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Climate Change/Environmental 1/16/2008 6:47:01 PM EST Registering Emissions Under Lieberman-Warner Bill - Liability Risks and Solutions Jenner & Block Climate & Clean Technology Law Practice In this Emerging Issues Commentary, Michael R. Strong of Jenner & Block's
Chicago office and Edward F. Malone examine America's Climate Security Act of 2007, also known as the Lieberman-Warner bill (S.2191), which passed out of the Senate Environment and Public Works Committee on December 5, 2007, and as of this writing is in front of the full Senate. If the bill becomes law, companies will have to quickly begin monitoring and reporting their greenhouse gas (GHG) footprints. In this article, which is the first in a series on litigation and liability issues arising from the GHG reporting requirements in S.2191, Messrs. Malone and Strong summarize those requirements, including the penalties for underreporting, and introduce some of the basic dilemmas companies will face as they attempt to comply with those requirements. They also discuss some easy steps that companies can take to avoid costly mistakes in calculating and reporting emissions. The authors write:
[The Lieberman-Warner Climate Security Act of 2007,] S.2191, like other cap-and-trade programs, begins with the government issuing (and later auctioning) a finite (and decreasing) number of "allowances" that entitle the holder to emit one ton of carbon dioxide, or the amount of other [greenhouse gases (GHGs)] that have the same impact as emitting one ton of carbon dioxide ("carbon dioxide equivalent"). The next step is measuring the allowance holders' compliance with the limitations on their emissions. That should be relatively simple where the allowances cover emissions by facilities that are 100% directly owned and operated by a single company. But there are different methodologies for measuring emissions, and it is not always clear how those methodologies should be applied to more complex ownership and operation arrangements.
Although the current version of S.2191 contains little guidance to the United States Environmental Protection Agency ("EPA") about establishing rules for the measurement of GHG emissions, it instructs EPA to "tak[e] into account the duties carried out by the Climate Registry." The Climate Registry is an independent standard setting entity established in May, 2007 that both facilitates collection of and audits GHG emissions data that companies voluntarily report to it beginning in 2008. As part of its mission the Climate Registry has created draft rules for reporting GHG emissions. The Climate Registry is a new organization, and it is not the only game in town; for instance, EPA's current voluntary Climate Leaders program has its own similar - but distinguishable - design rules. However, the Registry has advantages over its competition. It was created to provide a uniform standard for data collection and verification for GHG regulation in the U.S. (and in some participating provinces and states of Canada and Mexico), and would allow its member states and provinces to regulate as desired with that uniform data. Thus, companies would be wise to consider the Climate Registry's draft reporting rules to evaluate what their reporting obligations will be if and when S.2191 becomes law.
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