A Guide to Greenhouse Gas Regulation - November/December 2007 Update

Strong efforts to address climate change and to regulate greenhouse gases (“GHG”) continued at the federal, state, and regional levels throughout October and November 2007. Five new bills were introduced in Congress, the most prominent being a comprehensive cap-and-trade measure introduced by Sens. Joe Lieberman (I – CT) and John Warner (R – VA) known as the Lieberman-Warner Climate Security Act of 2007. Other recently introduced legislation includes a bill to establish a national biodiesel mandate, one to boost the country’s current renewable transportation fuels mandate, a bill to provide research for carbon capture and sequestration, and a bill to provide tax benefits for the new cellulosic fuels industry, while reducing tax benefits for the ethanol industry.

At the same time, the Executive Branch reported that 2006 GHG emissions levels declined 1.5% from the prior year, unveiled loan guarantee regulations for clean energy projects, and highlighted a proposal for lightening trade restrictions on advanced energy goods and services. The judiciary also addressed climate change, with an appellate court rejecting the administration’s fuel economy standards for light trucks and sport utility vehicles (“SUVs”).

There also was substantial activity at the state level, albeit with significant differences among state regulatory efforts that reflect disparities in their respective stages of GHG regulation. For example, California remains the state with the most mature regulatory process addressing climate change. Among other things, California petitioned the United States Environmental Protection Agency (“EPA”) to curb carbon dioxide from ships, released a draft regulation that would require certain industrial sectors to report their GHG emissions to the California Air Resources Board, unveiled additional early action measures aimed at reducing GHG levels, and sued to compel the EPA to begin implementing stringent vehicle tailpipe emission standards. In addition to California, Kansas became the first state to deny an air permit for two coal-fired power plants on the basis of global warming, New Mexico prepared a draft GHG reporting regulation, Alaska considered raising its oil tax, and New York moved toward implementing cap-and-trade regulations. During this period, other states joined the push towards GHG regulation, with Colorado, Florida, Montana and Utah producing climate change plans to influence climate change legislation.

Regional initiatives also progressed significantly, with New York state agencies proposing regulations to implement the Regional Greenhouse Gas Initiative (“RGGI”) in the state, the Climate Registry releasing its draft reporting protocol, and the Midwestern Governors Association creating a GHG Pact. Taken together, these developments signify that important progress is being made to integrate state and regional efforts to achieve greater uniformity in GHG regulation. This November/December 2007 Update to Stroock’s Guide to Greenhouse Gas Regulation focuses on the most important developments in the area of GHG regulation and climate change for the months of October and November 2007.