320 likes | 442 Views
Preparing Multinational Companies for Mandatory Greenhouse Gas Controls in the U.S. OFII General Counsel Conference. Roger R. Martella, Jr. rmartella@sidley.com (202) 736-8097 . 1. U.S. Climate Change Controls The relevance for multinational corporations.
E N D
Preparing Multinational Companies forMandatory Greenhouse Gas Controls in the U.S. OFII General Counsel Conference Roger R. Martella, Jr. rmartella@sidley.com (202) 736-8097 1
U.S. Climate Change ControlsThe relevance for multinational corporations • Multinational companies will be required to comply with domestic GHG controls for operations in the United States; some groups may argue extraterritorial application on mobile sources and supply chains. • U.S. approach could differ from other climate regimes such as in European Union. U.S. regulators are proposing “command and control” approach to reduce GHGs, mandating both specific technology and operational changes to improve energy efficiency across all sectors. • While the United States lags some other nations currently, ultimate climate change approach could become model for other nations given depth and specificity of approaches. • Some actions, such as biofuels and carbon sequestration, will create opportunities and risks at a global level. • Beyond those directly regulated, U.S. climate regulation will have upstream and downstream ramifications across the world.
Climate Change RegulationThe Way It Should Work Global Consensus Federal Legislation Federal Regulation Regional and Local Implementation Litigation
Climate Change RegulationThe Way It Is Working in the United States Global Consensus Federal Legislation Federal Regulation Regional and Local Implementation Litigation
A trend that may continue • Jason Grumet, policy aide to Obama campaign: • EPA will initiate GHG rulemakings in January, 2009. • “In the absence of Congressional action,” EPA would enact GHG regulations in 18 months.
Climate Change RegulationThe Way It Is Working in the United States Global Consensus Federal Legislation Federal Regulation Regional and Local Implementation Litigation
April 2, 2007 -- Mass v. EPA: Two Key Holdings Greenhouse gases are “air pollutants” “Because greenhouse gases fit well within the Clean Air Act’s capacious definition of ‘air pollutant,’ we hold that EPA has the statutory authority to regulate the emission of such gases from new motor vehicles.” Agency must consider “endangerment” On remand, the Agency must pursuant to CAA Section 202(a): (1) Make a positive endangerment finding; (2) Make a negative endangerment finding; or (3) offer a “reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.”
Massachusetts v. EPA Remand Mass v. EPA: Remanded ICTA petition to regulate GHGs from mobile sources under CAA 202(a) • Clean Air Act Title II • (Motor Vehicles) • 20 in 10 regulations/ Executive Order • 202(a) motor vehicles • 211(c) and (o) fuels
The Aftermath of Massachusetts v. EPA Mass v. EPA: Remanded ICTA petition to regulate GHGs from mobile sources under CAA 202(a) • Clean Air Act Title II • (Motor Vehicles) • 20 in 10 regulations/ Executive Order • 202(a) motor vehicles • 211(c) and (o) fuels • 2007 Energy (EISA) Act • California waiver petition • Natural Resource Issues • NEPA • Endangered Species Act • EPA Water Strategy • Clean Air Act Title I • (Stationary Sources) • NSPS rulemakings • Permits • Authorities for potential regulation • 108 NAAQS? • 111 NSPS? • 112 HAP? • Others? • PSD/NSR • Other issues • Legislative initiatives/ EPA Review • International discussions • Enterprise sustainability • Clean Air Act Title II • (Other Mobile Sources) • 213 marine shipping vessels • 231 aircraft • 213 nonroad • Other Stationary Source Issues • Mandatory reporting • CO2 sequestration
Key litigation issues pending in courts • Whether GHGs are “regulated pollutants” such that EPA already must impose GHG controls on all sources even absent endangerment finding (Deseret appeal before EAB). • Whether EPA must regulate GHGs from stationary sources (petroleum refinery NSPS) • Timing of EPA’s endangerment determination (Mass v. EPA request for mandamus). • California’s authority to enact greenhouse gas controls for cars and light duty trucks (D.C. Circuit and Ninth Circuit litigation). • NEPA/ESA issues (arguments raised in comments to various permits and projects). • Are GHG emitters for common law nuisance claims (four separate actions)
Climate Change RegulationThe Way It Is Working in the United States Global Consensus Federal Legislation Federal Regulation Regional and Local Implementation Litigation
Regulatory DevelopmentsNow to January, 2009 • Advance Notice of Proposed Rulemaking for Greenhouse Gases • Greenhouse gas inventory rule proposal • Renewable fuels rule proposal • Carbon sequestration proposal
EPA’S Advance Notice of Proposed Rulemaking Mass v. EPA: Remanded ICTA petition to regulate GHGs from mobile sources under CAA 202(a) • Clean Air Act Title II • (Motor Vehicles) • 20 in 10 regulations/ Executive Order • 202(a) motor vehicles • 211(c) and (o) fuels • 2007 Energy (EISA) Act • California waiver petition • Natural Resource Issues • NEPA • Endangered Species Act • EPA Water Strategy • Clean Air Act Title I • (Stationary Sources) • NSPS rulemakings • Permits • Authorities for potential regulation • 108 NAAQS? • 111 NSPS? • 112 HAP? • Others? • PSD/NSR • Other issues • Legislative initiatives/ EPA Review • International discussions • Enterprise sustainability • Clean Air Act Title II • (Other Mobile Sources) • 213 marine shipping vessels • 231 aircraft • 213 nonroad • Other Stationary Source Issues • Mandatory reporting • CO2 sequestration
Mobile Source Approach: Aircraft Example • EPA proposes to regulate the aircraft industry in new and specific ways for decades to come. • EPA would seek to mandate both new technology and operational practices affecting the aircraft industry. For example: • more efficient aircraft design to reduce weight through new materials; • reducing aerodynamic drag through installing film surface grooves, hybrid laminar flow technology, blended winglets, and spiroid tips; • using alternative fuels; and • operational changes, including potential air traffic controls. • EPA proposes two approaches to regulating aircraft GHG emissions: engine emission standards or fleet average standard. • EPA seeks industry’s comment on the feasibility of these options. • EPA has incorporated the states’ and NGO petitions for public comment. • Petitions argue for technological controls, operational measures, emission fees, and cap-and-trade systems tailored to aircraft industry. • Groups already have announced their intent to sue this year to force EPA regulation.
NSPS Proposals for Manufacturing From the ANPR stationary source TSD. • GHG Control Measures • “There are numerous demonstrated efficiency improvements that exist, including boiler and steam system optimization, heat exchanger fouling mitigation and optimization, efficiency improvements in process heaters and motors, waste gas and power recovery, and process optimization and process technology improvements.” Thermal efficiency improvements • Process improvements to reduce steam and electricity usage • Biomass firing/co-firing • Waste gas recovery • Approaches under 111 NSPS • Work practices, equipment standards, numerical efficiency standards. • Provide flexibility to make improvements and demonstrate they have received reductions through reporting. • “Significant” GHG reductions available from new and existing sources.
PSD/NSR and Title V PSD/NSR permits are pre-construction permits Title V permits are operating permits.
Alternative Designs for Market-Oriented Regulatory Mechanisms • Cap and trade • Rate-based emission credit program (tradable performance standard) (3) Emissions fee • Hybrid option Issue: Does EPA have legal and policy authority to implement, or is this debate for Congress?
Sidley Austin Sector Summaries • Stationary sources • Aircraft • Cars and light duty trucks • Marine vessels • Locomotives • Nonroad vehicles • Heavy duty trucks • Market based approaches Available at www.sidley.com/climatechange
The ANPROpportunities for Multinational Corporations • Identify multinational corporations as necessary stakeholders that both are impacted by and bring solutions to climate change mandates and thus should be consulted in both regulatory and legislative dialogues. • Ensure that EPA is taking into account the ramifications on multinationals operating in the United States and is giving credit for early action solutions already put in place to reduce greenhouse gas emissions. • Address the need to promote conformity between EU and US standards on issues such as renewable fuels and technology mandates, as well as international panels that also promote GHG controls. • Discuss the trade aspects of climate change regulation to ensure that EPA is taking into account global issues in fashioning domestic regulations. • Identify upstream and downstream impacts on multinational corporations from domestic climate change regulation, including possibility of leakage.
Mandatory GHG Inventory Reporting The omnibus appropriations bill appropriated $3.5M to EPA to draft a rule requiring the mandatory reporting of GHG emissions above appropriate thresholds in all sectors of the U.S. economy. EPA is to use its existing authority under the CAA to propose a rule within 9 months of the date of enactment and issue a final rule within 18 months of enactment. State laws also may require reporting, such as in NY, where NY Attorney General charged Xcel Energy for failing to disclose to shareholders the "increased financial, regulatory, and litigation risks" that are likely to be triggered by construction of coal-fired plants. Could provide first instances of federal enforcement of climate change rules.
Renewable and Alternative FuelsEnergy Independence Security Act (Dec. 2007) • Fuel Efficiency Standards (DOT) • In April, DOT proposed 25 percent increase in fuel efficiency for cars and light trucks ending in 2015 (4.5 percent per year), increasing CAFE from 27.5 mpg to 35.7 mpg by 2015 for cars. • Comment period closes in late June. • Scoping for CAFE EIS currently ongoing. • Renewable Fuel Standards (EPA) • Provides for 36 billion gallons of renewable fuels by 2022. • EPA has indicated publicly it is working on regulations to implement renewable fuel mandates in the EISA. • Regulations presumably will include several significant definitions, including “Lifecycle Greenhouse Gas Emissions” and accounting for “indirect impacts” • Pursuant to savings clause in EISA, EPA regulation will not trigger GHG regulation under other Clean Air Act provisions.
Carbon Sequestration Proposed EPA Rule July 2008 Public comment period Through November Final Rule 2010 (?)
Carbon Dioxide Capture and Storage CO2 Capture and Transport Geologic Sequestration UIC Program Scope
Geologic Sequestration of CO2 U.S. electric utility sectoral deployment of carbon dioxide capture and storage (CCS)-enabled generation systems
Carbon Sequestration Potential liability for: Harm to aquifer under Safe Drinking Water Act. Injection of a hazardous waste under CERCLA, RCRA.
Thank you.For more information, please contact:Sidley Austin LLP Roger R. Martella, Jr. rmartella@sidley.com (202) 736-8097