Managing the Legal Risks of Green Buildings
As with “green washing” of products, which are subject to existing product liability law, there is an emerging area of law regarding liability for claims that a building marketed as “green” or alleged to achieve the desired platinum, gold, silver or standard Leadership in Energy and Environmental Design (LEED) certification has failed to do so.
As the LEED requirements and techniques for sustainable development become better understood and more widely adapted, more and more developers are seeking to build “green.” To the extent that the construction costs permit a manageable return on investment (ROI) and the specifications and requirements for such development are clearly spelled out in the various contractual documents, including especially the agreement with architects, we will likely see more and more claims that the resultant buildings are “green.”
Although some theories of liability will track areas in construction law, e.g., deficiencies in design, construction or installation, green buildings claims will face an additional layer of risk. Without such statutory coverage, cf strict product liability, today’s bases for liability may include breach of contract, tort, fraud and false advertising claims.
For example, in the Maryland case of Shaw Development v. Southern Builders, which was settled without an opinion, the loss of a tax credit based upon compliance with a LEED Silver certification level led to a claim of liability.
The best way to mitigate these risks is to ensure that all contractual documents are clear and consistent, project management is assured, information disclosures are accurate, and finally that insurance coverage, where available, is provided. With regard to documents, AIA form contract B214-2007 has been developed to provide some model contractual language; more than forty insurance carriers are now underwriting green building liability; and in many law firms, some of their attorneys and other technical people have become LEED accredited.
This is an area that will continue to develop as more and more green buildings are constructed. For more in-depth information on potential liability and tips to mitigate claims, see the Harvard Law School Environmental Law & Policy Clinic White Paper, “The Green Building Revolution: Addressing and Managing Legal Risks and Liabilities”.
Climate Legislation Is Dead (For Now): Long Live Conventional Pollutants
Climate change legislation is dead for now. I won’t pretend it’s not depressing, even though I avoid the political channels and ignore the rhetoric. For those of us who haven’t refudiated climate change science, it’s a victory for the pessimists and evidence that Congress has a hard time addressing long-range problems, even if consequential.
With respect to regulation of GHG, it’s the worst of both worlds and no one should be happy (which is why I held out hope until the end that cooler heads would prevail). We’re still going to have regulation of GHG, the mechanism being EPA’s recently promulgated Tailoring Rule for GHG. One word. Ugh. Does this really make climate skeptics happy? Do they really think that they will somehow succeed in rolling back the Tailoring Rule? I don’t think so. On the other hand, we don’t have an economy-wide cap-and-trade or carbon tax regime. Are environmentalists happy? I still don’t think so.
I’m left feeling a little like Rodney King. 
Certainly, the issue isn’t going to go away before the next Congress is sworn in.
As I have noted before, however, problems with climate change legislation don’t mean that Congress can’t enact legislation further regulating traditional pollutants. The three-pollutant bill now before the Senate already has a Republic co-sponsor, Lamar Alexander. Now, according to a report in E&E Daily, even Senator Inhofe is stating that he’s interested in working with Democrats to move three-pollutant legislation. Given the failure to move GHG legislation, .jpg)
hell is likely to get hotter before freezing over, but if Inhofe can really be brought on board, there’s no reason why legislation couldn’t pass.
Three-pollutant legislation shares one significant feature with the GHG issue. Like GHG regulation, efficient regulation is hampered by limitations in existing law, as we saw with the D.C. Circuit’s rejection of the trading regime in the CAIR regulations, and EPA’s much more limited trading program in the Transport Rule. Senator Voinovich, another Republican that three-pollutant legislation supporters would like to have with them, noted as much, saying that the transport rule would be a "stringent and inflexible regime." New legislation could provide for a more robust trading regime. We’ll see if that’s enough to bring Republicans on board.
I sure hope so. Right now, all we’ve got is a GHG regulatory program that won’t do much for climate change, but will cause my clients endless headaches, and a Transport Rule that’s probably the best EPA can do on traditional interstate pollution, but not nearly as cost-effective as it might be with new legislative authority. I remain an optimist, but sometimes it’s difficult.
China Points To Population Control As Climate Change Strategy
The population issue has not received much comment when countries discuss ways to mitigate climate change and slow down global warming, according to Zhao Baige, Vice Minister of National Population and Family Planning Commission of China (NPFPC).
“Dealing with climate change is not simply an issue of CO2 emission reduction but a comprehensive challenge involving political, economic, social, cultural and ecological issues, and the population concern fits right into the picture,” said Zhao.
Zhao cites studies that link population growth with emissions and the effect of climate change, saying:
“Calculations of the contribution of population growth to emissions growth globally produce a consistent finding that most of past population growth has been responsible for between 40 percent and 60 percent of emissions growth,” citing the 2009 State of World Population report, released earlier by the UN Population Fund.
Although China’s family planning policy has received criticism over the past three decades, Zhao said that China’s population program has made a great historic contribution to the well-being of China’s society.
As a result of the family planning policy, China has seen 400 million fewer births, which has resulted in 18 million fewer tons of CO2 emissions a year, Zhao said. The UN report projected that if the global population would remain 8 billion by the year 2050 instead of a little more than 9 billion according to medium-growth scenario, “it might result in 1 billion to 2 billion fewer tons of carbon emissions.”
Meanwhile, she said studies have also shown that family planning programs are more efficient in helping cut emissions, citing research by Thomas Wire of London School of Economics that states: “Each $7 spent on basic family planning would reduce CO2 emissions by more than one ton” whereas it would cost $13 for reduced deforestation, $24 to use wind technology, $51 for solar power, $93 for introducing hybrid cars and $131 for electric vehicles."
Zhao admitted that China’s population program is not without consequences, as the country is entering the aging society fast and facing the problem of gender imbalance.
Whether, and, if so, how, population control should be an active part of a country’s climate control is certainly a difficult political and cultural issue – but one that fast-growing economies such as China, India, and Brazil may have to face in the coming years.
Livable Communities -- And How to Achieve Them
With work on financial reform almost complete, Senator Dodd announced this week that his remaining legislative priority is the enactment of the Livable Communities Act, S. 1619. There is a companion house bill, H.R. 4690. A hearing on the Senate bill will be held tomorrow.
It’s hard to be against livable communities and I may just be getting crotchety, but this legislation seems some combination of pointless and misguided. The legislative findings discuss traffic congestion, the percentage of oil used for transportation and CO2 generated from transportation, and the need to encourage and sustain compact development and historical town centers. And we’re going to solve this – or even make a dent – by making grants to “micropolitan” statistical areas? I don’t think so.
I agree that sprawl is a problem. I support transit-oriented development. However, there are reasons why we see development where we sit it in the United States. People still like the freedom and flexibility of personal automobile use. If we think that all that driving causes externalities – and I do – I’ve got two words for you: carbon tax. Until we make people internalize the cost of their living choices, they will continue to make those same choices and money spent on encouraging livable communities will be largely wasted. If we can’t summon the political will to tax carbon, we shouldn’t pretend that we’re solving the problem by spending money on micropolitan areas.
SEC Issues Interpretative Guidance on Climate Change Disclosures
by Michele B. Corash and Robert L. Falk
Morrison & Foerster LLP
San Francisco, California
In the first quarter of 2010, the U.S. Securities and Exchange Commission (“SEC”) issued a potentially significant “interpretative release” providing guidance to public companies on their disclosure obligations relating to climate change (Release Nos. 33-9106; 34-61469). The release focused on recent business and legal developments regarding climate change and advised companies to more carefully evaluate the impact these developments may have on their business and whether such impact should be disclosed.
As a technical matter, an interpretive release by the SEC does not create new legal requirements. Instead, it furthers a policy objective by “clarifying” the applicability of current SEC rules. In this case, the relevant SEC rules require the disclosure of material items associated with the impact of climate change on a business and cover a company’s risk factors, business description, legal proceedings, and management discussion and analysis.
Continue Reading...Energizing Brownfields
It has always amused me how many people are involved with Brownfields work as compared to how few projects have been completed. It is tough to make the economics work on a Brownfield development in the best of times. Thanks to clean energy rules and incentives this may be changing.
Brownfields and clean energy have several synergies. Brownfields are often in industrial corridors, with great infrastructure and proximity to electrical grids. Biomass projects in particular need access to efficient transportation networks in order to move large volumes of material. Clean energy projects such as solar, wind and biomass plants work well with risk based remediation and institutional controls required for cost effective risk management at a Brownfields sites.
Add to these synergies a vast array of incentives, mandatory quotas and grants for clean energy and we just may have a path to economic viability for some Brownfields projects. EPA has a task force known as ER3 to help facilitate such projects. Keep your eye on a project in Charlotte, North Carolina known as ReVenture Park which seems destined to put wind energy, wastewater treatment and a biomass plant on a large, complex CERCLA/RCRA site.
"CLIMATEGATE" GOES TO COURT
By now, everyone is familiar with "Climategate", the scandal surrounding the hacked e-mails from the Climate Research Unit (CRU) at the University of East Anglia in England. The inner workings of CRU are significant because the CRU is responsible for preparing the land temperature records upon which most of the climate change studies are based and which, more importantly, form the foundation for the assessment by the Intergovernmental Panel on Climate Change (IPCC) that manmade greenhouse gas emissions are responsible for global warming. The e-mails at issue include many e-mails which had previously been requested by numerous Freedom of Information requests, but which East Anglia had refused to produce, including e-mails relating to the preparation of the IPCC 2007 Fourth Assessment Report.
The CRU Temperature "Adjustments"
Most people probably think that land temperature records are the product of the rather mundane ministerial task of collecting and reporting actual temperature readings from weather stations around the world. However, there are numerous "adjustments" to the actual temperature readings which are made by CRU. There are adjustments made to account for the different times of day that the readings are taken. In addition, it is well recognized that urban areas artificially increase the measured temperature because materials like concrete, asphalt and metal structures collect and retain heat during the day and release the heat during the night. This artifact, known as the "urban heat index" (UHI), must be accounted for in the land temperature records. The magnitude of the proper adjustments for UHI are the subject of intense scientific debate, and the extent of any adjustments made for UHI serve to reduce global warming attributed to manmade greenhouse gases. Scientists that have studied UHI have also made subjective calls as to which weather stations to include and exclude in their studies, thereby injecting another "adjustment" into the equation. Numerous Freedom of Information requests had been made to and resisted by East Anglia for the underlying raw temperature data and the UHI adjustments that CRU made to such data, as well as requests for the underlying data upon which the Director of CRU, Dr. Phil Jones, had based his previous UHI studies.
Is There a New Era of Environmental "Veto" Legislation?
Will environmental issues play a prominent role in the upcoming elections? It appears so, particularly if your state’s Senior Democratic Senator is up for re-election, and is also Chairman of the Agriculture Committee and a member of the Committee on Energy and Natural Resources. Senator Blanche Lincoln (D. Ark.) cast the deciding vote in the Senate for health care reform, and received the typical “big government, liberal” moniker. Seven Republicans have lined up to run against her, and her $5 million (and growing) campaign war chest. But how will the competing campaigns deal with environmental issues? Senator Lincoln has a lifetime score of 49% on environmental issues from the League of Conservation Voters, an environmental activist group she has proudly referred to as “extremists.” Of the Democratic Senators up for re-election, Sen. Lincoln ranks the lowest. Labels are easy to assign, but are rarely very accurate.
The school of thought at the end of 2009 was that either Congress would enact climate change legislation prior to March of 2010, or EPA would enact its own climate change rules to implement the impending endangerment rulemaking. Not so fast. Not only is there no climate change legislation, Congress is now debating S.J. Resolution 26: “Congress disapproves the rule submitted by the Environmental Protection Agency relating to the endangerment finding and the cause or contribute to findings for greenhouse gases under Section 202(a) of the Clean Air Act (published at 74 Fed. Reg. 66496 (December 15, 2009), and such rule shall have no force or effect.”
Continue Reading..."The Increasing Role of Constitutionalism in Environmental Law: It's Less Boring Than That Suggests!"
On February 26, 2010, Dan Farber, Doug Kysar, Rob Glicksman and I will be on a panel at Georgetown about emerging issues at the intersection of Constitutional and Environmental Law. We'll puzzle over recent developments and the constitutional shape of environmental law to come. There is much to discuss. We have the limitations on judicial involvement, say, the political question doctrine and the treaty clause in the context of climate litigation. Summer suggests that Scalian standing is alive and well, and that procedural standing is hardly, er, left standing. And then there are 1:1 ratio limits to awards of punitive damages in cases involving environmental harm with which to contend under substantive due process.
Federalism could experience resurgence. Oneida and Kelo give the states an opening to do more (and do worse). Yet preemption still looms large (as with cap & trade), and sovereign immunity jurisprudence has diminished state accountability.
And of course, there is an enfeebled Congress, which behaves as if its powers are as a majority of the Supreme Court imagined them to be in 1935. While non-delegation is still in desuetude, and Raich revived rational basis review of Commerce Clause authority for the time being, it's any wonder that Congress delivers so little about national environmental challenges these days. Or anything else, for that matter. But if we're really at war, then how about Congress using its war powers to address environmental challenges that impinge upon national security, like climate change? And does Missouri v. Holland give Congress authority unbridled by the 10th Amendment to address international environmental issues, say, water pollution? Climate change?
Which brings us back to Article II separation of powers, and Chevron. For the next 2 1/2 years, all may learn to love Justice Alito's interpretive approach in last term's Kensington.
What does the future hold? Who knows, except for ineffective congressional responses and a Supreme Court that seems at least skeptical about national environmental programs. So maybe a constitutional devolution of sorts. Opportunities abound for constitutional innovation under the General Welfare and Due Process Clauses, or invocation of state (here and elsewhere) provisions that putatively provide a right to a healthy environment.
And if judicial takings are constitutionally cognizable (this term's Beach Renourishment), then why not sustainable development under the Privileges & Immunities or Equal Protection Clauses, or the 9th Amendment?
Or maybe not. It is, after all, a constitution we are expounding.
Opposition to Wind Farm Siting Based on Adverse Health Effect from Infrasound?
BLANKENSHIP-KENNEDY DEBATE CLIMATE CHANGE
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?
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.
Continue Reading..."MEGA" SHALE AND TIGHT SANDS GAS - A GAME CHANGER
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.
Continue Reading...STATE OF MAINE IDENTIFIES OFFSHORE WIND DEMONSTRATION SITES FOR FIRST-IN-NATION DEEPWATER TECHNOLOGIES
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."
Continue Reading...Carbon Offset Credits Available Now
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.
Continue Reading...Be Careful What You Wish For
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
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
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.
Continue Reading...Connecticut v. AEP Decision Supports Public Nuisance Actions Aimed at GHGs
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.
Continue Reading...
TWO NEW GHG NUISANCE CASES GO DIFFERENT DIRECTIONS
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."
Continue Reading...MIXED RESULTS FOR OREGON CLIMATE CHANGE LEGISLATION
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.
Continue Reading...GLOBAL WARMING: PROBABLY AN INCREMENTAL SUCCESS STORY
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.”
Continue Reading...KANSAS RENEWABLE ENERGY ACT: UNUSUAL COMPROMISE RESURRECTS COAL PLANT CONSTRUCTION; LIMITS AUTHORITY OF STATE ENVIRONMENTAL AGENCY
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.
Continue Reading...BIOFUELS AND CLIMATE CHANGE
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.
Interior Secretary Salazar Demonstrates True Commitment to Renewable Energy
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
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
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.
Continue Reading...Is the Midwest Climate Initiative D.O.A.?
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
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.
Continue Reading...Oregon as Center of Green Energy?
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.”
Continue Reading...UNITED STATES NEEDS TO GET ON BOARD IN 2009 WITH THE ONE-WATT INITIATIVE
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.
Continue Reading...A Quick Economic Stimulus Meets a Slow Environmental Process - Are NEPA Waivers Needed to Reach Energy Independence?
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.
MIDWEST GREENHOUSE GAS REDUCTION ACCORD RECOMMENDATIONS CONTINUE TO ADVANCE
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.
Continue Reading...The Role of States in Climate Change Regulation
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.
Continue Reading...Can Clean Energy Save America?
America, and our new President, face a daunting array of challenges as we close out 2008 and enter the New Year. These include a general economic meltdown, widespread job losses, a collapsing auto industry, unsustainable dependence on foreign oil, climate change and a protracted war in Iraq, among others. Many of these problems relate directly or indirectly to our production and consumption of energy.
The initial focus of the incoming Obama administration is rapid deployment of a massive economic recovery package. Early indications, including the President-elect’s post-election statements and his cabinet-level appointments, suggest that “green jobs” and “green infrastructure” are likely to play a prominent role in Mr. Obama’s efforts to restart the U.S. economy, as reflected in the Presidential transition website. A number of commentators have talked of a “Green New Deal” as the key to revitalizing our economy. They may just be right.
Continue Reading...What to Watch in 2009: Carbon Credits Are a Hot "Commodity"
2009 promises a fascinating year, in which carbon emissions – the newest environmental commodity – will continue to influence both world markets and world politics. The performance of the carbon market, and the emergence of new regulatory schemes to cap carbon, particularly in the U.S., is sure to be closely watched by many politicians, environmentalists, and players in the burgeoning carbon trading industry. While the carbon market’s outlook is healthy, how the U.S. enters it – whether it can find the political will for a national cap-and-trade system, and ensure that carbon emissions receive favorable domestic tax treatment – could mean the difference between the limelight or a bit part for the global carbon show.
Continue Reading...THE ROLE OF RENEWABLE ENERGY IN THE REDUCTION OF GREENHOUSE GASES
Despite some early skepticism, the concept that carbon dioxide and other greenhouse gases contribute to global warming is now a widespread, if not universally accepted, belief. This link was acknowledged by the U.S. Supreme Court in Massachusetts v. Environmental Protection Agency, 127 S.Ct. 1438, 1446 (2007). With the recognition of this relationship has come an increased awareness of the role that traditional energy production facilities have played in global warming, which, in turn, has resulted in an increased interest in the development of renewable energy.
Renewable energy is energy which, by definition, is naturally replenished. The most commonly recognized forms of renewable energy are sunlight, wind, geothermal, water and biofuel/biomass sources. While lawmakers throughout the U.S. have passed legislation requiring that a percentage of electricity must be derived from renewable resources, the state of Nevada has been a leader in mandating that renewable energy be a made a significant part of electric provider's portfolios. In 1997, Nevada’s legislature passed into law in the state’s first “Renewable Portfolio Standard” which required that electric providers in the state acquire renewable electric generation or purchase renewable energy credits so that each utility had 1 percent of total consumption in renewables. In 2001, the standard was modified to require that, by the year 2013, 15 percent of electricity be derived from renewables.
While renewable energy facilities are generally environmentally preferable to their fossil-fuel counterparts, they are not without their impacts to both the human and natural environments. For example, renewable energy sources are often less concentrated than fossil fuels, thereby requiring a significantly larger geographic footprint for renewable energy facilities. In addition, certain types of renewables have significant visual impact, and some renewable projects utilize other, sometimes precious, resources such as water.
These impacts are, in the case of most large scale electrical generation projects, analyzed in the course of the environmental review process mandated by the National Environmental Policy Act (“NEPA”). NEPA requires not only analysis of the environmental impacts of proposed projects when such projects have a federal nexus and are deemed to have a significant impact on the environment, but also requires mitigation of such impacts or rejection of projects where the environmental impact is significant and cannot be adequately mitigated.
Development of renewable energy projects requires careful examination of science, law and public policy to ensure compliance with all applicable legal requirements and protection of the environment. The process is lengthy, costly, and at times contentious, but each completed project brings us closer to meeting the nation's energy needs without contributing to global warming.
EMERGING CLIMATE CHANGE ISSUES: Impacts on Disclosure Obligations of U.S. Public Companies
Public companies are feeling pressure to make disclosure of the risks posed by climate change. The SEC has to date declined to issue any climate change-specific guidance, but existing SEC regulations are broad enough to require disclosure, if the information would be important to the “reasonable investor.” Investors and shareholders are increasingly vocal about their desire to have that information.
In the absence of SEC action, New York Attorney General Cuomo has used state law to obtain settlements from Xcel Energy and Dynegy that require specific disclosures regarding the financial risks from probable climate change regulation and from the physical impacts of climate change. Even more significant is the pressure coming from major purchasers. Wal-Mart, for example, is requiring all its suppliers to report on their GHG emissions and their strategies to reduce their carbon footprints.
The timing, scope and details of the anticipated national program to regulate GHG emissions are still unknown, making it difficult to predict the risks and implications of climate change and its regulation for any individual company, However, even in the face of these uncertainties, disclosure is increasingly the norm, rather than the exception. All public companies need to be analyzing the risks posed by climate change and, depending on the business, should be considering disclosure of those risks in their public filings.
To read the article in its entirety, please click here.
A FIRST GLIMPSE OF THE ENVIRONMENTAL AGENDA OF THE OBAMA PRESIDENCY
It has been a long time since an environmental issue attracted some serious attention in a presidential campaign. This is the year, and climate change is the issue. From his campaign to his election night reference to a "planet in peril", President-Elect Obama has focused on climate change. There are a few other environmental issues to watch as well.
Climate Change
The issue of climate change overshadowed other environmental issues in this election, in part because it is directly linked to other high priorities of the new administration. Goals of creating 5 million green-collar jobs and a focus on renewable energy and energy conservation enlarge the profile of climate change initiatives. For example, on the Obama-Biden website, the topics of environment and energy are grouped together as one, and the initiatives of each are related.
Green house gases reduction is an important goal for President-Elect Obama. The goal to reduce greenhouse gases has many parts, but imposing an economy-wide cap and trade system is the centerpiece of the policy. The plan would require that all credits be purchased at auction by industry. Costs to purchase credits could be enormous.
In addition to domestic commitments to climate change initiatives, Obama supports "re-engaging" with the United Nations and the creation of a Global Energy Forum that includes the G8+5 Nations . The initial steps of his international policy may come soon when Obama's representatives will likely visit the climate change talks in Poznan, Poland this December.
The broadening Democratic majority in Congress favors Obama's climate change agenda. In addition to Democratic gains in the House and the Senate, the League of Conservation Voters reports that seven of its 2008 "dirty dozen" legislators were defeated in the 2008 election. Among environmental groups, hopes are high for the new presidency.
But because Obama's objectives require heavy investment in renewable energy, regulatory compliance, and clean technology, they face difficult hurdles. High deficits and the global financial crisis challenge the ability of the federal government to spend, the capacity of private markets to invest, and the resilience of the U.S. economy and industry to weather increased costs of regulation. Great investment would be required for meeting goals for clean coal technology, biofuel development, renewable energy, and energy efficiency.
Other Environmental Issues
Here are some of the other environmental issues to watch.
CERCLA issues have not received great attention so far. However, Obama has suggested reinstitution of the tax on industry to pay for orphaned sites and has emphasized the concept of "polluter pays".
For many years, changes to the General Mining Law of 1872 to impose royalty and/or additional regulation have been proposed and defeated. Although mining law reform has not been a significant part of the presidential campaign, the chances for its passage in the more Democratic congress has increased.
Obama's past opposition to offshore drilling weakened a bit this year in the Senate as a result of a compromised effort. Obama would support offshore exploration in areas already set aside for it, but his opposition to ANWAR remains firm.
It is unclear what priority the Obama administration will place on biodiversity and the Endangered Species Act. Biodiversity has received little attention in the campaign, but the campaign has opposed lessening of ESA consultation requirements.
First Regional Greenhouse Gas Initiative Auction Results: Massachusetts Gets $13.3 Million
The operators of the Regional Greenhouse Gas Initiative, or RGGI Inc., announced yesterday that all of the 12,565,387 CO2 allowances offered for sale in the first RGGI auction on September 25, 2008 were purchased at $3.07 per allowance. This is above the auction reserve price of $1.86 per allowance, and below recent prices on the Chicago Climate Futures Exchange. See RGGI Inc.'s press release here.
RGGI did not announce the names of the winning bidders, but noted that there were 59 participants in the auction, all from the "energy, financial and environmental sectors." In total, the bidders sought to purchase more than 51 million allowances, or approximately four times as many as were offered. The auction was administered by World Energy Solutions, Inc., and RGGI also retained an independent market monitor, Potomac Economics, to oversee the auction. Potomac Economics stated that most of the allowances were purchased by "compliance entities or their affiliates." See the Potomac Economics release here.
Massachusetts' share of the RGGI allowance proceeds came to approximately $13.3 million. In a press release issued yesterday, Governor Patrick confirmed the commitment in the Green Communities Act to use the RGGI funds for energy efficiency programs that will help individuals and municipalities address energy challenges.
Specifically, the $13.3 million in proceeds from the first auction will be allocated in the following ways:
- $3.5 million for utility-administered energy efficiency programs, primarily funding the DPU's $7 million program to work with electric and natural gas utilities to expand their consumer energy efficiency programs
- $5 million for start-up of the Green Communities Program, created by the Green Communities Act
- $4.3 million for additional energy efficiency efforts this winter, subject to the report of the Winter Energy Costs Task Force which is due in early October
- $500,000 for administrative and vendor costs associated with Massachusetts' participation in RGGI and the allowance auctions
The next auction is currently scheduled to be held on December 17, 2008.
Offshore Wind Farm in the Mid-Atlantic - Will Delaware Be the First State of Offshore Wind?
The nation’s first offshore wind farm may soon be built off the coast of Delaware. Although climate change and clean energy issues were part of the debate over this project, the Delaware wind farm project finds its origins in energy reliability and price stability legislation.
In 2006, consumer energy prices in Delaware increased dramatically, following the State’s deregulation of electricity generation. As part of the deregulation process, a three year freeze had been placed on energy rate increases in Delaware. When the freeze expired, energy prices across the United States were spiraling upward and rates in Delaware were adjusted to market prices. The result was a significant increase in consumer electricity prices, with the attendant public outcry and legislative demand for reform.
In an attempt to stabilize prices, the Delaware General Assembly enacted the Electric Utility Retail Customer Supply Act of 2006. The Act established a bidding process for long-term purchase power agreements, and directed Delmarva Power & Light Company (“Delmarva Power”), the State’s largest electricity service territory provider, to solicit bids for such an agreement. The legislation also mandated an integrated resource planning process in order to ensure the availability of sufficient and reliable resources over time to meet customers' needs at a minimal cost.
Continue Reading...EPA PROPOSES CO2 STORAGE RULES
On July 15, EPA announced new rules for underground injection of carbon dioxide (CO2). The rules are intended to provide a measure of regulatory certainty for carbon capture and storage (CCS) implementation. CO2 STORAGE RULES. CCS is the technology for capturing CO2 as it is released from coal-fired power plants, oil refineries or other large scale sources of CO2 emissions, and then transporting the gas for injection into a suitable underground geologic formation. EPA estimates that CCS could account for as much as 30% of CO2 emissions by 2050, which has obvious implications for climate change.
NEW CLASS OF UIC WELLS
Under the Safe Drinking Water Act, EPA administers the Underground Injection Control (UIC) program. The program is designed to protect drinking water aquifers from industrial injection of fluids into deep geologic formations for purposes such as enhanced oil or gas recovery. CO2 storage presents special challenges as it is buoyant, can be corrosive and would be spread over a large area and held indefinitely. Therefore, EPA proposes a new Class VI well specific to storage.
NO PRESCRIPTIVE STANDARDS
EPA proposes performance-based standards, as opposed to prescriptive requirements. In general, an injection and operations plan must be included with the application that demonstrates drinking water would be protected. Permit holder would have to monitor and periodically report back to EPA to ensure that model predictions as to the size of the CO2 plume and injection pressures prove true. Permittees would be required to demonstrate financial responsibility for post-injection site care for 50 years; that time period could be shorter or longer, depending on the residual risk to drinking water aquifers based on monitoring data.
PLENTY OF ROOM FOR STATE REGULATION
Note that the rules do not address the capture and transportation of CO2. Further, the new rules do not address property rights, liability or other siting regulatory concerns, so we can expect the states to assert jurisdiction.
For more information, see full article here.Climate and the Courts
The Supreme Court ruled last term that climate change can be regulated under federal law. But will the continuing lack of action by Congress, the Environmental Protection Agency, and most states be replaced by new litigation by activist states and public interest organizations against government agencies and private parties? Is this an area where litigation will, or alternatively should, fill a void left by meaningful government activity? When EPA separately receives a record-breaking 100,000 comment letters on the request by California to waive the Clean Air Act’s barrier to state regulation of greenhouse gases from motor vehicles, one realizes that the public’s demand for concrete action is urgent. A legitimate fear, however, is that these petitions and lawsuits could produce a patchwork response to global warming where a comprehensive national strategy is called for.
Continue Reading...Wind Power Project Permitting: Demonstrating a Need for Clean Power and Evaluating the Economic and Wildlife Impacts of Wind Farms
Al Gore wins the Nobel Peace Prize. “Climate Change” and “Global Warming” are now topics of daily news articles, web debates, and dinnertime conversations. Many states are not waiting for the federal government, and instead are undertaking initiatives to reduce greenhouse gas emissions. The most efficient and available clean energy source across the U.S. at this time – wind power – is drawing the attention not only of American energy companies and developers, but also from those around the world who seek to build wind farms in the U.S. Yet proposed wind projects, including one represented by this article’s author, still often face fierce local opposition from certain environmental groups claiming unreasonable biological, economic, or scenic impacts.
As with climate change, there has been a growing volume of objective empirical data over the past few years assessing not only the need for clean renewable energy, but also the economic and environmental benefits of such energy sources as wind power. This article can only briefly touch on some of the results, and guide the way for the reader to find additional detailed information and reports. Continue Reading...The IOGCC Issues Its Model Program For The Geologic Sequestration of CO2
On September 25, 2007, the Interstate Oil and Gas Compact Commission (IOGCC) issued its model program for the storage of carbon dioxide in geologic formations. The full text of the model program can be found here.
OVERVIEW - Even though USEPA has announced that it will undertake the development of regulatory program for such activities under the Safe Drinking Water Act, the IOGCC model program is premised on the belief that the regulation of CO2 geological storage should be left to regulation by the states, rather than USEPA. Equally significant is the IOGCC view that the storage of CO2 in geological formations should be viewed as the storage of a commodity - not waste disposal. While the IOGCC proposes its CCS program in anticipation of a national program that would constrain the emission of CO2 to the atmosphere, the IOGCC avoids making recommendations about how CO2 should be constrained.
PROPERTY RIGHTS - The model program provides that an applicant for any such project should acquire the property rights to use pore space in the geologic formation for storage. While much of the IOGCC’s model program addresses the need to acquire property rights through negotiation, eminent domain or unitization of oil and gas rights, the model program specifically states that the IOGCC is less concerned about what mechanism is used to acquire those rights and is more concerned that all necessary property rights be acquired by valid, subsisting and applicable state law. The IOGCC goes on to recognize that states might develop alternative mechanisms to acquire property rights, such as adapting the concept of the forced unitization of oil and gas industry rights to other property interests. An applicant must demonstrate that a good-faith effort has been made to obtain the consent of a major of owners "having property interest affected by the storage facility." The program provides for an applicant to have the power of eminent domain and provides that an applicant will be deemed to have necessary property rights to the extent that the applicant has initiated unitization or eminent domain proceedings and have thereby gained the right a of access to the property.
COVERED FACILITIES - The definition of "storage facility", includes the reservoir, wells and related surface facilities but apparently not pipelines used to transport carbon dioxide from capture facilities to the storage and injection site. The IOGCC has stated its intent to consider over the next year, how its model program might best be expanded to include pipelines.
LIABILITY RELEASE - Following completion of the project an operator would be obligated to monitor the project to assure its integrity. At the completion of that period, title to the facility would be transferred to the state and the operator and all generators of CO2 injected would be released for all regulatory liability and any posted performance bonds would also be released. Over the next year, the IOGCC has stated that it will consider the possibility of expanding the liability release to include common law tort liability. As part of the inducement for a state to allow liability transfer, the program establishes a trust fund which would assess a fee on each ton of CO2 injected. The trust fund provides the financial resources for the state to take title to project at the end of its operating life.
COOPERATIVE AGREEMENTS - Cooperative agreements are authorized for use in connection with projects that extend beyond state boundaries.
EOR PROJECTS - Enhanced Oil Recovery projects are not covered by the model program, although agencies are encouraged to develop rules on how enhanced recovery operations would be converted to carbon dioxide storage projects.
PERMIT REQUIREMENTS - The program provides detailed requirements for completing an application for approval of a CCS project. Among other things maps accompanying a permit application would be required to identify existing oil and gas and coal mining operations. Public notice is completed upon mailing. The agency shall issue a permit to drill and operate once it has completed a review of the application. The permit would expire within twelve months from the date of issuance if the permitted well had not been drilled or converted. The program also sets forth detailed well operational standards, including requirements for safety plans, leak detection, and corrosion monitoring and prevention.
This article was authored by David M. Flannery, Jackson Kelly PLLC. For more information on the author see here.Regional Governors Sign On to Progressive Climate Change Agreement
On November 15, 2007 the Midwest Governors Association held the Energy Security and Climate Change Summit in Milwaukee, WI. The Summit provided Midwest leaders with the opportunity to come together on an issue of global importance and sign onto the Midwestern Greenhouse Gas Reduction Accord (the Accord). Full signatories to the Accord include Wisconsin, Minnesota, Illinois, Iowa, Michigan, Kansas, and the Canadian Province of Manitoba. Indiana, Ohio, South Dakota signed on as observer states, and although Nebraska and North Dakota did not sign onto the Accord, they did adopt the accompanying Energy Security and Climate Stewardship Platform (the Platform).
The Accord cites the lack of national leadership on climate change issues and asserts that Midwestern States are well positioned to take a leadership role in climate change policy. Several specific goals were put forth along with an aggressive timeframe within which to accomplish them. Of particular importance will be establishing targets for GHG emission reductions and implementing a regional cap and trade program.
The Platform provides policy options and measurable goals to help facilitate the transition to a lower-carbon energy economy. Among its top priorities are the development of widespread energy efficiency programs, utilization of bio-based products and transportation, increased development of local renewable electricity, and increased support for advanced coal technologies.
More information about the Midwestern Governors Association, the Accord and the Platform is available online here.Carbon Capture and Sequestration Issues and Debate
The proposed construction of a 700-megawatt coal-and-biomass-fuel power plant on the site of a former nuclear power plant in Maine has sparked a great deal of analysis into current issues and technologies associated with carbon sequestration, including but not limited to coal power plants. The Twin River Energy Center in Maine proposed an innovative technology to convert coal and wood biomass to a nearly sulfur-and particulate-free gas that would be burned to drive steam turbines, as well as to create a small amount of diesel fuel.
As in many parts of the country, the project proposal kindled debate about the use of America’s substantial coal resources in a time of climate change and greenhouse gas concerns. Consequently, a large conference was recently held by the Chewonki Foundation with participation of experts from around the country, as well as Twin River representatives, to discuss carbon capture and storage technologies and opportunities. The Twin River project would have the technology to capture carbon, but no ready sequestration site nearby presently exists.
The general consensus from conference presentations was that (1) carbon capture and sequestration will need to play an important role in reducing carbon dioxide emissions, not only in the United States, but especially in China, India and other parts of the world; (2) at the present time, there is insufficient geological information -- both on land and below the ocean floor -- about the potential for carbon dioxide storage not only in Maine but in the Northeast in general; and (3) it is imperative that government, industry and environmental groups work together in exploring the viability of carbon sequestration.
Maine is a member of the Regional Greenhouse Gas Initiative (RGGI), the nation’s first carbon-and-trade program, which involves all Northeast states from Maine to Maryland, with the exception of Pennsylvania. Commencing January 1, 2009, it required reduction of pollution from the region’s largest power plants by 10% by 2019. However, while the region itself is not heavily dependent upon coal-fired generation, it is heavily dependent upon fossil-fuel generation, as well as being downwind of substantial coal-generated power to the west and south.
During the Chewonki conference, findings were presented from the MIT Future of Coal Study; the U.S. Department of Energy presented on the priorities and challenges of carbon capture and storage; several speakers focused on technological issues of producing low-greenhouse gas liquid fuels, as well as the monitoring and site characterization for carbon storage; and a presentation was made by a Twin River consultant on the mine-to-wheels analysis of projected carbon dioxide emissions from the proposed plant.
A link to the carbon capture and storage presentations can be seen here. After the presentation, local voters in Wiscasset rejected a change in the zoning ordinance concerning height of structures. The project developer is still intending to pursue the project following some refinements.
In full disclosure, the author is lead environmental permitting attorney for the Twin River project, and his firm generally represents Twin River. For more information on the author, including contact information, please see firm website here.
