BLANKENSHIP-KENNEDY DEBATE CLIMATE CHANGE

Posted on January 28, 2010 by David Flannery

On January 21, 2010 thousands packed the auditorium at the University of Charleston in Charleston West Virginia and tuned in on television and radio for the debate between Massey Energy CEO Don Blankenship and environmentalist Robert F. Kennedy, Jr.

Asked about his primary concerns for the future of energy, Mr. Blankenship stated that they were the security of this country and improving the quality of life in this country and throughout the world. This answer became somewhat of a theme for Mr. Blankenship, as he stated his concern for the health and well-being of people, which is dependent on their quality of life, which is heavily dependant on affordable electricity, which is heavily dependent on coal.

When asked the same question, Mr. Kennedy offered several minutes of comments similar to other speeches he has given around the country concerning Appalachia and coal in which he highlighted his families’ ties to West Virginia along with his views against surface mining.

The audience, having a near equal number of supporters from both sides, was relatively subdued thanks to early pleas from University of Charleston President and event moderator Dr. Welch to hold-off applause until the end. At times, however, both debaters received loud applause for their answers to questions.

Throughout the debate, Mr. Kennedy stated the many health and environmental issues he believed to be caused by coal, while Mr. Blankenship reminded Mr. Kennedy that many of his biggest issues with coal, such as the burning of coal and its contribution to Mercury in water, are primarily caused by other countries with much a higher usage of coal, such as China and India.

Mr. Kennedy also focused a great deal on alternative energy, such as wind and solar energy, as well as West Virginia’s need to switch its focus on these alternative energy sources. Mr. Blankenship responded that if it was profitable to build solar panel fields or wind farms, without government subsidies, it would be happening at a greater rate than is occurring. Blankenship stated that his company is pouring hundreds of millions of dollars into the coal industry because that is where the investment will pay off in a free enterprise market.

While the security at the event mirrored that of international flight travel, the debate itself was a success, going off without much disturbance other than the occasional burst of applause.

SCOTT BROWN'S ELECTION - ONE MORE SET-BACK FOR CLIMATE CHANGE LEGISLATION?

Posted on January 27, 2010 by Michael Hockley

When Scott Brown was elected to fill Senator Kennedy’s senate seat, news reports highlighted the impact on health care legislation and the loss of the filibuster-proof sixty vote Democratic majority in the Senate. In environmental circles, however, many commentators pointed out the potential impact on climate change legislation. 

 

Prior to his election, most believed that once Congress passed the health care bill, it would turn its full attention to climate change legislation and pass some form of legislation to limit green house gas (“GHG”) emissions. The loss of this key Democratic Senate seat makes the prospect of GHG legislation in the near future seem less likely, although some commentators take the contrarian view. They argue that if health care reform moves to the back burner, the chances of passing a climate bill would increase because Democrats need a major legislative victory to bolster the 2010 election efforts.

 

Following the United States Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007) finding the Environmental Protection Agency (“EPA”) has the authority to regulate carbon dioxide as a pollutant under the Clean Air Act (“CAA”), some form of mandatory GHG controls, either through legislation, regulation, or a combination of both, has seemed inevitable. In response to the Massachusetts decision, EPA and Congress have been moving on parallel tracks to regulate GHG emissions. 

 

EPA has issued a number of proposed and final rules, including a final mandatory GHG reporting rule, 74 Fed. Reg. 56260 (Oct. 30, 2009), an Endangerment and Cause or Contribute Finding that motor vehicle GHG emissions contribute to GHG pollution and threaten public health and welfare, 74 Fed. Reg. 66496 (De. 15, 2009), and a proposed “Prevention of Significant Deterioration and Title 5 Greenhouse Gas Tailoring Rule,” 74 Fed. Reg. 55292 (Oct. 27, 2009), among others. EPA and the National Highway Traffic Safety Administration also announced a joint proposal to establish light duty vehicle GHG and mileage standards for model years 2012 through 2016.

 

In response to concerns expressed by both industry and environmental interests that the CAA is not the best vehicle for regulating GHGs, factions in the House and the Senate have proposed sweeping legislation to reduce GHG emissions, the Waxman-Markey Climate Change bill, H.R. 2454, “The American Clean Energy and Security Act of 2009,” in the House of Representatives, and  the Boxer-Kerry bill, the “Clean Energy Jobs and American Power Act,” in the Senate.  Both include GHG emissions reductions targets and use a cap and trade scheme to achieve those goals. In addition, they include a variety of other measures to encourage investment in alternative energy sources and energy efficiency. 

 

In recent months, efforts to move forward with this legislation seems to have been eclipsed by efforts to pass comprehensive  health care legislation, but the conventional wisdom was that some form of legislation would be passed once health care was put to rest. Now that the Democrats have lost a filibuster-proof super majority, prospects for climate change legislation seem to be dimming.

 

On the EPA regulatory front, Senator Lisa Murkowski (R-Alaska) has been on the attack, trying to prevent EPA from promulgating GHG regulations that limit emissions from major sources. Most recently, she filed a “disapproval resolution” on January 22, 2010, seeking to retroactively veto EPA’s endangerment and cause or contribute findings that GHGs endanger public health and the environment, thereby .blocking EPA’s GHG regulations. 

 

A disapproval resolution is a procedural mechanism that prohibits executive branch agency rules from taking effect. It only requires 51 votes and is not subject to filibuster rules. Senator Murkowski claims to have the backing of 39 other senators, including three Democrats, Sen. Blanche Lincoln (D-Ark.), Sen. Ben Nelson (D-Neb., and Sen. Mary Landrieu (D-La.). She introduced this resolution on the heels of Scott Brown’s election, and she does not expect this resolution to reach the floor for a vote before Scott Brown is sworn into office.

Even if she is able to garner 51 votes in the Senate, the House must pass a similar resolution, and it must be signed by the President to go into effect. Even if it does not succeed, it signals a widespread lack of support, even among Democrats, for legislation controlling GHG emissions this year.  Scott Brown’s election should make it more difficult to enact climate change legislation, especially with an election season just around the corner because his election is being interpreted by many to signal the electorate’s disapproval of the Obama agenda. 

 

In the meantime, if there is no climate change legislation passed, EPA likely will continue to move down the regulatory path of limiting GHG emissions using its authority under the CAA.

"MEGA" SHALE AND TIGHT SANDS GAS - A GAME CHANGER

Posted on January 19, 2010 by R. Kinnan Golemon

In the past several decades, due in large measure to the persistence of innovative independent oil and gas operators, advancements in drilling and completion technology and the increased demand for natural gas during the expanding economic times that existed prior to year-end 2008, a paradigm shift occurred in the domestic natural gas market that will have significant impact in areas of the U.S. that, heretofore, were not significant producers of the commodity. Prior to this development, supply tightness and price volatility were characteristic features of the natural gas market. Now, due to these " Mega" shale and tight sands gas plays, there will be increased environmental scrutiny of this sector's activities, in addition to the dampening of price swings.

 

            The U.S. gas supply currently is predicted to be at least 150 years at use levels similar to those existing in 2008. Only a few short years ago, forecasters were predicting the need for massive imports of liquefied natural gas to meet predicted near term demand. This change in conditions has very significant implications politically and certainly presents interesting opportunities on a variety of fronts for environmental attorneys.

 

            One particularly interesting aspect of these newly found natural gas reserves is the fact that a significant portion of this exploration, production, processing and transmission activity will be occurring in areas of the U.S. that have had limited exposure to such activity. The last ten (10) years of rapid expansion of natural gas activity in the Barnett Shale area of Texas, i.e., North Central Texas and the Dallas-Ft. Worth metroplex, is a forerunner for what is likely to occur as the resource development expands to other known shale deposits.

 

 

            Needless to say, there is opportunity for tremendous growth in local tax base, ample employment opportunities for certain skill sets, increased income to property owners, and, most certainly, a variety of allegations of environmental harm from anti-drilling opposition. Much of the latter in the very recent past in the Barnett Shale area has been directed at perceived increases in emissions of air contaminants, e.g., VOCs and "toxic" constituents. To date, snapshot air quality sampling has not confirmed any problem. (see January 12, 2010, Texas Environmental Quality Press Release – Oil and Gas Air Tests in Ft. Worth find "No Cause for Concern".) However, on the same date, the Mayor of Dish, a rural community of less than 200 residents, was appearing before another state agency, the Texas Railroad Commission, seeking a cessation to all natural gas drilling, production, processing and transmission activity with the contention that this community was besieged by toxins and odors emanating from nearby natural gas activity. (Additional TCEQ air sampling results from recent tests in that rural setting are due to be released this month.) 

  

           Numerous other environmental related contentions relative to the development of the Barnett Shale reserve have generally been directed at the well completion phase where large volumes of fresh water with additives are utilized in hydraulic fracing (pressurized mixture for breaking apart the formation rock to allow for the natural gas to flow), the disposal of wastewater and the specifics of the proprietary formulas for the additives. In addition, there are a variety of claims relative to general safety, increased truck traffic and disturbances of property for the placing of associated gathering and transmission lines.           

 

            This paradigm shift in the natural gas reserve potential should afford many in our profession an excellent opportunity to provide sound advice and counsel utilizing the experiences we have gained in addressing similar issues in the past.

STATE OF MAINE IDENTIFIES OFFSHORE WIND DEMONSTRATION SITES FOR FIRST-IN-NATION DEEPWATER TECHNOLOGIES

Posted on December 16, 2009 by Jeff Thaler

On December 15, Governor John Baldacci received from the Maine State Planning Office and Maine Department of Conservation the results of a search process to identify demonstration sites for offshore wind technology located in Maine coastal waters. The team from the State agencies traveled up and down the coast of Maine over the last four months talking with fishermen, citizens, local officials and others to determine the best areas to take advantage of Maine’s amazing offshore resources. Three sites were identified by the process: The sites are off Monhegan Island, Boon Island and Damariscove Island.

The site off Monhegan Island will be used by a consortium led by Dr. Habib Dagher and his team at the University of Maine, to which I am legal counsel. The consortium was recently awarded an $8 million grant from the U.S. Department of Energy for this project. The consortium includes more than 30 partners, including private companies interested in offshore wind development. This will be the first deep-water test site in the United States; as Dr. Dagher said, “We have a national responsibility here to lead the country in that direction."

 

Maine has been increasingly active in the past several years with wind energy development. There are currently 300 megawatts operating or under construction in Maine, with another 450 megawatts of wind in various stages of development throughout the State. Already, Maine is home to 95 percent of the operating on-shore wind capacity in New England.

 

The Governor said that the potential of our offshore wind resources is even greater, estimated at 100 gigawatts, or three-to-four times the current peak demand for all of New England.

Maine has the greatest renewable protfolio standard in the country, and has established a bold vision of reducing the State’s consumption of liquid fossil fuels by at least 30 percent by 2030. Maine has set ambitious but achievable targets for development of wind power. A State Task Force on offshore energy, with which I have been involved this year, is prepared to recommend this month that Maine have as a goal the production, by 2030, of at least 5 gigawats of deepwater wind power.

 

“The willingness to move forward is a significant investment in this State’s future as a leader in renewable energy,” said Governor Baldacci. “Clean energy development will reap investments and jobs right here in Maine.”

 

The University has the goal for the first demonstration turbine to be operating in the water in 2011. The remaining two sites that are available for demonstrations of offshore wind or wave energy technology are available to developers, who must begin the process by obtaining an expedited permit through the Department of Environmental Protection.

More information, including maps of the demonstration sites, is available at www.maine.gov/doc/initiatives/oceanenergy/oceanenergy.shtml or by contacting Jeff Thaler at jthaler@bernsteinshur.com

Carbon Offset Credits Available Now

Posted on December 15, 2009 by Patrick Dennis

Despite the widespread publicity surrounding the actions being undertaken by EPA and in Congress to address greenhouse gas emissions and the potential for a cap and trade program at the federal level, few lawyers are aware that rigorously verified carbon offset credits are currently available for purchase by third parties. Generally, carbon offset credits are issued in exchange for a project proponent’s (e.g., a property owner or other participating entity) implementation of practices and programs which sequester carbon or otherwise reduce greenhouse gas emissions. 

In some types of projects, CO2 (carbon dioxide) is sequestered in the leaves, trunks and roots of trees on the property, converted into carbon, and held in the vegetation and soil on the property. By growing a forest or managing a forest in such a way that it sequesters more carbon than would otherwise be held on the property, the project proponent becomes eligible for carbon offset credits, which can then be sold or optioned to third parties.

Carbon offset credits are issued not just for forest projects, but also for greenhouse gas reduction projects involving coal mine methane, landfill gases, livestock gases, and nitric oxide emissions. The carbon offset market incentivizes greenhouse gas sequestration and reduction, and provides a product to third parties looking for a way to offset their carbon emissions or otherwise satisfy regulatory requirements.

 

There are currently few organizations that issue any type of evaluation and registration for carbon offset credits. One of these organizations, the Climate Action Reserve is a non-profit based in Los Angeles, California which has registered a variety of types of greenhouse gas projects and is currently issuing carbon offset credits to project participants. The Chicago Climate Exchange also provides a cap and trade system for six greenhouse gases, with global affiliates and projects worldwide. There are other, regional and specialized programs that are much more narrow in their applicability and the types of emissions they verify.  

The Climate Action Reserve’s carbon offset credits are the result of a rigorous, third-party verification process to quantify and verify the net greenhouse gas emissions sequestration on projects based upon hundreds of pages of protocols which address details ranging from the modeling of carbon stored in live trees, dead wood and wood products, to annual monitoring requirements to determine reversals of carbon sequestration.  In the case of forest projects, covenants and contracts require that the project proponent (e.g. the property owner) abide by the protocols and sequester carbon for at least 100 years. 

A variety of legal issues arise about how best to document a project proponent’s commitments over the 100 year period, whether that be through contracts, covenants, restrictive easements, conservation easements, mortgages or some combination thereof. While California’s statutory scheme is relatively clear about what types of recorded documents run with the land, other States provide less guidance. See, e.g., California Civil Code 1460 et seq. Likewise, legal documentation must address a variety of issues including subordination to future encumbrances; future transfers of any subject property; reversals or significant carbon loss in the event of natural disasters (e.g., forest fires, earthquakes, etc.); and remedies in the event of intentional acts in violation the project proponent’s commitments (e.g., failure to sequester adequate carbon stocks).

After a project proponent complies with the documentation requirements, registers its project with the applicable entity and been issued carbon offset credits, it is then available to sell or option such credits to third parties. The market for these credits is growing. Currently, corporations and entities who have made voluntary greenhouse gas reduction commitments have purchased these credits to help fulfill such commitments. Obviously, if a mandatory cap and trade system is implemented either in California or on a nationwide basis, then such carbon offset credits will become more valuable. Likewise, if federal, state and local authorities, courts or other jurisdictions require project developers to mitigate their greenhouse gas emissions, carbon offset credits are likely to become more expensive.

Gibson, Dunn & Crutcher provides pro bono representation to the Climate Action Reserve. Posting submitted by: Patrick W. Dennis, Charles H. Haake and Shireen B. Rahnema of Gibson, Dunn & Crutcher.

Carbon Offset Credits Available Now

Posted on December 15, 2009 by Patrick Dennis

Despite the widespread publicity surrounding the actions being undertaken by EPA and in Congress to address greenhouse gas emissions and the potential for a cap and trade program at the federal level, few lawyers are aware that rigorously verified carbon offset credits are currently available for purchase by third parties. Generally, carbon offset credits are issued in exchange for a project proponent’s (e.g., a property owner or other participating entity) implementation of practices and programs which sequester carbon or otherwise reduce greenhouse gas emissions. 

In some types of projects, CO2 (carbon dioxide) is sequestered in the leaves, trunks and roots of trees on the property, converted into carbon, and held in the vegetation and soil on the property. By growing a forest or managing a forest in such a way that it sequesters more carbon than would otherwise be held on the property, the project proponent becomes eligible for carbon offset credits, which can then be sold or optioned to third parties.

Carbon offset credits are issued not just for forest projects, but also for greenhouse gas reduction projects involving coal mine methane, landfill gases, livestock gases, and nitric oxide emissions. The carbon offset market incentivizes greenhouse gas sequestration and reduction, and provides a product to third parties looking for a way to offset their carbon emissions or otherwise satisfy regulatory requirements.

 

There are currently few organizations that issue any type of evaluation and registration for carbon offset credits. One of these organizations, the Climate Action Reserve is a non-profit based in Los Angeles, California which has registered a variety of types of greenhouse gas projects and is currently issuing carbon offset credits to project participants. The Chicago Climate Exchange also provides a cap and trade system for six greenhouse gases, with global affiliates and projects worldwide. There are other, regional and specialized programs that are much more narrow in their applicability and the types of emissions they verify.  

The Climate Action Reserve’s carbon offset credits are the result of a rigorous, third-party verification process to quantify and verify the net greenhouse gas emissions sequestration on projects based upon hundreds of pages of protocols which address details ranging from the modeling of carbon stored in live trees, dead wood and wood products, to annual monitoring requirements to determine reversals of carbon sequestration.  In the case of forest projects, covenants and contracts require that the project proponent (e.g. the property owner) abide by the protocols and sequester carbon for at least 100 years. 

A variety of legal issues arise about how best to document a project proponent’s commitments over the 100 year period, whether that be through contracts, covenants, restrictive easements, conservation easements, mortgages or some combination thereof. While California’s statutory scheme is relatively clear about what types of recorded documents run with the land, other States provide less guidance. See, e.g., California Civil Code 1460 et seq. Likewise, legal documentation must address a variety of issues including subordination to future encumbrances; future transfers of any subject property; reversals or significant carbon loss in the event of natural disasters (e.g., forest fires, earthquakes, etc.); and remedies in the event of intentional acts in violation the project proponent’s commitments (e.g., failure to sequester adequate carbon stocks).

After a project proponent complies with the documentation requirements, registers its project with the applicable entity and been issued carbon offset credits, it is then available to sell or option such credits to third parties. The market for these credits is growing. Currently, corporations and entities who have made voluntary greenhouse gas reduction commitments have purchased these credits to help fulfill such commitments. Obviously, if a mandatory cap and trade system is implemented either in California or on a nationwide basis, then such carbon offset credits will become more valuable. Likewise, if federal, state and local authorities, courts or other jurisdictions require project developers to mitigate their greenhouse gas emissions, carbon offset credits are likely to become more expensive.

Gibson, Dunn & Crutcher provides pro bono representation to the Climate Action Reserve. Posting submitted by: Patrick W. Dennis, Charles H. Haake and Shireen B. Rahnema of Gibson, Dunn & Crutcher.

Be Careful What You Wish For

Posted on December 11, 2009 by Lee A. DeHihns, III

On December 7, 2009, EPA Administrator Lisa Jackson stated that greenhouse gases (GHGs) “threaten the public health and welfare of the American people”. This CAA endangerment finding was what everyone had expected due to the strong proposed finding and the inevitable result of legislation that the Obama administration has been supporting.  

Now that the U.S. has a position to take to Copenhagen - either EPA or Congress will tackle and reduce GHGs - so count on the U.S. to do its part. Despite all the discussions about the costs of the U.S. policy on the U.S. economy, which are not close to being resolved, where will the money come from to help the 3rd World countries? Amounts of $10B a year and upwards of hundreds of billions of dollars are used like the money is easily available in today’s economy. 

If GHGs are a serious threat, reductions are necessary and need to start soon. However, let’s be very careful to not to solve the problem by pushing the cost of energy so high that most of the world will eventually enjoy clearer skies and air, while sitting in the dark or shivering during the winter months.   

In shifting to cleaner fuel sources like natural gas (or solar or wind) as preferred sources of energy we need to be certain that the supply system can be created in a cost-effective manner and in time to meet the GHG emissions reduction goals. We also need to be sure that siting such generation facilities meets with the expectations of the host communities.

 

"Fast-Tracking" of Solar Development Not a Bypass of Environmental Review

Posted on November 20, 2009 by Linda Bullen

On June 29, 2009, Department of the Interior (DOI) Secretary Ken Salazar announced several initiatives to aid development of solar energy facilities on federal lands in the Western U.S. Working with Western leaders, the DOI initiative would:

 

  • Designate prime zones for utility-scale solar development
  • Open new Bureau of Land Management (BLM) offices to facilitate permit processing
  • Expedite project proposals. 

Twenty-four tracts of BLM land were designated as Solar Energy Study Areas, upon which projects of 10 megawatts or greater would, under this initiative, be eligible for priority processing. This “priority processing” is commonly referred to as “fast-tracking.” In early November 2009, Secretary Salazar announced the fast-tracking of six renewable energy facilities located on federal land in the State of California. 

 

Fast-tracking is not intended to circumvent any environmental or other process, but rather to facilitate the identified projects identified by the federal agencies involved (most commonly the BLM), giving priority to those that are marked as fast-tracked projects. Nevertheless, several fast-tracked projects, and fast-tracking in general, has come under criticism by some members of the environmental community and others.

 

This criticism is misplaced to the extent that it suggests that fast-tracked projects are not subject to the same rigorous scrutiny as non-fast-tracked projects. Every utility-scale project on federally-owned land is subject to review under the National Environmental Policy Act (“NEPA”). NEPA mandates thorough review of all environmental aspects of any utility-scale energy project on federal land. 

 

The NEPA process does not allow for “short cuts” or circumvention of any part of the process on projects upon which NEPA applies. Accordingly, fast-tracking of renewable projects does not result in a less meticulous or careful environmental review, just an expedited one. Efficiency does not equate to inadequacy, and such criticisms are misplaced.

EPA Tries to Silence Employees Who (Weakly) Criticize Cap-And-Trade

Posted on November 11, 2009 by Rodney Brown, Jr.

Obama’s EPA finds itself embroiled in a controversy that recalls the Bush Administration: trying to control what the agency’s employees can say about climate change. Today’s controversy is more limited, and more nuanced, than earlier ones. EPA is no longer asking its employees to deny that climate change exists. Instead, EPA has asked two of its attorneys to stop identifying themselves as EPA experts when they publicly criticize a cap-and-trade system for regulating greenhouse gases. Still, I wonder why EPA cares.

EPA previously allowed the attorneys to criticize cap-and-trade as private citizens. The two wrote letters and opinion pieces claiming cap-and-trade doesn’t work, primarily because companies can buy “offsets” that allow them to continue operations without reducing their emissions. They claim a carbon tax would work better than cap-and-trade.

Their writings have not had much effect on the debate in Congress and elsewhere. So the two recently switched from the written word to YouTube, posting a carefully produced video in which they more assertively cite their EPA credentials and experience to justify their critique of cap-and-trade. And as Grist recently noted, EPA took the bait.

EPA should stop worrying about the two attorneys. The two fail to recognize that cap-and-trade works fine when it’s done right. In fact, EPA itself runs one of the most successful cap-and-trade programs in the world. Several years ago, EPA needed to reduce smog in the eastern US. Instead of using typical command-and-control regulations, EPA created the NOx Budget Trading Program. Just last month, EPA released a report on the results achieved by that program. According to EPA, “summertime NOx emissions from power plants and large industrial sources were down by 62 percent compared to year 2000 levels and 75 percent lower than in 1990.”

And the emitters were able to achieve these reductions at a lower cost by trading with other emitters who had cheaper options for compliance. Smithsonian magazine reported a recent estimate that businesses paid only $3 billion to achieve emission reductions that would have cost them $25 billion under traditional command-and-control regulation.

The two attorneys don’t even need to worry about companies finding ways to avoid compliance with the system. Last year, only two emitters failed to comply out of 2,568, even then by only a modest amount. This is not a system full of loopholes.

Finally, the two attorneys ignore the fact that their own agency, under the Obama administration, will get to write the rules for how companies comply with a carbon cap-and-trade system. Both the Waxman-Markey and Boxer-Kerry bills require EPA to write rules regulating how companies can use “offsets” to comply with the system. Surely the agency can write rules that make this cap-and-trade system work as well as the NOx system the agency already runs.

And one more thing: As Grist reports, many experts think that the alternative — a carbon tax — may not achieve the emission reductions we need. We can only guess what carbon price might lead to the right amount of emission reductions. We’ll get the tax revenues we predict, but not necessarily the carbon reductions.

So the two attorneys should lighten up on their criticisms. But even if they don’t, EPA should stop worrying about them so much.

Connecticut v. AEP Decision Supports Public Nuisance Actions Aimed at GHGs

Posted on October 23, 2009 by Gregory Sharp

In Connecticut v. AEP, the Second Circuit upheld the right of state and municipal governments and private land preservation groups to pursue public nuisance claims against electric generating facilities with significant greenhouse gas emissions (GHGs), including those operated by TVA,. The plaintiffs alleged that facilities operated by five of the six defendants were the largest emitters of carbon dioxide in the country and among the largest in the world.

 

A recent ACOEL blog by Bob Wyman and Mike Romey touched on the decision in the context of the similar issues raised in the Fifth Circuit’s Comer decision and the Northern District of California’s decision in Kivalina. This blog will focus on some of the specific issues raised in the AEP decision.

 

 

 

The 139 page opinion exhaustively analyzes the numerous issues raised in the appeal, which was taken by the plaintiffs from a dismissal of their complaints by the District Court. The trial court held that the claims were non-justiciable as raising political questions.

The Second Circuit held that the district court erred in dismissing the complaints on political question grounds, that all of the plaintiffs have standing , that the federal common law of nuisance governs their claims, that plaintiffs have stated claims under the federal common law of nuisance, that the claims have not been displaced by Congressional action, and that the TVA’s alternate grounds for dismissal were without merit.

 

The decision turns in large part on the Supreme Court’s landmark “one man, one vote” decision in Baker v. Carr in 1962, which laid out six factors for determining when a complaint raises a non-justiciable political question based on the separation of powers doctrine.

 

One of the central issues was whether the federal common law was inapplicable because Congress had displaced common law rights through legislative action. On the displacement issue, the Second Circuit relied in part on Milwaukee I&II, noting that if Congress does not adopt statutes which cover a plaintiff’s claims and provide a remedy for them, then the plaintiff is free to bring its claims under the federal common law of nuisance. The Second Circuit concluded that Congress had not done so with respect to GHGs.

 

The Court concluded that all plaintiffs satisfied the injury in fact test for federal standing. The states alleged current injury from an increase in carbon dioxide levels that has caused rising temperatures and climate change resulting in reduced snowpack and related harms. The states also alleged future catastrophic injuries from continued increases in temperature, including a catastrophic change in climate when a tipping point is reached.

 

The land trusts alleged no current injury, but alleged future injuries and increased risk of harm. The Court found these injuries constitute “special injuries” to the land trust plaintiffs’ property interests, which are different in kind from injuries sustained by the general public.

In its conclusion, the Court found that, as to air pollution, and GHGs in particular, this case fits the same niche occupied by Milwaukee I with respect to water pollution. Paraphrasing the concluding words of Milwaukee I, the opinion notes: “’It may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance. But until that comes to pass, federal courts will be empowered to appraise the equities of the suits alleging creation of a public nuisance’ by greenhouse gases.”

 

In an interesting footnote, the decision notes that Justice Sonia Sotomayor was originally a member of the panel, but was elevated to the Supreme Court in August, so the appeal was determined by the remaining two members of the panel.

 

As with the recent 5th Circuit decision in Comer, the decision can be expected to increase pressure on Congress to act to develop a comprehensive greenhouse gas emission regulatory program, unless the Supreme Court reverses before Congress acts.

TWO NEW GHG NUISANCE CASES GO DIFFERENT DIRECTIONS

Posted on October 20, 2009 by Robert Wyman

Following on last month's Second Circuit decision in Connecticut v. AEP, two recent climate change decisions show that the federal courts continue to grapple with whether to allow nuisance suits against emitters of Greenhouse Gases (GHGs). It will likely take some time -- and a trip to the Supreme Court -- before this area of the law is settled. 

 Just last week in Comer v. Murphy Oil, the Fifth Circuit gave the green light to a class action brought by property owners along the Mississippi Gulf Coast against oil and chemical companies and utilities. Plaintiffs' alleged that GHG emissions from the defendants' operations contributed to global warming, heated the oceans, raised sea levels and made Hurricane Katrina stronger than it would have been. The court held that the plaintiffs had Article III standing to assert state law nuisance and trespass claims for the resulting damage to their property and that the political question doctrine did not apply to this "ordinary tort suit."

 

On September 30 the Northern California district court hearing Native Village of Kivalina v. ExxonMobil went the other way and granted the defendants' motion to dismiss. The court found that the Eskimo village who brought the suit could not establish that the threat to its existence from rising sea levels was "fairly traceable"

to the defendants' GHG emissions and thus lacked standing. The court also found that the plaintiffs' federal common law nuisance suit intruded on the separate political branches as it "seeks to impose liability and damages on a scale unlike any prior environmental pollution case . . . ."

Both cases cited AEP, where the Court rejected similar standing and political question challenges and allowed the plaintiffs, including eight states, to sue a group of electric power companies. The Fifth circuit lauded AEP's "careful analysis" of the political question doctrine and sharply criticized the AEP trial court's "serious error of law." Judge Saundra Brown Anderson's decision in Kivalina, on the other hand, found little to like in the AEP decision: "neither Plaintiffs nor AEP offers any guidance as to precisely what judicially discoverable and manageable standards are to be employed in resolving the claims at issue."

So what can we take away from this trio of cases?

The appellate courts are clearly more comfortable with taking these cases than the trial courts. In each of these three cases, the District courts dismissed the suits. Odds are good that the Ninth Circuit in Kivalina will agree with her sister circuits making it a clean sweep.

Cases like Comer which assert state common law claims in diversity and seek only damages for past conduct are bound to run into less trouble than cases like AEP and Kivalina which assert federal common law claims and seek to enjoin future emissions OR ALLEGE potential future injury.

The latter cases more directly call into question the limits of the power of the federal judiciary to make common law, the traceability of the harm to the defendants' emissions and the prerogatives of the legislative and federal branches and their ability to displace federal common law. On the other hand, state common law claims seeking damages for past injury are, as the Comer court said, just "'ordinary tort suits." The court applies easily discernable state law and is not asked to promulgate emissions standards.

It is worth remembering that the issues the courts in AEP, Comer and Kivalina grappled with are issues that are specific to the federal courts -- federal common law, Article III standing, and federal separation of powers. It remains to be seen whether plaintiffs will assert these same cases in the state courts and avoid the uncertainty that will continue to exist in the federal system for some time.

However interesting the procedural issues presented by these cases might be, they are nothing in comparison to the complex and difficult issues presented by the merits of these cases. Liability, causation and damages still must be proven.

Finally, the green light given to the federal judiciary by the Second and Fifth Circuits, combined with the EPA's recent steps to regulate GHGs under the Clean Air Act, will place additional pressure on Congress and the relevant stakeholders to pass a comprehensive climate change law. If not, federal courts (and juries) could soon be in the business of climate change regulation.

 

Authored by: Robert Wyman and Michael Romey of Latham & Watkins, LLP

MIXED RESULTS FOR OREGON CLIMATE CHANGE LEGISLATION

Posted on August 3, 2009 by Rick Glick

In my February 23, 2009 posting, I described Oregon Governor Ted Kulongoski’s ambitious agenda for state action to reduce green house gases (GHG). But then the tumbling economy got in the way and GHG lost its position at center stage. Still, some things did get done in the session that ended last month.

 

Oregon had already adopted renewable energy portfolio standards (RPS) for its electric utilities, adopted California automotive emissions standards and had the nation’s most generous business energy tax credit (BETC). This year the plan was to add a GHG cap and trade program and establish fuel standards, among other things.   Some of it passed, some didn’t, and the Governor has said little as to which he will sign into law.

 

SB 80 would have established the cap and trade program, in line with the Western Climate Initiative, but failed. The principle reason seems to be that a federal bill may be imminent. That legislation, the Waxman-Markey bill (HR 2454) passed the House on June 26 by a razor thin vote along party lines (219-212). The bill includes a provision pre-empting state legislation. Its fate is in the Senate, where it will need at least 60 votes to survive a filibuster, and the final shape of the bill is anyone’s guess. If it appears a federal cap and trade bill is not achievable or indefinitely delayed, SB 80 is likely to be reintroduced in Oregon in some form.

Other climate bills did pass. 

 

  • SB 38 authorizes a rulemaking to require registration and reporting for import to the state of electricity or fossil fuels. 
  • SB 101 establishes a GHG standard for electricity generation and prohibits utilities from long-term financial commitments for resources that do not meet the standard, effectively banning import of coal fired plant output. 
  • HB 2186 calls for development of a standard to reduce GHG emissions from transportation fuel 10% by 2020 and to conduct a study on retrofitting of trucks to make them more efficient; this element was proposed as mandatory, but a compromise calling for the study was adopted. This provision is intended to piggy-back on a California study of improving existing truck efficiency. HB 2186 also established a task force to look at reducing GHG emissions through integrated land use and transportation planning. 
  • HB 3039 promotes solar energy and provides a 2:1 RPS credit for each kWh produced from a qualifying facility operational before January 1, 2016 and that generates at least 500 kW. The bill sets a limit of 20 MW of capacity for the RPS credit. 

 

  • HB 2940 allows RPS credits for biomass facilities in place before 1995, capped at 100 MW. There are 8 biomass plants and one garbage burner in the state. This controversial bill was not proposed by the utilities, rather it was driven by the Oregon forest products industry in the interest of maintaining jobs and to provide a source of income for declining mills. Thought the bill had broad bi-partisan support among legislators, many observers see it as inappropriate to give RPS credits to old generating plants, predicting that existing hydropower will be right behind. The concept behind RPS for many is to offer an incentive for new development of renewable resources, not to reward existing ones. As of this writing the Governor has not acted on the bill but is known to be considering a veto.

 

  • HB 2472 modifies the BETC to include manufacture of electric vehicles among the industries eligible for the credit, along with renewable energy facilities and manufacturers of equipment for renewable energy production. The BETC was reduced to match budget concerns, and the Governor is also considering a veto of this bill in the interest of keeping Oregon competitive to attract clean tech business.

All eyes now shift to the U. S. Senate to see if there will be federal GHG controls enacted. It may take a while, these things take time.

GLOBAL WARMING: PROBABLY AN INCREMENTAL SUCCESS STORY

Posted on July 31, 2009 by Stephen E. Herrmann

On July 8, 2009, at the meeting of G8 world leaders, the United States agreed to a benchmark to limit climate change. It joined some other industrialized countries by agreeing that the globe should not warm up more than 2º Celsius (that is 3.6º Fahrenheit). A limit of 2º Celsius arose out of a scientific consensus. Scientists assembled by the United Nations in 2007 said that the world could face significant dangers if we warmed it up more than 2º Celsius. But David Archer at the University of Chicago said that it’s not a hard and fast danger point, more of a judgment call.

 

The results left some Western leaders cheering. British Prime Minister Gordon Brown called the group’s statement a “historic agreement.” Germany Chancellor Angela Merkel said it was “a clear step forward.” However, White House Press Secretary Robert Gibbs was a little less definite, saying: “I think in many ways success for us is going to be getting something through Congress and to [the President’s] desk. It puts in place a system, a market-base system, that lessens the amount of greenhouse gases in the air. Look, that’s going to be the true measure of things.” 

So what was agreed to on July 8? Michael Forman, Obama’s chief negotiator at the Summit said: [The G8 countries] pledged to confront the challenges of climate change and committed to seek an ambitious global agreement. They agreed to join with other countries to achieve a 50% reduction in global emission by 2050 and a goal of 80% reduction by developed countries by 2050.” 

 

But, we should realize that there is a hitch. The 50%and 80% reductions do not refer to the same starting number. The language in the G8 declaration is that there will be an 80% reduction from 1990 or later years. In other words, nations could pick their own starting point. In the United States, emissions have increased nearly 16% since 1990 so there is quite a bite of room in deciding where to start. Also, much of the world’s population is in non-G8 countries. China, India, Mexico and Brazil feel the better-established nations are not doing enough in the short term. They also worry that major reduction commitments on their parts, even if below the 80% target of rich nations, would hamper their economic growth.

 

But, it would certainly appear that the G8 accord is probably an incremental success. Until now, the United States has resisted embracing a target because it implied a commitment to dramatically change the way the world generates electricity, fuels its cars and builds its houses. The long range goals over the coming decades may be easier to agree upon when what the short-term action should be to start moving in the right direction. We all need to hope for the best.

 

KANSAS RENEWABLE ENERGY ACT: UNUSUAL COMPROMISE RESURRECTS COAL PLANT CONSTRUCTION; LIMITS AUTHORITY OF STATE ENVIRONMENTAL AGENCY

Posted on July 9, 2009 by Charles Efflandt

With the May 2009 enactment of comprehensive energy legislation, Kansas joined a majority of states establishing renewable and clean energy requirements. Although a significant step in the development of renewable energy, the story receiving the most attention was that the new law, ironically, resurrected a presumed-dead coal-fired power plant project. That project, which involved two proposed 700 megawatt coal-fired generating units, had previously been denied a construction permit solely due to concerns over the climate change impact of perceived excessive emissions of carbon dioxide. The legislature further enacted limitations on the broad regulatory authority relied on by the state environmental agency to deny the coal plant project a permit. The question now being asked is whether the complex political compromise that enabled the passage of the legislation was a “win-win” or a “no-win” result.

BIOFUELS AND CLIMATE CHANGE

Posted on June 23, 2009 by Christopher Davis

Biofuels are the subject of much recent interest and investment, as indicated by a recent Wall Street Journal article on biomass fueled power plants. Given the increasing scrutiny that is being given to “green” marketing claims by the Federal Trade Commission and various citizen groups (and the potential for SEC scrutiny of similar claims in public offering prospectuses), care should be taken to analyze and document the basis for any claims of carbon neutrality or other environmental benefits associated with particular biofuels.  

 Advantages cited by biofuel proponents include reduction of greenhouse gas (GHG) emissions as compared to fossil fuels, energy security, benefits from domestic production and green job creation. Downsides of biofuels production can include displacement of food crops and increased food prices, deforestation and conversion of grasslands to crop lands, GHG emissions associated with growing and converting biofuels, and other environmental impacts such as nutrient runoff and water consumption.
 

 

While all biofuels are renewable energy sources, this category includes a variety of liquid and solid fuels with a variety of sources and uses. For example, power plants can utilize biomass, generally in the form of wood or municipal solid waste. In the transportation arena, fuel can be made from corn and cellulose-based ethanol, or oils from soybeans, palm oil or animal wastes that can be used directly or chemically processed into biodiesel. Additional types of biofuels include syngas and algae-derived fuels. 

Numerous “clean tech” companies as well as established energy multinationals have invested in biofuels production. Examples include Mascoma Corporation and Verenium Corporation (cellulosic ethanol), Changing World Technologies (biodiesel from animal waste), GreenFuel Technologies (algae-based fuel) and Biogas Energy and Harvest Power (methane from agricultural wastes). Large energy and waste management companies are also investing heavily in biofuels, including Covanta (biomass-fired power plants), BP, Chevron, and Shell Oil (bio-ethanol and biodiesel), and Waste Management (landfill gas). The market for biofuels is sensitive to oil prices and demand for transportation fuels, as evidenced by recent bankruptcies and economic distress in the corn-based ethanol industry.

Biofuels are supported by a variety of federal and state mandates, subsidies and tax credits. For example, the Energy Policy Act of 2005 established a renewable fuel standard, and this standard was increased by the Energy Independence and Security Act of 2007. Further, the Food, Conservation, and Energy Act of 2008 provides financial assistance to biorefineries, funding for advanced biofuels and biomass research, biomass crop assistance, and tax credits for cellulosic ethanol production, among other measures. In addition, the American Recovery and Reinvestment Act of 2009 provides for loan guarantees, tax credits, and Department of Energy research related to biofuels and biomass energy.   Ethanol proponents are pressing Congress to further increase the mandate for ethanol use in transportation fuels, but many groups are simultaneously opposing such an increase.

Biofuels are often claimed to be “carbon neutral” (i.e., producing no net GHG emissions), because the plants from which they are derived only emit the same amount of carbon they would have released if they naturally died and decomposed, as compared to fossil fuels that release carbon stored in the earth’s crust that would not have been emitted. But not all biofuels are equal and generic claims of carbon neutrality need further scrutiny. 

Recently, a number of studies have attempted to assess the lifecycle GHG emissions of various biofuels. For example, several studies, including a leading study by the University of Minnesota and a California study performed in association with its low-carbon fuel standard, have concluded that corn-based ethanol may result in minimal net GHG emission reductions or even net GHG increases. This conclusion has been supported by scientists from The Nature Conservancy in a study published in Science that examines the GHG emissions and other environmental impacts of land use changes involved in the production of various biofuels. They conclude that there are significant differences in the “carbon footprint” of different biofuels based on how and where the underlying crops are grown.    In its recent proposed regulations for the National Renewable Fuel Standard, EPA has proposed to require evaluation of GHG emissions over the full lifecycle of various biofuels and to establish life cycle GHG emission reduction thresholds as compared to a lifecycle emissions analysis of baseline petroleum fuels – a requirement that is opposed by corn-based ethanol proponents.

It is clear that advanced biofuels, such as cellulosic ethanol and some types of biodiesel, hold great promise to reduce GHG emissions from transportation and other fuel uses. Such biofuels are clearly part of the solution in mitigating climate change and developing a sustainable energy economy, but careful scrutiny is needed to ensure that the full life cycle GHG emissions and other environmental impacts of biofuels are considered by policymakers and investors.

Posted by Christopher P. Davis, Goodwin Procter LLP

Interior Secretary Salazar Demonstrates True Commitment to Renewable Energy

Posted on June 15, 2009 by Linda Bullen

On May 2, 2009, Secretary of the Department of the Interior, Ken Salazar held a public meeting just outside Las Vegas, in the Red Rock Canyon National Recreation Area, to announce the opening of four new BLM offices to handle renewable energy permitting. The offices will be located in Nevada, Arizona, California and Wyoming, and have been designed to address the backlog of pending renewable energy project applications. The DOI estimates that 200 solar applications and over 25 wind projects are pending with the BLM in the western states.

 

            I was one of the 25 or so attendees lucky enough to have the honor and privilege to be invited to a meeting with Secretary Salazar prior to the public meeting where this announcement was made. This earlier meeting was attended by developers of solar, wind and geothermal projects and others in the renewable energy industry. I was impressed by Secretary Salazar’s level of knowledge about both renewable projects and the BLM permitting process, as demonstrated by his comments and questions. Secretary Salazar also announced that $305 million in American Recovery and Reinvestment Act(ARRA) monies will be used for BLM projects to restore landscapes, spur renewable energy development on public lands, and create jobs. I left the meeting with confidence in the Secretary’s commitment to renewable energy and to the implementation of changes, policies and programs that will convert renewable energy from a noble goal to a reality.

 

Linda M. Bullen

Derivatives Trading in Climate Change Legislation

Posted on June 2, 2009 by Stephen M. Bruckner

ACES & Eights? Swaps and Other Derivatives in Climate Change Legislation

 

By

 

Stephen M. Bruckner

 

            On May 21, 2009, the House Energy and Commerce Committee approved H.R. 2454, the American Clean Energy & Security Act (ACES), by a 33-25 vote. As the Committee touts its efforts on the much-examined markup of H.R. 2454 (aka, “Waxman-Markey discussion draft”), coalitions from each side of the ideological spectrum assail the legislation as toothless and watered-down, or a disaster for the American economy.  The bill has a long way to go, including review by other House committees and, of course, the Senate, so it may be premature for Committee Chairman Henry Waxman to bestow the mantle of “decisive and historic action.

Buried within ACES’ cap-and-trade emissions plan are a series of provisions that detail how big banks, hedge funds, and traders can use complex securities and derivatives to profit from the new carbon allowance market.  We all watched aghast as “credit default swaps” and similar financial alchemy led to the melt down of Wall Street and the credit markets. Do these types of investments have a proper role in climate change and energy legislation?  In a bill that already has plenty of political and policy hurdles, why add financial regulation?

Title III, Subtitle D of ACES, entitled “Carbon Market Assurance”, amends the Federal Power Act to create a financial instrument known as a “regulated allowance derivative”, which can include a “swap agreement”, and directs the Federal Energy Regulatory Commission to establish regulations for these financial vehicles.  Title III, Subtitle E of ACES, entitled "Additional Market Assurance", addresses transactions in derivatives involving energy commodities such as coal, gasoline, and natural gas. These provisions open the door for financial institutions to partake in the new market created by ACES’ emission allowances.  It allows companies, funds, and traders to purchase and trade emission allowances, and to devise complex derivative instruments to sell and trade, picking up commissions and charging fees along the way.  As a result, the theoretical value of the allowances and their derivatives will be determined, in large part, by the manipulation and speculation of financial parties with little or no concern for carbon emission standards or federal climate policy beyond immediate monetary gain. 

Simply put, the emerging market for new carbon allowances created by the bill could be (at best) undermined or (at worst) commandeered by financial contrivances that are already partially responsible for the nation’s current financial instability.  The fundamental value of the new cap-and-trade 'products' will necessarily fluctuate as the emissions market adjusts and stabilizes.  If big banks and hedge funds can use puts, swaps, options and other speculative instruments, which the federal government has yet to capably regulate, the stability of emissions allowances and carbon trading could be placed at risk.  The chaos visited upon the economy at large by these and other financial instruments should cause hesitation and serious consideration as to whether they belong in Congress' first attempt at comprehensive climate change legislation. 

EPA REQUESTS VOLUNTARY REMAND OF ITS DESERT ROCK ENERGY PROJECT PSD PERMIT DECISION

Posted on May 7, 2009 by Jarry Ausherman

In the desert of New Mexico, the effect of another of the new Administration's shifts in previous federal environmental policy is being felt. As difficulties in permitting and building new coal-fired power plants have become more substantial, many power plant projects across the United States that were on the drawing board several years ago have fallen off of it. A notable exception is the Desert Rock Energy Plant, a joint project of the Navajo Nation's Diné Power Authority and Houston-based Sithe Global LLC that would be built on lands of the Navajo Nation. A significant step forward for that project had been EPA's issuance of the PSD permit in July of 2008. But recently, that step forward in air permitting has been followed by an administrative step back.

 

The Desert Rock Energy Project would involve construction of a 1500 megawatt coal-fired power plant on the Navajo Reservation. EPA's Region 9 had issued a final PSD permit for the project on July 31, 2008. The plant incorporates sophisticated, state of the art air pollution control technology, but it does not employ the coal gasification process known as "integrated gasification combined cycle" technology. Opponents to the project filed petitions with EPA's Environmental Appeals Board for review of the decision issuing the final PSD permit. The opponents raised greenhouse gas issues as well as other air quality and endangered species issues. Project opponents included the State of New Mexico.


In January, Region 9 filed its brief responding to the issues raised by the petitioners except the issue of whether the permit must contain an emissions limit for carbon dioxide. It withdrew the permit's response to comments explaining the basis for not evaluating carbon dioxide emissions in the BACT analysis. Region 9 requested the opportunity to file a Surreply Brief by April 27, 2009 to give EPA officials under the Obama Administration opportunity to consider more fully the positions previously advocated by EPA under the Bush Administration.

 

The EPA Administrator's office requested that Region 9 reconsider its permitting decision with respect to use of PM10 as a surrogate for PM2.5 to satisfy PSD requirements; consideration of IGCC in the BACT analysis; ESA consultation issues; MACT analysis for hazardous air pollutants; and the sufficiency of additional impact analysis. In response, on April 27, 2009, Region 9 asked the Environmental Appeals Board to remand the PSD permit for reconsideration and development of additional information by EPA. If the motion to remand is granted, the PSD permit will be sent back to EPA for further analysis, which could take many months and trigger another round of public comment.


The request for voluntary remand of this key permit for the high profile Desert Rock Energy Project is evidence of the degree to which the EPA under the current administration is reevaluating previous policy. In the case of Desert Rock, the EPA seeks to reevaluate a permit that it had already issued and defended in an appeal by opponents to permit issuance. If EPA's request for remand is granted, the extent to which EPA changes its permit decision remains to be seen. But the process itself presents the prospect for significant delays and additional public comment at a minimum.

Is the Midwest Climate Initiative D.O.A.?

Posted on April 21, 2009 by George von Stamwitz

A report discussed at the March 31st meeting of the Midwestern Governors Association that highlights significant "leakage" if a regional GHG cap-and-trade program were adopted in the Midwest may be the beginning of the end for the Midwest GHG cap-and-trade program.  Essentially, the report notes the likelihood of significant increases in GHG emissions ("leakage") in other parts of the country that would result from a proposed regional cap-and-trade program.  According to a report cited in Carbon News, a companion publication of Inside EPA, the issue of leakage undermines the Midwest effort and attenuates the level of enthusiasm among state officials for a regional program. 

The report, “Cap-and-Trade Modeling: Initial Policy Run Results,” presented by the Pew Center on Global Climate Change, projects that more than half of the planned GHG emissions cuts would be offset by GHG emissions increases in other states.  Since only six states signed the Midwest Accord, the model assumes that the Midwest program would apply only to power generators within these six states, leading to an increase in electricity imported from non-participating border states.  The governors of Illinois, Iowa, Minnesota, Wisconsin, Kansas and Michigan (along with the Canadian province of Manitoba) signed onto the Midwest Accord in November 2007.  Ohio, Indiana, South Dakota and Ontario are observers to the process. The final meeting of the accord’s advisory group is May 11-12.  

Another factor that strongly contributes to a stalled Midwest GHG effort is the increasing likelihood that Congress will pass a national GHG cap-and-trade program.  On April 2, the House Energy and Environment Committee released a discussion draft of “The American Clean Energy and Security Act of 2009” (the Waxman-Markey bill).  While many important details have been left for future discussion, this comprehensive legislation promotes renewable sources of energy, carbon capture and sequestration technologies, energy efficiency, and would establish a national GHG cap-and-trade program.   The draft bill would apply to all sources greater than 25,000 tons per year and set aggressive reduction targets of 3% below 2005 level by 2012, 20% below by 2020, 42% below by 2030 and 85% below by 2050.  It has been projected that such reductions would virtually eliminate the use of carbon base fuels in the United States.  According to Rep. Waxman, D-California, a final draft of the bill will be sent to the floor for debate by Memorial Day.   

While some semblance of a Midwest GHG model rule may continue, it appears that any such effort under the Accord would serve simply as a prototype for a federal GHG cap-and-trade program (as would the Western Climate Initiative program).  Others argue that if the federal government fails to enact climate policy reasonably soon, the Midwestern Accord could serve as a “backstop,” but the more likely scenario would be the on-going effort at the EPA to regulate GHGs under the Clean Air Act.


Roger Walker
George von Stamwitz
Armstrong Teasdale LLP
 

CLIMATE CHANGE AND THE SITING OF NEW OCEAN ENERGY AND TRANSMISSION PROJECTS: URGENT PROCESS CONCERNS

Posted on April 8, 2009 by Jeff Thaler

Wind energy is a centerpiece of the Obama Administration’s renewable energy resources program, and coastal wind development offers enormous potential yet faces severe challenges. On April 2, 2009 Secretary of the Interior Ken Salazar spoke of major findings from a report he had commissioned from Interior scientists.  Secretary Salazar said, “More than three-fourths of the nation’s electricity demand comes from coastal states and the wind potential off the coast of the lower 48 states actually exceeds our entire U.S. electricity demand.” 

While the National Renewal Energy Laboratory has identified more than 1,000 gigawatts of wind potential off the Atlantic Coast and more than 900 gigawatts of wind potential off the Pacific Coast, the Interior Report finds the Atlantic Coast to have greater feasible potential for wind energy due to its relatively shallow ocean depths and proximity to population centers.  By contrast, the deeper waters of the West Coast are less ideal for wind power, while Alaska’s high wind and shallow waters create an excellent potential power source-- but it sits too far from the lower 48 states’ consumers.

 

However, two major obstacles loom for the major renewable energy goals of Secretary Salazar and President Obama:  insufficient electrical transmission grid capacity to bring the power to market, and “environmental sensitivities” such as visual impact complaints.  Each obstacle presents different issues, yet each obstacle can – and MUST – be swiftly solved.

                With respect to transmission siting issues, there are several battles raging in the Courts and Congress at this time.  On February 18, 2009 the Fourth Circuit of the United States Court of Appeals ruled in the case of Piedmont Environmental Council v. FERC, No. 07-1651, 2009 U.S. App. LEXIS 2944 (4th Cir. Feb. 18, 2009), rejecting arguments by the Federal Energy Regulatory Commission (FERC) that the 2005 Policy Act had permitted FERC to order “National Interest” Transmission Projects to go forward even if State Utility Commissions had not approved those projects.  In this case, the New York and Minnesota Utilities Commissions had denied such projects, but those denials were overruled by FERC.  By a 2-1 decision, the 4th Circuit ruled against FERC. 

However, several weeks later, two leading United States Senators-- Senate Majority Leader Harry Reid (D-Nev.) and Senator Jeff Bingaman (D-N.M.)-- each proposed legislation expanding FERC’s authority over the siting of new transmission lines.  Both Senate bills would require all permit decisions and related environmental reviews under applicable federal laws to be completed “not later than 1 year” from the date FERC deems an application to be complete.  Both bills also would provide FERC with siting authority over new interstate transmission lines; FERC would serve as lead agency to coordinate any federal authorizations and environmental reviews; and state and regional permitting entities would be required to develop “interconnection-wide green transmission plans” to be submitted within 1 year to FERC for approval, or else FERC would complete the plan itself.  State Utility Commissioners have testified against these legislative proposals, not surprisingly.

With respect to the environmental “sensitivities” advocated by opponents to many different on- shore and some off-shore wind project proposals in recent years, the two primary issues have been visual impact and wildlife (including marine mammals for off-shore) impacts.  However, frequently missing from the list is the fundamental overriding environmental concern –global warming or climate change.  Very recent scientific work shows that the Noble-Prize winning Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report issued in 2007 is already out-of-date.  For example, carbon dioxide is being emitted into the atmosphere faster than the IPCC had forecast just two years ago.  Moreover, recent studies find that the Arctic and Antarctic regions are warming faster than previously thought, and further find larger-than-expected pools of carbon in Arctic permafrost, which when released will accelerate levels of greenhouse gases in the atmosphere.  Moreover, since the 2007 IPCC report was issued, unexpectedly rapid melting of the vast Greenland Ice Sheet indicates that sea levels around the world could rise roughly 3 to 6 ½ feet by the end of the Century – almost triple that of the 2007 projections. 

Ocean and terrestrial plant and wildlife habitats already are being damaged by climate change, with the result that many of the birds, mammals, plants, trees and fish which are the subject of concern for some groups opposing wind projects will – in the absence of immediate and rapid facilitation of the siting and construction of clean energy projects – either be driven extinct or forced to move hundreds of miles northward in the United States or into Canada in order to survive during the lifetimes of our children and grandchildren.  Likewise, the environmental “concern” of scenic impact from wind turbines will – again in the absence of rapid facilitation of the siting and development of clean energy projects – be adversely impacted by accelerating climate changes that include greater presence of pests capable of destroying forest species and certain plant life.

                In Maine, an Ocean Energy Task Force has been hard at work over the past five months to meet the Governor’s Executive Order to increase our energy independence and security, reduce our substantial reliance upon fossil fuels, and substantially reduce our greenhouse gas emissions by, in part, developing a strategy to identify and recommend solutions to overcome “potential economic, technical, regulatory, and other obstacles to vigorous and expeditious development of grid-scale wind energy generation facilities in Maine’s coastal waters and adjacent federal waters.”  Tidal and wave power options are also being considered.  Sometime this month the Task Force will preliminarily forward to the Maine Legislature proposed legislation that would create a “General Permit” for off- shore wind energy demonstration projects at certain designated sites along the coast of Maine.

In conclusion, global warming, ocean energy, and our electrical grid system are each critical components to the urgent environmental and economic mandates requiring us to engage in a race, akin the 1960s’ race to the moon, to achieve what previously many may have thought to be unachievable – independence from foreign sources of fuel, independence from use of fossil fuels, and a deceleration of global warmer changes upon our hometowns, states, country and world.

Oregon as Center of Green Energy?

Posted on February 23, 2009 by Richard Glick

 By: Rick Glick and David Blasher of Davis Wright Tremaine, LLP

Many postings on this site have featured local and regional climate change policy initiatives. Oregon is no exception, but at the center of Governor Ted Kulongoski’s climate change strategy is making the state a hub of green technology development. Thus, the Governor seeks to combine greenhouse gas reductions with economic recovery. To that end, the state has used tax and other incentives to lure foreign clean technology investment to the state. Early signs are positive. The German solar cell company Solar World has recently taken over a stilled chip fabrication plant in the Portland suburbs and Sanyo is opening a solar cell facility in Salem. Vestas American Wind Technology, the largest manufacturer of wind turbines in the world, has announced plans to construct a 400,000 to 600,000 headquarters building near downtown Portland. As Governor Kulongoski declared in his 2009 State of the State address, “There is a green revolution stirring in America, and Oregon is the beating heart of that revolution.” 

 

To this end, the Governor is jockeying Oregon into a favorable position with President Obama's agenda of creating jobs that foster and incorporate sustainable energy projects. In order to maximize funds that Oregon will receive from the federal stimulus package, the Governor has established a state council called the Oregon Way Advisory Group. The Group is comprised of private business leaders and public officials who have an interest in developing sustainable energy proposals that will highlight Oregon’s green expertise. The Governor believes that by developing innovative projects to encourage job creation in green technologies, Oregon will have a leg up in the race for stimulus cash. “This approach will ensure that Oregon remains a leader in the green revolution,” the Governor said.

 

The Governor has proposed a legislative package for the current session that will address green energy and climate issues. Central among the Governor’s endeavors is an expansion of the Business Energy Tax Credit in order to attract new green industries to Oregon. The new green bills in the legislature include the following:

 

·        SB 80 will establish a cap-and-trade system to reduce greenhouse emissions by encouraging innovation and efficiency among Oregon’s industries. 

 

·        SB 79 is designed to increase energy efficiency in buildings by giving performance certificates to business to enable them to monitor efficiency in new and remodeled buildings. The ambitious goal is to reach zero net emissions by 2030, and in so doing, set Oregon as a leader in creating green building techniques.

 

·        SB 168 encourages energy independence of the state government by allowing energy efficiency projects on state lands and buildings, thus helping the state government to operate entirely on renewable power.

 

·        SB 201 is designed to provide an additional $4 million to weatherize and retrofit the homes of 400 low-income families each year, cutting energy costs for families by an average of $314 a year.   

 

·        SB 603 would stop Oregon from building any new dirty coal power plants and would require new power sources to be at least as clean as natural gas plants. 

 

·        HB 2120 will reflect the priority of providing more transportation choices for Oregonians in order to reduce emissions and traffic, to improve health, and to cut gas costs. 

 

·        HB 2121 will encourage the development of solar energy by directing the PUC to integrate up to 17 megawatts of solar energy into Oregon's electricity mix. Oregon launched the nation’s first solar highway at the I-5/I-205 interchange last year. Using Oregon manufacturers for the solar panels and emerging small Oregon businesses to install the solar system will supply jobs and renewable energy today and into the future.

 

·        HB 2180 would create an Oregon Renewable Energy Fund to provide grants to smaller community renewable energy projects. This bill also seeks to expand the Business Energy Tax Credit to provide a fifty percent tax credit for large-scale energy efficiency investments by businesses. The bill will also encourage sustainable bioenergy such as biofuels that do not compete with good supplies. Finally, HB 2180 will give the Oregon Department of Energy the flexibility to adjust tax credit incentives to encourage the development of the next generation of low and zero emission vehicles.

 

·        HB 2181 will give local governments bonding authority to provide loans to residential and business energy efficiency projects.

 

·        HB 2186 authorizes the citizen-comprised Environmental Quality Commission to develop reduction strategies including a low carbon fuel standard and restrictions on the unnecessary idling of trucks and commercial vehicles.

 

Governor Kulongoski views the current economic crisis as an opportunity to embrace sustainable energy projects that will make Oregon a leader in the future of green industries. As the Governor put it, “My message should be unmistakable – and it is the same message I conveyed to business and government leaders in Japan and China: Oregon is open for business. Especially green business.”

UNITED STATES NEEDS TO GET ON BOARD IN 2009 WITH THE ONE-WATT INITIATIVE

Posted on February 9, 2009 by Stephen E. Herrmann

TAKE ACTION ON PHANTOM LOADS:

 

The One-Watt Initiative is a fairly simple regulatory program proposed for eliminating unnecessary electricity losses from electronic equipment in standby mode, known as phantom loads. The European Union, Canada, Korea, Japan and China have all taken action. The United States needs to step up to action through the federal government or the states. President Obama's administration should be urged by all of us to adopt a policy in 2009. Because of the diverse pressures on the Federal government, simultaneous pressure should be exerted on all states to adopt the One-Watt policy.

 

WHAT IS THE STANDBY POWER PROBLEM:

Chances are that even environmental lawyers ignore the high energy costs of “phantom load.” But, now is the time to get regulation started.

Phantom load is the electricity consumed by a device when it is turned OFF.[1] Devices that have a phantom load are sometimes referred to as “vampires.”   For example, a television consumes electricity as it waits for the “on” button on the remote to be hit. Heavy phantom load users include the “power brick” adaptors that charge or operate cell phones, laptop computers, cordless drills, answering machines, radios, incheck printers and many other residential devices. These adapters are actually small transfers, turning AC electricity from the wall outlet into the DC electricity for use by the device. While one of these devices may only consume a small amount of power (e.g., 3-20 watts), a dozen or so of them running simultaneously and continuously, consume a significant amount of energy. What is worse is that even when not charging the cell phone or the battery for the cordless drill, that AC adapter may continue to consume power just because it is plugged into the wall.

 

HOW LARGE IS THE PHANTOM LOAD:

In the United States, the phantom load make up about six percent of the total, and around ten percent of residential consumption. 

As the United States Department of Energy stated: 

“Many appliances continue to draw a small of power when they are switched off. These “phantom” loads occur in most appliances that use electricity, such as VCRs, televisions, stereos, computers and kitchen appliances. In the average home, 75% of electricity used to power home electronics is consumed while the products are turned off. This can be avoided by unplugging the appliance or using the power strip and using the switch on the power strip to cut all power to the appliance.”

The British Government’s 2006 Energy Review found that standby modes on electric devices accounted for 8% of all British domestic power consumption. A similar study in France in 2000 found that standby power accounted for 7% of total residential consumption. Further studies have come to similar conclusions in other developed countries, including the Netherlands, Australia and Japan. Some countries estimates the proportion of consumption due to standby power as high as 13% in some countries. 

 

one-watt initiative:

The One-Watt Initiative is an energy saving proposal by the International Energy Agency to reduce standby power in all appliances to just one watt. The One-Watt Initiative was launched by the IEA in 1999 to promote, through international cooperation, that by 2010, all new appliances sold in the world would only use one watt in standby mode. On July, 2005, at the Gleneagles Summit in Scotland, the G8 countries signed an endorsement to, among other things, "promote the application of the IEA's 1 Watt Initiative". It is estimated that, if implemented, leaking electricity would be cut by as much as 75% when the existing stock of appliances is replaced. Further savings would occur as the number of vampire appliances increase.

 

INTERNATIONAL PROGRESS ON THE ONE-WATT PLAN:

An international group of experts was assembled to define standby power and establish a common test procedure. An internationally sanctioned definition and test procedure was adopted by the International Electrotechnical Commission (IEC 62301).

On January 9, 2009, the European Commission adopted a regulation laying down energy efficiency requirements, which is intended to cut the standby electricity consumption by almost 75% by 2020. As of 2010, the standby power consumption of new products has to be less than one watt or two watts. These values will be lowered in 2013 to 0.5 watt and one watt, which is close to the levels achievable with the best available technology.

NR Canada by Regulation is proposing that the Tier 1 energy efficiency performance standards for certain standby power will apply to products manufactured after June 1, 2009. The effective date for the Tier 2 standards will be applied to products manufactured after June 1, 2011.

Both South Korea and Australia have introduced the one watt benchmark in all new electrical devices, and according to the IEA, other countries, notably Japan and China, have undertaken “strong measures” to reduce standby power use. 

 

one-watt initiative in the united states:

So far the United States government's only action has been Executive Order 13221 signed by President George W. Bush in 2001. The Executive Committee states that every governmental agency “when it purchases commercially-available, off-the-shelf products that use external standby power devices, or that contain an internal standby power function, shall purchase products that use no more than one watt in a standby power-consuming mode.”

The State of California currently has an Appliance Efficiency Regulation which includes standby power limits for three consumer audio and video equipment categories (compact audio products, televisions and DVD players and recorders). A few other states have announced intentions to follow the California regulations for standby power limits but have not done so.

 

CONCLUSION:

This is an excellent issue to be pushed by any environmental group or generally concerned citizens. With the backing it has internationally, lobbying should garner little resistance. The United States or individual states should take action in 2009.



[1] There are issues about a definition for standby power. However, for purposes of general regulations, standby power is the lowest level of electricity consumed by appliances, which cannot be switched off (influenced) by the user, and may persist for an indefinite time when an appliance is connected to its main electricity supply.

A Quick Economic Stimulus Meets a Slow Environmental Process - Are NEPA Waivers Needed to Reach Energy Independence?

Posted on January 30, 2009 by Bradley Marten

President Obama has pressed Congress this week to enact an economic stimulus package that would “double our capacity to generate alternative sources of energy like wind, solar, and biofuels . . . and build a new electricity grid that lay down more than 3,000 miles of transmission lines to convey this new energy from coast to coast.”[i] On Wednesday, January 28, 2009, the House passed the American Recovery and Reinvestment Act of 2009 (H.R. 1), which contains nearly $15 billion in capital investments and loan guarantees for renewable energy projects and new electric transmission lines, and $18.5 billion for energy efficiency programs.  The Administration’s stated goal is to spend this money in the next 18 months. This may be possible for the energy efficiency projects such as weatherizing homes and government buildings.  But for dozens of new wind farms and thousands of miles of transmission lines, it is not, and a good part of the reason is that those projects have yet to undergo environmental review or receive necessary permits.



[i] These remarks came in the President’s first weekly address, which was delivered on Saturday, January 24, 2009. The address can be viewed at this link.

 

Typically, siting a transmission line, wind farm, or other major energy facility involves obtaining a long list of environmental permits, each of which has a review process that can be used by opponents of the project to delay and sometimes defeat it. Moving infrastructure projects forward quickly will only be possible if Congress and the Administration speed up the environmental review and permitting process.  

In a January 26, 2009, report, the Congressional Budget Office estimates that it will take up to seven years to spend the money that H.R. 1 dedicated to expanding alternative energy. Experience teaches that this estimate may be overly conservative. For example, the Arrowhead-Weston Transmission Project, a 220 mile transmission line from Wisconsin to Minnesota, took nine years to permit and construct, even though all but 50 miles of it were in existing transmission line corridors. Southern California Edison’s Tehachapi Transmission Project, a 250 mile transmission project to deliver electricity generated from wind farms in Southern California, took over 10 years to design, permit, and begin construction. Indeed, portions of the project are still undergoing environmental review by the U.S. Forest Service and others.

Recently, California Governor Arnold Schwarzenegger requested up to $44 billion for transportation, energy and water projects in California, claiming that these projects will create as many as 800,000 new jobs.  Knowing that traditional environmental review would slow short-term job creation, Governor Schwarzenegger asked the Obama Administration to “waive or greatly streamline National Environmental Protection Act requirements consistent with our statutory proposals to modify the California Environment Quality Act for transportation projects.”

The proposal drew immediately fire from environmental groups. In a January 13, 2009, letter to House and Senate Democratic leaders, the Environmental Defense Fund, the Natural Resources Defense Council, the League of Conservation Voters and Environment California called Governor Schwarzenegger’s proposal “unproductive and harmful” to the federal debate over reviving the economy.  “Inevitably, in the course of congressional consideration, special interests will assert that we cannot afford the NEPA process in a time of national urgency,” they said.  “The truth is that we cannot afford that kind of leap-before-you-look rashness.” 

The new Administration must navigate this tension – quickly addressing the economic crisis while maintaining the integrity of the environmental review process. Doing so will require identifying ways that environmental review and permitting can be streamlined and modernized, alongside the infrastructure system.  We ought to be able to get wind farms and bridges and light rail built in a time frame that provides the short-term stimulus our economy needs, and also allow for sufficient environmental review to make sure our resources are protected.   This article lays out some of the options the new Administration may wish to consider as it seeks to balance job creation with environmental stewardship.

Approaches for Streamlining the Environmental Review Process

Use Existing Provisions Allowing Temporary Waivers

 

Many environmental regulatory statutes contain waivers of applicable requirements in response to natural disasters or other emergency conditions.  For example, the Stafford Disaster Relief and Emergency Assistance Act authorizes NEPA waivers to facilitate prompt responses to natural disasters.[1]  Similarly, the White House Council of Environmental Quality (CEQ) is authorized to approve “alternative arrangements” allowing federal agencies to modify or limit NEPA review in response to natural disasters.[2]  Other federal environmental laws with emergency response provisions include the Clean Water Act[3] and CERCLA.[4]

In response to Hurricane Katrina, CEQ approved expedited NEPA review procedures for certain U.S. Army Corps of Engineers flood control projects.  EPA temporarily waived certain Clean Water Act, Clean Air Act, and other environmental regulations in Katrina’s wake.  Both Louisiana and Mississippi issued similar emergency administrative orders, temporarily suspending certain environmental regulations to facilitate clearing hurricane debris and other emergency response actions.

Waivers Based on Grounds of National Security

In 2002, after the Natural Resources Defense Council obtained a preliminary injunction halting the U.S. Navy’s use of a low-frequency, active, surveillance towed array sonar system,[5] President Bush issued a “Presidential Exemption from the Coastal Zone Management Act,”[6] in order to “ensure effective and timely training of the United States naval forces in anti-submarine warfare using mid-frequency active sonar.”  The Presidential exemption allowed the Navy to train and certify strike groups capable of deployment “in support of world-wide operational and combat activities, which are essential to national security.”

The United States Supreme Court upheld the President’s action, finding that the public interest in adequately training the Navy’s antisubmarine forces “plainly outweighs” conservationists’ interests in studying marine mammals that may be injured by sonar exercises.[7]

Legislative Exemptions for Specific Projects

 

Congress has also periodically either limited or exempted review under NEPA and other environmental statutes for specific projects or categories of projects.  For example, the Energy Policy Act of 2005 modified the environmental compliance requirements for a broad range of energy-related projects.  The modified environmental compliance measures included:

  • Establishing a rebuttable presumption that certain oil and gas projects conducted on federal land are categorically exempted from NEPA review (§ 390);
  • Exempting hydraulic fracturing in aid of oil, gas, and geothermal energy extraction from certain requirements in the Safe Drinking Water Act (§ 322);
  • Exempting oil and gas exploration, production, and transportation construction projects from the Clean Water Act’s construction stormwater regulations (§ 323);
  • Requiring EPA and federal land management agencies in Western states to develop a pilot project to expedite environmental review and permitting under NEPA, the ESA, the Clean Water Act, and other federal statutes (§ 365);
  • Expediting the permitting process for natural gas facilities located on federal lands (§ 366); and
  • Shortening the time frame for appealing permitting decisions under the Coastal Zone Management Act (§ 381).

Congress has also exempted or provided limited NEPA review for other projects, for example:

·        The TransAlaska Pipeline was exempted from NEPA review after completion of the initial EIS (43 U.S.C. § 1625(d));

·        Certain actions taken pursuant to the Clean Air Act are exempted from NEPA review (15 U.S.C. § 793(c)(1));

·        Department of Energy decisions to grant or deny exemptions from regulations governing fuel use at coal-fired power plants are exempted from NEPA review (42 U.S.C. § 8473);

·        For certain retrievable radioactive waste storage projects, an Environmental Assessment (as opposed to an EIS) constitutes sufficient compliance with NEPA (42 U.S.C. § 10155(c)(2)(A));

·        Alternate environmental review procedures have been established for determining surface transportation rights-of-way in the Arctic National Preserve (42 U.S.C. § 410hh(4)(d); and

·        Certain Department of Housing and Urban Development funding decisions are exempt from NEPA review, based on certification of compliance with state and local laws (42 U.S.C. § 3547(2)).

Using Streamlined Environmental Review to Address Economic Conditions

 

While legislative, regulatory, and executive precedent exists for either waiving or limiting environmental review, those precedents have rarely been used to justify waiving environmental review on the grounds of an economic crisis.[8]  But precedent exists for using “alternative arrangements” for environmental review in response to economic concerns.  In 1980, after General Motors threatened to build a new manufacturing facility outside the city limits unless the city cleared and delivered an appropriate site for the facility, the City of Detroit declared a state of emergency based on an economic crisis.  In September 1980, CEQ approved an “alternative arrangement” under NEPA allowing the Department of Housing and Urban Development to release loan guarantee funds prior to the completion of NEPA review.[9]

The challenge for the new Administration and Congress is to strike a balance between expediting environmental review while maintaining sufficient oversight to prevent bad decision making.  Options to achieve that goal include: (1) expediting funding for “shovel ready” projects which already have undergone federal and state environmental review and obtained necessary permits; (2) using programmatic environmental review of project categories that would obviate the need for project-specific (and often redundant) environmental reviews; (3) providing limited exemptions or streamlined environmental review for specific categories of projects; and (4) limiting judicial review of final agency approvals for projects funded by the stimulus bill, while providing for oversight, review, and approval by CEQ.

For more information, please contact Bradley Marten



[1] See 42 U.S.C. § 5159.

[2] 40 CFR § 1506.11.

[3] Under 40 CFR § 122.3, the President or an agency acting with delegated Presidential authority may grant a waiver of the NPDES requirement if necessary to address substantial threats to public health or welfare. EPA invoked this exception in response to Hurricane Katrina. Another exception is 40 CFR § 122.41(n), which allows a wavier in the event of an “upset,” which is the temporary failure to comply with NPDES permit conditions based on factors that are beyond the reasonable control of an operator, for example, a power failure or a large spill of contaminants into a collection and treatment system.

[4] CERCLA provides the President and EPA with broad authority and flexibility to undertake response actions whenever there is a release or threatened release of a hazardous substance which presents an imminent and substantial danger. See 40 CFR § 300.400(e)(1).

[5] See NRDC v. Evans, 232 F. Supp.2d 1003 (N.D. Cal. 2002) (for more information on this decision, see Colleen C. Karpinsky, A Whale of a Tale: The Sea of Controversy Surrounding the Marine Mammal Protection Act and the U.S. Navy’s Proposed Use of the SURTASS-LFA Sonar System, 12 Penn St. Envtl. L. Rev. 389 (2004)).

[6] Per its terms, the Presidential Exemption was based on the “Constitution and the laws of the United States, including section 1456(c)(1)(B) of title 16, United States Code.”

[7] Winters v. Natural Resources Defense Council, Inc., 555 U.S. ___, 129 S. Ct. 365 (2008).

[8] While NEPA allows agencies to allow “alternative arrangements” suspending or modifying environmental review, CEQ regulations limit their applicability to “actions necessary to control the immediate impact of the emergency.” 40 CFR § 1506.11 (emphasis supplied).

[9] Although the full NEPA review was eventually completed, the “alternative arrangement” allowed HUD and the city to expedite project activities in response to an economic crisis. The facts of the Detroit “alternative arrangement” are summarized at Crosby v. Little, 512 F. Supp. 1363 (E.D. Mich. 1981).

MIDWEST GREENHOUSE GAS REDUCTION ACCORD RECOMMENDATIONS CONTINUE TO ADVANCE

Posted on January 20, 2009 by David Flannery

The Advisory Groups working on the Midwest Greenhouse Gas Reduction Accord and the Midwest Governor’s Association Platform met in Indianapolis on January 14 and 15, 2009 for the purpose of advancing the development of recommendations for a regional program to reduce greenhouse gases. While the program being developed contemplates a regional cap and trade program, much work is being focused on the development of complimentary policies that would be implemented outside the cap and trade program. 

 

            The December 2008 draft recommendations of the Advisory Group, calls for a cap and trade program that would be applied to all six greenhouse gases. Initially, the cap and trade program would apply to electricity generation and imports, industrial combustion sources, and industrial process sources for which there are credible measurement in monitoring protocols. In addition, transportation fuels are being considered for inclusion in the cap and trade program based on the results of economic modeling that is currently being performed. Heating fuels will be included in the second three year compliance period. 

 

Significantly, the cap and trade program would be applied both to electricity generated within the region and to electricity imported into the region. In the latter case, the point of regulation for the program would be entity that first delivers electricity into a participating jurisdiction for consumption in that jurisdiction. The Commerce Clause implications on such an approach have yet to be tested. 

            Allowances under the cap and trade program are proposed to be distributed for climate related purposes. Among the purposes that have been identified by the Advisory Group are: 

  • accelerating transformational investments; 
  • mitigating transitional adverse impacts of the program; and
  • addressing harmful impacts due to climate change.

Individual states would be called upon to make a determination as to whether allowances would be auctioned or allocated for free. 

 

            Offsets would be encouraged under the draft recommendations for entities not covered by the cap and trade program. The Advisory Committee has yet to determine how much of the cap could be met by offsets, although a range of 10-50% are being considered. The final value would be set once economic modeling data becomes available. Initially, offsets would be limited to those which occur within the states and provinces that elect to participate in the program. 

 

            Beyond the cap and trade program, the recommendations contemplate the development of complimentary measures that would reduce greenhouse gas emissions. These complimentary measures include, among other things:

  • energy efficiency; 
  • low carbon fuels; 
  • management of vehicle miles; 
  • biomass;
  • renewable electricity; 
  • transmission planning and siting; and
  • carbon capture and storage. 

These potential policies are now being evaluated with economic modeling. The Advisory Group received a report this week on the results of the modeling of the base or reference case. Efforts will not turn to modeling policy cases. It is anticipated that the policy cases to be modeled will include: 

·        the cap and trade program alone;  

·        the complimentary measures alone; and

·        the combination of the cap and trade program and complimentary measures. 

It is anticipated that the results of this modeling will be available by the time the Advisory Group meets in March at a date and location that have not yet been determined. 

Final recommendations are expected to be issued during the third quarter of 2009. 

 

For more information regarding these activities, visit www.midwesternaccord.org.

The Role of States in Climate Change Regulation

Posted on January 14, 2009 by Roger Ferland

50 Ariz. L. Rev. 674-938 (2008)

 

            The primary function of the articles produced to date for this blog has been to alert colleagues of current developments of which they should be aware. This article’s purpose, however, is broader. There appear on occasion in law reviews and other publications valuable perspectives on law and policy issues in areas like climate change that are worthy of attention but might escape notice. The above-referenced symposium is such a document. In the spirit of full disclosure, it should be noted that the authors of the majority of the articles are law professors and consequently it is necessary to wade through a great deal of legal theory to glean the valuable nuggets of insight that are prevalent throughout the document.

 

The basis theme of the articles and commentaries is that states have a significant and critical role to play in the reduction of greenhouse gases (GHGs) even after the likely enactment of federal cap-and-trade legislation during the next two years. That role would not seem to be immediately apparent, particularly if EPA proceeds to fill those areas of regulation not covered by cap-and-trade legislation by maximizing the agency’s scope of regulation of GHG’s under the Clean Air Act. Indeed, several of the authors concede that, following national legislation, the climate benefits of state initiatives “would be so small as to be undetectable.” Nevertheless, the authors suggest that states and localities will continue to have a unique and important role to play, not so much in directly achieving reductions in GHGs through regulation, but by providing or encouraging the mechanisms to indirectly achieve those reductions. This facilitation role takes a number of forms:

  • State or local support of research and development of new renewable energy and innovative GHG control technologies through targeted subsidies and tax credits
  • Continuation and expansion of renewable portfolio standards imposed by state public utility regulatory bodies
  • State-level energy efficiency standards
  • Green building codes and certification systems
  • Gap-filling environmental regulation that forces the adoption or diffusion of existing technologies

            The articles also provide a comprehensive treatment of the potential legal barriers and drawbacks to state actions. One of those drawbacks that is discussed by several of the authors is the cost externalization produced by individual state initiatives. The most cited example of a cost externalization is the push by California and other states allied with California for automotive emission standards for GHGs. While California’s actions seem laudable on their face and it is likely that EPA will grant the waiver that California needs to enforce the standards, the cost of complying with the standards will ultimately be borne by the rest of the country even though they had no say in their adoption.

            The primary legal barriers to state action are preemption and its allied concept, the so-called dormant Commerce Clause. The range of legislation currently before Congress addresses preemption by either expressing a clear intent to broadly preempt state initiatives as far as GHG regulation or no preemption language thereby leaving it up to the federal courts to apply general principles of preemption to specific state actions. The authors tend to favor limiting the applicability of preemption, particularly when the state action does not directly impair the sale of allowances or does not directly impair the functioning of the other mechanisms necessary for a successful national cap-and-trade program. Thus, such state measures as renewable energy portfolio requirements, measures that encourage technological innovation or diffusion of existing technology and even product efficiency standards that are more restrictive than national standards, should not be subject to being invalidated because of preemption. Conversely, state restrictions on the sale or purchase of emissions allowances even as part of the direct regulation of GHG emissions would probably be preempted by federal legislation.

            A similar analysis is followed concerning the applicability of the dormant Commerce Clause to state climate change initiatives. A state’s regulations that directly discriminate between, for example, in-state and out-of-state electric utility companies, particularly if the effect of such discrimination was to interfere with the functioning of the national cap-and-trade program, would clearly run afoul of the dormant Commerce Clause. However, the range of state measures discussed in the articles would not seem to raise either dormant or general Commerce Clause issues, particularly if the national legislation, as seems likely, contains a savings clause like that in Section 116 of the Clean Air Act that explicitly allows states to adopt “standards or limitations” that are more stringent than federal standards or limitations.

            Obviously, the foregoing vastly oversimplifies what are a number of complex topics and their analyses, but it should provide enough of an overview of the content of the symposium to motivate interested parties to pursue the full benefit of its articles. As all of the authors note, it was the states, in the absence of federal action, that have been the leaders in GHG regulation and it is their initiative, experience and expertise that ensure that they will have a role and continued interest in addressing climate change even in the face of federal legislation.