The SEC Steps Toward the Full Monty on Corporate Climate Risk Disclosures
Author
David P. Clarke - Writer
Writer
Current Issue
Issue
3
David P. Clarke

The Securities and Exchange Commission’s recent vote to propose a rule mandating that companies disclose their greenhouse gas emissions and climate change risks, if finalized, will be a big win for advocates. The Biden administration, Democratic lawmakers, environmentalists, and investors managing trillions of dollars have called for businesses to report their emissions and disclose how worsening climate change could threaten the companies’ financial health. Threats include not only direct physical damage to properties from extreme storms or rising sea levels, but also, among others, “transition risks” that could reduce the value of companies’ assets as the world moves toward increasingly common “net zero” carbon goals.

But Republicans on the Senate Banking Committee, some industry groups, and others see an effort to remake “society” or “our economy as a whole” through SEC’s disclosure standard. Clearly, the stakes are high for both sides.

With its March 21 vote approving release of a 510-page proposal that for the first time would mandate that SEC-regulated companies “provide certain climate-related information in their registration statements and annual reports,” the SEC responded to a steadily building demand for corporations to come clean on their GHG connections. At the meeting, Commissioner Allison Herren Lee noted that after she published a climate disclosure statement in 2021 while serving as acting SEC chair, the “overwhelming majority” of comments in response agreed that the commission should adopt mandatory climate disclosure requirements.

But what exactly that will mean awaits a final rule that SEC says could go into effect in December. During the 60-day public comment period, two interlinked issues will certainly be at the heart of intense discussions, as they already have been. The first issue, “materiality,” refers to whether a reasonable investor’s decisions would be affected by information disclosed, in this case about a company’s climate-related risks. The second, “Scope 3 emissions,” refers to the GHGs along a company’s value chain, such as emissions from suppliers or from a product’s use. Supply chain emissions typically account for a company’s largest carbon connection. Scope 1, a company’s direct facility emissions, and Scope 2, GHGs from purchased energy, are less controversial because they are more easily calculated.

Regarding materiality, the one commissioner who voted against the proposal, Republican Hester Peirce, protested that it would mandate climate disclosures “without regard for materiality.” Current SEC disclosure rules are “rooted in the materiality principle,” she said, and argued that the proposal would “undermine” and turn the existing framework “on its head.” GOP lawmakers have also argued that mandating disclosures of “non-material climate-related information” would undermine the concept and its central role. However, SEC Chair Gary Gensler, in voting for the proposal, stated that his decisions about climate and other disclosures are “guided by the concept of materiality.”

On the Scope 3 issue, it is worth noting SEC staff struggled with those provisions, delaying release of the draft beyond an October 2021 target date. According to Reuters, industry critics argued with SEC staff that Scope 3 GHGs should be excluded because they are beyond a company’s control and there is no consensus method for calculating those emissions.

But in discussing Scope 3 GHGs and materiality, the draft notes that disclosing those emissions might be necessary to give investors a complete picture of a company’s climate risks. The draft concedes that collecting Scope 3 data and calculating emissions “would potentially be more difficult” than for Scope 1 and 2. Yet, those emissions could be an especially significant source of “transition risks” that “may materially impact” a company’s business operations and “associated financial performance,” the proposal says.

Given the importance of Scope 3 emissions coupled with the potential data and measurement challenges, the SEC in its extensive discussion of the issue is proposing that Scope 3 disclosures only be required “if those emissions are material,” or if a business claims its GHG-reduction goal includes Scope 3 emissions, among other concessions to allay concerns. Despite obstacles, SEC included Scope 3 as a “relatively new type of metric” because “capital markets have begun to assign financial value” to the information, making it potentially “material” for investors, the draft states.

The SEC’s proposal comes after the commission published 2010 guidance that another financial regulator, the Commodity Futures Trading Commission, found did not result in high-quality disclosure of climate change risks. It also follows the UN’s latest “dire warning” about climate inaction. The time for companies to fully disclose their GHG links may have arrived at last, and with it mounting pressure to act.

The SEC Steps Toward the Full Monty on Corporate Climate Risk Disclosures

ELI Report
Author
Akielly Hu - Environmental Law Institute
Environmental Law Institute
Current Issue
Issue
2

ELI at COP26 

In the face of growing climate litigation, Institute educates judges with the science needed to decide crucial cases

While ELI names Washington, DC, as its home base, the Institute’s policy analysis and educational programming spans the globe. This fall, its efforts reached Glasgow, Scotland, where staff engaged at COP26, the United Nations annual climate summit. ELI hosted and engaged in a number of events, sharing insights on how to strengthen regulation and build the law and policy toolkit for achieving climate solutions.

As part of the summit’s events, the Institute’s Climate Judiciary Program hosted a reception on November 5 to call attention to the critical role of the judiciary in climate action. Despite an increasing number of climate-related cases worldwide, many judiciaries lack a fundamental understanding of the climate science and impacts underpinning these proceedings. CJP is the only project in the world that provides the climate science information and education judges need to make reasoned and appropriate decisions in climate cases.

Held at the Merchant’s House of Glasgow, the historic site of an over 400-year old organization,
the event shared the importance of judicial education on climate science to an international audience. Over 50 attendees joined, including leading environmental judges from around the world, influential climate scientists, leaders of NGOs and foundations, and high-level officials from the government.

On the same day, ELI also hosted a roundtable on ensuring compliance with climate regimes as part of Climate Law and Governance Day, an event co-hosted by the University of Glasgow, University of Cambridge, and University of Strathclyde. The conference gathered the global climate law and governance community to discuss challenges and solutions for implementing the Paris Agreement and other climate obligations.

ELI’s roundtable was chaired by Associate Vice President of Research and Policy Sandra Nichols Thiam and Visiting Scholar Paul Hanle. Speakers included Vice President of Programs and Publications John Pendergrass and Environmental Justice Staff Attorney Arielle King, among other top scholars, judges, and scientists. The group discussed how climate science can inform questions that arise in climate litigation, and how to bridge the gap between science and justice.

On November 6, Associate Vice President Sandra Nichols Thiam also spoke on a panel as part of the half-day event, Climate Change Legislation, Litigation, and the Rule of Law, hosted at the University of Strathclyde. Nichols Thiam spoke on the importance of capacity-building for legal actors and ELI’s experience educating judges, including recent efforts with CJP.

Beyond speaking engagements, ELI staff also attended events held by C2ES, EARTHx, and the Global Judicial Institute for the Environment, and engaged with youth activists and leaders in the climate and environmental justice movements.

ELI’s mission to make law work for people, places, and the planet fills a critical niche in strengthening governance around the world. A U.S. organization with a global presence, ELI continues to collaborate internationally to advance climate and justice solutions.

Bridging governance between countries to protect wetlands

Environmental policies typically do not cross national borders, even when the need for conservation does. One example of this transboundary challenge is the Laguna Madre wetlands, which extends 400 miles from Texas to the state of Tamaulipas in Mexico.

According to the U.S. National Park Service, Laguna Madre is “perhaps one of the most overlooked natural wonders in North America.” The wetland provides critical habitat for threatened and endangered species, including migratory birds between North and South America. But adequate management of this natural wonder is uniquely complicated, in part because Laguna Madre is politically divided between the United States and Mexico.

In November, the Laguna Madre Initiative, ELI’s Ocean Program, and Texas A&M University at Galveston hosted a weeklong seminar to develop a binational agenda for the sustainable use and conservation of Laguna Madre. The project builds on ELI’s experience in restoration in the Gulf of Mexico, as well as the expertise of ELI Visiting Scholar Enrique Sanjurjo. As a former program officer for the Gulf of California at World Wildlife Fund, Sanjurjo worked with partners in the United States and Mexico to create and implement marine protected areas, strengthen small-scale fisheries governance, and protect wildlife.

By convening partners from both sides of the border, the initiative aims to develop an innovative regulatory framework for binational ecosystem governance. The seminar featured presentations from U.S. academics, NGO partners, and government employees, including staff at the National Park Service, the National Oceanic and Atmospheric Administration, and the Texas Park Service.

Representatives from NGOs and the government in Mexico also presented, including officials from Mexico’s National Institute of Fisheries, National Commission on Natural Protected Areas, and the Tamaulipas State Chamber of Industry. Attendees from both countries arrived from academia, government, NGOs, and law.

A roundtable with fishers from the Gulf of Mexico underlined the seminar’s focus on achieving connectivity between all aspects of the Laguna Madre: ecosystems, wildlife, and people. With an eye toward establishing long-term links between policymakers, scientists, and communities, the seminar accomplished important initial steps in facilitating cross-boundary environmental governance in the area.

Local government network helps address compliance needs

When local governments puzzle over a federal environmental requirement, or need help finding resources to prevent pollution, they can turn to the Local Government Environmental Assistance Network. One of EPA’s Compliance Assistance Centers, LGEAN is a “first-stop shop” for municipal government staff and elected officials who need information on environmental management, planning, funding, and federal regulations.

Since May 2020, ELI has managed the network under a cooperative agreement with EPA. The Institute revamped the official website (lgean.net), which provides updated information and resources for local governments, and launched a new podcast and webinar series.

Notable offerings include a half-day Small Community Drinking Water Financing online workshop in November. Small and very small community drinking water systems comprise 80 percent of all community water systems, yet they often face infrastructure barriers to achieving drinking water standards. The event featured EPA officials and financing experts from the Environmental Finance Center at the University of North Carolina at Chapel Hill, who presented strategies for planning, funding, and financing to reach compliance.

LGEAN also hosted a webinar on the use of the federal Toxic Release Inventory’s data for local and tribal governments in October. The webinar detailed responsibilities governments may have in reporting hazardous materials to the TRI, as well as opportunities to leverage TRI data to stay apprised of facilities that may release potentially toxic chemicals. LGEAN’s podcast series covers topics from lead abatement to solid waste.

The network’s offerings are guided by its Project Advisory Committee, composed of leaders from major associations of local officials. They include experts from the Institute of Tribal Environmental Professionals, National Association of Counties, International City/County Management Association, Rural Communities Assistance Partnership, and International Municipal Lawyers Association.

Also represented on the committee are the Environmental Council of States, Local Governments for Sustainability-ICLEI, Solid Waste Association of North America, National Rural Waters Association, Water Environment Federation, Association of Clean Water Administrators, American Water Works Association, Environmental Law and Policy Center, and National Association of Clean Air Agencies, as well as representatives from Yale University School of Medicine and New York University School of Law.

Local and tribal governments can use the LGEAN website, provide feedback through the survey and “Ask LGEAN” feature on the website, follow LGEAN on social media channels, and participate in programs.

ELI Points to Litigation at Glasglow Climate Conference

Continually Improving Sustainability
Author
Joshua Baca - American Chemical Council
American Chemical Council
Current Issue
Issue
2
Parent Article

We make plastics. Proudly. Our scientists and engineers create the essential materials that enable multiple industries to combat climate change. And we’re focused on doing even better by reducing our carbon footprint in making—and remaking—these materials.

The ongoing evolution from metals, glass, and paper to plastics has raised questions about environmental impacts, in particular waste in our environment and climate effects. While most people agree that plastics make it possible to create better and safer lives, many also ask, “But what about the environment?” People want to know if we can retain the societal benefit of plastics and combat climate change, all the while keeping plastics out of our rivers and oceans.

As America’s plastic makers, we believe we can. At the same time, we can also build on plastics’ significant contributions to sustainability.

On our climate impacts, we’re focused on tackling greenhouse gas emissions from plastic production. Overall, carbon emissions per pound of plastic produced have been dropping. On top of that, we’re engaged in an all-of-the-above strategy to dramatically reduce or eliminate our carbon footprint. We have delivered on similar commitments in the past, including large reductions in hazardous air emissions from plastic facilities.

Most importantly, we’re continually working on materials that enable carmakers, home builders, food manufacturers, aircraft makers, water suppliers, and low-carbon energy producers—a huge swath of our economy—to create solutions to drive down emissions.

The evolution to plastics is occurring in large part due to the efficiency of plastics as a material, which allows us to do more with less. Many industries are using plastic to help achieve their sustainability goals, such as by increasing fuel efficiency, and reducing food waste and GHG emissions.

While studies vary a bit, lifecycle studies—including a 2016 report by Trucost—typically show that use of plastic products and packaging results in approximately 2.5 times less GHG emissions than common alternatives. Likewise, switching back to alternative materials would increase GHG emissions by 2.5 times.

These highly effective materials significantly improve the efficiencies in industries that are key to combating climate change. Lightweight yet strong plastic vehicle components reduce weight and improve fuel efficiency in our cars and trucks. Plastic building insulation improves energy efficiency in our homes and buildings. Long-lasting plastic pipes streamline the movement of water and resist corrosion. Plastic composite wind-turbine blades improve the ability to generate wind power. Plastics protect and improve solar energy panels. Aircraft makers are turning to lightweight plastic composites to improve fuel efficiency (and combat jet lag!). Lightweight, efficient plastic food packaging helps reduce food waste and its immense contribution to GHG emissions. The list goes on.

Frankly, the global community cannot realistically meet its climate change commitments without the help of plastics. In any policy considerations, let’s remember that the use of lightweight plastics typically helps drive down GHG emissions.

On waste impacts, the use of plastics should not be “one and done.” Plastics are made to be remade. We’re working to create a circular economy in which plastics are reused rather than discarded, keeping them in our economy and out of our environment.

We’re investing in new and game-changing technologies that can dramatically increase the types and amounts of plastics that can be recovered for reuse and recycling. Major plastic makers are revising business models and production processes to take advantage of these advanced recycling technologies. We want to recover and remake as much plastic as possible. These technologies can transform how numerous plastics are made by replacing virgin fossil resources with used plastics, improving sustainability, conserving resources, and further driving down GHG emissions.

To smooth the way, we actively support federal and international policies to develop low-carbon, circular solutions that help keep waste out of our environment. In the United States, we’ve called on Congress to support “5 Actions for Sustainable Change,” a plan the American Chemistry Council released in July that will help usher in a circular economy. Among other provisions, these actions would require recycled content in plastic packaging and raise private funding to help fix our nation’s broken recycling infrastructure—we can’t recycle the plastics we don’t collect.

We’ve also called for an international agreement to end plastic waste in the environment. Governments worldwide should push for negotiations on a treaty that would accelerate a transition to a circular economy by creating universal access to waste collection, and expanding the infrastructure to collect and repurpose plastics. This treaty should require all nations to agree to eliminate plastic waste while providing flexibility to meet the needs of individual nations. Multiple governments, including the United States, have announced support for the United Nations Environment Assembly to approve negotiations on such a treaty at its February meeting.

While we’re proud of the materials we make and our contributions to sustainability, we know we can do even better. And we would welcome considerably more attention paid to plastics and sustainability.

Incentives Take Center Stage, With Mandates an Endangered Species
Author
Bob Sussman - Sussman and Associates
Sussman and Associates

For decades, the holy grail for climate advocates has been a binding cap on emissions—one that declines over time and aligns with national emission goals. However, this tool has never been broadly accepted and recent legislative and legal developments threaten to further limit its role in national climate policy. In the absence of mandates, we are turning to less-prescriptive tools that incentivize but do not require emission cuts. How these tools perform against our ambitious targets for greenhouse gas reductions is the central unknown in climate policy.

The best known mechanism for setting mandatory limits on GHG emissions is cap-and-trade. While it has been used successfully for conventional pollutants under the Clean Air Act and adopted by California and Northeast states for GHG emissions, intense opposition to cap-and-trade doomed the comprehensive 2009 Waxman-Markey climate bill and effectively foreclosed national climate legislation for over a decade.

To fill the legislative vacuum, the Obama administration adopted the 2015 Clean Power Plan for the electric power sector under the CAA. The CPP set state-by-state emission budgets for electricity generators premised on increased reliance on natural gas and renewables to replace coal. However, the CPP was stayed by the Supreme Court in 2016 and abandoned by the Trump administration.

The Biden presidency revived an expansive climate agenda, pledging to reduce emissions by 50-52 percent from 2005 levels by 2030. This aggressive goal demanded ambitious climate policies and, as in 2009, Democrats turned to Congress. A favored legislative option was an enforceable national clean energy standard that would set progressively more stringent targets for “clean” electricity.

However, the CES did not meet the strict criteria for the Senate budget reconciliation process, the vehicle for advancing the administration’s comprehensive Build Back Better package without a filibuster. To satisfy Senate rules, Democrats substituted the Clean Energy Performance Program, a $150 billion system of payments and penalties intended to compel utilities to increase clean electricity to 80 percent of total generation by 2030.

The CEPP was a mandate in fact if not in name and was unacceptable to Senator Joe Manchin of West Virginia, a Democrat whose vote was essential to put BBB across the finish line. Manchin opposed the CEPP as a blunt instrument to force power producers to close coal- and gas-fired power plants by imposing costs that made their operation uneconomic.

At the same time, Manchin signaled his openness to using incentives and subsidies to accelerate clean energy investment. After the CEPP was removed from BBB to mollify him, what remained was a $550 billion non-regulatory package that included $325 billion in tax incentives for clean energy, advanced manufacturing, and electric vehicles. The fate of BBB is still uncertain but there is widespread Democratic support for salvaging its climate package—which may still be enacted either alone or as part of a scaled-back BBB.

The demise of the CEPP prompted renewed interest in controlling utility emissions using existing authorities, but the revival of broad regulatory mandates under the CAA may soon receive a crippling blow. The Supreme Court recently agreed to review a D.C. Circuit decision vacating the Trump replacement for the Clean Power Plan, the Affordable Clean Energy rule, which rejected EPA’s authority to require power plants to convert to clean fuels. The Court’s conservative majority may use the case to hold that such expansive mandates violate the major question doctrine, which disallows federal regulations with sweeping effects on the economy absent clear congressional intent.

If mandates are foreclosed under existing law and are anathema to Congress, financial inducements on the BBB model will necessarily play a more prominent role in reducing emissions. This may not be a bad thing. The utility and transportation sectors are already investing heavily in zero-emission strategies, and an infusion of federal dollars will pave the way for more rapid deployment of renewable power and electric vehicles. But the pace of decarbonization will be driven by market forces as opposed to regulation. Policymakers will thus have limited ability to assure that the beneficiaries of federal largess achieve the rapid reductions in emissions needed to stave off catastrophic climate change. In this new environment, progress will depend on public opinion, technological advances, business leadership, and whether tax breaks and subsidies boost return on investment. Will this be enough?

Incentives Take Center Stage, With Mandates an Endangered Species

Incentives Take Center Stage, With Mandates an Endangered Species
Author
Bob Sussman - Sussman and Associates
Sussman and Associates
Current Issue
Bob Sussman

For decades, the holy grail for climate advocates has been a binding cap on emissions—one that declines over time and aligns with national emission goals. However, this tool has never been broadly accepted and recent legislative and legal developments threaten to further limit its role in national climate policy. In the absence of mandates, we are turning to less-prescriptive tools that incentivize but do not require emission cuts. How these tools perform against our ambitious targets for greenhouse gas reductions is the central unknown in climate policy.

The best known mechanism for setting mandatory limits on GHG emissions is cap-and-trade. While it has been used successfully for conventional pollutants under the Clean Air Act and adopted by California and Northeast states for GHG emissions, intense opposition to cap-and-trade doomed the comprehensive 2009 Waxman-Markey climate bill and effectively foreclosed national climate legislation for over a decade.

To fill the legislative vacuum, the Obama administration adopted the 2015 Clean Power Plan for the electric power sector under the CAA. The CPP set state-by-state emission budgets for electricity generators premised on increased reliance on natural gas and renewables to replace coal. However, the CPP was stayed by the Supreme Court in 2016 and abandoned by the Trump administration.

The Biden presidency revived an expansive climate agenda, pledging to reduce emissions by 50-52 percent from 2005 levels by 2030. This aggressive goal demanded ambitious climate policies and, as in 2009, Democrats turned to Congress. A favored legislative option was an enforceable national clean energy standard that would set progressively more stringent targets for “clean” electricity.

However, the CES did not meet the strict criteria for the Senate budget reconciliation process, the vehicle for advancing the administration’s comprehensive Build Back Better package without a filibuster. To satisfy Senate rules, Democrats substituted the Clean Energy Performance Program, a $150 billion system of payments and penalties intended to compel utilities to increase clean electricity to 80 percent of total generation by 2030.

The CEPP was a mandate in fact if not in name and was unacceptable to Senator Joe Manchin of West Virginia, a Democrat whose vote was essential to put BBB across the finish line. Manchin opposed the CEPP as a blunt instrument to force power producers to close coal- and gas-fired power plants by imposing costs that made their operation uneconomic.

At the same time, Manchin signaled his openness to using incentives and subsidies to accelerate clean energy investment. After the CEPP was removed from BBB to mollify him, what remained was a $550 billion non-regulatory package that included $325 billion in tax incentives for clean energy, advanced manufacturing, and electric vehicles. The fate of BBB is still uncertain but there is widespread Democratic support for salvaging its climate package—which may still be enacted either alone or as part of a scaled-back BBB.

The demise of the CEPP prompted renewed interest in controlling utility emissions using existing authorities, but the revival of broad regulatory mandates under the CAA may soon receive a crippling blow. The Supreme Court recently agreed to review a D.C. Circuit decision vacating the Trump replacement for the Clean Power Plan, the Affordable Clean Energy rule, which rejected EPA’s authority to require power plants to convert to clean fuels. The Court’s conservative majority may use the case to hold that such expansive mandates violate the major question doctrine, which disallows federal regulations with sweeping effects on the economy absent clear congressional intent.

If mandates are foreclosed under existing law and are anathema to Congress, financial inducements on the BBB model will necessarily play a more prominent role in reducing emissions. This may not be a bad thing. The utility and transportation sectors are already investing heavily in zero-emission strategies, and an infusion of federal dollars will pave the way for more rapid deployment of renewable power and electric vehicles. But the pace of decarbonization will be driven by market forces as opposed to regulation. Policymakers will thus have limited ability to assure that the beneficiaries of federal largess achieve the rapid reductions in emissions needed to stave off catastrophic climate change. In this new environment, progress will depend on public opinion, technological advances, business leadership, and whether tax breaks and subsidies boost return on investment. Will this be enough?

Incentives Take Center Stage, With Mandates an Endangered Species

Law Demands Dollars, Standards, and Protocols—and So Too Science
Author
Craig M. Pease - Scientist and Former Law School Professor
Scientist and Former Law School Professor
Current Issue
Issue
2
Craig M. Pease

Though admitting “climate change poses a monumental threat to Americans’ health and welfare,” the defendant has substantially prevailed in Juliana vs. United States, a federal public trust case. The science here is overwhelming. Yet the 9th Circuit opinion, and the district court opinion it overturns, make only passing reference to climate science; their legal analyses concern the major question doctrine, standing, and due process.

Even so, the roots of the Juliana courts’ analyses reach deep into science, and also economics. It is instructive to contrast Juliana to three other recent natural resource trust cases, where those protecting the resource substantially prevailed:

First, in Kirby Marine, concerning an oil spill in Galveston Bay by the named firm, pursuant to the Oil Pollution Act of 1990, the United States and Texas were named trustees for various natural resources, including dolphins, birds, water, and beaches. The Natural Resource Damage Assessment, completed under the OPA and its implementing regulations, contains a detailed post-mortem and toxicity analysis of dolphin carcasses recovered after the spill. The company entered into a consent decree to pay $15 million.

Second, the state supreme court decision in Pennsylvania Environmental Defense Foundation vs. Commonwealth of Pennsylvania, from July 2021, is grounded in a state constitutional amendment naming the commonwealth as natural resource trustee. Although there is much science on environmental harms of oil and gas production in the decision, the entirety of the dispute concerned the disposition of money from oil and gas leasing on state lands. The court’s decision was guided in substantial part by private trust law.

In both Kirby Marine and Pennsylvania Environmental Defense, by the time the court saw the case, all the complexity and nuance and detail of the natural resource science had been reduced to one variable—dollars. This is reminiscent of federal agency cost-benefit analyses, which too focus on dollars.

Third, in Hawkins vs. Haaland, a 2021 D.C. Circuit opinion, the dispute concerned the U.S. role as trustee for Indians. Here, the metric capturing the resource in dispute was not dollars, but water. The court resolved the case by drawing on Indian and water law.

Dollars, water, and fish are all readily measured. But so too is atmospheric carbon dioxide. Yet in Juliana, the court refused to act to protect the natural resource. Why?

Metrics and standards—key elements of both legal and scientific methodologies—are central and explicitly discussed in the Juliana opinions. The district court, though finding for the plaintiffs, undertook an in-depth analysis of the major question doctrine, including especially what is called the 2nd Baker factor, “a lack of judicially discoverable and manageable standards for resolving” a controversy. Similarly, the Ninth Circuit’s standing analysis references “metrics” and “standards,” and quoting the Supreme Court in Rucho, states that “‘a constitutional directive or legal standards’ must guide the courts’ exercise of equitable power.”

It’s more than just standards. To have a standard, one must standardize. Yet the evidence underlying a typical environmental dispute is messy, idiosyncratic, and not readily comparable to evidence in other cases. How to standardize?

Legal protocols, like scientific protocols, funnel messy data through a process, filtering out a good chunk of the idiosyncrasies, leaving as a residue evidence that is standardized, and more comparable. This greatly simplifies resolving disputes.

In sharp contrast to Juliana, in these three cases the courts found and employed specific legal protocols setting a standard of conduct, which it used to resolve the dispute. In the first case, the protocol is embedded in the Oil Pollution Act’s NRDA and associated regulations and agency practices. In the second case, the protocol consists of the statutes and case law of private trust cases. In the third, the protocol was more diffuse and implicit, being Indian treaties and water law.

Existing legal standards and protocols work decently, if imperfectly, to resolve environmental problems that are small, unwanted economic externalities. Alas, climate change is no ordinary environmental problem. It is a systemic threat to the very society and economic system that created it.

The Juliana courts looked for relevant standards and protocols, and could not find them. They do not exist.

Law and science are both creatures of the larger society in which they are embedded. These natural resource trust cases exhibit a profound and systemic infestation of economic markets into the standards and protocols of both law and science, thereby neutering the very institutions needed to halt climate change.

Law Demands Dollars, Standards, Protocols—and So Too Science

It Takes Five
Subtitle
The Drama of a Supreme Court Blockbuster
Author
Oliver Houck - Tulane University
Tulane University
Current Issue
Issue
2
Black and white photo of the Supreme Court

This book is a tale of the Supreme Court’s most important environmental case, Massachusetts v. EPA, decided in 2007. Scholar Richard Lazarus—for 25 years this magazine’s skillful and engaging courts columnist—is an ideal person to tell the story. The Rule of Five: Making Climate Change History at the Supreme Court becomes more than a history; it is an exciting read—like a novel, with appealing characters and an ever-shifting plot.

Today a professor teaching Supreme Court advocacy at Harvard Law School, Lazarus trained at the Office of the Solicitor General, learning the preparation and presentation of High Court cases. He went on to argue environmental cases himself before the Court, representing both government and environmental groups. He even won more than a few before a bench that is largely hostile to environmental causes.

In contrast, Massachusetts v. EPA was launched by a small-town lawyer who had never studied or practiced environmental law, and of whom no one had ever heard: Joe Mendelson. His complaint alleged a single violation of the Clean Air Act’s requirements to list pollutants, in this case carbon dioxide. To the astonishment of the entire environmental law community, he won in federal district court. At this point, all the major environmental litigating organizations intervened, and literally took over the case. From then on it was in the hands of the pros.

Mendelson’s victory did not last long. The D.C. circuit reversed the trial court in a two-to-one decision. Judge David B. Sentelle held EPA had no duty to list carbon dioxide as a pollutant, while Judge A. Raymond Randolph found that the plaintiffs had not shown sufficient personal injury to be able to sue in the first place. In this odd posture, the case went up to the Supreme Court.

At this juncture a “Pistol from Minnesota” (Lazarus’s label) entered the case: Lisa Heinzerling. An honors graduate from Princeton, her credentials as a scholar, a litigator, and a superb writer were impeccable. In effect, she shaped the case. Heinzerling wrote the briefs, and developed both their focus and their arguments. She knew the case better than anyone on either side. She had every reason to believe that she would be the best choice to stand before the nine members of the Supreme Court, five of them Republican appointees with a negative record for environmental decisions. But there was a hitch, and it came from Heinzerling’s client, Massachusetts.

The state itself played a dominant role in the case. It was losing thousands of acres of shoreline. The great sand dunes of Cape Cod were being eaten away by more frequent storms, and the city of Boston, at sea level, was highly vulnerable as well. The harm that Massachusetts was experiencing provided instant and incontestable standing.

Massachusetts also had a superb attorney general’s office, and within it a highly experienced litigator. James R. Milkey also had the advantage of not appearing as a hired gun, but as a public official defending his state. What emerged was, in Lazarus’s words, a “beauty contest” between Milkey and Heinzerling. For Milkey, and perhaps for Heinzerling, the competition became “highly personal.”

Milkey then argued the case before three moot courts. He described each as having “its own level of pain.” The three moot benches included the best attorneys and judges that could be found, but they were not hostile. Nonetheless they threw questions at him that were far stronger than those he would face from the justices.

Despite Milkey’s poor showing, his competition with Heinzerling could have been a bloodbath. At which point she did an amazing thing. Within weeks of the date of argument, she sent an email to all of the attorneys assisting in the case, withdrawing from the opportunity to make the argument.

Lazarus writes of this moment with considerable compassion: “Anyone in Heinzerling’s position would have been understandably upset. She had extraordinary academic credentials, had worked hard on the case, and had produced excellent work, only to be labeled too inexperienced.”

When he came before the Supreme Court, Milkey rose to the occasion. “Standing before the actual justices,” Lazarus writes, “Milkey clicked into high gear. The failed moot courts were history.” Milkey opened with two introductory sentences of 38 words that simply said what he was about to argue, and got no farther. In Lazarus’s words, “Scalia pounced.”

“When is the predicted cataclysm?” Scalia asked, clearly mocking the notion. He then suggested that there was no consensus on how much of it was attributable to human activity. Or attributable to the United States, or to auto emissions within the United States. Then he asserted that the “catastrophe” was not “right now,” which of course would defeat the immediacy necessary for standing. Finally, Scalia stated that carbon dioxide could not be lawfully regulated because emissions rise to the “stratosphere.” Milkey politely interjected that the word is “troposphere.”

From here on out it was all downhill sledding for Milkey. Justices Roberts, Thomas, and Alito could not touch him, except for indicating that they didn’t like his argument or perhaps the whole notion of climate change. There were clearly four votes to uphold the Court of Appeals. Then came Justice Kennedy.

Milkey’s entire argument was pitched to Kennedy, who had a firm preference for state authority and state remedies. The Supreme Court had supported this authority in a 1922 case called Tennessee Copper. Here was Massachusetts, which was suffering great harm from climate change, but with no ability to do anything about it. This would swing Kennedy and win the case.

After the hearing, the justices drafted their opinions. The dissents were longer than the majority opinion favoring the petitioner. According to Scalia, there was no standing. Climate change was not imminent, nor had any harm yet occurred, nor was the United States a significant part of it. Every criterion of the (largely Court-invented) doctrine of standing—causation, harm, imminent harm, and remedy—was lacking. Case closed.

Chief Justice Robert’s dissent went to the other half of the case. Even if the plaintiff had standing, they could not compel EPA regulation. The Clean Air Act required EPA to regulate six “criteria pollutants,” but carbon dioxide was not one of them. EPA had no authority to regulate COemissions even if it wanted to.

The case unfolded within a maelstrom of media coverage, editorials, and more than fifty briefs of amicus curiae written in support of both sides, so that in effect they neutered themselves. Despite the storm, the litigation boiled down to two dominant players on the side of Massachusetts: Milkey and Heinzerling.

As seen above, each of the two—rivals until the very end for the honor of arguing the case before the court—brought a great deal to the case. Milkey, an experienced litigator, flopped in three moot court performances before three different panels of judges. But when game time arrived he came suited up and ready to play. According to Lazarus’s book, he emerged a star, debating the likes of Scalia and Roberts to a standstill.

Heinzerling, for her part, did virtually all the spade-work on the case. As Lazarus also describes, she succeeded in arguing for a single brief in order to keep the issues focused; then wrote a powerful brief; then developed the strategy in tandem with others involved to focus—not on the issue of climate change at all—but rather on Kennedy and his penchant for the rights of states. This focus gave Milkey a strong advantage before the swing justice.

In the end, for all of their competition over oral argument, these two lawyers became the Dynamic Duo. It is more than possible that this case could never have been won without the two of them, working together.

And so, Massachusetts v. EPA closed with a double-bang, a ringing victory on standing to sue, and a virtual command to abate climate change. Whether either of these two victories will endure is an open question. The abatement was of course stymied by President Trump, who even denied that climate change was happening. The Congress has been no more successful, although its failure to move can be attributed to the steadfast opposition of one coal-state senator.

Which leaves the Supreme Court. It is, however, no longer balanced between five Republican-appointed justices and four Democratic-appointed justices. It is now dominated by six Republican appointees, a virtual guarantee that the liberal standing to sue of Massachusetts will be replaced with something more like the can’t-get-to-court-no-matter-how-hard-you-try of Scalia’s dissent.

Nor is this Court likely to support the abatement of climate change. Nothing it has yet decided even smells of its favor on this issue. The current test case on climate change is that of the children’s suit, Juliana v. United States. It has been to the High Court two times with remands, in each case, virtually ordering the courts below to kill the case altogether.

The best one can do now is to hope, and to hope that hope will suffice. And so this review ends, with the uncertainty that accompanies almost all difficult things in life.

This is my last review for the Forum. After many years, and many reviews, I have not only found the books I reviewed enjoyable to read, but also found them useful citations and jumping-off-points for more extensive articles. I have even assigned them as readings in my classes. Now it is time to step away from this small stage. It has been a wonderful run.

Oliver A. Houck is professor of law and David Boies chair in public interest law at Tulane University.

Oliver Houck on the Tale of a High Court Blockbuster

Net-Zero Not Yet in Sight After Conference of Climate Parties
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David P. Clarke

Call it a Glasgow half empty. During a press conference previewing the COP26 summit, President Biden’s climate envoy, John Kerry, asserted, “It’s not inconsistent” for Biden to ask the 13-member OPEC cartel to boost oil production while asking other countries and companies to curb their oil consumption.

According to Kerry, Biden only wants OPEC “to boost production in this immediate moment,” not long term. The “temporary” boost will keep the economy moving and generate revenue to “help pay for the transition” to the administration’s target of net-zero greenhouse gas emissions by 2050.

But it’s not just Biden’s OPEC plea that offends advocates demanding a swift end to oil and gas development. In a November statement published after the Bureau of Land Management announced new oil and gas leases on the federal lands of seven western states, environmental groups condemned what they regarded as “hypocritical” administration policies. WildEarth Guardians’ energy director, Jeremy Nichols, charged that Biden “is talking a good talk on climate action,” but, in reality, his administration “is actively working to fan the flames of the climate crisis by selling more public lands for fracking.”

Similarly, a group of scientists in a letter to Biden implored him to “end the fossil fuel era” and faulted eight specific administration policies as inconsistent with the urgency demanded by climate change’s “existential threat.”

Federal land oil and gas production accounts for only 6 percent of total domestic oil and 8 percent of total domestic gas. But critics say that amount adds to a growing climate crisis. In May the Paris-based International Energy Agency, once deemed a fossil fuel champion, issued a warning that achieving net-zero GHG emissions will require a rapid end to new oil and gas projects and no sales of new gasoline- and diesel-powered vehicles after 2035. Under a net-zero pathway, “No new coal mines or mine extensions are required,” IEA added.

Although Glasgow host UK Prime Minister Boris Johnson said that the new climate deal marked “the death knell for coal power,” the final COP26 text was amended to state that coal power would be phased “down,” not “out,” as originally proposed. Disappointed critics said the deal won’t limit global warming to 1.5 degrees Celsius by century’s end, thus pushing the world into the “disastrous” climate change zone.

Under COP26, by the end of 2022 countries will republish climate plans that set more “ambitious” goals. But as of now, emission reduction targets set by industrialized nations after the 2015 Paris climate accords were still not being met, and even if they were fully met, says IEA, it wouldn’t be enough to achieve net-zero by 2050.

Calls for aggressive policies notwithstanding, Big Oil sees a robust petroleum future. According to a spokesman for the American Petroleum Institute, “Credible studies from all sides affirm that natural gas and oil will continue to play a significant role in powering the global economy for decades to come as we work toward a lower-carbon future.” That being the case, “We should be focused on encouraging, not hindering, American energy development,” the spokesman says, and should look to U.S. producers, not OPEC, to meet growing domestic demand for “affordable, reliable, and sustainable energy.”

Biden deserves credit for trying to advance a net-zero transition in the face of extraordinarily difficult political challenges. The $1.2 trillion bipartisan infrastructure legislation Biden signed into law is “a critical step” toward net-zero, the president said in a statement declaring that a renewed American leadership in Glasgow “raises the ambition” for the United States to tackle the climate crisis.

Among its miscellaneous climate- and clean energy-related features, the law contains billions of dollars for flood mitigation and coastal restoration, for modernizing the electric grid, for zero- and low-emission buses and ferries, as well as electric school buses, and $7.5 billion for building a nationwide network of plug-in electric vehicle chargers.

Biden also deserves credit for advancing the Build Back Better Act, which at press time was pending in Congress. In a post-Glasgow dear colleague letter Senate Majority Leader Charles Schumer of New York described the bill as “the cornerstone” of America’s renewed climate leadership that Biden touted. The proposal to spend $1.75 trillion over 10 years on Democratic priorities, including $500 billion fighting climate change, was scaled back from a $3.75 trillion initial bid, and its key program aimed at replacing coal- and gas-fired power plants with wind, solar, and nuclear energy, was also dropped.

Clearly, it’s a long road to net-zero.

Net-Zero Not Yet in Sight After Conference of Climate Parties