Trumping Trump on Climate Change

Posted on July 25, 2017 by Dan Esty

President Donald Trump’s decision to back away from the Obama Administration’s Clean Power Plan and other policies to reduce U.S. greenhouse gas (GHG) emissions in fulfillment of America’s commitment to the 2015 Paris Climate Change Agreement might be seen as bad news for the global environment.  And it is.  But the news is not quite as bad as many fear.  Even if the President’s actions slow progress toward the U.S. “nationally determined contribution” to the emissions reduction goals of the Paris Agreement – a cut of 26-28 percent by 2030 – that will not stop the overall downward trend in GHG emissions for several important reasons. 

First, American Presidents have limited executive authority, meaning that a number of the climate change policies put in place by President Obama cannot be reversed with a stroke of President Trump’s pen.  Second, the shift away from coal as America’s electricity generation fuel of choice will continue – driven by prior regulatory requirements and the economics of the energy marketplace.  Third, many critical decisions that shape the carbon footprint of a society are made not by presidents and prime ministers but by mayors, governors (or other sub-national elected officials), and corporate leaders.

President Trump’s March 28 Executive Order directs his EPA Administrator to “review” the prior administration’s Clean Power Plan and “as soon as practicable, suspend, revise, or rescind” it.  But this is not a simple process.  The Clean Power Plan represents a regulatory strategy for implementing a Clean Air Act obligation to control emissions from any air pollutant found to “endanger public health and public welfare.”  The Supreme Court confirmed in Massachusetts v. EPA (2007) that this obligation is not discretionary with regard to greenhouse gas emissions. 

Thus, the Trump EPA can change the strategy for responding to greenhouse gases but cannot walk away from its obligation to control them unless it reverses the “endangerment” finding issued by former EPA Administrator Lisa Jackson in 2009.  To undo this prior conclusion, current EPA Administrator Scott Pruitt would need to establish a new scientific foundation that would justify a different policy conclusion.  Given the overwhelming scientific consensus that the build-up of greenhouse gas emissions in the atmosphere threatens to produce various harmful effects – including sea level rise, increased frequency and intensity of hurricanes and other windstorms, changed rainfall patterns, as well as more frequent droughts, floods, and forest fires – such an effort would be quickly challenged in any number of courts and almost certainly overturned.  Indeed, in the face of overwhelming scientific evidence that the build-up of GHG emissions in the atmosphere is a problem, a “non-endangerment” conclusion would be an almost paradigmatic example of an “arbitrary and capricious” regulatory action.  EPA will, therefore, almost certainly choose to revise the Clean Power Plan rather than dump it altogether. 

In introducing his climate change executive order, President Trump promised that his actions would bring back American coal production and power generation.  No such thing will happen.  Hundreds of U.S. coal-fired power plants have been shut down in the past decade – most in response to the Obama Administration’s Mercury and Air Toxics Standards.  These plants will not be reopening.

Not only have coal-burning power plants been the target of numerous regulatory restrictions, they also now face stiff competition from cleaner-burning and cheaper natural gas power generation as well as rapidly expanding renewable power production.  Nothing President Trump has done will reverse these trends.  Indeed, given the momentum toward a clean energy future and the prospects that a future president will redirect the Trump climate change policies and restore the U.S. commitment to lower greenhouse gas emissions, no utility is going to invest in new coal-fired power plants, and many power generators will proceed with planned retirements of existing coal units.  Simply put, the President’s shifting of gears on climate change policy does not over-ride the broader economic logic for movement toward cleaner and cheaper energy options.

In the face of the President’s disinterest in the Paris Agreement in particular and his hostility toward environmental regulation more broadly, leadership and political support for climate change action in the United States has shifted out of Washington.  Of particular note, more than 200 mayors, 10 governors, and nearly 1700 business leaders have formed a coalition called America’s Pledge that aims to ensure that the U.S. emissions reduction commitment is fulfilled.  Led by California Governor Jerry Brown and former New York Mayor Michael Bloomberg, the participants in America’s Pledge are pushing forward with climate action plans at the city, state, and corporate scales. 

Some of these leaders, moreover, have expressed interest in formally “signing” the 2015 Paris Agreement if the United States ends up withdrawing.  While there are constitutional limits to what sub-national jurisdictions can do in the international realm, legal work is underway to find a mechanism that would allow these mayors, governors, and CEOs to make a commitment to the goals of the Paris Agreement “to the full extent of their authority.”

The breadth and depth of these non-federal-government climate change initiatives means that American greenhouse gas emissions will continue to decrease regardless of what energy policies the Trump Administration puts forward.  In fact, one of the critical features of the climate change strategy that the world community agreed upon in Paris in 2015 was a shift from a top-down approach that relied upon national government actions to a bottom-up game plan for emissions reductions that called upon a much wider array of actors to join the effort to promote energy efficiency and a shift toward renewable power.

As it turns out, presidents and prime ministers don’t have that much say over the day-to-day decisions that determine the carbon footprints of their societies.  Mayors, governors, and CEOs are really the ones who make the critical choices about transportation options, housing and development patterns, product and production strategies, technology and infrastructure investments, and other decisions that determine the trajectory of greenhouse gas emissions.

Thus, while President Trump can take the United States out of a leadership role in the global effort to combat climate change, he will not be able to reverse the domestic momentum for action on climate change.  His policies may slow the pace of U.S. emissions reductions, but movement toward a decarbonized energy future will continue.

Comprehensive Study of Impacts of Shale Development Released

Posted on June 28, 2017 by Kinnan Golemon

A report, Environmental and Community Impacts of Shale Development in Texas was released by The Academy of Medicine, Engineering and Science of Texas (TAMEST) to the public on June 19, 2017 (1). TAMEST is a nonprofit and brain trust for Texas composed of Texas-based members of the National Academics of Sciences, Engineering and Medicines and the state’s Nobel Laureates.  This entity was the original idea of my law school classmate and friend, Honorable Senator Kay Bailey Hutchinson, in 2004. The recently released report is the product of the TAMEST Board decision in 2015 to organize a task force charged with writing a report to “collect the best science available and summarize what we do and do not know” about environmental and community impacts that are posed by new technologies for the extraction of hydrocarbons from shale and other tight rock formations.

Texas, although oil had already been produced at various locations within its boundaries, became a dominant entity in oil and gas production on January 10, 1901, when the Lucas Gusher at the Spindletop salt dome in Jefferson County, roared to the surface: soon producing 100,000 barrels of oil per day, more than all U.S. wells combined (2). Oil and Gas production for the next 100 years was driven by “conventional” vertical well technology seeking resources from porous formations. However, commencing in the late 1980s and through the 1990s, a company founded by an affable, brilliant, tenacious and innovative son of immigrant Greek parents, George Mitchell, undertook an extended effort to access organic resources trapped in shale and very tight rock formations. After many years of limited or no success, Mitchell Energy, by century end, had demonstrated that certain hydraulic fracturing strategies [i.e. well completion techniques similar to those used since the late 1940s] (3) could be deployed in organic rich formations to produce natural gas economically.

Mitchell Energy’s acquisition by Devon Energy in 2002 resulted in another known technology, horizontal well drilling, being deployed along with hydraulic fracturing to produce the basic technological template that is utilized for shale development of oil and gas throughout the U.S., and currently being deployed elsewhere in the world today (4). The production from shale has also resulted in the largest transformation of the U.S. petrochemical industry in a generation, with $185 billion in new U.S. petrochemical projects either under construction or in planning (5).

Those interested in current and future energy policy, as well as the economic, social and environmental impacts associated with modern-day fossil fuel extraction and production, will find this authoritative, comprehensive and well-written report, see http://www.tamest.org, to be far more enlightening than one gains from other current information sources.

Interestingly, a portion of the funding for the report was provided by the Cynthia and George Mitchell Foundation, a mission-driven grantmaking foundation that seeks innovative sustainable solutions for human and environmental problems that was established prior to his death (6).

 

  1. The Academy of Medicine, Engineering and Science of Texas, 2017, Environmental and Community Impacts of Shale Development in Texas. Austin, TX: The Academy of Medicine, Engineering and Science of Texas. Doi: 10.25238/TAMEST stf.6.2017
  2. www.history.com/topics/spindletop
  3. Society of Professional Engineers (SPE) CD ROM https://www.store.com/spe.org/Legend of-Hydraulic Fracturing-P.433.aspx
  4. https://assets.kpmg.com/content/dam/kpmg/pdf/2014/03/shale-development-global-update-v2.pdf
  5. Christopher M. Mathews. “Shale Boom’s Impact in One Word: Plastics”. Wall Street Journal, June 26, 2017, A1.
  6. http://cgmf.org/p/founders.html

Energy Benchmarking, An Idea Whose Time May Have Come (And Just May be Politically Palatable)

Posted on June 5, 2017 by James B. Witkin

Given the current political climate in Washington, environmental programs most likely to survive unscathed are those that rely on market principles, especially if they are enacted at the state or local level. Sustainability advocates may want to take a closer look at energy benchmarking programs, which pass both of those tests.  

The jurisdictions closest to me, the District of Columbia and its close-in neighbor to the north, Montgomery County, Maryland, have adopted mandatory energy benchmarking programs for many commercial buildings. Other cities with similar programs include Seattle, Philadelphia, Los Angeles, Kansas City and New York City. Many of those jurisdictions began requiring compliance for public buildings, then larger commercial buildings, and finally smaller buildings. In Montgomery County, buildings over 250,000 square feet had to start benchmarking last June; starting June 1, 2017, most buildings over 50,000 square feet must comply. In New York City, buildings larger than 25,000 square feet must benchmark by next May.

Although benchmarking programs vary from jurisdiction to jurisdiction, generally they require building owners to measure and report information on various types of energy and water usage. Some of that information may come from the owner’s own records; in tenanted buildings, landlords may need to obtain the information from tenants. Often the information is input into software such as the EPA’s Energy Star Portfolio Manager Program, which allows for uniform reporting and effective comparison of the data among buildings. That information is made available to the public.

There are several goals of benchmarking. First, it provides owners with information they may not have had, or understood—as one EPA benchmarking website states, you can’t manage what you don’t measure. By making owners focus on their energy costs, and see how those compare to their neighbors’, they should theoretically make efficient management and upgrade decisions.  Second, armed with this information, tenants looking to lease space (or buyers looking to purchase commercial properties) are better able to evaluate what their long term energy costs will be, and can make better leasing or purchasing decisions. Nothing like a lousy score to shame a landlord into making an upgrade decision that ideally is both cost effective and green.

While the programs are still young, some data indicate that they are working. (See the reports issued by the Institute for Market Transformation, and the studies cited by them.) Benchmarking seems like a concept that people on both sides of the isle should be able to support. 

Trump’s “Tortured” Maneuvering Can Be Legal Maneuvering

Posted on April 11, 2017 by Richard G. Stoll

Bob Sussman is a former high-ranking Obama and Clinton EPA official with a stellar academic and professional background.  He recently published in Inside EPA a thought-provoking piece entitled “Trump’s Tortured Maneuvering on Climate Change.”

No matter what your views on climate, Bob’s piece is worth reading.  I find much to agree with in Bob’s observations, but would respectfully disagree with one. 

Focusing on the president’s March 28 Executive Order (EO), Bob raises the valid question of why Mr. Trump touted it on job-saving, energy independence grounds.  Bob makes a strong case (as if he really needed to) that coal mining jobs are dwindling due to market forces and that the U.S. energy outlook is just fine. 

Bob posits that Trump’s job-energy independence focus reveals a divide and major discomfort within the Administration on whether and how much to deny that humans are involved with climate change.  He notes that the March 28 Order side-steps any position on both the “Endangerment Finding” and the Paris Accords.   

So far so good.  My respectful disagreement relates to Bob’s argument that the Trump EPA would have a difficult time sustaining major cutbacks to the Obama Clean Power Plan (CPP) on judicial review.  He speculates that a new Trump CPP might simply retain “building block 1” (plant efficiency improvements) from the 3-block “beyond-the-fenceline” Obama CPP.  He argues that “the courts may well balk at this approach as a contrived effort to duck the challenge of climate change by taking refuge in narrow legal arguments.”

Here is why I disagree:

a.  Following the 2007 Supreme Court Massachusetts ruling and EPA’s subsequent Endangerment Finding, EPA is not required by the Clean Air Act (CAA) to issue GHG rules with any particular degree of stringency – EPA must just issue rules.

b.  The “beyond-the-fenceline” features of the Obama CPP are based upon truly adventurous interpretations of the words of the CAA.  There is certainly nothing in the CAA that requires those interpretations.  (Recall the U.S. Supreme Court has taken the unprecedented step of staying the Obama CPP throughout the entire judicial review process.)  Even if the D.C. Circuit were to uphold these interpretations, it would only be upholding the Obama EPA’s discretion to adopt them; the Court could not rule that such interpretations were mandated by the CAA.

c.  The Supreme Court and D.C. Circuit case law are clear on the following points:

i.  A new administration is free to reverse rules issued by a prior administration based entirely upon policy preferences, even where there are no new facts or information, so long as the new administration adequately explains the basis for the reversal;

ii.  There is no heightened standard of judicial review when an agency reverses course; and an agency need not convince the court that the reasons for the new policy are better than the reasons for the rejected one.

See my recent ACOEL blog for the citations to the cases.

d.  Because the statutory interpretations supporting beyond-the-fenceline requirements are so adventurous (and stayed by the Supreme Court), it should be easy for the Trump EPA to defend a new CPP as a matter of policy based on CAA interpretations that are far less adventurous.

e.  If and when the new CPP reaches the Supreme Court, it is difficult to see the Court departing from the precedents of the cases cited in my ACOEL blog, particularly with Justice Gorsuch filling Justice Scalia’s seat.

Jordan Cove LNG Project Scores Legal Victory

Posted on April 10, 2017 by Rick Glick

The Jordan Cove LNG project in Coos Bay, Oregon, prevailed in a legal challenge to a key permit.  The permit, issued by the Oregon Department of State Lands, allows dredge and fill work for a deep water ship channel.  In Coos Waterkeeper v. Port of Coos Bay, the Court of Appeals rejected that challenge and upheld the permit.

Petitioners’ main argument on appeal was that DSL’s permitting decision should have applied statutory environmental standards not only to the dredge and fill work, but also terminal operations after construction.  The court found this argument to lack merit, finding that DSL’s authority is limited to the “project,” defined in the statute and its legislative history as the dredge and fill work only. 

Petitioners also argued that DSL should have asserted permitting jurisdiction over complementary uplands excavation.  This work would initially be separated from the bay by a 40-foot berm, and then the berm would be removed to create the channel.  The court concluded that DSL jurisdiction would not apply to uplands work (i.e. above the high tide line), and that removal of the berm and flooding the affected uplands are within scope of the permit.

The politics of LNG development in Oregon are highly charged.  The Oregon LNG project was abandoned following election of a new county board of commissioners made up of project opponents.  Local opposition slowed down state regulatory review and the project never was tested against objective legal standards.  It is heartening to see that for the Jordan Cove project, which also is controversial, both the state agency and the court assessed the project as they would any other.  The politics are still there, but the rule of law in this instance rose above.

The outcome of this case highlights an anomaly in green Oregon.  Unlike our neighbors to the north and south, we have no mini-NEPA law.  If we did, the environmental effects of the Jordan Cove project taken as a whole would certainly have been part of the state permitting calculus.  Many bills to create a comprehensive environmental impact review process have been proposed, but none have taken hold.  With a Democratic controlled legislature and state house, it seems only a matter of time.

The Latest Executive Order: Any Kind of Consistency Is the Hobgoblin of Little Minds

Posted on March 31, 2017 by Seth Jaffe

Make no mistake, the Executive Order signed by President Trump at EPA yesterday is a big deal.  Time will tell whether the Administration’s U-turn on the Obama rules currently in litigation, such as the Clean Power Plan and the rule on fracking on federal lands will make any difference to judicial review of those rules.  There are plenty of states and NGOs ready to step into EPA’s and BLM’s shoes to defend those rules.

Regardless, though, it’s important.  Social cost of carbon?  Poof.  Gone.  Climate Action Plan?  Gone.  Consideration of climate change in environmental impact reviews?  Gone.

We already know all this, though.  I’d like to focus on a few details concerning the EO that might have gone unnoticed.

  • The order states that development of domestic natural resources “is essential to ensuring the Nation’s geopolitical security.”  I found this statement interesting in light of the recent statements by Secretary of Defense Mattis, who very clearly stated that climate change is real and is itself an important security risk.
  • The order states that environmental regulations should provide “greater benefit than cost.”  I found this statement somewhat odd, given that the President’s prior EO known as the 2-for-1 order, essentially requires agencies to ignore the benefits of regulations and focus solely on the costs that they impose.
  • Similarly, the Order requires agencies, in “monetizing the value of changes in greenhouse gas emissions resulting from regulations,” ensure that their analyses are consistent with OMB Circular A-4, issued in 2003.  The Order states that Circular A-4 embodies “best practices for conducting regulatory cost-benefit analysis.”

I’d be interested in knowing if a single one of the authors or peer reviewers of Circular A-4 have anything nice to say about the 2-for-1 Order?

Earth Day Texas—People, Planet, and Profit—Key Legal Issues for a Protective and Productive Future

Posted on March 27, 2017 by Jeff Civins

On March 16th, Reuters reported that President Trump’s administration has proposed a 31 % cut to EPA’s budget, explaining: “Consistent with the President’s America’s First Energy Plan, the budget reorients the EPA’s air program to protect the air we breathe without unduly burdening the American economy.”  In this time of change and uncertainty, perhaps more than ever, there is a need for a measured dialog among diverse viewpoints. 

With over 130,000 participants attending last year’s  Earth Day Texas celebration in Dallas, its organizers decided a Legal Symposium of prominent representatives from environmental organizations, business, academia and the government might help policy makers grapple with fundamental environmental issues such as how best to balance economic development with environmental protection.  Several members of the College assisted the organizers in the development of that symposium.

On April 20-21, that Symposium will bring together those thought leaders to discuss: (1) how to integrate science into regulatory decision making; (2) how to reconcile energy and economic development with protection of public health and the environment; (3) how to facilitate environmental dispute resolution; and (4) how to integrate sustainability and ethical considerations into corporate decision-making. 

Consistent with the objective of having diverse viewpoints represented, the Thursday evening keynote speaker will be General Wesley K. Clark, discussing Climate Change as a Major Security Concern, and the Friday luncheon keynote speaker will be EPA Administrator Scott Pruitt, discussing the new administration’s objectives and goals.  For further information and to register, go to http://earthdaytx.org/legal-symposium/.

Energy Storage and Transforming The Grid in New York

Posted on March 21, 2017 by Virginia C. Robbins

For those who support national and international climate change initiatives like the Clean Power Plan and the Paris Agreement, the news out of Washington is gut-wrenching.  Disengaging from these initiatives is harmful on geo-political, economic, and moral grounds.  Despite these expected actions by the current administration, there is good news in the renewables sector:  battery storage technology has the potential to be a strong contender in the fight against climate change. 

In October 2015, a leak at the Aliso Canyon gas storage facility outside Los Angeles caused it to shut down.  The leak reduced fuel supplies for area power plants.  In response, the California Public Utilities Commission (CPUC) mandated mitigation measures, including the expedited procurement of about 100 megawatts (MW) of local energy storage resources in the Southern California Edison (SCE) and San Diego Gas & Electric (SDGE) service territories.  Renewable and other types of energy stored during the day would be available when electricity demand increased in the evening, thereby avoiding the need for increased fossil fuel generation to serve that peak need. 

The CPUC order directed utilities in Southern California to identify storage projects that could be sited, constructed, and put into operation providing electricity to the grid in only a few months.  Within 6 months after the CPUC issued its order, two battery storage facilities were completed.  SDGE contracted for the installation of two energy storage projects totaling 37.5 MW.  The larger 30 MW project in Escondido is said to be the biggest lithium ion battery storage facility in service on a utility grid in the world and is capable of serving 20,000 customers for four hours.  Also, Tesla completed a battery storage facility for SCE at the Mira Loma substation capable of powering about 15,000 homes for four hours.

These California energy storage projects are providing valuable “lessons learned” about the efficiency of battery technology, its benefits and limitations.  For example, building on these lessons, New York has established aggressive goals for meeting its electricity needs through renewable sources.  New York’s Governor Cuomo established a goal for 50 percent of the state’s electric needs to be met by renewable sources by 2030.  The strategy is to transform New York’s electric industry by building a cleaner, more resilient and affordable energy system through investment in clean technologies like solar, wind and energy efficiency.  And because wind and solar sources cannot always generate power during times of high electricity demand, energy storage must be a key component of the state’s energy future and more needs to be done for system operators to understand it and to develop the business models that will work.      

In October 2016, the New York Department of Public Service issued a Staff Report and Recommendations in the Value of Distributed Energy Resources Proceeding.  The goal of the proceeding is to develop accurate pricing for clean distributed energy resources (DERs) that reflects the actual value created by technologies that produce power outside of the utility grid (e.g., fuel cells, microturbines, and photovoltaics) and technologies that produce power or store power (e.g., batteries and flywheels) as well as demand-side measures.

The staff report supports including projects that pair any energy storage technology with an eligible generation facility to receive compensation under a proposed tariff.  The report also identifies a utility-driven demonstration project supporting solar-plus-storage.  Consolidated Edison Company of New York is currently pursuing a demonstration project that combines multiple solar plus storage systems to improve grid resiliency and provide a dispatchable “virtual power plant” that Con Edison can control and rely on in real time.  Con Edison is also pursuing grid-scale energy storage through a request for information seeking to demonstrate how large-scale utility storage can improve company operations, and establish how a singular type of energy storage can offer multiple kinds of value.   

Also, at its March 9, 2017 session, New York’s Public Service Commission (PSC) enacted a new compensation structure to value DERs installed in New York.  The order establishes compensation values for the first time in New York for energy storage (battery) systems when combined with certain types of DERs.  In addition, the PSC directed the state’s utilities to significantly increase the scope and speed of their energy storage endeavors.  By the end of 2018, each utility must have deployed and begun operating energy storage projects at no fewer than two separate distribution substations or feeders.  The Commission tasked the utilities with striving to perform at least two types of grid functions with the deployed energy resources, for example, increasing hosting capacity and peak load reduction.  The Commission stated that these actions are both feasible and necessary to promote timely development of a modern grid capable of managing DERs.   

These developments promise good outcomes for the deployment of energy storage, for environmental protection and for consumers.  They may also play a role in the planned shutdown (by 2021) of the Indian Point nuclear power facility, that has the capacity to generate more than 2000 MW of electricity and that serves about 25% of the energy needs of New York City and Westchester.  At a recent legislative hearing on the Indian Point shutdown, state officials discussed making up for the lost energy by efficiency programs and by encouraging opportunities for renewable, non-polluting sources like solar, wind and hydropower.  Their focus on renewables bodes well for further investment in energy storage as a component of reliable service using a resilient distribution system.  The battery storage “lessons learned” in Southern California in resolving the gas leak crisis may be valuable to New York State in planning for the shutdown of Indian Point.

The Conservative Uphill Slog for a Carbon Tax

Posted on February 9, 2017 by Seth Jaffe

Earlier this week, the Climate Leadership Council rolled out The Conservative Case for Carbon Dividends (note the absence of the “T” word in that title!).  It’s a serious proposal and, if we lived in a world of facts, rather than alternative facts, it would be a useful starting point for a discussion.

Here are the highlights:

  • A gradually increasing carbon tax, starting somewhere around $40/ton.
  • Return of all revenue from the tax to citizens through dividend checks.  The CLC predicts that the 70% of Americans with lowest income would receive more in dividends than they would pay in taxes.
  • Border carbon adjustments.
  • Elimination of existing carbon regulations.  It’s not clear what this would cover, but it would include at least the Clean Power Plan.  It would also include elimination of tort liability (presumably limited to tort liability related to claims concerning climate change).

I’d sign up for this today, but I’m not exactly one of the people that needs convincing.  According to GreenWire (subscription required), former Secretary of State James Baker, who led the public presentation of the report, acknowledged that attaining enactment of the proposal would be an “uphill slog.”  I think that’s putting it mildly.  The CLC members are basically a who’s who of the old-line GOP mainstream – precisely the types that President Trump appears to have consigned to the dustbin of history.

Nonetheless, hope springs eternal and we have to start somewhere.

Trump Greenlights Keystone and Dakota Access Pipelines, but the Battle is Far From Over

Posted on January 26, 2017 by Patrick A. Parenteau

President Trump wasted no time making good on his promise to reverse President Obama’s efforts to reduce greenhouse gas emissions and move U.S. energy policy towards cleaner energy sources.  On January 24 Trump signed two executive memoranda, one inviting TransCanada to resubmit its application to build the 800,000 barrel a day Keystone XL pipeline from the Canadian oil sands to the Gulf Coast; the other directing the Army Corps of Engineers to expedite the review and approval of the Dakota Access Pipeline (DAPL) to carry approximately 500,000 barrels per day of crude oil from the Bakken shale in North Dakota to oil markets in the United States. But a close reading raises some sticky legal and economic issues that will have to be resolved before the oil starts flowing.  [LINKS to Keystone and DAPL Memos]

In announcing the Keystone Memo, Trump said that approval was contingent on TransCanada’s  willingness to “renegotiate some of the terms” – including perhaps a commitment to use US steel and a share in any profits. The problem is that tar sands oil is not only the dirtiest fuel on the planet, it’s also the most expensive to extract. To be profitable oil prices need to be above $80 per barrel; today they sit around $52, and it is unlikely they will rise much higher in the foreseeable future given the competition from shale oil and the fracking boom that is flooding the market in the US. The break-even point for Bakken shale oil is $29 per barrel. Seventeen major oil sands projects were canceled after oil prices crashed in 2014, as companies took major losses. Major investors in the oil sands have begun to leave, including Norway-based Statoil, which pulled out of the oil sands in December 2016. So cutting a deal to the President’s liking may be harder than it looks.

Assuming the deal goes down, the Keystone Memo issues several directives to clear the way for the project. It directs the State Department to make a final decision within 60 days of the date TransCanada re-submits its application, and it further specifies that “to the maximum extent permitted by law” the final supplemental EIS issued in 2014 shall satisfy the requirements of NEPA as well as the consultation requirements of the Endangered Species Act, and “any other provision of law that requires executive department consultation or review.” The Keystone Memo also directs the Corps of Engineers to use Nationwide Permit 12 to summarily authorize the stream crossings needed to complete the project. These fast track measures are sure to be tested in court by the opponents who are not about to let their hard won victory be snatched away without a furious fight—in the courts as well as in the streets. While courts have ruled that the presidential permit itself is not reviewable, there is presumably no bar to challenging the decisions of the Corps and the Department of Interior that are necessary to complete the project.

The DAPL Memo directs the Secretary of the Army and the Chief of the Corps of Engineers to “review and approve in an expedited manner, to the extent permitted by law and as warranted, and with such conditions as are necessary or appropriate, requests for approvals to construct and operate the DAPL, including easements or rights-of-way to cross Federal areas under section 28 of the Mineral Leasing Act.” The Memo also instructs the Secretary to consider whether to rescind the memorandum issued by the Obama administration requiring preparation of an EIS on DAPL’s   request for an easement to cross Lake Oahe, and to deem the previously-issued Environmental Assessment sufficient to satisfy NEPA.

The Standing Rock protest over DAPL has become an historic confrontation that has united an Indigenous land-and-water movement and climate activism to confront a fossil-fuel corporation protected by a militarized police force.  At one point in December thousands of veterans arrived to provide a safe space for the protesters who call themselves “water protectors.” Litigation filed by the Standing Rock Tribe and other tribes challenging the Corps’ issuance of permits under the Clean Water Act and Rivers and Harbors Act is pending in federal district court in the District of Columbia.  Judge Boasberg denied a preliminary injunction but has yet to rule on the merits of the case. At the moment, the court is considering DAPL’s motion for summary judgment to declare that the project already has all of the approvals it needs and the Corps should not be able to reverse its earlier decision that an EIS was not required. Though the Justice Department has vigorously opposed this move, it will be interesting to see whether the Trump administration adopts a different posture. In any event, the Tribe has raised serious questions about whether the Corps properly evaluated threats to its water supply intake and alternative routes that would lessen the risk. One of the allegations invokes environmental justice concerns arguing that the project was re-routed away from Bismarck in response to concerns about threats to its water supply. The Tribe has also raised novel questions about whether granting the easement would violate treaty rights under the 1851 Treaty of Fort Laramie.

At the hearing on DAPL’s motion for summary judgment, Judge Boasberg acknowledged the uncertainty about what the new administration might do but observed that “It’s not my business to guess.” For now the rest of us will have to guess at what the final outcome of this epic confrontation that has galvanized indigenous peoples from all over the world will be.

The New Administration’s Initial Executive Order and Memoranda On Energy and Environmental Issues

Posted on January 26, 2017 by Theodore Garrett

The Trump administration has issued a key Executive Order and several memoranda relating to energy and the environment.  The goal of the Executive Order -- Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects – is to expedite environmental reviews and approvals.  It provides that action by the Chair of the Counsel of Environmental Quality to designate an infrastructure project as high priority would trigger an expedited review and approval process, as described in the memorandum Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing.

Two other memoranda – those addressing the construction of the Keystone Pipeline and construction of the Dakota Access Pipeline – are intended to clear the way for approval of these two controversial pipelines.  The President also stated that he wants pipe for U.S. pipelines to be made with American steel.     

Finally, the White House issued a memorandum providing for a regulatory freeze of regulations that have not taken effect and withdrawal of regulations that have not yet been published in the Federal Register. In accordance with this directive, EPA has issued a notice postponing to March 21, 2017 the effective date of 30 regulations that were published by EPA after October 28, 2016.  The delay is intended to provide further review of these regulations by the new Administration.

The Order and memoranda do not change the requirements of relevant environmental statutes.  It remains to be seen to what extent these policies will affect future permitting or regulatory decisions.  Interested parties will wish to carefully monitor how these developments unfold. 

The NSR Regulations Still Make No Sense: The 6th Circuit Reverses the DTE Decision Based on a 1-Judge Minority Opinion

Posted on January 17, 2017 by Seth Jaffe

Last week, the 6th Circuit Court of Appeals reversed – for the second time – a District Court decision granting summary judgment to DTE Energy in the United States’ case alleging that DTE Energy had violated EPA’s NSR regulations.  According to the 6th Circuit, EPA has authority to bring an enforcement action against DTE Energy, notwithstanding that the regulations don’t provide for EPA review of DTE Energy’s emissions projections prior to construction and also notwithstanding that the project did not in fact result in a significant net emissions increase.

One might well be surprised by the result, but the result itself is not the most surprising part of the case at this point.  What’s really surprising is that the United States won the case even though only one of the three judges on the panel agreed with EPA’s position.

How could such a thing happen, you might ask?  Here’s the best I can do.  Judge Daughtrey, author of the panel opinion, believes that EPA has the authority to second-guess DTE’s estimates if they are not adequately explained.  Judge Rogers disagreed and dissented.  Judge Batchelder also disagreed with Judge Daughtrey’s views, pretty much in their entirety.  However, Judge Batchelder concluded that she had already been outvoted once, in the first 6th Circuit review of this case and she felt bound to follow the decision in DTE 1.  The law remains an ass.  

Even were Donald Trump not about to nominate a Supreme Court justice, I’d say that this case is ripe for an appeal to the Supreme Court and, if I were DTE, I’d pursue that appeal vigorously and with a fairly optimistic view of my chances.

And once again, I’ll suggest that the very fact that the NSR program can repeatedly thrust such incomprehensible cases upon us is itself reason to conclude that the entire program is ripe for a thorough overhaul – or perhaps elimination.

Stop the Presses: Nuclear Power Still Does Not Emit Greenhouse Gases

Posted on October 6, 2016 by Seth Jaffe

On Monday, the TVA announced that Watts Bar Unit 2 watts-barhad successfully completed what is known as its final power ascension test.  It is now producing 1,150 MW of power in pre-commercial operation.  Though EnergyWire did report it (subscription required), I would have thought this would have received more coverage.  It’s been 20 years since the last nuclear facility came online in the United States.

In case anyone has forgotten, we’re trying to reduce GHG emissions in this country.  Nuclear power – still – does not produce GHG emissions.  Nuclear power’s role in combatting climate change seems only to be more salient in light of the recent study by Washington State University researchers concluding that hydroelectric dam reservoirs are a significant source of GHGs.  According to the study, reservoirs produce the equivalent of 1 gigaton of CO2 annually, or 1.3% of all GHGs produced by humans.

If we want to be carbon-free in our energy production, that leaves solar and nuclear.  Solar has a huge and growing role to play.  But are we really going to turn our back on nuclear power as an option?  As Robert Heinlein and Milton Friedman noted, TANSTAAFL.

RGGI Is a Success Story. When Will It Be Obsolete?

Posted on September 29, 2016 by Seth Jaffe

When RGGI rggilogo2was first implemented, I heard Ian Bowles, then Secretary of Energy and Environmental Affairs in Massachusetts, say more than once that the purpose of RGGI wasn’t really to reduce greenhouse gas emissions or jump start the clean energy economy.  Instead, the goal was much more modest; it was simply to demonstrate that a trading regime could work.  The RGGI states were to serve as a model, to be the laboratory of a GHG allowance system.  The hope was certainly that RGGI would succeed its way into obsolescence.  Surely, by 2016, there would be a federal statutory basis for GHG regulation.

It’s now September 2016 and a federal statutory basis for a GHG trading system remains a seemingly distant hope (this post is definitely not about the Clean Power Plan).  We may still be waiting, but we do at least have substantial data from the laboratory that is RGGI.  In fact, yesterday, RGGI released its analysis of The Investment of RGGI Proceeds through 2014.  Some highlights:

  • Power sector GHG emissions have decreased by more than 45% since 2005, while regional GDP has increased by about 8%.
  • The total value of RGGI investments reached $1.37 billion through 2014.
  • Energy efficiency has taken up 58% of RGGI investment. The report states that the expected return is $3.62 billion in lifetime energy bill savings.
  • Clean and renewable energy make up 13% of investments, with an expected return of $836 million in lifetime energy bill savings.

One can quibble with these numbers.  They don’t really provide a reliable comparison to what would have happened in the absence of RGGI.  Nonetheless, it’s pretty clear that RGGI does work.  We can reduce GHG emissions without giving up on economic growth, and we can use the regulatory process to move our energy economy where it needs to be.

Now, if someone could just figure out a way to make RGGI obsolete, that would be true success.

The Drama of the Massachusetts Power Wars

Posted on September 20, 2016 by Lisa C. Goodheart

Sometimes the most extraordinary things in the world of law and government get served up in the most undramatic way.  If you aren’t paying attention to the back story, and you don’t know the context, you might almost miss the action.  And future generations, seeking to decipher history, might all too easily overlook the most crucial and delicate tipping points.  This fact of life has been emphatically proven by the Pulitzer Prize-winning cultural juggernaut that is the Broadway musical Hamilton, by Lin-Manuel Miranda.  In addition to telling the very personal story of one of our nation’s founding fathers, Hamilton shows, in brilliant style, that even seemingly dry and technical matters such as the origins of our nation’s financial system, and the logic underlying the complex apparatus of modern administrative agencies, are actually fueled by passion, dripping with drama, and world-changing in consequence.  You just need to know whose story to tell, and how to read between the lines.

A recent case in point:  On August 17, 2016, the Massachusetts Supreme Judicial Court issued its decision in Engie Gas & LNG LLC v. Department of Public Utilities (Docket SJC-12051/SJC-12052).  Environmental and energy lawyers readily recognized the decision as an important one, but it’s easy to see how future generations, far from the current action, might miss the excitement here.  The question in Engie was whether the state utility department could approve ratepayer-backed, long-term contracts by electric distribution companies for the purchase and resale of interstate natural gas pipeline transportation capacity. 

To answer that question, the Engie court addressed, among other things, (1) the propriety of the appeal in the absence of a final adjudicatory order; (2) the pertinent standard of review, (3) the canon of statutory construction reddenda singula singulis, a.k.a. the rule of the last antecedent (which might also be merely a grammar rule), (4) whether ambiguity should or could be found in statutory language that neither expressly forbids nor clearly permits the proposed departmental action, (5) the parties’ competing interpretations of the legislative history, (6) the overall statutory framework, (7) the necessity of a “distributive reading” of the terms “gas or electric,” (8) the limitations of the deference to be afforded to an agency’s reasonable interpretation of a statute it is charged with enforcing, where the interpretation represents a significant departure from the agency’s own record of administering the pertinent statute, (9) the importance of ensuring consistency with the fundamental policy embodied in the legislation at issue, and (10) the interpretive pertinence of subsequent, separate legislation. Phew! 

Ultimately, the SJC rejected the utility department’s determination of the scope of its authority, and concluded that the pertinent statute forbade the imposition on electricity ratepayers of the costs of new natural gas supply infrastructure.  Like many judicial opinions concerning complex environmental and energy issues, the Engie decision has a sober logic that makes it seem unsurprising, correct, and even almost easy.  But wait – what just happened here? 

Ladies and gentlemen, we have an affair of honor!  One dueling party and its seconds, the state’s public utility department and electric distribution companies, contend that the policy choice by our state government’s executive branch to expand natural gas pipeline capacity is a sensible way of meeting our very real need for reliable electrical power.  Even as we move toward a more sustainable future of renewable energy, they say, we still depend urgently on new supplies of natural gas, obtained by means of fracking, to provide the essential “bridge” fuel, and we can all get ready for price spikes and power blackouts each winter if we ignore that reality.  It’s an emergency, and our future is at stake!  

The other dueling party and its seconds, who include the Massachusetts Attorney General and a coalition of environmentalists, land conservationists, and consumer and taxpayer advocates, insist that we don’t need any new natural gas infrastructure at all.  And if we don’t push much faster and harder for a larger-scale shift to more environmentally sustainable ways to support our energy consumption, they say, we are fiddling while Rome burns. It’s an emergency, and our future is at stake!

Grappling with the fine points of utility infrastructure regulation and financing may make some people’s eyes glaze over.  To which I say, are you kidding?  I can’t think of another moment when our courts were faced with environmental and energy law disputes more laden with tension and drama.  This is the high-stakes, heroic, dueling-on-the-ledge stuff on which our future history depends.  It could practically be a Broadway musical.

A Lumber Mill Biomass CoGen Need Not Consider Other Fuels In Its BACT Analysis. Other Sources Should Be So Lucky.

Posted on September 8, 2016 by Seth Jaffe

Ever since EPA began considering how BACT analysis would be applied to greenhouse gas emissions, there has been concern that EPA would use its BACT authority to “redefine the source” – with the particular concern that BACT for a coal plant would now be to burn natural gas instead.  In Helping Hands Tools v. EPA, the 9th Circuit Court of Appeals this week gave some protection to biomass plants biomassfrom such redefinition of the source.  However, other types of facilities will get no comfort from the decision.

Helping Hands Tools involved a challenge to a PSD permit issued to Sierra Pacific for a cogeneration plant to be located at one of its existing lumber mills.  Under EPA’s BACT Guidance, Sierra Pacific stated that the purpose of the CoGen plant was to use wood waste from the mill and nearby facilities to generate electricity and heat. Relying in part on the 7th Circuit decision in Sierra Club v. EPA, which held that it would impermissibly redefine the source to require a mine-mouth coal generating plant to consider different fuels in its BACT analysis, the 9th Circuit found that EPA was reasonable in determining that, because a fundamental purpose of the CoGen plant was to burn wood waste, it would impermissibly redefine the source to require Sierra Pacific to consider solar power as part of its BACT analysis.

Importantly, the Court also rejected the plaintiffs’ request that Sierra Pacific consider greater use of natural gas.  The Court concluded that very limited use of natural gas for the purposes of startup, shutdown, and flame stabilization did not undermine the fundamental purpose to burn wood waste.  This is critical to source-located biomass facilities, because EPA’s GHG Permitting Guidance specifically says that greater use of an existing fuel should be considered in the BACT analysis:

"unless it can be demonstrated that such an option would disrupt the applicant’s basic business purpose for the proposed facility."

Unfortunately, the language of the decision appears to me to give EPA substantial leeway in future BACT analyses to redefine the source in other cases.  It seems to me that, building on the 7th Circuit decision, the Court has simply created an exception to potential source redefinition in circumstances where the location of the facility justifies a very narrow fuel selection.  If a coal plant intends to burn coal from the mine next door, ok.  If a lumber mill intends to burn its own wood waste, ok.  Otherwise, however, all bets are off.

What is particularly troubling was the Court’s acknowledgement that the GHG BACT guidance is vague, and its deference to EPA’s application of its own vague guidance. This is precisely the concern I noted when the Guidance was first issued.  Time will tell, but I foresee some fairly extreme BACT determinations being blessed by some very deferential courts.

Who Moved My Cheese?

Posted on August 31, 2016 by Michael Hardy

Spencer Johnson’s classic came to mind when I learned of new plans for the Burger power plant on the Ohio River.  The Burger plant has had a makeover from an electric generating facility to a massive chemical plant feasting on the abundant natural gas in the Marcellus and Utica regions of Western Pennsylvania and Eastern Ohio.

When I returned from active duty, my employer said, you will practice environmental law. Because I was accustomed to taking orders, I said "yes sir". That led me to cooling towers for the Davis Besse and Perry Nuclear plants on Lake Erie. More dramatically, however, it led me to years of dealing with coal-fired generation in Ohio.  Rich with coal and numerous coal-fired plants on Lake Erie and the Ohio River (and other rivers as well), I thought Ohio would supply cheap, coal-fired energy for many people for years.  Unfortunately, I did not predict the obsolescence of coal-fired electric generation or the recent emergence of natural gas as the leading source of fuel for power. I saw clients invest billions of dollars in pollution control equipment only to see the emission reduction goal posts moved beyond reach as regulators adopted progressively more stringent measures to address new national ambient air quality standards, lake breeze fumigation, long range transport, acid rain, regional haze, hazardous air pollutants, and greenhouse gas emissions.

When I started my  practice, virtually all of the Ohio base load units burned coal. And thousands of Ohio miners worked and their families prospered. Barges carried coal down the Ohio River or unit trains took coal to the Lake Erie plants.  I saw Little Egypt take big bites of coal and overburden in southeastern Ohio. I remember when an interstate (77) was closed to let the mammoth excavator proceed to the next seam of coal on the other side.

I have stood on the air pollution control deck of a massive Ohio River power plant that spans a highway. I have wiped the floor with white gloves of a coal fired plant on Lake Erie. I have worked with the dedicated professionals who took pride in maintaining those plants. So it saddens me to read that talented engineers are being laid off from engineering companies in Akron, and major utilities are selling megawatts on the Ohio River.  AEP and First Energy have announced plans to auction generating units.

Some of us remember that our success was measured in jobs retained while reaching a reasonable accommodation with the environment.  I hope my successors have that opportunity .

So with  sadness and regret – but also an appreciation that my career started in 1973, at the beginning of the burgeoning practice of environmental law, when "Coal Was King" and the Burger plant was alive and well – I hope you watch this short video of the demolition of the Burger coal-fired power plant to make way for a natural gas cracker.  Here is the demise of the Burger "tall stack." May Burger rest in peace.  

Requiem for an LNG Project

Posted on August 29, 2016 by Rick Glick

Perhaps not many, at least not in Oregon, would mourn the failure of a liquefied natural gas terminal and associated gas pipeline project.  As counsel for over a decade to the Oregon LNG project at the mouth of the Columbia River, I mourn less for the failure of the project than the process.  I am confident that if the standards-based approval process had been allowed to play out, we would have satisfied all federal and state permitting criteria.  But, alas, we never got that opportunity.

The Natural Gas Act, as amended in 2005, confers upon the Federal Energy Regulatory Commission exclusive authority over the siting of LNG export terminals and interstate pipelines.  The NGA, however, preserves authority delegated to the states by the Clean Water Act, Clean Air Act, and Coastal Zone Management Act.  The problem is that Oregon law requires state agencies to first receive affirmation from local governments of compatibility with land use regulations before issuing a state permit. 

Other states have similar laws and have attempted to use them to halt or impede LNG projects, only to have  Courts of Appeals for the D.C., First and Fourth Circuits reject the incorporation of local land use planning into state processes as preempted by the NGA.  But the conflict with state law sets up an unnecessary confrontation, adding expense and delay that can prove fatal to a project under development, as it was here.

The Oregon LNG project, aware of the federal preemption argument, nonetheless filed land use applications at the City of Warrenton for the terminal, and at Clatsop County for the pipeline.  The project filed the applications to demonstrate a desire to comply with all applicable regulations, confident in its ability to do so.  In fact, an independent hearings officer, following an evidentiary hearing, concluded the project met all County criteria.  Following approval by the County Commission, and, while an appeal by opponents was pending, an election occurred.  An anti-LNG slate was elected to the Board of Commissioners, and the newly constituted County Commission promptly reversed course.  And there’s the rub: the criteria had not changed, only the elected officials passing judgment.  Thus, local land use compatibility statements were not to be had, rendering the state permitting process impossible to complete.

This is not a screed against the multitude of state or federal agencies reviewing our various, complex permit applications.  To be sure, the agencies felt the political pressure brought by opponents, which caused them to be cautious and deliberate (perhaps too deliberate) and thus slow moving.  Nor is this to suggest that local governments and sentiment should have no role in siting energy projects that affect their communities.  Of course they should.

The real problem, however, is the total deference given under Oregon law to local land use regulations, even when the local land use decision is so blatantly political, thus creating a legal basis for NIMBY-ism.  In our case, this deference essentially gave veto authority to the Clatsop County Board of Commissioners, which cannot have been the intent of Congress or the state legislature.  Otherwise, how would any infrastructure project of national importance ever be constructed—highways, power plants, transmission lines, fiber optic cables, telephone lines, railroads, bridges, or dams—if locals could block it through a land use resolution?

FINDING LEGAL PATHWAYS TO DEEP DECARBONIZATION IN THE UNITED STATES

Posted on July 21, 2016 by John Dernbach

On December 12, 2015, in Paris, France, the parties to the U.N. Framework Convention on Climate Change—a total of 196 countries—unanimously agreed to a goal of net zero greenhouse gas emissions by the second half of this century.  For the United States, the technical and logistical challenge of achieving the goal of the Paris Agreement (as it is called) is enormous, but so is the legal challenge.

The U.S. short-term emissions reduction objective, stated in a submission made in the run-up to the Paris conference, is “to achieve an economy-wide target of reducing its greenhouse gas emissions by 26%–28% below its 2005 level in 2025.”  This objective, the U.S. says, “is consistent with a straight line emission reduction pathway from 2020 to deep, economy-wide emission reductions of 80% or more by 2050.”   Achieving the short-term goal depends on the outcome of the presidential election as well as litigation involving the Clean Power Plan.  And there was, until recently, no roadmap for deep U.S. reductions by 2050. 

The absence of long-term analysis, in the U.S. and other countries, is being filled by the Deep Decarbonization Pathways Project, which is led by the Sustainable Development Solutions Network and the Institute for Sustainable Development and International Relations.  It is based on the work of research teams in 16 countries that are responsible for 74 percent of the world’s greenhouse gas emissions--Australia, Brazil, Canada, China, France, Germany India, Indonesia, Italy, Japan, Mexico, Russia, South Africa, South Korea, the United Kingdom, and the United States.  DDPP says in a report synthesizing the findings of the project to date that most of these countries “had never developed pathways consistent with a global 2°C limit, nor were they actively considering this question.”   (The purpose of the Climate Change Convention is to keep the increase in global temperatures from human-caused greenhouse gas emissions below a “dangerous” level.  That level is widely regarded as 2°C, or 3.6 °F, above pre-industrial levels, although the Paris Agreement seeks to keep the increase “well below” that level.  The temperature increase to date is already about 0.9 °C above 1880 levels, when temperatures were first recorded.)

DDPP has conducted a technical analysis and policy analysis of pathways to deep decarbonization for the United States.  These reports, prepared by E3 (an energy consulting firm), the Lawrence Berkeley National Laboratory, and the Pacific Northwest National Laboratory, appear to be the most detailed studies of how to achieve deep reductions in U.S. greenhouse gas emissions by 2050.  

Perhaps the DDPP’s most important finding “is that it is technically feasible for the U.S. to reduce [carbon dioxide] emissions from fossil fuel combustion” by 85% from 1990 levels by 2050, which is “an order of magnitude decrease in per capita emissions compared to 2010.”  If the U.S. did that, it could reduce its overall greenhouse gas emissions by 80% below 1990 levels by 2050.  

Enormous changes would be required in the U.S. energy system to make those reductions happen.  Because it is difficult to decarbonize gasoline and liquid fuels, the researchers said, meeting the 2050 objective would require almost complete decarbonization of electricity and, among other things, switching a “large share” of end uses that require gasoline and liquid fuels over to electricity (such as electric cars).  It would also be necessary to produce fuel from electricity itself, they said, citing the production of hydrogen from hydrolysis as an example. 

Decarbonizing electricity and producing fuel from electricity itself would double electricity generation but reduce its carbon intensity to 3% to 10% of current levels, requiring a vast increase in either renewable energy (as much as “2,500 gigawatts (GW) of wind and solar generation (30 times present capacity))” or carbon capture and sequestration.  The average fuel economy for light duty vehicles such as cars would need to be over 100 miles per gallon, and these vehicles would need to be fueled almost entirely by electricity and hydrogen.  

The challenge of translating these technical and policy pathways into a workable legal framework is considerable.  Assuming, for example, that the U.S. can achieve 54.5 miles per gallon as a fleet-wide average for new vehicles by 2025, as the current Corporate Average Fuel Economy standard requires, how does the U.S. achieve a fleet-wide average of more than 100 miles per gallon for all vehicles by 2050? As DDPP explains, “[t]his would require the deployment of roughly 300 million alternative fuel vehicles by 2050.”  A similar conundrum exists in reliance on renewable energy sources: what legal changes are needed to guide the development of the grid so that it can continue to be reliable while it accommodates a vast increase in intermittent electricity sources such as solar and wind energy?

Michael Gerrard, who directs the Sabin Center for Climate Change Law at Columbia Law School, and I have begun work on an edited volume that will identify and analyze a wide variety of legal pathways to decarbonization in the United States, based on these reports.  We have assembled an excellent team of legal scholars and practitioners and are aiming for publication in 2017.  We hope to inspire similar efforts in other countries.  

An essential part of the decarbonization challenge is proposing, analyzing, and comparing various legal decarbonization pathways in each individual country, including the U.S.  In the face of a daunting challenge, there exists a real possibility that lawyers can help improve human quality of life throughout the world by facilitating the creation of a legal framework that accommodates zero-carbon development.

Cape Wind Project Suffers Another Blow: Is This The Knock-Out?

Posted on July 13, 2016 by Jeff Thaler

The U.S. Court of Appeals for the District of Columbia Circuit on July 5 issued a ruling that the federal government violated the Endangered Species Act and the Administrative Procedure Act in approving the long-running, oft-litigated Cape Wind offshore wind project proposed to be built off the Massachusetts coast.  Senior Judge Randolph, writing for an unanimous panel, confirmed the District Court’s rejections of a number of the claims advanced by Plaintiffs (who included the Public Employees for Environmental Responsibility, the Town of Barnstable, and the Alliance to Protect Nantucket Sound), but reversed the District Court on two key points.

The proposed Cape Wind project, which has been the subject of voluminous news coverage and many court cases for well over a decade, sought to construct 130 3.6 MW turbines in shallow waters near Nantucket.  Challenges have included scenic impacts; Native American concerns that the project would will block their sunrise views across the sound, disturb ancestral burial grounds, and perhaps disturb cultural relics; and issuance of submerged land leases required by the project. Financial hurdles seemed to put the project into a death spiral two years ago, but quietly the project developers have continued legal fights to defend the permits and approvals previously issued. They have largely been successful—until this month.

Early on, biologists with the U.S. Fish and Wildlife Service (“FWS”) had recommended that the wind turbines be shut off during limited periods of highest risk to two birds listed under the Endangered Species Act-- the piping plover and roseate tern.  However, the FWS ultimately rejected that conservation measure on the grounds that it would impair the financial feasibility of the project. The Court of Appeals held that the FWS’s action was arbitrary and capricious.  The Court further held that the project cannot proceed without compliance with the Migratory Bird Treaty Act and without further analysis of environmental impacts pursuant to the National Environmental Policy Act. 

In conclusion, the Court stated:   “We reverse the district court’s judgment that the Bureau’s environmental impact statement complied with NEPA and that the Service’s incidental take statement complied with the Endangered Species Act, and we vacate both statements.” A copy of the ruling is here.

LNG Global Impacts Not FERC’s Problem

Posted on July 11, 2016 by Rick Glick

In companion cases, on June 28 the DC Circuit Court of Appeals held that the Federal Energy Regulatory Commission, in its environmental impacts analysis of two Gulf Coast LNG terminals, need not assess the potential for increased natural gas extraction and use, or market effects.  The first case deals with the Freeport project in Texas, and the second the Sabine Pass project in Louisiana; the court considered these cases in parallel with each other, and the Sabine Pass case follows the reasoning in the Freeport case.

 The Sierra Club and other national NGOs have attacked LNG facilities (1) for their potential to cause an increase in fracking to extract natural gas and the attendant emission of greenhouse gases, and (2) for increasing the use of U.S.- produced natural gas in world markets, which they assert will drive up the price of natural gas domestically, thus making coal more competitive and its use more prevalent in the U.S.  On this basis the Freeport and Sabine Pass plaintiffs argued that FERC’s failure to consider these potential effects violates the National Environmental Policy Act.  The court disagreed, finding that these effects are too attenuated for FERC to have to evaluate. 

Central to the cases is the fact that the Natural Gas Act confers exclusive authority over the export of natural gas on the Department of Energy, whereas FERC is only responsible for the siting of LNG facilities.  The court reasoned that FERC’s approval of LNG facilities are not the proximate cause of gas exports, which only DOE can approve.  Therefore, FERC need not consider environmental impacts related to market forces that could increase domestic production of gas and the use of gas outside of the United States.

 These same projects face challenges brought by the same NGOs against DOE in which the issue is whether DOE complied with NEPA in authorizing exports of LNG.  The Freeport and Sabine Pass courts “express no opinion” on the merits of the DOE cases.  Still, it seems that the relationship between export approvals and operation of global gas markets is at least as attenuated as FERC’s authorization to construct facilities.  My sense is that DOE will likely prevail there as well.

Minnesota May Not Prohibit Power Sales That Would Increase Statewide CO2 Emissions. Why Not? Pick Your Reason.

Posted on June 17, 2016 by Seth Jaffe

If you needed any further proof that energyelec_mag_fieldlaw is very complicated, Wednesday’s decision in North Dakota v. Heydinger should convince you.  The judgment is simple – the 8th Circuit Court of Appeals struck down a Minnesota statute which provides in part that:

"no person shall . . . (2) import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or (3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions."

Why, you ask?

  • The panel opinion, by Judge Loken, stated that the Minnesota statute violates the dormant Commerce Clause, by regulating purely “extraterritorial” economic activity.
  • Judge Murphy, in the first concurrence, disagreed with Judge Loken’s conclusion that the statute violates the dormant Commerce Clause, but joined the judgment, because she concluded that the statute is preempted by the Federal Power Act.
  • Judge Colloton, in the second concurrence, agreed with Judge Murphy that the statute does not violate the dormant clause, but also concurred in the judgment. Judge Colloton concluded that, to the extent that the “statute bans wholesale sales of electric energy in interstate commerce,” it is preempted by the Federal Power Act.  However, Judge Colloton wrote separately, because he at least partially disagrees with Judge Murphy (as well as with Judge Loken) and does not believe that the Minnesota statute constitutes a complete ban on wholesale sales of energy that increase CO2 emissions.  However, Judge Colloton concluded that, to the extent that the statute is not preempted by the Federal Power Act, it is preempted by the Clean Air Act.

Is that sufficiently clear?

I do feel compelled to add two final notes.  First, I don’t understand why Judge Loken wrote the panel opinion, when his rationale did not command a majority.  Indeed, as Judge Colloton pointed out, the Court should not even have reached the constitutional issue, since a panel majority existed that was prepared to strike down the Minnesota statute on statutory grounds.  (Preemption is considered a statutory, not a constitutional, rationale.)

Second, don’t analogize the electric energy transmission to the flow of water in a pipe, at least before Judge Murphy.  Here’s your electricity and magnetism primer for the day, courtesy of the Judge.

"In the electricity transmission system, individual electrons do not actually “flow” in the same sense as water in a pipe. Rather, the electrons oscillate in place, and it is electric energy which is transmitted through the propagation of an electromagnetic wave.

Certainly brought me back to course 8.02 at MIT.  Not one of my favorites.

Energy Policy Modernization Act of 2015 Passes Senate

Posted on May 17, 2016 by Chester Babst

On April 20, 2016, the U.S. Senate passed S.2012, the Energy Policy Modernization Act of 2015, by a vote of 85-12.  If enacted, S.2012 would be the first comprehensive energy legislation since the Energy Independence and Security Act of 2007.  This bipartisan bill is intended to expand domestic energy systems, facilitate investment into critical infrastructure and improve the performance of federal agencies while protecting the environment.

S.2012 contains two notable provisions that would impact domestic oil and natural gas production and infrastructure development.  First, the Act would designate the Federal Energy Regulatory Commission (“FERC”) as the lead agency responsible for coordinating all applicable federal authorizations and National Environmental Policy Act (“NEPA”) review for proposed natural gas projects and facilities.  According to the Act, once FERC determines that an application for a project or facility is complete, all required federal authorizations must be issued within the timeframe specified by FERC, which “should” not exceed 90 days.  The provision would likely speed the federal approval of interstate pipeline and liquefied natural gas (“LNG”) projects.

Second, the Act creates a Bureau of Land Management (“BLM”) pilot program that would allow operators to lease and develop certain mineral interests owned by the federal government without a federal drilling permit.  Specifically, the pilot program would include 2,000 spacing units in which the federal government owns 25% or less of the mineral interests and none of the surface estate.  BLM would be authorized to waive the requirement that operators obtain a federal drilling permit for the spacing units if BLM determines that the mineral interests are adequately protected by the lease terms or other laws and regulations.  The proposed pilot program may lead to permanent programs that ease the restrictions on exploration and production activities affecting mineral interests in which the federal government owns only a minority share.

The White House has previously threatened to veto legislation aimed at speeding the federal authorizations necessary to construct LNG facilities and pipelines.  However, no such veto statement has been issued with respect to S.2012.  This legislation may not face opposition from the White House because it was developed after numerous listening sessions were held with stakeholders across the country and after weeks of negotiations by many senators seeking common ground for modernizing energy policy.  Senator Murkowski (R-Alaska), Chairman of the U.S. Senate Committee on Energy and Natural Resources, stated that she expects a formal conference with the U.S. House Energy and Commerce Committee to merge the Senate and House bills, but no timeline for a meeting has been established.  

Update on the Clean Power Plan: The Knowns and Unknowns

Posted on March 2, 2016 by Jody Freeman

This is a reposting – the earlier post incorrectly omitted Prof. Jody Freeman’s name as a co-author. Richard Lazarus is also a co-author.

State Reactions to the Stay 

Now that the Supreme Court has stayed the Clean Power Plan, States are in the process of deciding whether or not to proceed with implementation planning, and if so, at what pace to do so. The situation is still in flux. States like Pennsylvania, Virginia, Washington State, California, and most of the northeastern states that are part of the Regional Greenhouse Gas Initiative, have all said they will continue planning. Others, like Texas, Kentucky and West Virginia, have declared they will stop. EPA’s official count shows eighteen States as having halted efforts, with nine still deciding, and thirty still working: http://www.eenews.net/interactive/clean_power_plan#planning_status_chart. Even official statements from the States are somewhat misleading, however: some States that have announced a suspension of compliance planning, like New Jersey, are still sending officials to compliance meetings. 

Still, there is a risk that, on net, momentum will slow, at least until the legal challenge to the CPP is resolved. That process could take more than two years.

Maintaining Momentum Through “No Regrets” Policies

During that time, anything that can be done to maintain momentum on CPP implementation and related policies that will promote clean energy (regardless of whether the rule eventually is upheld) should be supported, with a priority given to helping States pursue “no regrets” policies that will serve their interests whatever the outcome of the litigation. There are a variety of things States and utilities can do now to address shorter term Clean Air Act obligations, such as regional haze, National Ambient Air Quality Standards, or cross-state air pollution, that also would set them up nicely for CPP compliance should the rule be upheld. 

Implications of Justice Scalia’s death

The D.C. Circuit will hear argument on the CPP in June 2016, and is expected to rule on the merits expeditiously, likely by fall of 2016. The panel is viewed as more favorable toward EPA than not, although certainly not a sure thing: Judge Rogers is seen as the most sympathetic to EPA, Judge Srinivasan is seen as at least open to the government’s arguments, while Judge Henderson is seen as hostile to the rule. 

If this panel were to uphold the rule, and the Supreme Court were to remain without a confirmed ninth Justice, it is possible that the Supreme Court could split 4-4, which would normally result in an order affirming the lower court decision. However, there is also a chance that if there were a 4-4 split in a case of this importance and one that would decide the issue once and for all, the Chief Justice would not be content to issue such an order and would instead hold the case over for re-hearing once a ninth Justice is confirmed. If that ninth Justice were appointed by a new Democratic president, the rule’s prospects of being upheld likely would increase; if appointed by a new Republican president, prospects could be the same as they would have been with Justice Scalia on the court. That would require Justice Kennedy, the likely swing vote, to be persuaded by the government to vote to uphold the rule.

There is another interesting wrinkle: the D.C. Circuit panel could change. Judge Srinivasan has been identified as a potential Supreme Court nominee. If he were nominated, he would likely withdraw from pending cases not yet argued in order to prepare for (theoretical) hearings.  But then, of course, a new judge would be lotteried in to fill his place, perhaps changing the balance of the panel. One might think this risk worth taking, since Judge Srinivasan in theory would wind up on the Supreme Court, where he might cast the deciding vote in this (and many other) cases. Yet even if Judge Srinivasan were confirmed, he would be recused from the CPP case because of his earlier participation on the D.C. Circuit panel that denied the stay, so the Court would remain at eight Justices for purposes of this case. Again, this would leave the prospect of a 4-4 tie affirming the decision below (and perhaps affirming a decision to strike down the rule). 

Next Steps and Timing of Litigation

Whatever the composition of the D.C. Circuit panel, however, and whatever it decides, the losing parties might seek en banc review in the D.C. Circuit.  The State and industry challengers would be almost certain to do so, because delay favors their side. This is because the Supreme Court took the unusual step of staying the rule not just until the D.C. Circuit rules on the merits, but for longer: until the Supreme Court either denies certiorari or grants review and decides the case. Delay means the Stay remains in force, which means the deadline for filing compliance plans keeps being pushed off, which means momentum slows, which favors those opposed to the CPP. En banc review is rarely granted, however, and the D.C. Circuit may be reluctant to further delay things by providing it when the Supreme Court has already associated itself with the case (by granting the Stay and making it all but certain review will be granted). 

What all of this means is that the earliest the Supreme Court could decide the case--given the time necessary for the cert petition, briefing, argument and deliberation--is likely to be June 2017, and the latest the Court is likely to decide the case is June 2018. That means the Stay could remain in place for more than two years. 

The fate of the CPP is clearly in the hands of the Supreme Court, which, with an open seat, is clearly in the hands of the President--and most likely the next president. 

Implications for a New Administration

If the Court ultimately upholds the rule, a new president could still withdraw it and replace it with something else, or choose to implement it as-is. A new president might even bargain with a new Congress over suspending the rule in exchange for a more comprehensive economy-wide approach to greenhouse gas regulation, whether a carbon tax or a cap-and-trade approach, or something else. And if the Court, newly constituted, strikes down the Clean Power Plan, a new president would have to decide on Plan B. 

EPA has thus far been mum about possible Plan Bs, but obvious options include a narrower interpretation of “best system” that would regulate power plants within the so-called "fence-line" only, relying exclusively on what the rule refers to as "building block 1.” EPA might be able to set a fairly stringent standard based on this building block alone, although doing so might, ironically, leave utilities far less flexibility to use alternative means of compliance than they would have using the agency’s current approach. EPA might also examine the Clean Air Act for other provisions capable of regulating existing power plant emissions, such as section 115, or even set a NAAQS for greenhouse gases--options that have been discussed before and rejected by the agency, but which could always be revisited. 

Contracting for Original and Renewal of Pipeline Right-of-Ways on Tribal and Allottee Lands

Posted on February 24, 2016 by Tom Sansonetti

The Department of the Interior’s Bureau of Indian Affairs (BIA) has promulgated new regulations involving the original procurement and renewal of Right-of-Ways (ROW) on tribal and allottee lands which take effect on March 22, 2016. These new rules will replace those in place since 1947, creating a series of significant problems. This post lists the problems and suggests a legislative solution.

1) Majority Consent of Life Estate Heirs is Needed for ROW to be Granted or Renewed

The new rules limit the length of a ROW to 20 years. The ROWs are not subject to state or local laws, and the new rules impose consent and approval requirements that do not appear in the current regulations. Under the current law, voluntary agreements could be struck between tribes, allottees, and a company, so long as the BIA Regional Director approved the deal. The BIA would approve if a majority of the allottee landowners consented and the amounts of money paid for the ROW were not less than the fair market value (FMV) of the allotment parcel. Under the new rules, however, the company must obtain a majority consent for the original ROW or renewal thereof, not only from the living life estate allottees, but from their heirs as well. This presents a huge obstacle, as companies will now have to find each of the heirs and then attempt to bargain with them individually. Under the current rules, if agreement could not be reached, then the company was free to use a 1907 statute to condemn the allottee land but never the tribal land.

2) Life Estate Holders Can Withdraw Previously Granted Consents

In two separate New Mexico ROW cases involving Western Refining’s pipeline and Public Service of New Mexico’s (PNM) overhead wires, the companies both originally obtained the written consent of a majority of the life estate holders who were paid fair market value for their consent. However, upon the BIA Regional Director finding a lack of a majority of heirs consenting, certain life estate holders informed the BIA that they were “unconsenting” in order to hold out for better compensation, even though they had cashed the original checks. Because the BIA allowed the holdouts’ action of “unconsenting” to stand, the companies lost their majority consent of life estate holders. Attorneys for the life estate holders are now suing PNM for trespass in federal court in Albuquerque.

3) Fair Market Value Has Become a Floor in Negotiations Rather Than an Appraisal Standard

Since the 1947 statute came into existence, the fair market value (FMV), as determined by BIA-qualified appraisers, of the allotment acreage to be crossed by the pipeline served as the negotiation basis between the company and individual allottees. The allottees, knowing that their land could be condemned under the 1907 statute dealing with ROWs, often bargained for a payment that was two or three times FMV. However, under the new regulations, FMV is a starting point, non-binding and irrelevant to an allottee who believes that the sky is the limit when dealing with large corporations.

4) The Condemnation Alternative is Under Attack Due to Tribal Ownership of Undivided Interests in Allotments

In the Public Service of New Mexico federal district court litigation, PNM sued the allottees of several allotments under the New Mexico condemnation statutes after failing to obtain the consent of a majority of life estate heirs for a 20-year renewal. The federal judge dismissed the condemnation lawsuit, because recently deceased allottees left their interests to the Navajo Nation. Even though those interests amounted to less than 1% of the entire allotment, the court labeled that interest tribal land, recognized the Navajo Nation’s sovereign immunity from suit, declared the Navajo Nation an indispensable party, and dismissed the lawsuit. PNM is appealing the dismissal to the Tenth Circuit. Without the ability to condemn, pipelines will be left only with choice of either paying ransom under the 1947 statute or facing allottee trespass actions.

Western Refining has also filed a condemnation suit against the unconsenting allottees under the New Mexico condemnation statutes. The case is before a different judge than the PNM case and is currently stayed pending a decision from the Interior Board of Indian Appeals on the majority consent of heirs issue.

The best solution to the four problems above requires the active involvement of the Legislative Branch.

Utilizing its plenary authority concerning tribal issues, Congress should pass amendments to the 1907 and 1947 statutes or create new legislation supplanting the current law that:

  1. Eliminates the need for heirs to consent
  2. Eliminates the ability of consenters to unconsent once consideration is paid
  3. Re-establishes the sufficiency of fair market value as the basis for the compensation to be paid
  4. Guarantees the right of pipeline owners to condemn allottee land regardless of partial tribal ownership

Nothing less than the free flow of energy-oriented interstate commerce is at stake.