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This Month's Issue of ELR

Volume 50, Issue 8 — August 2020

Comment(s)

Analysis of Environmental Law Scholarship 2018-2019

by Courtney A. Tibbetts, Linda K. Breggin, Elizabeth A. Holden, and Michael P. Vandenbergh

This article highlights the results of the Environmental Law and Policy Annual Review (ELPAR) article selection process and reports on the environmental legal scholarship for the 2018-2019 academic year, including the number of environmental law articles published in general law reviews versus environmental law journals, and the topics covered in the articles. It also presents the top 20 articles that met ELPAR’s criteria of persuasiveness, impact, feasibility, and creativity, from which five articles were selected to re-publish in shortened form, some of them with commentaries from leading practitioners and policymakers. 

Too Much Risk, Too Little Reward

by Kim Smaczniak

The Federal Energy Regulatory Commission (FERC) is a little-known and too-often ignored federal authority with the power to block or rapidly accelerate the transition to a clean energy future, and is thus indispensable to addressing climate change. Institute for Policy Integrity scholars Bethany A. Davis Noll and Burcin Unel are to be applauded for bringing into focus a regulatory space that is essential to efforts to decarbonize the power sector. Unfortunately, their article focuses exclusively on a silver bullet approach that poses far too much risk for too little reward. This Comment offers three points of critique to the authors’ argument that FERC possesses authority under the Federal Power Act to impose a carbon price in the same manner that it has the power to address other market failures.

Sustainability Risk is Investment Risk

by Sally R.K. Fisk and Nikki Adame-Winningham

In her Making Sustainability Disclosures Sustainable article, Prof. Jill E. Fisch proposes creating a Sustainability Discussion and Analysis (SD&A) section to expressly obligate reporting companies to disclose their three most significant sustainability issues in annual reports to the U.S. Securities and Exchange Commission (SEC). Professor Fisch posits that the proposed SD&A, as a workable first step in mandating sustainability disclosures, would provide comparability and reliability to reports that are currently difficult to compare and which may vary in reliability. Professor Fisch correctly recognizes the challenges of both reporting on sustainability issues from the issuer perspective, as well as using such disclosures from the investor perspective. But what if the that obligation to adequately disclose sustainability issues already exists within extant SEC reporting requirements? This Comment acknowledges the need for accuracy, reliability, and comparability in sustainability disclosures and agrees that piecemeal regulation of individual sustainability issues is inefficient and undesirable, but is unconvinced that new mandatory disclosure requirements—even principle-based requirements—are necessary to achieve those goals.

Making Mandatory Sustainability Disclosure a Reality

by Rick A. Fleming and Alexandra M. Ledbetter

As we have come to expect from Prof. Jill Fisch, her recent article entitled Making Sustainability Disclosure Sustainable introduces a novel and thoughtful policy proposal on a matter of critical importance to investors. In short, she suggests a new sustainability discussion and analysis (SD&A) section within the corporate annual report. In their SD&A, companies would be required to identify and explain the three sustainability issues most significant to their operations. She describes her proposal as a “modest starting point” and “first step” for sustainability disclosure. The appeal of Professor Fisch’s SD&A proposal is that it could get more companies to speak to ESG topics in a way that is meaningful to investors while accommodating the prerogative of boards of directors and executives to manage the business as they see fit. It also allows for a plurality of views on the significance of sustainability topics. That said, a limitation of the SD&A proposal is that it might not get a company to speak directly to a particular issue that is the most significant to investors as opposed to management. An SD&A disclosure requirement could also be difficult to enforce because, as a practical matter, the SEC might be disinclined to challenge a company’s subjective determination as to the most significant issues if that determination were facially plausible. 

The Need for SEC Rules on ESG Risk Disclosure

by Veena Ramani and Jim Coburn

Sustainability disclosure is at an impasse. Today’s environmental, social and governance (ESG) disclosure is not delivering the decision-useful information financial markets need, yet the U.S. Securities and Exchange Commission (SEC) so far has not taken steps to formalize sustainability disclosure. Prof. Jill E. Fisch proposes an innovative and constructive approach to breaking this stalemate by implementing an SEC mandate that would require public companies to provide a sustainability disclosure and analysis (SD&A) section in their annual reports where they disclose the three sustainability issues most significant to their operations. In modeling the SD&A on existing Management’s Discussion and Analysis (MD&A) segments in financial filings, Professor Fisch favors adopting the MD&A’s principles-based approach, requiring SEC to issue guidance on identifying sustainability issues that are likely to be material to investors.

Principles Plus SASB Standards

by Thomas L. Riesenberg

Prof. Jill E. Fisch has authored an excellent piece about sustainability disclosure. Her proposal to mandate a new Sustainability Disclosure and Analysis section of SEC filings is an interesting idea for improving the disclosures that investors currently receive regarding such important matters as climate change, human capital, and a range of other issues. She also proposes that company management certify as to the accuracy of these disclosures, another step toward improved disclosure. But it is likely the case that without significant tweaks, her suggestion would not improve the consistency and comparability of disclosures. This is because her proposal is principles-based, that is, issuers would decide for themselves the three most significant sustainability issues and then decide what to disclose about these issues.

Energy Exactions: Supplementing the Local and State Energy Policy Toolkit

by Deron Lovaas

The authors of Energy Exactions make a compelling case for the use of energy exactions as a local policy tool that could complement important state policies. However, it must be designed carefully and tailored to different land uses and locations so it effectively supplements state and utility policy and does not become a barrier to housing affordability and enabler of suburban sprawl.

Deregulation Using Stealth “Science” Strategies [ABSTRACT]

by Thomas O. McGarity and Wendy E. Wagner

In this Article, the authors explore the “stealth” use of science by the Executive Branch to advance deregulation and highlight the limited, existing legal and institutional constraints in place to discipline and discourage these practices. Political appointees have employed dozens of strategies over the years, in both Democratic and Republican administrations, to manipulate science in ends-oriented ways that advance the goal of deregulation. Despite this bald manipulation of science, however, the officials frequently present these strategies as necessary to bring “sound science” to bear on regulatory decisions. To begin to address this problem, it is important to reconceptualize how the administrative state addresses science-intensive decisions. Rather than allow agencies and the White House to operate as a cohesive unit, institutional bounds should be drawn around the scientific expertise lodged within the agencies. We propose that the background scientific work prepared by agency staff should be firewalled from the evaluative, policymaking input of the remaining officials, including politically appointed officials, in the agency.

Regulation and Distribution [ABSTRACT]

by Richard L. Revesz

This Article tackles a question that has vexed the administrative state for the last half-century: how to seriously take account of the distributional consequences of regulation. The academic literature has largely accepted the view that distributional concerns should be moved out of the regulatory domain and into Congress’ tax policy portfolio. In doing so, it has overlooked the fact that tax policy is ill-suited to provide compensation for significant environmental, health, and safety harms. And the congressional gridlock that has bedeviled us for several decades makes this enterprise even more of a non-starter.

The Impact of Citizen Environmental Science in the United States [ABSTRACT]

by George Wyeth, Lee C. Paddock, Alison Parker, Robert L. Glicksman, and Jecoliah Williams

An increasingly sophisticated public, rapid changes in monitoring technology, the ability to process large volumes of data, and social media are increasing the capacity for members of the public and advocacy groups to gather, interpret, and exchange environmental data. This development has the potential to alter the government-centric approach to environmental governance; however, citizen science has had a mixed record in influencing government decisions and actions. This Article reviews the rapid changes that are going on in the field of citizen science, examines what makes citizen science initiatives impactful, as well as the barriers to greater impact, and specifically recommends that: (1) agencies take specific steps to encourage the use of citizen science; (2) citizen scientists learn from others’ successes; (3) air programs use citizen-generated data to address pollution in low-income and minority communities; (4) unnecessary legal barriers be removed; and (5) a centralized process for the validation of emerging technologies be implemented.

Articles

Markets, Externalities, and the Federal Power Act: The Federal Energy Regulatory Commission's Authority to Price Carbon Dioxide Emissions

by Bethany A. Davis Noll and Burcin Unel

Electricity generation in the United States is one of the leading sources of greenhouse gas emissions, which cause severe climate change-related harms. Despite the severity of those harms, the Federal Energy Regulatory Commission (FERC), which regulates the interstate transmission and wholesale electricity markets, has avoided addressing the issue. FERC has historically shied away from environmental considerations in ratemaking. But carbon dioxide (CO2) emissions are not just an environmental consideration; they are a prime example of the market failure known as a negative “externality.” This Article provides a comprehensive economic framework to show that addressing the CO2 externality through a carbon price falls within FERC’s authority to ensure an efficient market.

Making Sustainability Disclosure Sustainable

by Jill E. Fisch

The extent to which corporations should incorporate sustainability objectives into their operational decisionmaking is highly contested, as is the relationship between societal impact and economic value. At the same time, issuers are incorporating sustainability considerations into their business operations in response both to investor demands and to the claim that sustainable business practices lead to improved economic performance. Although the focus on increasing sustainability disclosure is accelerating both in the United States and globally, investors continue to report dissatisfaction with existing disclosures. This Article proposes a solution—mandating a Sustainability Discussion and Analysis (SD&A) as part of an issuer’s annual report to shareholders. The SD&A would be modeled after existing Management Discussion and Analysis and Compensation Discussion and Analysis and would reflect a similar principles based approach to those provisions.

Roads to Nowhere in Four States: State and Local Governments in the Atlantic Southeast Facing Sea-Level Rise

by Shana Campbell Jones, Thomas Ruppert, Erin L. Deady, Heather Payne, J. Scott Pippin, Ling-Yee Huang, and Jason M. Evans

Local governments in the coastal zone play a key role in adapting to the changing climate. This Article presents an analysis of coastal communities in four states, Florida, Georgia, South Carolina, and North Carolina, and provides three proposals for local governments that take action to address climate impacts: (1) redefining the scope of the duties that define reasonable conduct for governments making decisions about public infrastructure in an era of rising sea levels; (2) defining the scope of sovereign immunity protections in a way that encourages innovative and creative decisionmaking in an era of climate uncertainty; and (3) calling for consistent adaptation duties and authorities at the state level as a crucial first step in mending the legal-standards patchwork that currently exists at the state, county, and city levels in our four-state study area.

Energy Exactions

by Jim Rossi and Christopher Serkin

New residential and commercial developments often create costs in the form of congestion and burdens on municipal infrastructure. Citizens typically pay for infrastructure expansion associated with growth through their property taxes, but local governments sometimes use cost-shifting tools to force developers to pay for—or provide—new infrastructure themselves. These tools are forms of “exactions”—demands levied on developers to force them to pay for the burdens new projects impose. But local governments often ignore an additional cost: the burdens growth presents for energy infrastructure. This Article argues that energy exactions are normatively desirable, evaluates how they can help improve land use and energy regulation, and assesses the legal implications and limits of their use. It details two different forms of energy exactions: one that imposes pre-set prices on anticipated kilowatt energy demand and one that is focused on how the timing of a development affects energy infrastructure development (often called “concurrency”).

In the Courts

Massachusetts and San Mateo climate cases remanded to state court.

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In the Agencies

EPA proposes cost-benefit analysis procedure for CAA rules.

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In the Congress

Congress passes Great American Outdoors Act to fund public lands.

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In the States

Vermont proposed to adopt regulations for lead control.

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