One of the main areas of contention between supporters of economy wide cap-and-trade legislation came into view this week with the release of the Energy and Commerce Committee’s new “White Paper.” On the last page of the House Committee on Energy and Commerce staff’s release, Chairman Dingell “made it very clear that he believes that motor vehicle greenhouse gas standards should be set by the Federal Government, not by State governments . . . .” The White Paper then notes that “[o]ther Committee Members” take the opposite position. The resolution of this issue in the Committee will have enormous significance for the progress of climate change legislation in the House and eventual agreement with the Senate.

The question of whether motor vehicle standards should be uniform national standards or subject to some degree of state control arose in the context of the Committee’s evaluation of the appropriate roles the various levels of government should play in a comprehensive system of greenhouse gas regulations. As the White Paper astutely indicates, this question is far more complex than the over-simplified characterization of whether State programs should be preempted.

The White Paper starts with certain premises:

(a) a national goal of reducing GHG emissions by 60% to 80% by 2050;
(b) the use of a national, economy wide cap-and-trade program as the cornerstone for achieving that goal;
(c) that climate change results from the global nature of GHG emissions; and
(d) more stringent State standards may shift the location of national emissions without providing incremental environmental or public health benefits.

The White Paper then considers a number of hypothetical scenarios in which lower levels of government play varying roles. From these premises, a unifying principle for allocating responsibilities among the levels of government emerges - States, Indian Tribes, and local government GHG programs should cover only those emissions sources “completely outside the [hard Federal] cap.” The White Paper suggests that State, Tribal, or local programs also would play significant roles with respect to inspection and monitoring, land use decisions, and as a “laboratory” for different approaches in areas that the federal program would not cover or would miss due to “market imperfections.”

Not to diminish the many valuable questions addressed in the White Paper, the most significant development remains the statement of Chairman Dingell’s position regarding California’s authority to establish more stringent standards on motor vehicles, as allowed under the Clean Air Act. The State of California zealously guards this authority; the motor vehicle industry chafes at California’s exercise of this authority. With Chairman Dingell squarely on one side of this issue, and Speaker Pelosi and Senator Boxer on the other, how this intra-party disagreement is settled will go a long way in determining national climate policy for years to come.

For further information about this topic, please contact Akin Gump.