Climate Change and Trends in Global Finance

On December 12, French President Emmanuel Macron, joined by President of the World Bank Group, Jim Yong Kim and the Secretary-General of the United Nations, António Guterres, hosted the One Planet Summit highlighting public and private finance in support of climate action. The summit’s focus centered on addressing the fight against climate change and ensuring that climate issues are central to the finance sector.

The summit’s most notable event was perhaps the announcement that insurance giant Axa would be dumping investments in and ending insurance for controversial U.S. oil pipelines, quadrupling its divestment from coal businesses, and increasing its green investments fivefold by 2020. Axa’s plans echo those of BNP Paribas, who, in mid-October, announced that it would terminate business with companies whose principal activities involve exploration, distribution, marketing, or trading of oil and gas from shale or oil sands. The bank also ceased financing projects that are primarily involved in the transportation or export of oil and gas. These moves themselves follow controversy over the Dakota Access pipeline in the U.S. from mid-March that resulted in ING’s $2.5 billion divestment in the loan that financed the pipeline.

These measures prefigure what might be a more conspicuous trend of large institutional investors moving more rapidly away from fossil fuel investments and into green investments. In mid-December, the World Bank said it would end all financial support for oil and gas exploration by 2019. Around the same time, New York Governor Andrew Cuomo revealed a plan for the state’s common retirement fund, with over $200 billion in assets, to cease all new investments in entities with significant fossil-fuel related activities and to completely decarbonize its portfolio. Recently, HSBC pledged $100 billion to be spent on sustainable finance and investment over the next eight years in an effort to address climate change. Additionally, JP Morgan Chase committed $200 billion to similar clean-minded investments, Macquarie acquired the UK’s Green Investment Bank, and Deutsche Bank and Credit Agricole both made exits from coal lending. As the landscape of global finance shifts, it will be important to monitor how funds, banks, and insurers address the issues related to climate change.

 

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President Trump Announces Withdrawal from Paris Agreement on Climate Change

President Trump announced on Thursday his intention to initiate a formal withdrawal of the United States from the Paris Agreement, a global agreement designed to address climate change by reducing greenhouse gas (“GHG”) emissions. The President indicated that the United States would move forward with the pull-out and possibly attempt to re-negotiate the agreement in order to get “terms that are fair to the United States.”  President Trump frequently discussed pulling out of the Paris Agreement while on the campaign trail, citing concerns regarding its potential impact on the American economy, particularly the energy sector.

While the President’s intentions are clear, the path forward is less obvious. The U.S. cannot immediately exit the Paris Agreement and several nations, including Germany, France, and Italy, announced in a joint statement that “that the Paris Agreement cannot be renegotiated.”  In addition to announcing withdrawal from the Paris Agreement, President Trump also indicated that the U.S. would immediately halt the remaining $2 billion of the $3 billion in aid to developing countries pledged by President Obama as a part of the Green Climate Fund, which also is a component of the UNFCCC.

The Paris Agreement’s formal processes does not allow for a notice of withdrawal to be submitted until November 4, 2019, after which it will take one year for such notice to become effective. Assuming adherence to this process, the earliest the U.S. can formally withdraw from the Paris Agreement is November 5, 2020, one day after the next presidential election.  Because the Agreement’s only binding obligations are certain reporting requirements, the withdrawal is viewed by some as a symbolic gesture, since any federal GHG reduction measures resulting from the Paris Agreement would still need to be pursued through domestic legislation or regulatory action.  As a practical matter, irrespective of the Paris Agreement the administration can—and likely will—take steps to alter federal climate change policy.

Paris Agreement Background

The Paris Agreement builds on the United Nations Framework Convention on Climate Change (UNFCCC), a treaty signed by President George H. W. Bush and ratified by the United States Senate in 1992. The Paris Agreement was adopted in December 2015 as part of the twenty-first session of the Conference of the Parties (COP21) to the UNFCCC.  Following its initial adoption, President Obama ratified the Paris Agreement as an “executive agreement” on September 3, 2016.  The Paris Agreement was ultimately signed by 195 parties, ratified by 146 nations and the European Union, and entered into force on November 4, 2016.

The Paris Agreement directs signatory nations to develop voluntary GHG reduction measures, known as “Intended Nationally Determined Contributions,” which convert to “Nationally Determined Contributions” (NDCs) after a nation ratifies the Paris Agreement.  The Paris Agreement further provides for periodic updates to NDCs in order to continually “enhance” emission reductions targets.  The Paris Agreement’s only binding provisions are reporting obligations largely governed by the UNFCCC and “global stocktakes” that occur every five years.  These reporting measures were designed to help track total carbon emissions and progress towards meeting each NDC.  However, actual attainment of an NDC is voluntary and the Paris Agreement has no legally binding enforcement mechanism. The Paris Agreement also directs wealthier nations to help developing nations reduce GHG emissions and adapt to the impacts of climate change, but again these actions would be taken on a voluntary basis.

What happens next?

The UNFCCC made a formal statement in response to President Trump’s announcement that it “regrets” the decision of the United States to withdraw from the Paris Agreement, and that it remains open to discussion of the rules and modalities currently being negotiated for implementation of the Paris Agreement.  At the same time, the UNFCCC stated that the Paris Agreement has been “signed by 195 Parties and ratified by 146 countries plus the European Union [and] cannot be renegotiated based on the request of a single Party.”  Based on this statement and similar statements from France, Germany, Italy, and other nations, it appears that any near-term renegotiation of the Paris Agreement is unlikely.

Regardless of whether the United States is a party to the Paris Agreement, multinational corporations will still be subject to GHG reduction programs in other nations as those nations attempt to fulfill their NDCs. In addition, France and other nations have indicated the possibility of imposing a carbon tax on American imports from certain industries if the United States does formally withdraw from the Paris Agreement.

Under the Paris Agreement, the United States established its NDC as a goal of reducing GHG emissions 26-28 percent below 2005 levels, by 2025, and to make “best efforts” to reduce emissions by 28 percent. It is important to note that the U.S. is in the first sustained period where greenhouse gas emissions have decreased while economic growth has increased, largely the result of increased reliance on natural gas, improved vehicle fuel economy, state and regional GHG programs, and growth in renewable energy.  These factors are likely to persist even if the U.S. leaves the Paris Agreement.  And even in the absence of U.S. commitments under the Paris Agreement or additional federal action, U.S. GHG emissions are expected to decline by about 15-18 percent below 2005 levels by 2025.

The federal Clean Power Plan was one measure that was expected to further reduce U.S. GHG emissions. However, that program is subject to ongoing legal challenges and has been stayed by the U.S. Supreme Court.  There also are various lawsuits underway seeking to compel the federal government to take action on climate change. See e.g., Juliana v. United States, No. 6:15-cv-01517-TC (D. Or. Nov. 10, 2016).   Apart from litigation, the Trump Administration has indicated a willingness to modify the Clean Power Plan (should it be upheld) and reconsider other federal regulations and programs directed at GHG emissions and climate change, such as motor vehicle emissions standards.  These processes will take time to play out and, in combination with ongoing state-level programs, will ultimately determine the course of climate change policy in the United States for the remainder of the Trump Administration.

This post was written by Brook J. Detterman, Leah A. Dundon and Kristin H. Gladd of Beveridge & Diamond PC.

San Mateo Gardens Teaches College District a Lesson on Picking Thorny Subsequent Review Procedure

The California Supreme Court recently addressed an important California Environmental Quality Act (CEQA) issue: Who decides whether CEQA’s subsequent review provisions are applicable when there are changes to an adopted project? Subsequent review provisions include a subsequent Environmental Impact Report (EIR) or Negative Declaration (ND), a supplemental EIR, or an addendum to an EIR or ND.  When a project that has been reviewed and finalized under CEQA is altered, what type of review process under CEQA is required, if any?  As we said before on Friends of the College of San Mateo Gardens v. San Mateo County Community College District et al., (2016) 1 Cal.5th 937 (Friends of the College), the Court determined that the lead agency makes this determination.  The question that the lead agency should be analyzing is whether the original document “retains some informational value” – if it does, then CEQA’s subsequent review procedures apply.  Should the lead agency’s decision be challenged, then the Court must decide whether “substantial evidence” supports the lead agency’s conclusion.

The First District Court of Appeal thus took up applying this standard on remand. In Friends of the College of San Mateo Gardens v. San Mateo County Community College District et al., (2017 WL *1829176) (San Mateo Gardens), the Court of Appeal upheld the San Mateo County Community College District’s determination that it could proceed under CEQA’s subsequent review provisions.  The District had previously analyzed its project, including the demolition or renovation of some buildings on a San Mateo college campus, through a mitigated negative declaration (MND).  After a failure to obtain funding for renovations to the “Building 20 complex,” the District altered the project to include demolition of Building 20 and its associated gardens (the centerpiece of the dispute) and to renovate two other buildings that were previously slated for demolition.  The District determined that these changes would “not result in a new or substantially more severe impact than disclosed” in the original MND, and thus proceeded to adopt the alteration through a subsequent review procedure document called an addendum.

The Court of Appeal held that the District’s decisions to proceed by CEQA’s subsequent review procedures was supported by substantial evidence. The relevant changes only altered the treatment of three buildings while leaving alone plans to demolish 14 others with attendant mitigation measures.

That the District could proceed by CEQA’s subsequent review procedures, however, only answers the first question. The subsidiary, and more “critical” issue, is “to determine whether the agency has properly determined how to comply with its obligations under those provisions.” Friends of the College, 1 Cal.5th at 953.  In other words, which subsequent review procedure is correct to use.  The Court of Appeal held that a more rigorous standard of review is applicable at this second step when a project is originally accompanied by a negative declaration than when an approved project is originally analyzed through an EIR.  This more rigorous standard looks to whether the negative declaration will require a “major revision.”  A major revision is required when “there is ‘substantial evidence that the changes to a project for which a negative declaration was previously approved might have a significant environmental impact not previously considered in connection with the project as originally approved.’ ” San Mateo Gardens, 2017 WL *1829176 (quoting Friends of the College, 1 Cal.5th at 959).  If the project was previously analyzed through an EIR, however, the agency may proceed without a subsequent EIR so long as substantial evidence supports the agency’s conclusion that no major revisions to the original document are necessary.

It is at this critical second step that the District failed. The Court of Appeal determined that there was substantial evidence that the altered project might have a significant “aesthetic impact”, which is a cognizable environmental impact under CEQA.  The “Building 20 complex” demolition would include removal of gardens which were of particular value to the college community for aesthetic purposes.  The Court of Appeal therefore concluded that the District violated CEQA in analyzing the altered project through an addendum when a subsequent EIR or MND was necessary.

The takeaway from this case is that lead agencies will have to be especially keen on determining the impact of project changes when the original project is adopted by a negative declaration. While the original document may retain some residual “informational value,” and thus allow CEQA’s subsequent review procedures, it may be difficult to show that project changes do not require some type of further environmental review. It is the lead agencyiess responsibility to determine the need for and type of further review, but that decision must be based upon substantial evidence.

This article was written by David H. McCray and Jacob P. Duginski of Beveridge & Diamond P.C.

Trump Order Sets Up Rollback of Obama Energy and Climate Action

clean power planOn Tuesday March 28, President Donald Trump signed an Executive Order that takes the first step in rolling back executive actions that had been undertaken by the Obama Administration to address climate change and energy resource development.  The far-reaching order directly revokes or rescinds certain presidential and regulatory actions and directs the review and potential subsequent rescission or revision of other key programs and regulations administered by a variety of agencies.  However, it does not go as far as the Trump Administration might have in uprooting the underpinning of the federal government’s climate authority—the Environmental Protection Agency’s (EPA) 2009 endangerment finding—or in walking away from the international process to address climate change as codified in the 2015 Paris Agreement.  Moreover, implementation of the measures outlined in the Executive Order will likely take significant additional time and process to fully implement and will almost certainly be challenged in the courts.

The Executive Order directs EPA to reconsider its climate-related energy sector regulations.

1.  Clean Power Plan

Most prominently, the Executive Order directs EPA to immediately review the Clean Power Plan, a regulation promulgated pursuant to section 111(d) of the Clean Air Act that is intended to limit greenhouse gas emissions from existing power plants.  The Executive Order directs EPA to “as appropriate” initiate rulemaking to suspend, revise or rescind the rule and related actions.  Following the issuance of the Executive Order, EPA Administrator Scott Pruitt signed a Federal Register notice announcing that EPA is reviewing and, “if appropriate, will initiate proceedings to suspend, revise or rescind the Clean Power Plan.”

Importantly, the Executive Order cannot and did not itself rescind the Clean Power Plan.  This must be done by EPA, through the same notice-and-comment rulemaking process used to promulgate the rule in the first place, which could take up to a year.  A final rule rescinding or revising the Clean Power Plan rule will almost certainly be challenged by states and environmental organizations.

The Clean Power Plan is currently subject to challenge in the D.C. Circuit and has been stayed by the Supreme Court.  The Executive Order directs the Department of Justice (DOJ) to inform the D.C. Circuit of EPA’s plans and ask the court to put those challenges on hold while EPA takes action to rescind or revise the rule. Late Tuesday night, DOJ filed a motion requesting that the D.C. Circuit hold its proceedings in abeyance.  This request likely will be challenged by environmental groups, states, and businesses that have supported the Clean Power Plan.

2.  Carbon Pollution Standards Rule

The Executive Order directs EPA to review and, as appropriate, suspend, rescind or revise its Carbon Pollution Standards Rule, which sets emission limits for new, modified and reconstructed power plants.  Most significantly, this rule establishes a limit on carbon dioxide emissions from new coal-fired power plants that is achievable only if such a plant installs carbon capture technology.  Following issuance of the Executive Order, EPA Administrator Scott Pruitt signed a Federal Register notice announcing EPA’s review and intent to suspend, revise, or rescind the Carbon Pollution Standards Rule as appropriate. As with the Clean Power Plan, any revision or repeal of the rule must be done through notice-and-comment rulemaking and will most likely be subject to legal challenge in the D.C. Circuit.

The Carbon Pollution Standards Rule is currently subject to challenge at the D.C. Circuit.  The Executive Order directs DOJ to notify the court of EPA’s plans and ask the court to put the challenges on hold while EPA takes action to reconsider the rule.  Late Tuesday night, DOJ filed a motion requesting that the D.C. Circuit hold its proceedings in abeyance. As with the request related to the Clean Power Plan, this request likely will draw opposition from those entities that have supported the Carbon Pollution Standards Rule.

3.  Oil and Gas Sector Methane Emission Limits

The Executive Order directs EPA to review and, as appropriate, suspend, rescind or revise a 2016 rule establishing new source performance standards limiting methane emissions from new, modified, and reconstructed sources in the oil and gas sector.  That rule covers equipment, processes, and activities in the onshore production, gathering, transmission, and storage segments of the sector, and also expands upon a 2012 regulation directed at limiting emission of volatile organic compounds (VOCs). Among other things, the rule requires performance of a rigorous protocol for leak detection and repair (LDAR) on a periodic basis.  The rule is currently being challenged in the D.C. Circuit, and the Executive Order directs DOJ to request the case be suspended pending reconsideration of the regulation.  The Order also directs EPA, “if appropriate” and “as soon as practicable,” to suspend, rescind, or revise “any rules and guidance issued pursuant to” its oil and gas methane rule.  The impact this directive will have on EPA’s voluntary Methane Challenge Program and Control Technique Guidelines for VOC emissions from the oil and gas sector—policies that were included in the Obama Administration’s Methane Strategy (which the Executive Order also rescinds, as discussed below)—is uncertain.  For more details about the oil and gas methane new source performance standards, see our VNF alert here.

The Executive Order directs the Department of the Interior to reconsider specific energy-related regulations and policies.

1.  Coal Leasing Program Review and Coal Leasing Moratorium

The Executive Order directs the Department of the Interior (DOI) to amend or withdraw Secretarial Order 3338, which called for the Bureau of Land Management (BLM) to prepare a programmatic environmental impact statement (PEIS) to analyze potential leasing and management reforms to the federal coal leasing program.  Among other topics, the PEIS was to address the process, timing, and location of leasing; whether existing bonus bid, rent, and royalty payment policies provide a fair return to the United States; and the climate change and other impacts of coal development and use. The BLM published a scoping report in January 2017 summarizing the issues raised in meetings and public comments during the scoping period that began in March 2016, and the issues, including preliminary reform options, to be considered in the PEIS.

The Executive Order further directs DOI to suspend a moratorium that the Obama Administration BLM had placed on the leasing of new coal development on federal land while the agency reconsidered the coal leasing program. Unlike some of the other actions specifically identified in the Executive Order, the coal leasing moratorium and environmental review of the coal leasing program can be suspended without going through notice-and-comment rulemaking.

Recognizing “the critical importance of the Federal coal leasing program to energy security, job creation, and proper conservation stewardship” and “finding that the public interest is not served by halting the Federal coal program for an extended time” and that a PEIS is not necessary to consider potential improvements to the program, on March 29, Secretary of the Interior Ryan Zinke issued Secretarial Order 3348 revoking Secretarial Order 3338, halting further activity on the PEIS, and reopening the coal leasing program. Simultaneously, DOI established a Royalty Policy Committee to regularly advise the Secretary on the fair market value of, and collection of revenues from, energy and mineral resource development on federal and Indian lands.

2.  Fracking Rule

The Executive Order directs DOI to review and, if appropriate and as soon as practicable, suspend, revise, or rescind BLM’s March 26, 2015 final rule entitled “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands.”   The final rule imposed certain requirements related to well integrity, surface waste water management, and disclosure of details regarding the composition of hydraulic fracturing fluids.  The final rule had been vacated by the U.S. District Court for the District of Wyoming, but that decision is currently on appeal in the U.S. Court of Appeals for the Tenth Circuit.  Wyoming v. Jewell, No. 15-8134 (10th Cir. filed June 24, 2016).  The Executive Order directs DOJ to inform the court of this order and seek “appropriate relief,” such as requesting that the case be suspended or otherwise stayed pending DOI’s reconsideration of the regulation.

3.  Waste Prevention Rule

The Executive Order directs DOI to review and, if appropriate, suspend, revise, or rescind BLM’s final rule on the prevention of waste of natural gas from venting and flaring.  On November 18, 2016, BLM issued a final rule, entitled “Waste Prevention, Production Subject to Royalties, and Resource Conservation,” intended to reduce natural gas waste and air pollution resulting from onshore flaring, venting, and leaks by oil and gas production on federal and tribal lands, and to provide a beneficial return on public resources for states, tribes, and federal taxpayers.  The final rule, among other things, prohibits the venting of natural gas except in limited circumstances; requires operators to capture most of their gas after accounting for specified volumes of allowed flaring; and imposes rigorous LDAR protocols for limiting equipment leaks.   The final rule took effect January 17, 2017, after an unsuccessful attempt by several states and industry groups to enjoin implementation of the rule in federal court in Wyoming.   Western Energy Alliance et al. v. Jewell, No. 2:16-cv-00280 (D.Wyo. filed Nov. 15, 2016).  However, litigation concerning the final rule is ongoing, and the Executive Order directs DOJ to seek appropriate relief from the court, such as requesting the case be suspended pending reconsideration of the regulation, which the agency had already done.

Additionally, the House of Representatives has passed, but the Senate has not yet taken up, a joint resolution of disapproval under the Congressional Review Act that would rescind this rule and limit BLM’s authority to issue a substantially similar regulation in the future.

4.  Non-Federal Oil and Gas Rights Rules

The Executive Order calls for DOI to review and, as appropriate, suspend, rescind or revise two final rules related to non-federal oil and gas rights on National Park Service (NPS)-managed lands and Fish and Wildlife Service (FWS)-managed refuges.

The first rule, issued by NPS on November 4, 2016, and entitled “General Provisions and Non-Federal Oil and Gas Rights,” updated the regulations (called the “9B regulations”) that govern private and state-owned oil and gas rights in the National Park System, which had not been updated since being promulgated more than 37 years ago.  The final rule, which took effect December 5, 2016, eliminated provisions that previously exempted more than 300 oil and gas operations and requires all operators, except those in Alaska, to comply with the 9B regulations.  The final rule also eliminated the cap on financial assurances, and strengthened enforcement authority by incorporating existing NPS penalty provisions.

The second rule, issued by FWS on November 14, 2016, and entitled “Management of Non-Federal Oil and Gas Rights,” updated the regulations governing the exercise of non-Federal mineral rights located outside of Alaska within the National Wildlife Refuge System (NWRS), which had not been updated since being promulgated more than 50 years ago.  The final rule, which took effect December 14, 2016, instituted a permitting process for new operations; requirements related to well-plugging and reclamation; operating standards; and provisions for fees, financial assurances, and penalties.

Resolutions of disapproval have been introduced in the House of Representatives that would rescind both of these rules under the Congressional Review Act.

The Executive Order directs federal agencies to review regulations that burden domestic energy development.

In addition to directing review of specifically-identified regulations and policies at EPA and DOI, the Executive Order directs all “executive departments and agencies” to review and report on “all existing regulations, orders, guidance documents, policies, and any other similar agency actions” that “necessarily obstruct, delay, curtail, or otherwise impose significant costs on the siting, permitting, production, utilization, transmission, or delivery of” domestic energy resources.  The Executive Order directs agencies to pay “particular attention to oil, natural gas, coal, and nuclear energy resources”; it does not specifically mention renewable energy.  “Executive department and agency” is not defined, and the application of this requirement to independent agencies is not clear.

Specifically, each agency is directed to submit a plan outlining how it will conduct its review to the Office of Management and Budget (OMB) within 45 days.  Draft reports detailing the actions reviewed and including recommendations to address the burdens those actions impose on domestic energy production are due to OMB within 120 days, and final reports are due within 180 days.  Identified regulations that are rescinded can be used by the agency to comply with the President’s Regulatory Review Executive Order (for details on this order see our alert, here).

The Secretary of the Interior already has issued Secretarial Order 3349 commencing DOI’s review, requiring DOI bureaus and offices to submit reports within 21 days identifying regulations, orders, guidance documents, policies, and any other similar agency actions that burden energy development.  DOI has further committed to developing a department -wide plan within 35 days.

The Executive Order directs the Council on Environmental Quality to rescind guidance incorporating climate change into environmental reviews.

The Executive Order directs the Council on Environmental Quality (CEQ) to rescind its final guidance encouraging federal agencies to consider impacts from greenhouse gas emissions and climate change in environmental reviews pursuant to the National Environmental Policy Act (NEPA).  The final guidance, issued August 5, 2016, characterized climate change as a “fundamental environmental issue” and recommended that federal agencies consider the potential effects of a proposed action and related activities on climate change, using reasonably foreseeable, direct and indirect greenhouse gas emissions as a “proxy” for assessing impacts.  Although not binding or otherwise legally enforceable, federal agencies typically strive for compliance with NEPA guidance documents, and courts may afford greater weight to interpretations and guidance issued by CEQ.

This guidance can be revoked without having to go through notice or comment or other administrative procedures.  However, the Executive Order does not preclude federal agencies from continuing to consider the impacts of federal action on climate change in order to mitigate litigation risk when conducting environmental reviews.

The Executive Order rescinds the Interagency Social Cost of Carbon Guidance.

The social cost of carbon is a metric for quantifying the costs of greenhouse gas emissions and the benefits of policies that reduce greenhouse gas emissions.

The Obama Administration convened an Interagency Working Group, led by OMB, to implement a uniform range of values for agencies to use when quantifying impacts of carbon dioxide emissions and emission reductions—the “Social Cost of Carbon for Regulatory Impact Analysis” (SCC).  Similar guidance documents have been developed for two other greenhouse gases: methane, and nitrous oxide.  The SCC has largely been used to comply with executive orders requiring agencies to analyze impacts of regulations.  In some instances, agencies have used the SCC to set the stringency of regulatory actions in order to comply with statutory obligations.

The Executive Order disbands that Working Group and rescinds the uniform SCC guidance and related documents.  Based on court precedent, at least some agencies will likely still be required to consider the quantified benefits of greenhouse gas reduction in their rulemakings. See Ctr. for Biological Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2008); High Country Conservation Advocates v. U.S. Forest Serv., 52 F. Supp. 3d 1174 (D.Colo. 2014).

The Executive Order directs agencies to instead rely on long-standing cost-benefit analysis guidance outlined in OMB Circular A-4 when quantifying the costs of greenhouse gas emissions or benefits of greenhouse gas emission reductions.  Whereas the cost ranges required under the interagency SCC guidance included the impacts of greenhouse gas emissions on a global basis, OMB Circular A-4 directs agencies to primarily evaluate a rule’s costs and benefits only as they impact the United States.  This different direction, along with a number of other important technical changes, will likely result in agencies attributing much lower monetized benefits to actions that reduce greenhouse gases, if such quantification is performed at all.

The Executive Order revokes certain other energy- and climate change-related executive orders, presidential memoranda, and frameworks.

The Executive Order directly revokes the following four executive orders and presidential memoranda signed by President Obama related to energy and climate change.

First, the Presidential Memorandum on Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment directed agencies to more fully develop and implement requirements for the mitigation of adverse impacts from development and other activities on land, water, wildlife, and other ecological resources. Among other things, the memorandum established a mitigation hierarchy (avoid, minimize, then compensate); set a “net benefit goal” or, at a minimum, a no net loss goal for natural resources; emphasized large-scale or landscape-level planning and mitigation; and directed a number of agencies to take certain, specified actions to strengthen mitigation policies.  As noted above, following the Executive Order, the Secretary of the Interior issued Secretarial Order 3349 which, in part, revokes Secretarial Order 3330, “Improving Mitigation Policies and Practices of the Department of the Interior,” dated October 13, 2013, and directs a review of all actions taken pursuant to that order and the revoked Presidential Memorandum for possible reconsideration, modification, or rescission. This review will include the U.S. Fish and Wildlife Service’s recent Mitigation Policy, dated November 21, 2016, and Endangered Species Act Compensatory Mitigation Policy, dated December 27, 2016.

Second, the Presidential Memorandum on Power Sector Carbon Pollution Standards directed EPA to conduct a rulemaking to regulate greenhouse gas emissions from the power sector.  Rescinding this is consistent with the Executive Order’s direction to suspend, rescind or revise the Clean Power Plan and Carbon Pollution Standards Rule.  It also leaves open the possibility that EPA will only repeal, but not replace, these two rules.

Third, the Presidential Memorandum on Climate Change and National Security established a framework and directed agencies to take actions to ensure that climate change-related impacts are fully considered in the development of national security doctrine, policies, and plans.

Fourth, Executive Order 13653 (Preparing the United States for the Impacts of Climate Change) directed federal agencies to take steps to prepare for climate change impacts and to support state and local resilience efforts, and established a State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience.

The Executive Order also rescinds the Obama Administration’s Climate Action Plan, which identified addressing climate change as a priority and established a framework for doing so across federal agencies, and the Obama Administration’s Methane Strategy, a framework for addressing emissions of methane across a number of federal agency programs.  Rescinding these documents will have no independent legal effect and can be done with no further process.

The Executive Order directs agencies to review and, as appropriate, suspend, rescind, or revise regulations, orders, guidance documents, policies, and any other similar agency actions made in furtherance of these executive orders, presidential memoranda, and frameworks.  Such actions may require notice-and-comment rulemaking.  As noted above, DOI already has initiated its review, requiring that departments identify all such actions issued pursuant to them or currently under development within 14 days, identify actions that should be reconsidered, rescinded, or revised within 30 days, and submit to the Deputy Secretary draft revised or substitute actions within 90 days.

The Roads Not Taken

Finally, the Executive Order is notable for two actions that it does not take.

It does not direct reconsideration of, or even discuss, EPA’s 2009 finding that greenhouse gas emissions cause air pollution which endangers public health and welfare (the “endangerment finding”).  This finding was made under the Clean Air Act in response to the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007) (holding that greenhouse gases are an “air pollutant” under the Clean Air Act) and upheld by the D.C. Circuit, Coalition for Responsible Regulation v. EPA, 684 F. 3d 102 (D.C. Cir. 2012).  The endangerment finding serves as the necessary factual and legal predicate authorizing EPA to adopt greenhouse gas regulations under the Clean Air Act.  Doing so would have called into question not only EPA’s energy-related greenhouse gas regulations targeted for repeal or revision by the Executive Order, but also regulations under Clean Air Act section 202 limiting greenhouse gas emissions from passenger cars and trucks, and heavy duty vehicles and its requirement that large new and modified stationary sources install the best available control technology to limit greenhouse gas emissions pursuant to the Clean Air Act Prevention of Significant Deterioration program.

Second, the Executive Order does not direct the State Department to withdraw the United States from the Paris Agreement or otherwise mention that agreement.  However, this silence cannot be interpreted to mean that the United States will remain and continue to participate in the Paris Agreement in the manner set forth by the Obama Administration.  For example, if the Trump Administration reverses or significantly revises the policies targeted by the Executive Order, it will be difficult, if not impossible, to achieve the level of emission reductions that correspond to the U.S. pledge under the Paris Agreement.  This pledge—referred to as the U.S. “Nationally Determined Contribution” (NDC)—is a 26 percent reduction in greenhouse gas emissions below 2005 levels by 2025, and requires periodic updating of the greenhouse gas emissions reductions pledged under the NDC to assure the achievement of the Paris Agreement’s goals.  Accordingly, the Executive Order might presage a future action by the Trump Administration either to withdraw from the Paris Agreement or to submit a revised NDC with a significantly lower greenhouse gas reduction pledge.

The Executive Order calls for a large number of specific actions from a wide variety of agencies.  How agencies go about implementing those actions and the outcome of the inevitable legal challenges to those actions remains to be seen.

© 2017 Van Ness Feldman LLP

Interior Secretary Immediately Implements President’s Executive Order on Energy and Climate

President Trump Executive Order Environmental RegulationNew Secretary of the Interior Ryan Zinke wasted no time implementing the mandates of the Trump Administration’s most recent Executive Order (EO), “Promoting Energy Independence and Economic Growth,” which was issued on March 28. On March 29, the Secretary issued two Secretarial Orders (SO) implementing the March 28 Order, and took additional administrative action consistent with its mandates. Separately, the Secretary has reinstated a public-private advisory committee to address royalty issues.

The first Order, SO 3348, overturns the Obama Administration’s 2016 moratorium on federal coal leasing, and terminates the programmatic environmental impact statement process under National Environmental Policy Act (NEPA) that would have re-evaluated the environmental impacts of the Bureau of Land Management (BLM) coal leasing program.  Hours after this SO was issued, a coalition of environmental groups sued the Department in the U.S. District Court for the District of Montana challenging the decision to lift the moratorium and resume federal coal leasing without first completing the NEPA process.

The second Order, SO 3349, implements the agency review provisions of the March 28 EO directed to the Department of the Interior.  Specifically, SO 3349:

  1. revokes SO 3330, “Improving Mitigation Policies and Practices of the Department of the Interior,” which was a prior Department-wide directive to adopt more landscape-level mitigation strategies and more rigorous compensatory mitigation criteria;

  2. directs each bureau to review all regulations, orders, and policies that could hamper energy development and, where permissible, rescind, revoke or suspend such regulations, orders, and policies;

  3. directs review of Departmental actions impacting energy development, including re-evaluation of BLM’s “venting and flaring rule” for oil and gas leases, for consistency with the policies set forth in the March 28 EO;

  4. directs BLM to “expeditiously proceed” with a proposal to rescind its 2015 hydraulic fracturing rule, which was invalidated by a federal district court and is now on appeal to the Tenth Circuit; and

  5. directs each bureau and office to identify other existing actions that could potentially burden the development of domestic energy resources, particularly oil, gas, coal, and nuclear resources.

The SO affords the Interior agencies little time to accomplish this work. Deadlines fall within the next 90 days, including as soon as 14 days.

Finally, Secretary Zinke signed a charter re-establishing a Royalty Policy Committee (RPC).  As it had done in prior years, the RPC will operate as a Federal Advisory Committee Act body providing regular advice to the Secretary on fair market value and collection of revenue from federal and Indian mineral and energy leases, including renewable energy leases.  The group will consist of up to 28 federal, local, Tribal, state, and other stakeholders, and will also advise on royalty-related regulatory matters.

Trump Order Sets Up Rollback of Obama Energy and Climate Action

President Trump clean power planOn Tuesday March 28, President Donald Trump signed an Executive Order that takes the first step in rolling back executive actions that had been undertaken by the Obama Administration to address climate change and energy resource development.  The far-reaching order directly revokes or rescinds certain presidential and regulatory actions and directs the review and potential subsequent rescission or revision of other key programs and regulations administered by a variety of agencies.  However, it does not go as far as the Trump Administration might have in uprooting the underpinning of the federal government’s climate authority—the Environmental Protection Agency’s (EPA) 2009 endangerment finding—or in walking away from the international process to address climate change as codified in the 2015 Paris Agreement.  Moreover, implementation of the measures outlined in the Executive Order will likely take significant additional time and process to fully implement and will almost certainly be challenged in the courts.

The Executive Order directs EPA to reconsider its climate-related energy sector regulations.

1.  Clean Power Plan

Most prominently, the Executive Order directs EPA to immediately review the Clean Power Plan, a regulation promulgated pursuant to section 111(d) of the Clean Air Act that is intended to limit greenhouse gas emissions from existing power plants.  The Executive Order directs EPA to “as appropriate” initiate rulemaking to suspend, revise or rescind the rule and related actions.  Following the issuance of the Executive Order, EPA Administrator Scott Pruitt signed a Federal Register notice announcing that EPA is reviewing and, “if appropriate, will initiate proceedings to suspend, revise or rescind the Clean Power Plan.”

Importantly, the Executive Order cannot and did not itself rescind the Clean Power Plan.  This must be done by EPA, through the same notice-and-comment rulemaking process used to promulgate the rule in the first place, which could take up to a year.  A final rule rescinding or revising the Clean Power Plan rule will almost certainly be challenged by states and environmental organizations.

The Clean Power Plan is currently subject to challenge in the D.C. Circuit and has been stayed by the Supreme Court.  The Executive Order directs the Department of Justice (DOJ) to inform the D.C. Circuit of EPA’s plans and ask the court to put those challenges on hold while EPA takes action to rescind or revise the rule. Late Tuesday night, DOJ filed a motion requesting that the D.C. Circuit hold its proceedings in abeyance.  This request likely will be challenged by environmental groups, states, and businesses that have supported the Clean Power Plan.

2.  Carbon Pollution Standards Rule

The Executive Order directs EPA to review and, as appropriate, suspend, rescind or revise its Carbon Pollution Standards Rule, which sets emission limits for new, modified and reconstructed power plants.  Most significantly, this rule establishes a limit on carbon dioxide emissions from new coal-fired power plants that is achievable only if such a plant installs carbon capture technology.  Following issuance of the Executive Order, EPA Administrator Scott Pruitt signed a Federal Register notice announcing EPA’s review and intent to suspend, revise, or rescind the Carbon Pollution Standards Rule as appropriate. As with the Clean Power Plan, any revision or repeal of the rule must be done through notice-and-comment rulemaking and will most likely be subject to legal challenge in the D.C. Circuit.

The Carbon Pollution Standards Rule is currently subject to challenge at the D.C. Circuit.  The Executive Order directs DOJ to notify the court of EPA’s plans and ask the court to put the challenges on hold while EPA takes action to reconsider the rule.  Late Tuesday night, DOJ filed a motion requesting that the D.C. Circuit hold its proceedings in abeyance. As with the request related to the Clean Power Plan, this request likely will draw opposition from those entities that have supported the Carbon Pollution Standards Rule.

3.  Oil and Gas Sector Methane Emission Limits

The Executive Order directs EPA to review and, as appropriate, suspend, rescind or revise a 2016 rule establishing new source performance standards limiting methane emissions from new, modified, and reconstructed sources in the oil and gas sector.  That rule covers equipment, processes, and activities in the onshore production, gathering, transmission, and storage segments of the sector, and also expands upon a 2012 regulation directed at limiting emission of volatile organic compounds (VOCs). Among other things, the rule requires performance of a rigorous protocol for leak detection and repair (LDAR) on a periodic basis.  The rule is currently being challenged in the D.C. Circuit, and the Executive Order directs DOJ to request the case be suspended pending reconsideration of the regulation.  The Order also directs EPA, “if appropriate” and “as soon as practicable,” to suspend, rescind, or revise “any rules and guidance issued pursuant to” its oil and gas methane rule.  The impact this directive will have on EPA’s voluntary Methane Challenge Program and Control Technique Guidelines for VOC emissions from the oil and gas sector—policies that were included in the Obama Administration’s Methane Strategy (which the Executive Order also rescinds, as discussed below)—is uncertain.  For more details about the oil and gas methane new source performance standards, see our VNF alert here.

The Executive Order directs the Department of the Interior to reconsider specific energy-related regulations and policies.

1.  Coal Leasing Program Review and Coal Leasing Moratorium

The Executive Order directs the Department of the Interior (DOI) to amend or withdraw Secretarial Order 3338, which called for the Bureau of Land Management (BLM) to prepare a programmatic environmental impact statement (PEIS) to analyze potential leasing and management reforms to the federal coal leasing program.  Among other topics, the PEIS was to address the process, timing, and location of leasing; whether existing bonus bid, rent, and royalty payment policies provide a fair return to the United States; and the climate change and other impacts of coal development and use. The BLM published a scoping report in January 2017 summarizing the issues raised in meetings and public comments during the scoping period that began in March 2016, and the issues, including preliminary reform options, to be considered in the PEIS.

The Executive Order further directs DOI to suspend a moratorium that the Obama Administration BLM had placed on the leasing of new coal development on federal land while the agency reconsidered the coal leasing program. Unlike some of the other actions specifically identified in the Executive Order, the coal leasing moratorium and environmental review of the coal leasing program can be suspended without going through notice-and-comment rulemaking.

Recognizing “the critical importance of the Federal coal leasing program to energy security, job creation, and proper conservation stewardship” and “finding that the public interest is not served by halting the Federal coal program for an extended time” and that a PEIS is not necessary to consider potential improvements to the program, on March 29, Secretary of the Interior Ryan Zinke issued Secretarial Order 3348 revoking Secretarial Order 3338, halting further activity on the PEIS, and reopening the coal leasing program. Simultaneously, DOI established a Royalty Policy Committee to regularly advise the Secretary on the fair market value of, and collection of revenues from, energy and mineral resource development on federal and Indian lands.

2.  Fracking Rule

The Executive Order directs DOI to review and, if appropriate and as soon as practicable, suspend, revise, or rescind BLM’s March 26, 2015 final rule entitled “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands.”   The final rule imposed certain requirements related to well integrity, surface waste water management, and disclosure of details regarding the composition of hydraulic fracturing fluids.  The final rule had been vacated by the U.S. District Court for the District of Wyoming, but that decision is currently on appeal in the U.S. Court of Appeals for the Tenth Circuit.  Wyoming v. Jewell, No. 15-8134 (10th Cir. filed June 24, 2016).  The Executive Order directs DOJ to inform the court of this order and seek “appropriate relief,” such as requesting that the case be suspended or otherwise stayed pending DOI’s reconsideration of the regulation.

3.  Waste Prevention Rule

The Executive Order directs DOI to review and, if appropriate, suspend, revise, or rescind BLM’s final rule on the prevention of waste of natural gas from venting and flaring.  On November 18, 2016, BLM issued a final rule, entitled “Waste Prevention, Production Subject to Royalties, and Resource Conservation,” intended to reduce natural gas waste and air pollution resulting from onshore flaring, venting, and leaks by oil and gas production on federal and tribal lands, and to provide a beneficial return on public resources for states, tribes, and federal taxpayers.  The final rule, among other things, prohibits the venting of natural gas except in limited circumstances; requires operators to capture most of their gas after accounting for specified volumes of allowed flaring; and imposes rigorous LDAR protocols for limiting equipment leaks.   The final rule took effect January 17, 2017, after an unsuccessful attempt by several states and industry groups to enjoin implementation of the rule in federal court in Wyoming.   Western Energy Alliance et al. v. Jewell, No. 2:16-cv-00280 (D.Wyo. filed Nov. 15, 2016).  However, litigation concerning the final rule is ongoing, and the Executive Order directs DOJ to seek appropriate relief from the court, such as requesting the case be suspended pending reconsideration of the regulation, which the agency had already done.

Additionally, the House of Representatives has passed, but the Senate has not yet taken up, a joint resolution of disapproval under the Congressional Review Act that would rescind this rule and limit BLM’s authority to issue a substantially similar regulation in the future.

4.  Non-Federal Oil and Gas Rights Rules

The Executive Order calls for DOI to review and, as appropriate, suspend, rescind or revise two final rules related to non-federal oil and gas rights on National Park Service (NPS)-managed lands and Fish and Wildlife Service (FWS)-managed refuges.

The first rule, issued by NPS on November 4, 2016, and entitled “General Provisions and Non-Federal Oil and Gas Rights,” updated the regulations (called the “9B regulations”) that govern private and state-owned oil and gas rights in the National Park System, which had not been updated since being promulgated more than 37 years ago.  The final rule, which took effect December 5, 2016, eliminated provisions that previously exempted more than 300 oil and gas operations and requires all operators, except those in Alaska, to comply with the 9B regulations.  The final rule also eliminated the cap on financial assurances, and strengthened enforcement authority by incorporating existing NPS penalty provisions.

The second rule, issued by FWS on November 14, 2016, and entitled “Management of Non-Federal Oil and Gas Rights,” updated the regulations governing the exercise of non-Federal mineral rights located outside of Alaska within the National Wildlife Refuge System (NWRS), which had not been updated since being promulgated more than 50 years ago.  The final rule, which took effect December 14, 2016, instituted a permitting process for new operations; requirements related to well-plugging and reclamation; operating standards; and provisions for fees, financial assurances, and penalties.

Resolutions of disapproval have been introduced in the House of Representatives that would rescind both of these rules under the Congressional Review Act.

The Executive Order directs federal agencies to review regulations that burden domestic energy development.

In addition to directing review of specifically-identified regulations and policies at EPA and DOI, the Executive Order directs all “executive departments and agencies” to review and report on “all existing regulations, orders, guidance documents, policies, and any other similar agency actions” that “necessarily obstruct, delay, curtail, or otherwise impose significant costs on the siting, permitting, production, utilization, transmission, or delivery of” domestic energy resources.  The Executive Order directs agencies to pay “particular attention to oil, natural gas, coal, and nuclear energy resources”; it does not specifically mention renewable energy.  “Executive department and agency” is not defined, and the application of this requirement to independent agencies is not clear.

Specifically, each agency is directed to submit a plan outlining how it will conduct its review to the Office of Management and Budget (OMB) within 45 days.  Draft reports detailing the actions reviewed and including recommendations to address the burdens those actions impose on domestic energy production are due to OMB within 120 days, and final reports are due within 180 days.  Identified regulations that are rescinded can be used by the agency to comply with the President’s Regulatory Review Executive Order (for details on this order see our alert, here).

The Secretary of the Interior already has issued Secretarial Order 3349 commencing DOI’s review, requiring DOI bureaus and offices to submit reports within 21 days identifying regulations, orders, guidance documents, policies, and any other similar agency actions that burden energy development.  DOI has further committed to developing a department -wide plan within 35 days.

The Executive Order directs the Council on Environmental Quality to rescind guidance incorporating climate change into environmental reviews.

The Executive Order directs the Council on Environmental Quality (CEQ) to rescind its final guidance encouraging federal agencies to consider impacts from greenhouse gas emissions and climate change in environmental reviews pursuant to the National Environmental Policy Act (NEPA).  The final guidance, issued August 5, 2016, characterized climate change as a “fundamental environmental issue” and recommended that federal agencies consider the potential effects of a proposed action and related activities on climate change, using reasonably foreseeable, direct and indirect greenhouse gas emissions as a “proxy” for assessing impacts.  Although not binding or otherwise legally enforceable, federal agencies typically strive for compliance with NEPA guidance documents, and courts may afford greater weight to interpretations and guidance issued by CEQ.

This guidance can be revoked without having to go through notice or comment or other administrative procedures.  However, the Executive Order does not preclude federal agencies from continuing to consider the impacts of federal action on climate change in order to mitigate litigation risk when conducting environmental reviews.

The Executive Order rescinds the Interagency Social Cost of Carbon Guidance.

The social cost of carbon is a metric for quantifying the costs of greenhouse gas emissions and the benefits of policies that reduce greenhouse gas emissions.

The Obama Administration convened an Interagency Working Group, led by OMB, to implement a uniform range of values for agencies to use when quantifying impacts of carbon dioxide emissions and emission reductions—the “Social Cost of Carbon for Regulatory Impact Analysis” (SCC).  Similar guidance documents have been developed for two other greenhouse gases: methane, and nitrous oxide.  The SCC has largely been used to comply with executive orders requiring agencies to analyze impacts of regulations.  In some instances, agencies have used the SCC to set the stringency of regulatory actions in order to comply with statutory obligations.

The Executive Order disbands that Working Group and rescinds the uniform SCC guidance and related documents.  Based on court precedent, at least some agencies will likely still be required to consider the quantified benefits of greenhouse gas reduction in their rulemakings. See Ctr. for Biological Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2008); High Country Conservation Advocates v. U.S. Forest Serv., 52 F. Supp. 3d 1174 (D.Colo. 2014).

The Executive Order directs agencies to instead rely on long-standing cost-benefit analysis guidance outlined in OMB Circular A-4 when quantifying the costs of greenhouse gas emissions or benefits of greenhouse gas emission reductions.  Whereas the cost ranges required under the interagency SCC guidance included the impacts of greenhouse gas emissions on a global basis, OMB Circular A-4 directs agencies to primarily evaluate a rule’s costs and benefits only as they impact the United States.  This different direction, along with a number of other important technical changes, will likely result in agencies attributing much lower monetized benefits to actions that reduce greenhouse gases, if such quantification is performed at all.

The Executive Order revokes certain other energy- and climate change-related executive orders, presidential memoranda, and frameworks.

The Executive Order directly revokes the following four executive orders and presidential memoranda signed by President Obama related to energy and climate change.

First, the Presidential Memorandum on Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment directed agencies to more fully develop and implement requirements for the mitigation of adverse impacts from development and other activities on land, water, wildlife, and other ecological resources. Among other things, the memorandum established a mitigation hierarchy (avoid, minimize, then compensate); set a “net benefit goal” or, at a minimum, a no net loss goal for natural resources; emphasized large-scale or landscape-level planning and mitigation; and directed a number of agencies to take certain, specified actions to strengthen mitigation policies.  As noted above, following the Executive Order, the Secretary of the Interior issued Secretarial Order 3349 which, in part, revokes Secretarial Order 3330, “Improving Mitigation Policies and Practices of the Department of the Interior,” dated October 13, 2013, and directs a review of all actions taken pursuant to that order and the revoked Presidential Memorandum for possible reconsideration, modification, or rescission. This review will include the U.S. Fish and Wildlife Service’s recent Mitigation Policy, dated November 21, 2016, and Endangered Species Act Compensatory Mitigation Policy, dated December 27, 2016.

Second, the Presidential Memorandum on Power Sector Carbon Pollution Standards directed EPA to conduct a rulemaking to regulate greenhouse gas emissions from the power sector.  Rescinding this is consistent with the Executive Order’s direction to suspend, rescind or revise the Clean Power Plan and Carbon Pollution Standards Rule.  It also leaves open the possibility that EPA will only repeal, but not replace, these two rules.

Third, the Presidential Memorandum on Climate Change and National Security established a framework and directed agencies to take actions to ensure that climate change-related impacts are fully considered in the development of national security doctrine, policies, and plans.

Fourth, Executive Order 13653 (Preparing the United States for the Impacts of Climate Change) directed federal agencies to take steps to prepare for climate change impacts and to support state and local resilience efforts, and established a State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience.

The Executive Order also rescinds the Obama Administration’s Climate Action Plan, which identified addressing climate change as a priority and established a framework for doing so across federal agencies, and the Obama Administration’s Methane Strategy, a framework for addressing emissions of methane across a number of federal agency programs.  Rescinding these documents will have no independent legal effect and can be done with no further process.

The Executive Order directs agencies to review and, as appropriate, suspend, rescind, or revise regulations, orders, guidance documents, policies, and any other similar agency actions made in furtherance of these executive orders, presidential memoranda, and frameworks.  Such actions may require notice-and-comment rulemaking.  As noted above, DOI already has initiated its review, requiring that departments identify all such actions issued pursuant to them or currently under development within 14 days, identify actions that should be reconsidered, rescinded, or revised within 30 days, and submit to the Deputy Secretary draft revised or substitute actions within 90 days.

The Roads Not Taken

Finally, the Executive Order is notable for two actions that it does not take.

It does not direct reconsideration of, or even discuss, EPA’s 2009 finding that greenhouse gas emissions cause air pollution which endangers public health and welfare (the “endangerment finding”).  This finding was made under the Clean Air Act in response to the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007) (holding that greenhouse gases are an “air pollutant” under the Clean Air Act) and upheld by the D.C. Circuit, Coalition for Responsible Regulation v. EPA, 684 F. 3d 102 (D.C. Cir. 2012).  The endangerment finding serves as the necessary factual and legal predicate authorizing EPA to adopt greenhouse gas regulations under the Clean Air Act.  Doing so would have called into question not only EPA’s energy-related greenhouse gas regulations targeted for repeal or revision by the Executive Order, but also regulations under Clean Air Act section 202 limiting greenhouse gas emissions from passenger cars and trucks, and heavy duty vehicles and its requirement that large new and modified stationary sources install the best available control technology to limit greenhouse gas emissions pursuant to the Clean Air Act Prevention of Significant Deterioration program.

Second, the Executive Order does not direct the State Department to withdraw the United States from the Paris Agreement or otherwise mention that agreement.  However, this silence cannot be interpreted to mean that the United States will remain and continue to participate in the Paris Agreement in the manner set forth by the Obama Administration.  For example, if the Trump Administration reverses or significantly revises the policies targeted by the Executive Order, it will be difficult, if not impossible, to achieve the level of emission reductions that correspond to the U.S. pledge under the Paris Agreement.  This pledge—referred to as the U.S. “Nationally Determined Contribution” (NDC)—is a 26 percent reduction in greenhouse gas emissions below 2005 levels by 2025, and requires periodic updating of the greenhouse gas emissions reductions pledged under the NDC to assure the achievement of the Paris Agreement’s goals.  Accordingly, the Executive Order might presage a future action by the Trump Administration either to withdraw from the Paris Agreement or to submit a revised NDC with a significantly lower greenhouse gas reduction pledge.

The Executive Order calls for a large number of specific actions from a wide variety of agencies.  How agencies go about implementing those actions and the outcome of the inevitable legal challenges to those actions remains to be seen.

© 2017 Van Ness Feldman LLP

USDA Releases Report On Lifecycle Greenhouse Gas Balance Of Ethanol

greenhouse gasOn January 12, 2017, USDA released a report on the lifecycle greenhouse gas (GHG) balance of corn ethanol, titled “A Life-Cycle Analysis of the Greenhouse Gas Emissions of Corn-Based Ethanol.”  The study reviewed industry and farm sector performance over the past decade and found that in the United States corn-based ethanol generates 43 percent less GHG emissions than gasoline.  Compared to previous studies, the lifecycle GHG benefits were greater due to improvements in corn production efficiency, conservation practices, and ethanol production technologies.  The report also presented two projected GHG emissions profiles for corn ethanol in 2022, with one assuming a continuation of observable trends and the other analyzing additional improvements that could further reduce the GHG emissions.

©2017 Bergeson & Campbell, P.C.