Latham's Clean Energy Law Report

Sixth Circuit Determines It Has Jurisdiction to Hear Challenges to the Clean Water Rule

Posted in Environmental and approvals

By Christopher Garrett, Andrea Hogan, Daniel Brunton, and Daniel Aleshire

On February 22, 2016, in a 2-1 decision, the US Court of Appeals for the Sixth Circuit determined it has jurisdiction over the numerous legal challenges to the Clean Water Rule (the Final Rule), thus siding with the position of the agencies that promulgated the Final Rule, the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (together, the Agencies). The Final Rule was issued on May 27, 2015 and defines “waters of the United States,” a threshold term that determines the Clean Water Act’s (CWA) scope and application. Previously, on October 9, 2015, the Sixth Circuit stayed the implementation of the Final Rule nationwide, concluding that the challengers demonstrated a substantial possibility of success on the merits. In a fragmented decision, two of the panel’s judges found that under the Sixth Circuit precedent in National Cotton Council of America v. U.S. E.P.A., 553 F.3d 927, 933 (6th Cir. 2009), the Sixth Circuit had jurisdiction over review of the Final Rule.

Sixth Circuit Issues Splintered Decision

Judge David W. McKeague delivered the Sixth Circuit’s opinion and concluded that the court has jurisdiction over challenges to the Final Rule under both 33 U.S.C. § 1369(b)(1)(E) and (F). Section 1369 identifies the seven types of actions by the EPA Administrator that are reviewable directly in the federal circuit courts.  Sections 1369(b)(1)(E) and (F) provide for review of actions “in approving or promulgating any effluent limitation or other limitation” under certain CWA sections and actions “in issuing or denying any permit under section 1342,” which governs the issuance of permits for the discharge of pollutants. In concluding that the Sixth Circuit had jurisdiction over review of the Final Rule under both provisions, Judge McKeague relied on a “functional” rather than “formalistic” construction of the CWA’s judicial review provision, an approach that the opinion states has been favored by courts, including the Supreme Court and the Sixth Circuit, over the past 35 years. Continue Reading

California Governor’s Office Releases Updated CEQA Guidelines Proposal on SB 743 Implementation

Posted in Environmental and approvals

By Chris Garrett and Ana De Santiago Ayon

On January 20, 2016, the Governor’s Office of Planning and Research (OPR) released a new draft proposal for implementing Senate Bill 743 (Steinberg 2013) (SB 743), which would require traffic analysis to be based on vehicle miles traveled (VMT) instead of auto delay, commonly measured by Level of Service (LOS). The proposal is an update to an earlier draft released in August 2014. OPR will be accepting public comments until February 29, 2016 before finalizing the proposal for formal rulemaking by the Natural Resources Agency.

Background

As discussed in a previous client alert, SB 743 directs OPR to update the California Environmental Quality Act (CEQA) Guidelines to establish new criteria for determining the significance of transportation impacts for projects within transit priority areas. The new criteria are intended to promote reduced greenhouse gas emissions, multimodal transportation network development and diverse land uses. SB 743 also provides that the new transportation methodologies may be based on, but are not limited to, VMT. Once the new transportation guidelines are certified, SB 743 eliminates automobile delay as a significant impact for a limited category of infill projects located in transit priority areas and infill opportunity zones. Continue Reading

Congress Extends Wind and Solar Tax Credits Subject to Phase-out

Posted in Tax and incentives

By Julie M. Marion and Thomas Halpern

The Consolidated Appropriations Act, 2016 (the Act), which President Obama signed into law on December 18, 2015, re-enacts the production tax credit (PTC) and investment tax credit (ITC) for wind energy projects and modifies and extends the 30% ITC for solar energy projects. For both resources, the Act generally provides a five-year extension, with a step-down in the amount of credit available depending on when construction of a project commences. For solar energy projects, the Act modifies the eligibility rules from a “placed-in-service” requirement to a “begun-construction” requirement, similar to the existing rules for wind energy credits. Assuming the Internal Revenue Service (IRS) adopts guidance similar to the existing guidance for wind energy credits, the Act’s changes generally will allow developers at least seven years to complete new and existing projects.

Read more about the timeline for the wind and solar energy credits

Low Carbon Fuel Standard Challenged (Again) in California State Court

Posted in Emerging companies, Energy storage, Environmental and approvals, Finance and project development, Tax and incentives

By Joshua Bledsoe and Max Friedman

After a lengthy process of policy review and revision, the California Air Resources Board (ARB) re-adopted the state’s Low Carbon Fuel Standard (LCFS) on September 25, 2015. The LCFS is expected to contribute approximately 20% of the statewide greenhouse gas (GHG) reductions required by 2020 under Assembly Bill 32. Moreover, the LCFS has been identified by Governor Brown as a key regulatory tool both to reduce petroleum consumption 50% by 2030 (a goal ultimately removed from Senate Bill 350) and to achieve the state’s 2030 and 2050 GHG emission reduction targets. The LCFS focuses on the transportation sector and requires a 10% reduction in the carbon intensity (CI) of gasoline and diesel from 2010 levels by 2020, with CI targets designed to become more stringent each year. The CI of fuels, expressed as grams of CO2e per megajoule, is calculated across the full lifecycle of transportation fuels (i.e., well-to-wheel) and is intended to include all of the GHG emissions associated with producing, distributing, and using fuels.

POET, LLC (POET), a South Dakota-based ethanol producer, filed suit in California Superior Court, County of Fresno on October 30, 2015, challenging the re-adoption. POET has challenged ARB’s LCFS rulemaking procedures successfully in the past. In 2013, the California Court of Appeal agreed with POET that ARB’s initial approval procedures for the LCFS violated the California Environmental Quality Act (CEQA), although the Court allowed the LCFS rules to remain in effect while ARB reapproved the regulations.

POET now argues that ARB’s re-adoption of the LCFS failed to comply with the writ of mandate issued pursuant to the first lawsuit and that it violates CEQA, the California Administrative Procedure Act (APA), and the Health & Safety Code. POET’s new lawsuit includes 20 separate causes of action, but generally focuses on co-pollutant impacts and procedural issues. Specifically, POET contends that ARB did not properly analyze nitrogen oxide (“NOx”) emissions, as required by the 2013 writ of mandate. POET argues that the failure results from ARB having improperly included the NOx emissions that resulted from implementation of the original LCFS in the CEQA “baseline” and improper “piecemealing” of a CEQA project. Moreover, POET argues that ARB fell short of its burden to consider increased NOx emissions resulting from biodiesel fuels and failed to adopt sufficient mitigation measures. POET also contends that ARB did not analyze the NOx impacts of other aspects of the regulations, including the use of certain biodiesel blends, the exemption of other blends in parts of the state, and the use of biodiesels in new technology diesel engines.

Beyond these complaints relating to ARB’s treatment of NOx, POET’s petition also alleges a failure to analyze, quantify, or mitigate: (i) the impact of “fuel shuffling” (the process by which regions with low-carbon fuel regulation, like California, effectively export high CI fuels to regions without such policies) on emissions; and (ii) the impacts of construction or modification of low CI fuel production facilities to meet demand that the LCFS creates. It also asserts that ARB gave insufficient consideration to proposed alternative measures (e.g., adjusting the Cap-and-Trade Program to account for whatever increment of GHG emissions reductions would be foregone by eliminating the LCFS), and that the analysis and mitigation of the LCFS’s own impacts are inadequate. Finally, POET claims that ARB failed to comply with the APA by not adequately peer reviewing the scientific portions of the rules and by being too slow in adding required documents to the rulemaking file.

The latest lawsuit closely resembles the first lawsuit. For example, the following items are at issue in both cases:

  • The determination of what is called “indirect land use change” or “iLUC”
  • CEQA adequacy of ARB’s analysis and mitigation of NOx emissions due to potential increases in the use of biodiesel
  • The compliance of ARB’s rulemaking file with the APA
  • ARB’s scientific peer review under Health & Safety Code § 57004
  • ARB’s maintenance of the public file under CEQA
  • The adequacy of ARB’s responses to environmental comments received

Unsurprisingly, ARB has filed a Notice of Related Case seeking that the same judge that heard the first case also be assigned to the second case. However, the original and the re-adopted LCFS regulations have separate administrative records and were adopted via independent rulemaking proceedings. Thus, despite the similarity of the cases, it would be folly to uncritically assume a similar outcome. That said, one can safely assume that the state will again mount a robust defense of the LCFS given ARB’s and Governor Brown’s perspective on the importance of the program for achieving California’s climate and public health objectives.

California Supreme Court Charts New Course For Climate Change Analysis

Posted in Environmental and approvals

By Christopher Garrett, James Arnone and Joshua Bledsoe,

On Monday November 30, 2015, the California Supreme Court overturned the Department of Fish and Wildlife’s (the Department) Environmental Impact Report (EIR) for the Department’s approvals of the Newhall Ranch project. The Newhall Ranch project includes plans to develop almost 12,000 acres along the Santa Clara River west of the City of Santa Clarita, with up to 20,885 dwelling units housing nearly 58,000 residents as well as areas for commercial and other uses over the next 20 years.

Center for Biological Diversity v. Department of Fish and Wildlife (Newhall Land and Farming Company), S217763, (Cal. November 30, 2015) struck down the Court of Appeal’s determination that the EIR and State Endangered Species Act approvals for the project were adequate. The California Supreme Court summarized its holding as follows:

“We conclude, first, that as to greenhouse gas emissions the environmental impact report employs a legally permissible criterion of significance—whether the project was consistent with meeting statewide emission reduction goals—but the report’s finding that the project‘s emissions would not be significant under that criterion is not supported by a reasoned explanation based on substantial evidence.

 Second, we conclude the report’s mitigation measures calling for capture and relocation of the stickleback, a fully protected species under Fish and Game Code section 5515, subdivision (b)(9), themselves constitute a taking prohibited under subdivision (a) of the same statute.

Finally, we hold that under the circumstances of this case plaintiffs exhausted their administrative remedies regarding certain claims of deficiency by raising them during an optional comment period on the final report.”

Read more on the background of the case and the California Supreme Court Decision here.

 

Sixth Circuit Stays Obama Administration’s New Clean Water Rule Nationwide

Posted in Environmental and approvals

By Paul Singarella, Chris Garrett, Andrea Hogan, Daniel Brunton, John Heintz, Taiga Takahashi, and Lucas Quass

On October 9, 2015, the US Court of Appeals for the Sixth Circuit stayed the implementation of the Clean Water Rule (the Final Rule) nationwide. The Final Rule defines “waters of the United States” (WOTUS), a threshold term that determines the Clean Water Act’s (CWA) scope and application. The Final Rule was issued on May 27, 2015, by the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (Corps), with an effective date of August 28, 2015.

The Sixth Circuit found that the coalition of states challenging the Final Rule “demonstrated a substantial possibility of success on the merits of their claims” and that a stay would “temporarily silence the whirlwind of confusion that springs from the uncertainty about the requirements of the new Rule and whether they will survive legal testing.”[i]

Subject Matter Jurisdiction Still Under Consideration By the Sixth Circuit

The case already has a complex procedural history. Challenges to the Final Rule were filed in courts in a number of circuits. There is parallel litigation in the District Courts, and about a month ago, the US District Court for the District of North Dakota issued a preliminary injunction against implementation of the Final Rule, but applied the injunction to only the 13 states that were party to the case before the court. The US Judicial Panel on Multidistrict Litigation consolidated the petitions before the Circuit Courts for review and randomly selected the Sixth Circuit to hear the consolidated petitions. Continue Reading

California Supreme Court Hears Oral Argument in Case Challenging 2010 Bay Area Air Quality Management District Air Quality Thresholds

Posted in Environmental and approvals, Permitting

By Chris Garrett, Shivaun Cooney and Shannon Lankenau

On October 7, 2015, the California Supreme Court heard oral argument in California Building Industry Association v. Bay Area Air Quality Management District (Supreme Court Case No. S213478), a case which calls into question the “continued vitality” of a line of appellate cases holding that the “reverse application” of the California Environmental Quality Act (CEQA) is inconsistent with the statute’s language and intent. While the California Building Industry Association’s (CBIA) challenge to the Bay Area Air Quality Management District’s (BAAQMD) guidelines raised numerous legal issues, the Supreme Court’s order granting review in the matter expressly limited briefing and argument to the following issue: “Under what circumstances, if any, does the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) require an analysis of how existing environmental conditions will impact future residents or users (receptors) of a proposed project?” In other words, is CEQA review limited to an analysis of a project’s impact on the existing environment, or does it also require an analysis of the existing environment’s impact on the project and its future occupants and users?

CBIA’s Challenge to BAAQMD’s Thresholds of Significance

On November 29, 2010, CBIA filed a petition for writ of mandate challenging BAAQMD’s 2010 thresholds of significance for certain air contaminants (Thresholds), adopted pursuant to Section 15064.7 of the CEQA Guidelines. The trial court agreed with CBIA that BAAQMD should have conducted an environmental review under CEQA before issuing the Thresholds, but declined to address CBIA’s remaining arguments, including that the Thresholds were arbitrary and capricious to the extent they required an evaluation of the impacts the environment would have on a given project (referred to by some as CEQA in reverse).[i] Continue Reading

California Adopts Comprehensive Groundwater Basin Adjudication Law

Posted in Energy regulatory

By Paul Singarella, Maria Hoye, John Heintz, Lucas Quass & John Morris

California enacts basin adjudication statutes with the goal of reducing uncertainty, costs and time of water rights litigation.

On October 9, 2015, California Governor Jerry Brown signed AB 1390 (Alejo) and SB 226 (Pavley) to implement a comprehensive approach to groundwater basin adjudications throughout the state. Basin adjudications involve a judicial process in which a party initiates a lawsuit against all other users in a groundwater basin so that the court can determine the groundwater rights of all parties overlying the basin and whether others may export water from the basin. Through basin adjudications, courts can require the cooperation of users who otherwise might resist limits the on pumping of groundwater. Currently, 22 basins in California have been adjudicated. (There are over 500 such basins.)

Basin adjudications, however, have been costly and time consuming (in some cases taking over a decade to complete). In light of the time and expense associated with basin adjudications, the Legislature developed AB 1390 and SB 226 ostensibly to reduce the burden of groundwater adjudications on both the courts and claimants without modifying groundwater rights law. The new law will be effective January 1, 2016. A summary of these two companion bills follows. Continue Reading

Obama Administration Releases Infrastructure Permitting Guidance

Posted in Energy regulatory, Environmental and approvals, Finance and project development, Permitting

By Marc Campopiano, Andrea Hogan and Joshua Marnitz

On September 22, 2015, the White House, through the Office of Management and Budget (OMB) and the Council on Environmental Quality (CEQ), issued guidance to the heads of certain federal departments and agencies[1] (the Agencies) establishing metrics for the permitting and environmental review of infrastructure projects in the United States (the Guidance). The Guidance is intended to expand the use and reframe the purpose of the publicly accessible online Federal Infrastructure Permitting Dashboard (the Dashboard). To that end, the Guidance establishes a set of metrics to track permit and review timelines for certain infrastructure projects, and sets a schedule for collecting and posting that data to the Dashboard. It then outlines an approach for capturing and reporting the environmental and community impacts resulting from the federal permitting and review process.

The infrastructure projects covered by the Guidance include those projects in the following sectors: surface transportation (including all highway, rail, and transit projects); airport capital improvement projects; ports and waterways; water resource projects; renewable energy generation; electricity transmission; storm-water infrastructure; broadband internet; and pipelines (except those subject to Federal Energy Regulatory Commission oversight). The Guidance also provides that the Agencies can include other sectors, as appropriate. Continue Reading

Legislative Update: California Passes Groundbreaking Legislation Increasing Renewable Energy and Energy Efficiency Mandates, But Petroleum and Greenhouse Gas Reduction Measures Fail

Posted in Energy regulatory, Energy storage, Finance and project development, Permitting, Smart grid technologies, Solar PV/Rooftop solar

By Marc T. Campopiano, Joshua T. Bledsoe, Douglas Porter, Danny AleshireJennifer Roy and Andrew Yancey

The end of the California State Legislature’s regular session for the year culminated in a frenzy of action, with Assembly members scrambling to pass dozens of bills before midnight on September 12, 2015. The California Legislature voted on a package of 12 bills addressing environmental and health concerns, such as off-shore drilling, divestment of investment funding from coal companies, water quality, energy efficiency in disadvantaged communities, and increased public transportation. This post analyzes three of the more significant and controversial bills proposed this year, including last minute changes to each during the final week of the session: SB 350; SB 32; and AB 1288.

SB 350 (De León): The Clean Energy and Pollution Reduction Act of 2015

The most far-reaching climate change goals of the climate bill package were enshrined in SB 350. The proposed bill, authored by Senate President Pro Tempore Kevin de León and Senator Mark Leno, originally called for a 50 percent reduction in petroleum use in cars and trucks, a 50 percent increase in energy efficiency in buildings, and for 50 percent of the state’s utility power to be derived from renewable energy, all by 2030; termed the “50-50-50” formula.

These standards paralleled Governor Jerry Brown’s climate change agenda for the year, which was first announced during his inaugural address in January. Last Wednesday, following a failure to garner the necessary votes amid resistance from moderate Democrats, state legislative leaders amended SB 350 to drop requirements for a 50 percent reduction in petroleum use for cars and trucks. As modified, the bill passed on a 52-27 vote. Continue Reading

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