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

Senate Climate Change Legislation Passes Environment and Public Works Committee

On November 5, 2009, the Senate Environment and Public Works Committee (“the committee”) voted 11 to 1 in favor of S. 1733, the “Clean Energy Jobs and American Power Act,” introduced in September by committee chairwoman Barbara Boxer (D-CA) and Sen. John Kerry (D-MA).  Due to a boycott by Republican members of the committee, no Republican voted on the bill; the sole ‘no’ vote came from Sen. Max Baucus (D-MT).  The version of the bill voted on by the committee was the revised “Chairman’s mark” released by Sen. Boxer in late October.  Five other Senate committees with jurisdiction over the bill have yet to vote on it, and numerous amendments are expected to be considered as Senators negotiate a compromise bill capable of garnering 60 votes to defeat a filibuster.  Proposed amendments are expected to address the severity of the required emissions cuts, nuclear energy, assistance for vulnerable industries, energy efficiency provisions and the definition of biomass under the bill, among other topics.  Sen. Boxer stated on Nov. 17, 2009, that she expects the other Senate committees to continue deliberating the bill through early next year.

Bill Would Award Cash Prizes for Sequestering CO2 From the Atmosphere

On November 5, 2009, Sens. John Barrasso (R-WY), Jeff Bingamen (D-NM) and Michael Enzi (R-WY) introduced the “Carbon Dioxide Capture Technology Act of 2009” (S. 2744), a bill that would create financial awards for the development of mechanisms to capture CO2 from “media in which the concentration of carbon dioxide is dilute,” including the atmosphere.  The bill directs the Secretary of Energy (“the Secretary”) to develop rules for the competition for the financial awards, minimum performance standards for participating projects, and monitoring and verification requirements for projects approved to compete for the awards, and requires the Secretary to submit an annual report to Congress on the success of projects designed to capture CO2 from dilute media.  In addition, the bill establishes a Carbon Dioxide Capture Technology Advisory Board, which would advise the Secretary in matters of climate science, economics, chemistry, physics and other matters relevant to the Secretary’s duties under the bill.  Finally, the bill requires that any award winner agree to “vest” the intellectual property related to the developed technology in an entity incorporated in the United States.  The bill was referred to the Senate Committee on Energy and Natural Resources on November 5.

Stabenow Bill Would Clarify Allowable Offsets in Climate Change Program

On November 4, 2009, Sen. Debbie Stabenow (D-MI.) introduced the “Clean Energy Partnerships Act” (S. 2729), which would clarify the types of offsets that could be purchased under the cap-and-trade program proposed under the Senate climate change bill (S. 1733).  Under S. 2729, 15 categories of projects would qualify as offsets, including afforestation or reforestation of land not covered by forest on Jan. 1, 2009; methane capture from landfills; carbon capture and sequestration projects; capture of “fugitive emissions” that escape from oil and gas plants which would otherwise be vented or flared; and agricultural practices such as the planting of winter cover crops.  The Department of Agriculture would have authority to approve agricultural and forestry offset projects, while EPA would approve other types of offsets.  To qualify for use under the climate bill, offsets would have to be measurable, meet requirements for additionality, prevent leakage of emissions, and meet verification standards set jointly by the two agencies.  To be considered “additional,” projects would either have to begin after January 1, 2009, or have begun after January 1, 2001 and be registered with an approved program.  Finally, separate from the offset program, the bill would authorize research and demonstration activities for carbon sequestration, soil sequestration, and reduction of methane and nitrous oxide emissions, and would establish incentives for the development of forestry- and agriculture-related emissions reductions.  The bill was referred to the Committee on Environment and Public Works on November 4.

Nuclear Power, Other Clean Energy Technologies Would Be Funded Under New Bill

On November 16, 2009, Sens. Lamar Alexander (R-TN) and James Webb (D-VA) introduced the “Clean Energy Act of 2009” (S. 2776), a bill which would increase funding for nuclear and other clean energy development.  Under the bill, loan guarantees of up to $100 billion would be provided for carbon-free electricity development, including nuclear energy, and $750 million would be authorized for the development of transportation biofuels, CO2 capture and storage, and batteries for electric vehicles, as well as for research directed at lowering the costs of solar electricity and discovering ways to recycle nuclear fuel.  According to Sens. Alexander and Webb, the cost of the bill would total at most $20 billion over 20 years.  The bill was referred to the Senate Committee on Energy and Natural Resources on Nov. 16.

Federal Litigation Developments

EPA Agrees to Consider Revisions To GHG Emissions Standards for Nitric Acid Plants

On November 2, 2009, the EPA signed a proposed consent decree with the Environmental Integrity Project and the Sierra Club in which EPA agreed that by November 15, 2010, it would either promulgate a proposed rule revising the New Source Performance Standards (“NSPS”) for nitric acid plants, pursuant to the Clean Air Act (“CAA”), or issue a proposed or final determination that revisions to those NSPS are not called for under CAA § 111(b)(1)(B).  The proposed consent decree stems from a lawsuit filed by the two environmental groups in February, 2009, accusing EPA of failing to comply with a CAA requirement that it review and, if appropriate, revise the NSPS for nitric acid plants at least every 8 years.  The environmental groups sought an order compelling EPA to review and revise the nitric acid plant NSPS to include technologies for limiting emissions of nitrous oxide, a GHG which, they claim, traps heat 310 times more efficiently than CO2.

International, Advocacy Groups, & Business Developments

Obama Pledges to Cut GHG Emissions to 17 Percent Below 2005 Levels by 2020

On November 25, 2009, President Obama announced that, at the 15th United Nations Climate Change Conference in Copenhagen (the “Copenhagen conference”) in December, the US will offer to cut GHG emissions to 17% below 2005 levels by 2020.  According to a White House announcement, the President chose that offer because it is “in line with the final US energy and climate legislation” which he is “working closely with Congress” to pass.  The White House also announced that President Obama will travel to Copenhagen on December 9, and that a large US delegation will attend the Copenhagen conference, including several Cabinet secretaries and senior administration officials.  President Obama’s plans changed following the announcement, and he now plans to meet with world leaders on the final day of the conference, December 18.

China, Japan, South Korea Pledge GHG Emission Cuts

In November, 2009, China, Japan and South Korea all promised significant GHG emission cuts in their respective countries.  First, BNA reports that on November 6, Japanese Prime Minister Yukio Hatoyama announced that Japan would set a goal of cutting GHG emissions to 20% below 1990 levels by 2050.  Then, on November 17, South Korean President Lee Myung Bak stated that South Korea would voluntarily reduce emissions 4% below 2005 levels by 2020, cutting GHG emissions 30% as compared to business-as-usual scenarios.  Finally, on November 26, 2009, vice chairman Xie Zhenhua of China’s National Development and Reform Commission announced that China would cut its “carbon intensity” - its GHG emissions per unit of GDP - 40 to 45% below 2005 levels by 2020.  However, Mr. Xie stated that China’s pledge would not be subject to international verification, but rather would be ensured through domestic processes.

US to Collaborate with China, India on Energy and GHG Emissions-Reduction Projects

On November 17, 2009, the White House released 6 “fact sheets” detailing energy policy topics on which China and the United States have agreed to cooperate following President Obama’s November 2009 visit to China.  According to the facts sheets, the US and China will: a) establish a US-China Clean Energy Research Center to facilitate joint research on clean energy technologies and energy efficiency; b) initiate a US-China Electric Vehicles Initiative, which will develop joint standards for such vehicles, share data on electric vehicle development and consumer preferences, and develop materials to educate the public on electric vehicles; c) launch a US-China Energy Efficiency Action Plan aimed at reducing energy waste in both countries through green building and energy efficiency initiatives; d) create a US-China Renewable Energy Partnership to facilitate the deployment of renewable energy technologies in both countries; e) work together to develop cleaner uses of coal via joint venture pilot projects and joint research; and f) establish a US-China Shale Gas Resource Initiative to develop environmentally-friendly shale gas development.

Similarly, on November 24, 2009, the White House released another “fact sheet” describing a “Green Partnership” between the United States and India.  As part of the Green Partnership, the two countries will cooperate to develop clean energy technologies, reduce GHG emissions from land use and forests, support climate science and mobilize public and private resources to invest in clean energy projects in India.  In addition, the two countries agreed to launch an Indo-US Clean Energy Research and Deployment Initiative, aimed at fostering innovation and deployment of clean energy technologies such as smart grid development, biofuels, clean coal technologies, and renewable energy generation.  The US and India will further collaborate to develop solar and wind energy in the two countries, to explore opportunities to exploit unconventional natural gas, and to more accurately predict and adapt to climate change’s effects on agriculture and storm systems.  Finally, the countries agreed that the US EPA will assist India in establishing an effective national environmental protection agency.

Federal Regulatory Developments

EPA Proposes Framework to Categorize Species’ Vulnerability to Climate Change

On November 25, 2009, EPA published a notice requesting public comment on a proposed framework for ranking threatened and endangered species’ vulnerability to climate change (“the framework”).  A Framework for Categorizing the Relative Vulnerability of Threatened and Endangered Species to Climate Change, 74 Fed. Reg. 61671 (Nov. 25, 2009).  According to the notice, the framework is intended to indicate species’ comparative, not absolute, vulnerabilities to climate change, and to assist the EPA in “prioritizing those species most vulnerable to climate change,” rather than to “serve as a tool for determining whether a species is endangered or threatened” under the Endangered Species Act.  The framework consists of four “modules.” The first module evaluates a species’ life history, conservation status and demographics to determine the species’ baseline vulnerability to factors other than climate change.  The second module reviews the species’ vulnerability to climate change, while the third module evaluates the results of the first two modules together to create an overall score of the species’ vulnerability to climate change.  The fourth and final module evaluates the uncertainty of the species’ vulnerability as determined by the evaluations in the other modules.  The public comment period on the framework closes on December 28, 2009.

Investors Renew Request to SEC to Impose Climate Risk Disclosure Requirements

On November 23, 2009, numerous environmental groups, chief financial officers of New York, California, Florida, Oregon, Maryland, Connecticut, Vermont and North Carolina, and large investors, including the California Public Employee’s Retirement System (“the investors”), filed a supplemental petition with the SEC requesting that the agency require companies to disclose climate-related risks in their financial reports.  The investors, who in September 2007 and June 2008 filed similar petitions seeking clarification of companies’ obligations to disclose climate-related risks, assert in the supplemental petition that recent activity by the federal and state governments oblige the SEC to impose climate-risk disclosure requirements on corporations.  The investors point to EPA’s promulgation of mandatory GHG reporting requirements, EPA’s waiver allowing California to enforce its vehicle GHG emissions standards, studies on the future economic impact of climate change, cap-and-trade legislation pending in Congress, and other state and federal actions as evidencing a “‘known trend’ within the meaning of Regulation S-K Item 303, [which triggers] the obligation for companies to assess and disclose material emissions data and their analysis of climate risks and opportunities.”

State and Regional Developments

Idaho Permit Requires Control of CO2 Emissions

On November 30, 2009, the Idaho Department of Environmental Quality (“IDEQ”) issued a Prevention of Significant Deterioration (“PSD”) permit that requires a coal gasification plant to limit CO2 emissions to no more than 750,000 tons per year.  Under the permit, for the first five years of operation, the plant may offset any CO2 emissions it emits beyond the permitted amount using offsets from a GHG registry.  Once those first five years have passed, Southeast Idaho Energy Inc., the owner of the plant, would be required to capture and sequester any emissions that exceed the limit.  The CO2 limits stem from an agreement between the Sierra Club, the Idaho Conservation League, and Southeast Idaho Energy Inc.  Although IDEQ agreed to include the enforceable CO2 limits in the permit, an IDEQ press release states that IDEQ does not consider CO2 to be a regulated pollutant, and “does not intend to include greenhouse gas emission limits in future air quality permits until federal regulations have been finalized.”

Midwest GHG Reduction Accord Members Release Draft Model Rule for Cap-and-Trade

On October 21, 2009, representatives of the Midwest Greenhouse Gas Reduction Accord (“MGGRA”) released a draft model rule describing the governing framework for a Midwest regional GHG cap-and-trade program. The program would apply to electricity generators, stationary fuel combustors, cement manufacturers and numerous other industrial sources that emit at least 25,000 metric tons per year of the CO2-equivalent of GHGs including CO2, hydro-fluorocarbons, nitrous oxide, sulfur hexafluoride, perfluorocarbons, and methane.  Under the draft model rule, slated to go into effect in 2012 if no federal cap-and-trade program has yet been established, covered entities would be required to purchase emissions allowances totaling their allowed emissions under a declining cap designed to cut emissions 20% from 2005 levels by 2020 and 80% from 2005 levels by 2050.  Control periods would last three years, and 33% of emissions allowances would be auctioned, while the remainder would be sold, for small fees increasing each control period, to covered entities.  Covered entities could purchase offsets to cover up to 20% of their emissions compliance requirements.  Before the program could go into effect, MGGRA members would have to pass the necessary legislation and/or regulations to authorize and implement it.  MGGRA members include Illinois, Wisconsin, Michigan, Minnesota, Iowa, Kansas and the province of Manitoba in Canada.

California Publishes Preliminary Draft Regulation for State Cap-and-Trade Program

On November 24, 2009, the California Air Resources Board (“CARB”) released a preliminary draft regulation providing the framework for a multi-sector GHG cap-and-trade program that would begin in 2012 and last through 2020.  Under the draft regulation, titled the California Cap-and-Trade Program Preliminary Draft Regulation and authorized by the state’s Global Warming Solutions Act of 2006, covered industries would trade GHG emissions allowances under a declining cap designed to cut GHG emissions to 1990 levels by 2020.  Emissions allowances would be issued each year, with an as-yet-undetermined percentage auctioned to finance clean energy projects, but compliance periods would be three years.  At the end of each compliance period, covered entities would have to turn in allowances corresponding to their cap, and could bank, sell, or request that CARB retire any excess allowances.  Covered entities would be permitted to purchase qualified offsets to cover up to 4% of their required emissions cuts.  Industries covered by the cap would include electricity importers and generators, cement plants, oil refineries, and hydrogen plants, among others, with emissions from natural gas in commercial and residential settings and emissions from the production and delivery of transportation fuels covered beginning in 2015.  Covered GHGs would include CO2, methane, sulfur hexaflouride, nitrous oxide, nitrogen triflouride, hydrofluorocarbons and perfluorocarbons.

The comment period on the preliminary draft regulation is open until January 11, 2010.

New York, Illinois Adopt Legislation Facilitating Funding for Clean Energy

In November, 2009, both New York and Illinois passed legislation aimed at financing clean energy projects.  On November 20, New York Governor David Paterson (D) signed S. 66004, a bill allowing local governments in the state to take part in the “property-assessed clean energy” (“PACE”) pilot program created by the federal government.  Under the PACE program, governments may make loans to owners of residential and commercial property to fund energy efficiency and renewable energy projects approved for their properties.  Those loans can then be paid back via additional charges on the borrowers’ property tax bill.  On November 12, Illinois Governor Pat Quinn (D) signed a bill authorizing the Illinois Finance Authority ("IFA") to issue bonds to fund “clean coal,” energy efficiency, and renewable energy projects in the state, as well as to guarantee bonds used to finance those types of projects.  The bill, Senate Bill 390, limits funding for pipelines for sequestering CO2 and for “carbon abatement technology” at current coal-fired energy generation facilities to $500 million, and funding for transmissions lines to connect new sources of power with delivery points to $300 million.  “Clean coal” projects and energy efficiency projects may be funded up to $2 billion each, with no individual borrower receiving more than $450 million.  The bonds authorized by the bill will not be debts of the State of Illinois, but rather will be “payable solely from the revenues, income or other assets of the [IFA] pledged therefor.”