It’s Getting Hot in Hells Canyon

Posted on February 2, 2017 by Martha Pagel

The state of Oregon has turned up the heat in Hells Canyon.  The burning question, so to speak, is whether a state can require passage and reintroduction of anadromous fish as a condition of certification under Section 401 of the Clean Water Act for relicensing of an existing hydroelectric project.  The issue gets hotter because the particular project involved  -- the Hells Canyon Complex (“HCC”), owned by Idaho Power Company (“IPC”) -- is located on the Snake River, which forms the border between Oregon and Idaho.  The State of Oregon has issued a draft 401 certification with detailed conditions for passage and reintroduction of anadromous fish into a tributary on the “Oregon side” of the river.  Idaho is opposed to reintroduction of any fish species above Hells Canyon Dam, leaving IPC in the middle.

Making a very long and complicated story short, for more than 13 years IPC has been working with state and federal agencies and stakeholders toward relicensing of the HCC.  The project consists of three developments, each with a dam, reservoir, and powerhouse.  In 1955, FERC issued a 50-year license with recognition that construction of the project would block fish passage and eventually lead to extirpation of anadromous fish above the dams.  As a result, the initial FERC license included mitigation conditions to offset fish impacts, and additional mitigation was provided under a subsequent settlement agreement. 

After more than a decade of studies, meetings, and negotiations, it looked like IPC and the states were on track for general agreement as to the terms and conditions of compatible, but separate 401 certifications to be issued by Oregon and Idaho – except as to the issue of fish passage and reintroduction. Despite Idaho’s objections, the Oregon Department of Environmental Quality (ODEQ) issued its draft 401 certification for public comment on December 13, 2016.  The draft relies on a number of existing state water quality standards as the legal basis for requiring fish passage and reintroduction, though none of the standards is directly on point. ‎

Public comments on the proposed 401 certification are due February 13.  Objections relating to the fish passage and reintroduction conditions are likely to focus on whether such conditions are generally within the scope of 401 certification for FERC-licensed hydroelectric projects, and, if so, whether Oregon’s specific water quality standards provide a sufficient regulatory basis for the proposed ODEQ action.  ‎The comments may also raise questions about the baseline for mitigation and whether impacts to fish due to construction of the project – as opposed to on-going operations -- have already been fully mitigated.  And then there’s the question of Idaho’s opposition. 

ODEQ will consider the comments before issuing a final 401 certification decision.  If the states are unable to resolve their differences over the passage and reintroduction issue, it’s likely to get a lot hotter in Hells Canyon. 

And finally, a disclosure that the HCC relicensing issues hit close to home for ACOEL:  I am part of a team representing IPC, and other College members are very much involved on both sides of the issue.  There’s a lot we won’t be able to talk about at the next annual meeting! 

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

Posted on June 17, 2016 by Seth Jaffe

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

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

Why, you ask?

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

Is that sufficiently clear?

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

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

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

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

GRID UNLOCK: WHOLESALE MARKET DEMAND RESPONSE PAYMENTS UPHELD

Posted on January 29, 2016 by Brian Rosenthal

By upholding FERC’s regulatory authority over demand response transactions, the Supreme Court finds FERC is properly regulating wholesale electricity market sales operating in interstate commerce (Federal Energy Regulation Commission vs. Electric Power Supply Association).  Associate Justice Scalia’s dissent criticizes the framing of the question.  While acknowledging  FERC’s regulatory authority over wholesale sales, he notes the statutory framework proscribes regulating other sales or those “not at wholesale,” suggesting a proper focus on whether there is a true sale at wholesale includes reviewing whether the prospective participant is in the business of reselling energy.  

Besides the regulatory impact and effect on the markets, Justice Kagan’s majority opinion sends waves by its impact on energy use or non-use.  As in peak periods it may be more efficient and easier to pay consumers for non-use versus paying generators to increase production, wholesale market operators developed demand response programs that pay consumers not to use available power.  Non-use has the complementary benefits of being less taxing on a grid and results in fewer emissions.  Thus, the reviewed and supported programs were viewed as resulting from market forces balancing supply and demand of wholesale electricity, which programs serve to improve competitiveness (may “drive down” generator bids), provide more efficient grid use, result in greater grid reliability, and, produce fewer emissions.

Additional parts of the opinion discuss: (i) the method and formula for compensating demand response payments similarly to those to suppliers, with an added review of whether resulting payment for the demand response is indeed cost beneficial; and (ii) whether the technical order was properly supported by “reasoned judgment” and “intelligibly explained,” and thus, not subject to being set aside as arbitrary and capricious.      

In short, the Court found that FERC did not go too far in affecting retail markets and regulated on the wholesale side.  Acknowledging the breadth of regulatory authority over affecting wholesale rates and charges must be read with “common sense” and care so as not to extend the same beyond its intended reach, the Court concluded that because wholesale demand responses result in reduced wholesale rates, the rules and regulations that govern same are a direct effect on the wholesale markets. 

In a footnote the Court notes even if states could achieve the same result by giving rebates to customers for non-use, the process would be less efficient.  The dissent uses this same example to support its view that the overall program in practice is the equivalent to offering credits to retail customers in excess of  FERC’s authority. 

FERC Commissioner Tony Clark’s post decision comments predict further judicial involvement as participants test jurisdictional limits.  He invites the Commission to re-evaluate its approved pricing mechanism, referred to by the commissioner as a “compensation regime that continues to be widely panned by market experts.

For another review of the case and its common sense outcome, see college member Seth Jaffe’s post.

Pioneering Environmental Law: Remembering David Sive (1922-2014)

Posted on May 2, 2014 by Nicholas Robinson

Before environmental law existed, David Sive knew that the law could protect forests and fields, abate pollution of air and water, and restore the quality that humans expected from their ambient environments.  He fashioned legal arguments and remedies where others saw none.  His commitment to building a field of environmental law is exemplary, not just historically, but because we shall all need to emulate his approach as we cope with the legal challenges accompanying the disruptions accompanying climate change.

David Sive learned to love nature by hiking and rambling from parks in New York City to the wilderness of the Catskill and Adirondack Mountains.  He carried Thoreau’s Walden into battle in World War II in Europe, and read William Wordsworth and the Lake poets while recuperating from wounds in hospitals in England.  He had a mature concept of the ethics of nature long before he began to practice environmental law.

His early cases were defensive.  He defended Central Park in Manhattan from the incursion of a restaurant. He rallied the Sierra Club to support a motley citizens’ movement that sought to protect Storm King Mountain from becoming a massive site for generating hydro-electricity on the Hudson River.  Scenic Hudson Preservation Conference v. Federal Power Commission [FPC] (2d Cir. 1965), would become the bell-weather decision that inaugurated contemporary environmental law.  The case was based on the multiple use concepts of the Progressive Era’s Federal Power Act.  The FPC (now FERC), had ignored all multiple uses but the one Con Edison advanced.  When the Court of Appeals for the Second Circuit held that citizens had the right to judicial review to require the FPC to study alternative ways to obtain electricity, as well as competing uses for the site, the court laid the basis for what would become Section 102(2)(c) of the National Environmental Policy Act (NEPA).

When Consolidated Edison Company decided to build a huge hydroelectric power plant on Storm King, the northern portal to the great fiord of the Hudson River Highlands, citizens and local governments were appalled.  This was no “NIMBY” response.  Con Ed had forgotten that these fabled Highlands inspired the Hudson River School of landscape painting.  This artistic rendering of nature in turn inspired the birth of America’s conservation movement of the late 19th century.  The Hudson also instrumental to the historic birth of this nation; here the patriots’ control of the Highlands had kept the British from uniting their forces, and here soldiers from across the colonies assembled above Storm King for their final encampment as George Washington demobilized his victorious Army.  The Army’s West Point Military Academy overlooks the River and Storm King.  

David Sive and Alfred Forsythe formed the Atlantic Chapter in the early 1960s, despite heated opposition from Californians who worried the Club would be stretched too thin by allowing a chapter on the eastern seaboard.  David Sive chaired the Chapter, whose Conservation Committee debated issues from Maine to Florida.  He represented the Sierra Club, pro bono, in its intervention in the Storm King case, and other citizens brought their worries about misguided government projects or decisions to him. 

David Sive represented similar grassroots community interests in Citizens Committee for the Hudson Valley v. Volpe (SDNY 1969), affirmed (2d Cir. 1970).  Transportation Secretary Volpe had approved siting a super-highway in the Hudson River adjacent to the shore in Tarrytown and Sleepy Hollow, to accommodate Governor Nelson Rockefeller’s proposal to connect his Hudson estate to the nearby Tappan Zee Bridge.  Without the benefit of NEPA or any other environmental statutes, which would be enacted beginning in the 1970s, and relying upon a slender but critical provision of a late 19th century navigation law, after a full trial in the US District Court for the Southern District of New York, David Sive prevailed against the State and federal defendants.  He won major victories on procedure, granting standing to sue, and on substance, a ruling that the government acted ultra vires.  David Sive saved the beaches, parks and marinas of the Hudson shore.

Public interest litigation to safeguard the environment was born in these cases.  Public outrage about pollution and degradation of nature was widespread.  In September 1969, the Conservation Foundation convened a conference on “Law and the Environment,” at Airlie House near Warrenton, Virginia.  David Sive was prominent among participants.  His essential argument was that “environmental law” needed to exist. 

On December 1, 1970, Congress enacted the NEPA, creating the world’s first Environmental Impact Assessment procedures and establishing the President’s Council on Environmental Quality (CEQ).  The CEQ named a Legal Advisory Committee to recommend how agencies should implement NEPA chaired by US Attorney Whitney North Seymour, Jr. (SDNY).  This Committee persuaded CEQ to issue its NEPA “guidelines” on the recommendation of this Committee.  That year launched the “golden age” of NEPA litigation.  Courts everywhere began to hear citizen suits to protect the environment.

David Sive went on to represent citizens in several NEPA cases, winning rulings of first impression.  In 1984, he reorganized his law firm, Sive Paget & Riesel, to specialize in the practice of environmental law.  From the 1970s forward, NEPA allowed proactive suits, no longer the primarily defensive ones of the 1960s. “Citizen suits” were authorized in the Clean Air Act, Clean Water Act and other statutes. 

David Sive knew that without widespread support among the bar and public, these pioneering legal measures might not suffice.  He became a founder of the Natural Resources Defense Council (NRDC), which became one of the nation’s pre-eminent champions of public environmental rights before the courts.  To continue the Airlie House conference precedent, he institutionalized the established professional study of environmental law, as a discipline, through creation of the Environmental Law Institute (ELI).  With ALI-ABA (now ALI-CLE) he launched nationwide continuing legal education courses to education thousands of lawyers in environmental law, a field that did not exist when they attended law school.  He devoted an active decade to teaching law students in environmental law, as a professor at Pace Law School in New York.

This month, the Intergovernmental Panel on Climate Change (IPCC) released the second part of its Fifth Assessment Report.  The IPCC summaries of peer-reviewed scientific investigation suggest that law will confront problems even more challenging than those that David Sive addressed.  New legal theories and remedial initiatives will be needed that do not exist today.  The wisdom of ecologist Aldo Leopold can inform the next generation.  Globally, others carry on David Sive’s role, such Attorney Tony Oposa in the Philippines or M. C. Mehta in India.  The law can cope with rising sea levels, adaptation to new rainfall patterns, and other indices of climate change, but it will take individual commitment to think deeply about environmental justice in order to muster the courage to think and act tomorrow as David Sive did yesterday.

LNG Import or Export—Should the Public Care Which?

Posted on February 6, 2012 by Richard Glick

Just a few years ago, the price of natural gas was high enough to encourage development of liquefied natural gas (LNG) import terminals to receive LNG from foreign gas producers and then “re-gassify” such gas before sending it to existing interstate pipelines.  Three such facilities were proposed in Oregon, after a failed attempt to site an LNG terminal in California.  The presumption had been that due to the high capital cost of the terminal and related pipeline, and because of market constraints, there would be but one terminal on the West Coast. 

That dynamic has shifted with discovery of abundant domestic shale gas deposits and attendant lowering of gas prices, and LNG terminal developers are thinking “export,” instead of import.  Should this change in the LNG business model matter to anyone?

Of the proposed Oregon projects, two remain: at the Port of Coos Bay and on the Skipanon Peninsula in Youngs Bay, at the mouth of the Columbia.  The projects have generated controversy, with opponents asserting public safety concerns (i.e. uncontrolled “blast zones”), harm to aquatic habitat, creation of a terrorist target, usurpation of land owner rights along the pipeline route, and all apparently with no benefit to Oregon because the gas may only be shipped to our evil sister to the south, California.  Of course, these are all issues that the FERC and state permitting reviews are designed to uncover, assess and prescribe mitigation for and those processes are incomplete.
 
Natural gas prices have come down to the point that an LNG import facility may no longer make sense.  On the other hand, demand for natural gas in Asia is high, particularly in Japan following the Fukushima nuclear disaster, which in turn raises prices.  Thus, the two remaining Oregon LNG projects are actively considering conversion to export facilities, and there is enough global demand—and plenty of surplus Canadian and U.S. natural gas—that more than one would be needed to make much of a dent in that surplus.  This result has enraged environmental activists, as though it is somehow unfair to change the economic model on which a proposed project is based.

There is nothing about a LNG export facility that is so different—either in form or impact on land or resources—such that it should affect how the public views LNG.  The two concepts have approximately the same footprints, and to the untrained observer, would look the same.  In the case of the Skipanon Peninsula project, tanks are the most prominent structures; import and export tanks are identical, except that an export facility would require only two, whereas an import terminal requires three.  The dock/pier arrangements for import or export facilities are identical.  The two concepts have very similar (and very limited) environmental impacts, all of which will be reviewed in detail in the various state and FERC regulatory processes.  In addition, an LNG export facility would provide four times as many construction jobs (about 10,000 man-years) and almost twice the amount of long-term employment originally anticipated from the project.  The project represents a $5 billion investment in a region with no apparent industrial development alternatives on the horizon, and with property tax rates right around 1%, such a project would infuse approximately $50 million in local annual tax assessments.

There are some who suggest allowing exports of LNG would raise domestic natural gas prices and thereby place the U.S. economy at a disadvantage.  But of course the U. S. participates in a global economy and gas prices are driven by global market conditions.  A commodity will find a market, seeking the highest prices available, wherever it originates.  The U. S. exports approximately 50 million metric tons of grain every year and that probably raises U.S. domestic food prices a little, but would anybody seriously argue that we should stop grain exports?

Markets will determine whether a shift to exporting LNG makes economic sense.  Environmental effects and other public interest issues related to an LNG export terminal and related pipeline projects should be judged on their merits by the federal and state agencies charged to do so.