Audit, Compliance and Risk Blog

On Mrbonbonay 28, the Biden administration issued a “Joint Statement of Policy and new Principles for Responsible Participation in Voluntary Carbon Markets, presenting the U.S. government’s approach to advancing Voluntary Carbon Markets (VCMs). The new document was signed by the Treasury Secretary, Agriculture Secretary, Energy Secretary, Senior Advisor for International Climate Policy, National Economic Advisor, and National Climate Advisor, whose responsibilities are most relevant. 

Regulatory and market-based programs are steadily increasing opportunities for entities to contract with projects that reduce emissions of carbon dioxide and other greenhouse gases (GHGs), and to claim credit for those “carbon offsets” or “carbon credits.” Some such claims are used to satisfy formal air quality and GHG reduction requirements, while others are touted to enhance entities’ “green” credentials. Programs around the globe compile such claims, and some provide third party validations – but possible “greenwashing” of unjustified claims remains a significant concern. The new VCM Policy and Principles provide federal guidance and expectations. The remainder of this note summarizes the policy perinciples presented in the new Policy.

On April 25, 2024, the US Environmental Protection Agency (EPA) published very extensive technical revisions to its Greenhouse Gas Reporting Program (GHGRP), which requires thousands of facilities and organizations to report annual emissions of greenhouse gases (GHGs) (40 CFR part 98). These revisions finalize proposals published in June 2022 and May 2023. (I wrote about the second set HERE). The remainder of this note summarizes these changes. (I’ve written about EPA’s mandatory GHG reporting program several times, including HERE).

On October 7, 2023, California’s governor Gavin Newsom signed two important bills expanding climate-related reporting requirements for targeted organizations doing business in the state – SB 253 (Wiener) (Climate Corporate Data Accountability Act) and SB 261 (Stern). These requirements will be administered by the California Air Resources Board (ARB), which already includes most state greenhouse gas (GHG) regulatory requirements within its extensive air quality and climate authority (centered on the Global Warming Solutions Act of 2006 (AB 32). The remainder of these note discusses these new requirements.

The Washington state Department of Ecology (Ecology) has just conducted its first auction of greenhouse gas (GHG) emission allowances, under the state’s Climate Commitment Act (or CCA) which establishes a comprehensive, market-based program to reduce carbon pollution and achieve greenhouse gas limits set in state law. The CCA was one of a package of climate-related laws passed in 2021, including the Clean Fuel Standard, and an expanded hydrofluorocarbons management program. The remainder of this note discusses CCA and the recent sale of GHG allowances.

On January 24, the US Environmental Protection Agency (EPA) published tighter standards for emissions from “heavy-duty” engines and vehicles, beginning with model year 2027. These new standards form the important first step toward implementation of EPA’s Clean Truck Plan, which has the ultimate goal of zero emissions from motor vehicles. The new standards are more than 80% stronger than current standards, which have been in place more than 20 years. These changes therefore continue the recent trend toward tighter federal emission standards for motor vehicles, including light-duty vehicles (automobiles and light trucks; I discussed the latest rules for light-duty vehicles, covering greenhouse gas (GHG) emissions for model years 2023-2026 HERE). The remainder of this note discusses the latest heavy-duty vehicle standards.

On November 10, the Biden Administration announced a proposal to amend the Federal Acquisition Regulation (FAR) to require “major federal suppliers” and “significant federal suppliers” to disclose their greenhouse gas (GHG) emissions and assessments of climate-related risks, and to set targets for GHG emission reductions. The rest of this note summarizes this proposal.

The US Environmental Protection Agency (EPA) continues to expand and refine environmental compliance requirements, including those related to greenhouse gas (GHG) emissions. In particular, facilities and organizations subject to EPA's mandatory GHG emission reporting rules should be preparing to submit reports covering calendar year 2021. The remainder of this note summarizes these requirements.

During the last decade, federal state authorities have sparred with themselves and with states over regulatory standards limiting greenhouse gas (GHG) emissions from automobiles. Nationally, the US Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) share authority over fleetwide and individual vehicle standards. EPA applies authority under the Clean Air act (CAA) and NHTSA applies authority under the Energy Policy and Conservation Act of 1975 (EPCA) including Corporate Average Fuel Economy (CAFÉ) standards. In addition, the state of California has unique CAA authority over vehicle emission; in recent years, Democratic presidential administrations generally produce federal-state cooperation, whereas Republican presidential administrations produce conflicts. (I’ve written about these issues several times, most recently HERE). True to this pattern, on December 21, 2021 EPA issued tighter vehicle emission rules covering Model Years (MY) 2023 through 2026, and NHTSA rescinded its (Trump era) rule preempting California’s stricter GHG emission standards. The remainder of this note discusses these new rules, within the context of ongoing rulemakings.

One of the longest running sub-national greenhouse gas (GHG) control efforts in the U.S. has been the Regional Greenhouse Gas Initiative (RGGI) program. RGGI provides a cap-and-trade program covering GHG emissions from targeted fossil fuel power plants in participating northeastern states. The program is preparing to add a new participating state in 2021 -- Virginia.

After nearly a decade of talking and planning, most of the northeast and middle Atlantic states (plus the District of Columbia) in the Transportation and Climate Initiative (TCI) have proposed a cap-and-trade program intended to reduce greenhouse gas (GHG) emissions from transportation. On October 1, TCI issued a “Framework for a Draft Regional Policy Proposal,” and on December 17 a formal “Draft Memorandum of Understanding (MOU)” that jurisdictions can sign to formalize their participation. If things go well, the formal program should begin in 2020.