The theme of the 2008 presidential election was change. During his campaign President Obama spoke often about energy and the environment and used the phrase "new energy for America" in describing his plans to create new "green-collar jobs". With Obama's election, Democrats now control both houses of Congress and the White House. The courts, and in particular the Supreme Court, have with increasing frequency addressed important issues concerning the scope of major US environmental statutes.
In the months ahead, stakeholders with an interest in American environmental policy will be closely watching how the administration develops and prioritises environmental, energy and resource policies, and legislative action in this session of Congress, and key judicial decisions. These and other factors, including economic recovery issues and the globalisation of business markets and environmental requirements, ranging from Kyoto to REACH, will create challenges and opportunities for companies and their attorneys.
Climate change was the most prominent environmental issue in the recent presidential campaign. Barack Obama announced his environmental agenda in a plan entitled "New Energy for America," which focused on climate change and addressing US dependence on foreign oil. The New Energy Plan proposed a cap-and-trade programme to reduce greenhouse gas emissions in 80 per cent by 2050, based on auctions for pollution credits. Obama proposed that a portion of the proceeds from auctioning allowances would be used to support the development of clean energy, energy efficiency improvements, and the next generation of biofuels and clean-energy vehicles.
As previewed in the Obama campaign, the new administration is focusing on fostering research and development of new forms of energy and the development of energy-saving approaches. President Obama named former New Jersey Governor's Chief of Staff Lisa Jackson to head the Environmental Protection Agency (EPA). Steven Chu, a Nobel laureate in physics, was appointed to head the Department of Energy. President Obama named former EPA Administrator Carol Browner to fill a newly created White House position, assistant to the president for energy and climate change. The president has issued several presidential memoranda and a number of press releases addressing environmental issues since taking office. President Obama has addressed appliance-efficiency standards and requested EPA to review the prior dministration's denial of California's request for a waiver under the Clean Air Act so that it may set its own vehicle emission standards. The White House has also announced the Major Economies Forum on Energy and Climate.
In a major announcement, EPA proposed to formally declare that carbon dioxide and five other heat-trapping gases are pollutants endangering public health and welfare, setting in motion a process to regulate carbon dioxide and other greenhouse gases associated with global warming. This announcement on 17 April 2009 came two years after the Supreme Court's decision in Massachusetts v EPA, discussed below. The Agency said the science supporting its endangerment finding was "compelling and overwhelming." The ruling triggers a 60-day comment period before any proposed regulations governing emissions of greenhouse gases are published. Administrator Lisa Jackson said: "This finding confirms that greenhouse gas pollution is a serious problem now and for future generations. Fortunately, it follows President Obama's call for a low-carbon economy and strong leadership in Congress on clean energy and climate legislation."
EPA's 17 April announcement does not include specific targets for reducing greenhouse gases or new requirements for energy efficiency in vehicles, power plants or industry sources. Such new restrictions would be developed in subsequent rulemaking or in legislation enacted by Congress. EPA's finding will spur consideration of new regulations for mobile and stationary sources and will serve as a major impetus for legislation. EPA's announcement stated that "[n]otwithstanding this required regulatory process, both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy".
During his April trip to Europe, President Obama pledged to aggressively address climate change. The Energy Plan presented by Barack Obama during his campaign suggests that the Administration will encourage climate change legislation based on a cap-and-trade system. Bills introduced in Congress have taken different approaches to climate change legislation. These approaches include a cap-and-trade system, a tax on carbon dioxide emissions rather than a cap, and a hybrid of a cap-and-trade system and a tax. Another proposal suggests a market-based approach with an oversight board to forecast and select emission allowance prices during the first years of the programme. The cap-and-trade bill offered by Senators Joe Lieberman and John Warner in the last Congress included a requirement that importers of carbon-intensive industries like steel, aluminium and paper buy carbon credits from a separate carbon market for importers, which may raise trade issues. At this point, all that can be said is that a number of climate-change bills will likely be discussed this session of Congress.
The American Recovery and Reinvestment Act, referred to by Barack Obama on the campaign trail as the "Green New Deal," was signed into law on 17 February 2009. The Act includes US$7.22 billion for projects and programmes administered by EPA, including state clean water and drinking water revolving fund targeted toward green infrastructure, water and energy efficiency, and environmentally innovative projects, grants and loans for projects that reduce diesel emissions.
The Recovery Act also includes US$600 million for the Federal Superfund remedial programme. By starting or speeding up cleanup at Superfund sites, Recovery Act funding can help increase the speed with which these sites are returned to productive use and is also expected to jump-start the local economy by creating jobs. On 15 April 2009, EPA announced new funding through the Recovery Act for five Superfund sites in Massachusetts, New Hampshire, and Vermont. The money will accelerate the hazardous waste clean-up already underway at the sites.
The New Energy Plan included various proposals for the development of clean energy, including investing US$150 billion over the next 10 years to spur private efforts to develop plug-in hybrid vehicles, commercial scale renewable energy, encourage energy efficiency, invest in low emissions coal plants, advance the next generation of biofuels and fuel infrastructure, and begin transition to a new digital electricity grid. The New Energy Plan also includes provisions for increasing the domestic production of oil and natural gas and a plan to diversify US energy sources by focusing on requirements for use of renewable energy and developing and deploying clean coal technology.
Consistent with Obama's New Energy Plan, the recently enacted Recovery Act includes US$32.7 billion (in addition to loan programmes) for energy projects that foster energy efficiency and renewable energy. Funds are allocated to environmental areas such as weatherproofing and state energy programmes, supporting US manufacturing of advanced batteries needed for plug-in hybrids, renewable energy backup, energy efficiency and renewable energy, environmental management, developing a smart grid, and fossil energy research and development. Specific provisions include up to US$20 billion in tax incentives for solar, wind, hydro, and other renewable power sources, which will drive the creation of new clean energy industry jobs. The Act includes more than US$13 billion to increase the energy efficiency of federal buildings and public housing and to weatherproof and insulate additional homes and more than US$17 billion to be invested in public transport. The Appropriations Act increased the budgets for research and development for the EPA and the Department of Energy. The Administration has a website that shows how Recovery Act funds are being invested: recovery.gov.
The Supreme Court has accepted a greater number of environmental cases in recent years and has issued important decisions concerning the scope of major environmental statutes. Three cases dealing with air, water and waste are illustrative. In Massachusetts v EPA, 75 USLW 4149 (2 April 2007), a divided Court rejected, by five votes to four, the prior administration's position that EPA had no authority under the Clean Air Act to regulate greenhouse gas emissions from new motor vehicles. This case arose when several parties petitioned the EPA to regulate four greenhouse gases, including carbon dioxide. The EPA denied the petition, reasoning that it did not have authority to issue regulations to address climate change, and even if it did, it would be unwise to do so because the link between greenhouse gases and global warming is uncertain. The Supreme Court disagreed, holding that EPA has authority to regulate carbon dioxide. The Court held that greenhouse gases "fit well within the Act's capacious definition of ‘air pollutant,' i.e., any physical or chemical substance that is emitted into the atmosphere". The Court held that the EPA administrator must exercise his judgment as to whether greenhouse gases "cause or contribute to air pollution which may reasonably be anticipated to endanger public health and welfare". Finally, the Court stated that for EPA to rely on uncertainty regarding climate change, the uncertainty must be "so profound" that it prevents the administrator from exercising his judgment. The Court's important decision in Massachusetts v EPA set the stage for EPA's recent endangerment finding, discussed above.
The Supreme Court addressed the scope of the 1972 Clean Water Act in Rapanos et al v United States, 547 US 715 (2006). That case involved four Michigan wetlands lying near ditches or man-made drains that eventually empty into traditional navigable waters. The United States brought civil enforcement proceedings against the Rapanos petitioners, who had backfilled three of the areas without a permit. The District Court and the Sixth Circuit found federal jurisdiction over the wetlands. The Supreme Court vacated the judgment and remanded, in a split 4-1-4 decision. The plurality opinion, written by Justice Scalia, concluded that the phrase "the waters of the United States" includes only those relatively permanent, standing or continuously flowing bodies of water "forming geographic features" that are described in ordinary parlance as "streams," "oceans, rivers, [and] lakes," and does not include channels through which water flows intermittently or waters "adjacent to" remote "waters of the United States" based on a mere hydrologic connection. Justice Kennedy, who provided the fifth vote for remand, concluded that a wetland constitutes "navigable waters" under the act if the wetlands significantly affect the chemical, physical, and biological integrity of other waters that are navigable in the traditional sense. The split Rapanos decision has resulted in further debate, with some taking the position that the plurality opinion in Rapanos should control and others that Justice Kennedy's opinion, which provided the fifth vote for a remand, should govern. The Justice Department has taken the position that a water body that satisfies either test should be considered a navigable water under the Act. Legislation or another Supreme Court decision may eventually resolve the issue.
The Supreme Court also issued a major decision concerning Superfund liability this spring, Burlington Northern & Santa Fe Railway co et al v United states et al, 2009 WL 1174849 (4 May, 2009). The government sued two railroads and Shell Oil Company, a supplier of chemicals, to recover its costs for cleaning up contaminated property, most of which was owned by a defunct chemical distributor. The court further held that Shell's mere knowledge of continuing spills and leaks during delivery of its pesticide product was insufficient grounds for concluding that it "arranged for" disposal and is thus liable for cleanup costs. The court held that an entity may qualify as an arranger when it takes intentional steps to dispose of a hazardous substance, but here Shell took numerous steps to encourage its distributors to reduce the likelihood of spills. Turning to the railroads, the Supreme Court rejected the government's argument that liability should be joint and several and upheld the trial court's apportionment of only 9 per cent of the liability for cleanup costs to the railroads. Although the evidence did not allow one to precisely calculate the portion of chemicals from the railroad parcel, the court held that apportionment is proper when there is a "reasonable basis" for determining the contribution of a party to the harm, citing §433A of the Restatement (Second) of Torts. The trial court's findings, based on geographic, time and volumetric factors, showed that the primary pollution at the site was on a portion of the facility most distant from the railroad parcel. The Supreme Court's recent decision will change the landscape of many pending and future Superfund cases.
It is early in the new administration, and there have been significant developments, including economic, since Obama's campaign. However, the election of President Obama augurs a change of direction in US environmental policy. The administration's environmental policies, the current investment climate and the globalisation of business markets and environmental requirements will create challenges and opportunities for companies and their attorneys.