Paul M. Seby McKenna Long & Aldridge LLP 1875 Lawrence Street, Suite 200 Denver, CO (303) WESTERN REGIONAL AIR PARTNERSHIP “INFORMATION SHARING MEETING ON CLIMATE CHANGE” Santa Fe, New Mexico August 25, 2005

THE FEDERAL CLEAN AIR ACT A.A “model of cooperative federalism” B.Evolution of the state-federal relationship “in the struggle against air pollution.” C.What is a “pollutant”?

STATE “CLIMATE CHANGE” INITIATIVES 1.Will there be CO 2 /GHG regulation in individual Western States? CDEAC InitiativeCDEAC Initiative Arizona - Governor executive orderArizona - Governor executive order California Sky Trust – CPUC/CECCalifornia Sky Trust – CPUC/CEC West Coast Governors’ “Global Warming Initiative”West Coast Governors’ “Global Warming Initiative” 2.Eastern States’ “Regional Greenhouse Gas Initiative” (RGGI)

HOW DO THESE INITIATIVES COMPARE TO FEDERAL LAW ? 1.D. C. Circuit’s recent decision in Massachusetts v. EPA 2.Overview of the case and why it’s relevant/important

Massachusetts v. EPA (D.C. Cir. July 15, 2005) 1.The Court concluded that even if EPA had statutory authority to regulate GHG emissions, EPA correctly exercised its policy judgment to decline to exercise that authority. 2.The Court relied on a federal Clean Air Act provision which directs the EPA Administrator to regulate motor vehicle tailpipe emissions if “in his judgment” such emissions “may reasonably be anticipated to endanger public health or welfare.”

Massachusetts v. EPA (D.C. Cir. July 15, 2005) 1.The Court ruled that EPA had appropriately concluded that there is too much “scientific uncertainty” to make this judgment. 2.The Court’s decision includes an analysis of the National Research Council’s 2001 Climate Change Science: An Analysis of Some of the Key Questions, which is the principle scientific document upon which EPA relied.

Massachusetts v. EPA (D.C. Cir. July 15, 2005) The Court noted this report concluded that: 1.“a causal linkage” between GHG emissions and global warming cannot unequivocally be established; 2.increases in CO2 levels have not always been matched by increases in temperature; 3.there is considerable uncertainty in current understanding of the climate system; 4.assumptions about effects of future GHG emissions have proven to be erroneously high.

WESTERN GOVERNORS’ PERSPECTIVES 1.WGA Resolution (June 14, 2005) – “Issues related to CO 2 or other greenhouse gases are being addressed individually by states. Due to limited funding, WRAP should continue to concentrate their efforts on regional haze.” 2.Colorado Governor Owens (August 5, 2005) “I do not believe that recommendations that seek to favor one clean coal technology over another are useful, nor are recommendations that seek to favor one clean coal technology over another are useful, nor are recommendations that seek to determine appropriate clean energy technologies based on factors related to carbon issues. I believe there are other, more appropriate forums than the CDEAC for discussions of the future and propriety of carbon regulations.” 3.North Dakota Governor Hoeven (August 8, 2005) “WGA has yet to develop a consensus position on carbon and does not have a policy on that issue.”

FEDERAL CONSTITUTIONAL ISSUES A.“Supremacy Clause” – federal preemption by FERC jurisdiction over interstate wholesale sales and transmission? B.“Commerce Clause” – prevents states from discriminating against, or unduly burdening, interstate commerce.

THE PATH AHEAD? 1.Develop voluntary, market-based efforts to reduce the carbon intensity of all economy sectors 2.Develop incentives, rather than mandates, to encourage increased investment in an array of clean energy technologies 3.Enhance efforts enabling all clean coal technologies to flourish