Renewable + Law : Renewable Energy Lawyer & Attorneys : Stoel Rives Law Firm : Climate Change, Emissions, Carbon Markets, Wind, Solar, Biofuels : Western United States

As described in a previous alert, the Securities and Exchange Commission ("SEC") voted on Wednesday, January 27, 2010 to adopt an interpretive release to provide guidance on existing public company disclosure requirements as they apply to business or legal developments relating to climate change. The SEC has now distributed the interpretive release itself, which can be found here.  The interpretive release indicates that its purpose is to provide guidance on how to interpret existing SEC disclosure rules and requirements as applied to business and legal developments associated with climate change.  For our detailed alert on the subject, click here.

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My partner Tom Wood recently composed and circulated this email alert about the return of the "Global Warming" case against several electric utilities:

Five years ago eight states and New York City made headlines when they sued several electric utilities alleging that their carbon dioxide emissions constituted a federal common law nuisance.  The plaintiffs wanted to force the companies to cap and reduce their carbon dioxide emissions.  The federal trial court dismissed the case, holding that the issue was a political question that had to be addressed through the political branches of government and not through the courts.  Earlier today the Second Circuit Court of Appeals reversed the trial court.  This enables the plaintiffs to resume their nuisance lawsuit against the generating companies, but does not guarantee them victory as they will have significant evidentiary challenges to address.  In reinstating the suit, the Second Circuit touted the judiciary’s ability to handle complex cases of this type and said that doing so would not interfere with the business of the other branches of government.  However, the court noted in several places that the judiciary would be preempted in the future from addressing carbon dioxide through nuisance law if either Congress (i.e., the legislative branch) amends the Clean Air Act to regulate carbon dioxide or the executive branch, through EPA, moves to regulate carbon dioxide under existing authority.

Today’s decision will potentially have significant impacts on future climate change litigation.  One of the areas heavily debated in the case was who has the ability to bring a federal nuisance claim such as that alleged here.  The defendant companies recognized that states have the ability to bring federal common law nuisance claims, but argued that the potential contribution of carbon dioxide emissions to climate change was not the sort of issue for which a federal nuisance suit is available because, among other reasons, the impacts could not be traced to particular emission sources.  The Second Circuit rejected this argument, setting the stage for the state suits to continue.  The court also rejected arguments that private parties cannot bring federal nuisance suits related to climate change.  The court recognized that the Supreme Court had never addressed this question, but concluded that private parties should be able to proceed with federal nuisance claims related to climate change when they invoke an overriding federal interest or federalism concerns.   By holding that private parties can bring federal nuisance suits and by recognizing that climate change is of overriding federal interest, the court potentially cleared the way for federal lawsuits against all types of companies that emit material levels of greenhouse gases.

The decision will create significant new pressure on EPA and Congress to regulate greenhouse gas emissions.  The court noted that it was reasonable to assume that EPA has the authority to regulate greenhouse gas emissions if it first determines that they “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare” (referred to as an “endangerment finding”).  However, as the court noted, EPA has only proposed to make such a finding and only in relation to mobile sources—not stationary sources such as factories and power plants.  When/if EPA makes such findings, it must then develop a regulatory program.  Until such time that a program is developed, the court held that the field is left open for federal common law nuisance suits.  This holding will undoubtedly create increased support for taking the regulation of greenhouse gases out of the courts and back into the legislative or executive branches. 

EPA is poised to issue several rules that will commence the regulation of greenhouse gases for mobile and stationary sources.  These rules were not considered by the court as they had not been finalized.  As these rules become finalized in the weeks and months ahead, the plaintiff’s victory may prove short-lived.  However, there is no question that the decision is likely to have a tremendous impact on the debate regarding whether to proceed with greenhouse gas regulations.

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On June 16, 2009, the Environmental Protection Agency ("EPA") issued a request for applications ("RFA") for its Climate Showcase Communities Grant Program.  The RFA provides $10 million for programs to help lower green house gas ("GHG") emissions through energy and resource management.

Eligible activities are those that reduce GHG emissions in the following priority areas:

• Use or supply of green power products, on-site renewables, and other clean energy supply options;
• Energy performance in municipal operations (including municipal energy, water, and waste-water utilities);
• Energy performance in residential, commercial, agricultural, aqua-culture, and/or industrial buildings;
• Land use, transportation, or community master planning;
• Reduction of vehicle miles traveled;
• Solid waste management;
• Agricultural, aqua-cultural, and natural resource management;
• Heat island management;
• Removal of barriers for greenhouse gas management, through the development of effective programs, policies, or outreach; or
• Other innovative activities which generate measurable reductions of greenhouse gases

The EPA expects to award up to 30 cooperative agreements.  Individual awards can be as high as $500,000, but most awards will range in value from $300,000 to $500,000.  Eligible entities include local governments, Indian tribes, and intertribal consortiums.

Applicants must submit an informal notice of Intent to Apply by July 1, 2009 and full applications are due July 22, 2009 at 4:00 p.m. EDT.

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