A district court has ruled that federal law does not preempt an indirect source rule that targets emissions associated with warehouses in Southern California.

By Joshua Bledsoe, Nick Cox, and Jennifer Garlock

On December 14, 2023, a US federal judge rejected claims that federal law preempts the South Coast Air Quality Management District’s (SCAQMD or the District) adoption of Rule 2305 (Rule), upholding the first-in-the-nation Rule[1] that regulates trucking emissions from warehouses.

Rule 2305 is the Warehouse Indirect Source Rule (ISR) — Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program. As described in this Latham blog post, the WAIRE Program applies to certain warehouses in the South Coast Air Basin and imposes a compliance obligation based on the number of truck visits to that warehouse per year. Warehouse operators can meet that obligation by taking any number of emissions-reducing actions, either from the “WAIRE Menu” or through a custom plan approved by the District.

Goods imported into the UK from countries with a lower or no carbon price will face a levy by 2027.

By Paul A. Davies, Michael D. Green, and James Bee

On 18 December 2023, the UK government announced a proposal for a new carbon border adjustment mechanism (UK CBAM). The announcement follows extensive consultation earlier this year on possible measures to mitigate carbon leakage risks and aims to support the UK’s decarbonisation efforts.

The UK has made a number of decarbonisation commitments including reaching net zero by 2050. These commitments to decarbonise can be undermined by “carbon leakage”, in which production of goods and associated emissions move from a jurisdiction with more ambitious climate policies (which add costs to carbon-intensive processes) to another jurisdiction with less ambitious policies, resulting in an overall negative impact on the carbon intensity of the processes/goods themselves. The UK CBAM (or other form of carbon tax) seeks to address this issue by aiming to put a fair price on the carbon emitted during the production of certain carbon-intensive goods entering the UK.

The new rules would oblige companies to integrate their human rights and environmental impact into their management systems.

By Paul A. Davies, Michael D. Green, and James Bee

On December 14, 2023, the European Council (Council) and European Parliament (Parliament) reached provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD). The agreement follows an extensive negotiation processes, which began in June 2023, after the European Commission had initially proposed the CSDDD in February 2022.

The CSDDD’s key aim is to enhance the protection of the environment and human rights globally. The CSDDD as proposed will set obligations for companies regarding the actual and potential adverse impacts of their own operations, those of their subsidiaries, and those carried out by business partners, described as the “business chain of activities.” The CSDDD would also establish a requirement for large EU companies to adopt a plan to ensure that their business model and strategy are compatible with the Paris Agreement, i.e., including concrete targets and measures in line with limiting global warming to 1.5 °C.

The proposed CSDDD would establish rules on penalties and civil liability for infringements (although these will ultimately be set by Member States).

The Supervisory Body published the Methodology Guidance and the Removal Guidance to be presented for discussion in COP28.

By Jean-Philippe Brisson, Paul A. Davies, Joshua T. Bledsoe, Michael Dreibelbis, Qingyi Pan, and Brett Frazer*

After two years of discussion, the Supervisory Body (SB) responsible for determining the guidelines for Article 6.4 of the Paris Agreement published two sets of recommendations, which will be presented for consideration and adoption by the Parties to the Paris Agreement (CMA) at the 28th annual Conference of Parties (COP28).

The first recommendation came on November 16, 2023, when the SB published guidelines on the requirements for the development and assessment of Article 6.4 mechanism methodologies (the Methodology Guidance).[i] The second recommendation followed the next day, when the SB published guidelines on activities involving removals under the Article 6.4 mechanism (the Removal Guidance).[ii]