October 07, 2009

Holding Government and Emitters Accountable Under Boxer-Kerry

This post is the fifth in a series from CPR Member Scholars examining different aspects of the Boxer-Kerry bill on climate change, which was released September 30.

To expand a bit on some of what Bill Buzbee discussed in his excellent analysis of the Boxer-Kerry bill on CPRBlog, it is critical to ensure that the implementation of a new climate change regime is done in a way that is prompt and efficient, but also accountable. An effective bill needs to hold government and private actors accountable for their new climate change obligations and actions. Such accountability is key to ensuring that there is confidence in the new cap-and-trade market and that we actually obtain the greenhouse gas reductions we need. In particular, we should focus on the citizen enforcement provisions of the bill and the management of offsets.

The bill incorporates the Clean Air Act enforcement provisions, including its citizen suit provisions that allow citizens to sue government to force it enforce the law (sections 126-27). That’s good. But it would be even better if the bill had its own citizen suit provision, as Bill Buzbee notes. Further, the bill would be even stronger if it made an effort to clarify the uncertain law on standing -- whether and which citizens can bring claims to help avert climate change. As I wrote in my blog entry on Waxman-Markey, citizen enforcement suits are a critical supplement to government enforcement of the law’s violations against greenhouse gas dischargers and a means of holding government itself accountable for carrying out environmental programs properly. Citizen standing is a particularly challenging issue because of the widespread nature of the harm from global warming – it will be difficult to say that any individual citizen’s harm is “particularized” and distinctively different from the harm suffered by others. A clear congressional indication that citizens should be able to bring claims despite the widespread nature of the harm is likely to be helpful in the courts. The bill would be stronger if it added such language to a citizen suit provision.

Relatedly, we need to be sure that the government and offset project creators are adequately accountable for implementing the bill’s provisions on offsets. As did Waxman-Markey, Boxer-Kerry authorizes an extraordinarily large number of offsets—up to 2 billion tons of CO2 equivalent emissions per year. That could be a third or more of total permitted U.S. carbon dioxide-equivalent emissions per year. Because offsets are generally projects in which greenhouse gas emissions are more difficult to monitor or calculate (for example, the greenhouse gas implications of planting a tree are tougher to calculate than the operations of a coal-fired electric utility) , it’s not hard to imagine questions emerging about whether greenhouse gas reductions are "real." It’s also possible that in many cases, the reductions offered up as offsets might have happened anyway.

As Victor Flatt explained, the bill acknowledges these pervasive issues for offsets more effectively than Waxman-Markey did. Just saying that we should have good standards for offsets, however, is not sufficient. It is critical that the bill provide a workable and accountable regime for setting up offsets and contesting offsets. Only in that way will the standards be meaningful. Right now, as Bill Buzbee says, the bill imposes very large obligations on the agencies, a circumstance that presents a real risk of administrative delays. For example, the bill specifies that offset project categories must be approved through a petition process, with a to-be-designated agency rendering an answer within 90 days. (Inadequate resources for review cannot be a reason for rejecting a petition for a category of offset.) The bill also calls for verification by “accredited” third parties that offset projects are working properly and obtaining greenhouse gas reduction or sequestration – a good idea. It falls upon the to-be-designated agency, however, to run the accreditation process for the third party verifiers.

Similarly, arguments that a particular project warrants an offset -- or that an already-granted offset ought to be "reversed" - also must all be resolved through petition processes (new Clean Air Act sections 734 and 735). Interestingly, in contrast to the bill’s provisions about offset categories, the bill does not bar an agency from denying a petition for a specific offset on the grounds of inadequate resources. That raises the question of whether the bill would be read to allow the agency to rely on those grounds to deny a petition. The biggest worry of this immensely large offset program is that the agency, whichever one it turns out to be, will be so bogged down with most of these responsibilities that it will not be able to adequately monitor offset projects or handle claims that offset projects have been “reversed” in whole or in part. And if offset projects do not deliver the promised greenhouse gas reductions, that will substantially undermine the “cap” of the cap and trade system. We will not achieve the meaningful reductions in greenhouse gases that we need and that the bill promises. One possibility is to phase in offset projects more slowly, so that the agency can get up to speed and ensure that offset projects actually meet the standards they should. The big appeal of offsets is that they offer greater flexibility to meet the GHG reduction targets of the bill. The bill’s accountability mechanisms for offsets require so much from the agency, however, that they significantly raise the risk that offset projects will make only phantom reductions. While I would be the last to say we should weaken our greenhouse gas reductions targets, it still might be better to have a slightly higher cap than to set up such a large offset program at the outset.

Another possibility is to empower citizens to bring claims not only by petitioning the agency (as the bill currently provides) that offset projects are ineffective but at least in some circumstances to bring those claims in courts against the government or against private actors illegally claiming offset creation or benefits. If the bill expanded enforcement options in this way, it would help ensure that offset projects represent genuine reductions in our overall greenhouse gas contributions and help the bill achieve its goals. A cap-and-trade bill such as the Boxer-Kerry bill is basically setting up a huge, new market. Like all markets, its success is dependent on scarcity, transparency, enforceability and stability. Ensuring the reality of offset credits and empowering private and public actors to police illegality will help make a new greenhouse gas cap-and-trade market both profitable and effective in reducing climate harms.

Nina Mendelson, CPR Member Scholar; Professor of Law, University of Michigan Law School. Bio.

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