Great Expectations: President-Elect Obama’s Environmental and Energy PoliciesBy Jeff Kray and Brad Marten
In his acceptance speech in Grant Park Tuesday night, President-elect Obama spoke of a “planet in peril.” As a candidate, he promised to combat global warming and to reduce the country’s dependence on foreign oil. Obama tied energy issues to our national security and economic recovery. He said he would act quickly to put in place policies that create new “green collar” jobs and develop new domestic sources of energy.
In his acceptance speech in Grant Park Tuesday night, President-elect Obama spoke of a “planet in peril.” As a candidate, he promised to combat global warming and to reduce the country’s dependence on foreign oil. Obama tied energy issues to our national security and economic recovery. He said he would act quickly to put in place policies that create new “green collar” jobs and develop new domestic sources of energy. To accomplish this ambitious agenda, the country’s environmental laws, which have not been substantially changed since the early 1990s, will have to change, perhaps fundamentally.
In this article, we will summarize the key environmental positions taken during the campaign by President-elect Obama. We focus on climate change, energy, water quality and conservation, toxic cleanups, and endangered species issues - all policies on which the President-elect has taken significantly different positions than his predecessor. We will discuss how Obama may seek to change environmental and energy policies as President, and some of the potential challenges that he and his Administration will confront in doing so.
I. Climate Change
President-elect Obama favors a national, economy-wide, market-based cap and trade system to reduce U.S. carbon dioxide emissions to 80% below 1990 levels by 2050. President Bush favored voluntary actions. Obama wants to make them mandatory. He has called for auctioning rights to emit carbon to create an estimated $250 billion in annual revenues for the federal government to reinvest in clean energy technologies. The details on how any cap and trade system is implemented will be an early test of his new administration. Some experts – even those who favor a cap and trade system - oppose carbon auctions. They argue that auctions reduce the competitiveness of carbon-intensive industries in a global market, particularly the steel, aluminum, pulp, and paper industries. They would distribute some or all emission rights free of charge to existing carbon emitters, or perhaps phase-in an auction system over time. For a summary of the various cap and trade proposals introduced this year in Congress, see S. Brandt-Erichsen, Three Key Issues Emerge in Congressional Climate Debate, Marten Law Group Environmental News (October 16, 2008). The pending legislation discussed in that article is a likely starting point for the new administration.
Even without cap and trade legislation in place, the President-elect can move quickly to curtail carbon emissions through new regulations. He can, for example, direct the Environmental Protection Agency (“EPA”) to begin regulating carbon dioxide as a “pollutant” under the Clean Air Act (“CAA”). The United States Supreme Court has already decided that EPA has the authority to regulate greenhouse gases (“GHGs”) as pollutants. The Bush Administration declined to order EPA to do so, and the agency instead issued a notice of proposed rulemaking which listed all of the reasons it should not. For more information on regulating GHGs as pollutants, see EPA Says Clean Air Act “Ill-Suited” to Address Greenhouse Gases, Marten Law Group Environmental News (July 16, 2008). In contrast to President Bush, President-elect Obama said during his campaign that he favors having EPA proceed with rulemaking to regulate carbon dioxide and other GHGs under the Clean Air Act.
During the campaign, Obama also promised to promote transportation fuel efficiency. As a senator, he co-sponsored the Fuel Economy Reform Act, which set an annual four percent increase target for fleet fuel economy under the Corporate Average Fuel Economy (“CAFE”) standards. He is also on record as stating that he will reverse EPA’s decision not to grant California’s waiver request to implement stricter vehicle emissions standards. Obama has also said he favors tax credits to promote sales of fuel-efficient vehicles and tax incentives to automakers to re-tool their factories to manufacture more hybrid vehicles. Obama is also expected to keep a close eye on California’s Low Carbon Fuel Standard, and to consider implementing national standards. For more information on California’s Low Carbon Fuel Standard, California Moves to Reduce Greenhouse Gas Impacts from Transportation Fuels, Marten Law Group Environmental News (January 16, 2008).
In sharp contrast to the previous administration, we can expect to see increased U.S. participation in international climate negotiations. The United Nations Framework Convention on Climate Change (“UNFCCC”) is developing a post-Kyoto framework that is actively moving towards a new international climate change agreement with a target completion date of December 2009. Emerging consensus indicates that would be impossible without U.S. participation. Even before the election, Professor Dan Kammen, an alternative energy expert and spokesperson for Obama on energy issues, was selected by the Obama campaign to attend the UNFCCC conference in Poznan, Poland in December 2008. President-elect Obama has said that he would be willing to discuss a binding international agreement as long as there is some measure of commitment from developing countries and emerging economies, particularly China and India. Such agreements would require U.S. Senate approval. To facilitate this commitment, Obama has discussed creating a program within the Department of Energy to transfer lower-polluting American energy technology to developing counties. A major leadership test for the Obama Administration will be the positions it takes at the UNFCCC negotiations in Denmark in December 2009.
Calling the United States’ dependence on imports of foreign oil “a security threat, an economic albatross, and the moral imperative of our time”, President-elect Obama has called for 25% of U.S. electricity to come from renewable sources by 2025, and for 30% of the federal government’s electricity to come from renewables by 2020. He has also promised to direct $15 billion per year over 10 years towards building the country’s wind, solar, biofuels, clean coal, and safe nuclear energy infrastructure, all of which he appears to favor over off-shore drilling. Obama has set to increase biofuel use to 36 billion gallons per year by 2022 and 60 billion gallons per year by 2030, spurred by tax credits for biofuel production, E85 infrastructure, flex- and alt-fuel vehicles, mandatory increases of biofuels in the nation’s fuel supply mix, and requirements that all new cars sold in the U.S. be dual-fuel capable.
In recent months, the problems caused by the expansion of biofuels based on food crops, including increased food prices, the conversion of conservation lands to corn fields, and the potential to exacerbate climate change, have caused Obama to re-visit his earlier pro-ethanol stand. He now characterizes corn-based ethanol as “transitional” technology, and has considered reducing corn subsidies in exchange for subsidizing the development of cellulosic ethanol, which is based on woody biomass rather than food crops. The Obama Administration will face increasing demands from the cellulosic fuels industry, which must be able to produce 21 billion gallons of this fuel under the Energy Independence and Security Act of 2007. These fuel producers need funding for research and development, changes in laws and regulations governing land use, and streamlined permitting for distribution and facility siting.
The Obama energy platform relies on traditional fossil fuels along with alternative fuels, but with more controls in place then the Bush Administration has required. Obama has said he would require oil companies to first develop the 68 million acres of land (40 million of which are offshore) that have already been leased but are not being drilled. The Obama Administration also intends to establish a process for “early identification of any infrastructure obstacles/shortages or possible federal permitting process delays to drilling in the Bakken Shale formation, the Barnett shale formation, and the National Petroleum Reserve-Alaska.” In addition, Obama said he would promptly seek public-private partnerships to develop clean carbon capture and sequestration technology.
Carbon sequestration, while one of the most promising ways to mitigate GHG emissions from coal-fired power plants, faces its own technological, economic, and permitting challenges. Several states have established legislative and regulatory proposals for carbon dioxide sequestration programs, and EPA issued a draft rule this summer establishing a nationwide carbon sequestration permitting program under the Safe Drinking Water Act (“SDWA”). Concerns persist, however, about whether geologic sequestration on a commercial scale is technologically and economically feasible. For more information on carbon sequestration and its challenges, see Uncertainty Persists as EPA Begins Carbon Sequestration Rulemaking, Marten Law Group Environmental News (January 16, 2008).
As to nuclear energy, President-elect Obama has said nuclear power is needed to transition to a lower carbon economy, but stated that there is “no future for expanded nuclear power without first addressing four key issues: public right-to-know, security of nuclear fuel and waste, waste storage, and proliferation.” Obama has promised new regulations concerning storage of nuclear waste, and has said that “Yucca Mountain is not an option” for the safe storage of nuclear waste.
III. Promoting Clean Technologies
As part of his pledge to increase energy efficiency and independence, President-elect Obama promised during the campaign that his administration would help to create millions of new ‘green collar’ jobs. Through increased energy efficiency, he has pledged that there will be zero emissions from federal buildings by 2050, and carbon neutrality for all new buildings by 2030. Obama has set a national goal of improving new building efficiency by 50% and existing building efficiency by 25% over the next ten years to help meet the 2030 goal. This commitment, if carried out, will impact builders and developers who will need to meet energy efficiency standards, and industries that will need to comply with stricter emissions standards. For more information on the potential to reduce GHG emissions via energy efficient building standards, see L. Larson, Local Governments Use Both Carrots and Sticks to Encourage Green Buildings, Marten Law Group Environmental News (December 5, 2007).
The country’s economic problems will likely play a role in determining how, and how quickly, the Obama administration will be able to promote a clean technology agenda. During the campaign, Obama pledged to make $150 billion in renewable energy investments, particularly in wave and tidal power, solar farms, plug-in hybrid cars, and clean coal. Some of this investment will come from the financial industry bailout, which included $18 billion in renewable energy incentives. The incentives included an eight-year investment tax credit for solar power, as well as new incentives for other forms of renewable energy, such as geothermal, closed-loop biomass, hydropower, landfill gas, wave and tidal energy, and trash combustion facilities.
Still, paying for renewable energy tax cuts and regulating relatively new forms of renewable energy will prove challenging. Investors will need streamlined permitting processes for the infrastructure needed to support renewable energy. Regulators will need to re-shape rules which make wind and tidal technologies difficult to permit. New regulations frequently take years to enact and implement, and will likely face additional regulatory or litigation hurdles before they are fully implemented. There are also collateral resource and environmental challenges, such as the competition for water between salmon and hydroelectric power, the competition for land between transmission lines and preservation, and increased demands for a shrinking supply of water. For analysis of recent cases addressing these issues, see J. Kray, Federal Court Rejects Klamath Basin Irrigators’ Property Rights Claims Arising From 2001 Drought and Distinguishes Tulare Lake Decision, Marten Law Group Environmental News (Sept. 28, 2005); J. Ferrell, Klamath Basin Decisions Leave Irrigators High and Dry, Marten Law Group Environmental News (April 25, 2007); J. Ferrell, Federal Court Requires Wildlife Services to Analyze Climate Change Effects During ESA Consultations, Marten Law Group Environmental News (May 7, 2008).
IV. Enforcing Toxics Cleanup
During his campaign, President-elect Obama stated that he would strengthen and enforce the “polluter pays” principle, and seek reinstatement of the “Superfund” tax on chemical and petroleum feedstocks to pay for cleanups. As a senator, Obama expressed dissatisfaction with EPA’s slow responses to controlling Superfund sites where human exposure to contaminants was not under control. But there are challenges here too. Many of the biggest toxic cleanup sites are military and nuclear facilities owned by the United States, which has been slow to address them due to a lack of funding. Many of the largest “polluters” are themselves struggling financially, and ordering them to conduct expensive cleanups could push them into bankruptcy. Moreover, the liability issues under the federal Superfund law continue to evolve, with the United States Supreme Court set to decide this term whether liability under CERCLA is joint and several - a cornerstone of EPA enforcement policy.
V. Conserving Air, Land and Water Resources
a. Water Quality, Wetlands, and Water Resources
EPA and the courts have been struggling for years with two issues: (1) the scope of federal jurisdiction over “navigable waters” and wetlands under the Clean Water Act (“CWA”); and (2) and whether pollution discharge permits are required for inter-basin water transfers. The Obama administration may take a different approach than its predecessor on both issues.
The CWA strictly prohibits discharging pollutants into the “navigable waters of the United States” without an NPDES permit from the EPA or authorized state environmental authority. After Congress passed the CWA, an issue arose concerning the extent to which wetlands adjacent to navigable waters constitute “waters of the United States.” In 2006, the United States Supreme Court issued a decision in Rapanos v. United States,  that the courts, EPA, and the Army Corps of Engineers (“Corps”) have found difficult to interpret and apply. In June 2007, EPA and the Corps issued a joint guidance memorandum in which they stated that their respective staff may determine CWA jurisdiction under either of two tests set forth in Rapanos. The Obama administration may determine to revisit that guidance. The new administration will also need to decide how to proceed in U.S. v. McWane, Inc., et al. (docket 08-223) a case asking the Supreme Court to revisit and clarify Rapanos. For more on post-Rapanos jurisdictional issues under the CWA, see J. Kray, Post-Rapanos Courts Setting High Evidentiary Bar for Clean Water Act Jurisdiction, Marten Law Group Environmental News (December 19, 2007).
Another hot-button issue is water transfers. In August 2008, the EPA’s “National Pollutant Discharge Elimination System (NPDES) Water Transfers Rule” (Water Transfers Rule) took effect, codifying that “water transfers” are excluded from regulation under the CWA and, therefore, do not require NPDES permits. The rule has been challenged in federal court by several states and environmental groups. Under a new administration, it is possible that EPA would withdraw the rule and initiate rulemaking to confirm that water transfers do require NPDES permits. For more on EPA’s water transfer rule and its challenges, see J. Kray, EPA Rule Exempts Water Transfers from NPDES Permit Requirements, Marten Law Group Environmental News (June 18, 2008), and J. Kray, Environmental Groups Challenge Inter-Basin Water Transfers Rule, Marten Law Group Environmental News (September 11, 2008).
Water rights are primarily state-created property rights and allocation is primarily decided at the state, not federal, level. There are no indications from the Obama platform that show a shift towards seeking increased federal involvement in regulating water law. However, the Federal Bureau of Reclamation is a major water provider and the federal government plays a significant role in managing water resources. President-elect Obama has opposed water transfers from his Great Lakes home territory, and encouraged water conservation in the American West.
Congress recently passed the Great Lakes-St. Lawrence River Basin Water Resources Compact. Co-sponsored by Obama, the Compact is a multistate agreement governing the use and allocation of water from the Great Lakes. Regions within the Great Lakes watershed will have use-rights; regions outside of the designated watershed will have to meet strict state standards in order to access Great Lakes water. The Great Lakes also stand to benefit from Obama’s pledge of $5 billion in new funds to protect and restore the water bodies, including efforts to repair sewage treatment facilities that discharge into the lakes, toxics cleanup, and wetland restoration. He has also expressed a “zero tolerance” policy for invasive species in the Great Lakes. Key to this policy will be decisions regarding ballast water and vessel discharges, an issue that proved nationally contentious earlier this year with EPA’s proposed NPDES permits for recreational and commercial vessel discharges. Under the new administration, the push for requiring permits is likely to continue. For more information on the proposed vessel discharge permits, see Battle of the Bilge: EPA Issues Draft NPDES Permits for Incidental Boat Discharges, Marten Law Group Environmental News (July 16, 2008).
Noting the American West’s “serious water crisis,” Obama promised to promote improved technology for water conservation and efficiency, wastewater treatment, and voluntary water banks. Those efforts could include regulations affecting water use in appliances and incentives to shift from irrigated lawns to “water smart” landscapes, information, training, and economic assistance to farms and businesses that will need to shift to more efficient water practices, and assistance to help businesses and homeowners audit their water use and find ways to reduce use. The new administration’s water conservation plans could take the form of constructing new water storage, such as reservoirs or underground aquifer storage and recovery, but that remains to be seen.
Obama’s EPA is expected to follow through on commitments to tougher regulations on smog and soot, mercury emissions, and lead. Key Bush Administration air rules were invalidated this year, as the D.C. Circuit struck down both the Clean Air Mercury Rule (“CAMR”) and the Clean Air Interstate Rule (“CAIR”). CAMR, which Senator Obama supported would have permanently capped and reduced mercury emissions from coal-fired power plants. The mercury emission trading provision of the rule was controversial, and was not adopted by a number of states. The D.C. Circuit invalidated CAMR on the ground that it sidestepped the strict control technology standards applicable to hazardous air pollutants.
The CAIR rule would have limited power plant emissions of sulfur dioxide (SO2) and nitrogen oxide (NOx), as precursors to fine particulates and ozone, in 28 states and the District of Columbia. The rule was a response to years of complaints from “downwind” states that they could not improve their air quality without reductions in out-of-state upwind sources. The D.C. Circuit found that this rule ran afoul of limits on EPA’s ability to regulate emissions from power plants that result from the structure of the federal Clean Air Act.
There has been no apparent interest in the waning days of the Bush Administration to rethink limits on mercury emissions or to resolve the problem of cross-state migration of air pollutants in the Eastern U.S. It will be up to the new Obama Administration’s EPA to take up these issues again.
c. Endangered Species
The Bush Administration has sought to limit the scope of the Endangered Species Act (“ESA”). For example, a recent proposed change to regulations implementing the ESA would blunt the authority of one the statute’s key provisions: consultation requirements under Section 7. During consultations, the U.S. Fish and Wildlife Service and/or NOAA Fisheries (together, the “Services”) assess actions with a federal nexus to ensure that those actions will not jeopardize the continued existence of listed species or adversely affect their critical habitat. Under the Bush Administration’s proposed ESA rule, in some circumstances federal agencies would decide for themselves – without concurrence by either Service – whether projects that they undertake, fund or authorize would jeopardize listed species or adversely affect their critical habitat, triggering consultation requirements. Combined with definitional changes in the consultation regulations, the rule could significantly reduce the number of projects required to undergo consultation with the Services, and thereby narrow the regulatory impact of the ESA. For more information on the proposed ESA rule, see J. Ferrell, Proposed ESA Rule Could Significantly Reduce Section 7 Consultations, Marten Law Group Environmental News (September 3, 2008).
The proposed rule also reiterates the Bush Administration’s position regarding the intersection of climate change analysis and the ESA: that, while the impact of emissions on air pollution could be an effect of an action, “GHG emissions’ contribution to global warming and associated impacts to listed species … are not, and the effects of those impacts would not need to be considered in any [ESA] consultation.”
In response to the proposed ESA rule, an Obama campaign spokesperson stated that, “[a]s president, Senator Obama will fight to maintain the strong protections of the Endangered Species Act and undo this proposal from President Bush.” How this will occur remains unclear. If the proposal becomes final in November 2008, the Obama Administration could propose another rule or legislation to undo the changes. Either process could take months to complete. Still, a statutory overhaul of the ESA is unlikely, as President-elect Obama has voiced his support for the existing ESA.
d. Land Conservation and Forests
During the campaign, the President-elect said he opposed building new roads within designated wilderness areas. Consequently, the Obama Administration may favor re-instating and enforcing the Clinton-era “Roadless Rule,” which prohibited logging, road building, road re-building and other development on nearly 60 million acres of inventoried roadless federal land. A “lightening rod for controversy,” the Roadless Rule has been struck down and resurrected in the courts, endorsed and attacked by federal legislators, challenged by the forest and mining industries, replaced by the United States Forest Service with the State Petitions for Inventories Roadless Areas Rule, and defended by environmental groups. Most recently, the California federal judge who reinstated the rule signaled that she may reduce the scope of her decision to cover the 9th Circuit and New Mexico. An Obama Administration could be slowed by ongoing legal uncertainties in enforcing this rule, especially in the interior West. For more information see Roadless Rule Redux: Wyoming Federal Court Enjoins Roadless Rule (Again), Marten Law Group Environmental News (August 20, 2008).
Obama has also promised to emphasize conservation of private lands, increase funding for the Conservation Society Program and the Conservation Reserve Program, and create additional incentives for private landowners to protect and restore wetlands, grasslands, forests, and other wildlife habitat. Early in his campaign, President-elect Obama said he strongly opposed drilling in the Arctic National Wildlife Refuge. Later in the campaign, after a spike in energy prices, he stated that he may be willing to “compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage.”
President-elect Obama has outlined ambitious environment and energy priorities. Those plans broadly and sharply differ from the Bush Administration’s approach on many issues, most notably climate change, energy, use of public lands, and the Endangered Species Act. In light of the priority that these issues were given in the just-completed 2008 campaign, we are likely entering a period of rapid change in the nation’s environmental laws.
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