Latham's Clean Energy Law Report

California Court of Appeal Partially Upholds Air Quality Thresholds of Significance Following State Supreme Court Decision

Posted in Environmental and approvals

By Marc Campopiano, Lucas I. Quass and Samantha Seikkula

In a published decision, following the Supreme Court’s decision in California Building Industry Association v. Bay Area Air Quality Management District (2015) 62 Cal.4th 369, the First District Court of Appeal upheld California Environmental Quality Act (CEQA) thresholds of significance adopted by the Bay Area Air Quality Management District (the District) in California Building Industry Association v. Bay Area Air Quality Management Dist. (2016) 2016 Cal. App. LEXIS 683. While the Court upheld limited use of the District’s thresholds, it determined that the thresholds “may not be used for the primary purpose envisioned by District, namely, to routinely assess the effect of existing environmental conditions on future users or occupants of a project.”

Adopted in 2010, the District’s thresholds set “construction-related” and “operational-related” significance levels for TACs and PM2.5 emissions, broken down into four separate categories, including categories for new receptors (Receptor Thresholds). The District also published new “CEQA Air Quality Guidelines” (District Guidelines), which include the thresholds and suggest methods of assessing and mitigating impacts found to be significant. The California Building Industry Association challenged the Receptor Thresholds on the grounds that CEQA does not require an analysis of an existing condition’s impact on a project’s future occupants. The Supreme Court agreed, finding that CEQA does not require an agency to consider a project’s existing conditions on future users and residents of a proposed project. The Supreme Court remanded the case to the Court of Appeal to determine whether the Receptor Thresholds were consistent with its decision. Continue Reading

White House Issues Final NEPA Guidance on Climate Change

Posted in Energy regulatory, Finance and project development, Permitting

By Joshua Bledsoe, Sara Orr and Stacey VanBelleghem

On August 2, 2016, the White House Council on Environmental Quality (CEQ) issued its final guidance for federal agencies to assess the impact of their decisions on greenhouse gas emissions (GHGs) and also how such decisions may be impacted by a changing climate (e.g., future sea level rise impacts on a long-term infrastructure project proposed for a coastal barrier island) when conducting reviews under the National Environmental Policy Act (NEPA). The final guidance follows CEQ’s issuance of draft guidance in 2010 and revised draft guidance in 2014, incorporating consideration of public comments and feedback on the two drafts. Following this six-year process, CEQ’s guidance is a recommendation to federal agencies versus a formal legal requirement and therefore does not have the same authority as a federal rule or regulation.

The guidance does not establish any particular quantity of GHG emissions as representing a significant burden on the environment – that determination will be left to the discretion of the agencies. However, the guidance does prohibit the so-called “de minimis approach” where an agency would compare a Federal action’s GHG emissions to global GHG emissions, finding that since the action did not represent a meaningful percentage of the global GHG inventory, the action did not significantly affect the environment. Continue Reading

California Proposes Draft Amendments to California Cap-and-Trade Program

Posted in Environmental and approvals

By Jean-Philippe Brisson, Josh Bledsoe, Michael Dreibelbis and Andrew Westgate

On July 12, 2016, the California Air Resources Board (CARB) proposed amendments to the California Cap-and-Trade Program (17 CCR 95800 et. seq.) for the first time since 2014. The amendments include major substantive changes to compliance requirements as well as new program initiatives such as post-2020 caps, additional linking, and Clean Power Plan (CPP) compliance provisions.

In an unusual move, CARB has provided a “Preliminary Draft Proposed Regulation Order and Staff Report” prior to formally initiating the rulemaking. CARB will release a draft of the formal regulatory package on July 19 for Office of Administrative Law review prior to opening the formal comment period. “Final” draft documents will be posted on August 2, and the formal public comment period will begin on August 5.

2021-2031 Emission Cap

CARB has proposed to set emissions caps for 2021 to 2031. The caps decline annually at a linear rate from 2020 to 2030. CARB set the post-2020 caps by calculating the ratio of the 2020 cap in the current regulation (334.2 MMTCO2e) to the statewide GHG target for 2020 (431 MMTCO2e) as set forth in the Scoping Plan. CARB then extrapolates that ratio—77.5 percent—using the goal of 258.6 MMTCO2e established by Governor Jerry Brown in Executive Order B-30-15. The final cap for the 2030 using this methodology is 200.5 MMTCO2e. Continue Reading

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

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