A massive 821-page bill aimed at improving U.S. energy independence and curbing domestic greenhouse gas emissions was introduced in the U.S. Senate on Wednesday, September 30. The "Clean Energy Jobs and American Power Act" ("Kerry-Boxer") was introduced by Senator John Kerry (D-MA), Chair of the Foreign Relations Committee, and Senator Barbara Boxer (D-CA), Chair of the Environment and Public Works Committee.

Summary of the Bill

The comprehensive bill calls for the establishment of a Pollution Reduction and Investment (PRI) system designed to keep American industry competitive during the transition to the new economy. It targets a 20% reduction by 2020 and an 83% reduction by 2050 (both over 2005 levels). The 2020 target is more aggressive than the 17% reduction sought in Waxman-Markey, the climate bill passed by the House in June. The PRI provisions of the bill apply only to businesses emitting more than 25,000 tons of carbon-based pollutants, and exempt all agricultural enterprises, also similar to Waxman-Markey.

Boxer-Kerry retains the offsets provisions in Waxman-Markey that are friendly to the agriculture and forestry sectors and also provides a comprehensive list of qualifying offsets projects. Senator Blanche Lincoln (D-Ark.), Chair of the Agriculture Committee stated that her committee intends to undertake a markup of those provisions specifically affecting agricultural interests, including more details on the regulation of a national carbon market. Boxer-Kerry lacks specificity on the regulation of the market, although the bill does place enforcement of offsets in the hands of a new Offsets Integrity Unit within the Department of Justice.

Several other Senate committees will now weigh in on the bill, including possibly Finance, Energy and Natural Resources, and Commerce. Despite this step, it may not mean that a final version will be ready for a vote by the full Senate yet this year. And even if the Senate does pass a bill, there may still need to be a significant reconciliation process before a final bill is ready for the president's signature. For his part, President Obama has voiced an interest in having a U.S. plan in place in advance of international climate negotiations occurring in Copenhagen in December of this year. Whether that means having a comprehensive law on the books remains to be seen.

Other Significant Developments in Climate Change

The introduction of this bill also follows on the heels of recent developments in the other two branches of federal government. On September 22, the U.S. Environmental Protection Agency (EPA) issued its final Mandatory Greenhouse Gas Reporting Rule, which requires roughly 10,000 domestic facilities to report greenhouse gas emissions beginning in 2010. Moreover, EPA Administrator Lisa Jackson has announced that the issuance of a final "endangerment" finding is likely within the next couple of months, which could pave the way for the EPA to regulate greenhouse gas emissions in the event that Congress does not act.

Meanwhile, on September 21, the U.S. Court of Appeals for the Second Circuit opened the door to potential federal nuisance claims relating to greenhouse gas emissions. In Connecticut v. American Electric Power Company Inc., Civ. Nos. 05-5104, 05-5119 (2d Cir. Sept. 21, 2009), the court resurrected two lawsuits brought by eight states and New York City, and three private land trusts against six large electric utilities, finding that the plaintiffs had standing to pursue their claims and remanding the cases to the district court for trial.

The issues raised in this case (or other similar pending cases) are likely to reach the U.S. Supreme Court. In the near term, however, the decision adds a new twist to the development of regulatory and legislative measures, as either one could potentially preempt federal public nuisance claims going forward. In short, with all three branches of the federal government acting on climate change issues, there is growing uncertainty surrounding what greenhouse gas regulations and legal decisions ultimately will look like—and how they will affect regulated facilities. It will be vital for the owners of such facilities to monitor and understand these risks in the near term.

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