Tag: scholarship

Transparency in Regulatory Science — for Whom?

Transparency in Regulatory Science — for Whom?

By Lilly Leibu, Digital Editor at N.Y.U. Environmental Law Journal.  This post is part of the Environmental Law Review Syndicate.  Introduction    Former Administrator of the Environmental Protection Agency (EPA) Andrew Wheeler purported to rid EPA of “secret science” and “[empower] the American people to demand…

The Winds of Change: Investing in Floating Offshore Wind Development

The Winds of Change: Investing in Floating Offshore Wind Development

By Cole Jermyn, Editor-in-Chief at Harvard Environmental Law Review.  This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment.  Introduction The offshore wind power industry in the United States is at an inflection point. Only two projects…

The Origins of Federal Wildlife Regulation Under the Commerce Clause

The Origins of Federal Wildlife Regulation Under the Commerce Clause

By Kathryn E. Kovacs, Professor at Rutgers Law School, The State University of New Jersey.

This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment.


June 8, 2020, marked the eightieth anniversary of the Bald Eagle Protection Act—the first federal statute to rely on the Commerce Clause for the authority to prohibit the taking of wildlife. Its enactment marked a turning point in federal wildlife law. The Eagle Act’s forgotten history supports the Ninth Circuit’s conclusion that the Eagle Act is within the scope of Congress’s Commerce Clause power,[1] as well as the many federal courts of appeals that have come to the same conclusion about the Endangered Species Act.[2] This history should leave no doubt that Congress may regulate the taking of wildlife.

I. The Migratory Bird Treaty Act

The “cautious first step in the field of federal wildlife regulation” was the Lacey Act of 1900.[3] Reflecting the narrow view of Congress’s power to regulate wildlife under the Commerce Clause that prevailed at the time,[4] the key provision of the Lacey Act merely prohibited the interstate transportation of wildlife killed in violation of state law.[5] The Act also empowered the Secretary of Agriculture to “adopt such measures as may be necessary” for “the preservation, distribution, introduction, and restoration of game and other wild birds,” but subjected that power to the laws of the states.[6]

Congress’s first attempt to prohibit the hunting of migratory birds directly under the Commerce Clause, the Migratory Bird Act of 1913, fell prey to two lower federal courts.[7] The government appealed in one of the cases and argued it twice in the Supreme Court.[8] “Apparently fearful of an adverse decision,”[9] the government entered into a treaty with Canada for the protection of migratory birds,[10] and Congress implemented the treaty in the Migratory Bird Treaty Act of 1918 (MBTA).[11] The Supreme Court then dismissed the challenge to the 1913 Act[12] and later upheld the MBTA as a valid exercise of the treaty power.[13] Neither the treaty with Canada, however, nor a subsequent treaty with Mexico, which followed in 1936,[14] included raptors. Thus, at the time, the MBTA did not protect raptors.[15]

II. Early Efforts to Protect Eagles

Congress first considered proposals to extend statutory protection to the bald eagle in the 1930s. The Senate passed an eagle protection bill on April 7, 1930, that echoed the terms of the MBTA in making it unlawful

for any person to take, kill, or capture, attempt to take, kill, or capture, possess, offer for sale, sell, offer to purchase, purchase, deliver for shipment, ship, cause to be shipped, deliver for transportation, transport, cause to be transported, carry, or cause to be carried by any means whatever, receive for shipment, transportation, or carriage, or to export, at any time or in any manner, any bald eagle (the emblem of the United States and commonly known as the American eagle) or any part thereof, or the nest or egg of any such bird, except for scientific, propagating, or exhibition purposes, or in defense of wild life or agricultural or other interests, as permitted by regulations of the Secretary of Agriculture.[16]

The House Committee on Agriculture held a hearing on an identical bill.[17] At the hearing, committee members inquired about the bill’s constitutionality. Dr. T.S. Palmer, President of the Audubon Society of the District of Columbia, testified that Congress had the authority to “exercise [its] latent power . . . to protect an emblem of sovereignty of the United States.”[18] The bill died in committee.

The Senate passed another eagle-protection bill in 1935, which provided that

whoever . . . without being permitted to do so as hereinafter provided, shall take, possess, sell, purchase, offer to sell or purchase, transport, or export, at any time of in any manner, any bald eagle, commonly known as the “American eagle”, alive or dead, or any part, nest, or egg thereof, shall be fined not more than $100 or imprisoned not more than six months, or both.[19]

The bill would have allowed the Secretary of Agriculture to issue regulations to permit eagle takings with a determination

that it is compatible with the preservation of the bald eagle as a species. . . [and is] for the scientific or exhibition purposes of public museums, scientific societies, or zoological parks, or that it is necessary to permit the taking of such eagles for the protection of wildlife or agricultural or other interests.[20]

The House referred a similar bill to the Committee on Agriculture,[21] which in turn asked the Attorney General for an opinion on the bill’s constitutionality.[22] The Attorney General declined to issue a formal opinion, but pointed the Committee to two cases. In one, a district court held that the Migratory Bird Act exceeded Congress’s power under the Commerce Clause.[23] In the other, the Supreme Court held that the Migratory Bird Act did not conflict with and hence did not preempt a state duck hunting law.[24] The Committee determined that the bill would be unconstitutional and did not consider it further.[25]

III. Changing Views of the Commerce Clause

Soon thereafter, the federal courts’ view of the Commerce Clause power over wildlife began to change. In Cochrane v. United States[26] and Cerritos Gun Club v. Hall,[27] the courts of appeals upheld provisions of the MBTA that exceeded the terms of the migratory bird treaties as valid exercises of Congress’s Commerce Clause power.[28] Both courts relied on the Supreme Court’s 1926 decision in Thornton v. United States,[29] which upheld convictions for conspiracy to assault federal employees who were attempting to dip the defendants’ cattle (that is, submerge them in pesticide) to prevent the spread of splenetic fever.[30] Congress charged the Bureau of Animal Industry (BAI) with combating disease among domestic animals using what we would now call a “cooperative federalism” model.[31] The defendants argued that their convictions exceeded the scope of the Commerce Clause because the cattle at issue were not intended to be in interstate commerce, but merely wandered across the Florida-Georgia border on their own.[32] The Supreme Court rejected that argument, reasoning that the BAI employees’ actions were “were all part of the measure of quarantine reasonably adapted to prevent the spread of contagion in and by interstate commerce.”[33] Under existing precedent, preventing such a burden on commerce was within the Commerce Clause authority.[34] Whether the cattle had been transported across the border or wandered there on their own made no difference to the Court; the wandering was “made possible by the failure of the owners to restrict their ranging, and is due, therefore, to the will of their owners.”[35]

In Cochrane, the Seventh Circuit upheld federal regulations that limited duck hunting methods, specifically baiting.[36] The appellants argued that the regulations exceeded the terms of the migratory bird treaties and thus violated the Tenth Amendment.[37] The court rejected that argument, reasoning that “the authority to deprive the hunters of any open season [under the MBTA] carries with it the power to provide for a limited open season for limited purposes only. . . . [T]he greater power necessarily carries with it the lesser power.”[38] The court further held that the regulations were a proper exercise of the commerce power, finding the case “not readily distinguishable” from Thornton.[39] The court rejected the appellants’ assertion that the state’s property interest in migratory birds precluded federal regulation:

It is unbelievable that the framers of the Constitution intended to leave this form of valuable property, which did not vest in the individual and which could not be controlled by the state, unprotected and fated to total destruction. It is not a matter of sentiment but of common sense.[40]

The Ninth Circuit in Cerritos Gun Club followed Cochrane, but added a lengthy disquisition on migratory birds’ migration patterns, threats to survival, domestication, and ownership.[41] The court relied on Thornton directly, reasoning that, because ducks can be domesticated, the failure to domesticate them leaves them free to cross state lines, thus subjecting them to the Commerce Clause power.[42] In other words, the Ninth Circuit read Thornton not as upholding a statutory system designed to prevent disease from burdening interstate commerce in domestic animals, but as holding that “traveling of . . . animals following their instinct to range [across state lines] constitutes the interstate character of their movements.”[43] In any event, both Cochrane and Cerritos Gun Club upheld migratory bird regulations as proper exercises of the Commerce Clause power.

IV. The Eagle Act

By the time Representative Charles Russell Clason introduced H.R. 4832 on March 7, 1939,[44] the Commerce Clause winds had shifted. Clason’s bill was designed to extend to the bald eagle “complete protection against being taken in any way,” except that the Secretary of Agriculture would be authorized to issue permits for museums and eagles that were causing “trouble.”[45] His bill to protect the bald eagle was referred to the Committee on Agriculture,[46] which held a hearing on March 11, 1940.[47] At the hearing, Clason quoted from a letter from the Department of Agriculture explaining that the bald eagle was threatened with extinction due to trophy hunting and egg poaching.[48] He opined that Congress had the authority to protect the bald eagle under the Commerce Clause, relying on the court of appeals’ decisions in Cochrane and Cerritos Gun Club.[49]

Not surprisingly, given the backdrop of fascist belligerence in Europe, patriotism permeated the hearings. The prior fall, Hitler had invaded Poland, and Great Britain and France had declared war on Germany. Clason asserted that the bald eagle needed protection “[f]or patriotic reasons, for humane reasons and in order that the greatest bird which has made its home widely throughout the United States may be preserved for posterity.”[50] Clason felt that the bald eagle’s status as “the Emblem of the United States” was “more than sufficient grounds for the enactment” of the bill.[51] Maud Phillips, President of Blue Cross Animal Relief, hit the same patriotic theme. She asserted that Americans were united around “individual liberty,”[52] and as they became “more liberty conscious” they became “more eagle-minded.”[53] She stated that the bald eagle’s “ruthless destruction is a violation of trust tending to weaken loyalty to those fundamental principles of constitutional freedom for which it stands.”[54] Like the flag, Ms. Phillips believed that the bald eagle should be protected from “desecration.”[55]

As he had in 1930, Dr. T.S. Palmer, President of the District of Columbia Audubon Society, testified that Congress has the power “to select an emblem[,] . . . to command respect for that emblem, and . . . to encourage patriotism among its citizens.”[56] He quoted from United States v. Gettysburg Electric Railway Co.,[57] in which the Supreme Court upheld the federal power of eminent domain:

Any act of congress which plainly and directly tends to enhance the respect and love of the citizen for the institutions of his country, and to quicken and strengthen his motives to defend them, and which is germane to, and intimately connected with, and appropriate to, the exercise of some one or all of the powers granted by congress, must be valid.[58]

In its report, the House Committee on Agriculture recommended passage of the Eagle Act.[59] The report quoted from the same letter from the Secretary of Agriculture that Clason had read at the hearing.[60] In the letter, the Secretary expressed his gratification at Congress’s renewed interest in protecting the bald eagle, a species worth protecting for both its aesthetic value and its status as the national symbol.[61] He said that trophy hunting and egg poaching threatened bald eagle populations and that they would go extinct without further protection.[62]

The Senate Committee on Agriculture recommended passage of the companion bill.[63] The Senate report quoted a similar letter from the Secretary of Agriculture explaining that

“[b]ecause of its conspicuousness and relatively large proportions, and doubtless also because of its rarity in certain sections, it is a fact that there are persons in almost every community where an eagle may appear who are eager to shoot it and to boldly advertise their assumed prowess in newspapers and other publications. There are also numerous collectors of birds’ eggs who persistently rob the nests of these eagles.”[64]

The bill passed the House on May 20, 1940,[65] just days after Hitler invaded Belgium, France, Luxembourg, and the Netherlands. On the House floor, Congress exempted Alaska from the bill and substituted references to the Department of Agriculture with the Department of the Interior, which had recently taken over wildlife management functions.[66] On May 28, 1940, the Senate substituted the House bill for its identical bill[67] and passed the measure without discussion.[68] President Roosevelt signed the Act for the Protection of the Bald Eagle on June 8, 1940.[69]

The preamble to the Act recited that the Continental Congress in 1782 had adopted the bald eagle as the national symbol, “the bald eagle is no longer a mere bird of biological interest but a symbol of the American ideals of freedom,” and it “is now threatened with extinction.”[70] The statute made it unlawful to “take, possess, sell, purchase, barter, offer to sell, purchase or barter, transport, export or import, at any time or in any manner, any bald eagle, commonly known as the American eagle, alive or dead, or any part, nest, or egg thereof,” except as permitted by the Secretary of the Interior.[71] The term “take” included “pursue, shoot, shoot at, wound, kill, capture, trap, collect, or otherwise willfully molest or disturb,” and the term “transport” included “ship, convey, carry, or transport by any means whatever, and deliver or receive or cause to be delivered or received for such shipment, conveyance, carriage, or transportation.”[72] Section 2 of the Act authorized the Secretary of the Interior, if he determined it to be “compatible with the preservation of the bald eagle as a species,” to “permit the taking, possession, and transportation of [bald eagles] for the scientific or exhibition purposes of public museums, scientific societies, or zoological parks, or . . . for the protection of wildlife or of agricultural or other interests in any particular locality.”[73]

In 1940, Congress believed that the Commerce Clause gave it the authority to regulate the taking of a particular species. The Supreme Court endorsed that understanding when it cited the Eagle Act in support of the proposition that “[p]rohibiting the intrastate possession or manufacture of an article of commerce is a rational (and commonly utilized) means of regulating commerce in that product.”[74] After eighty years, it is time to put Commerce Clause challenges to federal wildlife regulation to rest.


[1] United States v. Bramble, 103 F.3d 1475, 1480–82 (9th Cir. 1996).

[2] See People for Ethical Treatment of Prop. Owners v. U.S. Fish & Wildlife Serv., 852 F.3d 990, 1007 (10th Cir. 2017) (discussing prior cases).

[3] Michael J. Bean & Melanie J. Rowland, The Evolution of National Wildlife Law 15 (3d ed. 1997); Lacey Act, ch. 553, 31 Stat. 187 (1900) (codified as amended at 16 U.S.C. §§ 3371–3378).

[4] See Bean & Rowland, supra note 4, at 14–15; Geer v. Connecticut, 161 U.S. 519 (1896) (holding a state statute prohibiting the transportation of game out of state did not violate Commerce Clause).

[5] 31 Stat. 187 § 3 (1900) (codified as amended at 16 U.S.C. § 3372(a)(2)(A)).

[6] Id. § 1 (codified as amended at 16 U.S.C. § 701).

[7] United States v. Shauver, 214 F. 154 (E.D. Ark. 1914), appeal dismissed 248 U.S. 594 (1919); United States v. McCullagh, 221 F. 288 (D. Kan. 1915).

[8] See Bean & Rowland, supra note 4, at 17.

[9] Id.

[10] Convention Between the United States and Great Britain for the Protection of Migratory Birds, Gr. Brit.-U.S., Aug. 16, 1916, 39 Stat. 1702.

[11] Migratory Bird Treaty Act, ch. 128, 40 Stat. 755 (1918) (codified as amended at 16 U.S.C. §§ 703–711).

[12] Shauver, 248 U.S. at 594 (1919).

[13] Missouri v. Holland, 252 U.S. 416 (1920).

[14] Convention Between the United States and Mexico for the Protection of Migratory Birds and Game Mammals, Mex.-U.S., Feb. 7, 1936, 50 Stat. 1311.

[15] Now it does. See Migratory Bird Treaty Act Protected Species, U.S. Fish & Wildlife Serv., https://perma.cc/U5AW-DQVF.

[16] S. 2908, 71st Cong. (1930); see also 72 Cong. Rec. 6612 (1930).

[17] American Eagle Protection, Hearing on H.R. 7994 Before the H. Comm. on Agric., 71st Cong. (1930).

[18] Id. at 14.

[19] S. 2990, 74th Cong. § 1 (1935); see also 79 Cong. Rec. 10,061 (1935).

[20] See S. 2990 § 2.

[21] 79 Cong. Rec. 1456 (1935) (referring H.R. 5271, 74th Cong. (1935)).

[22] Miscellaneous Wildlife Conservation Legislation, Hearing on H.R. 4832 Before the H. Comm. on Agric., 76th Cong. 55 (1940) [hereinafter 1940 Hearing].

[23] United States v. McCullagh, 221 F. 288 (D. Kan. 1915).

[24] Carey v. South Dakota, 250 U.S. 118 (1919).

[25] 1940 Hearing, supra note 23, at 56, 63–65.

[26] 92 F.2d 623 (7th Cir. 1937).

[27] 96 F.2d 620 (9th Cir. 1938).

[28] 92 F.2d at 626–27; 96 F.2d at 627. The Supreme Court did not endorse that view until it decided Andrus v. Allard, 444 U.S. 51 (1979).

[29] 271 U.S. 414 (1926).

[30] Id. at 418. The defendants actually killed one federal employee and blew up facilities. Id. at 422.

[31] See Sam Kalen, Muddling Through Modern Energy Policy: The Dormant Commerce Clause and Unmasking the Illusion of an Attleboro Line, 24 N.Y.U. Env’t L.J. 283, 293 n.46 (2016).

[32] 271 U.S. at 425.

[33] Id. at 424.

[34] Id. at 425 (citing United States v. Ferger, 250 U.S. 199 (1919)).

[35] Id.

[36] Cochrane v. United States, 92 F.2d 623, 627 (7th Cir. 1937).

[37] Id. at 626.

[38] Id.

[39] Id. at 627. Unfortunately, the court provided no explanation for that conclusion.

[40] Id. at 627; see also id. (“Here a national interest of very nearly the first magnitude is involved.”) (quoting Missouri v. Holland, 252 U.S. 416, 435).

[41] Cerritos Gun Club v. Hall, 96 F.2d 620, 623–29 (9th Cir. 1938).

[42] Id. at 625–27.

[43] Id. at 626.

[44] H.R. 4832, 76th Cong. (1939).

[45] 1940 Hearing, supra note 23, at 69 (statement of Hon. Charles Russell Clason).

[46] H.R. 4832.

[47] 1940 Hearing, supra note 23.

[48] Id. at 51, 53 (statement of Hon. Charles Russell Clason).

[49] Id. at 56–57, 63–65.

[50] Id. at 49.

[51] Id.

[52] Id. at 79 (statement of Maud Phillips, President, Blue Cross Animal Relief).

[53] Id. at 76.

[54] Id. at 75.

[55] Id. at 76–77.

[56] Id. at 80 (statement of Dr. T.S. Palmer, President, Audubon Society, Washington, D.C.).

[57] 160 U.S. 668, 681 (1896).

[58] 1940 Hearing, supra note 23, at 80–81 (statement of Dr. T.S. Palmer).

[59] H.R. Rᴇᴘ. Nᴏ. 76-2104, at 1 (1940).

[60] Id. at 1–2.

[61] Id. at 1.

[62] Id.

[63] S. Rᴇᴘ. Nᴏ. 76-1589, at 1 (1940).

[64] Id. at 2.

[65] 86 Cᴏɴɢ. Rᴇᴄ. 6447 (1940).

[66] Id. The Bureau of Fisheries in the Department of Commerce and the Bureau of Biological Survey in the Department of Agriculture moved to the Department of the Interior effective July 1, 1939, Reorganization Plan No. II, 53 Stat. 1433, § 3(e)–(f) (1939) (“The functions of the Secretary of Agriculture relating to the conservation of wild life, game, and migratory birds are hereby transferred to, and shall be exercised by, the Secretary of the Interior.”), and combined to form the Fish and Wildlife Service in 1940, Reorganization Plan No. III, 54 Stat. 1232 § 3 (1940).

[67] 86 Cᴏɴɢ. Rᴇᴄ. 7006 (1940).

[68] 86 Cᴏɴɢ. Rᴇᴄ. 7007 (1940).

[69] An Act for the Protection of the Bald Eagle, Pub. L. No. 76-567, 54 Stat. 250–51 (1940).

[70] Id. at 250.

[71] Id. §§ 1–2 (codified at 16 U.S.C. §§ 668(a), 668a).

[72] Id. § 4.

[73] Id. § 2.

[74] Gonzales v. Raich, 545 U.S. 1, 26 & n.36 (2005).>

Flying the Coop: The Trump Administration’s (Mis)Interpretation of the Migratory Bird Treaty Act

Flying the Coop: The Trump Administration’s (Mis)Interpretation of the Migratory Bird Treaty Act

By Alexander Liguori, Managing Editor at N.Y.U. Environmental Law Journal. This post is part of the Environmental Law Review Syndicate. Introduction Any good survey of our nation’s bedrock environmental laws will likely cover the Clean Air Act and Clean Water Act, but hardly any would…

Introducing a Voluntary Extended Producer Responsibility Scheme for the New Plastics Economy

Introducing a Voluntary Extended Producer Responsibility Scheme for the New Plastics Economy

By Hannah Yang, Articles Editor at N.Y.U. Environmental Law Journal. This post is part of the Environmental Law Review Syndicate. Introduction Ocean plastic pollution is a large-scale problem that stems from multiple points of the plastics life cycle, ranging from design, production, use, disposal, and…

“A Great Deal of Discretion”: <i>Bostock</i>, Plain Text, and the Future of Climate Jurisprudence

“A Great Deal of Discretion”: Bostock, Plain Text, and the Future of Climate Jurisprudence

By Grace Weatherall, Managing Editor at the Harvard Environmental Law Review.

This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment.


Introduction

Bostock v. Clayton County was marked for a place among landmark Supreme Court jurisprudence as soon as it arrived.1. The decision protected LGBTQ+ employees from discrimination based on their sexual orientation or gender identity,2 and LGBT activists and allies rightly celebrated it as an affirmation of basic human rights and dignity. But amidst this celebration, excitement arose from a different, surprising, quarter: climate change activists.

Before the ink had dried on Bostock—or, more accurately, before many readers had managed to battle through the download delay that Justice Alito’s unwieldy dissent caused the Court’s servers3—various climate scholars were already arguing that the language and reasoning that Justice Gorsuch employed in his majority decision could have major implications for climate regulation under the federal Clean Air Act (CAA).4 Specifically, scholars posited that Gorsuch’s use of progressive textualism, and his specific acknowledgment that old statutes may be used to address new problems,5 bodes well for the durability of future climate change policymaking under CAA authority.6 Following the Bostock framework, climate litigants could, in theory, argue that the text of the CAA must allow for broad regulation of greenhouse gas as a pollutant, despite Congress’s failure to address greenhouse gases or climate change directly.

Climate advocates and policymakers are certainly justified in searching for a silver bullet of legal theory to convince the Supreme Court to uphold a major CAA climate rulemaking. Climate scientists across the globe are warning policymakers that time is running out to save the world from climate disaster,7 and lacking climate-specific legislation, it seems more important than ever that the Environmental Protection Agency (EPA) undertake significant action under its existing authority. I have suggested elsewhere that EPA should institute National Ambient Air Quality Standards (NAAQS) for greenhouse gases (GHGs) under CAA sections 108–10, in order to activate broad federal power over state implementation plans (SIPs) for emissions reduction.8 Similarly, several scholars have argued stridently for the implementation of a GHG SIPs program under section 115.9 Either way, regulating GHGs through SIPs represents the broadest possible approach to GHG regulation under the existing CAA,10 but represents a difficult legal argument to make to the Supreme Court. Moreover, the Court has already demonstrated wariness of EPA attempts to address climate change under the CAA,11 and climate litigants can expect this wariness to increase as the conservative wing of the Court grows.12 Since a successful EPA climate rule must survive judicial review, in this article I examine whether Justice Gorsuch’s Bostock framework could indeed aid EPA in future climate rulemaking and advocacy before the Court.

Ultimately, I conclude that Bostock is not the legal silver bullet that climate activists seek.13 As attractive as the Bostock framework is, it cannot save climate change policymaking under the CAA from a textualist standpoint because interpretation of the word “pollutant” in the  CAA, unlike “sex” in the Civil Rights Act, involves deference to an agency head. Thus, the battle for CAA GHG regulation must be fought on the fields of reasonability analysis, not textualism. And this raises a second problem for EPA. In a future climate case, the Court may reject Chevron deference entirely and instead utilize either the deregulatory “major questions” doctrine, or the Schechter-era nondelegation doctrine—and in either case, Bostock offers no useful tool to climate litigants. I do not argue that EPA has no chance of enacting climate policy under the CAA, nor that the agency should not attempt to do so. On the contrary, I feel strongly that EPA is morally obligated to make every effort possible to enact significant GHG regulation. I conclude, however, that future climate jurisprudence will be governed not by precise textualism, but by broad judicial and political philosophy—and that realistically, climate advocates’ best bet is to pursue the appointment of as many liberal justices to the Supreme Court as possible.

DISCUSSION

I. Overview of Bostock v. Clayton County and Its Potential Relevance to Climate Litigation
A. Bostock v. Clayton County

Bostock v. Clayton County began in its life in Clayton County, Georgia, when Gerald Bostock, a county employee with an excellent work performance record,14 joined a gay softball league and was promptly fired for “conduct unbecoming a county employee.”15 Bostock sued, alleging that the county had violated Title VII of the Civil Rights Act of 1964.16 The district court ruled against Bostock,17 and the Eleventh Circuit agreed, holding that Title VII’s prohibition of discrimination “on the basis of sex” did not apply to sexual orientation.18 The Supreme Court reversed.19

Justice Gorsuch, writing for a six-three majority, announced in the first paragraph of his seventeen-page opinion that the phrase “discrimination . . . on the basis of . . . sex” included discrimination on the basis of sexual orientation because sexual orientation itself depends on sex.20 “An employer who fires an individual for being homosexual or transgender,” Justice Gorsuch explained, “fires that person for traits or actions it would not have questioned in members of a different sex,”21 and thus “[s]ex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.”22 In the following pages, Justice Gorsuch also rejected protests that Title VII cannot be used to protect LGBT employees because such a result is at odds with the “expected applications” of the law.23 Such an application of purposivism, Gorsuch insisted, has no place in Supreme Court jurisprudence today.24 Instead, he reasoned, the ordinary public meaning of the word “sex,” and its use in the statute,25 requires the Court to recognize protections for gay and transgender individuals—and it has always done so.26 Ultimately, Gorsuch declared, the fact that the framers of the statute may not have realized that such protections existed was no reason to deny these protections now, because “the limits of the drafters’ imagination supply no reason to ignore the law’s demands.”27

Moreover, Justice Gorsuch specifically forestalled potential objections on “elephants in mouseholes” grounds.28 While Gorsuch acknowledged the late Justice Scalia’s adage that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions,”29 Gorsuch insisted that this canon “ha[d] no relevance” in the Bostock case, because while the policy implications of Gorsuch’s interpretation are sweeping—an indisputable “elephant”—Title VII’s prohibition against sex discrimination is hardly a “mousehole.”30 Instead, Gorsuch wrote, the prohibition is “written in starkly broad terms,” which necessarily, according to the ordinary public meaning of the word “sex,” include sexual orientation discrimination.31

B. Parallels to Climate Rulemaking and Litigation

The implications of Bostock to future climate litigation and jurisprudence are complex, but a series of parallels can be identified as follows. First, it can be argued that a prohibition against “discrimination on the basis of sex” is to LGBT employee protections under the Civil Rights Act—a statute that never mentions sexual orientation—as “air pollutant” is to GHGs under the Clean Air Act—a statute that never mentions climate change, but which empowers EPA to broadly regulate “air pollutants”32 for the protection of the “public health and welfare.”33 In other words, both phrases explicitly identify a general issue that their statute is designed to address, and thus both should implicitly include specific aspects of that broader issue in the same way: sexual orientation discrimination is a type of sex-based discrimination (and civil rights violation), as climate change-causing GHG is a type of air pollutant (and a threat to public health and welfare). Second, climate change and sexual orientation discrimination are both issues that have been neglected by most national politicians until relatively recently,34 despite decades of advocates’ efforts, and both seem ripe for regulation under an old statute that was designed to address a general issue but that did not directly acknowledge this specific problem. Third, Gorsuch’s choice in Bostock to brush aside “elephants in mouseholes” concerns, despite the broad policy implications of his holding, is encouraging to climate activists because the Supreme Court has made clear in past climate cases that it considers broad GHG regulation programs to constitute an elephantine effect on national industry.35

C. Overview of Relevant Climate Jurisprudence

For those hoping for a friendly judicial reception to climate change regulation, Justice Gorsuch’s Bostock arguments are tantalizing. I am convinced, however, that the series of parallels outlined above will not, alone, be enough to ensure the protection of an ambitious Clean Air Act GHG regulation scheme. In order to understand why not, we must first understand the history of the three Supreme Court cases that have addressed GHG regulation under the CAA thus far: Massachusetts v. EPA (Mass. v. EPA),36 American Electric Power Co. v. Connecticut (AEP v. Connecticut),37 and Utility Air Regulatory Group v. EPA (UARG v. EPA).38

1. Massachusetts v. EPA and the Origins of Greenhouse Gas Regulation Under the Clean Air Act

 The Supreme Court first addressed GHG regulation under the CAA in 2007, in Mass. v. EPA. Today, this case represents the basis for EPA regulation of GHGs as pollutants. Mass. v. EPA began in 2003 when EPA made an official determination declaring that it lacked authority under the CAA to regulate GHGs as pollutants in the context of climate change.39 A coalition of states, cities, and environmental organizations brought suit, arguing that section 202 of the CAA—requiring EPA to set emissions standards for “any air pollutant” produced by vehicles—included GHGs.40 The Supreme Court agreed, finding that GHGs “fit well within the Clean Air Act’s capacious definition of ‘air pollutant.’”41 Accordingly, in 2009, EPA under the newly-elected President Obama made an “endangerment finding” officially establishing that the six primary “well-mixed” greenhouse gases together constituted a singular “air pollutant” under section 202.42

2. AEP v. Connecticut, Stationary Source Regulation, and the Potential for Future Rulemaking

 AEP v. Connecticut, decided in 2011, subsequently expanded EPA’s ability to regulate GHGs as an air pollutant beyond section 202 (vehicle regulation) to include subsections 111(b) and (d) (stationary source regulation). AEP v. Connecticut began when an alliance of states and environmental interests sued a group of energy companies, attempting to use federal common law authority to force the companies to reduce GHG emissions from their power plants.43 The Supreme Court dismissed the case.44 Writing for a 6-0 majority,45 Justice Ginsburg held that the CAA had foreclosed common law litigation on matters of interstate air pollution, because the Act “speaks directly” on this issue46—and after Mass. v. EPA, it was “plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act.”47 Significantly, in addition to confirming EPA GHG regulatory authority under sections 202 and 111, Justice Ginsburg also left the door open for GHG rulemaking under other sections of the CAA, including the NAAQS program.48 “The Act,” she wrote, “provides multiple avenues for enforcement, [and i]f EPA does not set emissions limits for a particular pollutant or source of pollution, States and private parties may petition for a rulemaking on the matter.”49

3. UARG v. EPA and the GHG Regulation – Textualism Mismatch

 Mass. v. EPA and AEP together constitute an essential foundation to federal GHG regulation, but UARG v. EPA, decided in 2014, provides the most relevant precedent for future attempts at ambitious GHG regulatory policy. UARG began in 2010, when EPA, reacting to Mass. v. EPA, determined that it must regulate GHG emissions under the “prevention of significant deterioration”50 (PSD) and Title V programs, which require emissions permits for “major sources.”51 Per the statute, a “major source” is any source emitting 250 tons of “any air pollutant” each year52––but many sources emit GHGs in such vast amounts that millions of nontraditional sources, including residences, would count as “major sources” if GHGs were considered “air pollutants” under these programs.53 Seeking to avoid unmanageable permitting responsibilities, EPA designed the “Tailoring Rule,” which specified that sources would be considered “major” due to their GHG emissions alone only if they emitted at least 100,000 tons of GHGs each year.54

Energy interests challenged the Tailoring Rule in the D.C. Circuit, and the Supreme Court struck it down.55 Writing for a deeply divided plurality which only Chief Justice Roberts and Justice Kennedy joined in full,56 Justice Scalia held that EPA had been wrong to “tailor” a statutory provision this way.57 In writing a rule that purported to recognize GHG sources as “major” for purposes of regulation only if they emitted at least 100,000 tons per year, Scalia wrote, EPA had illegally “revise[d] statutory terms.”58 The only solution to the legal and practical problem at hand, Scalia held, was to read an implicit exemption into the phrase “any air pollutant” in the context of the PSD and Title V programs.59 Thus, according to Justice Scalia, GHGs are officially not “air pollutants” under sections 165, 169, or 171–73 of the CAA.60

Justice Breyer, meanwhile, argued in a partial concurrence that the Court had misplaced its implicit exemption. While Scalia had decided that the term “any air pollutant” must be read to exclude “non-traditional” pollutants like GHGs, Breyer argued that it would instead be possible to read the term “any major source” to exclude those sources, like private residences, which are unsuited to Title V permitting.61

Finally, Justice Alito argued in a separate partial concurrence that EPA should not be allowed to regulate GHGs under the CAA at all.62 Alito argued that GHGs are fundamentally unsuited to regulation under the CAA and that while EPA had attempted to gloss over the problems of GHG regulation under the CAA by arguing that the Act grants the agency “a great deal of discretion,” ultimately “[t]hat is not what the Clean Air Act contemplates.”63

This, then, is the state of Supreme Court climate jurisprudence after ten years of EPA GHG regulation and climate cases before the Court. After UARG, the Court’s conservative wing has made its suspicion of ambitious GHG regulation clear––but the door is not closed to climate rulemaking entirely. Would-be climate policymakers and litigants, anticipating a possible Biden presidency, will keep all this in mind as they seek a successful legal framework for ambitious policy.

II. Textualism, Deference, and the Nondelegation Doctrine: What Bostock Does and Does Not Mean for the Future of Climate Jurisprudence

Based on the precedent outlined above, it appears that the Bostock textualist approach cannot be used as a template for climate litigation. This is true both because the Court has already held that “any air pollutant” does not actually mean “any,” and because interpretation of the term “pollutant” in the context of the CAA fundamentally involves relative deference to the EPA administrator. In theory, litigants could argue that the plain text of the CAA mandates full deference to the EPA Administrator in identifying those pollutants that endanger public health or welfare and are thus subject to CAA regulation. Realistically, however, the battle for climate regulation will depend not on textualism, but on the broader questions of reasonability and deference. And unfortunately for EPA, this Court is likely to forego Chevron altogether and dismiss a climate rule either on major questions grounds, or, in a worst-case-scenario situation, through the revival of the nondelegation doctrine. This unfortunate possibility is now more likely than ever in light of Justice Ginsburg’s death and likely replacement with conservative judge Amy Coney Barrett.64

A. The Textualist Mismatch Between Title VII’s “on the Basis of Sex” and the Clean Air Act’s “Any Air Pollutant”

Despite Bostock’s progressive textualist appeal, it is unlikely that the Bostock framework will aid a future EPA in establishing GHGs as “any air pollutant” throughout the Clean Air Act. As noted above, Justice Gorsuch in Bostock put forth a compelling argument for the inclusion of an implicit, specific issue within an explicit, general statutory term and mandate. The Civil Rights Act’s prohibition against “discrimination on the basis of sex”, Gorsuch insisted, must include a prohibition against sexual orientation discrimination.65 It is tempting to conclude by the same logic that the CAA’s reference to “any air pollutant” must include GHGs––but this does not necessarily follow from likely Supreme Court reasoning, for two reasons.

First, it is important to note that Bostock itself overturned no Supreme Court precedent—instead, it announced the existence of a previously unrecognized inherent meaning in the phrase “discrimination…on the basis of sex.”66 By contrast, the Supreme Court has already addressed the question of whether the term “air pollutant” could include GHGs, and purports to have settled the matter under more than one section of the CAA. According to Mass. v. EPA and AEP v. Connecticut, GHGs are air pollutants under sections 202 and 111.67 But according to UARG, GHGs are not air pollutants under section 169.68 It is already clear, then, that the Court does not believe that the phrase “any air pollutant” must always include GHGs.

Second, both sides of the ideological spectrum have already exhibited an aversion to a plain text approach in the context of climate change. In UARG, Justice Scalia and Justice Breyer’s majority and dissenting opinions are opposite in function but identical in form: both engage in a textualist approach of a sort, yet explicitly reject the bounds of plain meaning. Each Justice notes that the term “any” need not mean “any in the universe,”69 and each acknowledges the need to read an implicit exemption into the text—accordingly, Scalia proposes to read the relevant line as “any air pollutant except greenhouse gases,”70 and Breyer proposes “any major source except non-traditional sources.”71 In advancing a plain text approach to support GHG regulation throughout the CAA, litigants would need to convince the Supreme Court to both overturn decided precedent and abandon longstanding methods of interpretation. Neither proposition is likely to succeed.

B. A Textualist Obligation to Afford Deference?

Certainly, the status of greenhouse gases as air pollutants remains unsettled under several thus-far unlitigated sections of the Clean Air Act—including, notably, the NAAQS program. The NAAQS program empowers the EPA Administrator to identify a list of ambient air pollutants which she feels may “endanger public health or welfare”72 and develop national standards for these pollutants, and it provides an excellent example of why the Supreme Court has good reason to eschew a plain text approach in interpreting “any air pollutant” under the CAA. Despite Justice Alito’s protestations, the CAA does indeed grant EPA “a great deal of discretion”73—in particular, regarding which substances to regulate as pollutants. The Administrator’s choice of pollutant under the NAAQS program is of course reviewable in theory, but thus far the Court has essentially granted EPA free reign in identifying criteria pollutants74—cabined by the traditional “reasonableness” metric for evaluating agency discretion.75

Arguably, this means that despite the clear failure of a plain text approach to defining the term “any air pollutant,” there may still be hope for a plain text argument in support of deference to the EPA Administrator. The NAAQS program demands that the Administrator be allowed to exercise her “judgment” in identifying and listing criteria pollutants.76 Thus climate advocates could adopt a sort of Bostock framework and argue that the CAA has always given EPA the ability to regulate any substance which can reasonably be said to endanger health or welfare, regardless of cost or regulatory reach.77 I have argued elsewhere that under the NAAQS program at least, EPA is clearly authorized to regulate GHGs as an air pollutant, in part because of the broad discretion granted to the Administrator in the stark language of the CAA.78 Under this theory, the Court would be required to accept EPA’s identification of GHGs as a pollutant, and subsequently engage in the traditional reasonability and arbitrary and capriciousness analysis of whatever the resulting rule may be.

C. Major Questions, New Tricks, and the Court’s Evolution Away from Deference

As noted above, while an intellectually honest textualist approach may in theory require the Court to grant EPA the discretion to regulate GHGs as a pollutant throughout the CAA, in practice it is unlikely that defending a massive GHG regulatory program will be as simple as a text-based argument for EPA discretion. Furthermore, this Court is likely to forego a Chevron reasonability analysis altogether, and instead either invoke its “major questions” doctrine to bar EPA’s regulatory authority over GHGs for lack of a “clear statement,”79 or use a major climate rule as a vehicle to revisit the Schechter-era nondelegation doctrine.80

First, the Supreme Court could invoke its “major questions” jurisprudence, used to great effect in UARG,81 and declare that EPA cannot, for example, regulate GHGs as a pollutant under the NAAQS program without a “clear statement” from Congress authorizing it to do so—because GHGs are not “conventional” pollutants,82 and because any major climate rule would surely have a transformative effect on industry. Justice Scalia, of course, is no longer on the Court, but other justices seem eager to pick up his mantle on this point.83 Justice Kavanaugh, for instance, has already demonstrated his fondness for the major questions principle on environmental and administrative law issues in particular.84 In oral argument for West Virginia v. EPA, the 2016 D.C. Circuit case regarding the legality of the Obama EPA’s ambitious Clean Power Plan, then-Judge Kavanaugh pressed government counsel on major questions grounds.85 It is not difficult to imagine that Kavanaugh and like-minded justices would be swift to invoke the “major questions” rule in a major climate case to bar EPA from regulating GHGs as a pollutant under major sections of the CAA.

More troubling still, the Court’s conservative wing has recently been sending signals that it is eager to move away from the Chevron tradition altogether in favor of the nondelegation doctrine of the Schechter era, which could require Congress to outline a highly specific “intelligible principle” before agencies may develop regulatory schemes.86 This shift was most recently demonstrated in Gundy v. United States,87 a case addressing whether the Sex Offender Registration and Notification Act, in stating that the Attorney General has “the authority to specify the applicability of the requirements of [the Act] to sex offenders convicted before [its] enactment,” fails to establish an intelligible principle cabining the Attorney General’s authority and thus violates the nondelegation doctrine.88 Although Justice Kagan’s plurality opinion did not alter Supreme Court precedent on the matter, the conservatives in dissent made their displeasure with this result clear.89 Indeed, those heralding the Bostock decision as a harbinger of friendly climate jurisprudence may find reason to be concerned with the fact that Justice Gorsuch himself wrote a dissenting Gundy opinion, joined by the Chief Justice, Justice Kavanaugh, and Justice Thomas. Specifically, Gorsuch argued that Gundy would have been an opportunity to revisit the nondelegation doctrine because the statute in question inappropriately “hand[ed] off to the nation’s chief prosecutor the power to write his own criminal code.”90 It is not difficult to imagine that Justice Gorsuch might feel the same way about the argument that the CAA grants EPA the power to identify and regulate any pollutants that endanger health or welfare in any way. And Justice Gorsuch would likely find particular reason to be concerned if EPA applied this reasoning to the regulation of GHGs because GHGs are well-mixed, globally dispersed, dangerous only on an international scale, and impossible to effectively control without a significant shift in the American energy industry.91

In response to this concern, climate advocates may cite the second significant Bostock finding: the idea that old statutes can perform new tricks, regardless of their framers’ intent.92 Certainly, this holding may help to defeat an “elephants in mouseholes” challenge, following Justice Gorsuch’s Bostock reasoning, because while deference to EPA in regulating GHGs as pollutants is certainly an elephant, the text of the Clean Air Act grants EPA the authority to identify and regulate pollutants that endanger public health and welfare—and thus no “mousehole” exists.93 Ultimately, however, I fear that in light of the Court’s shift toward the major questions and nondelegation doctrines,94 this is but a hollow victory.

CONCLUSION

Having considered the future of climate jurisprudence in light of Bostock, relevant climate cases, and the Court’s current trend toward nondelegation, I conclude that the problem with climate advocates’ search for a silver bullet may not be that no such bullet exists, but rather that the Court is unlikely to acknowledge one. It may be true, in theory, that the text of the Clean Air Act demands deference to the EPA Administrator in identifying pollutants for regulation, but the Court may refuse to acknowledge this, either by citing major questions or by announcing a revival of the intelligible principle requirement. Ultimately, I do not suggest that climate advocates and a theoretical Biden EPA should cease regulatory attempts under the Clean Air Act. For one thing, I believe that the Act provides a clear mandate for EPA action in identifying pollutants that endanger public health or welfare and regulating emissions of those pollutants. And despite the challenges, I do not think it is impossible that Justice Roberts or Gorsuch could be persuaded to support a new significant climate rulemaking. In the end, however, it is clear that climate advocates’ best bet is not to craft a brilliantly reasoned rulemaking to impress this Court, but instead to elect a President who will appoint one or two climate-friendly justices—and perhaps, given recent events on the Court, even to initiate a Court-packing plan. Time, after all, is running out.


 

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Mitigating Greenhouse Gas Emissions in the Northeast and Mid-Atlantic Transportation Sector: A Cap-and-Invest Approach

Mitigating Greenhouse Gas Emissions in the Northeast and Mid-Atlantic Transportation Sector: A Cap-and-Invest Approach

By James D. Flynn

James Flynn is an LL.M. candidate at New York University School of Law and the graduate editor of the NYU Environmental Law Journal.

This post is part of the Environmental Law Review Syndicate.


I. Introduction

In recent years, states in New England and the mid-Atlantic region have made significant progress in reducing climate change-inducing greenhouse gas (GHG) emissions from the electricity generation sector.[1] Several factors–including the effects of the economic recession, shifts in energy markets from coal to natural gas and renewable energy sources, and carbon pollution mitigation and clean energy programs like renewable portfolio standards–have been identified as principal drivers of these reductions.[2] Another is the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort among nine northeastern and mid-Atlantic states to reduce carbon dioxide (CO2) emissions from the power sector.[3] RGGI employs a cap-and-invest approach in which the participating states set a regionally uniform, decreasing cap on CO2 emissions from covered power plants, periodically auction off emission allowances, and invest auction proceeds in other programs including end-use energy efficiency, renewable energy, greenhouse gas abatement, and direct customer electric bill assistance.[4] One study estimates that CO2 emissions in the RGGI region would have been approximately 24 percent higher in 2015 but for the program, which took effect in 2009.[5] At the same time, it is estimated that through 2015, RGGI generated approximately $2.9 million in net economic benefits,[6] and that the investment of RGGI allowance auction proceeds in 2015 alone will return $2.31 billion in lifetime energy bill savings for consumers.[7]

Over approximately the same period of time, however, CO2 emissions from the transportation sector in RGGI states have remained relatively level or have increased. Transportation accounts for 44 percent total CO2 emissions in the region, more than any other sector.[8] Each RGGI member state has adopted a long-term GHG reduction goal, set by statute or executive order, or in climate- or energy-related plans, “generally consistent with achieving an 80 percent reduction of GHG emissions by 2050 from 1990 levels.”[9] Most states’ goals do not include sector-specific emission targets, but because transportation is the largest source of emissions in the region, shifting to a cleaner transportation system is a “critical component of the action needed to meet economy-wide goals and to avoid further catastrophic harms of climate change.”[10] RGGI states already employ a variety of policy mechanisms aimed at decarbonizing transportation,[11] but have been considering whether to employ a cap-and-invest approach similar to RGGI or California’s multi-sector cap-and-invest program, which includes the state’s transportation sector.[12]

This paper first discusses the mechanics of RGGI and California’s cap-and-invest program generally, including how auction proceeds are invested. It then discusses the potential to use a cap-and-invest approach to mitigate GHG emissions from transportation in the Northeast and mid-Atlantic and addresses two key policy considerations: the type of fuels to be covered and the point of regulation. It concludes that, if properly designed, a cap-and-invest approach could achieve significant GHG reductions from transportation in the region and generate substantial funds for other GHG mitigation and climate change adaptation initiatives.

II. The Cap-and-Invest Model

Cap-and-trade programs generally operate as follows.[13] The government sets an overall emissions target–the cap–and determines which facilities will be covered. Emission allowances, each generally equal to one ton of emissions, are periodically auctioned or distributed without cost—or both—to covered facilities.[14] The total number of allowances is equivalent to the cap number, which decreases over time.[15] A market is created in which covered facilities may purchase or sell allowances from other covered facilities. Covered facilities are required to hold enough allowances to cover their emissions at the end of a compliance period, which may range from one to three years.[16] If a facility lacks sufficient allowances, it will be assessed a monetary penalty in addition to having to purchase enough allowances to cover the shortfall.

This market-based approach provides covered facilities three options: (1) they may reduce their emissions to meet the number of allowances they purchase or receive; (2) they may purchase additional allowances on the market and emit more; or (3) they may reduce their emissions below the allowances they hold and sell the remainder on the market.[17] The advantage of cap-and-trade programs is that facilities that can reduce their emissions more cost-effectively will do so, while those that face higher emissions reduction costs will purchase additional allowances at auction or on the market.[18] Accordingly, cap-and-trade schemes provide firms with flexibility to design cost-effective, tailored emissions plans, and the regulator achieves its policy objective by means of the overall emissions cap.[19] “Cap-and-invest” refers to cap-and-trade programs that invest their proceeds into other policy initiatives intended to address the pollutant or its effects.

a. RGGI

RGGI is the first market-based regulatory program in the United States designed to reduce GHG emissions.[20] It is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the electricity generation sector.[21] RGGI is composed of individual CO2 budget trading programs implemented in each participating state. Through independent regulations, each state’s CO2 budget trading program limits emissions of CO2 from electric power plants with the capacity to generate 25 megawatts or more (some 164 facilities), issues CO2 allowances, and establishes participation in regional CO2 allowance auctions.[22]

RGGI began with discussions among the governors of seven New England and mid-Atlantic states, which led to a 2005 Memorandum of Understanding that outlined the program.[23] In 2008, the RGGI states issued a Model Rule that participating states could use as guidance to establish and implement their individual programs.[24] RGGI’s designers expected the initial program might be expanded in the future by covering other emission sources, sectors, GHGs, or states.[25] CO2 emissions from covered facilities in RGGI states account for approximately 20 percent of GHG emissions in the region.[26]

At the end of each three-year compliance period, covered facilities must surrender one allowance for each ton of CO2 emissions generated during the period.[27] Covered facilities are permitted to bank an unlimited number of emission allowances for future use.[28] Over 90 percent of allowances are distributed through periodic auctions, and a reserve price sets a price floor for allowances.[29] RGGI employs a “cost containment reserve” that allows for additional allowances to be auctioned if certain price thresholds are met.[30] In limited circumstances, covered facilities may also submit offsets, which are measurable reductions, avoidances, or sequestrations of emissions from non-covered sources, in lieu of emission allowances.[31] The RGGI states agreed that each would use at least 25 percent of its individual auction proceeds “for a consumer benefit or strategic energy purpose.”[32]

Member states invest the proceeds from allowance auctions in a variety of consumer benefit programs at scale.[33] In October 2017, RGGI, Inc. (the corporate entity that administers RGGI) released a report that tracks the investment of RGGI auction proceeds in 2015 and the benefits of these investments throughout the region.[34] The report estimates that “[t]he lifetime effects of these investments are projected to save 28 million MMBtu of fossil fuel energy and 9 million MWh of electricity, avoiding the release of 5.3 million short tons [4.8 million metric tons] of carbon pollution.”[35] The report also notes that “RGGI investments in 2015 are estimated to return $2.31 billion in lifetime energy bill savings to more than 161,000 households and 6,000 businesses which participated in programs funded by RGGI investments, and to 1.5 million households and over 37,000 businesses which received direct bill assistance.”[36] RGGI states have discretion as to how they invest RGGI proceeds.

The report breaks down these investments into four categories. Energy efficiency makes up 64 percent of investments. Funded programs are expected to return $1.3 billion in lifetime energy bill savings to over 141,000 participating households and 5,700 regional businesses.[37] Clean and renewable energy makes up 16 percent of investments, and investments in these technologies are expected to return $785.8 million in lifetime energy bill savings to 19,600 participating households and 122 regional businesses.[38] Greenhouse gas abatement makes up 4 percent of investments and are expected to avoid the release of 636,000 short tons of CO2.[39] Finally, direct bill assistance makes up 10 percent of investments accounting for $40.4 million in bill credits and assistance to consumers.[40] One independent report notes that while RGGI states each have their own unique auction revenue investment programs, “[o]verall, greater than 60 percent of proceeds are invested to improve end-use energy efficiency and to accelerate the deployment of renewable energy technologies,”[41] which far exceeds the 25 percent investment “for a consumer benefit or strategic energy purpose” required by the Model Rule.

Whether or not RGGI has been successful is the subject of debate. As designed, it applies only to CO2 and only to emissions from some 164 power plants with the capacity to generate twenty-five megawatts or more.[42] Since CO2 accounts for only 20 percent of total GHG emissions in the RGGI states, and electricity generation accounts a fraction of total CO2 emissions, RGGI’s potential is limited.[43] The Congressional Research Service has thus described the initiative’s contribution to global GHG reductions to be “arguably negligible.”[44] In addition, RGGI significantly overestimated emissions from member states for its first compliance period and set an initial emissions cap that was actually above realized emissions levels.[45] This limited participation in the program and allowed participating facilities to bank substantial amounts of unused allowances. After the 2012 program review, RGGI lowered the cap by 45 percent between 2014 and 2020.[46] And after the most recent review in 2016, RGGI lowered the cap by an additional 30 percent between 2020 and 2030.[47] The extent to which these adjustments will hasten emissions reductions to be seen. On the other hand, several studies have shown that the combination of the price signal created by RGGI and the investment of allowance auction proceeds in other environmental programs has been the dominant driver of the recent emissions decline in the region.[48]

b. California’s Cap-and-Invest Program

In 2006, California enacted its landmark climate change law, the Global Warming Solutions Act, also known as AB (“assembly bill”) 32.[49] The statute established an aggressive goal of reducing GHG emissions to 1990 levels by 2020, and an 80 percent reduction from 1990 levels by 2050, across multiple sectors of the state’s economy.[50] AB 32 directed the California Air Resources Board (CARB), the state’s air pollution regulator, to implement a cap-and-trade program, which went into effect in 2013.[51]

According to CARB, the program, which covers approximately 450 entities, “sets a statewide limit on sources responsible for 85 percent of California’s greenhouse gas emissions, and establishes a price signal needed to drive long-term investment in cleaner fuels and more efficient use of energy.”[52] It is “designed to provide covered entities the flexibility to seek out and implement the lowest-cost options to reduce emissions.”[53] The 2013 cap was set at about 2 percent below the emissions level forecast for 2012, declines an additional 2 percent in 2014, and declines 3 percent annually from 2015 to 2020.[54]

Unlike RGGI, California’s program distributes free allocations of emission allowances earlier in the program, but those allocations decrease over time as the program transitions to an auction process.[55] The allocation for most industrial sectors is set at approximately 90 percent of average emissions and is updated annually based on each facility’s production.[56] Electrical distribution and natural gas facilities receive free allowances on the condition that the value of allowances must be used to benefit ratepayers and achieve GHG emission reductions.[57] The allocation for electrical distribution utilities is set at about 90 percent of average emissions, and for natural gas utilities, is based on natural gas supplied in 2011 to non-covered entities.[58] The program includes cost containment measures and allows for the banking of allowances, has a three-year compliance period with an annual obligation to surrender 30 percent of their previous year’s emissions, and allows for offsets of up to 8 percent of a facility’s compliance obligation.[59] AB 32 also employs a substantial penalty mechanism for facilities that fail to meet their compliance obligations: “If the compliance deadline is missed or there is a shortfall, four allowances must be provided for every ton of emissions that was not covered in time.”[60]

California’s cap-and-trade program became linked with Québec’s cap-and-trade system on January 1, 2014 and became linked with Ontario’s cap-and-trade program on January 1, 2018.[61] All allowances issued by the California, Québec, and Ontario programs before and after the linkage can be used for compliance interchangeably across jurisdictions.[62] The three jurisdictions also hold joint allowance auctions.

On January 1, 2015, suppliers of transportation fuels, including gasoline and diesel fuel, became covered under the program.[63] A fuel supplier is defined as “a supplier of petroleum products, a supplier of biomass-derived transportation fuels, a supplier of natural gas including operators of interstate and intrastate pipelines, a supplier of liquefied natural gas, or a supplier of liquefied petroleum gas.”[64] All fuel suppliers that deliver or import 10,000 metric tons or more of annual CO2 equivalent emissions are subject to a reporting requirement, but only suppliers that reach a 25,000 metric ton threshold are covered by the cap-and-trade program.[65]

Proceeds from the allowance auctions are deposited in the state’s Greenhouse Gas Reduction Fund and are appropriated by the state legislature for “investing in projects that reduce carbon pollution in California, including investments to benefit disadvantaged communities, recycling, and sustainable transit.”[66] As of 2017, some $3.4 billion had been appropriated to state agencies implementing GHG emission reduction programs and projects, collectively referred to as the California Climate Investments.[67] Of that amount, $1.2 billion has been expended on projects “expected to reduce GHG emissions by over 15 million metric tons of carbon dioxide equivalent.”[68]

III. Applying a Cap-and-Invest Approach to Northeast and Mid-Atlantic Transportation Sector

Under business-as-usual trends, carbon emissions in RGGI states will be 23 percent below the 1990 baseline in 2030.[69] These states must achieve much deeper emissions reductions across multiple economic sectors in order to achieve their “greenhouse gas emission reduction targets for 2030 that range from 35 to 45 percent, centered around a 40 percent reduction from 1990 levels.”[70] Since transportation represents the largest share of GHG emissions in the RGGI states, that sector should be a primary focus of policymakers’ attention.

One study finds that the levels of emissions reductions necessary to meet the GHG reduction goals of the states in the region could be accomplished “through a suite of clean transportation policies” including financial incentives for the purchase of clean vehicles, such as electric and hybrid light-duty vehicles and natural gas powered heavy-duty vehicles; investments in public transit expansion including bus rapid transit, light rail, and heavy rail; promotion of compact land use; investment in bicycle infrastructure; support for travel demand management strategies; investment in system operations efficiency technologies; and investment in infrastructure to support rail and short-sea freight shipping.[71]

One potential mechanism for achieving the levels of reductions necessary for the RGGI states to meet their targets “would be to implement a transportation pricing policy, which could both achieve GHG reductions and generate proceeds that could be used to fund clean and resilient transportation solutions.”[72] For example, “carbon-content-based fees, mileage-based user fees, and motor-fuel taxes” could “generate an average of $1.5 billion to $6 billion annually in the region.”[73] A mid-range pricing policy that generated approximately $3 billion annually “would create a price signal that would promote alternatives to single-occupancy vehicle travel and result in modest additional emission reductions. It would also raise a cumulative $41 billion to $46 billion for the region during 2015-2030.”[74] Proceeds from such a pricing policy would offset projected declines from existing state and federal gasoline taxes and could be used to fund other clean transportation initiatives.[75]

A hypothetical regional cap-and-invest program for vehicle emissions might be structured as follows. Member states would establish a mandatory regional cap on GHG emissions from the combustion of fossil transportation fuels calculated using volumetric fuel data and fuel emission factors available from the Environmental Protection Agency.[76] The cap would decline over time. States would auction allowances equal to the cap and establish an entity like RGGI, Inc. to administer the program, auction platform, and allowance market.[77] Regulated entities would achieve compliance by purchasing allowances at auction or from other market participants, and possibly with offsets earned from reductions in other aspects of their operations.[78] As with RGGI, individual member states would commit to invest a percentage of their auction proceeds into other initiatives aimed at reducing GHG emissions, including from transportation, and could retain the discretion to decide individually how to allocate those funds.[79]

Because power plants are stationary and relatively few in number, their GHG emissions can be regulated directly, i.e., at the stack. Vehicles, however, are mobile and far more numerous. To regulate the emissions from every fossil fuel powered vehicle at the tailpipe would entail a substantial and possibly prohibitive administrative burden, and would likely be politically unpalatable. An alternative is to use transportation fuel as the point of regulation. Determining which types of fuels and which entities in the fuel supply chain to cover under the cap-and-invest program will be critical.

Transportation fuels that could be covered include gasoline, on-road and off-road diesels, aviation fuels, natural gas, propane/butane, and marine fuels.[80] Considering both the volume of each type of fuel consumed and the comparative emissions resulting from its consumption, the program should cover, at a minimum, gasoline and on-road diesel, which account for approximately 85 percent of carbon emissions from transportation in the region.[81] Other fuels may make up too small a portion of total emissions to justify the additional technical and regulatory burden of covering them.[82] In addition, because all states in the region currently require reporting on gasoline and on-road diesel, the most straightforward approach would be to regulate those fuels. Covering other fuels would require at least some states that do not already require reporting of these fuels to establish new reporting requirements.[83]

Another key design choice is the point of regulation: which entities within the transportation fuel supply chain should be subject to the regulatory obligation to hold sufficient allowances. Because all states in the region have existing reporting and enforcement mechanisms for gasoline and on-road diesel (and many also tax off-road diesel and aviation fuel), one option would be to regulate existing state points of taxation for these fuels.[84] However, state points of taxation are not uniform throughout the region. They can include many different types of entities in the supply chain and in some states the point of taxation is different for different fuels.[85] State regulations also differ with respect to what actions by covered entities trigger the reporting requirement.[86] Many states have points of regulation low in the supply chain, such as entities that purchase fuel from the terminal rack and distribute it to retailers.[87] Thus, while using existing state points of taxation to regulate transportation fuels would make use of existing state regulatory mechanisms, it would also require regulating over one thousand entities across the region, many of which are smaller distributors.[88]

Another possible point of regulation would be one that is as far upstream as possible, i.e., entities that refine fuel in the region for use in the region, and those that import fuel into the region for use in the region.[89] This would include refineries, and for fuels refined outside the region, the first importers into the region.[90] Eight refineries in the region and an unknown number of first importers, including foreign suppliers and suppliers from U.S. states outside the region, would be subject to regulation.[91] This option would require reporting of the destination of all fuel produced in or that enters the region to ensure that a fuel to be used outside the region is not inadvertently covered.[92] While the Energy Information Administration (EIA) and the Environmental Protection Agency generally require destination data from refiners and importers into the U.S. and from interstate suppliers, the agencies do not publicly disclose this data.[93] Thus, regulating refiners and importers would likely cover many fewer entities as compared to existing state points of taxation, most of which would be large petroleum companies.[94] However, because only three states in the region have refineries within their borders, and because importers are not systematically tracked throughout the region, accounting for fuels that are transported through states to prevent double-counting would likely require the establishment of new regional reporting requirements that would include points of origin and destination.[95]

A third possible point of regulation would be entities known as prime suppliers, defined by the EIA as “suppliers who produce, import, or transport product across state boundaries and local marketing areas and sell to local distributors, local retailers, or end-users.”[96] For the region, this includes approximately 30 refiners, other producers of finished fuel, interstate resellers and retailers, and importers.[97] EIA requires these entities to report the amount of fuel, including gasoline, diesel, and aviation fuel, sold or transferred for end use by state on a monthly basis.[98] Although EIA does not publicly provide disaggregated prime supplier data because of statutory privacy restrictions, organizations may enter into data-sharing arrangements with EIA to obtain individual prime supplier data.[99] Thus, while the prime supplier group would include a larger number of regulated entities than importers and refiners, it would provide a consistent definition of a point of regulation already understood by the regulated entities.[100] Regulating prime suppliers, most of which are higher in the supply chain than existing state points of taxation, would also relieve most smaller entities of compliance obligations.[101]

IV. Conclusion

States in states in New England and the mid-Atlantic region must make much deeper emissions reductions in the transportation sector in order to meet their overall GHG emission reduction targets. Recognizing this reality, representatives from Connecticut, Delaware, Maryland, Massachusetts, New York, Rhode Island, Vermont, and Washington, D.C., at the 2017 Conference of the Parties to the United Nations Framework Convention on Climate Change, signed a joint statement affirming their commitment to reducing GHG emissions from the transportation sector. In that statement, they identified “market-based carbon mitigation strategies” as potential pathways to achieving needed emissions reductions.[102]

Despite its early struggles, the cap-and-invest approach to mitigating emissions in the northeast and mid-Atlantic electricity generation sector has achieved, at a minimum, some emissions reductions, substantial investment in other GHG mitigation efforts, and overall net benefits within the region. California has achieved substantial GHG emissions reductions across multiple sectors, including transportation, and has invested substantial sums in a suite of other green programs. These examples demonstrate the potential of using a cap-and-invest approach to accomplish environmentally and economically sound policy objectives, both within the RGGI region and in the context of transportation. If properly structured, such an approach could achieve significant emissions reductions in the region and raise substantial funds for other GHG mitigation and climate change adaptation initiatives.

How would a cap-and-invest approach to transportation emissions be structured? The fundamental aspects of RGGI and California’s cap-and-invest program are similar in most respects. California occupies a unique position in federal regulation of automobile emissions and had the benefit of constructing a program applicable only to itself, although its program is now linked with programs in other jurisdictions. RGGI already covers much of the Northeast and mid-Atlantic region, could be expanded to include other sectors of those states’ economies, including transportation, and could be linked with the California-Québec-Ontario cap-and-invest system to create a larger and more efficient allowance market.

Owing to the practical differences between directly regulating emissions from power plants and indirectly regulating transportation emissions by fuel type and supply chain point, the mechanics of using a cap-and-invest approach to mitigate transportation emissions, especially across jurisdictions, poses some potentially challenging design issues. The program should cover, at a minimum, gasoline and on-road diesel. Identifying the appropriate point of regulation will require policymakers to consider a host of technical, administrative, and policy issues. Existing state points of taxation are numerous and vary by jurisdiction and by fuel type within jurisdictions. Upstream refiners and importers are far fewer in number but regulating these entities would likely require the development of new regional reporting mechanisms that might make this option administratively undesirable. While the prime suppliers group is larger in number than refiners and importers, regulating prime suppliers would provide a consistent state-based definition of a point of regulation already understood by the regulated entities, and would not subject most smaller entities to compliance obligations.

[1] See Energy Information Administration, State Carbon Dioxide Emissions Data (last visited Feb. 10, 2018), https://www.eia.gov/environment/emissions/state/.

[2] See Gabe Pacyniak, et al., Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic, Georgetown Climate Center 8 (2015), http://www.georgetownclimate.org/files/report/GCC-Reducing_GHG_Emissions_from_Transportation-11.24.15.pdf.

[3] Regional Greenhouse Gas Initiative, Welcome (last visited Feb. 10, 2018), https://www.rggi.org.

[4] Regional Greenhouse Gas Initiative, RGGI Benefits (last visited Feb. 10, 2018), https://www.rggi.org/investments/proceeds-investments.

[5] Brian C. Murray and Peter T. Maniloff, Why have greenhouse emissions in RGGI states declined? An econometric attribution to economic, energy market, and policy factors, Energy Economics 51, 588 (2015).

[6] See Paul J. Hibbard, et al., The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States, Analysis Group 5 (July 14, 2015), http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/analysis_group_rggi_report_july_2015.pdf; Ceres, The Regional Greenhouse Gas Initiative: A Fact Sheet (2015), https://www.ceres.org/sites/default/files/Fact%20Sheets%20or%20misc%20files/RGGI%20Fact%20Sheet.pdf.

[7] Regional Greenhouse Gas Initiative, The Investment of RGGI Proceeds in 2015 3 (Oct. 2017), https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2015.pdf.

[8] See Energy Information Administration, supra note 1; Gerald B. Silverman and Adrianne Appel, Northeast States Hit the Brakes on Carbon Emissions From Cars, BNA (Oct. 16, 2017), https://www.bna.com/northeast-states-hit-n73014470981/.

[9] Pacyniak, supra note 2.

[10] Id.

[11] See Gabe Pacyniak, et al., Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic, Appendix 3: State GHG Reduction Goals in the TCI Region, Georgetown Climate Center 4-13 (2015), http://www.georgetownclimate.org/files/report/Apndx3_TCIStateEnergyClimateGoals-Nov2015-v2_1.pdf.

[12] See, e.g., Center for Climate and Energy Solutions, California Cap and Trade (last visited Feb. 10, 2018), https://www.c2es.org/content/california-cap-and-trade/.

[13] See Joel B. Eisen, et al., Energy, Economics and the Environment 326 (4th ed. 2015).

[14] Id.

[15] Id.

[16] See id.

[17] Id.

[18] See id.

[19] See id.

[20] See Regional Greenhouse Gas Initiative, supra note 3.

[21] See id.

[22] Regional Greenhouse Gas Initiative, Program Design (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/elements.

[23] Regional Greenhouse Gas Initiative, A Brief History of RGGI (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/design-archive.

[24] Id.

[25] Jonathan L. Ramseur, The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress,

Congressional Research Service 3 (May 16, 2017), https://fas.org/sgp/crs/misc/R41836.pdf.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id. at 4.

[32] Id. at 3.

[33] See Brian M. Jones, Christopher Van Atten, and Kaley Bangston, A Pioneering Approach to Carbon Markets: How the Northeast States Redefined Cap and Trade for the Benefit of Consumers, M.J. Bradley & Associates 4 (Feb. 2017), http://www.mjbradley.com/sites/default/files/rggimarkets02-15-2017.pdf.

[34] Regional Greenhouse Gas Initiative, The Investment of RGGI Proceeds in 2015 (Oct. 2017), https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2015.pdf.

[35] Id. at 3.

[36] Id.

[37] Id.

[38] Id.

[39] Id.

[40] Id.

[41] Jones, supra note 33.

[42] Id.

[43] See id. at 3.

[44] Id. at 17.

[45] Id. at 4.

[46] Regional Greenhouse Gas Initiative, Elements of RGGI (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/elements.

[47] Regional Greenhouse Gas Initiative, Summary of RGGI Model Rule Updates 1 (Dec. 19, 2017), https://www.rggi.org/program-overview-and-design/elements.

[48] See Murray, supra note 5 at 25-26; Man-Keun Kim and Taehoo Kim, Estimating impact of regional greenhouse gas initiative on coal to gas switching using synthetic control methods, Energy Economics 59, 334 (2016).

[49] California Air Resources Board, Assembly Bill 32 Overview (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/ab32/ab32.htm.

[50] Id.

[51] Id.

[52] Id.

[53] California Air Resources Board, Overview of ARB Emissions Trading Program 1 (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/capandtrade/guidance/cap_trade_overview.pdf.

[54] Id.

[55] Id.

[56] Id.

[57] Id.

[58] Id.

[59] Id. at 2.

[60] Id.

[61] California Air Resources Board, Facts About The Linked Cap-and-Trade Programs 1 (updated Dec. 1, 2017), https://www.arb.ca.gov/cc/capandtrade/linkage/linkage_fact_sheet.pdf.

[62] Id.

[63] California Air Resources Board, Information for Entities That Take Delivery of Fuel for Fuels Phased into the Cap- and-Trade Program Beginning on January 1, 2015 1 (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/capandtrade/guidance/faq_fuel_purchasers.pdf.

[64] Id. at 2.

[65] Id.

[66] California Air Resources Board, 2017 Report to the Legislature on California Climate Investments Using Cap-And-Trade Auction Proceeds i (2017), https://www.arb.ca.gov/cc/capandtrade/auctionproceeds/cci_annual_report_2017.pdf.

[67] Id.

[68] Id. at v.

[69] Elizabeth A. Stanton, et al., The RGGI Opportunity, Synapse Energy Economics, Inc. 3 (revised Feb. 5, 2016), http://www.synapse-energy.com/sites/default/files/The-RGGI-Opportunity.pdf. Notably, this study took into account the anticipated effect of the Clean Power Plan, which President Donald Trump and Environmental Protection Agency Administrator Scott Pruitt propose to repeal. See id. at 4.

[70] Id. at 2.

[71] Pacyniak, supra note 2 at 22. The Georgetown Climate Center serves as the facilitator for the Transportation Climate Initiative, which is “a collaboration of the agency heads of the transportation, energy, and environment agencies of 11 states and the District of Columbia, who in 2010 committed to work together to improve efficiency and reduce greenhouse gas emissions from the transportation sector throughout the northeast and mid-Atlantic region.” Id. at i.

[72] Id. at 25.

[73] Id.

[74] Id.

[75] Id. at 26-27.

[76] Drew Veysey, Gabe Pacyniak, and James Bradbury, Reducing Transportation Emissions in the Northeast and Mid-Atlantic: Fuel System Considerations, Georgetown Climate Center 7 (Nov. 13, 2017), http://www.georgetownclimate.org/files/report/GCC_TransportationFuelSystemConsiderations_Nov2017.pdf.

[77] Id.

[78] Id.

[79] See id.

[80] Id. at 9.

[81] See id. at 11-13.

[82] See id. at 33.

[83] Id. at 20.

[84] Id.

[85] Id. at 16.

[86] Id.

[87] Id. at 17.

[88] Id. at 33.

[89] Id. at 21.

[90] Id.

[91] Id.

[92] Id. at 22.

[93] Id.

[94] Id. at 33.

[95] Id.

[96] Id. at 24.

[97] Id.

[98] Id.

[99] Id. at 25.

[100] Id. at 33

[101] Id.

[102] See Transportation and Climate Initiative, Northeast and Mid-Atlantic States Seek Public Input As They Move Toward a Cleaner Transportation Future (Nov. 13, 2017), https://www.transportationandclimate.org/northeast-and-mid-atlantic-states-seek-public-input-they-move-toward-cleaner-transportation-future; Sierra Club, Northeast and Mid-Atlantic Governors Lauded for Announcement on Transportation and Climate, Press Release (Nov. 13, 2017), https://www.sierraclub.org/press-releases/2017/11/northeast-and-mid-atlantic-governors-lauded-for-announcement-transportation.

Opportunities to Address Climate Change in the Next Farm Bill

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