Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

It now appears that Senator Murkowski’s resolution disapproving EPA’s endangerment finding will come to a vote in the Senate sometime in June. The complexity of the political dynamic is highlighted by the speculation regarding what such a vote will mean.  On the one hand, there are those who argue that a significant number of votes for the resolution will mean that climate change legislation is dead. On the other hand, Senator Graham has now predicted that the resolution will pass precisely because most Senators do want to pass a climate bill.

As a logical matter, Senator Graham is right. Being against EPA regulation of GHG under existing authority doesn’t necessarily mean that one is opposed to climate change legislation. Indeed, my guess at this point is that at least a plurality and probably a majority of the regulated community supports climate change legislation, but thinks that regulation of stationary sources under existing authority would be a bad idea. 

In terms of practical politics, however, it seems likely that there may be very little correlation between Senators’ views on climate change legislation and their vote on the Murkowski resolution. Some senators may vote for it because on the merits they think that GHG should be regulated pursuant to specific legislation enacted by Congress. However, many will just be taking a stand against any government regulation of climate change. On the other side, there may be many Senators who would prefer that climate change be addressed through legislation, but since legislation is not guaranteed, want to be certain that some kind of regulatory program is in place. 

Of course, it’s also important to remember that the Murkowski resolution would not just preclude regulation of stationary sources. Because it would disapprove the endangerment finding, it would also jeopardize the carefully negotiated agreement on mobile sources. They aren’t very many people who want to reopen that agreement, I assume.

The world’s greatest deliberative body? We’ll see about that.

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So, Kerry Lieberman (Graham?), also known as the American Power Act, is here. What does it mean?

My immediate reaction is that, in a big picture sense, they got it just about right. The fundamental issue, which was previously acknowledged by Senator Graham (can we start calling him “he who must not be named?”), is that we’re not going to solve the energy independence or climate change problems unless we put a price on carbon. This bill does that.

Frankly, the rest of the issues really only matter either to particularly constituencies or, as a related concern, to particular members of Congress. What are some of these other issues and how would they be handled in this bill? We’ll be getting a more detailed client alert out shortly, and if you can't wait, you can review the short summary or the section by section analysis, but here’s the very quick version.

Basic cap-and-trade provisions –

Goal is to reduce CO₂e by 4.75 percent of 2005 levels by 2013 and 83% by 2050, with interim targets in 2020 and 2030

EPA administrator will set allowance numbers to reach those targets

Only facilities emitting >25,000 tpy CO₂e will be subject to the program

Generating facilities are subject to the program in 2013; manufacturing facilities will not be subject until 2016.

Initial price floor of $12/ton and price ceiling of $25/ton

Limits on who can participate in the carbon market to avoid market manipulation

Allowances used primarily to cushion consumers from energy price increases, but also to support various industries

Includes a “WTO-consistent border adjustment mechanism.” In the absence of a global agreement, tariffs will be imposed on countries without similar GHG controls

Nuclear power – lots of help for the nuclear industry

Off-shore drilling – Provides substantial revenue sharing to certain coastal states, but allows states to prohibit leasing within 75 miles of their coastline

Coal – significant support for carbon capture and sequestration

Renewable energy – Does not include a national renewable energy standard, or RES, though does provide for federal assistance to encourage development of renewable energy technology

Preemption – preempts state cap-and-trade programs, but not other state regulation of GHG. Precludes EPA regulation:

No listing of GHG as criteria pollutants based on climate change impacts

No listing as hazardous air pollutants based on climate change impacts

Limitation – but not complete preemption – of GHG regulation under existing NSR authority

Don’t yell at me if this list does not include your favorite provision. This is a blog, not a treatise. As to the big political picture, I still think that, if Senator Graham can be brought back on board, there is a reasonable chance that this bill passes. If not, then I’m pretty skeptical. 

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As Senators Kerry, Lieberman, and Graham get ready to release their version of a climate bill, negotiations with moderate Democrats are heating up. Ten Democrats, apparently let by Sherrod Brown and Debbie Stabenow released a letter outlining what they call “key provisions for a manufacturing” package as part of an overall bill. Here are some highlights the Senators' wish list:

Investments in clean energy manufacturing and low carbon industrial technologies.

Ensuring law energy costs for manufacturers, including a “firm price collar”

A phase-in for regulation of GHG emissions from manufacturing

Allowance rebates for energy-intensive, trade-exposed industries

Tariffs on imports from countries without comparable GHG regulatory regimes

Preemption of state GHG regulation

If Kerry, Lieberman, and Graham can actually bring these Senators along, they will have come a long way towards getting a bill passed. However, there are still a number of moderate to conservative Democrats who have not signed this letter and whose support is by no means a sure thing. 

Similarly, one wonders what kind of Republican support there will be, if any. One thing is clear, if a bill is enacted, President Obama and the Congressional leadership are going to owe a big debt to Senator Graham. If he stays on board, it’s hard to see how Senators such as Collins and Snowe don’t sign on as well. 

Environmentalists are the ones who may have to be dragged across the finish line, assuming that final legislation includes preemption, support for nuclear energy and clean coal, a phase-in for manufacturing compliance and, perhaps, off-shore drilling.

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Now that health care legislation has passed, the question is whether passage of the health care bill will unleash a cascade of other legislation, including a climate change bill, or whether Congress will be so exhausted and so polarized that nothing else will happen. I lean to the former position, but only time will tell. One positive indication was Senator Graham’s statement that, notwithstanding his views on the health care bill, he will continue to work towards passage of a climate change bill. Another shout out seems in order for Senator Graham.

The second positive indicator is the chorus of concern recently voiced by environmental groups about the direction in which climate legislation seems to be heading. If the Center for Biological Diversity is expressing grave concern, I suspect that negotiations are probably about where they need to be for a bill to pass. The concern expressed most recently by environmental groups is that the Senate negotiations appear to be headed towards inclusion of language preempting both state regulation and EPA regulation under existing Clean Air Act authority – both of which seem to me to be no-brainers. 

I’m sure that the CBD truly is appalled at the idea of preemption; I hope that the more mainstream environmental groups are more practical and will simply use their opposition as a bargaining chip. While I’m not really in the prognostication business, I’d be about willing to guarantee that there won’t be a bill unless there is preemption language.

Another issue that’s jumped up on the radar screen is off-shore drilling, with a number of Senators indicating that it has to be part of a bill, while 10 Democrats have written to Senators Kerry, Graham, and Lieberman indicating that they may not be able to support a climate change bill that provided for increased off-shore drilling.

Finally, E&E Daily reported that Obama staffers, including Carol Browner, met with Senate Democrats yesterday to discuss ways to move Senate legislation in April. The report indicates that Kerry, Graham, and Lieberman hope to draft a bill in the next few weeks. I don’t think we’re going to see the Senate pass a bill any time soon, but it does look as though things are starting to move.

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Since I did a post earlier today indicating the cap-and-trade legislation is unlikely to become law in the near term, it’s only fair that I also do a post on efforts by Senators Kerry, Graham, and Lieberman to resuscitate the legislation. The bill's prospects are too uncertain to spend too much time on the details. In short, it would include a phased-in approach to regulation, starting with the biggest emitters, such as utilities, combined with a carbon tax on transportation fuels that has been supported by several major oil companies.

To me, the most notable statements come from Senator Graham, the only Republican in the gang of three. Senator Graham has turned out to be one of the more intriguing and less predictable members of Congress in recent years. This may have its pluses and minuses and I have no idea whether he can bring any GOP support along, but you have to sit up and take notice when a Republican says

Cap and trade as we know it is dead, but the issue of cleaning up the air and energy independence should not die -- and you will never have energy independence without pricing carbon.

Of course, he’s right. The sad thing is that the rest of his party has so demonized any and all taxes that no Democrat could possibly say something like this – and many of the distortions in the various bills we’ve seen to date have resulted from strenuous efforts to avoid having consumers see any price signals about the cost of carbon emissions.

Keep sayin’ it, Brother Graham.

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Yesterday, Senators Kerry, Graham, and Lieberman sent to President Obama a “framework” for Senate climate change legislation. The framework is short on details and does not contain many surprises. For example, it proposes “near term” – near team is undefined – reductions of 17% from 2005 levels and “long-term” – also undefined – reductions of 80%. 

The framework is nonetheless noteworthy, particularly for its inclusion of strong support for both the coal and nuclear industries. Senator Kerry was must have loved writing “Additional nuclear power is an essential component of our strategy to reduce greenhouse gas emissions.” And this: “We will commit significant resources to the rapid development and deployment of clean coal technology.”

It is clear from the public statements that the Senators have made what this language really means. The translation is fairly easy, but for those not in the know, here goes:

“Nuclear power is essential” means “We need some Republican votes.”

“We will commit substantial resources to … clean coal” means “We need some coal-state Democratic votes.

If this weren’t so important to the environment and our economy, I might enjoy watching this.

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