SEC, EPA & CEQ Act on Climate Change

Three federal agencies have recently taken important actions on the topic of climate change:

  • EPA recently finalized regulations imposing significant new monitoring and reporting requirements on the owners and operators of facilities directly emitting greenhouse gases. In addition to covering facilities in sectors traditionally associated with climate change (for example energy and mining), the new requirements also apply to certain health care facilities and other commercial buildings. Facilities with emissions equivalent to 25,000 metric tons of carbon dioxide/year (a low threshold exceeded by many medium-sized boilers) must monitor their emissions throughout 2010, and will be required to report their emissions beginning in March 2011. Failure to comply could result in penalties of up to $32,500 per day.
  • CEQ. On February 18 the President's Council on Environmental Quality released draft guidance addressing climate change analysis under the National Environmental Policy Act (NEPA). The guidance proposes that federal agencies evaluate the climate change impacts of any proposed action involving a "meaningful" source of greenhouse gases. This requirement is not restricted to actions initiated by federal agencies; it also applies to private projects requiring a federal permit, including a wide variety of energy and infrastructure projects on federal land. CEQ suggests using the EPA cutoff of 25,000 metric tons/year.
  • SEC recently released new guidance clarifying the extent to which public companies must account for climate change before making required disclosures. Among other things, the SEC guidance requires that that companies account for potential impacts of international climate treaties and accords, that management acquire sufficient information about the company's greenhouse gas emissions to determine whether climate change legislation or regulation would have a material effect on the company, and, perhaps most importantly, that companies consider indirect consequences of climate change regulation -- for example, decreased demand for energy-intensive products or increased competition for "green" products.