Enclosure

> **ELECTRIC POWER INDUSTRY CLIMATE INITIATIVE COMMENTS ON LEGAL
> AUTHORITY QUESTIONS**

**I. [Background]{.underline}**

**A. [The President's Directives]{.underline}**

On February 14, 2002, in summarizing a "new approach to the challenge of
global climate change," the President "directed" the Secretary of Energy
first to "propose improvements to the current voluntary emission
reduction registration program under section 1605(b) of the 1992 Energy
Policy Act" (EPAct), and second to "recommend reforms to ensure that
businesses and individuals that register reductions are not penalized
under a future climate policy, and to give transferable credits to
companies that can show real emissions reductions."[^1] The President
elaborated on the second directive by emphasizing that the registry
"will encourage participation by removing the risk that these actions"
of reducing emissions through voluntary efforts "will be penalized or
inaction rewarded by future climate policy."

**B. [Raising the So-Called "Legal Authority" Issue]{.underline}**

The February 14 "New Approach" document, under the heading "**Background
on Current Registry** **Program**," also raised the possibility of legal
authority issues in achieving "reforms." In doing so, the document said
there were a "number of proposals" in Congress in the past year "to
reform the existing registry --- or create a new registry" and that the
"Administration will fully explore the extent to which the existing
authority under the Energy Policy Act is adequate to achieve these
reforms" (Tab 2, at 9-10). No specific reform was mentioned \-- such as
protection against future policy actions, transferable credits or other
matters listed in the four-agency letter \-- as possibly lacking
authority. In fact, the President's document merely states that in
revising the section 1605 guidelines, the Administration will consider,
as is proper, any issues or questions of legal authority in that
process.

In addition, it is important to emphasize that the President's second
directive distinguished \-- through use of a comma, the word "and" and a
second clause \-- between the issue of protecting volunteers from the
vagaries of possible future changes in climate policy brought about by
the Executive or the Legislative Branches (or both), and the issue of
transferable credits for such volunteers. However, the July 8, 2002,
letter to the President by the Secretary of Energy and the heads of
three other agencies appears to blur that difference by paraphrasing the
directive, deleting the comma and, most importantly, by making no
mention in its recommendations of the baseline protection issue, while
including two recommendations about transferable credits. The letter
also includes a placeholder for credit for past actions. Nevertheless,
we assume that the blurring was inadvertent and that these agencies will
follow the President's directive in full.[^2]

> **C. [Legal Authority Questions Raised by Some Commenters in Response
> to DOE's Notice of Inquiry]{.underline}**

In its May 6, 2002, Notice of Inquiry (NOI), the Department of Energy
(DOE) also did not identify any particular "reforms" that raised issues
of "authority" under EPAct (67 *Fed. Reg.* 30370). However, the NOI
noted that pursuit of the "Presidential directives poses significant
policy, technical, and legal questions." The notice identified some of
the policy and technical questions, but was silent on what might be the
"legal" authority questions and did not expressly ask for comments on
them. Nevertheless, one commenter, the National Resources Defense
Council (NRDC), together with other environmental organizations,
addressed this matter in their June 5, 2002, NOI comments to DOE. First,
they quoted the President's directive on penalty protection and
transferable credits, saying it "appears to be a request for legislative
recommendations," and then contended that the DOE should recommend to
the President "new legislation . . .to place emissions under a cap as
early as is feasible," rather than "legislate rules for rewarding early
action in a policy vacuum." They went on to say that the directive
"mixes together two very different issues with quite different
solutions: penalty protection and credit for early action," saying,
unlike the four-agency letter, that these are "distinct issues."

As to the first issue, they contend in a footnote that neither the
Administration nor Congress can "resolve this issue short of full cap
and trade legislation," because neither can bind a "future Congress."
However, they did not expressly suggest an absence of legal authority.
Regarding the credits issue, they contend that it is a "much more
controversial proposition" and that "the administration has no legal
authority to recognize or guarantee such credits under existing law."

II\. **Summary of EPICI Supplemental Comments**

One purpose of these EPICI supplemental NOI comments is to respond, in
support of the President's directives, to the aforementioned comments of
the NRDC regarding DOE's legal authority. Another is to agree in part
with the NRDC and emphasize, as the President did on February 14, that
these two very important and "distinct issues" of baseline protection
and transferable credits must be addressed by the DOE in revising the
guidelines. EPICI's comments also reiterate the importance of the
revised guidelines continuing to give clear recognition to reductions,
avoidances and projects reported in good faith by entities and persons
under the existing 1605 guidelines and the policies of the previous
Administration.

As to DOE's legal authority, EPICI concludes that there are no known
legal obstacles under existing law to the DOE addressing, as part of its
revision of the section 1605 guidelines, both the issue of not
penalizing volunteers for taking early action (often at considerable
cost to them in resources) to reduce, avoid or sequester greenhouse gas
(ghg) emissions in furtherance of the Framework Convention on Climate
Change (FCCC) and the objectives of the climate change provisions of
EPAct, and the issue of transferable credits. In reaching this
conclusion, EPICI submits that:

-   The legislative history of EPAct shows that the House-Senate
    conferees in 1992 streamlined section 1605 by transforming it from a
    combined voluntary/rulemaking program to a voluntary/guidelines
    program and expanded it to cover reporting of emissions as well as
    reductions.

-   The provisions of the DOE Organization Act, EPAct section 1605 and
    the FCCC provide a sound legal basis to address these two distinct
    issues in revising the guidelines as the President has directed.

-   There is no statutory or other prohibition in law against addressing
    these distinct issues in revising the guidelines.

-   "Baseline reporting" is more of a definitional or technical matter,
    while "baseline protection" is a policy matter.

-   Existing law \-- which includes the DOE Organization Act, EPAct
    section 1605 and the FCCC \-- provides a more than adequate basis
    for formulating and adopting a policy of baseline protection through
    recognition or certification of reported reductions, without binding
    future Congresses or Presidents or resorting to onerous cap and
    trade approaches.

-   Such a baseline protection policy would remove a significant
    disincentive for volunteers.

-   EPICI knows of no Presidential plans (in issuing the February 14
    directives) to attempt to bind any future President or Congress, and
    EPICI certainly is not suggesting such attempts.

-   An NRDC contention that in 1992 Congress rejected proposals for
    credits on reported reductions is not supported by the legislative
    history of section 1605.

-   DOE has ample authority to provide for such credits without running
    afoul of the Supreme Court's 1996 holdings in the *Winstar* case,
    notwithstanding the NRDC claim that that decision acts as a bar to
    such credits.

**III. [Discussion]{.underline}**

**A. [Legislative History of Section 1605(b) of EPAct]{.underline}**

In spring 1991, the then Senate Energy Committee reported out bipartisan
and comprehensive National Energy legislation (S. 1220) based on the
urging of the Bush I Administration. It included three very contentious
issues: CAFE, ANWR and a WEPCO "fix." No climate provisions were
included in S. 1220. However, after several months in which then Sen.
Johnston attempted to convince the Senate of the merits of S. 1220, a
motion to proceed failed on the Senate floor on November 1, 1991.
Subsequently, a new Senate energy bill, S. 2166, was considered in the
Senate, which did not include the above items. It passed the Senate on
February 19, 1992, and was sent to the House.

Early in 1991, the House began, also at the urging of the Bush I
Administration, development of its version of an energy bill, H.R. 776,
at the Energy Subcommittee level. It was reported by the House Energy
and Commerce Committee on March 30, 1992 (H.R. Rep. 102-474, Pt. 1).
From March 30 to May 5, 1992, eight other House committees filed reports
amending H.R. 776, as reported by the Energy and Commerce Committee. The
House reconciled these and passed the bill on May 27, 1992, with a
climate title, including a section 1605, without ever considering the
Senate-passed bill, S. 2166.[^3] However, that did not result in a
stalemate. Instead the Senate took up H.R. 776, substituted S. 2166 and
on July 30, 1992, sent the amended version back to the House and asked
for a conference. Like S. 1220, S. 2166 also did not include a climate
title. The House agreed to a conference on August 12, 1992.[^4]

In the subsequent conference between the House and Senate, section 1605
was rewritten by the conferees. The conferees' only comment about the
revised provision and their intent was as follows:

> The guidelines for the voluntary reporting of greenhouse gases and the
> national inventory shall address coal bed methane emissions,
> inventories and reductions. Persons who wish to establish baselines
> shall be provided an opportunity to do so.

H. Conf. Rep. 102-1018, at 393 (1992).

Nevertheless, during the debate on final passage in the Senate of the
Conference-agreed version of H.R. 776, Sen. Lieberman called section
1605 one of several "key provisions" that he "strongly" supported. He
said:

> First, I am especially pleased about the provision in this bill which
> establishes a system for corporations to register current emissions of
> greenhouse gases and allows them to record reductions in greenhouse
> gases for inclusion in a national data base. The provision will allow
> Government to recognize the achievements of American businesses who
> are taking steps to reduce the emissions of greenhouse gases. Major
> utilities, natural gas producers, appliance manufacturers, forest
> companies, and others have taken voluntary steps to stop the growth of
> greenhouse gas emission. Under this provision, these companies can
> request the Federal Government to approve their reductions for
> inclusion in the greenhouse gas data base.

\* \* \* \* \* \*

> Under S. 1605 of this energy bill, companies engaged in these
> voluntary activities will be able to demonstrate that the Federal
> Government should approve their reductions for inclusion in the data
> base.
>
> I believe this provision removes a disincentive facing U.S. firms
> seeking to reduce voluntarily their greenhouse gas emissions. Without
> this provision those firms will not have an official data base which
> can be used by these firms to demonstrate achieved reductions of
> greenhouse gases. The simple accounting mechanism removes this
> disincentive by recognizing positive steps to reduce greenhouse gas
> emissions.
>
> The provision also preserves American competitiveness as the United
> States seeks to meet its international obligations under the Rio
> agreement and potential future agreements. Historically, the United
> States struggled to demonstrate that past achievements deserve credit
> as international emissions levels are negotiated. With this section,
> our negotiators will be able to demonstrate conclusively the real
> reductions by U.S. firms.
>
> The conferees streamlined some of the details of the program, giving
> more discretion to the Administration in implementation. Proper
> implementation is critical. Since the United States committed in the
> Rio convention to report our actions for international review, I am
> confident that the agencies will implement these programs
> appropriately.[^5]

138 *Cong. Rec.* S17626 (daily ed. Oct. 8, 1992).

Indeed, the conferees in several ways "streamlined some of the details"
of what is now section 1605(b) of EPAct from the House versione. First,
they eliminated involvement of an interagency coordinating council and a
mandate that a national accounting system for voluntary reductions of
greenhouse gases be established by rule. The House had provided that the
rule was to "include" 11 specific items set forth in numbered
subparagraphs. One included "opportunities for entities to receive
official certification of net greenhouse gas emission reductions"
relative to a baseline also established by rule. The purpose was for the
entities to receive "credit against any future Federal requirements that
may apply" to such emissions and to "create a National Greenhouse
Registry for the purpose of tracking" ghg emission reductions. Another
was to ensure against double counting. Still another was to account for
reductions achieved in other countries by U.S. entities.

In addition to these 11 items, the rule was to create a national
registry and to "require the identification of persons" who obtained
such certifications. Moreover, the rule was to "provide for such
certification of voluntary" ghg emission reductions through a panoply of
specified measures, actions or methods, such as fuel-switching, carbon
fixation, more efficient motor vehicles and appliances, methane
recovery, power plant heat improvements and a catchall item of "other
actions and methods" that the Secretary decided would result in net ghg
reductions. In the case of fuel-switching, the House provided that the
rule establish relevant procedures for calculating fuel use, etc.

In lieu of the council, rulemaking, the specified registry, the credit
and other House specifics that were to be part of rulemaking, the
conferees were far less prescriptive in devising the final version of
section 1605 as we know it today. Even though the House version appeared
to provide considerable discretion in implementation, the conferees (as
noted by Sen. Lieberman) in fact provided even "more discretion to the
Administration in implementation," and in doing so they expanded the
voluntary reporting to include not only the reporting of reductions, but
also ghg emissions. With these changes, the conferees also emphasized
the voluntary nature of reporting and (as Sen. Lieberman said) sought to
remove any "disincentive" to volunteering.

As a substitute for the council, the conferees provided for consultation
with EPA, "as appropriate." Instead of rulemaking and the specific
registry, the conferees called for secretarially issued guidelines and a
"data base" of "information voluntarily reported." That information
would cover both emissions and reductions as well as projects. As to the
11 items, including the provision on certification, the conferees
directed that the guidelines cover the voluntary collection and
reporting of ghg sources and that they establish "procedures for the
accurate reporting" of such information. In addition, the conferees
specified that the Secretary act through the Energy Information
Administration (EIA), which was given by the Congress in the 1970's
under the DOE Organization Act (42 U.S.C. § 7135) independent authority
to "collect, evaluate, assemble, analyze and disseminate data and
information" on all manner of energy matters without secretarial
approval. The conferees also added provisions on confidentiality and
provided for self-certification of the accuracy of the reported
information. As to the list of voluntary reduction measures to receive
credit, the conferees consolidated many of them in what is now sections
1605(b)(1)(B) and (C).

In addition, the conferees moved the voluntary reporting provisions to
subsection (b), while creating in subsection (a) of section 1605 an
added directive to the Secretary to develop, through the EIA, an
inventory of "national aggregate emissions of each" ghg and to update
annually and analyze the inventory "using available data," while
specifying that the subsection "does not provide any new data collection
authority." We understand that the EPA relies heavily on this subsection
(a) through an agreement with the EIA in preparing the U.S. national
inventory of greenhouse gas emissions and sinks for submission to the
FCCC Secretariat in April of each year.

In short, the conferees clearly "streamlined" section 1605, as noted by
Sen. Lieberman, and did not include any prohibition regarding any of the
items listed for rulemaking in the House-passed version. In fact, the
entire scheme of section 1605 was transformed from a combined
voluntary/rulemaking program to a voluntary/guidelines program, and
Congress expanded it to cover the voluntary reporting of not only ghg
emission reductions, but also ghg emissions.

With this legislative history in mind, these comments examine the
so-called "legal authority" issues raised by the NRDC and others for
these two different issues --- baseline protection and transferable
credits --- and suggest means of recognition that could be explored
under existing law by DOE to ensure that the President's directives as
to those two distinct issues are fully implemented.[^6]

**B. [Legal Authority Regarding the Two Distinct Issues]{.underline}**

Relevant to this discussion is a point made by Sen. Lieberman in his
floor remarks. In his view, section 1605(b) intentionally "removes a
disincentive facing U.S. firms seeking to reduce voluntarily their
greenhouse gas emissions." He added that this "simple accounting
mechanism removes this disincentive by recognizing positive steps to
reduce" ghg emissions and that it "preserves American competitiveness as
the United States seeks to meet its international obligations under the
Rio Agreement" (*i.e*., the FCCC). EPAct is the first U.S. non-research
and development-type climate law enacted by Congress and signed by
President George H.W. Bush. Bush I also signed the FCCC, which was
ratified by the U.S. in 1992, after advice and consent by the Senate.

In this examination, one should bear in mind 1) the DOE Organization
Act, which includes as one of its purposes the establishment and
implementation of "policies regarding international energy issues that
have a direct impact on research, development, utilization, supply and
conservation of energy in the United States and to undertake activities
involving the integration of domestic and foreign policy" (42 U.S.C. §
7112(10*)*); 2) the provisions of section 1605, which call for the
issuance, after an opportunity for public comment, by the Secretary of
guidelines to (among other things) "establish procedures," including
revisions thereof, for accurate "voluntary reporting" of ghg emission
and reduction information, which "may be used by the reporting entity to
demonstrate achieved reductions of greenhouse gases"; and 3) the FCCC.
Taken together, they provide a sound legal basis for ways to address
these two distinct issues.

> 1\. **[Reform of existing guideline "procedures" to "ensure that
> businesses and individuals that register" under section 1605 "are not
> penalized under a future climate policy"]{.underline}**

As noted above, the President separated the issues of baseline
protection and transferable credits. However, the four-agency letter did
not, as the President did, address baseline protection as a "separate"
objective. Rather, that letter recommended the development of "fair,
objective, and practical methods for reporting baselines" as one of
several steps in the process of awarding transferable credits. While
statements in the four-agency letter could be read to mean that
improvements in baseline reporting are sufficient for baseline
protection purposes and thus the avoidance of penalties for
volunteering, or that transferable credits provide such protection, or
both, we look forward to the DOE and the Administration ultimately
following the path of separation, as directed by the President, in
developing revisions to the guidelines.

One reason for our concern is that we understand "baseline reporting"
\-- which we consider very important for such matters as estimating the
magnitude of emissions and drawing comparisons among various reductions
\-- to be more of a definitional and technical issue. On the other hand,
"baseline protection" is an important policy matter that has economic
implications for volunteers in the private sector that must regularly
justify use of resources to their shareholders and governmental bodies
and that normally cannot incur large marginal costs on altruistic
grounds, particularly when they operate in a competitive landscape.
Companies would like and need a reasonable expectation that their
voluntary investments will be recognized, through accurate reporting, in
the development of future policies, whether administrative or
legislative.

This is best illustrated by the discussion over credit for prior
actions. Many utilities have taken significant voluntary actions since
1993 to reduce, avoid or sequester ghg's under the prior
Administration's voluntary Climate Challenge Program that relied on
reporting under section 1605(b) and its guidelines. DOE has not yet
signaled in the NOI or the four-agency letter whether it will recognize
these actions in revising section 1605(b). That letter merely states
that DOE will "\[d\]evelop a process for evaluating the extent to which
past reduction may qualify for credits." If a policy on baseline
protection had been in place in 1993 under the section 1605(b)
guidelines, this might not be a concern now. In any event, as the
guidelines are revised DOE has the opportunity under existing law to
adopt that policy now and to apply it to past actions accurately
reported.

As noted above, there is every reason to believe that existing law \--
including the DOE Organization Act and section 1605(b) \-- , coupled
with the clear purposes of the FCCC and the absence of any prohibitions,
provide a more than adequate basis for achieving the President's
baseline protection directive. For example, this may be accomplished in
furtherance of section 1605(b)(4), which provides that the "information"
on emissions and reductions reported to EIA's database/registry "may be
used by the reporting entity to demonstrate achieved reductions" of
ghg's. Clearly, DOE's guideline revisions can enhance such
demonstrations through improved transparencies in reporting and
appropriate forms of recognition of the reductions.

However, NRDC claims that the legal obstacle to adoption of this policy
under existing law is that DOE cannot bind a "future Congress" and that
Congress, as well as the President, "has no more power . . . to resolve
this issue short of full cap and trade legislation." In reality, that is
more of an overstatement than a legal obstacle to adoption of such a
policy. As a matter of fact, President after President has \-- through
Executive Orders, interpretations of law, regulatory changes, the
budget, guidelines and other means \-- adopted, in the absence of any
legal prohibition, policies, programs, processes, procedures, etc. that
have a reasonable basis in law and that remained in effect long after he
has left office. In addition, in some cases those policies, etc. have
been changed or amended by succeeding Presidents. Similarly, Congress
has passed many laws that also have lasted for years without change and
that have, in effect, bound subsequent Congresses. EPAct is an example.
When it was enacted by the 102^d^ Congress, it contained 30 titles with
many provisions, most of which remain unchanged as the 107^th^ Congress
nears *sine die* adjournment. In fact, section 1605 remains unchanged.
Even the Senate's version of the energy bill, H.R. 4, now in conference,
does not amend that section. In particular, section 1103 of title XI of
the Senate amendment to H.R. 4 expressly directs that a memorandum of
agreement retain section 1605(b). (By way of contrast, section 1031 of
title X of the Senate amendment would amend, at least indirectly,
Executive Order 13211 of May 18, 2001, thus affecting an administrative
policy.) In short, each new Congress can always enact a law that changes
prior laws and policies.

But most importantly, we know of no plans by the President, in calling
for these distinctly different reforms, to attempt by guidelines to bind
a future President or Congress, and we are not suggesting that he
attempt to do so. A recognition or certification by DOE of reductions
reported accurately pursuant to revised 1605 guidelines could not be
said to have such a binding effect. However, what recognition or
certification offers to volunteers is an opportunity for them to
demonstrate how and to what extent they, at considerable cost, have
under the prior Administration and this Administration taken steps to
reduce ghg emissions at the strong urging of Presidents Clinton and Bush
and in accordance with the congressional enactment of section 1605 and
the purposes of the FCCC. Such an approach, as Sen. Lieberman said,
would help to remove a "disincentive" to volunteering. However, a future
President and Congress would most assuredly not have any legally binding
obligation to accept that demonstration. After all, guidelines are not
regulatory in nature. Such recognition and certification also are not
contracts. By their very nature, they are non-binding. What they offer
is an opportunity for reporting entities to demonstrate their past
actions and persuade the government if and when some future policy is
debated in one or both of these two branches of government.

The four-agency letter suggests that baseline protection will be
provided in the context of a transferable credit. Conceptually, this
thinking is similar to the concept of credit for early action that was
under discussion in the previous Administration:

-   The credit for early action was a form of baseline protection for
    voluntary actions to reduce ghg emissions in advance of a possible
    future mandatory program.

-   In addition, credits for early action would be tradable, similar to
    the Bush Administration concept of a transferable credit.

-   The primary distinction was with respect to future climate policy.
    The Clinton policy was clear that the ultimate policy goal was a
    mandatory program --- with or without the Kyoto Protocol --- with
    credits for early action being an interim step towards this goal.
    The four agencies apparently are considering transferable credits as
    a hedge against an unknown future policy.

While some may want to link baseline protection and transferable
credits, there are likely to be situations where entities may simply
want recognition for baseline protection purposes without the formal
designation of transferable credits. For example:

-   Entities may wish to bank their ghg emission reductions for their
    own future use, without consideration of trading.

-   Most importantly, entities may wish to have a clear policy statement
    on baseline protection as an incentive to move forward with
    voluntary ghg emissions reductions, without undue risk that these
    investments will become worthless if and when a future climate
    policy regime ever evolves administratively or legislatively.

Moreover, there may be situations where entities seek awards of
adjustments for baseline protection purposes. These awards (to be banked
for future use) may be separate and apart from transferable credits.
Baseline protection awards may be designated for possible future use,
whereas transferable credits may be needed currently or in the near term
by entities who are subject to ghg regulatory regimes in the states
(such as Massachusetts and New Hampshire) or internationally (in Kyoto
Protocol countries, if and when the Protocol enters into force).

Just as relevant is the uncertainty of the development of future climate
policy, as well as its substance and timing and the role of this or a
future Administration and Congress. While there have been administrative
and legislative proposals, no one can predict what, if any, or when such
policies might be developed or whether they will be mandatory or
otherwise. However, it is in the interest of the FCCC and the public to
encourage entities to take actions to address ghg emissions and to
provide information thereon. The adoption of a policy of baseline
protection as part of the 1605 guidelines is consistent with that
encouragement.

> 2\. [Reform of existing guideline "procedures" to "give transferable
> credits to the private and public sectors that can show real emissions
> reductions]{.underline}"

In its response to the DOE NOI, EPICI submitted an extensive paper
entitled "Transferable Credits for Voluntary Reductions in GHG Emissions
Intensity" that lists six questions about such credits and provides
detailed responses. We will not repeat the content of that paper since
it is part of the NOI docket.

However, NRDC is critical of including such a credit approach in the
revised guidelines. It broadly contends that the "objective" of the
Presidential directive is to permit entities to earn credits "that count
against a cap before a cap is even agreed." NRDC said that is
"controversial," and we agree. In fact, even the mere suggestion of a
cap program is controversial. However, it is not our understanding that
the Administration, which has been long opposed to a ghg cap program,
directed that DOE provide for transferable credits in advance of, or to
encourage, a "cap." Moreover, there is nothing in the paper submitted
earlier by EPICI to suggest that our members seek recognition of
transferable credits for purposes of a cap, particularly since they have
long looked with great disfavor on establishing a cap.

A second NRDC contention is that the "1992 EPAct legislation pointedly
rejected proposals made at that time to confer credit status on reported
reductions." As we have noted above, the House-passed bill, H.R. 776,
directed the DOE to establish, in consultation with an interagency
council, a national accounting system for voluntary reductions of ghg's
and to do so by rule. The rule was to "include" a list of 11 items set
forth in sections 1605(a)(1)-(11) of that House bill. We reiterate that
they covered matters such as reductions achieved in other countries, the
establishment of equivalency measures for reductions applicable to
different ghg's, provisions on double counting and provisions regarding
baselines, together with three items on certification. One permitted a
person to file for verification "such documentation as the Secretary
considers appropriate for the certification" ghg emission reductions
"generated by such person." Another called for annual certification
after the ghg reduction or ghg fixation "has occurred." A third provided
"opportunities for entities to receive official certification" of
reductions relative to the baseline "for purposes of receiving credit
against any future Federal requirements that may apply" to ghg
emissions. All were to be developed by rulemaking, not guidelines. Yet
none of these items was included in the final version of the conference
report.

Instead, as we have said, the conferees shifted to a scheme of DOE
issuing guidelines, not rules, in an effort to streamline "some of the
details of the program, giving more discretion to the Administration in
implementation," as pointed out by Sen. Lieberman. The final version
called explicitly for guidelines on the "voluntary collection and
reporting of information on sources" of ghg's. They are to provide
"procedures" for the "accurate voluntary reporting of information," not
only on reductions, but also on emissions. That shift applied to all of
these items or details, not just the one on credits. Yet it cannot be
reasonably argued that all or some of the original items were "rejected"
by Congress and thus, upon enactment, the DOE could not include
"procedures" on, for example, double counting, baselines or reductions
achieved in other countries, all of which were in the list of 11,
together with the credit provisions. In fact, such matters are now
addressed in various ways in the existing 1605 guidelines.

It is unreasonable to claim that one of the 11 items was "pointedly
rejected" by the Conferees and not all of the other 10. Moreover, there
is nothing in the conference report to suggest such a rejection.
Certainly, the remarks of Sen. Lieberman do not support that claim, nor,
as noted on p. 8 n. 5, *supra,* do the remarks of one of the conferees,
Rep. Moorhead.

Under the guidelines approach, the DOE could, as we have said, propose
procedures that give recognition of an entities' reductions by
certification or other means that could make them more marketable. As to
the NRDC's concern that the Administration might enter into "collusive
contracts" recognizing the reductions or credits and thus "box Congress
into conferring a regulatory benefit," or in the alternative "obligate
the government to pay damages if a future Congress failed to recognize
the supposed credits" in climate change legislation, we are unaware of
any such proposal and believe that the Administration is fully cognizant
of the Supreme Court's holdings in *U.S.* v. *Winstar*, 518 U.S. 839
(1996).[^7] Clearly, EPICI has not urged use of such contracts.

[^1]: "U.S. Climate Change Strategy, a New Approach," Executive Summary,
    at 2 (Feb. 14, 2002).

[^2]: The letter was signed by the Secretaries of Energy, Commerce and
    Agriculture and by the Administrator of the Environmental Protection
    Agency (EPA).

[^3]: In addition, the House did not follow the usual practice of
    joining its version, H.R. 776, as an amendment to S. 2166 so that a
    House-Senate conference could be initiated. Rather, the House sent
    H.R. 776 to the Senate as a free-standing, House-passed bill.

[^4]: Initially, the Senate moved to the consideration of H.R. 776,
    which had been reported by the Finance Committee, with amendments
    that struck some provisions and bracketed provisions intended to be
    "inserted." 138 *Cong. Rec.* S10558 (daily ed. July 29, 1992). That
    version retained the House Title XVI on "Greenhouse Warming --
    Energy Implications," including section 1605. However, the then
    chairman of the Finance Committee, Sen. Bentsen, withdrew those
    amendments and offered a "modified committee amendment" that did not
    include the above-referenced greenhouse warming title. 138 *Cong.
    Rec.* S10660*, supra*.

[^5]: Very similar remarks were made earlier in the House on final
    passage by that body of the Conference agreement by then Rep.
    Moorhead, a conferee and the ranking minority member of the Energy
    Subcommittee, who said, "I am delighted that this program survived
    in the conference report, albeit with less detail and more
    discretion for the administration." 138 *Cong. Reg.* H11438 (daily
    ed. Oct. 5, 1992).

[^6]: Under the heading "Business Challenge," the President's document
    said that EPA "will launch a new, voluntary Climate Leaders program"
    in a "test" of new reporting guidelines. These guidelines are under
    development by the World Resources Institute (WRI) and the World
    Business Council for Sustainable Development (WBCSD), which are
    private, non-governmental organizations. As part of the "test," EPA
    is modifying the WRI/WSCSD guidelines for this program, which would
    appear to have the effect of transforming them into a government
    document insofar as the Climate Leaders program is concerned. Unlike
    the 1605 guidelines revisions by the DOE, EPA apparently does not
    plan a *Federal Register* process for public input. However, in
    response to the NOI, WRI recommended that DOE redesign the 1605
    guidelines "to transition into a mandatory reporting program" and
    that DOE build on, and be "consistent with," the WRI/WBCSD
    guidelines. EPAct does not authorize such a transition, and we
    question the status of the WRI guidelines in light of modifications
    by EPA.

[^7]: A footnote in the comments of NRDC purports to briefly summarize
    the *Winstar* facts and holdings in support of its contention. For
    purposes of these EPICI comments, there is no need for us to discuss
    these facts or holdings.