A key aspect of the political balance that allowed H.R. 2454-the American Clean Energy and Security Act of 2009 (ACESA)-to pass in the U.S. House of Representatives was its “border adjustment” provisions designed to safeguard the competitiveness of U.S. manufacturing industries facing foreign competitors not subject to comparable emissions regulation.  Now that the Senate has begun deliberations on a companion bill, the debate about the optimal form of border adjustment measures, as well as their legality under international trade rules, has begun anew against a backdrop of heightened criticism from U.S. trading partners. 

H.R. 2454 sets forth a two-phased approach.  First, under Title IV, Part F, subpart 1, the bill would establish an “Emission Allowance Rebate Program” under which domestic industrial sectors shown to be vulnerable to “carbon leakage” (the transfer of emissions-intensive manufacturing to jurisdictions with lesser emissions restrictions) would recover a specified level of the costs of compliance with ACESA’s emissions caps.  Eligibility would be determined on a sector-specific basis through formulae measuring each sector’s energy-, greenhouse gas-, and trade-intensity.

In the second phase, under subpart 2, entitled “Promoting International Reductions in Industrial Emissions,” the President could, as of 2020, impose on importers a requirement to submit emissions allowances.  The President would be required to do so if, by 2018, there is no international agreement to ensure globally coordinated reduction of greenhouse gas emissions.  In the absence of an international agreement, the importer allowance requirement could be waived only if the President determines that the requirement would not be in the national economic or environmental interest and if Congress passes a joint resolution approving the President’s determination.  No importer allowance requirement would be imposed, however, for any sector for which the President determines that over 85% of global production meets specified emissions reduction criteria.  Further, imports from individual countries that have met the same emissions reduction criteria, or other specified de minimis criteria, would be exempted from the importer allowance requirement.

Key Senators have stated, however, that they cannot accept the balance struck in the House bill on border adjustment measures.  According to Sen. Barbara Boxer (D-CA), who chairs the Environment and Public Works Committee, H.R. 2454 would irritate U.S. trading partners and undermine U.S. efforts to negotiate a comprehensive U.N. climate accord to replace the Kyoto Protocol, which expires in 2012.  Sen. Max Baucus (D-MT), Chair of the Finance Committee, reportedly shares Sen. Boxer’s concerns.  So too does Sen. John Kerry (D-MA), who stated at a recent Finance Committee hearing that the President must be afforded more discretion than exists in H.R. 2454 to determine when border adjustment measures may be warranted.  At the same time, another group of Democratic Senators representing Midwest states where emissions-intensive manufacturing is concentrated, such as Sherrod Brown (D-OH), are conditioning their support for the bill on tough border adjustment measures.

As Congress continues its work to strike the right balance between the interests of domestic manufacturing industries and harmony with U.S. trading partners, the Obama Administration faces its own challenges to sell U.S. climate change legislation on the international stage.  Shortly after the passage of H.R. 2454, President Obama told the press that, in light of the continuing global recession and a drop in international trade flows, the United States should be “very careful about sending any protectionist signals.”  The President made his comments amid mounting global concerns about new protectionist tendencies, including repeated warnings by the Director-General of the WTO, Pascal Lamy, that border measures designed to stem carbon leakage could trigger retaliatory actions among trading partners and burden the WTO’s dispute settlement system.

Such warnings find support in a recent joint report of the WTO and the U.N. Environment Program describing the technical challenge of devising border measures that impose a fair cost for the greenhouse gas emissions associated with the production of an imported product and the potential difficulties of sustaining such measures under the WTO’s trade rules if challenged.  The recent comments of India’s Environment Minister Jairam Ramesh to visiting U.S. Secretary of State Hillary Clinton, who stated that India faces “the threat of carbon tariffs on our exports to countries such as yours,” underscore the diplomatic challenges triggered by ACESA’s border adjustment measures.

ClimateIntel has previously discussed the WTO rules implicated by border adjustment measures.  As discussed in relation to earlier U.S. bills, the outcome of a WTO challenge to any final U.S. climate change law would likely depend in large part on the application of GATT Article XX, which can excuse discriminatory trade practices that are “necessary to protect human, animal or plant life or health,” or that relate to “the conservation of exhaustible natural resources.”   Article XX requires and WTO jurisprudence clarifies, however, that trade restrictions for ostensible environmental purposes may not be used to shield arbitrary discrimination.

The more immediate challenge under WTO rules may focus on the first phase of ACESA’s border adjustment construct-rebates to domestic industries found to be vulnerable to carbon leakage.  Article 3 of the WTO Agreement on Subsidies and Countervailing Measures prohibits subsidies contingent upon export performance.  Under WTO subsidy rules, subsidies intended to spur exports are subject to the tightest disciplines.  Experts on WTO subsidy rules do not agree on whether ACESA’s rebate provisions run afoul of the Article 3 prohibition.  Because ACESA determines eligibility for rebates in part on a formula taking into account the applicable sector’s exports, however, such a challenge cannot be ruled out.

ACESA’s many complexities, combined with a clogged legislative calendar, suggest that it will not be easy for the House and Senate to find common ground on border adjustment measures.

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

Hydrofracturing, also known as “hydraulic fracturing” or “fracking”, involves injecting specialized liquids down natural gas wells to create small fractures in the rock, increasing the rate at which gas flows into the well.  Hydrofracturing is also used as an Enhanced Oil Recovery (EOR) technique at depleted oil fields, where liquid CO₂ or other substances are injected into one well in order to sweep remaining oil towards an operating pump. (See here for diagrams explaining EOR techniques and the usefulness of hydrofracturing.) 

This technique for enhanced oil and gas recovery is receiving increasing scrutiny on Capitol Hill.  Most of the debate concerns the potential tradeoffs between promoting domestic oil and natural gas production and protecting drinking water sources.  While other forms of underground injection are regulated by EPA to protect groundwater resources, Congress exempted hydrofracturing from regulation under the Safe Drinking Water Act (SDWA) in the Energy Policy Act of 2005 (EPAct).  Adding a layer of complexity to this policy discussion is the role hydrofracturing techniques and previously-fracked oil and gas fields may play in providing United States’ geologic sequestration capacity  for captured carbon.

In recent days, complementary bills to regulate hydrofracturing under the SDWA have been introduced in both chambers.  Bill supporters argue that excess hydrofracturing fluid has the potential to contaminate underground water supplies and migrate to the surface.  Opponents respond by citing EPA’s 2004 study concluding that hydraulic fracturing posed little or no threat to drinking water sources and warning that the regulatory burden would reduce or prevent development of significant amounts of natural gas.

Viewed in the context of the wider climate debate, these issues could have broader implications.  First, natural gas, with its significantly lower carbon emissions per unit energy than coal or oil, is an important bridge to a low-carbon energy future.  Second, because oil and gas recovery sites provide many of the most promising and practical opportunities for CCS injection, particularly in the near term, the creation of any new regulatory hurdles could decrease or delay momentum for sequestration project deployment

Hydrofracturing — A Potential Role for CCS

While hydrofracturing  has been used for years to support natural gas and oil recovery, the technique has also become a potential tool in increasing the domestic geologic sequestration capacity.

• Sequestration in Unmineable Coal Seams: These seams, which are too deep or narrow to be cost-effectively mined, provide carbon storage potential in the pores of the coal itself. As carbon dioxide is pumped into these coal seams, it displaces methane previously stored in the pores of the coal, a process known as enhanced coalbed methane (ECBM) recovery. Hydrofracturing allows CO₂ to penetrate into these seams, providing complementary benefits - accessing previously unreachable pockets of methane, allowing for both increased natural gas production, and increasing CO₂ storage capacity. (See page 6 of this document for a diagram showing the role of fracking in ECBM.)
• Sequestration in Deep Saline Formations: These formations, of saltwater-saturated rock, hold the most promise for widespread carbon storage, as they are more extensive than other potential storage reservoirs and are located in areas with exisiting coal-fired power plants. These formations, however, have lower permeability, meaning that fracking of injection zones could improve injection rates and cost effectiveness.
• Sequestration in Depleted Oil and Gas Fields: The majority of carbon sequestration projects demonstrated to date have been conducted on former oil and gas fields. Many, if not most domestic oil and gas fields have been or will be subjected to hydraulic fracturing in the course of their operations (indeed, the federal government provides tax credits to companies that use enhanced oil recovery methods to maximize well productivity). This means that even if hydrofracturing activities were to stop today, policymakers would have to develop working methods for making CCS viable and safe in previously drilled (and fracked) areas.

Reconciling Hydrofracturing Regulation and CCS Policy

In July 2008, pursuant to the SDWA, EPA released proposed Underground Injection Control (UIC) regulations governing carbon sequestration wells. The proposed regulations would prohibit various activities that could endanger sources of drinking water.  The proposed regulations would allow limited fracking “to improve wellbore injectivity” where the responsible EPA or state officials deems it permissible.  The proposed regulations also acknowledge the current statutory exemptions for unmineable coal seam sequestration and enhanced oil recovery, stating that “these hydraulic fracturing operations are used to enhance oil and gas recovery and for ECBM recovery, and in general are exceptions to the definition of underground injection under the SDWA.”  EPA nonetheless requested comments on “the extent and scope to which hydraulic fracturing should be allowed during GS injection, and whether the use of fracturing for the purposes of well stimulation is appropriate.” 

The impact of new hydrofracturing restrictions on CCS operations and capacity will vary from site to site.  Sequestration sites utilizing former-ECBM and deep saline formations typically occur at depths far below level of drinking water aquifers, making it unlikely that any associated fracturing activities would affect drinking water sources. The relationship between fracking at EOR sites and any sort of drinking water regulations are not addressed in the EPA’s proposed rule, even though many of the most promising domestic sequestration site locations are in pre-existing oil and gas fields.  If policymakers are to avoid a head-to-head standoff between developing CCS capacity and exploiting US energy reserves, they may have to find a way to resolve hydrofracturing’s role in oil and gas production with the potential that oil and gas fields have as future host-sites for geologic sequestration.

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

In their article, “Border Adjustment Measures in Proposed U.S. Climate Change Legislation-A New Chapter in America’s Leadership on Climate Change?” co-authors Stephen Kho, Bernd Janzen and Holly Smith of Akin Gump examine mechanisms proposed in recent U.S. legislation aimed at preserving the competitiveness of U.S. manufacturing industries that may be subject to greenhouse gas emissions reductions costs not borne by their foreign competitors.  Such mechanisms, often referred to as border adjustment measures, would impose costs on imports of emissions-intensive manufactured goods commensurate with the costs of compliance with U.S. emissions regulations.  The authors examine both the rationale for border measures as well as their exposure to potential challenge under World Trade Organization rules.

In particular, the authors examine the border adjustment provisions of the American Clean Energy and Security Act of 2009 (”ACESA”), which recently passed in the House of Representatives by a thin margin and now is under consideration by the Senate.  The bill’s border measure provisions are among the bill’s most controversial aspects, and are also complicating the Obama Administration’s efforts to find common ground in the U.N. climate change negotiations with developing countries such as China and India, whose exporters would likely be adversely affected by any final border adjustment measures in U.S. law.

The authors conclude their analysis with a proposal that would minimize the WTO risks of border adjustment measures by shifting compliance from the border to the point of consumption within the United States.  Such an approach could reduce the appearance that border measures discriminate against imports based on their country of origin, and could contribute to their effectiveness in spurring U.S. trading partners to join in a globally coordinated approach to reduce greenhouse gas emissions.

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

This week, Congress is focused on health care, with climate change policy taking a back seat until sometime this fall when Congress returns from its August recess.  Committees in both the House and Senate will hold hearings in support of efforts to pass climate change legislation.  The House Select Committee on Global Warming holds hearings on Tuesday and Wednesday on clean tech issues, including an increasingly important discussion on protections for intellectual property in a global greenhouse gas agreement.  The Senate Commerce Committee has a Thursday hearing on the Climate Services and the Senate Environment and Public Works Committee has a reprise of a hearing on climate change and national security.

Tuesday, July 28

The House Select Committee on Energy Independence and Global Warming will hold a hearing entitled “New Technology Solutions - Carbon Capture and Sequestration and Solar” at 9:30 a.m. in Room 2172 of the Rayburn House Office Building.  The hearing will feature next generation solar technology and companies sequestering CO₂ in cement and under the ocean floor.

Wednesday, July 29

At 9:30 a.m. in Room 210 of the Cannon House Office Building, the House Select Committee on Energy Independence and Global Warming will hold a hearing entitled “American Energy, American Made: Intellectual Property Rights.” 

Thursday, July 30

The Senate Environment and Public Works Committee will conduct a hearing on climate change and national security in Room 406 of the Dirksen Senate Office Building.

That afternoon the Senate Commerce Committee has scheduled a hearing on “Climate Services: Solutions from Commerce to Communities” at 2 p.m. in Room 253 of the Russell Office Building.

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

On July 21, 2009, in the midst of chaotic Congressional efforts to hammer out climate and health care legislation, Senator John Kerry (D-MA) introduced a Senate version of the “National Nanotechnology Initiative Reauthorization Act of 2009.”  Like the 31-page House bill passed in mid-February, the 55-page Senate bill, S. 1482, promotes a more strategic approach to setting federal research priorities and places a greater emphasis on health and safety research as well as research into “areas of national importance.”  Notably, however, the Senate Bill expands its list of “areas of national importance beyond those identified in the House.  Where the House bill targeted “energy efficiency,” “nano-electronics,” “health care” and “water remediation” as priorities, the Senate bill expands the list to include:  

• Nano-electronics;
• Energy production, transmission, storage, use, and efficiency, including renewable energy;
• Health care;
• Water remediation and purification;
• Instrumentation for nanoscale characterization and metrology;
• Rapid production nanomanufacturing for information and intelligence, including cost-effective, green, and safe nanomaterial manufacturing methods;
• Precision agriculture; and
• Sensors and sensor networks for defense and homeland security.

Given the impact that nanotechnology is already having on applications for renewable power generation, storage, and transmission, the bill’s broader support for clean-energy research will be welcomed by the Cleantech industry.  The increased emphasis on precision agriculture and sensor networks, in turn, may increase interest in passing the bill among Senate agricultural and defense advocates.  

Senator Kerry’s sponsorship of the bill (along with Senators Mark Pryor (D-AR), Jay Rockefeller (D-WV), Olympia Snowe (R-ME), and Ron Wyden (D-OR)) is also a positive sign given the challenges the bill will face in reaching a floor vote.  Although not particularly controversial, the bill must compete for Senate floor time with highly contentious climate and health-care legislation, both priorities for the Obama administration and Senate leaders.  As Chair of the Communications, Technology, and the Internet Subcommittee in the Senate Committee on Commerce, Science, and Transportation, Kerry could exercise greater sway in moving the bill through the Subcommittee and Committee.  Kerry’s participation on the Senate Finance Committee is also a plus.  As a member of the Finance Committee’s Subcommittees on Health Care (a subcommittee chaired by bill co-sponsor Jay Rockefeller) and Energy, Natural Resources, and Infrastructure, Senator Kerry might be positioned to attach the NNI reauthorization bill to any final Senate health care or climate bill.  Given the NNI reauthorization bill’s focus on clean energy and health care as priority research areas, both bills could be good fits.  Given the importance of nanotechnology to continued innovation in the cleantech and climate management sectors, it would also be good policy. 

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

Current Administration and congressional climate proposals depend heavily on geological sequestration to reduce CO2 emissions from coal-fired power plants and other major sources and tend to presume that sources in every state will have access to nearby underground storage capacity.  This is the third post in a three-part series reviewing obstacles to a 50-state sequestration strategy and suggesting the need for a national infrastructure to support medium to long-range transport of CO2.

• Part 1: The Porosity Problem
• Part 2: Not Under My Back Yard (NUMBY)

Part 3: 50 States, 50 Hurdles

A fifty-state sequestration strategy will require not only state-by-state access to geologically-suitable subsurface storage capacity and some minimum level of buy-in from state residents and property owners , but also state and municipal governments to codify, fund and implement the supporting legal, regulatory and oversight infrastructure needed to regulate long-term underground injection and storage as an approved land use.  While many state and local governments are struggling to manage and maintain their existing portfolio of governmental functions (issues like healthcare, education and core environmental programs), some are likely to balk at advancing carbon capture and sequestration (CCS) policy to the front of their legislative and regulatory agendas.  At a May 2009 hearing by the Senate Energy and Natural Resources Committee, a  Wyoming state legislator, reflected some of the issues states face in regulating the carbon capture and sequestration industry.  These comments may be particularly trenchant given that Wyoming is one of the first states to codify a comprehensive CCS legislative framework—

• Ownership of pore space as a distinct property right.  Most states have well-established rules relating to allocation of ownership of surface rights versus mineral rights at a given site, a function of the country’s long history of extractive industry (mining, oil and gas production, etc.).  Geologic sequestration introduces a different and less common subsurface property interest-interest in underground pore space as a storage commodity.
• Dominance of surface, mineral, and pore space estates.  Just as the interests of surface property owners and mineral right owners can sometimes clash, the addition of a third form of property right creates the need for rules of priority- particularly between the interests of mineral right owners and pore-space owners
• Site Permitting and Regulation.  EPA is currently establishing federal regulations for underground injection and sequestration of CO2 under its Safe Drinking Water Act authority.   EPA has acknowledged, however, that it lacks authority to address all issues raised by CCS.  Moreover, even recent legislative proposals that would augment EPA’s authority may not address siting issues subject to state and local jurisdiction. 
• Long-term liability for sequestered carbon.  The issue of financial and legal liability for the site, particularly during the decades or centuries after a CCS project has ceased active operations, is currently unresolved.  EPA has ignored the issue in the context of its federal rulemaking, citing a lack of authority.  Given the long time horizon of sequestration storage (centuries to millennia absent development of new uses for sequestered CO2), the prospect of unlimited liability for future problems is a significant source of uncertainty and risk for project managers and host states. 
• Unitization standards or eminent domain.  Liquid CO2, once injected into subsurface pore space, does not respect legal boundaries and ownership divisions.  To address situations where site developers are unable to negotiate terms with other affected subsurface pore space owners to support a project, governments need to establish procedures for unitizing or pooling groups of properties and the associated property interests to accommodate the subsurface scope of a project-sometimes against the objection of some owners. 

While Wyoming has been a leader in the development of CCS-related legislation, it is not the only state addressing these issues.  Recent studies by the National Conference of State Legislatures and the  Interstate Oil and Gas Commerce Commission  reported that at least 31 states were considering legislation addressing CCS issues.  To date, however, only a handful have put actual legislative or regulatory standards in place, including Kansas, Massachusetts, North Dakota, Oklahoma, Texas, Utah and Washington.  (Illinois, home to the recently reinstated FutureGen project, recently passed new CCS legislation that was sent to the governor for signature on June 26, 2009).

Oil and gas states have lead the effort to develop state sequestration policies.  States with well-developed oil and gas industries have numerous advantages when it comes to crafting state and local CCS policies.  Existing oil and gas laws provide policymakers with a starting point, if not a template, for sorting through complicated issues of property ownership, liability and land-use management raised by CCS.  Oil and gas states are more likely to have encountered and considered some of the unique policy associated with underground CO2 injection in the context of already-occurring enhanced oil or gas recovery activities or natural gas storage within their borders.  This experience and familiarity with subsurface property rights and responsibilities, at both the voter and policymaker level, may reduce the political complexities of introducing a new layer of rights and obligations.  Finally, oil and gas states, as natural homes for future geologic sequestration projects, likely see a greater value in developing the regulatory infrastructure needed to support what may become an important new industry, particularly as their oil and gas reserves dwindle.

The lack of CCS standards or experience with the types of issues faced in the other states shows a flaw in the assumption that each state will be ready to attend to its own geologic sequestration needs any time soon.   State lawmaking and regulatory processes can be time-intensive, especially where the public’s attitude is mixed regarding a potential policy.   Indeed,  states like California and New York may face particular challenges in developing legislation and in promulgating implementing regulations due to the extensive public participation and environmental review requirements established under state law.   

Moving Forward

Ultimately, the challenge in a 50-state sequestration strategy will not be spurring the first 10 to 20 states to action-that is already happening, in part because these states see economic benefits to being early movers.  The challenge will be in making the last10 to 20 states CCS ready.  The natural variability of carbon storage potential from one region to another, and the political and legal practicalities of siting and regulating CCS facilities, suggest that not all states will have local CO2 storage infrastructure, at least at a cost and/or a time-frame needed to meet proposed emissions reduction goals.  If policymakers want to rely on carbon capture and storage mandates as part of a nation-wide strategy to reduce CO2 emissions, medium to long-distance transport of the captured CO2 is certain to be a necessary component.  CO2 transport policy can no longer be ignored in the unfolding energy and climate debate. 

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

With Sen. Barbara Boxer’s recent announcement that her committee would not take up the climate bill until the fall, the momentum for a comprehensive climate change bill has slowed.  This week, Sen. Boxer will continue to try to build the case for climate legislation through a Tuesday hearing on cap-and-trade legislation.  Assisting in that effort, the Senate Foreign Relations Committee will hold a hearing on national security challenges presented by global climate change, and the Senate Agriculture Committee will hold a hearing on climate change and its effects on agriculture.  Of great interest will be how members of the Senate Agriculture Committee weigh into the debate.  After all, it was the House Agriculture Committee that provided much of the constructive opposition to the first iteration of the Waxman-Markey bill before reaching compromises on the package, which eventually provided the votes for its passage.

Tuesday, July 21

The Senate Environment and Public Works Committee will conduct a hearing entitled “Clean Energy Jobs, Climate-Related Policies and Economic Growth - State and Local Views” at 10 a.m. in Room 406 of the Dirksen Senate Building.  That afternoon at 2:30 p.m. in Dirksen 419 the Senate Foreign Relations Committee will hold a hearing entitled “Climate Change and Global Security: Challenges, Threats and Diplomatic Opportunities.”

Wednesday, July 22

The Senate Agriculture Committee will conduct a hearing entitled “The Role of Agriculture and Forestry in Global Warming Legislation” at 1 p.m. in Room 325 of the Russell Senate Building.  Witnesses include, among others, Mr. Tom Vilsack, Secretary of Agriculture, and Ms. Lisa Jackson, Administrator of the Environmental Protection Agency.

Thursday, July 23

A Science and Technology Committee hearing on “Effectively Transforming Our Electric Delivery System to a Smart Grid” will take place at 10 a.m. in Room 2318 of the Rayburn House Office Building.  Later that day, starting at 2 p.m., the Foreign Relations Committee will hold a hearing entitled “From L’Aquila to Copenhagen: Climate Change and Vulnerable Societies” in Room 2172 of the Rayburn House Office Building.

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

This week the Senate Environment and Public Works Committee, under Senator Barbara Boxer, will hold multiple hearings on climate change.  With last week’s announcement that her committee was unlikely to take up comprehensive climate change legislation until the fall, the House and the Senate recalibrate this week by focusing on the economic benefits of capping carbon emissions.  Even with a delay in consideration of the cap-and-trade bill, however, both Senate and House leadership have stated that they plan on sending President Obama to Copenhagen with a change in American policy.  Also this week, the Senate Judiciary Committee will consider Judge Sonia Sotomayor for the U.S. Supreme Court.

Climate-related hearings for the week of July 13 - July 17 include the following-

Tuesday, July 14

The Senate Environment and Public Works Committee will conduct a hearing entitled “Economic Opportunities for Agriculture, Forestry Communities, and Others in Reducing Global Warming Pollution” at 10 a.m. and a hearing entitled “Transportation’s Role in Climate Change and Reducing Greenhouse Gases” at 2:30 p.m.  Both hearings will take place in Room 406 of the Dirksen Senate Office Building.

The House Science and Technology Committee, starting at 2 p.m. in Room 2318 of the Rayburn House Office Building, will hold a hearing on wind and solar research and development.

Thursday, July 16

A hearing entitled “Ensuring and Enhancing U.S. Competitiveness while Moving toward a Clean Energy Economy” will take place at 9:30 a.m. in Room 406 of the Dirksen Building.  The hearing takes place in the Environment and Public Works Committee.

That afternoon the House Transportation and Infrastructure Committee will hold a hearing entitled “Green Buildings Offer Multiple Benefits: Costs Savings, Clean Environment, and Jobs” at 2 p.m. in Room 2167 of the Rayburn House Office Building.

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

On June 24, 2009, the U.S. Court of Appeals for the Ninth Circuit issued a little notice Order, granting the unopposed motion of the State if California to dismiss its appeal of the district court decision in California v. General Motors Corp., No. 06-5755, 2007 WL 2726871 (N.D. Cal. Sept. 17, 2007).  The district court held that California’s suit for damages from the automobile manufacturing industry for injuries relating to climate change presented a nonjusticiable political question.  Two other courts of appeals have heard arguments on appeals of similar district court decisions that actions for nuisance to recover damages caused by greenhouse gas emissions presented nonjusticiable political questions:

• Comer v. Murphy Oil Co., No. 05-CV-436LG (S.D. Miss. Aug. 30, 2007)., the so-called “Katrina” litigation pending in the U.S. Court of Appeals for the Fifth Circuit;
• Connecticut v. American Electric Power (AEP), 406 F.Supp.2d 265 (S.D.N.Y. 2005), the case brought by several northeastern states against five electric utilities pending in the U.S. Court of Appeals for the Second Circuit; and

The “political question” doctrine sets provides generally that certain issues are best resolved by the decision-making processes of the “political” branches. The leading “political question” case is the Supreme Court decision in Baker v. Carr, 396 U.S. 186 (1962), which determined that the reapportionment of the districts for elected officials was a political question over which the federal courts did not have jurisdiction.

The dismissal of the Ninth Circuit appeal leaves two other potential avenues of Supreme Court review of whether tort claims alleging injury from greenhouse gas emissions may be adjudicated in federal court.  The nomination of Judge Sotomayor to replace the now-retired Justice Souter as Associate Justice of the Supreme Court could have a decisive impact on the result in the event the Supreme Court grants certiorari in one the cases.

Judge Sotomayor served as presiding judge on the Second Circuit panel that heard argument in the Connecticut case in June 2006.  That case, which has been held for over three years without a decision, could potentially become an issue in the Sotomayor confirmation hearings. Moreover, should Judge Sotomayor be confirmed, as currently seems likely, and that case becomes the vehicle for Supreme Court review, then Sotomayor would recuse herself from participating in the case, according to the guideline set out in 28 U.S.C. 455.

The consequences of this series of events lie firmly in the real of speculation.  But, some of the questions to be pondered as the two courts of appeals proceed include:

• Justice Souter sided with the majority in the landmark Massachusetts v. EPA decision holding that EPA had authority to regulate greenhouse gasses (GHGs) under the Clean Air Act, would a Justice Sotomayor have voted identically;
• Justice Souter’s political question jurisprudence is somewhat limited. The Supreme Court has yet to consider application of the political question doctrine in the cases of tort injuries from GHG emissions. During the one clear case of political question jurisprudence he faced during his tenure on the Court, Nixon v. United States, 506 U.S. 224 (1993)—a question relating to judicial impeachment proceedings—he expressed doubts whether the political question doctrine was an insurmountable bar to judicial action.
• Judge Sotomayor has had experience with political question jurisprudence in its relation to GHGs and federal common law—the Connecticut v. AEP case she heard in June 2006. During oral argument in that case, Judge Sotomayor’s questions of counsel could be interpreted as expressing skepticism of application of the political question doctrine (that oral argument can be found in nine parts: part 1, part 2, part 3, part 4, part 5, part 6, part 7, part 8 and part 9); and
• The issues before the Court in Massachusetts and those that would be before the Court in Comer or Connecticut are materially different—divining congressional intent in a statute versus determining whether a court should defer to the political branches in defining rules of liability. In the context of the Comer or Connecticut cases, the latter issues cannot be neatly categorized as liberal or conservative, activist or strict constructionist, empathetic or indifferent.

Based on the few district court decisions to date, climate change litigation in the federal courts appears headed toward an early grave—precluded from judicial review by political question jurisprudence.  There are, however, a number of imponderables that will be clarified before the death certificate is signed.

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

***UPDATE: The full Senate Environment and Public Works Committee will hold a hearing entitled “Moving America toward a Clean Energy Economy and Reducing Global Warming Pollution: Legislative Tools” on Tuesday, July 7, at 10:00 am. Scheduled witnesses include the heads of the US Department of Energy, the US Environmental Protection Agency, and the US Department of Agriculture, as well as the Governor of Mississippi, the Mayor of Braddock, Pennsylvania, and representatives from The Dow Chemical Company and the Natural Resources Defense Council.

On Friday evening, June 26, the House of Representatives voted to approve the American Clean Energy and Security Act (ACES) (H.R. 2454), a 1300-plus page bill that would impose the first federal restrictions on CO2 emissions, establish a market structure for trading CO2 and other greenhouse gas emissions permits and promote investment in, and transition to, cleaner-energy technologies.  Friday’s 219 to 212 House vote was an important step forward for comprehensive climate change legislation, providing a much-needed endorsement of the cap-and-trade-style regulatory approach.  But if the vote in the House wasn’t challenging enough, securing the 60 votes needed in the Senate likely will prove even more difficult.

H.R. 2454: Select Provisions of the Bill

Climate Intel will provide more detailed assessments of the final House bill in upcoming posts, but some of the most notable elements of the new bill include—

• The first-ever federal cap on US emissions of greenhouse gases, starting with a required 17 % reduction from 2005 levels by 2020 and an 80 % reduction by 2050
• A system for buying, selling and trading greenhouse gas emissions permits within the limits of the cap, including a robust market for domestic and international carbon offsets
• A renewable portfolio standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity
• New funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies
• Targeted allocations of tradable emissions permits to reduce the impact of the program on key stakeholders, including coal-reliant states, consumers and “energy-intensive, trade-exposed industries that make products like iron, steel, cement and paper.”

The Vote

The Friday floor vote capped off several frenzied weeks of negotiations with policymakers in the Energy and Commerce Committee, the Science and Technology Committee, the Ways and Means Committee, the Agriculture Committee and the Rules Committee, which had to gain support for the bill.  Ultimately, the House passed 219 to 212, with 8 Republicans supporting and 44 Democrats opposing. See the vote count here.

Read the rest of this entry »

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