Climate Change

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The march toward mandated corporate disclosures for climate-related risks continues. Despite significant pushback and substantial legal challenges, state legislatures and regulators are continuing to advance laws and rules that will require disclosures of both greenhouse gas (GHG) emissions and climate risks.

California Senate Bill (SB) 219, signed into law…

The U.S. Securities and Exchange Commission (SEC) has issued its long-awaited climate reporting requirements, making it mandatory for the largest publicly traded companies in the U.S. to annually disclose both greenhouse gas (GHG) emissions and their material climate risks, with some requirements kicking in as early as 2025. On March 6, the SEC voted 3-2 along party lines to pass a pared down version of its March 2022 proposal, giving regulated companies the final word on the much-anticipated rule.

On October 7, 2023, California Governor Newsom signed two landmark bills into law, Senate Bill (SB) 253 and SB-261, imposing new requirements on large companies doing business in California to publicly report their annual greenhouse gas (GHG) emissions and climate-related risks. These laws apply to both publicly traded and privately held companies, exceeding the scope of the climate disclosure rule proposed by the U.S. Securities and Exchange Commission (SEC) in March 2022. Our professionals have prepared a more detailed summary here; some key highlights are included below.

EPA’s long-promised rules for reducing CO2 emissions from fossil fuel-fired power plants have now been published. In the proposal, EPA lays out “performance standards” for new natural gas-fired power plants and “emission guidelines” for states to use in developing standards for existing gas- and coal-fired power plants.

The Biden administration has enormous climate and carbon management goals, which rightfully include the geologic sequestration of carbon dioxide as a core part of its climate adaptation strategy. The administration, to its credit, has worked with Congress to provide tax credits and billions of dollars of new funding for programs targeting the transportation and sequestration of carbon, but without equal commitment to the regulatory side of the house, the administration’s ambitious goals are at risk.

Much ado is being made of recent amendments to the Clean Air Act (CAA) contained in the Biden administration’s budget reconciliation law passed in mid-August, commonly referred to as the Inflation Reduction Act (IRA). And with good reason, as the law includes the most significant changes to the CAA since 1990, and the new sections formally define greenhouse gases (GHGs) as an “air pollutant,” consistent with the Supreme Court’s 2007 decision in Massachusetts v. EPA.

However, the IRA amendments to the CAA do not in fact make significant substantive changes in law. Legally speaking, they can’t, given that the IRA is merely a reconciliation bill through which Congress may only assign funding. More to the point, none of the IRA amendments to the CAA address in any way the limitations the Supreme Court recently placed on EPA’s authority to adopt climate change regulation in West Virginia v. EPA, notwithstanding some characterizations to the contrary.

On the last day of what was already an historic term, the Supreme Court issued another significant decision impacting EPA’s authority under the Clean Air Act to regulate greenhouse gas emissions and address climate change. As EPA embarks on a third attempt at a rule targeting CO2 emissions from existing power plants that will pass legal muster, the question now is how the Court’s decision will affect that new rule.

On June 7, the U.S. Fish and Wildlife Service (FWS) issued a proposed rule titled, “Endangered and Threatened Wildlife and Plants; Designation of Experimental Populations.” In issuing the proposed rule, FWS re-affirms its authority to designate and introduce experimental populations of protected species into areas of habitat outside of their historical range when climate change, invasive species, or other threats have affected or will affect that range. Importantly, this proposal only applies to species managed by FWS. Species managed by NMFS are governed by separate regulations, which NMFS updated back in 2016. These changes will make the FWS regulations more similar to those of NMFS. Pursuant to NMFS’ existing regulations, experimental populations of salmon have been re-introduced in certain waterways in the Western United States. FWS’s proposal could result in similar re-introduction of experimental populations of terrestrial and freshwater species.

The Securities and Exchange Commission (SEC or Commission) published proposed rules on March 21 that, for the first time, would codify the Commission’s expectations regarding what kinds of climate-related disclosures public companies must make in their required filings to the SEC. Prior to now, companies have had to rely on 2010 guidance from the Commission to determine what information they should disclose to investors regarding their climate-related risks.

To help reboot after the holiday break, here is a list of air topics we expect to make news in 2022 with a short discussion of why each one may be important to you.