Environmental Law ReSource : Environmental Lawyer & Attorney : Reed Smith Law Firm : Climate Change, Sustainability

This post was written by Eric McLaughlin.

Since the enactment of California’s two landmark green chemistry laws in September 2008 (AB 1879 and SB 509), significant effort has been made to develop their implementing regulations. This process has proven to be difficult and controversial, because a compromise must be reached between numerous competing concerns, most notably the legislative mandate to protect human health and the environment, and the significant costs to be imposed on companies manufacturing and selling consumer products in California. The process has also come under intense nationwide scrutiny, because California's Green Chemistry Initiative is considered a possible model for national chemical policy reform.

State regulators at the Department of Toxic Substances Control (DTSC) have until January 1, 2011 to enact the final version of the green chemistry regulations, known as the Safer Consumer Products Alternatives (SCPA) regulations. An informal rulemaking process has been used to shape the regulatory framework and extensive public comment has been received from stakeholders, including the scientific community, industry and environmentalists. The most recent draft of the SCPA regulations was released on June 23, 2010 and public comments were accepted through July 15, 2010.

California’s green chemistry laws are intended to completely refocus the regulation of chemicals in consumer products on the beginning of the product life cycle – the design phase. This approach will enable determinations to be made about which chemicals should be used in which products, and weighing the potential effects of those products on human health and the environment before they occur. Drafting the regulations to accomplish this goal, however, has prompted much debate throughout the informal rulemaking process, which has intensified as the SCPA regulations have taken shape, and has focused on six main issues: (1) scope of the regulations; (2) prioritizing chemicals of concern; (3) alternatives analysis; (4) confidential business information; (5) conflicting and duplicative regulations; and (6) the cost of implementation. This post summarizes the status of these issues.

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This post was written by Jennifer Smokelin and David Wagner.

On August 23, 2010, the U.S. Environmental Protection Agency (USEPA) postponed the public hearing on its plan to take over greenhouse gas (GHG) permitting programs related to construction or modification projects. The hearing was scheduled to be held in Arlington, VA on August 25, 2010, and was delayed because the draft rule has not yet been published in the Federal Register. USEPA has not set a new date for the hearing. As we discussed in a blog post last week, USEPA has proposed two rules to fill gaps in 13 state permitting programs that do not allow for the regulation of GHG emissions from industrial sources. The first proposed rule seeks to allow states that are not prepared to regulate GHGs to revise their State Implementation Plans. The second rule outlines USEPA's plan to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet the requirements by next January, when USEPA’s Tailoring Rule would be in effect.

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This post was written by Jennifer Smokelin and David Wagner.

Here's the issue:  Certain larger emission sources of greenhouse gases (GHGs) will be subject to permitting requirements for planned construction projects starting January 2, 2011.  In 13 states, the permitting programs (known as the Prevention of Significant Deterioration (PSD) permitting program) do not apply to sources of GHGs.  Thus, emission sources in those states would be unable to obtain a PSD permit that covers GHG emissions, and would potentially be unable to undertake construction or modification projects on or after January 2, 2011.  The states are Alaska, Arkansas, Connecticut, Florida, Idaho, Kansas, Oregon, Texas, and portions of California, Arizona, Kentucky, Nebraska, and Nevada.

Here's USEPA's proposed solution:  The Agency recently proposed two rules that would fill the gap in the permitting programs for these 13 states: (1) the SIP call and (2) the FIP.  Under the first proposed rule, the U.S. Environmental Protection Agency (USEPA) would issue a "SIP call," requiring the 13 states to revise their State Implementation Plans (SIPs).  According to USEPA, the PSD program in these jurisdictions is "presumptively inadequate" because they do not allow for the regulation of GHG emissions. All other states would be required to review their rules and inform USEPA if they would not be able to issue PSD permits for greenhouse gas emissions. 

Under the second rule, USEPA proposes to establish a FIP - a Federal Implementation Plan for the 13 "presumptive inadequate" states, and for any other state in which USEPA determines that the state PSD program does not meet requirements for regulation of GHGs. Only the states deemed by USEPA to be inadequate would need the federal plan.  In other words, in any states that do not update their regulations within 12 months after USEPA signs the final action, the second proposed rule would give the Agency the authority to take over until the state can assume the responsibility.

What this might mean to regulated entities:  A state that has to amend its rules, especially the 13 "presumptive inadequate" states, would likely have difficulty making the changes by USEPA's deadline, which is within 12 months after USEPA signs the final action.  If USEPA steps in as planned, new sources and modification projects might be unusually delayed while USEPA works through the GHG portions of permitting applications.

What this might mean in Allegheny County and most California counties:  It's hard to say.  Allegheny County and most of the Air Quality Management Districts in California are in a "grey area" - that is, they are not listed on either the Presumptive SIP Call or the Presumptive Adequate Lists.  USEPA has determined that these jurisdictions (among others) do not have an approved PSD SIP.  See additional discussion below.

What's next:  The two rules have not yet been formally proposed with publication in the Federal Register, and comments on the rules would be due 30 days after publication.  USEPA has scheduled a public hearing on the matter for August 25, 2010 in Arlington, Virginia.

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This post was written by Siobhan Hayes and Indeg Kerr.

The latest Government Press Release shows that 1,299 businesses have registered under the UK’s Carbon Reduction Commitment (Energy Efficiency) Scheme (‘CRC’). The Government’s own estimate is that 5,000 businesses will have to register and comply in full with the CRC. The deadline for registration is 30 September 2010 but the process of registration may take weeks. This posting addresses registration issues and the consequences of failing to register.

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This post was written by Larry Demase, Jennifer Smokelin and David Wagner.

Although an energy bill is now on the Senate floor, it is limited to energy conservation and issues related to the oil spill. It does not include a price on carbon in the form of cap and trade for any sector, and we are unlikely to see comprehensive climate legislation in September or later this year. So now what? Congressional failure to act now or later in 2010 means that, on the federal level, the U.S. Environmental Protection Agency ("USEPA") will step in and use its authority under the Clean Air Act to regulate greenhouse gases ("GHGs") from the utility, transportation and industrial sectors, and there is a small possibility that such regulation by USEPA will include a cap-and-trade program. To be sure, USEPA has already taken several steps to regulate GHGs. 

The following post discusses what will likely come out of Congress and USEPA's ongoing efforts to enact measures that regulate GHGs.

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This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

Reed Smith joined an audience of 1,200 attendees at last night's "Opportunity for Stakeholder Input on Criteria for Selecting Case Studies for Consideration in USEPA's Hydraulic Fracturing Research Study" meeting in Southpointe, PA, just outside of Pittsburgh. The standing-room only event marked the largest turnout yet in this series of public hearings sponsored by the U.S. Environmental Protection Agency (USEPA). Approximately 600 people attended the first hearing in Fort Worth, Texas on July 8, while nearly 350 attended in Denver, CO on July 13. The last hearing in the series of four will take place in Binghamton, NY on August 12.

USEPA has explained that the purpose of the hearings is to solicit input from community and industry stakeholders on the design of USEPA's upcoming study of the potential impact of hydraulic fracturing ("hydro-fracking")­—which involves pumping large volumes of water mixed with frac fluid and sand into geologic formations to extract natural gas—on groundwater and drinking water. To facilitate this goal, USEPA welcomed members of the community to register for two-minute slots of speaking time during which they could address their thoughts on the scope and design of the study, as well as on the potential costs and benefits posed by Marcellus Shale natural gas production in Pennsylvania.

It became clear from the comments of the 130 or so speakers that public concern over the potential adverse environmental and health impacts of hydro-fracking has reached fever pitch. Some concerned community members advocated for a moratorium to be placed on all Pennsylvania natural gas drilling, similar to the one currently in effect in New York state, until USEPA completes its hydro-fracking study (expected sometime in late 2012). Industry supporters expressed fears that over-regulation could chill the significant increases in job opportunities and government revenue expected in Pennsylvania as a result of Marcellus Shale natural gas development and production.

According to USEPA, the study is scheduled to begin in early 2011, with preliminary study results expected in 2012. In addition to conducting the series of four public hearings, USEPA is also soliciting comments from the public via email at hydraulic.fracturing@epa.gov on the following inquiries: (1) where should USEPA prioritize its efforts?; (2) where are gaps in current knowledge?; (3) is there data and information already in existence that USEPA should be aware of?; and (4) are there potential candidate sites or case studies that would be useful for the study?

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This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

On July 10, 2010, the Pennsylvania Environmental Quality Board (EQB) published its proposed rulemaking measures to update existing state requirements for drilling, casing, cementing, testing, monitoring and plugging of oil and gas wells. The proposed rulemaking, originally adopted by the EQB in May, is now open for public comment until August 9, 2010. Once the period for public comment is over, the proposal will go before the Pennsylvania Independent Regulatory Review Commission for review and final publication.

According to the EQB, a large portion of the updates contained in the proposal are already employed as part of best management practices among operators. However, the new regulations are said to further decrease any risk of gas migration from well sites to neighboring water supplies. The proposed rulemaking was prompted, in part, by public concern over the potential impact that the increasing number of Marcellus Shale wells could have on groundwater and drinking water supplies. Although the Pennsylvania Department of Environmental Protection's review of current well site construction and operation practices revealed that "many, if not all, Marcellus well operators met or exceeded the current well casing and cementing regulations[,] . . . the current regulations were not specific enough" in detailing guidelines for proper well construction or requirements for operators to respond to complaints over gas migration. The current updates would provide for more specificity in these areas, as well as establish a requirement that well operators conduct quarterly inspections of the structural integrity of all wells in operation. 

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This post was written by David Wagner.

If you missed Reed Smith's Quarterly Report on Climate Change, feel free to listen to an audio recording of the event. In addition, the slideshow presentation is available here. The report covered a lot of information and featured:

• A status report on Congressional action on comprehensive climate regulation;
• A summary of issues regarding the GHG cap-and-trade scheme under AB 32 in California;
• An overview of the legal issues related to carbon capture and storage; and
• A discussion of offset projects in the United States.

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This post was written by Ariel Nieland.

The Wyoming Oil and Gas Conservation Commission voted unanimously yesterday to pass two new regulations that require energy companies to disclose all chemicals used in the fracking process as well as to identify all groundwater sources and state-licensed wells in proximity to well heads. One of the major industry concerns over such disclosure requirements is the protection of trade secrets, i.e. what chemicals comprise each company's frac fluid and in what proportion. To address this concern, the regulations impose confidentiality requirements on state regulators in possession of proprietary information. The disclosure requirement is the first of its kind in the nation; however, other states, including Pennsylvania have proposed similar regulations.

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This post was written by Siobhan Hayes and Indeg Kerr.

We wrote a variety of blog postings on the UK’s Carbon Reduction Commitment (Energy Efficiency) Scheme (‘CRC’) whilst the Government was consulting on the draft Regulations. A lot of the information must have seemed unimportant prior to April 2010 but now the CRC Energy Efficiency Scheme Order 2010 (‘CRC Order’) is in force and many businesses will need to evaluate whether, how and to what extent they must comply with the CRC. 

The CRC is aimed at organisations which are not energy intensive and will cover many sectors including offices, retailers and hotels. The CRC affects overseas companies that do business in the UK and applies whether or not they do so using UK subsidiaries. Private equity investors have to determine how to manage their CRC liabilities.

This posting covers how to determine whether the first phase of the CRC Order is going to apply to your business and provides pointers on what to do next.

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This post was written by Ariel Nieland.

Based on news reports, Senator John Kerry (D-Mass.), along with Senator Lindsey Graham (R-S.C.), and Senator Joseph Lieberman (I-Conn.) plan to release a revised climate bill aimed at cutting U.S. industry emissions of carbon dioxide and other greenhouse gases associated with global climate change. It may be unveiled as early as next week in time for Earth Day on April 22. A key issue raised in prior climate bills, which the new bill is not expected to address, is the creation of a national "cap and trade program" for managing greenhouse gases, such as the ones currently in place in the European Union to reduce greenhouse gases and in the U.S. to control acid rain-causing sulfur dioxide. The new climate bill will, however, likely provide for an overall cap on greenhouse gas emissions for certain utilities, with other industries to be phased in over time, as well as "a modest tax" on transportation fuels. The bill is also expected to incentivize construction of nuclear power plants, carbon capture and storage facilities, renewable energy sources such as wind and solar power, as well as oil and gas drilling.
 

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This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

In a statement released yesterday, John Hanger, Secretary of the Pennsylvania Department of Environmental Protection, championed the proposal of new rules aimed at keeping Pennsylvania streams, drinking water, and rivers free from a pollutant known as "total dissolved solid" (TDS), which is a measure of chemical substances dissolved in water. In addition to natural gas drilling, sources of TDS include abandoned mine drainage, agricultural runoff, and discharges from industrial or sewage treatment plants. Mr. Hanger's hope is to establish the necessary regulations now that will prevent TDS from becoming a source of contamination later. In the press release, Mr. Hanger focused on the high TDS concentrations related to natural gas drilling, stating that “Marcellus drilling is growing rapidly and our rules must be strengthened now to prevent our waterways from being seriously harmed in the future.”

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This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

During a Marcellus Shale public forum meeting held last week near Scranton, Pennsylvania, the Pennsylvania Department of Environmental Protection (DEP) proposed a new regulation to be added to the most recent draft of proposed legislation regulating well construction. Under the proposed regulation, gas drilling companies would have to provide information about chemical usage on a well-by-well basis. This new proposal would require each company, upon completion of well construction, to disclose in a report a list containing all the names and total volume of chemicals used in the hydraulic fracturing process. The new proposal will be presented at a Pennsylvania Environmental Quality Board meeting for discussion on May 19, 2010. Scott Perry, director of DEP's Bureau of Oil and Gas Management, explained that this proposed regulation was drafted in response to a growing desire by the public for increased transparency with respect to well site development.

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This post was written by Lou Naugle, Chris Rissetto and  David Wagner .

Almost 10 years after the United States committed in an international agreement to strengthen its hazardous waste regulations, the U.S. Environmental Protection Agency (EPA) issued a final rule that governs the shipping of hazardous waste between the United States and other countries. Details on the new rule can be found in The Sentinel, Reed Smith's quarterly newsletter that discusses export, customs and trade developments.

According to EPA, the new measures will increase regulatory oversight of the international shipping of hazardous waste and provide stricter controls. The final rule, which will be effective on July 10, 2010, is also designed to make international shipment regulations under the Resource Conservation and Recovery Act more consistent with those of the Organization for Economic Cooperation and Development (OECD), a consortium of 31 Member countries that includes the United States. Key changes to the rules include:

• Modifying the requirements concerning international shipment of hazardous waste destined for recovery among OECD countries;
• Establishing notice and consent requirements for SLABs intended for reclamation in another country;
• Changing the hazardous waste import-related requirements for U.S. hazardous waste management facilities to confirm that individual import shipments comply with the terms of EPA’s consent; and
• Revising the EPA address to which exception reports concerning hazardous waste exports are to be sent.

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This post was written by Chris Rissetto, Lou Naugle, Bob Helland, and David Wagner.

Last week, the U.S. Environmental Protection Agency ("EPA") outlined what it terms a "rigorous accountability framework" for addressing pollution levels in the Chesapeake Bay and its tributaries. Federal efforts to cleanup the Chesapeake Bay watershed have been ongoing for over 25 years and this is the first time that EPA has outlined a number of punitive measures intended to force compliance with pollution controls by the six Chesapeake Bay states – Delaware, Maryland, New York, Pennyslvania, Virginia and West Virginia – and the District of Columbia.

The update by Reed Smith describes the regulatory regime in place to address the harmful levels of pollutants in the watershed and discusses the punitive measures along with the legal issues they raise. The update also discusses what measures are expected in 2010, especially as they relate to the Chesapeake Bay total maximum daily load (TMDL) for nitrogen, phosphorus and sediment.

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This post was written by Luca Salerno and Siobhan Hayes.

In earlier postings we have introduced the UK’s Carbon Reduction Commitment (Energy Efficiency) Scheme (“CRC”) and have considered the impact for companies and groups and penalties for non-compliance. This note considers briefly what the problems are in the legal classification of carbon emission allowances and the issues that will need to be resolved by the time businesses start trading them.

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This post was written by Tim Foster and Siobhan Hayes.

In earlier postings we have introduced the UK’s Carbon Reduction Commitment (“CRC”) which has been the subject of public consultation. The Government issued their policy decisions recently and a number of things will change when the Regulations come into force next April. To restate, headlines reporting the CRC was deferred were wide of the mark and the CRC will still start to apply in April 2010. To emphasise the impact of the CRC the first thing to note is that it will now be called the CRC Energy Efficiency Scheme. Energy efficient businesses are to be rewarded for their good behaviour. 

This is a note on the main changes we expect to see when the next draft of the Regulations is published towards the end of this year.

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This post was written by Siobhan Hayes and Tim Foster.

In earlier postings we have introduced the UK’s Carbon Reduction Commitment (Energy Efficiency) Scheme (“CRC” )and have considered the impact for companies and groups and penalties for non-compliance .This is a note on the performance league tables that will rank all CRC participating organisations in terms of energy efficiency. The more efficient will receive bonus payments while the less efficient will be penalised, under a system of “revenue recycling”, which is explained below.

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This post was written by Siobhan Hayes, Indeg Kerr and Tim Foster.

In earlier postings we have introduced the UK’s Carbon Reduction Commitment Energy Efficiency Scheme(CRC). This posting is a brief look at how the hotels sector will be affected by the CRC.

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This post was written by Siobhan Hayes.

In earlier postings we introduced the UK’s carbon reduction commitment (CRC) and we have considered which companies need to comply. In this posting we are covering the penalties that UK businesses will face if they fail to comply with various reporting requirements and fail to buy and surrender carbon emission allowances by the relevant deadline.

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This post was written by Todd O. Maiden, Eric M. McLaughlin, and Amy E. Coren.

Despite heavy criticism from House Republicans and generally tepid support from House Democrats, the latest bill on climate change initiatives, H.R. 2454: The American Clean Energy and Security Act (ACESA), garnered just enough votes to move forward in the legislative process, passing 219 to 212. Having passed the House, the next stop for ACESA is the U.S. Senate for consideration.

Introduced by U.S. House Energy and Commerce Committee Chairman Henry Waxman (D-CA) and House Energy and Environment Subcommittee Chairman Edward Markey (D-MA), H.R. 2454 calls for an economy-wide greenhouse gas (GHG) cap-and-trade system and various complementary GHG reduction measures, while also providing for federal investment in the areas of clean energy and energy efficiency programs, carbon capture and sequestration technologies, and the research and development of renewable technologies.
 

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This post was written by Siobhan Hayes, Indeg Kerr, and Tim Foster.

In earlier postings we’ve introduced the UK’s Carbon Reduction Commitment (Energy Efficiency) Scheme (CRC). All UK businesses with half hourly meters were sent letters from the Environment Agency (EA) introducing them to the CRC and the obligations the business will face. However, please note that letters went to the billing addresses for each relevant meter. The EA states that it does not know which parent company will be responsible for compliance with the CRC and that applies across the whole of the business of the UK group (covered in a previous posting). It is possible that your organisation has received a letter but there may be complications: it could have gone to a person who no longer works at the company; may be overlooked; or may not reach the right level of management. Even without the initial EA letter getting to the right people, businesses in the UK need to be prepared.

This posting covers the information to be gathered for the qualification year of 2008 and some practical steps to prepare for CRC compliance.

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This post was written by Tim Foster and Siobhan Hayes.

In 2010 the Carbon Reduction Commitment Order will require many UK businesses to measure and report on their energy consumption, to buy allowances to cover their carbon emissions and to pay significant penalties if they do not comply. The CRC was summarised in a recent Reed Smith posting.

Unlike previous legislation affecting EU carbon emissions (the Emissions Trading Scheme) the CRC does not apply to specific installations or individual companies in relation to their own emissions. It applies to the whole of the organisation in the UK. For companies doing business in the UK that means that the CRC applies to the relevant UK group as a whole. If the UK group is owned by a parent incorporated overseas the parent will have compliance duties in respect of its UK subsidiaries.

The rules are not straightforward and involve a raft of potentially confusing definitions and terms to describe participating and responsible entities.   This posting covers the key points on who has to comply:

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This post was written by Indeg Kerr, Siobhan Hayes and Tim Foster.

UK businesses need to know their carbon footprint because in 2010 the Carbon Reduction Commitment Order will apply. Since our CRC posting in December 2008, draft regulations have been published and are now subject to public consultation. This remains a scheme where businesses using a substantial amount of energy will have to report on their energy consumption, buy carbon allowances based on projected carbon emissions for each scheme year then surrender them at the end of each year when energy use is known. A league table will be published by the Environment Agency (EA) who will administer the scheme showing the relative energy efficiency of all those in the program. The best performing businesses will receive a refund of some of the costs of the allowances plus a bonus but the worst performing businesses will pay a penalty.

Some industries are high intensity energy users and already have to comply with the EU’s Emissions Trading System. The CRC scheme will capture lower intensity energy users who used a significant amount of electricity in 2008 and may include large offices, chains of retail outlets, hotels, banks, chains of restaurants as well as industry.
This posting outlines the types of business that may need to comply with the CRC scheme, the basic requirements of the program, some cost issues, and next steps to consider.
 

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This post was written by David Wagner.

The UK's Department for Business Enterprise and Regulatory Reform (BERR) published a consultation on April 7 soliciting public comment on European Commission proposals to revise the WEEE and RoHS Directives. The consultation paper highlights the significant changes and poses questions for industry and others to address. Among other revisions, the proposal would establish under WEEE new collection targets for Member States and new targets for recovery and reuse/recycling. The proposal would also likely increase WEEE financing costs for producers. The proposed revisions to RoHS would include the possible review and restriction of four substances, specifically: hexabromocyclododecane (HBCDD); bis (2-ethylhexyl) phthalate (DEHP); butyl benzyl phthalate (BBP); and dibutylphthalate (DBP). Consultation responses (i.e., public comments) are due May 13, 2009.

The WEEE Directive (or Directive on Waste Electrical and Electronic Equipment) aims to minimize the environmental impact of electrical and electronic equipment by encouraging its reuse, recycling and recovery when it is discarded at end of life. The RoHS Directive (or the Restriction on the use of certain Hazardous Substances Directive) ensures that all Member States observe similar restrictions on the levels of six hazardous substances in the same categories of electrical and electronic equipment.
 

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This post was written by Jayme Butcher.

Substantive revisions to Pennsylvania’s Right to Know Law took effect on Jan. 1, 2009. The thoroughly revised law establishes for the first time an Office of Open Records with the Department of Community and Economic Development to administer the new law and fundamentally changes how citizens access public records. Key changes are discussed below and include:

• The request and appeals process has been substantially streamlined to enable requesters to reach judicial review, in most cases, within a roughly two-month period.
• All records are presumed “public.”
• Agencies bear the burden of proving the applicability of one of 30 new statutory exemptions to the requested information.
• The new law removes substantial ambiguity as to the specific records exempt from disclosure, which should expedite the request and appeals process.
• Appeals procedures are, in part, determined by the type of agency from which records are sought.
   

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This post was written by Eric M. McLaughlin and Keisha M. Williams.

In late September, New York became the latest state to give the green light to “green building,” after Gov. David Paterson signed two bills introducing green building performance standards for construction and renovation of New York state government buildings, and a Grants Program for green residential builds. The new laws aim to encourage and incentivize the construction of energy-efficient, sustainable buildings, using recyclable and environmentally friendly materials, and are in line with the governor’s “15 x 15” plan to reduce energy use by 15 percent of expected levels by 2015. New York’s new laws highlight the fact that buildings account for nearly 40 percent of the nation’s greenhouse gas emissions and more than 70 percent of its electricity consumption, and that these impacts can be reduced by regulations governing design and construction.

The State Green Building Construction Act (A. 2005) (State Building Act) will require all new state-owned buildings, and substantial renovations of existing state-owned buildings, to comply with green construction principles set forth in standards to be developed by the Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA). State agencies will also be required to prepare annual building performance reports containing information on their green credentials, including energy consumption, waste reduction, and how indoor air quality compares with set benchmarks. The State Building Act takes effect 180 days after signature, on or about March 25, 2009.

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This post was written by Ruth N. Holzman, James R. Eskilson, Todd O. Maiden, Eric M. McLaughlin, and Jennifer Smokelin.

There’s good news for commercial building owners who have wanted to “go green,” but have been waiting to see whether the tax incentives for green buildings, set to expire at the end of 2008, would be extended. The historic financial rescue bill (H.R. 1424), signed by President Bush on Friday, Oct. 3, 2008, also included the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (“TEAMTRA”). Among the tax-extenders in TEAMTRA was a five-year extension of the tax incentives for “green” commercial buildings.

Internal Revenue Code Section 179D gives owners of commercial real property a tax break by allowing them to deduct the cost of certain energy-efficient property. It applies to both new construction and to retrofits of existing construction. Prior to TEAMTRA, this tax break only applied to property placed in service on or prior to Dec. 31, 2008. With the extension of this provision to Dec. 31, 2013, property owners now have sufficient time to design, construct and complete projects that will qualify for this tax break. Although numerous bills had been introduced in Congress that would have raised the amount deductible under Section 179D, TEAMTRA did not contain any increase in this amount. The deduction is still limited to the product of $1.80 multiplied by the square footage of the building.

For a brief overview of the Section 179D deduction for “green” buildings, see “New Tax Incentives for ‘Green’ Buildings Have Owners Seeing Green,” in The Critical Path, Fall 2006; for a more detailed discussion, see "New Tax Incentives for 'Green' Buildings Have Owners Seeing Green," in the ABA's The Construction Lawyer, Summer 2007.

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This post was written by Todd O. Maiden and Eric M. McLaughlin.

On Sept. 29, 2008, California Gov. Arnold Schwarzenegger signed two green chemistry bills—AB 1879 and SB 509—into law. This new green chemistry law totally refocuses chemical regulation in California, from reacting to chemicals after they have already been used in manufacturing or industrial processes, to assessing and regulating the use of chemicals in the design stage. The regulatory system created by the law will evaluate chemical risks and impose tailored restrictions based on science and the real-life impacts of chemical usage, rather than instituting an abstract chemical ban. California’s green chemistry law will take effect Jan. 1, 2009, which means the rulemaking process for the numerous regulations needed to implement the system will begin in earnest.

To achieve the goal of a regulatory system based on science and the real-life impacts of chemical usage and exposure, the green chemistry law was drafted using a comprehensive and collaborative approach. Implementation of the regulations will involve an interagency consultative process, incorporating chemical-related research done by other government agencies, and comments from stakeholders and the public. This approach, combined with the notice and comment requirements of the California Administrative Procedure Act, is intended to eliminate the ad hoc rulemaking seen with other environmental laws, such as California’s Proposition 65. Additionally, the scope of the law includes all chemicals used in consumer products, unlike the current patchwork of California laws that address only select product categories, such as lead in jewelry and on lunchboxes, chemicals in food containers, and household products such as light bulbs and batteries.

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This post was written by Jennifer Smokelin, Lawrence Demase and Louis Naugle.

Global warming legislation was enacted for the first time in Pennsylvania July 10, when Gov. Ed Rendell signed the Pennsylvania Climate Change Act. The measure was overwhelmingly approved earlier this month by both houses of the Pennsylvania General Assembly.

A coal-rich state, Pennsylvania emits 1 percent of the world’s greenhouse gases responsible for global warming, more than the emissions of 105 developing countries combined. 

The Climate Change Act is immediately effective and will:

(1) Require the Pennsylvania Department of Environmental Protection to conduct an annual inventory of greenhouse gas emissions in all sectors, specifically but not limited to transportation, electricity generation, industrial, commercial, mineral and natural resources, production of alternative fuel, agricultural, and domestic sectors, and through such inventory, to establish a baseline of GHG emissions

(2) Require DEP, within 90 days of the Act’s effective date, to set up a voluntary registry for business and industry where they can track their GHG emissions and potentially get credit for voluntary GHG emission reductions

(3) Provide for an 18-member politically appointed stakeholder advisory group to DEP (the “Climate Change Advisory Committee” or “Committee”), that will work with DEP to develop a state plan (“Climate Change Action Plan”) to reduce GHG emissions, which is to be available within 15 months of the Act’s effective date

(4) Require DEP to report on potential climate change impacts and economic opportunities for the state within nine months of the Act’s effective date (revisions to be provided every three years thereafter)

(5) Require the Secretary of DEP to monitor the enactment of laws by the U.S. Congress to determine whether any federal law is more stringent than Pennsylvania law with regard to GHG inventory, registry or reporting requirements and, if so, to identify the affected entities, which must comply with the more stringent federal regulations through a notice in the Pennsylvania Bulletin.

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This post was written by Todd O. Maiden, Lawrence A. Demase, Jennifer Smokelin, Louis A. Naugle, and John Lynn Smith. 

On June 6, 2008, U.S. Senate Majority Leader Harry Reid withdrew from consideration a bill that would have established a national “cap-and-trade” system, requiring industry to pay to emit carbon dioxide and the five other most abundant greenhouse gases (“GHGs”).  The Senate voted 48-36 in favor of the legislation, but Democratic proponents fell 12 votes short of the 60 votes needed to overcome a Republican filibuster.  Six senators absent from the debate, including presidential candidates John McCain and Barack Obama, sent letters indicating they would have voted for the bill, had they been present.

The bill, dubbed the Lieberman-Warner Climate Security Act of 2008, and championed by California Sen. Barbara Boxer, Chair of the Senate Environment and Public Works Committee, aimed to reduce total U.S. GHG emissions by about 66 percent of current levels by 2050.  In the coming decades, the Act – proposing the first cap-and-trade system to cover the electricity, industry, and transportation sectors – would have generated more than $5 trillion in government revenue, to be distributed to affected industries, consumers, and local governments.

Sen. Boxer remained optimistic about the chances of passing federal climate change legislation in the near future.  “It’s clear a majority of Congress wants to act,” she said, referring to the 54 senators who had demonstrated support.  She predicted that a new Congress and a new president would be more amenable to legislation mandating reductions in GHGs.

Other senators had harsher words for the bill’s opponents.  Sen. Robert Menendez (D-N.J.), a member of the Energy and Natural Resources Committee and Chairman of the Senate Foreign Relations subcommittee in charge of international environmental agreements, released a statement in which he charged that “The Republican ‘No’ Machine has reared its head again . . . prevent[ing] our nation from reducing the emissions that have caused the climate crisis and from investing in green technologies that can create jobs and spur the economy.”  Noting the bill was “not perfect,” he added that “every major movement starts with a first step, and that’s what this bill represented.”

Utilizing the same general approach as is being developed under California’s Global Warming Solutions Act of 2006, the bill would have created a national market in emission allowances and provided companies with financial incentives to reduce emissions.  The legislation would have allowed total U.S. GHG emissions to peak in 2012, and required subsequent reductions of about 2 percent per year until 2050.  Approximately 2,100 companies – mostly coal-fired power plants, oil refineries, natural gas processors, and factories – would have been required to purchase permits, or “allowances,” to emit GHGs.  Companies exceeding the target reductions would have been able sell or trade their allowances.  While many of the initial allowances would have been distributed at no charge, most would have been auctioned off.  The revenue from these auctions would have paid for cleaner technologies and rebates to poorer consumers to offset expected increases in energy prices.  The bill would have also established a Carbon Market Efficiency Board, which would have monitored progress and assisted companies in dealing with fluctuations in carbon prices.  In short, the bill was intended to incentivize GHG emission reductions while enabling the emitting parties to determine how they wish to accomplish those reductions.

Opponents, including the current Administration, viewed the bill as a tax on industry that would have increased energy prices, eliminated jobs, and made American businesses less competitive.  President Bush said the bill was “the wrong way to proceed,” and had threatened a veto if it were to pass in its current form.  He added that the bill “would impose roughly $6 trillion of new costs on the American economy.”  An Energy Information Administration study estimated that reducing greenhouse gases 45 to 55 percent by 2030 would slow economic growth by 0.2 percent to 0.6 percent of U.S. gross domestic product.  Because the electric power industry would account for more than 80 percent of the reductions, the study predicts that electricity prices could rise by 11 percent to 64 percent by 2030, and gasoline prices could rise by 22 to 49 cents over the same period.

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This post was written by Jennifer Smokelin.

Will national GHG cap and trade hit this country? If so, when? Will the cap and trade system affect your client? And can your clients take advantage of trading in GHG cap and trade before then (IETA estimates predict an overall growth to 70 billion Euro next year in the global market for carbon, of which EU-ETS is 75 percent)?  The Lieberman-Warner Climate Security Act of 2007 (S.2191), which would establish a national cap-and-trade system to reduce U.S. greenhouse-gas emissions, is much less stringent than some other climate bills in Congress, but Lieberman-Warner is so far the only one to pass out of committee; it's scheduled for a Senate vote in June. It would become effective in 2012 and affect 80 percent of the GHG emitting sectors in the United States. Further, U.S.-based entities can benefit today from the carbon markets created by the Kyoto Protocol and the European Trading System (ETS), even though the United States has not ratified Kyoto. They can do so by investing in Clean Development Mechanism (CDM) projects in "non-Annex I" countries like Mexico, and then trading the resulting Certified Emissions Reductions (CERs) into the ETS at a current estimated value of $27 per ton CO2 equivalent. In addition, under Lieberman-Warner as passed out of committee, foreign-generated credits might be used to meet required allowances in the early years of the U.S. cap-and-trade program.

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