Audit, Compliance and Risk Blog

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).

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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.” 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. To address these concerns, California has just enacted legislation to regulate Voluntary Cabon Market Disclosures and penalize noncompliance (Assembly Bill (AB) 1305, Gabriel). These requirements synthesize the most thorough voluntary disclosure programs, and are intended not only to protect California consumers but to codify disclosure standards. The rest of this note summarizes carbon offsets, and AB 1305 requirements.

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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.

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The federal Council on Environmental Quality (CEQ) has proposed to revise its regulations administering the National Environmental Policy Act (NEPA) of 1969. NEPA requires federal agencies to assess the environmental effects of their proposed actions, and incorporate this information into their decisions. Government-wide guidance is provided by the White House’s CEQ, established by NEPA and appointed by the President. CEQ issues formal regulations that agencies must follow, and guidance documents that provide additional advice.  CEQ also reviews agencies’ NEPA implementation programs, and publishes annual national Environmental Quality Reports.

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The federal government has taken another step in its car wars with California. Late in September the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) issued joint rules declaring NHTSA’s preemptive authority to set national standards covering greenhouse gas (GHG) emissions from petroleum-fueled vehicles and electric vehicles, and revoking a waiver from EPA that lets California set such standards.

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