4) because climate change is a global concern related to multifarious activities around the world, the court should end the suit in the name of prudential standing.  The states countered, among other things, that tort remedies should be displaced only when EPA begins regulating GHGs from existing stationary sources, and that courts have traditionally been trusted to balance competing interests in deciding nuisance cases based on pollution and emissions. 

The Justices’ questions at argument focused on displacement and whether a climate change tort suit inappropriately asks a judge to craft emissions policy.  They seemed inclined to the power companies’ position that common law claims based on climate change have been displaced by federal regulation and that determining a reasonable level of emissions is not an appropriate task for a judge.  During oral argument, the Justices appeared less interested in the standing and prudential standing issues.

D.C. Circuit Rejects Auto Dealers’ Challenge to California Limits on GHG Emissions from Vehicles

On April 29, 2011, the U.S. Court of Appeals for the D.C. Circuit ruled that the U.S. Chamber of Commerce and the National Automobile Dealers Association lacked standing to challenge California’s rules for GHG emissions from new vehicles.  Chamber of Commerce v. EPA, No. 08-1237 (D.C. Cir. April 29, 2011).  Petitioners contended that California lacked justification for promulgating its 2004 standards for fleet-average GHG emissions for new vehicles.  They argued that the regulation, which took effect in 2009, would hurt their members in California and other states that have signed onto the California rules because it would increase the manufacturing cost of vehicles and dictate the mix of vehicles with which auto manufacturers would supply them, which could cost them sales if the mix does not match market preferences.

The D.C. Circuit never reached the question of whether the California rules are justified because it concluded that the auto dealers had not asserted an imminent or actual injury that was fairly traceable to implementation of the state rules and could be redressed by a favorable court decision.  The court focused on the petitioners’ declaration that they might suffer injury if the state regulations caused an increase in manufacturing costs or motivated manufacturers to alter their vehicle mix, and it found the claim too speculative.  The court also observed that at least some automakers appeared to be voluntarily decreasing the GHG emissions of their fleets, so the California regulation could not fairly be said to cause the injury complained of; accordingly, a favorable court decision would not change the price or mix of vehicles available to dealers.  Lastly, the court found significant that EPA and California had subsequently agreed to coordinate emissions standards.  That pact, the court ruled, mooted the issue of whether California was justified in establishing its own standards.  Because the federal standards set the same GHG emissions levels as California did, the California standards no longer had any impact on the dealers and were not the source of any injury.

Environmental Groups Sue EPA Over Biomass Deferral, Definition of Renewable Fuel

On April 7, 2011, a coalition of environmental groups petitioned the U.S. Court of Appeals for the D.C. Circuit to review EPA’s grant of an industry motion for reconsideration of the GHG-permitting rule for biomass fuel.  As reported in the January and March issues of this publication, the motion for reconsideration prompted EPA to defer GHG-permitting requirements for three years for new and modified industrial facilities that burn biomass, such as wood, crop residues, and grass.  The proceedings in this case, Center for Biological Diversity v. EPA, D.C. Circuit, No. 11-1101, are unusual in that the deferral has not yet been finalized, although the comment period for the rule is now closed.

On April 18, 2011, the National Wildlife Federation asked the United States Court of Appeals for the D.C. Circuit to review EPA’s refusal to reconsider its definition of renewable fuels under the Energy Independence and Security Act of 2007, a decision that was reported in the March 2011 issue of this publication.  The case is National Wildlife Federation v. EPA, D.C. Cir., No. 11-1110.   In seeking reconsideration, the National Wildlife Federation and other environmental groups urged EPA to require producers of biofuel crops to keep records showing they did not grow their crops on new farmland.  They also contended that EPA’s calculation of the reduction in GHG emissions associated with any fuel must include the potential global increase in petroleum usage that might result if slackened American demand for petroleum led to a decrease in world prices.  The National Biodiesel Board and the Renewable Fuels Association are intervening on behalf of EPA in the case.

International, Advocacy Groups, & Business Developments

EU Revises Emissions Trading System to Reduce Free Allowances

On April 27, 2011, the European Commission (the EU’s executive body) announced updates to the EU’s Emissions Trading System.  Previously, the system was based on fixed national emissions caps, and the vast majority of installations, including electricity generators, received free emissions allowances pegged to their level of historical emissions.  This system, however, had the effect of rewarding installations that historically emitted more GHGs with a greater number of free allowances. 

The new system establishes a European Union-wide cap that will decrease annually.  Free allowances will no longer be awarded to electric utilities, which will have to purchase their allowances at auction.  Other classes of emitters will receive free allowances, each of which represents the right to emit one metric ton of carbon-dioxide equivalent, based upon benchmarks.  Approximately 80% of the free allowances will be tied to one of 52 product benchmarks; each benchmark represents the average GHG emissions per ton of output at the top 10% most GHG-efficient of European installations that produce that product.  Installations that produce products not covered by a product benchmark may receive allowances related to a heat or fuel benchmark for carbon dioxide (“CO2”) emissions per terajoule of energy consumed at the installation.

In  2013, the first year of the new program, a facility will receive free allowances for 80% of the emissions that would result if it emitted at the benchmark rate while maintaining its historic production level.  The percentage of free allowances will decline annually until it reaches 30% of benchmark-rate emissions in 2020; the EU hopes to end free allowances by 2027.  The new system will, however, award free allowances for 100% of the benchmark-rate emissions from installations in sectors that are exposed to significant risk of “carbon leakage,” i.e., an increase in production and, consequently, GHG emissions at installations outside the EU that might result if EU installations are burdened by the expense of procuring allowances or reducing emissions.

EU Sees Increase in Renewable Energy; European Parliament Asks Bank to Cease Lending for Projects Powered by Fossil Fuel

On April 11, 2001, Eurostat, the European Commission’s statistical service, announced that the proportion of energy generated in the EU from renewable sources increased from 5.4% in 1999 to 9% in 2009.  The EU-wide number masks wide variation among member states: Sweden and Latvia produced more than 30% of their energy from renewable sources, while the United Kingdom generated less than 3% of its energy from renewable sources.  In other news, on April 7, 2011, the European Parliament passed a nonbinding resolution that calls on the European Investment Bank to stop funding projects that use fossil fuel, including coal-fired power plants, and to redouble its efforts in developing renewable-energy and energy-efficient technology.

Canadian Power Co. Will Rebuild Power Plant to Capture Carbon Dioxide

On April 26, 2011, Saskatchewan approved plans filed by the utility SaskPower to rebuild a coal-fired unit at the Boundary Dam Power Station so that it captures and sequesters CO2.  The unit will produce approximately 1 million tons of CO2, which the petroleum industry will use to extract oil.  The project will also capture sulfur dioxide, which can be repurposed for the production of sulfuric acid.  Construction is expected to commence immediately, with the carbon capturing unit coming online in 2014.

Federal Regulatory Developments

Department of Energy Increases Efficiency Requirements for Room A/Cs and Dryers

On April 21, 2011, the Department of Energy published a final rule that requires increased energy efficiency for room air conditioners and residential clothes dryers.  The rule increases the energy-efficiency requirements for room air conditioners by between 9 and 13%, depending on the design and cooling capacity of the unit.  Dryers will have to be between 14% and 24% more efficient-- depending on the size of the unit, its voltage, and whether it is heated by gas or electricity – with the exception of ventless compact electric dryers that run on 240V current, for which the new standard is actually more lenient.  The new standards are the result of a consensus agreement reached by efficiency advocates and appliance manufacturers in 2010 and will take effect on August 19, 2011, unless the Department of Energy receives adverse comments by August 9, 2011.  Absent adverse comments, compliance with the new standards will be required by April 21, 2014.

EPA Extends Deadlines for Use of Best Available Monitoring Methods for Calculating GHG Emissions from Petroleum and Natural Gas Systems

On April 25, 2011, EPA reconsidered a rule issued in November 2010 and published a new final rule that grants owners and operators of petroleum and natural gas systems three extra months in which to (1) apply for permission to use, (2) use, and (3) seek an extension of permission to use best available monitoring methods (“BAMM”) to calculate their GHG emissions, rather than relying on calculation methodologies outlined by EPA.  According to EPA, the following sources constitute BAMM: (1) monitoring methods currently used by the facility that do not meet the specifications of the rule; (2) supplier data; (3) engineering calculations; or (4) other company records. 

The new rule amends 40 CFR Part 98, subpart W.  That regulation previously provided that owners and operators could request permission to use BAMM throughout 2011 to calculate GHG emissions related to leaks, but only if they filed a request to do so by April 30, 2011.  The new rule extends the deadline for filing that request by three months, to July 31, 2011.  Under the old rule, no permission was necessary to use BAMM until April 30, 2011, to monitor well-related emissions or to gather input data on the following: cumulative hours venting; times of operation; numbers of blowdowns, completions, workovers, or similar events; volume of fuel used; and cumulative volume produced, volume input and output.  The new rule extends that time period by three months, so that BAMM can be used until September 30, 2011, for those purposes without a special grant of permission.  The new rule also pushes back the deadline for filing a request to continue using BAMM for these purposes throughout the year.  The new deadline is July 31, 2011.

Federal Housing Administration to Insure Loans for Improvements to Home Energy Efficiency

On April 21, 2011, the Secretary of Housing and Urban Development and the Secretary of Energy announced the selection of 18 lenders to participate in a two-year pilot program called PowerSaver, in which the Federal Housing Administration (“FHA”) will back loans to homeowners to make energy improvements.  A list of eligible improvements will be developed by FHA and the Department of Energy; according to a press release from FHA, the list will include insulation, duct sealing, energy-efficient doors and windows, energy-efficient HVAC systems and water heaters, solar panels, and geothermal systems.  Homeowners may borrow up to $25,000 for terms as long as 20 years.  FHA will insure up to 90% of the value of each loan and will provide streamlined payment for insurance claims in the event of default.  Participating lenders may also be eligible for grants or other incentives.  PowerSaver loans will be available only to borrowers with credit scores of at least 660, and total debt-to-income ratios may not exceed 45%.  The approved lenders include credit unions, local and regional banks, and larger mortgage companies, such as Quicken loans.

Bureau of Land Management Issues Rule to Protect Solar and Wind Projects from Mining Claims

On April 26, 2011, the Bureau of Land Management (“BLM”) published a proposed rule that would prevent mining claims from being filed on public lands that BLM has designated for rights of way for wind- or solar-energy projects or for which an application for a right of way is pending.  The Mining Law of 1872 prohibits rights of way from materially interfering with a previously located mining claim, and mining claims, unlike rights of way, are presumed valid upon filing, until proven otherwise.  Also, mining claims are easy and inexpensive to file, and proving that a mining claim was improperly filed or does not contain a valid discovery is difficult, time-consuming, and costly.  Thus, mining claims can tie up pending applications for solar- or wind-energy rights of way and may undercut BLM’s efforts to set aside land for future rights of way.  Indeed, BLM is concerned that some mining claims were being filed for the sole purpose of disrupting plans for solar- and wind-energy projects in the hope that developers would pay the filers to relinquish the claims.  Consequently, BLM proposes to segregate all lands that are designated for wind- and solar-energy rights of way or are involved in a pending application for such a right of way from other public lands that are available for mining claims.  The proposed segregation would have no impact on applications for rights of way for other purposes and would not affect valid existing rights in mining claims.  On April 26, 2011, BLM also published an interim final rule that immediately segregates land for solar- and wind-power rights of way for two years, until April 26, 2013, while the proposed rule is being considered.  Comments on the proposed rule must be received by June 27, 2011.

State and Regional Developments

California Adopts Renewable Energy Mandate

On April 12, 2011, California Governor Brown signed into law a requirement that by 2020 one-third of the electricity sold in the state must come from renewable resources, such as solar, wind, or geothermal power.  The new law requires all electricity retailers, including public utilities, to begin buying 20% of their electricity from renewable sources by the end of 2013.  That number will go up to 25% by 2016, and 33% in 2020.  California law already compelled investor-owned utilities to purchase 20% of their power from renewable sources starting in 2010, but the utilities have not achieved that level yet.  California has committed to cutting its GHG emissions to 1990 levels by 2020.

Department of Energy Announces Billions in Loan Guarantees to California Solar Developments; Work Halted on Project that Threatens Tortoises

The Department of Energy took several actions in April promoting solar projects in California.

On April 18, 2011, the Department of Energy announced that it had finalized a $2.1 billion conditional loan guarantee for the Blythe Solar Power Project in Southeastern California.  The loan will support two 242-megawatt concentrated solar thermal power plants, but ultimate plans for the Blythe Solar Power Project call for approximately 1,000 megawatts of generating capacity, enough to provide electricity for 300,000 homes.  The project developer expects to complete the first stage of the project within two to three years, and the total project within four to five. 

On April 12, 2011, the Department of Energy reported that it had offered a conditional loan commitment worth $1.187 billion for the California Valley Solar Ranch project, which when completed will have a capacity of 250 megawatts, enough to power 60,000 homes.

And on April 11, 2011, the Department of Energy announced that it had finalized a $1.6 billion loan guarantee for the Ivanpah Solar Energy Generating System, a group of three solar-electricity plants with a total capacity of 392 megawatts that are to be constructed on federally owned land in the Mojave Desert.  But on April 15, BLM, which oversees the land being used, imposed an immediate and temporary suspension on all construction activities in two of the three parcels designated for power plant construction.  BLM stopped work after it concluded that the number of threatened Mojave desert tortoises taken incidentally in the early stages of the sites’ development had already reached, if not exceeded, the limits set for the whole project.  BLM also temporarily barred the developer from using a BLM road out of concern for potential tortoise deaths.  Work may, however, proceed in those areas from which all tortoises have been removed and that have been fully fenced to exclude tortoises.  During the work stoppage, the project developer must survey the affected parcels and a buffer zone two kilometers wide to determine how many tortoises remain in those areas, and it must fill open trenches and holes that may pose a hazard to tortoises.

New York City Targets Rooftops for Energy Improvements

On April 25, 2011, New York City enacted three ordinances that aim to increase the energy efficiency of roofs and rooftop installations in the City.  One ordinance exempts solar-panel installations from provisions of the building code that count rooftop structures -- such as air conditioners, roof tanks, and chimneys -- against height and story restrictions if they in aggregate cover more than one-third of the roof.  Now solar-energy facilities may cover any portion of a roof without regard to height or story limitations, a change that the City Council predicts will lower the cost of installing solar-energy systems and expand their use.  Another ordinance amends the City Code to explicitly include cogeneration systems, which produce both heat and electricity, among the equipment that may cover up to one-third of a roof without counting as an extra story.  The third ordinance updates the City’s previous requirement that a covering on a roof with a slope less than or equal to 25% must “be white in color or EnergyStar rated as highly reflective for at least 75 percent of the area.”  In place of color or Energy Star rating, the new “cool roof” ordinance highlights standards developed by ASTM International, an organization that develops voluntary consensus standards.  The ordinance now provides that a roof cover must have either 1)  a minimum initial solar reflectance of 0.7 and a minimum thermal emittance of 0.75 as determined in accordance with ASTM standards; or 2) a minimum Solar Reflectance Index of 78, as determined in accordance with ASTM calculations.  The new rule does not apply to roofs with a slope greater than 16.6%, green roofs, ballasted roofs that meet a minimum solar reflectance threshold, or those used as playgrounds by schools or daycares.  It also exempts any portions of a roof that are used as outdoor space, made of glass, metal, tile, plastic or rubber, or that are under mechanical equipment, roof tanks, flush-mounted solar equipment, a platform, duckboarding or decking.

Washington to Phase Out Coal Power

On April 29, 2011, the state of Washington adopted a statute that mandates the shutdown of the state’s only coal-fired power plant by 2025.  The plant must install technology in 2013 to reduce nitrogen oxide emissions, and its first coal boiler will be shut down in 2020.  The final boiler will go offline in 2025.