Climate Change Law 101

Environmental and climate change law is extremely complex and quickly evolving, and jurisdictional lines often overlap. The analysis that follows has been greatly simplified to communicate essential information and highlight those areas of the law that impact health care facilities. You are encouraged to seek further sources of information.

Climate Change Law 101

As a general proposition, climate change laws are likely to have only an indirect effect on U.S. health care organizations through higher energy prices. The larger the facility, particularly those with significant power generation systems, the more likely it will be directly regulated. The text that follows does not explore this issue in detail, but larger facilities and facilities with larger power plants are encouraged to understand the current trajectory of these laws.

International Law

In the United States, when Congress ratifies an international agreement that agreement becomes the law of the land. Currently, three basic international documents drive climate change law in the United States: the Montreal Protocol, the U.N. Framework Convention on Climate Change, and the Kyoto Protocol. These laws affect health care facilities indirectly through their expression in U.S. laws.

Montreal Protocol
President Ronald Reagan signed the Montreal Protocol in 1988, and Congress enacted Title VI of the Clean Air Act (CAA) in 1990 to carry out the terms of the agreement. The protocol has been amended four times, and the United States has met or exceeded all of its obligations to date under this treaty. At present, this agreement primarily affects health care facilities through the CAA and its effect on fire protection systems (i.e., halon) and refrigeration fluids. This treaty was widely adopted and adhered to, showing that it is possible for countries to come together to implement a far-reaching climate agreement. Because nitrous oxide, one of the six Kyoto gases (see Kyoto Protocol below), is now the most significant contributor to ozone depletion, the international community is considering adding regulation of nitrous oxide to the Montreal Protocol.

U.N. Framework Convention on Climate Change (UNFCCC)
In 1992 the United States, along with 192 other countries, ratified the U.N. Framework Convention on Climate Change, which went into effect in 1994. The convention sets an overall framework in which the signatory countries work together to address climate change. It is the foundation of the talks that have followed. Under the terms of this agreement, the United States must:

  • Gather and share information on greenhouse gas emissions, national policies, and best practices.
  • Launch national strategies for addressing greenhouse gas emissions, including the provision of financial and technological support to developing countries.
  • Cooperate in preparing for changes required to adapt to the effects of climate change.

Kyoto Protocol
The Kyoto Protocol is an international agreement linked to the UNFCCC. The major feature of the Kyoto Protocol is the binding greenhouse gas emissions reduction targets that it sets for 37 industrialized countries and the European community. These targets would amount to an average of 5 percent below 1990 levels during the five-year period 2008-2012.

The Kyoto Protocol went into force in February 2005.

Under the initial treaty, countries must meet their targets through national measures or market-based strategies. The market-based mechanisms include clean development, joint implementation, and emissions trading. The United States has not signed the Kyoto Protocol and, as a result, cannot officially participate in any of the international market-based mechanisms.

Doha Amendment to the Kyoto Protocol
On December 8, 2012, the Doha Amendment to the Kyoto Protocol was adopted. The amendment updates the Kyoto Protocol and revises emissions reduction commitment to reduce emissions by 18 percent below 1990 levels in the eight-year period from 2013 to 2020.

Copenhagen Meeting
The parties to the UNFCCC met in Copenhagen in 2009 to discuss what regulations needed to take effect after January 1, 2010. At that meeting, the parties agreed to the following:

  • Cut emissions so as to limit global warming to 2 degrees Celsius above pre-industrial levels.
  • Require explicit, quantitative pollution reduction commitments across the world.
  • Set up an emissions verification system.
  • Reduce deforestation.
  • Push for all new public buildings to be net zero energy.
  • Introduce a carbon trading system for buildings.

On January 28, 2010, President Obama declared the U.S. government's intention to reduce overall national emissions by 17 percent against 2005 emissions, or about 4 percent below 1990 levels, in accordance with the Copenhagen agreements. So far, no comprehensive plan for achieving these goals has been developed.

Other International Agreements
The difficulty in reaching a worldwide agreement is that the needs of each country vary so widely and in ways that often conflict. Balancing the needs of underdeveloped and developed nations in a comprehensive plan is a delicate and difficult matter, and unfairness is often the perceived byproduct. Adding to the difficulty, previous climate talks were largely driven by Europeans, but China and the United States together represent more than 50 percent of total world emissions. As a result, many people watching these developments predict that instead of worldwide agreements, it is far more likely that we will see agreements between groups of nations. These agreements may start the United States toward an emissions reduction scheme that could affect U.S. health care organizations.

One other way international agreements might coalesce is at a subnational level. Several parties, notably the state of California, pushed for sub-national agreements during the Copenhagen meeting. Such agreements could, for example, allow states like California with their own cap and trade systems to link with other countries in order to use market forces to allow least expensive reductions in emissions.

One final idea is that there are two ways to effect climate-changing behaviors. The first is to be direct and prescriptive (i.e., you will do this or you will not do that). The second way is economic: we can gradually increase the cost of energy generated by fossil fuels and/or decrease the cost of energy generated from renewable sources. It is most likely that all policy means will be used, over time, in this area.

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United States - National Law

What is Cap and Trade?
Cap and trade is a market-based mechanism intended to use the power of markets to reduce emissions at the lowest overall cost. It works by putting a cap on everyone's emissions, which is then gradually lowered. When the cap becomes lower than the emissions a company actually emits, that company will have to invest in emission reductions. It can either reduce its own emissions, or it can pay someone else to reduce theirs. In this way, cap and trade facilitates achievement of the emissions goal without the need for excessive spending. Cap and trade is a system originally designed by the United States that has been successfully used to reduce pollutants that cause acid rain.

Congressional Legislation
Congress has the power to pass laws regulating greenhouse gases, make tax policy, and set standards for clean air, water, and energy. In so doing, it has the greatest ability to have major impacts on health care facilities of any U.S. government entity. In 2009 the House of Representatives passed H.R. 2454, The American Clean Energy and Security Act, which features a national cap and trade system along with many other provisions with more direct effects on health care organizations. However, although this is promising, real action cannot occur without consensus between the Senate and the House.

Executive Orders
The President has the power to issue executive orders to help officers and agencies of the Executive Branch manage operations within the federal government. Executive orders have the full force of law since presidents normally issue them as the result of Congress delegating a discretionary power to the Executive.

President Obama has issued several executive orders directing his administration to carry out certain activities. On January 29, 2010, he issued an executive order requiring all federal buildings to reduce their emissions 28 percent by 2020.

Administrative Law
The President and Executive agencies are responsible for carrying out the programs of the Congress. Particularly important in this area are the Department of Energy (DOE) and the Environmental Protection Agency (EPA).

The administrative agencies of the Executive Branch also are charged with implementing various national laws. The most well-known of these regulatory actions are promulgated by the Environmental Protection Agency, acting under the authority of the Clean Air Act. The CAA consists of many parts with diverse requirements, but the most well-known and directly relevant has to do with airborne emissions of greenhouse gases.

Under CAA, the EPA is required to set limits on how much of a pollutant can be present in any location. The law requires states to enforce these limits through creation of state implementation plans (SIPs). The states then enforce these regulations inside their borders. This approach has led to disparate requirements in different states, all under the overall federal framework.

Under the CAA, the EPA must assess various emissions to determine whether they endanger human health. In 2007 the U.S. Supreme Court ordered the EPA administrator to determine whether there is sufficient evidence to support the proposition that emissions of the six greenhouse gases (GHGs) named in the Kyoto Protocol “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.” As a result, the EPA issued a “proposed endangerment finding” and a related “cause or contribute finding” on April 17, 2009. After a 60-day public review period that engendered 380,000 comments, the EPA concluded that the increasing concentration of GHGs does threaten the public health and welfare. This finding gives the EPA the authority to implement GHG regulations. The EPA administrator has indicated she would rather have Congress implement legislation to regulate GHGs, but that, in the absence of such legislation, she intends to issue the regulations as required by the CAA.

One EPA regulation directly affects at least some medical centers. On October 9, 2009, the EPA issued its final regulations requiring reporting for entities that emit more than 25,000 tons of CO2 equivalents or CO2e (a CO2e is an amount of another greenhouse gas that has the same emissions as a ton of CO2). The intent of the rule is to collect accurate and timely emissions data to inform future policy decisions.

Other agencies also influence emissions issues that affect health care facilities. One interesting example is the Securities and Exchange Commission (SEC). This agency is responsible for overseeing accurate reporting of financial information for publicly traded companies. The SEC recently ruled that companies must disclose information on potential climate-related lawsuits, risk for business opportunities, and risk of legislation. In addition, the DOE has created numerous programs, primarily educational in nature, to help health care facilities green themselves.

Judicial Action
The Federal Judiciary has two basic roles in creating climate change law. First, the courts compel other government bodies to carry out their duties appropriately, as discussed briefly above in the context of the EPA administration of the CAA. An emerging area of environmental law is dealing with intranational disputes. For example, the U.S. Court of Appeals for the Second Circuit recently held that states, land trusts, and cities may bring public nuisance claims and seek remedy against emitters of GHGs. This case has been sent back to the trial court for trial and has yet to be fully litigated. The upshot, though, is that even absent federal action to limit emissions, states will be able to seek redress from polluters. If the courts finally find that CO2 emissions are a source of nuisance, it will likely pose such a danger to emitters that they will seek federal regulation simply to clarify the affirmative rules and to forestall this kind of threat.

It is unlikely that small health care organizations will be subject to judicial action regarding climate change. It is much more likely that a health care organization with a power generation plant will be subject to air quality suits from neighbors.

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United States - Regional Law

In the absence of clear federal mandates, several regions of multiple states have begun to band together to create climate action plans. Such regional agreements tend to have two basic rationales.

First, they often pursue implementation of cap and trade systems on a subnational level in advance of the federal government implementing a national system. The logical benefit of regional agreements is that if, for example, California has already implemented a high measure of energy efficiency in its buildings, any further increases in efficiency will likely cost most per unit than efforts to reduce emissions in neighboring states that have not already invested for years in energy-efficient technologies. Therefore, California can reduce emissions (which it wants to do) and spend less money by getting their neighbors to make changes instead. This is another use of market-based mechanisms to achieve a desired goal at the lowest overall cost.

Second, these regions are trying to influence eventual federal legislation by proposing various models of emissions regulation that are most acceptable to them.

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United States - State Law

State governments presently regulate GHG emissions in a wide range of forms. Three prominent methods are utility regulation, emissions measurement and limits, and land-use planning restrictions.

States have primary regulatory authority over the energy generation systems within their borders. This power creates tremendous opportunity to influence GHG emissions, as the bulk of such emissions derive from the generation of energy produced by the combustion of fossil fuels. Most states work to keep energy prices low; low-energy prices are generally recognized as being a key engine of economic well-being for a geographical region. Because combustion of fossil fuels is cheap, states that attempt to reduce GHG emissions will be forced to drive up the cost of energy. There are exceptions that are increasingly being seen:

  • Offering grants, rebates, and even tax incentives for reducing energy demand and/or installing renewable energy systems.
  • Feed-in tariffs require a utility to purchase energy produced by renewable energy sources at a fixed rate in order to allow these investments to make financial sense.
  • Rate structures can be designed to encourage use of various kinds of renewable energy or other efficiency measures. For example, the price differential between natural gas and electricity can be manipulated to make efficient co-generation systems economically feasible.
  • Renewable Portfolio Standards (RPS) require utilities to generate a certain portion of their energy using renewable sources. Obviously, if doing this were the cheaper option, the utility would do this without regulation. So, it follows that the implementation of RPS will likely lead to higher energy prices from the utilities as they seek to recover their costs.
  • Decoupling is a method for setting rates that permits the utility to recapture its operating costs, but allows a profit only when the utility partners with its customers to reduce overall demand. Traditional energy rates are structured so the utility earns higher profits with every unit of energy sold, meaning there is an incentive to encourage the use of more power to make more money. Decoupling reverses this incentive, making it profitable and thus desirable to reduce energy consumption.

Other state laws are beginning to require inventory, reporting, and reduction of various GHGs. Best known is probably California's Global Warming Solutions Act of 2006, but other states have equally interesting and influential laws. In particular, both Washington and West Virginia require emission inventories for facilities emitting more than 10,000 CO2e. This limit is very likely to affect many health care facilities in those states. Health care organizations need to know their GHG emission levels so they can keep a better eye on their own risk.

A final broad area of state law aimed at GHG reductions is related to land use planning. The front line for this issue is in California, where the legislature requires land use planning permits for new construction to include an estimate of the new building's GHG emissions and to propose acceptable mitigation measures. The regulations surrounding this issue are far from clear at this point, but this requirement will have a tremendous impact on the design of buildings and where they are sited, most often at a time when the project is very ill-defined. Other states and the federal government are watching the California experiment with a view to following its lead on this issue, as this is an important way to reduce emissions.

States also have the duty to enforce the CAA within their borders, as described above.

Because health care facilities will be affected by many of these regulations, health care organizations would do well to at least be aware of these issues, particularly those of their state.

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United States - Local Law

Below the state level, numerous jurisdictions have regulatory power over various climate change issues. The massive number of these jurisdictions makes it impossible to catalog them all here, but three issues in particular stand out.

First, it is usually the local authority that has jurisdiction determining relevant building codes (although for hospitals, it is more often the state's responsibility). Increasing numbers of jurisdictions now require LEED® certification. Many others require different forms of environmental performance. California has recently enacted the first statewide green buildings code, and Massachusetts requires compliance with LEED or the Green Guide for Healthcare to obtain a Determination of Need. This trend is gaining momentum in other states.

Second, some jurisdictions are issuing their own carbon taxes. In 2006 Boulder, Colo., created the first carbon tax for a city. The Air Quality District in the San Francisco Bay area imposed a similar tax under its CAA powers, discussed above. To date, such taxes have remained rare because of the political and economic climate, but they are being increasingly eyed by cash-strapped governments as sources of revenue. Other proposals include lowering payroll taxes equal to the increased revenue from carbon, so as to keep them revenue-neutral.

Finally, the variety of emission requirements created by various air quality management districts is increasingly upping the climate ante. Aside from the San Francisco Bay area carbon tax mentioned above, other California Air Quality Districts are implementing a range of climate change solutions. The South Coast Air Quality Management District (SCAQMD) is perhaps the strictest of them, particularly its New Source Review (NSR) program.

The NSR is required under both federal and state statutes for new and modified sources located in areas that do not meet the CAA standards for healthy air ("non-attainment" areas). In a local form of cap and trade, the SCAQMD plan requires anyone who wants to increase emissions to apply Best Available Control Technology (equivalent to the federal Lowest Achievable Emission Rate). In addition, facilities with a net increase in emissions are required to offset the increase by using Emission Reduction Credits (ERCs). The SCAQMD regulations dictate the application, eligibility, registration, use, and transfer of ERCs, and even banks ERCs. Some facilities also need public notice and modeling analysis to determine the downwind impact.

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Non-Governmental Organizations (NGOs)

There are innumerable nonprofits and other organizations with quasi-regulatory sets of rules that attempt to mitigate climate change and that can impact health care facilities. Among them are:

  • Building Code Organizations: Various organizations promulgate model building codes for adoption by local authorities having jurisdiction. Two codes relevant to the subject of this website are the International Code Council's International Green Construction Code (IGCC) and the proposed “Design, Construction and Operation of Sustainable High Performance Health Care Facilities,” under development as proposed ASHRAE/ASHE standard 189.3.
  • Other organizations offer rating systems that create rules by which a building must perform to be awarded a level of efficiency.
  • Voluntary carbon markets create opportunities to monetize reductions for those who establish their emissions baseline and then reduce it. Reuters recently reported that demand is picking up in the voluntary carbon credit market, particularly from the United States.
  • The American College and University Presidents Climate Commitment (ACUPCC) is a voluntary program undertaken, so far, by 665 universities around the country. Many of these organizations, which have committed to becoming carbon neutral by 2030, have healthcare facilities on their campuses. If nothing else, they herald a moral call to action by the healthcare community.
  • Various companies now require improved environmental performance from their downstream supply chain. Notably, Wal-Mart has created its own Sustainability Index, which it imposes on suppliers, requiring not only good but continuously improving environmental performance.
  • Members of the press frequently rate and report their own assessments of organizational “green-ness,” which promotes healthy competition within the health care community.

The sources, extent, and dimensions of climate change law are extensive, diverse, overlapping, and rapidly evolving. While few of these developments seek to impact health care facilities directly, almost all will impact health care organizations at least indirectly. Health care engineers and other facility personnel must stay on top of these developments and be prepared to act accordingly.

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