WHO WINS WHEN FEDERAL MINERAL LESSEES COLLIDE WITHIN THE SAME ACREAGE?

Posted on June 14, 2019 by Tom Sansonetti

Berenergy Inc. has been operating seven oil and gas wells on three federal leases in the Powder River Basin area of Wyoming since the 1960s.  Peabody Energy has been strip mining coal on multiple federal leases in the same area since the 1970’s. Further background of this conflict is found in my previous post.

Peabody’s North Antelope Rochelle Mine is the largest coal mine in the United States with a mine plan that requires it to move in a south-to-north direction over several decades.  The mine has advanced to within a quarter mile of the Berenergy wells.  The wells are spaced as to form a picket-fence like barrier to the mine’s progress.

Berenergy’s well bores extend several thousand feet below the surface.  Peabody’s coal reserves are only 850 feet under the surface.  In order to mine through, Peabody would have to pull the piping and plug each of the well holes.

After passing through the well sites, Peabody could re-drill and replace the piping to allow the oil and gas production to continue. The cost to Peabody would be approximately $500,000. Mining through the well sites would take approximately four years. The cost to Peabody of moving the mining machinery around the seven wells would be approximately $180 million. 

The value of the 91 million tons of coal under or near the wells at current prices is $1 billion. Because of the mine plan’s northerly direction and the mammoth size of the operations, the cost of returning to the bypassed coal years later would be prohibitive. Thus, the coal would remain in place if bypassed.

Peabody offered to purchase the Berenergy wells for their appraised price of $477,000. Berenergy rejected the offer, instead requesting a much larger sum in order to “get out of the way.” Peabody refused to pay the requested amount and both Peabody and Berenergy approached the BLM, as the common lessor, to seek a resolution of the standoff.

As a valid lessee in good standing, Berenergy argued that its leases were “first in time” giving them the “first in right” to continue producing until the wells run dry. Berenergy pointed out that Peabody leased its coal with full knowledge of the existence of the wells and should have to wait to mine unless willing to meet Berenergy’s monetary demands. Berenergy petitioned the BLM to suspend Peabody’s leases.

As a valid lessee in good standing, Peabody argued that the “first in time” theory was not embodied in either statutes or regulations and without statutory guidance or legal precedent the BLM should adopt a “doctrine of accommodation” that would permit maximum recovery of both the oil and the coal. Peabody petitioned the BLM to suspend Berenergy’s leases so it could mine through.

On August 17, 2018, the BLM Wyoming State Director issued a decision allowing Peabody to mine through the well areas based on the provisions of Section 209 of the Mineral Leasing Act. This provision allows the Secretary of the Interior to suspend mineral leases in order to conserve natural resources.

Peabody immediately began pulling and plugging the well closest to its operations. Berenergy obtained a temporary restraining order in Wyoming federal district court and appealed the BLM decision to the Interior Board of Land Appeals. The IBLA ruled against Berenergy’s motion for stay of the BLM order and Peabody demanded that Berenergy post a multi-million-dollar bond in order to continue the litigation before the IBLA. Berenergy was not able to post the bond and dismissed its IBLA appeal, opting to return to the Wyoming federal district court for resolution of its “first in time” claim naming the BLM as the defendant. Peabody intervened in the case to support the BLM decision.

After lengthy briefing and an oral argument, Wyoming District Judge Scott Skavdahl ruled on May 13, 2019 in favor of the BLM and Peabody. The court ruled that the MLA’s Section 209 permitted the BLM to suspend leases in the name of the conservation of natural resources when two valid federal leases developed a conflict over acreage where the minerals in question could not be simultaneously produced. Given the vast disparity between the value of the remaining oil and gas reserves versus the coal reserves to be bypassed, the court found that the BLM’s use of a comparative valuation standard to aid in its decision-making was reasonable. The court noted that it could not find regulatory authority on “first in time” that contradicted the language in Section 209.

On June 11, Berenergy filed its appeal in the Tenth Circuit Court of Appeals. Stay tuned.

A Rational Counter to the Green New Deal

Posted on May 15, 2019 by Dick Stoll

For anyone serious about climate policy, I highly recommend Bob Sussman’s Comment in the May 2019 Environmental Law Reporter. Sussman, a former high-ranking EPA official in the Clinton and Obama Administrations, has produced an amazingly comprehensive review of where we have been and where – in his view – we should be going with climate policy and law in the U.S.

He recommends a detailed mix of legislative and regulatory proposals covering all sectors of the economy.  His proposals are based (necessarily) on the assumption that Democrats will control both the White House and Congress beginning in 2021.  If this happens, he says, the Democrats “will need to be ready with a fully developed and actionable climate policy agenda . . . building this agenda will take time and must begin now.”

So is Sussman – like many Democratic Presidential candidates – endorsing the Green New Deal (GND)?  Hardly!  His baseline is to seek “economically responsible and realistic” measures.  And when he says “realistic,” he means politically as well as technically.

Sussman criticizes the GND as a “wild card” formulated by “idealistic newcomers” who could “unwittingly torpedo their own efforts.”  He urges those formulating new proposals to account seriously for concerns about (1) economic disruption, (2) an expansive federal bureaucracy, (3) picking winners and losers among energy technologies, and (4) the U.S. competitive position internationally.  Democrats, he writes, “need to acknowledge these political realities.” 

These are concerns and realities, of course, that the GND essentially flaunts.  He warns that the GND “will polarize the electorate and alienate the political center,” which would lead to “yet another policymaking failure that allows GHG emissions and global temperatures to continue to rise unchecked.”

Sussman’s detailed proposals are summarized neatly in Table I to his Comment.  He is realistic in dividing proposals that will need new legislation as opposed to beefed up regulations.  For instance, he is careful to note that cap-and-trade or “beyond the fenceline” approaches would need new legislation.  In this regard, he recognizes that anything like the ambitious Obama Clean Power Plan would be unlikely to survive judicial review given the current composition of the Supreme Court.

For the power and manufacturing sectors, he endorses legislation providing an integrated cap-and-trade system.  I have one caution in this regard.  I would hope that such legislation would not look very much like the Waxman-Markey bill that passed the House in June, 2009 (and was never brought to the floor of the Senate).

As I wrote in a piece for BNA that year, the House bill contained short deadlines for dozens of new EPA regulations – deadlines that could never have been responsibly met. This would have set up an inevitable round of citizens suits forcing new deadlines coupled with massive judicial review opportunities.  All this in turn would produce tons of work for lawyers accompanied by very few tons of emission reductions.   Hopefully any new cap and trade legislation can be sufficiently specific on programmatic elements and numeric details so the program could get off the ground without suffering through years of judicial process.

Whatever Happened to the Conservative Belief in Markets?

Posted on May 3, 2019 by Seth Jaffe

After receiving an analysis showing that shutting the Jim Bridger and Naughton coal-fired electric generating plants in Wyoming would save ratepayers money, PacificCorp, the owner of the plants, announced that it would shut the plants and the mines that supply them as early as 2022.  Mark Gordon, the Republican Governor of Wyoming is not happy.

According to Greenwire (subscription required), Gordon said that:

I will advocate for a positive path where this utility and others are part of developing solutions rather than destroying communities and delaying progress on meaningful technological advances that keeps coal as part of a diverse energy portfolio and also address climate change.  The potential for early retirements of some coal-fired power plants means we drift further away from finding solutions for reducing carbon emissions.  (Emphasis very much added.)

If we stop burning coal, we’ll never figure out how to reduce carbon.  Rats.  Why didn’t I think of that?

However, I’m not here to criticize Gordon for thinking that we need to burn coal in order to reduce CO2 emissions.  I’m here to criticize him for thinking that it is reasonable for the Republican-led government of Wyoming to criticize private companies for taking economically rational decisions to reduce costs for ratepayers.  Indeed, Wyoming has not just criticized PacificCorp.  Wyoming has apparently enacted legislation requiring a utility that wants to close a coal plant to search for a buyer.  It apparently also would require the utility to purchase electricity from such a new buyer, so long as it does not increase customer bills.

Since when did Republicans start second-guessing private sector economic decisions?  Conservatives should stop worrying about the green new deal and start worrying about socialism in Wyoming!

North to the Future: Alaska and the Risks of Pursuing a Trump Legacy

Posted on April 5, 2019 by Peter Van Tuyn

On the last Friday in March, Judge Sharon Gleason of the Federal District Court for the District of Alaska issued two opinions in closely-watched cases* concerning federal public lands and waters in and offshore of Alaska.  In both cases, the Trump administration’s actions were overturned by the court, having immediate impact on two State of Alaska priorities and potential impact on a number of other State and private development efforts. 

The first case concerns a land trade approved by Interior Secretary Ryan Zinke in which the United States agreed to transfer formal Wilderness in the Izembek National Wildlife Refuge to an Alaska Native Corporation.  Izembek Refuge is internationally significant and of critical importance to many species of wildlife, including migratory waterfowl.  For example, virtually the entire global populations of Pacific Brant and Emperor Geese migrate through Izembek.  The land trade was intended to enable the construction of a road between the Alaska communities of Cold Bay and King Cove.  In multiple analyses since the 1980s the Interior Department had found that such a road would harm wildlife in the Refuge.  In 2013 Interior Secretary Sally Jewell formally rejected a land trade due to harm it would cause to “irreplaceable ecological resources,” and because “reasonable and viable transportation alternatives” exist between the communities.  In 2018, Secretary Zinke reversed course and approved the land trade.  A coalition of conservation groups then sued.

In rejecting the land trade, Judge Gleason found that Secretary Zinke had not addressed anywhere in the record his reasons for reversing course; indeed, he had not even acknowledged the change in agency position. Relying on the seminal U.S. Supreme Court administrative law cases of Motor Vehicle Manufacturers v. State Farm and FCC v. Fox, which require an acknowledgement and reasoned explanation for such a change of course, Judge Gleason invalidated the land trade, writing that while a court should “‘uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned,’ a court may not ‘supply a reasoned basis for the agency’s action that the agency itself has not given.’”

Later that same day Judge Gleason issued an opinion in a challenge to a 2017 President Trump executive order concerning areas where offshore oil and gas leasing can take place.  In that case, conservation organizations and an Alaska Native-focused NGO challenged Trump’s  revocation of President Obama’s earlier withdrawals from oil and gas leasing of most of the United States’ Arctic Ocean and a number of canyons within the Atlantic Ocean. 

This lawsuit turned on an interpretation of presidential withdrawal authority under the Outer Continental Shelf Lands Act. Section 12(a) of OCSLA provides the president with the clear authority to withdraw certain areas of the Outer Continental Shelf from oil and gas leasing, and the central question in the lawsuit was whether it also provides authority for a president to undo existing  withdrawals that were intended, like Obama’s Arctic and Atlantic actions, to be of unlimited duration.  Judge Gleason found that section 12(a) authority works only in the direction of presidential withdrawals, and not the undoing (or “revocation”) of such withdrawals.

Looking to the future, should Acting (and likely soon-to-be-confirmed) Secretary David Bernhardt revisit the Izembek land trade, he will need to either win on appeal during his tenure (should he take one) or directly confront the agency’s previous rejection of a land trade and the reasons for that rejection.  Furthermore, Trump’s “energy dominance” effort to expand offshore oil drilling in the Arctic Ocean is dealt a blow.  Notably, the OCSLA issue is similar to one raised in litigation over Trump’s revocation of National Monument designations under the Antiquities Act and Judge Gleason’s treatment of the issue thus may influence other courts. 

More broadly than even these implications, the two Gleason decisions may portend the result of other Alaska-related federal policy and decision-making.  For example, the Corps of Engineers is fast-tracking Clean Water Act section 404 permitting for the proposed Pebble mine in Southwest Alaska.  And the proposed mine’s developers are trying to get EPA to reverse course on its intended use of its Clean Water Act section 404(c) authority to restrict or prevent any Corps’ permit for the mining of the Pebble ore deposit.  EPA’s proposed restrictions were based on a Bristol Bay Watershed Assessment, which the developer had waived challenging in settling a previous lawsuit with EPA.  Given the clarity of Judge Gleason’s Izembek opinion on what it would take for the agency to reverse course, and the settled science of EPA’s watershed assessment, securing a 404 permit won’t be as simple for proponents as winning a policy argument, which appeared to be the case with the Izembek land trade. 

Looking back to the Interior Department, the Bureau of Land Management is moving forward with oil and gas lease sales on the Coastal Plain of the Arctic Refuge.  Critics of that effort, including a former Interior official, say the legal process is being illegally shortcut, which is an attribute it may thus share with the Izembek land trade.  Interior is also speedily-redoing a 2013 management plan for the 23 million acre National Petroleum Reserve with a goal of expanding oil and gas leasing in the Reserve starting in 2020.    

Ironically, on Thursday, March 28, the day before Judge Gleason issued her decisions, Interior Secretary-nominee David Bernhardt had his confirmation hearing before the U.S. Senate Energy and Natural Resources Committee.  This committee is chaired by Alaska’s Senator Lisa Murkowski, who is a supporter of expanded oil and gas development on federal lands in and offshore of Alaska.  The judicial smackdown the next day, however, is sure to complicate Bernhardt’s efforts to implement such an agenda before the next presidential term, which is the timeframe which appears to underly Interior’s and other agencies’ efforts on Alaska issues.  And if the rush to secure more decisions in this presidential term leads to more losses in court, Alaska development interests could face complicated bureaucratic and legal landscapes, and strong political backlash, well into the future.

* Izembek case:  Friends of Alaska Wildlife Refuges, et al, v. Bernhardt, 3:18-cv-00029-SLG (March 29, 2019, D. Ak).

* Arctic OCS case:  League of Conservation Voters, et al, v. Trump, 3:17-cv-00101-SLG (March 29, 2019, D. Ak)

 

What Happens When the Green New Deal Meets the Old Green Laws?

Posted on March 27, 2019 by JB Ruhl

Representative Alexandria Ocasio-Cortez and Senator Ed Markey made headlines when introducing the Green New Deal resolution to Congress. Within milliseconds, contesting waves of support and opposition flooded the news wires, social media, and blogs. Critics focused on the proposal’s perhaps overly hopeful (some say, delusional) absence of any accounting for the funding, political feasibility, and technological capacity needed to get to net zero greenhouse gas emissions by the Green New Deal’s target date of 2050 (some Green New Dealers advocate an even earlier date), especially under the other conditions they demand. After all, the Green New Deal movement is basically asking our nation to replace one national energy infrastructure with another, plus demanding that government also ensure social justice for present and future generations, provide millions of new jobs, install an awesomely sustainable economy, extend free health care, and the list goes on.

But let’s put all that aside. Let’s say we had a blueprint for the Green New Deal’s carbon goal and a whole lot of money to spend. The stark reality is that the Green New Deal is going to run smack dab into the wall of the Old Green Laws. I’m talking about the National Environmental Policy Act, the Endangered Species Act, Section 404 of the Clean Water Act, the National Historic Preservation Act, the Migratory Bird Treaty Act, the Clean Air Act, the…do I really need to keep going, because the list is really long.

What the Green New Deal movement simply does not seem to appreciate is that the nation’s existing energy infrastructure is a vast physical, social, and economic entity that has been defined in its geographic, technological, and economic dimensions largely by decades upon decades of lawsuits brought under those Old Green Laws by many of the interest groups now behind the Green New Deal. The infrastructure the New Green Deal envisions—particularly if it rules out hydropower and nuclear power—can’t just land where the existing fossil fuel energy infrastructure is located, as if we are just changing car tires. Wind power has to follow wind, and solar power has to follow the sun, and neither of those geographic footprints has much overlap with where the fossil fuel infrastructure is currently located. So, making the Green New Deal happen means putting vast new renewable energy production facilities on the landscape. And then, because our existing transmission grid is based on where fossil fuel generation occurs, which is generally not where solar and wind generation will occur, we’ll need to put new transmission lines on the landscape. Just looking at NEPA alone, it would take 25 years just to get the Environmental Impact Statements done and through the courts before the first shovel of dirt is moved!

To put it bluntly, this is going to be ugly. Environmental protection special interest groups already are attacking wind and solar energy projects around the nation, claiming they will kill too many bats, birds, and desert creatures. Yet, if you were to map out what would be needed to implement the Green New Deal, we’ll need to locate new wind and solar power generation infrastructure, and their transmission line infrastructure, on the landscape at a pace and scale unprecedented in our nation’s history. Believing that everyone will be behind that is naïve. Wherever this Green New Deal landscape transformation machine goes, it will face opposition by narrow-interest environmental groups, not-in-my-backyard landowners, states, local governments, and companies threatened by the new regime, and so on. To think otherwise is delusional. And their first weapon of choice is going to be the Old Green Laws. After all, look around and ask, what has for decades impeded and often stopped new fossil fuel infrastructure such as pipelines, processing facilities, and port facilities. It’s the Old Green Laws.

Looking into the Law 2050 future, the “green” interests that are promoting the New Green Deal sooner or later will have to come up with a convincing soundbite explanation for how they propose to comply with the Old Green Laws in a way and time frame that meets their 2050 deadline. Doing so without in some substantial ways relaxing the current Old Green Laws seems implausible, but relaxing any current regulations seems a nonstarter for Green New Deal politicians. In other words, the Green New Deal is between a rock and a hard place, and they can blame their predecessor “green” generations who designed and implemented the Old Green Laws that must be satisfied regardless of the climate virtues of the Green New Deal.

One can easily imagine that many industry and landowner special interest groups long pitted against the environmental protection special interest groups have grins on their faces, as the latter will seem to have been hoisted by their own petard. It is not hard to envision how the Green New Deal will splinter the environmental interest group universe—indeed, more than 600 groups recently signed a letter to Congress supporting the Green New Deal agenda, but a good number of leading national groups such as the Sierra Club and Audubon Society did not sign on.

There is perhaps a third path, however. To make its agenda complete, the Green New Deal could propose a new environmental law regime as well, one that does not tinker with the Old Green Laws and thus face the claim of “deregulation” or “backsliding.” The Green New Deal must acknowledge the environmental disruptions its infrastructure proposal will cause and design an environmental planning, assessment, permitting, and regulatory regime (perhaps even with--gasp!--market mechanisms like trading and taxes) built from scratch around concepts of resilience, adaptive management, and collaborative adaptive governance. This will mean dispensing with the Old Green Laws’ morass of comprehensive pre-decision studies and rounds of lawsuits. In short, the New Green Deal needs New Green Laws.

What’s Going on with Keystone XL?

Posted on February 20, 2019 by Mark Walker

As one of his earliest executive actions, and following through on campaign promises, on January 24, 2017, President Trump signed an Executive Memorandum (EM) inviting TransCanada to resubmit its application for an international border crossing permit for the Keystone XL pipeline.  To facilitate prompt action, the EM directed the Secretary of State to make a final decision on the application within sixty days utilizing “to the maximum extent permitted by law” the State Department’s January 2014 Environmental Impact Statement (EIS).

On March 24, 2017, a Presidential border crossing permit was issued for Keystone XL based upon the findings in the 2014 EIS.  The Indigenous Environmental Network and others immediately appealed in federal court in Montana (Case 4:17-cv-00029-BMM, District of Montana, Great Falls Divisions) claiming, among other reasons, that the record of decision (ROD) failed to adequately explain why the State Department had reversed Obama’s denial of the permit in 2015 because approval of the pipeline “would undermine U.S. climate leadership.”

On November 8, 2018, Judge Brian Morris issued a 53-page order which enjoined further construction activities.  This was based in part on the Court’s finding that the 2017 ROD did not provide a “reasoned explanation” for its reversal in policy course.While acknowledging the Trump Administration’s authority to change policy and reverse course, the Court held that, “when reversing a policy after an election, an agency cannot simply discard prior factual findings without a reasoned explanation.” 

The 2017 ROD attempted to justify the shift in policy by finding that, since 2015 “there have been numerous developments related to global action to address climate change, including announcements by many countries to do so” and “a decision to approve [the] proposed Project would support U.S. priorities relating to energy security, economic development and infrastructure.”  The Court held that this was not sufficient because it failed to adequately explain why the climate change findings in the 2015 ROD were no longer applicable.  Quoting from a U.S. Supreme Court decision, the Court held, “an agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past.”  

The Court also held that the use of the 2014 EIS violated NEPA in several respects, including: (1) it was based upon outdated oil market data (the 2014 EIS predicted $100 to $140 per barrel oil for the next 20 years); (2) it failed to evaluate the cumulative climate impacts from the Alberta Clipper pipeline; (3) it failed to complete the required cultural resources analysis; and (4) it was based on outdated information regarding the frequency of oil spills and, therefore, it also did not adequately assess the potential impact of oil spills on certain endangered species.

The Court’s order gives the Trump Administration the opportunity on remand to supplement the 2014 EIS to address the deficiencies and an opportunity to provide a reasoned explanation for its policy reversal.  The EIS supplementation will likely take several years to complete.  It looks like the Keystone XL border crossing permit is now into the next election cycle, and certainly more appeals will follow.

A LAWYER’S GUIDE TO ADDRESSING CLIMATE DISRUPTION

Posted on February 14, 2019 by John C. Dernbach

Co-authored by Michael B. Gerard

Recent scientific reports by the U.S. Global Change Research Program and the Intergovernmental Panel on Climate Change depict the present and future consequences of climate disruption in increasingly urgent terms.  At the same time, according to a new poll, record numbers of Americans believe that climate change is real, that it is human caused, and that it affects them personally. 

But there is good news.  It is possible for the U.S. to dramatically reduce greenhouse gas emissions.  We also have the legal tools to do the job—more legal tools, and a greater variety of tools, than we may have imagined. 

In 2014 and 2015, the Deep Decarbonization Pathways Project (DDPP)  published a technical report and a policy report on deep decarbonization in the United States—reducing U.S. greenhouse emissions by at least 80% by 2050.  The DDPP is a global effort to assess the technological and economic feasibility of deep decarbonization in 16 countries representing 74% of the world’s greenhouse gas emissions.

The U.S. reports conclude that “it is technically feasible” for this country to reduce its greenhouse gas emissions by 80% from 1990 levels by 2050.  They also conclude that the cost of this effort would only be one percent of U.S. gross domestic product, not including the many benefits that would come from doing so.   

Enormous changes would be required to achieve this level of reduction, the reports said.  The U.S. would more than double the efficiency with which energy is used.  Nearly all electricity would be carbon free or use carbon capture and sequestration.  Electricity production would also need to double because gasoline and diesel fuel for transportation, and oil and natural gas used for space heating and cooling and water heating, would be mostly replaced by electricity.  

These reports do not, however, discuss what legal tools would be necessary to achieve these outcomes.  In response, in late 2015, we began planning an edited volume to comprehensively analyze and explain the various laws that could be employed, building on the DDPP reports. The resulting book, Legal Pathways to Deep Decarbonization in the United States is being published by the Environmental Law Institute Press in March.  You can order a copy here.  In 35 chapters authored by 59 experts, adding up to 1,200 pages, the book identifies more than 1,000 federal, state, local, and private legal tools for deep decarbonization.   

To get the key messages of the book to the broadest possible audience, ELI has also published a Summary and Key Recommendations volume.  This book includes a thumbnail summary of each chapter, key recommendations by chapter, and a separate listing of recommendations organized by actor.  You can download this book here without charge.

Legal Pathways describes a dozen different types of legal tools.  As explained in greater detail here, these are not just the usual suspects (additional regulation, market-leveraging approaches, tradable permits or allowances), but also reduction or removal of legal barriers to clean energy and removal of incentives for fossil fuel use.  They also include information/persuasion, facilities and operations, infrastructure development, research and development, insurance, property rights, and social equity.  The wide range of types of legal tools provides great opportunity for building consensus.  One particularly important category, for example, is reduction or removal of legal barriers.

The book is thus a playbook for deep decarbonization.  In fact, various legal tools could be designed and combined to achieve quicker and deeper reductions than 80% by 2050, and even negative overall emissions.

This book is also a resource for lawyers because the laws it describes need to be proposed, drafted, and implemented on behalf of a wide variety of clients in many contexts.  The many types of tools also make clear that a variety of lawyers are important in this effort, including not only energy and environmental lawyers, but also finance, corporate, municipal, procurement, contracting, real estate, and other types of lawyers.

While both the scale and complexity of deep decarbonization are enormous, the book has a simple message: deep decarbonization is achievable in the United States using laws that exist or could be enacted. These legal tools can be employed with significant economic, social, environmental, and national security benefits.

Toward that end, we are launching a project to turn the recommendations into legal language—drafting federal and state statutes and regulations, model ordinances, guidance documents, transactional agreements, and the like.  We are well aware that a great many lawyers are already doing this kind of work, and that many more are feeling the need to respond to the challenges that climate disruption imposes.  We welcome lawyers from all backgrounds to join in our effort, and plan to work with ACOEL as well.  If you are interested, please contact us.

Deadlines For Permit Issuance Are Double-Edged Swords

Posted on January 29, 2019 by Seth Jaffe

On Friday, the D.C. Circuit Court of Appeals ruled that applicants for licenses under the Federal Power Act may not reach private agreements with states to circumvent the FPA requirement that states act on water quality certification requests under § 401 of the Clean Water Act within one year.

The facts are important here and somewhat convoluted.  The short version is that PacifiCorp operates a number of dams on the Klamath River.  In 2010, PacifiCorp reached a settlement with California, Oregon, and a number of private parties – not including the Hoopa Valley Tribe, the plaintiff here – to decommission certain dams and relicense others.  However, the decommissioning was dependent on certain third party actions, including, apparently, federal funding.  Part of the settlement required California and Oregon to “hold in abeyance” their § 401 certificate reviews.  Specifically, each year, PacifiCorp:

sent a letter indicating withdrawal of its water quality certification request and resubmission of the very same . . . in the same one-page letter . . . for more than a decade.

The Court was not pleased.

Such an arrangement does not exploit a statutory loophole; it serves to circumvent a congressionally granted authority over the licensing, conditioning, and developing of a hydropower project. … There is no legal basis for recognition of an exception for an individual request made pursuant to a coordinated withdrawal-and-resubmission scheme, and we decline to recognize one that would so readily consume Congress’s generally applicable statutory limit.

The Court limited its holding to the facts of this case; it does not apply, for example, to applications that are substantively amended and resubmitted.  It only applies to what PacifiCorp and the states unabashedly did here – reach a private agreement to get around the explicit provisions of the statute.

Nonetheless, it’s an important decision.  Based on data reported in the opinion, it may have a significant impact on a number of FERC licensing proceedings, where similar agreements may also be in place.

The decision also highlights an issue with these types of permitting deadlines.  These provisions follow a fairly well-trod path.  Some agency is slow in responding to permit applications.  A legislature responds by demanding that approvals be issued within a certain period of time.  The regulated community is happy.  Then, life moves on and, in the real world, parties realize that, for one reason or another, strict adherence to the statutory deadline is infeasible, impractical, or just plain not in anyone’s best interest.  They thus do what creative people do – they find a way around the deadline that was supposed to be protecting them.  Or, they try to do so until a court says no, no, no.

Be careful what you wish for.

Wildfires and the Winds of Change

Posted on January 24, 2019 by R. Christopher Locke

Renewable energy sources have been rapidly deployed across the nation over the past decade.  In addition to state government mandates for addressing climate change, federal and state tax incentives and technological advances have spurred their growth, as have the reduced cost and improved efficiency of photovoltaic (PV) solar energy, wind turbines, and energy storage systems.

California has led the way with government-mandated renewable energy goals.  Under AB 32, enacted in 2006, the California Public Utilities Commission (CPUC) established a renewables portfolio standard (RPS) for retail sellers and goals of generating 33 percent of electricity from renewable energy sources by the end 2020 and 50 percent by the end of 2030.  Last year, Governor Brown signed SB 100, which stepped up the 2030 goal to 60 percent and added a new goal of 100 percent of electric power from carbon-free energy sources by the end of 2045.  Hawaii, a state that is “off the grid” and entirely dependent on its own generating capabilities, has similarly adopted the goal of generating 100 percent of its electricity from renewable sources by the end of 2045.;

States have also addressed the need to balance the grid through energy storage systems.  These systems can reduce or eliminate reliance on “peaker plants” and other fossil fuel sources when the sun is not shining and the wind is not blowing, and variable sources like solar and wind are producing little or no energy.  Once again, California has led the way.  Enacted in 2010, AB 2514 calls for 1.3 gigawatts of energy storage capacity from the state’s three large investor-owned utilities by 2020, and legislation adopted last year accelerates and expands the deployment of energy storage systems.

Other states across the nation have adopted similar mandates and incentives to promote the development of renewable energy and storage capacity.  And the low cost of PV solar itself provides a significant incentive.  In fact, a recent study by Lawrence Berkeley National Laboratory documented the geographic spread of new solar installations in 2017, with 40 percent being built in the southeastern states and another 17 percent in Texas alone.

Despite the current Administration’s withdrawal from the Paris Climate Accord and its support for fossil fuels, some recent federal actions have also addressed renewable energy and climate change.  Last year the Federal Energy Regulatory Commission (FERC) amended regulations to facilitate development and use of energy storage systems.  And earlier this month, House Speaker Pelosi re-established the Select Committee on Climate Change and appointed Representative Kathy Castor (D-FL) as Chair. 

Given the reduced costs of solar and wind energy systems, government mandates and support for renewable energy, technological advances, and success in expanding reliance on renewable sources and balancing the grid with energy storage systems, we seem on track toward achieving renewable energy goals in many states.  What could possibly go wrong?

Last week Pacific Gas & Electric (PG&E), announced that it would seek Chapter 11 bankruptcy protection from an estimated $30 billion in potential liability resulting from the horrific California wildfires of the past two years.  Ironically, the hotter, drier climate change-related conditions that contributed to these wildfires and affected PG&E’s potential liability could adversely impact attainment of California’s renewable energy goals to combat climate change.  Scenarios similar to the wildfire-related losses and liability for PG&E could be presented for electric utilities elsewhere in the nation due to severe storms, flooding, storm surge, and sea level rise.

Climate change –related losses, liabilities and bankruptcy proceeding for utilities could in turn affect existing long-term power purchase agreements (PPAs) for renewable sources, especially when combined with changes in demand, the declining cost of solar and wind, and changes in rate schedules.  Indeed, PPA rates have declined significantly over the past decade, providing impetus for potential renegotiation of such agreements.  In PG&E’s 2001 bankruptcy, the court took into account the need for continuation of essential services and left the existing PPAs largely in place.  If older PPAs are renegotiated or restructured, the parties and the court should recognize the need to preserve and promote the financial viability of the renewable energy industry.

In recent years, community choice aggregators (CCAs) have been created by some cities and counties and may provide opportunities to help stabilize power supplies that historically have been furnished almost exclusively by investor-owned utilities.  However, reliance remains on the utilities to maintain and control transmission and distribution networks, and there are some uncertainties about the long-term financial viability of CCAs.

Further government action may also help to stabilize energy supplies and commitments to renewable energy sources and goals.  Last year California passed SB 901, allowing PG&E to issue bonds, supported by increased rates, to cover losses and liabilities relating to the previous year’s wildfires.  And last week, Governor Newsom announced his intent to work with the legislature to find a solution that provides continued reliable electric power, addresses fire victims’ claims, and promotes California’s renewable energy goals.

Reducing potential impacts associated with climate-related risks will depend not only on pursuing programs and infrastructure to prevent and respond to wildfires and other climate-related events, but also on maintaining credit-worthy power purchasers and the financial viability of renewable energy project owners, developers, manufacturers, and suppliers.

In California this will require the support of, and coordination with, the CPUC, FERC, the legislature, the Governor, and the courts.  As noted in Liam Denning’s January 16 opinion in Bloomberg: Business News, the issues are “multi-dimensional” and the solution “will be a job not just for a judge but for the regulators and legislators, too.”

Nuclear Power and Preemption under the Atomic Energy Act: Is a New Era Dawning?

Posted on January 23, 2019 by Shane Swindle

The Supreme Court recently heard argument in Virginia Uranium, Inc. v. Warren, a case concerning the scope of preemption under the Atomic Energy Act (AEA).  Based on the questions several justices asked at argument, the Court could be poised to issue a ruling that would allow states to enact new constraints on the generation of nuclear power, even if motivated by nuclear safety concerns that fall squarely within the scope of AEA preemption.

Back in 1983, in Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commission, the Supreme Court held that the Atomic Energy Act (“AEA”) “has occupied the entire field of nuclear safety concerns,” and that a state law that is “grounded in [radiological] safety concerns falls squarely within the prohibited field.” And a few years later, in English v. Gen. Elec. Co., the Court held that “the pre-empted field” under the AEA is defined, “in part, by . . .  the motivation behind state law[s],” and specifically whether those laws are animated by concerns regarding radiological safety.

Looking beyond the neutral language of state statutes and beyond the purposes put forward by state legislatures and regulators, lower federal courts have struck down a wide range of state statutes as preempted by the AEA. In Entergy Nuclear Vt. Yankee, LLC v. Shumlin, for example, the Second Circuit struck down a Vermont statute that required state legislative approval to build a nuclear power plant, even though the statute purported to regulate the generation, sale, and transmission of electric power. Noting that courts do not “blindly accept the articulated purpose . . . for preemption purposes,” the court considered “the legislative record” and found “references, almost too numerous to count, [that] reveal legislators’ radiological safety motivations and reflect their wish to empower the legislature to address their constituents’ fear of radiological risk, and belief that the plant was too unsafe to operate.”  Other circuit courts similarly have looked beyond facially-neutral statutory language to find statutes preempted in cases addressing transportation of spent nuclear fuel and storage of radioactive wastes.

This approach to preemption under the AEA may be about to change. The Supreme Court heard argument on November 5, 2018 in Virginia Uranium, Inc. v. Warren and will decide whether Virginia’s ban on uranium mining on private land is preempted by the AEA. As reported on the SCOTUSBlog, multiple justices questioned whether the Court should look beyond the language of the statute at issue to consider the legislature’s motivation.

The nuclear power industry already faces many obstacles to increasing generation of nuclear power. If the Supreme Court holds that courts may not look behind the language and stated purposes of state statutes, the nuclear industry may also face the prospect of non-uniform, checkerboard regulations across the country, as states use their newfound authority to preclude or sharply limit nuclear power production within their borders.

Why We’re Taking a Hard Look at Nuclear Power Plant Closures

Posted on November 13, 2018 by Kenneth Kimmell

Last month the Intergovernmental Panel on Climate Change (IPCC) issued a sobering report. Based on the most up-to-date scientific evidence, the report warns that we are rapidly losing any appreciable chance of meeting the Paris climate agreement goal of keeping temperature increases to “well below” 2 degrees Celsius above pre-industrial levels.

The report also makes clear that if we fail to meet this goal, the consequences will not only be severe, but they will be experienced sooner than expected. (For more information on the IPCC report, see our blog series)

In stark defiance of science, here in the United States the federal government has abdicated its leadership role and is now taking a wrecking ball to the pillars of progress—the Clean Power Plan, our nation’s first limits on CO2 from power plants; fuel economy/greenhouse gas emission limits for cars and trucks; and rules to limit methane emissions from oil and gas operations.

While a number of states, cities, businesses, universities and others have stepped up admirably, many observers have concluded that there is a high degree of uncertainty about whether we will meet or even get close to the pledge we made as part the Paris Agreement—a 26 to 28 percent reduction from 2005 levels by 2025. This graph, adapted from a study performed by the Rhodium Group, depicts this:

US projected emissions compared to the US Paris pledge. Source adapted from Taking Stock 2018, Rhodium Group

These sobering realities dictate that we keep an open mind about all of the tools in the emissions reduction toolbox—even ones that are not our personal favorites. And that includes existing nuclear power plants in the United States, which currently supply about 20 percent of our total electricity needs and more than half of our low-carbon electricity supply.

A new UCS report, The Nuclear Power Dilemma: Declining Profits, Plant Closures, and the Threat of Rising Carbon Emissions, indicates that more than 22 percent of total US nuclear capacity is unprofitable or scheduled to close over the next five to 10 years. The report also indicates that without new policies, the electricity generated by these and other marginally economic nuclear plants is likely to be replaced in large part with natural gas-fired generation (although this will vary from plant to plant). If this occurs, cumulative carbon emissions in the electric sector could increase by up to 6 percent between 2018 and 2035.

While a 6 percent increase in emissions doesn’t sound that sizable, emissions from the electric sector must decrease, rapidly and substantially. The National Research Council has found, for example, that power plant emissions must decrease by 90 percent by 2040 to meet US climate goals.

Most of that reduction will be achieved by using electricity more efficiently, expanding increasingly cheap solar, wind, and energy storage, modernizing our grid, and building more transmission lines to connect these renewable sources to load centers. We are counting on these approaches to replace capacity as coal plants close; cut down on an overreliance on natural gas in the short term and displace it over time; and increase overall electricity supply to pave the way for the electrification of transportation, space and water heating, and industrial processes.

But if nuclear power plants close prematurely, we add a fourth task—replacing lost nuclear capacity. While efficiency, renewables, transmission and storage may be up to the task, governments must adopt policies that assure that we will decarbonize even if these resources fall short of our expectations.

Factoring all of these considerations in, our new report calls for proactive policy to preserve nuclear power from existing plants that are operating safely but are at risk of premature closures for economic reasons or to ensure that lost nuclear capacity is replaced with carbon-free sources.

The best policy is an across-the-board national carbon price, which UCS has been advocating for years. Another policy solution that hasn’t received as much attention is a national low carbon electricity standard. This policy builds on the success of state renewable electricity standards but would include other low or zero carbon energy technologies. Either option would help the existing nuclear fleet, substantially boost solar and wind energy, and substantially decrease natural gas and coal use, while reducing US power sector carbon emissions by up to 28 percent cumulatively by 2035. These are durable policy solutions. Rather than a temporary fix that throws money at the problem, these policies address a systemic market failure that will help level the playing field for nuclear and other low carbon technologies in the long-run.

In the absence of national carbon price or low carbon electricity standard, the report calls upon states—which have plenary authority over the electric sector—to take proactive measures of their own. For example, California’s strong renewable energy and energy efficiency standards and climate policies mean that it can likely replace the Diablo Canyon nuclear facility by 2025 with clean energy and continue to drive down emissions. New York, Illinois and New Jersey have all adopted policies to provide financial support for distressed nuclear power plants that value their carbon-free power attributes. At the same time, these states have boosted renewables and efficiency, and sought to ensure that preserving existing nuclear power does not in any way undermine expansion of renewables.

The UCS report does not argue for subsidies for any specific plants. That case will have to be made in state-specific forums. Should states decide to support nuclear power plant subsidies, our report calls for them to be temporary and subject to periodic reassessment. And companies seeking subsidies must open their books and allow the public and regulators to make sure that the subsidies are needed and cost-effective, and that the same level of carbon free power cannot be provided during the relevant time period with less costly options.

Finally, our report makes clear that we would never support financial assistance that is tied to also subsidizing fossil-based energy sources, such as the rumored Trump administration proposal to bailout coal and nuclear plants based on spurious national security grounds.

Our report also factors in the critical issue of nuclear safety. Since its founding, UCS has been deeply concerned about the risks posed by nuclear power. An accident or terrorist attack at a US nuclear reactor could severely harm public health, the environment, and the economy. For this reason, UCS has worked as a nuclear power safety and security watchdog for more than 40 years. Consistent with our longstanding advocacy for nuclear safety, subsidies should be considered only for plants that at a minimum earn the highest safety rating from the Nuclear Regulatory Commission. This ensures that subsidies are not used to correct safety problems caused by bad management and gives under-performing plants an incentive to improve to be eligible for subsidies. And our report in no way backtracks from our longstanding insistence that there be strict oversight from the Nuclear Regulatory Commission, and that nuclear power plant operators continue to make their plants safer by expediting the transfer of spent fuel to dry casks, bolstering emergency management procedures, increasing emergency planning zone sizes, and other measures outlined in numerous UCS reports, including Preventing an American Fukushima.

Nuclear power plants are controversial, for legitimate reasons. But the IPCC report reminds us that we are running out of time and will have to make hard choices. Preserving the capacity of safely operated nuclear plants or ensuring that this capacity is replaced with zero carbon alternatives is an imperative that cannot be ignored.

We May Not Always Have Paris, But Perhaps We Can Do Better Than Paris

Posted on September 20, 2018 by Seth Jaffe

Last week, the Climate Leadership Council released an analysis demonstrating that the “Baker Shultz Carbon Dividends Plan” would result in greater reductions in greenhouse gas emissions than the US committed to attaining under the 2015 Paris agreement.  (And a shout out to ACOEL fellow Pam Giblin, who is a Senior Policy Advisor at the CLC.) 

I don’t doubt that the CLC analysis is right.  If I had to guess, I’d predict that they probably underestimate the reductions that would be reached with a robust carbon tax.

I understand the difficulty in convincing what passes for the GOP base at this point – and the GOP members of Congress – to endorse the carbon tax.  Oops, I meant dividend.  I’m hopeful that enough members will come around at some point.  My real worry is that the environmental movement will reject the plan because it calls for elimination of current regulations concerning carbon.

Years ago, Gina McCarthy used to say quite freely that the Obama administration would get most of its carbon reductions, not from direct regulation of GHG emissions, but instead from all of the other air regulations it was promulgating, such as the power plant MACT standards.

What environmentalists have to remember is that the reverse is also true – any robust program to reduce carbon emissions will also lower emissions of conventional pollutants.  Indeed, in defending the Clean Power Plan, environmentalists have made that very argument.  Why not acknowledge the same point in connection with a carbon tax and give up on a set of regulations that have always been clunky at best, are nowhere near as efficient a regulatory tool as a carbon tax, and which, as compared to a carbon tax, really benefit no one other than environmental lawyers and consultants?

God, wouldn’t it be a breath of fresh air to see Congress actually get something big done for the American people?  Let’s not screw this one up.

Brett Kavanaugh: Enemy of Innovation

Posted on September 5, 2018 by Kenneth Kimmell

The confirmation fight over Supreme Court nominee Brett Kavanaugh is underway.  Supporters and opponents are drawing battle lines over crucial issues such as abortion, health care, immigration, and whether the President is subject to criminal processes.  But the nominee’s views on the role of federal agencies in protecting public health, safety and the environment deserve our attention as well.

Unlike others before him, Brett Kavanaugh is no “stealth nominee.” As a judge on the DC Circuit Court of Appeals, Judge Kavanaugh authored many opinions on the role of federal agencies, and these opinions provide an unusually expansive window into his thinking.

Unfortunately, a careful review of his opinions reveals a disturbing pattern:

Judge Kavanaugh is hostile to innovation by executive branch agencies. He has such rigid and antiquated views of the respective roles of congress and executive agencies that he leaves little room for federal agencies to try new approaches to existing problems or to take on new challenges. This should alarm not just those on the left who would like to see more robust federal response to threats to public health, the environment, worker safety and the like, but conservatives as well, who should also want government to be nimble and able to adjust to new circumstances.

To see this pattern, follow me on a guided tour of his thinking in three key cases.

Interstate air pollution and the “Good Neighbor Rule.”

Air pollution crosses state boundaries, and many states are in the unenviable position of having dirty air even though they are effectively controlling pollution sources within their state. For example, even if Maryland were to shut down every business in its state that emits ozone-causing pollutants, portions of the state would still be in violation of federal ozone standards due to pollution from neighboring upwind states. There is a provision in the federal Clean Air Act, colloquially called “the Good Neighbor” rule, that prevents one state from causing or significantly contributing to another state’s violation of federal air quality standards.

The problem is that it is fiendishly complex to implement the good neighbor rule. Many “upwind” states emit multiple pollutants to many downwind states, many downwind states receive multiple pollutants from multiple upwind states, and some states are both upwind and downwind states. Thus, it is exceedingly difficult to point a finger at any one particular upwind state and say that it is “responsible” for any downwind’s state air quality, and even more difficult to devise a formula to fairly and effectively apportion responsibility.

In 2011, after many false starts, the Environmental Protection Agency (EPA) crafted an ingenious “Transport Rule” to address the problem. The EPA conducted extensive analysis of the costs of pollution control to determine how expensive it would be, per ton of pollutant reduction, to ensure that upwind states in the aggregate do not cause downwind states’ air quality in the aggregate to exceed federal standards. The EPA then gave each upwind state a pollution “budget” for the state to use to reduce the pollutants that were wafting beyond their borders, based on this “cost per ton” reduction benchmark. In this way, just enough pollution would be reduced so that upwind states would not tip a downwind state into non-compliance, and the amount of each state’s pollution reduction would be based on a common yardstick of cost-effectiveness.

But Judge Kavanaugh struck this plan down. In his view, Congress had not expressly embraced this particular approach, and therefore the EPA was not allowed to implement it. His decision instead required EPA to determine each upwind state’s “proportionate responsibility” for pollution in downwind states and base the required reductions on that (even though the statute does not explicitly require that approach). Judge Kavanaugh’s decision largely ignored the compelling practical difficulty of assigning proportionate responsibility, or the many economic benefits of the EPA’s proposed approach.

As a result, his ruling would have consigned downwind states to many more years of air pollution while the EPA grappled with how to implement it.

Had Judge Kavanaugh’s “proportionate” responsibility approach been required by the law, that would be one thing. But it wasn’t. The Supreme Court, on a 6-2 vote that included Justices Kennedy and Roberts, found that that the statute did not require a proportionate responsibility approach (even assuming one could be fashioned). Instead, they ruled that Congress had vested the EPA with broad discretion to devise an appropriate remedy, and the Transport Rule was both fair and cost effective.

The Clean Power Plan oral argument

This same apparent hostility to agency innovation was on display in Judge Kavanaugh’s comments on the Clean Power Plan during a court hearing. That case involved a challenge to the Obama Administration’s Clean Power Plan, the nation’s first-ever rules to limit carbon pollution from coal and gas fired power plants, one of the largest sources of greenhouse gases in the United States. The Clean Power plan, a measure that received extensive input from Union of Concerned Scientists and many others, relied on an infrequently used provision of the Clean Air Act that allows the EPA to require polluters to use the “best system of emissions reduction” to address pollutants such as greenhouse gases.

After years of review and receipt of over 4 million comments, the EPA issued a final rule in October 2015. The EPA determined that the “best system of emissions reduction” for carbon pollution from power plants included three strategies that are in widespread use today—improving the efficiency of coal plants, switching from coal to gas, and substituting low or no carbon generation, such as wind, solar and nuclear. The EPA quantified the emissions reduction that would be possible using these strategies, and devised a national standard based on this quantification. The rule was intended to cut carbon emissions from power plants by approximately 30 percent by 2030, and formed a key component of the United States’ pledge to reduce its overall emissions as part of the Paris Climate agreement.

Industry and states filed suit to challenge the Clean Power Plan, and the case was heard by the DC Circuit court of appeals. No decision was ever issued on the case, but the court held an all-day oral argument in which Judge Kavanaugh participated. His questions and comments were revealing.

A major point of debate focused on the unusual nature of the regulation. When regulating conventional air pollutants, EPA often sets pollution control standards by focusing on what each plant can do with pollution controls at the source to cut pollution, e.g. a scrubber to lower sulfur dioxide emissions, or a baghouse to collect soot. In the Clean Power Plan, in contrast, EPA established CO2 limits by focusing not on what each individual plant could do to cut CO2, but rather what the system as a whole could do by shifting away from coal-based generation towards gas and renewables.

The opponents contended that this “beyond the fenceline” approach rendered it illegal, because Congress had not specifically authorized it.

Judge Kavanaugh’s questioning at the hearing demonstrated that he bought into this line of thinking. Judge Kavanaugh stressed repeatedly that the rule would have significant economic consequences, that the EPA was using a previously unused provision of the Clean Air Act to implement this approach, and that Congress had not specifically embraced the policy of shifting to low or no carbon generation. Judge Kavanaugh seemed unmoved by the strong counterarguments that: 1) EPA had a mandatory duty under the act to lower carbon pollution from power plants; 2) this was the most cost-effective and tested method of doing so; and 3) it fit the statutory command to deploy “the best system of emissions reduction.”

While the court never issued a ruling, it seemed clear that Judge Kavanaugh was prepared to strike down the rule on this basis, leaving behind no remedy for carbon pollution from power plants.

The Case of the Killer Whale

In 2010, an employee of Sea World was lying on a platform above a pool during a whale training show when a killer whale dragged her into the water, maiming and drowning her. This marked the third death by killer whales in a roughly 30-year period.

The Occupational Health and Safety Administration (OSHA) responded by requiring the company to ensure minimum distances and physical barriers between a trainer and a whale.

Sea World challenged this order, claiming that OSHA impermissibly extended its authority to regulate the risks of sporting events. Two of the three judges, including Merrick Garland, President Obama’s ill-fated Supreme Court nominee, dispensed with the challenge, ruling that OSHA had the authority to require these commonsense safeguards for workers.

Not so Judge Kavanaugh. His dissenting opinion begins as an elaborate paean to the thrill of sporting events in which physical risks are present. He never actually critiques the solution that OSHA devised on the merits, but rather deploys the familiar lawyer’s trick of a “parade of horribles,” claiming, e.g. that if OSHA can regulate killer whale shows, it can prohibit tackling in football or set speed limits on NASCAR racing (things that OSHA has never done). All of this, according to Kavanaugh, would go well beyond the authority that Congress intended OSHA to have.

As for the physical safety of employees who work with whales—according to Kavanaugh’s logic, that would be up to Congress to legislate.

Common threads

What unites these opinions—and others like them—is that, in each of these cases, Judge Kavanaugh struck down solutions (or appeared poised to do so), when a federal agency responded to an existing problem with a novel approach or sought to address a new problem in a manner we should all value—with creativity, scientific evidence, consideration of costs and benefits, and an eye towards feasibility and practicality. In none of these cases did the agency violate any specific provision of its authorizing statute. But, in all of these cases, Judge Kavanaugh opposed these solutions under the theory that Congress had not specifically blessed the choice the agency had made.

Judge Kavanaugh and his defenders claim that curbing the power of agencies is essential to ensuring that elected leaders in Congress, rather than unelected bureaucrats, make the fundamental policy choices. This seemingly benign principle is either naïve, malevolent, or both.

The fact of the matter is that Congress is largely paralyzed and incapable of passing legislation on virtually any important issue—witness the stalemates on immigration, gun control, climate, health care, and many others. And even when Congress manages to overcome gridlock, as a necessity it legislates in broad generalities, not specifics. This is because Congress does not have a crystal ball to foresee all the possible variations of a problem or all the best solutions to it. That is why Congress wisely delegates implementation to agencies staffed with experts, and why we use a process of notice and comment to ensure that all views are heard before a regulation becomes final.

There is an important role for the courts in this rulemaking process judges must make sure that agencies do not violate the law or disregard sound reasoning and evidence. But Judge Kavanaugh takes the judicial role too far. His insistence that Congress specifically endorse an agency plan that is otherwise scientifically sound and legally within its discretion is a formula for paralysis, and the maintenance of the status quo (which helps explain his appeal to groups such as the Koch Brothersand the US Chamber of Commerce).

All of us will regret it if Judge Kavanagh’s reactionary view becomes the guiding principle of a new Supreme Court majority. With Congress already deadlocked and demonstrating almost daily basis its inability to respond to pressing challenges, we cannot thrive if executive branch agencies are paralyzed as well.

The Environmental Impact of Bitcoin

Posted on August 30, 2018 by Stephen Gidiere

I have a confession to make.  I just couldn’t resist.  I know it was foolish.  But, yes, it’s true—I own bitcoin.  To be exact, I own 0.00108151 bitcoin.  I even have a bitcoin “wallet,” which is nothing more than an app on my phone that I transferred some money (I’m sorry, dollars) into.

I have another confession to make.  Although I have read article after article about “crypto-currencies” and the technology underlying them—blockchain—I really do not fully comprehend it.  I get that it’s a method of digitally validating transactions using a decentralized network of computers.  And that bitcoin is a way of compensating people who do the validating.  But that’s about as far as it goes for me.  I thought that buying my 0.00108151 bitcoin would give me some insight into the whole process, but really I am just out about $35 so far.

But what I have gained is some appreciation for the environmental cost of bitcoin and, by extension, the paperless, digital world that we live in.  On the surface, going to a paperless currency—or paperless anything—seems like plus on the environmental side.  No cutting down trees.  No printing process with solvents and other waste.  No transportation with greenhouse gas emissions.

Yet the environmental impact of the digital currency, though unseen by most, is substantial.  Running all those computers uses substantial amounts of electricity.  In fact, the cost of running the computers is the major limiting factor in bitcoin mining operations (basically server farms).  I have read that investors are flocking to areas of the country with low cost power—like Washington State, rich with cheap hydro power.  And I have recently read about one community in Texas where it is reported that a bitcoin mining operation will start up at a retired aluminum smelting plant, to take advantage of the energy infrastructure already in place.

With the price of bitcoin fluctuating widely (including in my bitcoin wallet), is this sustainable?  There is a real risk of energy infrastructure being built and then abandoned—who gets stuck with those stranded costs?  What about all those servers, creating mountains of electronic waste?  Will the bitcoin rush leave a trail of destruction, like virtual tailing piles from the California Gold Rush?  So I’m thinking—maybe I should cash in what’s left of my bitcoin and fold it up in my real wallet to do my part.

“To Count or Not to Count, That is the Question”

Posted on June 28, 2018 by Jeff Civins

“To count or not to count”--greenhouse gas (“GHG”) emissions--was a question facing both the Bureau of Land Management (“BLM”) and the US Forest Service (“USFS”), in deciding whether to lease 13 parcels of federal mineral estate in Santa Fe National Forest in New Mexico for oil and gas production, and the federal district court in New Mexico, on an appeal of those agencies’ joint determination to lease those parcels.  The appeal, filed by plaintiff citizen groups, in San Juan Citizens Alliance v. United States Bureau of Land Management, No. 16-cv-376-MCA-JHR, D. NM (June 14, 2018), asserted a number of violations of the National Environmental Policy Act (“NEPA”) based on, among other things, the agencies’ alleged failure to take a hard look at direct, indirect, and cumulative impacts of oil and gas leasing.  The GHG emissions in question related to those that would result not from the production of oil and gas from the leases, but rather from the consumption of that production--and the resulting climate change impacts of those emissions.  The court answered yes to the question of whether to count those emissions, but its determination raised another question--what difference would or should counting those GHG emissions make.

Operating under a memorandum of understanding, the USFS and BLM jointly manage oil and gas leasing on federal forest land, with the USFS regulating the surface and the BLM, the subsurface.  The USFS identifies specific lands to be offered for lease; the BLM provides a reasonably foreseeable development scenario.  If the UFS consents to leasing, it may include conditions; BLM may then issue competitive leases.  The leases here were issued after protracted administrative proceedings, which included the USFS’s preparation of an environmental impact statement and supplement that supported the permitting of oil and gas leasing and which culminated in the BLM’s issuance of a Decision Record and Environmental Assessment approving the parcels for lease, which “tiered to” the USFS environmental studies.

Plaintiffs argued that the agencies “failed to take a hard look at direct, indirect, and cumulative impacts of oil and gas leasing” before making an irretrievable commitment of resources.  Regulations of the Council on Environmental Quality, at 40 CFR Part 1500, define the pertinent terms.

Direct effects” are “caused by the action and occur at the same time and place” while “indirect effects” are effects that “are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable.” A “cumulative impact,” on the other hand, is an “impact on the environment [that] results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency … or person undertakes such other actions.” “Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time.” 

BLM’s Decision Record explained that the agency was evaluating only GHG emissions associated with exploration and production of oil and gas (estimated to be 0.0018% of the US’s total GHG emissions), because the environmental impacts of GHG emissions from consumption of that oil and gas, e.g., refining and consumer-vehicle combustion, were not direct effects and neither were they indirect effects because production was not a proximate cause of GHG emissions resulting from consumption.  BLM argued, however, that emissions from consumption were accounted for in the cumulative effects analysis. 

The Decision Record explained:

The very small increase in [GHG] emissions that could result from approval of the action alternatives would not produce climate change impacts that differ from the No Action Alternative. This is because climate change is a global process that is impacted by the sum total of [GHG] emissions in the Earth’s atmosphere. The incremental contribution to global [GHG] from the proposed action cannot be translated into effects on climate change globally or in the area of this site-specific action. It is currently not feasible to predict with certainty the net impacts from the proposed action on global or regional climate.

The Air Resources Technical Report discusses the relationship of past, present and future predicted emissions to climate change and the limitations in predicting local and regional impacts related to emissions. It is currently not feasible to know with certainty the net impacts from particular emissions associated with activities on public lands.

The Air Resources Technical Report noted that the BLM did not have the ability to associate an action’s contribution in a localized area to impacts on global climate change,” but may do so in the future when “climate models improve in their sensitivity and predictive capacity.” 

In its review of the agencies’ record, the court noted “neither the Record Decision nor its tiered or incorporated documents estimate the potential greenhouse gas emissions from consumption of the oil and gas produced by wells developed on the leases, nor do they discuss the potential impacts of such emissions. “  The court concluded that the failure to estimate the amount of GHG emissions resulting from consumption of the oil and gas produced as a result of development of wells on the leased areas was arbitrary and required that BLM reanalyze the potential impact of such greenhouse gases on climate change in light of the recalculated amount of emissions in order to comply with NEPA.

For that reason, the court remanded the case to the BLM to address this error and to consider whether, based on that reanalysis, its mitigation analysis needed to be revised as well.  The court reasoned that GHG emissions from the consumption of oil and gas were an indirect effect that BLM should have considered, citing Sierra Club v. Fed. Energy Regulatory Comm’n, 867 F.3d 1357, 1374 (D.C. Cir. 2017), and found that BLM also did not adequately consider the cumulative effects of those emissions, together with other emissions.

The question raised by this case, and Sierra Club v. FERC, which the court cites, is how helpful the analysis of indirect and cumulative effects will be to the agency in its decision-making and could or should that analysis result in the selection of a different alternative or in requirements to mitigate. As a practical matter, given the global nature of the concern posed by GHG emissions and the relatively small contribution of the activity under review, is there an expectation that an agency will make meaningful changes in its decision-making as a result of any required reanalysis? So perhaps the question should be not whether to count or not to count, but rather, “What difference would or should counting make?”And, perhaps an even more salient question is, as a policy matter, should concerns posed by GHG emissions be better addressed through legislation and rulemaking rather than by imposing constraints on an ad hoc basis?

Paving a Legal and Regulatory Path to America’s Clean Energy Economy

Posted on May 30, 2018 by Kenneth Berlin

A clean energy revolution is underway in this country, buoyed by market forces making renewable energy sources increasingly cost-competitive with fossil fuels. Wind and solar are now cheaper than coal and natural gas in much of the country, and their costs will continue to drop. This stunning decrease in the price of wind and solar generation has created a new paradigm in the energy industry.

Similarly, the cost of energy storage is falling fast, and batteries will soon eliminate – at fully competitive prices – the intermittency issues around wind and solar. Meanwhile, electric vehicles are projected to become both cheaper to purchase and cheaper to run than gasoline cars by 2025.

Despite these extremely favorable economic trends, legal and regulatory barriers that protect fossil fuels continue to slow the transition to a clean energy economy. Removing these obstacles is a critical step toward securing a clean, safe and prosperous future.

At the outset, new clean energy projects face potential challenges around siting and transmission, including permitting restrictions, utilities’ unwillingness to enter into the necessary contracts, and a lack of support from public officials.

Once a project has cleared those hurdles, additional legal, regulatory and policy barriers may remain. Some of the primary impediments include:

o   Non-existing, limited, or even preventative legal frameworks for independent power producers – like homeowners – to sell energy to utilities or third parties. These power purchase agreements are currently allowed in only 26 states, the District of Columbia and Puerto Rico.

o   Utility interconnection, or connection of home or commercial renewable energy systems to the regional grid, that may be limited or severely restricted by regulation or laws.

o   Lack of or insufficiently priced net metering policies that make renewable investments much less attractive. In 2016, for example, Nevada’s Public Utilities Commission (PUC) sought to triple fees for solar customers while at the same time reducing credit for net excess generation by approximately three-quarters. After pushback from solar manufacturers and installers, as well as the prospect of hundreds of solar jobs leaving the state, the PUC approved new rules, partially restoring the net metering rate.

o   Tariffs on components of renewable energy systems like those recently announced by the Trump Administration on solar panel imports.

These obstacles don’t even touch on the fact that fossil fuel companies are not held financially responsible for the global warming pollution they dump into our shared atmosphere, leaving everyday Americans to foot the bill for these extraordinary health and economic costs. They also don’t factor in the uneven playing field that well-funded lobbyists tilt in favor of the fossil fuel industry, including enormous government subsidies.

The good news is that many individuals and organizations are working to build the political support needed to remove these barriers, including my organization, The Climate Reality Project, and our Founder and Chairman, former US Vice President Al Gore.

With enough voices working together across many sectors, we can eliminate these challenges and allow market forces and popular support to usher in a new clean energy economy.

Common Sense Species Mitigation Policy Shouldn’t Be Reversed By Trump DOI

Posted on March 29, 2018 by Melinda E. Taylor

Depending on one’s political persuasion, the Endangered Species Act is either a glaring example of federal overreach or a critical safety net for scores of plants and animals that are at risk of extinction. Its impact is felt across the country in regulations that protect the spotted owl and salmon in the Pacific Northwest, the red-cockaded woodpecker in the Southeast, the Mojave Desert tortoise in the Southwest, and the whooping crane on the Gulf Coast. 

Thanks to the act, over 220 species have avoided extinction and remain in the wild, including the bald eagle, brown pelican, American alligator, peregrine falcon, and northern right whale.

When Richard Nixon signed the law in 1973, few expected it to be as controversial as it eventually became. It was passed by Congress with little opposition, but by the 1990s, the Wise Use movement and extractive industries like forestry, mining, and oil and gas were bristling at the land use restrictions that accompanied federal decisions to list endangered species, while at the same time, environmental groups were filing lawsuits to force the federal government to use the law even more aggressively.

To varying degrees, the Clinton, Bush, and Obama administrations each adopted policies designed to reduce the conflicts between the warring sides and make it more appealing for private landowners to protect rare species. Those efforts were important, because 75% of endangered species occur on private land. Without the cooperation of landowners, their chances of rebounding were slim.

Because of incentive-based policies, over 130 conservation “banks” have been established on private lands to protect 70+ species, including the Florida panther, golden-cheeked warbler, American burying beetle, and gopher tortoise. Private investors, as well as ranchers, farmers, and forest owners, have invested millions of dollars in land management practices that help rare species in return for the right to sell “credits” to companies that destroy the species’ habitat elsewhere. Regulated industries benefit from a streamlined permitting process.

The Obama Administration crafted policies to clarify and improve the incentives. It also worked with states, ranchers, industries, and conservation groups to formulate ambitious, large-scale conservation plans intended to preclude the need for federal protection altogether and give more flexibility to state governments. Unfortunately, the Trump Administration appears determined to undermine these efforts.   

On March 28, 2017 President Trump signed an Executive Order on Energy and Climate Change that reversed key parts of the Obama Administration’s agenda. The intent was to unleash fossil fuel development, especially on public lands, by relaxing environmental requirements applicable to oil, gas, and coal that were supposedly holding the industry back.

Among the several actions that the executive order rescinded was a relatively obscure Presidential Memorandum dated November 3, 2015 titled “Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment.”  Unlike the other actions rescinded by the order (Power Sector Carbon Pollution Standards, Climate Change and National Security, and Preparing the United States for the Impacts of Climate Change), the 2015 Obama Memorandum did not address climate change or energy development.

Rather, it directed federal agencies to formulate policies that would encourage private investment in natural resource conservation, a goal that should be appealing to conservatives and liberals alike.

The 2015 Obama Presidential Memorandum had ordered agencies to refine their species mitigation programs, including conservation banking, to ensure they produced measurable outcomes. It required an increased level of transparency and consistency for the regulated industries and landowners. It was designed to level the playing field among conservation bankers and other providers of species mitigation. In short, it was intended to create conditions in which the free market could work efficiently for endangered species. It is hard to imagine a rational justification for abandoning this common sense policy; like a number of other environmental decisions by the Trump Administration, this one appears to be driven by the notion that, regardless of the merits, if the previous administration put the policy in place, it must be reversed.

The Endangered Species Act has become highly politicized, despite the fact that polls show a core of strong, unwavering public support for the law. Republicans in Congress have introduced dozens of bills in the last year that would undermine its protections. A far better approach, a win-win for private landowners and industry, would be to fine-tune the tools developed by previous administrations to harness the power of the marketplace and the willingness of private landowners to protect the nation’s natural heritage.

Infrastructure, Deficits and Climate Change

Posted on March 28, 2018 by Mark R. Sussman

America’s infrastructure is deteriorating as the result of insufficient investment by federal, state and local governments.  In 2017, the American Society of Civil Engineers gave our Nation’s infrastructure a grade of D+, stating that “Deteriorating infrastructure is impeding our ability to compete in the thriving global economy, and improvements are necessary to ensure our country is built for the future.” The President and both the Republicans and Democrats in Congress seem to agree that we need to improve our Nation’s infrastructure.

The problem is “how do we pay for infrastructure improvements?”  In February, the President proposed a plan to invest $1.5 trillion in infrastructure improvements, but the plan relies mostly on privatization of government-owned infrastructure, and on state and local governments, whose resources are already stretched thin.  The federal government’s share of costs would be “only” $200 billion.  Congress is unlikely to agree to a significant investment in infrastructure given the massive deficits predicted to result from the recent Republican tax cuts and the bipartisan budget plan enacted in February.  The tax changes will reportedly increase the deficit by more than $1 trillion over the next ten years, and the bipartisan budget is expected to add at least $300 billion to the deficit.

Paying for the infrastructure improvements that almost everyone seems to agree upon will require either new sources of revenues, or enormous cuts in entitlements or other domestic programs.  Although Speaker Ryan and other proponents of smaller government might want to cut Social Security, Medicare and Medicaid, how likely are they to do so, especially in light of the huge tax give-away to our wealthiest citizens in the recent tax legislation?  Moreover, if they are successful in cutting the country’s safety net, what will that do to the tremendous income inequality that the United States is already experiencing?

One solution to this dilemma may be found in legislation optimistically called “America Wins Act” (H. R. 4209) proposed by Connecticut Congressman John Larson and 20 co-sponsors in November 2017. The bill, like the Carbon Dividends Plan offered by the Climate Leadership Council in February 2017, relies on a gradually increasing carbon tax of over $40 per ton, with some amount paid back to lower income Americans.  Our colleague and frequent blogger, Seth Jaffe, described the Carbon Dividend Plan in a post last year.  The main difference between the Carbon Dividend Plan, proposed by mainstream conservative Republicans, and the plan embodied by the America Wins Act, co-sponsored by Congressional Democrats, is that the former is specifically designed to be revenue neutral, while the later proposes to invest $1.8 trillion over ten years to fund infrastructure improvements.  Of course, since the Climate Leadership Council proposed its Carbon Dividends Plan, Congress blew a huge hole in the federal budget, so a completely revenue neutral plan no longer seems practical if we are to find revenues to support the rebuilding of our infrastructure.

The key elements of the “America Wins Act” include: (i) the imposition of a gradually increasing carbon tax imposed at the first point where fossil fuels enter the economy; (ii) a border adjustment fee on imports to maintain a level playing field with US producers; (iii) establishment of an infrastructure investment fund to finance highways, transit, airports, waterway and flood protection facilities, water pollution facilities, and broadband development; (iv) an energy refund program to provide “carbon dividends” to lower income households; and (v) a fund dedicated to supporting workers and communities heavily reliant on carbon-intensive industries, such as coal, to ease the transition to a new energy future. 

Unlike the Climate Leadership Council’s Carbon Dividend Plan, Congressman Larson’s proposal does not specifically include steps to reduce energy and climate change regulation that should not be needed if a market-based carbon fee program is adopted.  Nor does the “America Wins Act” contemplate the use of carbon offsets, like those suggested by our colleague, Jeffrey Fort, in his post of August 21, 2017.  These good ideas and others can certainly be incorporated into any legislation proposing to reduce carbon emissions, while simultaneously improving our Nation’s infrastructure without further exploding the deficit.  Such legislation offers a genuine opportunity for a true bipartisan approach to these critical issues facing the Nation.  Wouldn’t it be great if the President and our representatives in Congress actually worked in a bipartisan way to enact legislation that does not look to the past, but instead addresses policies that will strengthen our Nation’s economy and protect the World’s environment in the 21st Century and beyond?   Is it too much to ask our leaders to focus on implementing innovative, market-based solutions that can be supported by both conservatives and liberals, instead of spending all of their time trying to make partisan political points to be re-elected?

Federal Common Law Controls California Climate Actions: Never a Dull Moment

Posted on March 12, 2018 by Seth Jaffe

Earlier this week, Judge William Alsup denied a motion by Oakland and San Francisco to remand their public nuisance claims against some of the world’s largest fossil fuel producers to state court.  However, I’m not sure that this is a victory for the oil companies.  This might be more of a “be careful what you wish for” scenario.

After the Supreme Court decision in AEP v. Connecticut and subsequent decisions, such as Native Village of Kivalina, it seemed pretty clear that the federal Clean Air Act had displaced federal common law, leaving only potential state law claims in its place.

Judge Alsup had a different idea.  The cities’ claims were only brought against fossil fuel producers, not electric generators.  The claims were based on the allegations concerning the companies’ conduct in selling fossil fuels into the stream of commerce, while at the same time allegedly making misrepresentations concerning the risks of climate change.

Judge Alsup concluded that this was a distinction with a difference.  The Clean Air Act displaces federal common law regulating operations that emit GHGs.  The Clean Air Act, however, does not regulate the sale of fossil fuels.  Thus, it does not displace the type of public nuisance action at issue in this case.  (Of course, this leads to the odd result that the companies’ sale of fossil fuels is subject to public nuisance claims, even though methane emissions from oil wells and refineries are not, because those are subject to regulation under the CAA!)

Having made this critical distinction, the rest of the decision was relatively easy.  As Judge Alsup noted:

If ever a problem cried out for a uniform and comprehensive solution, it is the geophysical problem described by the complaints, a problem centuries in the making. The range of consequences is likewise universal. Taking the complaints at face value, the scope of the worldwide predicament demands the most comprehensive view available, which in our American court system means our federal courts and our federal common law. A patchwork of fifty different answers to the same fundamental global issue would be unworkable. This is not to say that the ultimate answer under our federal common law will favor judicial relief. But it is to say that the extent of any judicial relief should be uniform across our nation.

I’m not sure that Judge Alsup is right, though I appreciate his creativity.  And if appellate courts decide he is right, the defendants may come to regret removing the action from state courts.

If Jimmy Fallon Was an ACOEL Member, Here is What He’d Sing

Posted on March 1, 2018 by Jeff Thaler

While many in Philadelphia were in the streets after the end of Super Bowl LII, and New Englanders promptly went to bed after the last pass hit the Minneapolis turf, the Doppelgänger of a native-born Minnesotan made a national appearance in the middle of that long, cold night.

By now, many have seen the 2018 version of “The Times They Are a-Changin,’” performed by someone born 10 years after the original version was created—one Jimmy Fallon. According to my consultation with Dr. Google, the only time Mr. Fallon has talked about environmental issues was back in May 2016 when he did a segment on Sarah Palin, climate change and climate scientists.

Therefore I think it is time that ACOEL commissioned Mr. Fallon to perform an updated version of that and another Dylan song, ones many of us could probably sing by heart (with a refresher class) even though written in the early ‘60s—that pre-NRDC/CAA/CWA/ESA/et.seq. classic, “Blowin’ in the Wind.” The original lyrics for both songs need to be refreshed, as do all of us who were alive and kicking back then, so here they are:

The Times They Are A-Changin'

Come gather ’round people                                                       

Wherever you roam                                                                           

And admit that the waters                                                               

Around you have grown                                                               `                   

And accept it that soon                                                                     

Under water will be our coast and flood zones                       

If our kids’ future to you is worth savin’                                   

Then you better start swimmin’                                                  

or you’ll sink like a stone                                                              

For climate times they are a-changin’

 

Come federal and state legislators

Please heed the call

Don’t stand in the doorway

Don’t block up the hall

For those who should be ashamed

Will be those who have stalled

Weather extremes are outside and they’re raging

Floods, fires and storms will break down your walls

For climate times they are a-changin’

 

Come bloggers, reporters, and skeptics

Throughout the land

Please don't criticize

What you refuse to understand

Rising CO2 levels and temperatures

Are getting beyond our command

Your old fossil-fueled road is

Rapidly agin'.

Please embrace a clean energy new one and

Vote out of office resisting government hands

For climate times they are a-changin'.

 

Blowin’ in the Wind

How many droughts & fires must the world endure                                  

Before we know they are a warning?

Yes and how many seas must flood our shores                        

Before we seek a solution?                                                           

Yes and how many times must the fake news fly                     

That climatic disruption is not real?                                                

The answer my friend is blowin' in the wind                              

The answer is blowin' in the wind.                                                    

 

How many years will our beaches and airports exist

Before they are washed into the sea?

Yes and how many years can the glaciers survive

Before they are just memories?

How many heads must be buried in the sand

So that people can deny what should be seen?

The answer my friend is blowin’ in the wind

The answer is blowin' in the wind

 

How many more years must we create greenhouse gases

Such that too many species can’t survive?

Yes and how many times will clean energy projects be held up

Before too many people have died?

How can we power our cars, lights and heat pumps

Without harming the world for our kids?

The answer my friend is blowin' in onshore winds

The answer is blowin' in offshore wind.

 

So break out your harmonicas and guitars, and we will sing the songs of climate changes while working to change our laws and policies for the benefit of all.

Prizes for Progress with a Caveat: DOE Offers $3 Million Incentive

Posted on February 15, 2018 by Irma S. Russell

The U.S. Department of Energy (DOE) recently announced a $3 million prize competition for solar energy manufacturing innovations.  The American Made Solar Prize, seeks to encourage innovation in solar manufacturing in the private sector.  Given the urgency of the threat of climate disruption, incentives for a green energy industry are definitely a good thing.  

In 2017 the U.S. Global Change Research Program Climate Science Special Report reported key findings, including stronger evidence of “rapid, human-caused warming of the global atmosphere and ocean,” and observable changes in the planet have made the scientific consensus about climate disruption clear as glaciers shrink, oceans and rivers warm, and coast lines recede.  A draft report by agencies such as NASA and the National Oceanic and Atmospheric Administration released late last year states that the world “has warmed by about 1.6 degrees Fahrenheit over the past 150 years and that human activity is the primary cause for that warming.”   It seems clear that rewards for innovation to combat climate disruption are worth the effort and worth the money if they produce progress in sustainable energy.  Despite such promise, however, DOE and community oversight groups should use caution in this new prize enterprise. 

Entrepreneurs have a played a dramatic role in historic energy discoveries of the past.  For example, the discovery and development of fossil fuel was driven by the private energy sector.  A recent example is the rocket launch by Elon Musk in February or 2018.  Likewise, DOE’s laboratories, university researchers and other energy researchers have a proven track record of progress in energy research.  Moreover, private investment seems posed to spur renewable energy technologies.  Venture capital investments needed to take ideas and turn them into marketplace reality seem likely to support private innovations, particularly when those innovations have the endorsement of the DOE. These factors suggest optimism about the result of this prize and others like it. 

So what’s the caution and why?  In an article forthcoming in the UMKC Law Review Green Economy Symposium later this spring, I survey current-day green economy sector jobs and other efforts to build markets to help encourage sustainable practices.  The article describes natural incentives to promote an all-hands-on-deck approach to addressing climate disruption and argues for the use of ex post rewards for innovations, like the award now offered by DOE.  Caution: it won’t work toward environmentally positive outcomes if, rather than creating incentives for real innovation, it is an excuse for a give-away. 

However, Concerns that ex ante rewards may confer unfair benefits to inventors turns a blind eye to the risks accompanying the failure to attract innovations to solve the global climate problem and other environmental problems.  Government support should encourage the progress that a modern-day Edison, Tesla or Jonas Salk might make with true break-through advances.  In such cases, governments should mobilize to support inventions even when the government did not foresee such developments.

The possibility that the reward program will advance new and robust solar energy manufacturing innovations makes it worth pursuing.  The risk, however, that the program will fail to advance the science of solar energy is real. It is again that some wasted funding is likely.  And distinguishing between an incentive for innovation and a reward for being part of the energy structure can be difficult.   For example, last year Secretary of Energy Rick Perry announced payments to nuclear and coal companies for their status as sources of power based on the rationale that such payments serve as insurance against a compromise of the energy grid in the future.  The plan did not include payments to renewable energy companies, however, causing some to speculate that the payments had a political purpose rather than the stated purpose of insuring an uninterrupted energy supply. 

The answer to whether the DOE program is worth pursuing hinges not on the ultimate result but on the good faith nature of the incentive and the effectiveness of the efforts of those monitoring the implementation of the reward.    The use of government incentives, including prizes, presents a potentially fertile avenue for progress.  While risks exist, the possibility of progress is alluring.  So long as the rewards serve to stimulate new ideas rather than simply rewarding existing players to continue business as usual, the expenditures are justifiable and, ultimately, justified because of the possibility of new.   Discovering innovation that moves the country toward a carbon-neutral economy is a goal worth funding – even when the success of such research is not assured.  In fact, this is the nature of research itself.  

The North Slope Is Really, Really, Getting Warmer. Drill, Baby, Drill

Posted on December 20, 2017 by Seth Jaffe

The Washington Post reported last week that Utqiagvik, Alaska (formerly known as Barrow), has gotten so warm, so fast, that NOAA’s computers can’t even believe it.  The data for Utqiagvik (that’s hard to type!) were so high that the computers determined it must be anomalous and pulled all of the data from Utqiagvik from the NOAA monthly climate report.  Only when scientists realized that Utqiagvik was completely missing from the report did they notice what had happened.

How hot does it have to get to get bounced by the computer?  How about average October temperatures 7.8 degrees warmer than in 2000?  Average November temperatures 6.9 degrees warmer than in 2000?  Likely culprit?  Melting sea ice means that less sunlight is reflected.  That’s one nasty negative feedback loop.

In the meantime, as I noted in October, Alaska Governor Bill Walker has concluded that Alaska needs more oil drilling (can you say “Open ANWR” three times fast?) in order to pay for climate change mitigation.  It’s apparent that Governor Walker has not read Faust.

Governor Walker, this one’s for you.

PASSING LESS GAS

Posted on December 5, 2017 by Keith Hopson

While some still debate climate change, on 11/22/17, eight of the oil and gas industry’s biggest players signed on to a set of Guiding Principles for reducing methane emissions across the natural gas value chain.  BP, Eni, Exxon Mobil, Repsol, Shell, Statoil, Total and Wintershall, in collaboration with international institutions, NGOs and academics, drafted the Guiding Principles.

The five guiding principles are: continually reduce methane emissions; advance strong performance across value chains; improve accuracy of methane emissions data; advance sound policy and regulations on methane emissions; and increase transparency.  Click here for the entire Guiding Principles document.

It will be interesting to see if these “voluntary principles” eventually become enforceable regulations.  Likewise, it will be interesting to see if these guidelines become “industry standards” and, accordingly, whether by acquiescence, private litigation, or lender requirements, become de facto regulations.

Time will tell.

It is significant to see so many major oil and gas industry actors responsibly, firmly and publicly commit to both reduce methane emissions and advance monitoring.  Perhaps now others in the industry will be more inclined to join the responsible eight and commit to pass less gas.

AS IT TURNS OUT, NEW SOURCES OF ENERGY ARE BLOWING IN THE WIND

Posted on November 13, 2017 by Gregory H. Smith

There is growing recognition that New England’s energy costs are much higher than neighboring parts of the country.  To a large extent, these high costs are due to the combination of transmission congestion, an ever-increasing reliance on natural gas and a shortage of natural gas supply in the New England market.  As a result, new participants are seeking entry into the market, including several seeking to expand the diversity of generation sources.

Antrim Wind Energy, LLC is an example of new participants seeking entry into the market.  In 2015, Antrim filed an Application for Certificate of Site and Facility with the New Hampshire Site Evaluation Committee (“SEC”) to develop a wind farm.  The Application was Antrim’s second attempt to gain SEC approval.  As noted in this space, an earlier Antrim project was denied in 2013 based primarily on its “aesthetic” effect on the region.    Several key factors led to a different outcome in the second proceeding.

Since 2013, the New Hampshire SEC has substantially revised its siting rules. Particularly pertinent to the Antrim Wind Project are new, more specific rules for aesthetic assessments.  Although review of aesthetic effects are, by their nature, somewhat subjective, the rules provide objective standards for visual impact assessments to provide greater predictability of outcomes.  The SEC rules require the Committee to consider seven different, specific criteria in making a determination as to whether a proposed project will have an unreasonable adverse effect on aesthetics. 

In reviewing the second Antrim proposal, the SEC placed particular emphasis on criterion six (6), whether the project would be a dominant or prominent feature in the landscape. 

In its second proposal, Antrim made several significant modifications to its earlier application case, that, coupled with the changes in the governing law, produced the favorable outcome.  Most important, the number of wind turbines, and their size and scale were reduced.  This modification doubtless affected the Committee’s analysis of whether the project “would be a dominant and prominent feature” in the landscape.

The SEC also adopted a public interest test as part of the new rules, which made a significant difference in review of the 2015 application.  No clear definition is provided in the rules as to how an applicant can demonstrate that a project is in the public interest.  A focus on project benefits seems to be a key factor.  In the Antrim case, beyond the obvious benefits of diversifying energy generation to include clean, renewable wind energy with the corresponding beneficial effect on climate change, there were recognized benefits to the community similar to those in the land use approval process.  These included stabilizing tax payments through a municipal agreement, investments in community infrastructure, and permanent preservation of 908 acres of land as a form of mitigation. 

The Antrim Wind project now stands alone in New Hampshire as the only sizable energy project to first have been rejected by the SEC, and subsequently reheard and approved.  The protracted Antrim case demonstrates that the somewhat complicated siting rules are capable of reasoned and predictable application.  It is also clear that this case provides useful instruction for what will likely be required for approval in the subsequent applications.

Court Rejects BLM’s Efforts to Unbalance the Scales of Justice

Posted on November 6, 2017 by Seth Jaffe

Last month, Magistrate Judge Elizabeth Laporte granted summary judgment to plaintiffs and vacated the Bureau of Land Management’s notice that it was postponing certain compliance dates contained in the Obama BLM rule governing methane emissions on federal lands.  If you’re a DOJ lawyer, it’s pretty clear your case is a dog when the Court enters summary judgment against you before you’ve even answered the complaint.

The case is pretty simple and the outcome should not be a surprise.  BLM based its postponement of the compliance deadlines on § 705 of the APA, which authorizes agencies to “postpone the effective date” of regulations “when justice so requires.”  However, every court that has looked at the issue has concluded that the plain words of the APA apply only to the “effective date” of a regulation and not to any “compliance date” contained within the regulation.

It seems clearly right to me.  For Chevron geeks out there, I’ll note that the Court stated that, because the APA is a procedural statute as to which BLM has no particular expertise, its interpretation of the APA is not entitled to Chevron deference – a conclusion which also seems right to me.

What particularly caught my eye about the decision was the Court’s discussion of the phrase, “when justice so requires.”  In a belt and suspenders bit of analysis, the Court also made findings that justice did not require postponement.  BLM’s argument was that justice required the postponement because otherwise the regulated community would have to incur compliance costs.  However, as the Court noted, “the Bureau entirely failed to consider the benefits of the Rule, such as decreased resource waste, air pollution, and enhanced public revenues.”  Indeed:  

If the words “justice so requires” are to mean anything, they must satisfy the fundamental understanding of justice: that it requires an impartial look at the balance struck between the two sides of the scale, as the iconic statue of the blindfolded goddess of justice holding the scales aloft depicts. Merely to look at only one side of the scales, whether solely the costs or solely the benefits, flunks this basic requirement. As the Supreme Court squarely held, an agency cannot ignore “an important aspect of the problem.” Without considering both the costs and the benefits of postponement of the compliance dates, the Bureau’s decision failed to take this “important aspect” of the problem into account and was therefore arbitrary.

I think I detect a theme here.  Some of you will remember that Foley Hoag filed an amicus brief on behalf of the Union of Concerned Scientists, supporting the challenge to President Trump’s “2-for-1” Executive Order.  We made pretty much the same arguments in that case that Magistrate Judge Laporte made here – minus the reference to the scales of justice.

Unless SCOTUS gets rid of all agency deference, the Trump Administration is going to get some deference as it tries to eliminate environmental regulations wherever it can find them.  However, if it continues to do so while looking solely at the costs of the regulations to the business community, while ignoring the benefits of the regulations, it’s still going to have an uphill battle on its hands.