Latham's Clean Energy Law Report

US FWS Announces Record of Decision Streamlining Wind Energy Permitting for the Upper Great Plains

Posted in Energy regulatory, Finance and project development, Permitting

By Sara Orr and Bobbi-Jo Dobush

On July 7, 2016, the US Fish and Wildlife Service (FWS) announced its Record of Decision (ROD) for the Upper Great Plains Wind Energy Programmatic Environmental Impact Statement (PEIS).[1] This is the final step in a process that US FWS, along with Western Area Power Administration (Western), embarked upon in 2010 to streamline the environmental review process for wind energy projects in the Upper Great Plains (UPG).[2] The process applies to wind energy projects in Iowa, Minnesota, Montana, Nebraska, North Dakota, and South Dakota that would interconnect to Western’s transmission facilities or require the US FWS to consider an easement exchange to accommodate placement of project facilities.

Western, which is responsible for marketing and delivering wholesale power in the western United States and is the joint lead agency on the PEIS, announced its ROD adopting Alternative 1 on August 26, 2015.[3] Eleven months later, US FWS made its final decision and also adopted Alternative 1 of the PEIS which supports US FWS participation in easement exchanges for wind development and provides for expedited environmental reviews (including review pursuant to the National Environmental Policy Act (NEPA) and Endangered Species Act (ESA)) if developers follow specified best management practices, minimization and mitigation measures. Now that US FWS has issued its Record of Decision, it may implement the PEIS when permitting wind energy projects involving easement swaps within Western’s Upper Great Plains region. Continue Reading

President Obama Signs PIPES Act of 2016, Reauthorizing PHMSA and Introducing New Mandates for Oil and Gas Pipeline Programs

Posted in Energy regulatory

By Marc Campopiano and Samantha Seikkula

On June 22, 2016, President Obama signed a bill reauthorizing the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) oil and gas pipeline programs through 2019. Obama’s final stamp on the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act or Act) follows unanimous passage in both the House and Senate. In addition to reauthorizing PHMSA and its associated programs, the Act includes new mandates aimed at strengthening PHMSA’s existing safety procedures and programs.

Pipeline Safety After the completion of a PHMSA pipeline safety inspection, the Act requires the Comptroller General to submit reports to Congress regarding the integrity management programs for gas and hazardous liquid pipeline facilities.  The reports must include, among other requirements: an analysis of technical, operational, and economic feasibility regarding measures to enhance pipeline facility safety; an analysis of the pipeline facility features’ impact on safety; and a description of any challenges affecting Federal and State regulators in the oversight of pipeline facilities.

In addition, the Act authorizes several studies aimed at improving pipeline safety. For example, the Secretary of Transportation (Secretary) must conduct a study on “improving existing damage prevention programs through technological improvements in location, mapping, excavation, and communications practices” to reduce releases caused by excavation.  Further, the Act requires the Secretary to convene a working group to consider developing a voluntary information-sharing system to facilitate improving inspection information feedback and pipeline facility integrity risk analysis.  The PIPES Act also requires the Secretary to study the feasibility of establishing a national integrated pipeline safety regulatory inspection database to facilitate collaboration between PHMSA and State pipeline regulators.

Underground Gas Storage Facilities The Act amends 49 U.S.C. section 60101(a) to define “underground natural gas storage facility” as “a gas pipeline facility that stores natural gas in an underground facility, including—(A) a depleted hydrocarbon reservoir; (B) an aquifer reservoir; or (C) a solution-mined salt cavern reservoir.”  The PIPES Act requires PHMSA to issue, within two years of passage, “minimum safety standards for underground natural gas storage facilities.”  In addition, the Act expressly allows states to adopt more stringent safety standards for intrastate facilities, if such standards are compatible with the minimum standards prescribed in section 12 of the Act.  In order to implement the safety standards, the PIPES Act imposes a “user fee” on entities operating underground storage facilities.

Hazardous Liquid Pipeline Facilities Under the Act, owners or operators of hazardous liquid pipeline facilities are required to prepare a response plan that considers the impact of a discharge into or on navigable waters, and includes procedures and resources for responding to such a discharge.

Leak Prevention and Reporting Requirements The Act commissions a study of materials and corrosion prevention in pipeline transportation.  The study will analyze: the range of piping materials used to transport hazardous liquids and natural gas in the United States and other countries; the types of technologies used for corrosion prevention; common causes of corrosion; and the training provided to personnel responsible for identifying and preventing corrosion in pipelines, and for repairing such pipelines.  The study will also analyze best practices or guidance aimed at preventing or recognizing corrosion, and analyze the costs and benefits associated with the use of such materials and technologies.

The Act also authorizes a study on natural gas leak reporting. The study will examine various reporting requirements, and analyze whether separate or alternative reporting requirements could better measure the amounts and identify the location of lost and unaccounted for natural gas, and the impacts alternative reporting may have on safety.

Further, the Act calls for a review of State policies relating to natural gas leaks. The PHMSA Administrator must conduct a State-by-State review of State-level policies relating to leak repair and replacement of systems that pose a safety threat, or that may create barriers for entities to conduct work to repair and replace leaking natural gas pipelines.

Emergency Order Authority The PIPES Act gives the Secretary the power to quickly issue emergency orders for the pipeline industry if “the Secretary determines that an unsafe condition or practice, or a combination of unsafe conditions and practices, constitutes or is causing an imminent hazard.” The emergency order may impose “emergency restrictions, prohibitions, and safety measures on owners and operators of gas or hazardous liquid pipeline facilities without prior notice or an opportunity for a hearing, but only to the extent necessary to abate the imminent hazard.”

Energy Storage Gets a Boost from Federal and Private Sector Actions

Posted in Emerging companies, Finance and project development

By Michael Gergen, David Pettit and Tara Rice

On June 16, 2016, the White House hosted a Summit on Scaling Renewable Energy and Storage with Smart Markets. As a backdrop to the Summit, the Obama Administration announced new executive actions and 33 public and private sector commitments intended to accelerate the grid integration of renewable energy and storage. Together, these actions are expected to result in at least 1.3 gigawatts of energy storage procurement or deployment within the next five years.  Continue Reading

US FWS Releases Draft Midwest Wind Energy Multi-Species Habitat Conservation Plan

Posted in Energy regulatory, Environmental and approvals

By Sara Orr, Daniel Brunton, Marc Campopiano and Andrea Hogan

On April 15, 2016, the US Fish and Wildlife Service (FWS) issued its Draft Midwest Wind Energy Multi-Species Habitat Conservation Plan (Plan) and Draft Environmental Impact Statement (EIS) proposing a regional approach to Endangered Species Act (ESA) compliance process in response to the growth of Midwestern wind energy development. The Plan is intended to streamline the incidental take permitting process for certain bird and bat species.  Comments on the draft Plan and draft EIS are due on July 14, 2016.

Background

With its abundant wind resources, the American Midwest is an attractive region for renewable energy development. In addition to state and local permitting requirements, Midwestern wind energy facilities must also comply with federal natural resource laws, including ESA and the Bald and Golden Eagle Protection Act (Eagle Act). Under Section 10 of the ESA, the FWS may issue permits to authorize the “incidental take” of federally listed fish and wildlife, including bird and bat species potentially affected by wind energy development. “Incidental take” is defined as take that is incidental to, and not the purpose of, carrying out an otherwise lawful activity. Likewise, under the Eagle Act, the FWS may issue a permit to authorize take of individual eagles and their nests. Continue Reading

Corporations Directly Buying Renewable Power on the Rise

Posted in Energy storage, Solar PV/Rooftop solar

By Marc Campopiano, Kelley Gale and Michael Sullivan

Recent trends demonstrate a rapid growth in corporations directly buying renewable energy from wind, solar and other renewable energy generators. Renewable energy capacity under corporate power purchase agreements (PPAs) doubled each year from 2012 to 2015. For wind energy generation, corporate purchasers constituted 52% of capacity contracted through PPAs in 2015, up from only 5% in 2013. Many corporations are looking to increase reliance on renewable power to meet internal sustainability or environmental policies, and dramatic decreases in renewable costs have increasingly made renewables competitive with traditional power sources. The long-term nature of most PPAs can be attractive to businesses seeking the stability of fixed electricity costs, while renewable developers gain a dependable off-taker, often a critical component of securing financing.

This trend was punctuated by the recent announcement by MGM Resorts International that it plans to pay $86.9 million for the ability to exit Nevada Power’s utility service and purchase its own electricity on the wholesale market. Some states, including Nevada, require approval from state regulators and the payment of an exit fee before being able to purchase power directly from generators across utility transmission lines. As the largest purchaser of energy from Nevada Power (at nearly 5% of annual energy sales), MGM determined it was worth paying the substantial exit fee to control its ability to directly purchase renewable power. Continue Reading

US Court of Appeals Affirms District Court Judgment Upholding Federal Approval of Tule Wind Project on NEPA, Migratory Bird Act, and Bald & Golden Eagle Act Claims

Posted in Energy regulatory

By Christopher Garrett, Daniel Brunton and Taiga Takahashi

On June 6, 2016, in Backcountry Against Dumps et al. v. Jewell et al., the US Court of Appeals for the Ninth Circuit affirmed the judgment of the District Court for the Southern District of California upholding federal approvals for the Tule Wind Project. The Court of Appeals found in favor of the Federal Government and Tule Wind LLC, rejecting claims the plaintiffs brought under the Administrative Procedure Act, National Environmental Policy Act (NEPA), Migratory Bird Treaty Act (Bird Act) and Bald and Golden Eagle Protection Act (Eagle Act).

As we have noted in previous reports, project challengers have increasingly alleged, in litigation, that the mere potential to incidentally affect migratory birds requires government agencies and/or project developers to obtain a permit under the Bird Act and the Eagle Act as a precondition to any regulatory approval for the project. The Court of Appeals, like the District Court, rejected this tactic. Continue Reading

EPA Targets Oil and Gas Sector with Suite of New Emissions Rules

Posted in Energy regulatory

By Robert Wyman, Claudia O’Brien, Michael Carroll, Alicia Handy, Andrew Westgate and Samantha Seikkula

On May 12, 2016, the US Environmental Protection Agency (EPA) released its final rules aimed at reducing methane emissions from the oil and gas industry, in support of the Obama Administration’s efforts to cut methane emissions from the oil and gas sector by 40 to 45 percent from 2012 levels by 2025. EPA introduced a suite of rules including New Source Performance Standards (NSPS) that will curb emissions of methane, smog-forming volatile organic compounds (VOCs) and hazardous air pollutants such as benzene from new oil and gas sources. The final NSPS will achieve greater methane reductions than estimated at proposal due to changes made in response to public comments. EPA also finalized the Source Determination Rule, which clarifies how EPA intends to aggregate onshore oil and natural gas emission sources for purposes of its Title V, Prevention of Significant Deterioration (PSD), and New Source Review (NSR) permitting programs.

We previously discussed discussed EPA’s draft proposal. This post summarizes the final NSPS and describes key revisions from the proposal, as well as the Source Determination Rule and information requests that were released.

Summary of NSPS

The final NSPS builds on EPA’s 2012 rules to curb emissions from new, reconstructed and modified processes and equipment, along with reducing VOC emissions from sources not originally covered Continue Reading

IRS Issues Additional Guidance on “Begun Construction” Requirement for Wind Energy Credits

Posted in Tax and incentives

By Julie Marion and E. Rene de Vera

On May 5, 2016, the Internal Revenue Service (IRS) issued Notice 2016-31 (Notice) to provide additional guidance regarding the “begun construction” requirement for renewable energy facilities seeking to qualify for the production tax credit (PTC) under Section 45 of the Internal Revenue Code (Code) or the investment tax credit (ITC) in lieu of the PTC under Code Section 48. The PTC and ITC were extended in December 2015 under the Consolidated Appropriations Act, 2016 (Budget Act). The Notice does not address the ITC extension for solar facilities, which the IRS intends to address in separate guidance.

Key highlights of the Notice include:

  • Extension of the “continuity safe harbor” from two years to four years
  • A prohibition on the use of different methods for satisfying the begun construction requirement in alternating years to extend the period for satisfying the continuity safe harbor
  • A disaggregation rule to determine whether the continuity safe harbor has been satisfied by a renewable energy facility that is operated as part of a larger project
  • Revisions to the non-exclusive list of construction disruptions that will not cause a renewable energy facility to fail the “continuous construction” or “continuous efforts” requirements
  • Guidance on the application of the “5% safe harbor” to retrofitted renewable energy facilities

Read more about the wind energy tax credits and begun construction requirements

California Energy Agencies Advance Renewable Transmission Line Planning

Posted in Finance and project development, Tax and incentives

By Marc Campopiano, Jennifer Roy, and Francesca Bochner

California energy agencies and key stakeholders have finished the first step of a statewide planning process to evaluate transmission needs in the state and the region. This process, called the Renewable Energy Transmission Initiative 2.0 (RETI 2.0), will culminate in recommendations to the legislature on where to increase transmission capacity to meet California’s new, more ambitious renewable energy mandate (see our summary of SB 350, which increased California’s Renewables Portfolio Standard (RPS) to 50% by 2030). RETI 2.0 is not a regulatory proceeding, but the resultant recommendations will frame and inform future transmission planning in California.

Background

RETI 2.0 was launched in September 2015 by the California Natural Resources Agency, the California Energy Commission (CEC), the California Public Utilities Commission, the California Independent System Operator (CAISO), and the US Bureau of Land Management California Office.

In December 2015, the managing agencies released a RETI 2.0 Workplan that divides the RETI 2.0 objectives between three overlapping working groups: Continue Reading

California Supreme Court Hears Oral Argument in Friends of the College of San Mateo Gardens v. San Mateo County (Case No. S214061)

Posted in Environmental and approvals, Finance and project development

By Christopher Garrett, Daniel Brunton and Shannon Lankenau

On May 4, 2016, the California Supreme Court heard oral argument in Friends of the College of San Mateo Gardens v. San Mateo County Community College District (Case No. S214061), which addresses the standard of review that applies when a lead agency decides that changes or additions to a previously approved project can be treated as a modified version of the original project instead of as an entirely new project. Under the California Environmental Quality Act (CEQA), a modified version of a project will often be analyzed with an expedited “addendum” to the previous CEQA document while an entirely new project may require starting the CEQA review from the beginning.  The Supreme Court’s opinion will likely provide important guidance on this frequently encountered situation. The Court is expected to issue its opinion by early August.

Factual and Procedural Background

Friends of the College of San Mateo Gardens (Friends) challenged the San Mateo County Community College District’s (the District) decision to demolish a building complex on the District’s College of San Mateo campus. The District previously approved a project plan to renovate ten campus buildings and demolish sixteen others, using a mitigated negative declaration to address the project’s environmental impacts. The District later revised its plans to include demolition of one building that had been set for renovation and renovation of two buildings previously slated for demolition. The District evaluated the possible environmental consequences of the change in plans, concluded that the revisions were not extensive enough to require preparation of a subsequent Environmental Impact Report (EIR), and adopted an addendum to the previously approved mitigated negative declaration.

Friends petitioned the Superior Court for a writ of mandate, arguing the demolition project violated CEQA and seeking to compel the District to prepare an EIR for the demolition project as a “new project” rather than a change to the previously adopted campus renovation plans. The trial court granted Friends’ petition. The Court of Appeal affirmed, opining that the demolition project was a “new project” requiring environmental review beyond an addendum. The Supreme Court granted review, framing the issue as follows: “When a lead agency performs a subsequent environmental review and prepares a subsequent [EIR], a subsequent negative declaration, or an addendum, is the agency’s decision reviewed under a substantial evidence standard of review (Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385), or is the agency’s decision subject to a threshold determination whether the modification of the project constitutes a “new project altogether,” as a matter of law (Save our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288)?” Continue Reading

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