Clean Energy Law Report - Insights & commentary on climate change, renewable energy and clean technology

By Robert A. Wyman, Jr., Michael G. Romey, and Aron Potash

Climate tort plaintiffs cannot catch a break in the Fifth Circuit Court of Appeals.  In a May 14, 2013, decision, the Fifth Circuit found—once again—that a group of Mississippi Gulf Coast property owners is barred from alleging that energy companies tortiously emitted greenhouse gases (“GHGs”). 

The case, Ned Comer, et al. v. Murphy Oil USA, et al., has a long and twisting history and at one point was widely viewed as being in the vanguard of a small handful of cases with the potential to radically realign the legal framework under which companies emit GHGs. 

Comer was originally filed in the Southern District of Mississippi in 2005.  Plaintiff coastal property owners alleged that the defendant companies’ emissions exacerbated climate change, which intensified Hurricane Katrina, which in turn damaged the plaintiffs’ property.  Invoking the federal courts’ jurisdiction over state law claims between citizens of different states, the plaintiffs sought compensatory and punitive damages asserting state law claims of nuisance, trespass, and negligence, among other claims. The district court dismissed the claims on the grounds that the plaintiffs lacked standing and that the matter was not justiciable under the political question doctrine. 

In November 2009, a Fifth Circuit panel reversed, in part, the district court’s dismissal of the claims.  The Fifth Circuit panel found that plaintiffs had standing to bring state law public and private nuisance, trespass, and negligence claims challenging energy sector emissions of GHGs and that the claims did not present political questions. 

The Fifth Circuit panel’s decision came in the wake of the Second Circuit’s precedent-setting September 2009 decision in State of Connecticut, et al. v. American Electric Power Company Inc., et al., in which the Second Circuit recognized the validity of federal common law public nuisance claims challenging the emission of GHGs, found that a number of states and private environmental groups had standing to press such claims, and rejected the argument that the claims are nonjusticiable.  Together, these cases were viewed as potentially ushering in a new era in which companies emitting GHGs would need to contend not just with EPA’s regulations but also with common law climate tort claims seeking injunctive relief or money damages.

The new era was not to be.  As to Comer, before the panel opinion’s mandate issued, a majority of the Fifth Circuit’s active, unrecused judges voted to rehear the case en banc.  Under Fifth Circuit rules at the time, this vacated the panel opinion reversing the district court’s dismissal.  Before the Fifth Circuit reheard the case en banc, however, another Fifth Circuit judge was recused, leaving the court with only eight active, unrecused judges.  Five of the remaining eight judges then determined that, with the additional recusal, the court lacked a quorum to proceed, and the judges issued in May 2010 an order dismissing the plaintiffs’ appeal from the district court’s decision for lack of a quorum. 

Plaintiffs petitioned the Supreme Court, seeking review of the Fifth’s Circuit dismissal of their appeal.  The Supreme Court denied the petition in January 2011, at which point one might have expected the case to be over. 

However, the same group of property owners proceeded to file a new complaint in May 2011 alleging many of the same nuisance, trespass, and negligence claims against the same energy company defendants.  The District Court again dismissed the claims, finding them to be barred by res judicata and the applicable statute of limitations, and also to fail to establish proximate causation and be preempted by the Clean Air Act.  In addition, as it had in Comer I, the court found that the plaintiffs lacked standing and that the claims raised nonjusticiable political questions. 

The Fifth Circuit’s May 2013 decision in Comer II upholds the district court’s dismissal of the climate tort claims.  The Fifth Circuit found dispositive the doctrine of res judicata—the principle that a controversy, once decided, shall remain in repose—and did not address the district court’s other grounds for dismissal.  Despite the procedural quirks of Comer I, the Fifth Circuit found the district court’s decision in that case to represent a final judgment, never modified on appeal.  In addition, the Fifth Circuit found the district court’s final judgment to be on the merits because it adjudicated the jurisdictional issues of standing and justiciability. 

Fall of 2009 may turn out to have been an apogee of sorts for climate tort claims.  In June 2011, the Supreme Court issued a decision in Connecticut v. American Electric Power, holding that the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of GHG emissions.  Climate tort plaintiff in a third case, Native Village of Kivalina v. Exxon Mobil Corp., et al., were also on the losing end of a September 2012 Ninth Circuit panel decision which found the plaintiffs’ claims that climate change would result in erosion and flooding of the island where they live to be a matter that should be left to the legislative and executive branches of government.  The Kivalina plaintiffs petitioned the Supreme Court in February for a writ of certiorari. 

As GHG levels in the atmosphere approach their highest levels in hundreds of thousands of years or longer, the prospects for new legislative or executive branch action are uncertain.  Although California recently implemented an economy-wide GHG cap and trade scheme which began imposing compliance obligations earlier this year, there appears to be little appetite for comprehensive federal climate change legislation.  EPA proposed in April 2012 a GHG performance standard for new power plants pursuant to its Clean Air Act authority, but the timing for action with respect to existing power plants and other emitting sectors is unclear.  In light of the uncertainty on the regulatory and legislative fronts, and given the massive alleged harms involved, it may be too early to say if the climate tort is essentially finished or will in the future be resuscitated in a new and more potent guise. 

By Christopher Garrett, Jim Arnone and DJ Moore

Many interest groups have urged that the California Environmental Quality Act (“CEQA”) needs to be “modernized”, but disagree as to the changes that are needed.  As the California Legislature tackles this challenge, the most visible effort is Senate Bill 731 (S.B. 731) now sponsored by California Senate President pro Tem Darrell Steinberg.  As a bill sponsored by the President pro Tem there is a reasonable likelihood this legislation will pass, whether in this form or in an amended version, so its provisions are of particular interest.

S.B. 731, which faces its first legislative hearing on Wednesday May 1, 2013, was amended last week.  

Rather than broad-based CEQA reform, the bill focuses more narrowly on changing the CEQA process for infill and clean energy projects and makes modest changes in a number of areas. While the bill is intended to benefit infill projects that implement “smart growth” attributes, the extent to which the legislation might result in benefits or burdens to such projects will depend upon new significance thresholds that the bill proposes to be developed by the Resources Agency. The bill also contains a number of new procedural requirements that could lengthen and complicate the CEQA process for all types of projects. Opinions of observers are quite divided as to whether the bill on an overall basis provides greater benefits than burdens to project applicants.

S.B. 731 contains the following proposed changes:

• Aesthetic impacts for “residential, mixed-use residential, or employment center projects within a transit priority area” would not be considered significant impacts under CEQA.  (“Transit priority area” is defined by S.B. 731 as an area within one-half mile of an existing or planned major transit stop.)   The language is vague about whether this would apply to all residential and mixed-use residential projects, or only those in a transit priority area.
• The Secretary of Resources would be directed to propose new guidelines for significance of noise, transportation and parking impacts within transit priority areas.  Some have argued that the application by lead agencies of traditional significance thresholds for traffic, parking and noise often has counterproductive effects for infill projects that implement “smart growth” concepts, and the legislation attempts to address these concerns by  requiring the Secretary of Resources to develop new significance thresholds.  For example, for traffic impacts, the bill requires significance thresholds to be developed that are based on a project’s proximity to a multimodal transportation network, its overall transportation accessibility, and its proximity to a diversity of land uses, rather than the “level of service” metric typically used by lead agencies. Of course, the impact of  the bill on the process for these projects will depend upon the significance thresholds developed by the Resources Agency.
• Opinion is divided as to the benefits of creating new statewide minimum thresholds of significance compared to current law that allows local control on these issues. Moreover, applicants may not be able to place complete reliance on new significance standards contained in these potential Guidelines until potential litigation has ended, because in the past CEQA Guideline standards adopted by the Secretary of Resources have been subject to extensive litigation and at times invalidated.
• New procedural requirements would be imposed on local and state agencies for CEQA findings.  All public agencies would be required to provide their proposed CEQA findings to the public at least 15 days prior to the proposed approval date and provide a public notice of the availability of the findings for public review.  Additionally, public notice of the availability of these draft findings must be made by electronic mail and by newspaper publication, which as a practical matter means that the documents must be available for a longer period of time.  This new provision would appear to reduce local agency flexibility to respond to project opponents who make late comments by making it more difficult for the local agencies to adopt new or different findings in response to public comments, without going through delay if there is a requirement to “re-notice” revised findings.  The result of this provision could be to potentially increase processing times and procedural risks and delays for projects.  
• The legislation would give project applicants the option to require the lead agency, for certain types of projects, to post the administrative record electronically as it is created so that it can be filed within 30 days in the event of litigation.  The intent of this provision is to reduce the litigation delay that is caused by lead agencies taking several months to prepare the administrative record once a lawsuit is filed.  However, S.B. 731 further provides that all of the costs of preparing and certifying the electronic record must be reimbursed by the applicant, and the petitioner filing a CEQA lawsuit would not be obligated to advance or reimburse to the public agency the costs of preparing this electronic record, thereby reducing the potential costs to CEQA challengers for filing lawsuits against projects with an electronic record.  Under this provision, public agencies would be required to make all public comments available electronically within 5 business days of receipt of electronic comments, and 7 business days of receipt of non-electronic comments, at the applicant’s expense. The bill is not clear as to the impact of the failure to comply with the new provisions, but this provision could provide a new basis for CEQA lawsuits alleging failure to timely provide materials on an electronic basis while the public agency is considering the project.
• New requirements would be imposed on local and state agencies for annual monitoring and reporting.  After project approval, for an indefinite time, all public agencies would be required to prepare annual reports available online regarding project compliance with the adopted mitigation and monitoring plan.
• The bill adds language to Government Code Section 65457 which contains an existing limited exemption from CEQA for residential projects consistent with an adopted Specific Plan, specifying that new information “consisting solely of argument, speculation, unsubstantiated opinion or narrative” or “is clearly inaccurate or erroneous,” or suffers from other defects, should not affect the applicability of the exemption.  It appears that this current language in S.B. 731 simply reflects existing law regarding material that can be considered as “evidence” by a public agency under CEQA, though the stated intention appears to be to strengthen the existing exemption.
• Section 13 of the bill amends Public Resources Code Section 21168.9(a) to clarify language regarding the requirements for a court order to be issued when a court finds a CEQA violation, including the circumstances under which a portion of the approved project can be “severed” from the Court’s decision overturning the project approval.  This section of the bill also specifies that an agency found to have violated CEQA must be ordered by the court to provide an “initial return” to a writ of mandate specifying what must be corrected under CEQA before taking steps to adopt new CEQA documents.  This procedural requirement could be helpful to the extent it provides clarity for the corrections, but could also lead to significant delays in undertaking corrective actions by the local agency and may result in a new round of litigation with project opponents challenging the agency’s proposed corrective measures.
• The bill adds a new Section 21167(g) which authorizes tolling agreements to extend the statute of limitations when agreed to by the public agency, the “party asserting noncompliance” with CEQA and the real party in interest (normally the project applicant).  At least one case has already held that the CEQA statute (without S.B. 731) authorized tolling agreements, but this proposed amendment provides additional confirmation of the court’s decision.  The new language of this bill may also amend CEQA so that a tolling agreement with one party extends the statute of limitations for any opponent, but the language of the bill is not clear on this point.
• A new office of “Advisor on Renewable Energy Facilities” is created in the office of the Governor.  The legislation does not specify the authority of this office, and no changes are made to CEQA’s applicability to renewable energy facility projects.
• The bill adds a new section, Public Resources Code Section 21080(h), stating that a project applicant for a renewable energy project may present to a public agency “the benefits onsite or offsite of the project, including, but not limited to measures that will mitigate greenhouse gas emissions resulting from the project”.  While this is something that most project applicants are already doing under existing CEQA provisions, there have been reports that some public agencies were not allowing project applicants to include these project environmental benefits in the CEQA analysis for renewable projects.  While the additional language in S.B. 731 does not mandate how public agencies should treat the information submitted by project applicants, it may be read as additional support for including these benefits in the CEQA analysis.

As the Legislature considers S.B. 731 this week and in the next several months, more information about S.B. 731 should become available, and further amendments may be made by the bill’s sponsor or the Legislature.

By Marc Campopiano and Tim Henderson

On March 11, 2013, the California Energy Commission (CEC) released a proposed Seventh Edition of the Renewables Portfolio Standard (RPS) Eligibility Guidebook (proposed Guidebook).  As we discussed in a previous blog entry, on March 28, 2012, the CEC suspended the RPS eligibility of power plants generating electricity using biomethane. 

In response to the passage of AB 2196, which created a pathway for using biomethane to generate RPS-eligible electricity, the proposed Guidebook would lift the biomethane suspension and, among other changes, establish detailed procedures for certifying the RPS eligibility of electricity generated from biomethane.  The proposed changes would allow RPS-eligible electricity from both existing and new facilitates using biomethane provided the new requirements are met.  For example, for new facilities using biomethane delivered by a common-carrier pipeline, the facility must demonstrate that the biomethane flows from the injection point towards the facility and the biomethane capture and injection results in environmental benefits in California. 

In addition to the changes related to biomethane, the proposed Guidebook makes other notable changes to the RPS rules, including:

•  Clarifying the RPS eligibility requirements for other renewable resources, including biomass and geothermal facilities.
• Revising the conditions for facilities using nonrenewable fuel above the de minimis threshold to count the facility’s generation towards the RPS.
• Establishing procedures for storing renewable electricity to produce future renewable energy credits (RECs).
• Modifying the requirements for the types of facilities that may be RPS-certified, including adding limitations on facilities serving POUs.
• Revising the process for tracking RPS compliance, including with respect to the retirement and reporting of the use of RECs.   
• Clarifying the roles of the CEC and CPUC in implementing the RPS program, especially with respect to the portfolio content categories under SBX1-2.

The CEC held a public workshop on the proposed revisions on March 14, 2013, and is accepting comments until March 25, 2013.  A final draft Guidebook is expected in late April 2013. 

By Janice M. Schneider and Andrea M. Hogan

On February 27, 2013, the U.S. District Court for the Southern District of California rejected the Quechan Tribe of the Fort Yuma Indian Reservation’s (“Quechan Tribe”) suit challenging the Ocotillo Wind Energy Facility Project (the “Project”), a wind energy project in the Sonoran Desert in California.  See Quechan Tribe of Fort Yuma Indian Reservation v. U.S. Department of Interior, et al., 2013 U.S. Dist. LEXIS 27069 (S.D. Cal. Feb. 27, 2013).  The Quechan Tribe alleged that BLM’s approval of a Record of Decision (“ROD”) allowing an approximately 10,000 acre right-of-way over federal land for the construction of 112 wind turbines, violated the National Historic Preservation Act (“NHPA”), Federal Land Policy and Management Act (“FLPMA”), and the National Environmental Policy Act (“NEPA”), among other laws.

The Quechan Tribe’s NHPA claim alleged that BLM (1) failed to adequately identify all the historic properties prior to ROD approval, and (2) failed to adequately consult the Tribe.  As to the first argument, the court found based on the administrative record that archaeological surveys were conducted in the area of direct impact, including the wind turbine construction areas, and that tribal monitors were invited to participate and did participate in the surveys.  Id. at *14-19.  The court also rejected the Quechan Tribe’s failure to consult claim and found instead that “the administrative record reveals many attempts, starting regularly in 2010, were made by BLM to engage the Tribe in Section 106 government to government consultation.”  Id. at *5.  This case stands in sharp contrast to the Quechan Tribe’s successful challenge against the Imperial Valley solar project,[1] where that project was enjoined based upon the Tribe’s argument that the BLM failed to adequately consult with it.  This new decision is instructive in that it details the process by which tribal participation occurred and was documented by the environmental consultants handling the cultural resources work, as well as the degree of oversight provided by BLM.  Id. at *12-19; see also id. at *19-27 (documenting the Section 106 process and distinguishing Quechan I). 

The Tribe’s FLPMA claims alleged that the Project does not comply with the Class L (limited use) designation included in the California Desert Conservation Area (“CDCA”) Plan, violates the Visual Resource Management (“VRM”) standards and will result in the unnecessary and undue degradation of public lands.  Id. at *27-48.  Again, the court rejected these claims finding that the Tribe did not demonstrate that the Project will “significantly diminish” sensitive resources values, pointing to the mitigation measures in the ROD, a reduction in the number of turbines authorized (from 155 proposed to 112 approved) and the small footprint of the project.  Id. at *28-35.  The court further found that BLM’s decision to change the VRM class from interim Class III (in which the level of change to the characteristic landscape should be moderate) to a final interim Class IV (in which the level of change to the characteristic landscape can be high) in the final Environmental Impact Statement (“EIS”) was not arbitrary or capricious because the prior designation was interim and could be changed.  The court also held that BLM’s conclusion that the Project would not result in the unnecessary or unduly degradation of public lands was not arbitrary and capricious, particularly in light of the ROD’s numerous mitigation measures.  Id. at *35-48. 

Finally, the court rejected the Tribe’s NEPA claim that BLM was required to analyze six “priority” renewable energy projects planned for the CDCA in a single EIS because under the “independent utility” test the Tribe failed to show how all of the projects were connected.  Id. at *50-53.  The court similarly rejected the Quechan Tribe’s other NEPA claims, finding that BLM’s cumulative impacts  and growth inducing effects analyses were not arbitrary, capricious or an abuse of discretion, and that the BLM adequately analyzed the Project’s consistency with local laws.  Id. at *54-68. 

[1]  Quechan Tribe of Fort Yuma Indian Reservation v. U.S. Dept. of Interior, 755 F. Supp. 2d 1104 (S.D. Cal. 2010) (Quechan I).

By Anne B. Beaumont 

On January 18, 2013, Secretary of the Interior Ken Salazar announced the approval of Arizona’s Restoration Design Energy Project (RDEP), a Bureau of Land Management (BLM) initiative to identify public lands in Arizona that may be suitable for renewable energy development.

The RDEP Record of Decision (ROD)[1] establishes 192,100 acres of renewable energy development areas (REDAs) on BLM lands across Arizona. These REDAs are available for solar or wind energy development and are close to areas with high electricity demand (such as population centers and industrial areas). They are also located near transmission lines or designated corridors. The identified lands include previously disturbed sites (such as retired agricultural lands and landfills) and consist of areas with low resource sensitivity and few environmental conflicts. Consequently, they are unlikely to contain resources protected by statute or policy. As part of its environmental analysis, the BLM eliminated from consideration lands that contain sensitive resources requiring protection.

The ROD also establishes the Agua Caliente Solar Energy Zone (SEZ), located on 2,550 acres in western Arizona. This is the eighteenth SEZ in the nation and the third in Arizona. The other seventeen SEZs were previously identified in the Final Programmatic Environmental Impact Statement for Solar Energy Development in Six Southwestern States (Final Solar PEIS). Approved in October 2012, the Final Solar PEIS established the concept of SEZs as potential sites for utility-scale solar development. [2]

The Final Environmental Impact Statement for the RDEP evaluated six action alternatives. Alternative 6 (titled the Collaborative-Based Alternative) combined the themes looked at individually in Alternatives 1 through 5 into one overarching alternative. This Collaborative-Based Alternative—which incorporated all of the concepts, issues, and protections from the other five alternatives—is the BLM’s environmentally preferred alternative.

In identifying the REDAs and SEZ, the RDEP does not eliminate the need for further environmental review of individual sites and proposed projects within those areas. In addition, proposed renewable energy projects outside of a REDA or SEZ will be evaluated on a case-by-case basis, consistent with the Final Solar PEIS.

[1] The ROD and Approved Resource Management Plan Amendments (RMPA) were released on January 18, 2013, and are available at http://www.blm.gov/pgdata/etc/medialib/blm/az/pdfs/energy/rdep.Par.61787.File.dat/RDEP-ROD-ARMP.pdf.

[2] For more on the Final Solar PEIS, see our previous blog entry and related Client Alert, available at http://www.cleanenergylawreport.com/environmental-and-approvals/federal-government-issues-record-of-decision-approving-programmatic-environmental-impact-statement-f/. Recently, three environmental organizations—Western Lands Project, Desert Protective Council and Western Watersheds Project—have filed a lawsuit against the U.S. Department of the Interior challenging the program.

Please join us today (Wednesday, November 14) at 11:30am pacific/1:30 pm eastern for a discussion of the lawsuit filed on Tuesday, November 13, by the California Chamber of Commerce seeking to invalidate ARB’s auction of allowances under AB32. There will be an opportunity for participants to submit questions via the webcast. 

Speakers
Jean-Philippe Brisson, New York
Claudia O’Brien, Washington, D.C
Michael Romey, Los Angeles

Click here to register for the webcast.

By Janice Schneider, Buck Endemann, and Jennifer Roy

On October 22, 2012, the Ninth Circuit vacated certain federal authorizations for the Ruby Pipeline, a completed natural gas pipeline running from Wyoming to Oregon.  The Court concluded that the U.S. Fish and Wildlife Service’s (Service) Biological Opinion (BiOp) failed to comply with the federal Endangered Species Act (ESA).[1]  The Court also found that the Bureau of Land Management’s (BLM) Record of Decision (ROD) relying on the BiOp was therefore arbitrary and capricious.[2]  The court vacated the BiOp and ROD and remanded each document to its respective agency for further consideration.[3]

The ESA requires federal agencies to ensure that their actions are not likely to jeopardize the continued existence of any listed species or result in the destruction or adverse modification of designated critical habitat.[4]  Ruby Pipeline L.L.C. (Ruby) obtained a Certificate of Public Convenience and Necessity (CPCN) from the Federal Energy Regulatory Commission (FERC) authorizing construction of the pipeline, the transport and sale of natural gas, and certain cost recovery.[5]  Pursuant to the ESA, FERC consulted with the Service on the pipeline’s effects on listed species.[6]  ESA regulations require the Service to formulate an opinion “as to whether the action, taken together with cumulative effects, is likely to jeopardize” listed species.[7]  The Service ultimately issued a BiOp concluding that the pipeline was not likely to jeopardize nine species of endangered fish or their critical habitat.[8] 

In making the “no jeopardy” determination, the BiOp relied in part on a “Conservation Action Plan” (CAP) agreed to between Ruby and FERC that included measures for the protection of endangered species.[9]  While the CAP was not included as part of FERC’s “proposed action” (i.e., it was not described as part of the proposed pipeline project), the BiOp considered the CAP measures as “cumulative effects,” or “effects of future [non-Federal] activities… that are reasonably certain to occur . . . .”[10]  Relying on the CAP’s beneficial cumulative effects, the Service determined that the Ruby Pipeline would not likely jeopardize endangered fish, although the CAP was ostensibly a separate effort from the proposed pipeline project.[11] 

Under these facts, the panel held that the BiOp’s “no jeopardy” determination was flawed.[12]  According to the court, the CAP did not meet the criteria for background “cumulative effects,” because the CAP measures and the pipeline construction were “unequivocally interrelated.” [13]  For instance, FERC conditioned its approval in the CPCN on Ruby’s fulfillment of the CAP’s obligations; similarly, the conservation measures were dependent upon approval of the project.[14]  The court characterized this as a “quid-pro-quo” relationship that could not be appropriately characterized as a future non-federal cumulative action.[15]

Additionally, the panel held that under these circumstances, a conservation agreement promising to address project impacts on endangered species must be described as part of the proposed project, not merely a background consideration, to be properly considered in a BiOp’s jeopardy determination.[16]  The panel found that only mitigation measures in a proposed project or otherwise incorporated into the Service’s incidental take statement are fully enforceable under the ESA.[17]  Although FERC and BLM may have been able to enforce the CAP under their respective conditions of approval, the court found significant the Service’s special and primary role in protecting endangered species.[18]  The panel found that unless a mitigation agreement is binding under the ESA, the Service cannot effectively enforce the act by reinitiating consultation, levying “strict civil and criminal penalties,” and ESA citizen suits would likewise not be available to encourage enforcement with the measures.[19]  The potential for discretionary enforcement by other federal agencies (whose regulations may require them to balance competing, non-species concerns) was deemed to be inadequate by the Court.[20]

Ultimately, the court vacated the BiOp and ROD, and remanded both documents to the Service and BLM, respectively.[21]  While a revised BiOp is required under the Court’s order, it remains to be seen how the federal agencies will address this decision, especially because the pipeline has already been constructed, and the Court’s opinion did not on its face appear to affect the project’s BLM right-of-way or FERC approval.[22]  The parties have 45 days to seek a rehearing of the court’s decision.[23]

[1]  16 U.S.C. §§ 1531-1544.

[2]  Center for Biological Diversity v. United States Bureau of Land Mgmt, 2012 WL 5193100 (9th Cir. Oct. 22, 2012) at *14.

[3] Id. at *24.

[4] 16 U.S.C. § 1536(a)(2). 

[5] 15 U.S.C. §717f(c); Order Issuing Certificate and Granting in Part and Denying in Part Requests for Rehearing and Clarification, 131 FERC ¶ 61,007 (April 5, 2010), available at http://www.ferc.gov/EventCalendar/Files/20100405150436-CP09-54-000.pdf.

[6]   See 50 C.F.R. § 402.14(g); Center for Biological Diversity, 2012 WL 5193100 at *3.

[7]   50 C.F.R. § 402.14(g)(4). 

[8]   Center for Biological Diversity, 2012 WL 5193100 at *4.

[9]   Id.

[10] 50 C.F.R. § 402.02. 

[11] Id. at *7.

[12] Id. at *4.

[13] Id. at *13.

[14] Id. at *6, *13.

[15] Id. at *13. The court also concluded that these particular CAP mitigation measures were “vague and distant-in-time” and thus would have likely been inadequate under the ESA.  Center for Biological Diversity, 2012 WL 5193100 at *14.

[16] Id.

[17] Id. at *12.

[18] Id. at *4.

[19] Id. at *4, *12.

[20] Id. at *12.

[21] Id. at *24.  The court also held that the BiOp failed to adequately discuss potential impacts of groundwater withdrawals on listed species; that the Service’s reliance on an earlier BiOp when calculating incidental fish take levels was reasonable; and that the Service’s method of quantifying incidental take levels was not arbitrary and capricious.

[22] FERC’s CPCN was not challenged in the litigation.

[23] Fed. R. App. P. 40. 

By Damon P. Mamalakis and Taiga Takahashi

In September 2012, the Court of Appeal in Mount Shasta Bioregional Ecology Center v. County of Siskiyou affirmed the approval of a 15 MW biomass-fueled cogeneration plant in northern California.[1]  This case is the first published state court opinion regarding a challenge to the approval of a biomass energy project in California.

At the core of the lawsuit was the California Environmental Quality Act (CEQA), with challenges to the adequacy of the Environmental Impact Report (EIR) and its analysis regarding alternatives, air quality, noise, and water resource impacts, among others.[2]  The case highlights the importance of managing risk throughout the administrative approval process, specifically in developing a thorough, well-documented EIR that allows for informed decision making.  In doing so, project applicants may enjoy the protection of a relatively high degree of deference in judicial review, even where the EIR has some errors (as CEQA does not require perfection, but rather informed decision making), and can thereby help control the likelihood of surviving a challenge in court.

For a more complete discussion of the Mount Shasta case, please see our client alert. The Mount Shasta opinion is available here.

[1] No. C064930 (Cal. Ct. App. Sept. 26, 2012) (ordered published Oct. 18, 2012).

[2] In the Superior Court, the petitioners also challenged the analysis regarding other environmental impacts, including climate change, aesthetic and visual resources, traffic, and geology and soils.  Memorandum of Decision, Mount Shasta Bioregional Ecology Ctr. v. County of Siskiyou, No. SC CV PT 08 8144 (Cal. Super. Ct. Feb. 22, 2010).  The Superior Court’s judgment on these claims was not a part of the appeal.  See Appellants’ Opening Brief, Mount Shasta Bioregional Ecology Ctr. v. County of Siskiyou, No. C064930 (Cal. Ct. App. Oct. 18, 2010).  In a related lawsuit, petitioners challenged the Siskiyou County Air Pollution Control District’s determination of best available control technology for the project and brought other claims based on alleged violations of procedural due process.  Verified Petition for Writ of Mandate, Mount Shasta Bioregional Ecology Ctr. v. Siskiyou County Air Pollution Control Dist., No. SC CV PT 09 0933 (Cal. Super. Ct. July 6, 2009).  The Superior Court also rejected this challenge, and the Court of Appeal affirmed the Superior Court’s judgment in an unpublished opinion.  Mount Shasta Bioregional Ecology Ctr. v. Siskiyou County Air Pollution Control Dist., No. SC CV PT 09 0933 (Cal. Super. Ct. May 4, 2010), aff’d, No. C065668 (Cal. Ct. App. Sept. 26, 2012).

By Janice Schneider, Laura A. Godfrey, Buck Endemann and Taiga Takahashi

Earlier this year, the Navy, Army, and Air Force committed to deploy three gigawatts total of renewable energy on service installations by 2025. In late July, the Department of the Interior (“DOI”) and the Department of Defense (“DOD”) took the first steps to implement this policy by entering into a Memorandum of Understanding (“MOU”) aimed to facilitate the federal government’s goals of increasing renewable energy generation from federal lands and the Outer Continental Shelf.

The MOU establishes three programs for developing appropriate, mission-compatible renewable energy near military installations or on public lands withdrawn for military purposes.

One program is an Installation Renewable Energy Partnership Plan (“Installation Partnership Plan”) for siting projects on or near DOD installations[1] to provide power for the military and excess power to the grid. This plan identified six DOD installations to serve as pilots in an interagency process to authorize solar energy projects in California[2] and Arizona.[3] This plan also calls for the identification of areas on withdrawn lands for other types of renewable energy development.[4] The Installation Partnership Plan adds to other service-specific renewable energy development programs already in progress, such as the U.S. Army’s recent $7 billion Request for Proposals (“RFP”) for renewable and alternative energy.[5]

Another program introduced by the MOU is an Offshore Wind Partnership Plan (“Offshore Wind Partnership”) near DOD coastal installations along the eastern seaboard, the Pacific coast, the Gulf of Mexico, and Hawaii. The Offshore Wind Partnership could result in potential project efficiencies, including security, land for a substation, and potential landing sites on coastal DOD installations. An offshore wind generator could also enter into an offtake contract with the military, which tends to have relatively consistent and predictable energy requirements.[6]

The final partnership program is the Alaska Initiative, which seeks to increase renewable energy generation in Alaska and will likely focus on wind, biomass, geothermal, and tidal and wave energy generation. In addition to federal installations, the Alaska Initiative would promote the development of small-scale renewable energy packages for off-grid, remote locations, including Native Alaskan villages.

Given these new federal initiatives, DOD installations—and in particular lands withdrawn from public lands for military purposes—present a substantial opportunity for renewable energy development. DOD installations encompass almost 30 million acres of land, 16 million of which were public lands formerly managed by the Bureau of Land Management (“BLM”) before being withdrawn for military purposes and 13 million of which are high in solar, wind, and geothermal resources. Furthermore, the MOU directs the Interagency Land Use Coordinating Committee (“ILUCC”) [7] to seek legislative clarification on the real property and resource aspects of renewable energy projects on withdrawn lands.

Improved access to DOD installations and military customers presents a new opportunity for onshore and offshore renewable energy development. As the processes in the MOU unfold alongside other DOD policies[8]—and, in particular, as long as federal agencies continue to develop processes for agency land-use coordination through initiatives like the ILUCC—utility-scale renewable energy developers should find an increasing number of opportunities to engage in projects on military land or with military customers that will improve military readiness,  enhance national security, and provide other renewable energy benefits.

A map of DOD installations across the United States is provided here.

[1]  For example, the U.S. Army alone has potentially 5 million available acres.

[2]  Three sites are at Fort Irwin.

[3]  The other sites are at Barry M. Goldwater Range East and West and the Yuma Proving Ground.

[4]  Including, for example, a similar pilot process to develop a geothermal plant at a yet to be determined DOD installation.

[5]  This RFP will be available at http://go.usa.gov/Gd6 until 2 P.M. Central Standard Time on October 5, 2012.

[6]  There are some limits to the Offshore Wind Partnership. For example, the MOU explicitly notes that neither the DOI nor the DOD will directly develop a project or commit in advance to purchase power as an incentive for project financing. However, the DOI and DOD plan to hold a wind energy forum before October 1, 2012, among military, other federal agency, state, tribal, local, and industry stakeholders to share information regarding offshore wind projects.

[7]  The ILUCC currently addresses, at the undersecretary/deputy level, the development of renewable energy on lands withdrawn for defense-related purposes. The ILUCC consists of deputy-director level representatives from the DOI (including the U.S. Fish and Wildlife Service, National Park Service, and BLM), DOD (individual service components), and their respective legal counsel. A basic overview of DOI-DOD coordination efforts is available at www.smrconference.com/getfile.cfm?ID=135.

[8]  While the MOU is not the first action that DOD has taken to facilitate renewable energy development on or near military installations, the MOU is clearly consistent with forward-looking energy policy that emphasizes the relationship between military readiness, energy independence, and national security. Each service (e.g., Army, Navy, Air Force, and Marine Corps) has been developing special departments, policies, and tools focused on emissions reduction, renewable energy development, and energy efficiency and conservation. Links to some of the initiatives are collected below:

• DOD Siting Clearinghouse
• Naval Energy Strategic Roadmap; U.S. Navy Shore Energy Policy
• U.S. Marine Corps Expeditionary Energy
• U.S. Army Energy Initiatives Task Force
• U.S. Air Force Energy Initiatives
• DOD-Natural Resources Defense Council Renewable Energy and Defense Geospatial Database

By Marc Campopiano and Tim Henderson

On May 9, 2012, the California Energy Commission (CEC) adopted a revised Renewables Portfolio Standard (RPS) Eligibility Guidebook.  The update implements several key modifications to the RPS eligibility criteria, including but not limited to:

•  Incorporating changes required by Senate Bill X1-2, which raised the RPS to 33 percent by 2020.  Signed by Governor Brown on April 12, 2011, Senate Bill X1-2 made other significant revisions to the RPS, including covering publicly-owned utilities for the first time, changing renewable delivery requirements, and expediting permit review for renewable projects by the California Department of Fish and Game.  Senate Bill X1-2 represented a substantial new statutory requirement that will have significant ramifications on energy markets, electricity generation and transmission line development in California and throughout the western states. The California Public Utilities Commission has estimated that a 33 percent by 2020 RPS will require almost a tripling of renewable generation from 27 terawatt hours in 2009 to 75 terawatt hours in 2020, potentially necessitating $115 billion in new infrastructure investment including at least seven new major transmission lines at a cost of $12 billion.  For a more detailed discussion of Senate Bill X1-2, see the recent Latham & Watkins Client Alert.
• Reflecting the recent suspension of biomethane as an RPS-eligible renewable fuel source.  The suspension is discussed further in a recent Latham & Watkins Client Alert. 
• Limiting the amount of nonrenewable fuel that can be counted as renewable under the RPS. 
• Allowing facilities serving onsite load (distributed generation) to be RPS-certified and generate renewable energy credits (RECs), as long as they meet all eligibility requirements for the specific renewable fuel source used at the facility. 
• Allowing facilities serving publicly owned utilities to count resources generated since January 1, 2011, for RPS purposes, as long as they apply to the CEC for RPS certification by October 1, 2012. 

The CEC also adopted a revised Overall Program Guidebook, which describes requirements and information related to the RPS and broader renewable energy programs at the CEC.   

By Taiga Takahashi

The U.S. EPA recently opened access to NEPAssist, an online Geographic Information System program that “facilitates the environmental review process and project planning in relation to environmental considerations” under the National Environmental Policy Act (NEPA) and other environmental assessment statutes. The program is available at the EPA website and is open to the public.

NEPAssist has the normal features of other publicly available web-based mapping services, such as nationwide street maps in two and three dimensions, in addition to aerial and satellite views.

Map overlays
NEPAssist draws environmental data from EPA and other government databases at the user’s request and provides an immediate overview of various environmental assessment indicators for a user-defined area of interest. These overlays include, for example:

• EPA facilities, such as brownfields, Superfund sites, toxic release points, and hazardous waste sites;
• Water monitoring stations;
• Community points of interest, such as schools, churches, and hospitals;
• Railroads and airports;
• Water body features, such as impaired streams and water bodies under the Clean Water Act, aquifers, and watersheds;
• Clean Air Act nonattainment areas for the ozone, lead, and annual and 24-hour particulate matter standards;
• Borders of interest, such as zip codes, congressional districts, cities, towns, counties, states, federal lands, and EPA regions;
• Demographic information;
• Other important land-use information, such as wetlands areas, FEMA flood hazard designations, topographical overlays, and development and land cover overlays.

Built-in data analysis
NEPAssist offers a variety of other useful data analysis and comparison features.

• Source data access: for certain information, the original source data or report is available instantly. For example, highlighting an impaired water body gives access to the original TMDL source report.
• Drawing features and customized reports: the user can draw project boundaries, and NEPAssist will produce reports that will show distances to important points of interest for environmental planning, including distances to wetlands, Superfund sites, etc. as described above. These reports include state-specific requirements, as well as requirements pertaining to federal law.
• Environmental Justice reports: NEPAssist also provides Environmental Justice reports. These reports compare project-specific demographic characteristics to County and national averages.

Example NEPAssist Report

Limitations
NEPAssist is still a work in progress, but EPA is planning to revise and update it according to user feedback. Some limitations and plans for further development include:

• Saving data: each time a user leaves the website and returns, he/she will have to redraw the study area.
• Not all federal environmental data has been incorporated into NEPAssist, but EPA plans to supplement current data and add new data in the future.
  • More complete data: For example, wetlands information is available through NEPAssist, but it is incomplete. EPA is in the process of fully incorporating wetlands data into NEPAssist.
  • New data: ESA-related data (for example, presence of listed species, critical habitat, etc.) is not (yet) available through NEPAssist. EPA stated a desire to add this information in the future.

While still in the development stage, NEPAssist offers relatively easy and consolidated access to federal government environmental data. Planners, decision-makers, and the public should find NEPAssist to be a valuable and convenient tool in the environmental review process. 

By: Marc T. Campopiano

On March 28, 2012, the California Energy Commission voted unanimously to suspend the Renewable Portfolio Standard (RPS) eligibility guidelines for certification of power plants generating electricity using biomethane.   In 2011, California’s Legislature passed Senate Bill X1-2 that raised the RPS to 33% by 2020, one of the most aggressive renewable energy mandates in the country.  The Commission asserted its decision was necessary to provide it “additional time to evaluate the RPS eligibility of biomethane as a result of Senate Bill X1-2.”

The Commission voted for the suspension after only a 10-day notice period.  Numerous representatives of the biogas industry, public utilities and investor-owned utilities submitted written comments and voiced concerns during a March 28 hearing that a suspension could devastate the industry and jeopardize millions of dollars of RPS-compliant contracts between utilities and biomethane suppliers.  While the Commission approved several last-minute revisions to address some of these concerns, the Commission adopted the suspension without delay.

To support its decision, the Commission cited potential concerns that renewable biomethane may not advance the “preference” of Senate Bill X1-2 “for electricity generation that provides more environmental benefits to the state by displacing in-state fossil fuel consumption, reducing air pollution within the state, and helping the state meet its climate change goals by reducing emissions of greenhouse gases (GHGs) associated with electrical generation.”  The Commission did not explain how Senate Bill X1-2 created this preference.  The Commission’s notice of the suspension included a supporting letter from four members of the Legislature but did not include letters from a number of other Legislators who opposed the suspension.

Prior to the suspension, the Commission’s RPS Eligibility Guidebook (4th ed., December 15, 2010) recognized the potential RPS-eligibility of landfill and digester gas that could be delivered as biomethane to a power plant using the existing natural gas pipeline system.  The power plant received RPS credit for generation attributable to biomethane instead of natural gas, provided that the power plant was certified by the Commission and met the RPS Eligibility Guidebook’s tracking and monitoring requirements.  RPS-eligible electricity from biomethane can provide important benefits by supporting baseload and peaking generation—which supports grid stability and the integration of intermittent renewable resources such as wind and solar—without typically requiring significant new transmission or infrastructure development.

By Janice M. Schneider, Laura A. Godfrey and Taiga Takahashi

The 2012 Consolidated Appropriations Act (Appropriations Act), signed by President Obama on December 23, 2011, replaced the appeal process for most Forest Service actions with a pre-decisional objection process.  The Appropriations Act also gave the Chief of the Forest Service authorization to exempt Forest Service actions from this pre-decisional objection process in an “emergency situation”.[1] The new “pre-decisional objection process” applies to “proposed actions of the Forest Service concerning projects and activities implementing land and resource management plans developed under the Forest and Rangeland Renewable Resources Planning Act of 1974[2] and documented with a Record of Decision or Decision Notice, in lieu of . . . providing for an administrative appeal process.”

Previously, an administrative appeal process was available to challenge the Forest Service’s project-related decisions. Such appeals were to be filed within 45 days of the publication of the Forest Service’s notice of its decision on a project. Decisions on appeals were to be made within a 45-day appeal period. If no appeal decision was issued within this 45-day period, the agency decision became the final administrative action.[3]

The new process eliminates this appeal process and replaces it with a pre-decisional objection process as outlined in Section 105(a) of the Healthy Forests Restoration Act of 2003. The objection process will be the “sole means by which a person can seek administrative review regarding [the Forest Service’s decision regarding the applicable project] on Forest Service land.”[4] The objection process will begin after the completion of the environmental assessment (EA) or environmental impact statement (EIS) and will end, at the latest, when the Forest Service issues its Record of Decision or Decision Notice. In addition, to participate in the administrative review process and object to a project, an individual must submit specific written comments regarding the proposed action to the Forest Service during the scoping or public comment period for the draft environmental analysis for the project.

Federal regulations implementing Section 105(a)’s objection process,[5] which originally applied only to hazardous fuel reduction projects, may provide a preview of this new process. If these other regulations provide any indication, the time to file an objection could be reduced to 30 days following the publication of notice of the completion of the EA or EIS.[6] In addition, if no objection is filed, final decision may occur as early as 5 days after the end of the 30-day objection period.[7]

The new objection process is expected to decrease the time needed for the Forest Service’s review and decision regarding proposed actions as compared to the former appeal process, and it should provide more uniformity to Forest Service decision-making processes. Appeals available to project applicants under 36 C.F.R. pt. 251 and appeals of plan adoptions or amendments themselves under 36 C.F.R. pt. 219 appear to be unaffected.[8] This drive for efficiency in Forest Service process is also reflected in the Obama Administration’s recently proposed “Preferred Alternative for the Land Management Planning Rule”, which the Administration claims “will make land management on 175 national forests and grasslands cheaper, more efficient[,] and less vulnerable to lawsuits[.]”

The Forest Service is currently in the process of drafting new regulations to implement this new pre-decisional objection process. An interim final rule is currently expected to be published by this summer and a final rule by this fall.

[1] The statutory language is set out at Section 428 of the appropriations bill (Public Law 112-74, 125 Stat. 1046)
[2] 16 U.S.C. §§ 1600-14.
[3] See generally 36 C.F.R. § 215.15.
[4] See supra note 1.
[5] 36 C.F.R. pt. 218.
[6] See 36 C.F.R. § 218.10(a).
[7] See 36 C.F.R. § 218.12.
[8] Compare 2012 Consolidated Appropriations Act § 428, supra note 1 (applying to “proposed actions of the Forest Service concerning projects and activities implementing land and resource management plans developed under the Forest and Rangeland Renewable Resources Planning Act of 1974 (16 U.S.C. 1600 et seq.), and documented with a Record of Decision or Decision Notice, in lieu of subsections (c), (d), and (e) of section 322 of Public Law 102–381 (16 U.S.C. 1612 note), providing for an administrative appeal process”), with 36 C.F.R § 251.80 (applying to applicants “who hold or . . . apply for written authorizations to occupy and use National Forest System lands”) and 36 C.F.R. § 219.32 (applying to a “proposed amendment or revision” of a land and resource management plan, which is already subject to a pre-decisional objection process).

By Taiga Takahashi

On December 30, 2011, the Court of Appeal for the First Appellate District affirmed the Alameda County Superior Court’s rejection of petition for a writ of mandate based on California Environmental Quality Act (CEQA) and public trust doctrine claims. This case, Citizens for East Shore Parks v. Cal. State Lands Comm. (Cal.App., Dec. 30, 2011, No. A129896 [2011 Cal.App.LEXIS 1645]), involved the California State Lands Commission’s 2009 renewal of Chevron U.S.A. Inc.’s operating lease for a marine terminal in San Francisco Bay waters.

The marine terminal at issue was the Long Wharf Marine Terminal in Richmond, California, near Chevron’s Richmond-based refinery. Both the refinery and marine terminal have been operating since the early 1900s. Chevron acquired the refinery from Standard Oil in the mid-1970s. At that time, Chevron assumed the remainder of Standard Oil’s lease for the terminal. Because the terminal’s operation began nearly 70 years before CEQA existed, CEQA review of the terminal’s construction or operation did not occur. When Chevron’s lease expired in 1997, the State Lands Commission issued a Final Environmental Impact Report (EIR) and renewed the lease in early 2009.

The State Lands Commission used the current, operational condition of the marine terminal as the baseline in the Final EIR. Project opponents petitioned the Superior Court to force the State Lands Commission to re-open the CEQA record and reconsider the lease renewal. They argued that the baseline should have included only the existence of the terminal, not its operation. Because the action was a lease renewal, the project opponents argued that the baseline should assume a state of affairs in which the lease was rejected, even though their proposed baseline would have “reflect[ed] conditions that have not existed at the locale for more than a century.”[1]

The Court of Appeal confirmed that the proper baseline for CEQA analysis and evaluation of environmental impacts is “what [is] actually happening”, not what might happen or what should be happening.[2] This holding is consistent with a growing body of case law, including:

• Communities for a Better Env’t v. S. Coast Air Quality Mgmt. Dist (2010) 48 Cal.4th 310, 320-21 [holding that the baseline must reflect “existing physical conditions in the affected area that [constitutes] the real conditions on the ground, rather than the level of development or activity that could or should have been present according to a plan or regulation[]”].[3]
• Sunnyvale W. Neighborhood Assn. v. City of Sunnyvale City Council (2010) 190 Cal.App.4th 1351, 1376-93 [rejecting a municipality’s use of a baseline of projected traffic in the year 2020] [Sixth Appellate Dist.].

In sum, Citizens continues the growing trend in the case law indicating that the proper baseline for CEQA analysis must reflect current, operative conditions, not a hypothetical scenario based on projections into the future or normative ideas of what should be occurring.

[1] Citizens, supra, No. A129896, slip op. at p. 10.

[2] Id. at pp. 8-9.

[3] Internal citations, quotations, and emphasis omitted.

By Janice Schneider and Joshua Marnitz

Last week, the Bureau of Land Management (BLM) published in the Federal Register an Advance Notice of Proposed Rulemaking outlining a competitive process for leasing public lands for solar and wind energy development.  76 Fed. Reg. 81906 (December 29, 2011).  BLM believes that a competitive process will better enable it to capture fair market value for the use of public lands, as required under the Federal Land Policy and Management Act (FLPMA) (43 U.S.C. 1764(g)), and ensure fair access to leasing opportunities for renewable energy development.  BLM will accept public comments on its proposal until February 27, 2012.

The proposed rulemaking would establish competitive bidding procedures for lands within designated solar and wind energy development leasing areas, define qualifications for potential bidders, and structure the financing arrangements necessary for the process.  The public lands available for competitive bidding would include those identified by BLM as Solar Energy Zones (SEZ) once it finalizes the Draft Programmatic Environmental Impact Statement for Solar Energy Development in Six Southwestern States (Draft Solar PEIS).  [A discussion of SEZs and BLM’s October 2011 proposal to restrict further the amount of public land available for solar energy development is available here.]  As BLM did not designate potential wind energy development leasing areas in the Final Programmatic Environmental Impact Statement on Wind Energy Development on BLM-Administered Lands in the Western United States (Final Wind PEIS) or its associated Record of Decision (ROD), it anticipates needing to subsequently establish Wind Energy Zones before applying its competitive leasing program to wind.

The rulemaking would enable BLM to offer lands through a call for nominations and a competitive process to solicit interest in parcels of land instead of simply through the existing application process.  While competitive leasing might potentially maximize federal revenues, the proposal would mandate additional procedures and would appear to require a new and redundant environmental review process for leasing.  These additional requirements could ultimately delay development of individual projects on the ground and potentially limit the ability to develop in areas not offered for leasing.

BLM states that the new regulations could also require:

• Publication of a Notice of Competitive Offer, which would include a legal description of the lands involved, the process for conducting the competitive offer, a minimum bid requirement, the qualifications for potential bidders, and due diligence requirements for the successful bidder to submit a Plan of Development (POD).
• Definition of a bonus bid competitive process or other competitive procedures, including sealed bids, oral auctions or ascending bidding, two-stage (i.e., a combination of sealed and oral auctions) bidding, or multiple-factor bidding, possibly structured similar to the method that the Bureau of Ocean Energy Management provides for offshore wind leasing (30 CFR 285.220). 
• BLM would issue a competitive ROW lease to the successful bidder, and require a POD within specified timeframes.  The review and approval process for the POD would again require compliance with NEPA and other Federal laws and regulations.  Approved PODs would include due diligence development requirements to ensure timely actual development.
• BLM proposes that competitive ROW leases be 30-year fixed-term leases with specific terms and conditions, available for renewal.

 BLM is currently seeking comments on the following issues, among others:

• How the competitive process should be structured for leasing public lands within designated solar or wind energy development areas;
• Whether a competitive process should be implemented for leasing public lands outside designated solar or wind energy development areas (and if so, how the process should be structured);
• What competitive bidding procedures should be adopted;
• What is the appropriate term for leases;
• How fees should be determined; and
• What due diligence requirements should be incorporated into competitive ROW leases and thus required of project developers.

BLM’s proposal has the potential to impact not only project proponents’ ability to site solar and wind energy projects on public lands, but also the costs, terms and conditions of doing so.  Entities with an interest in these areas should consider participating actively in this process. 

In a decision that could have widespread application to cases challenging agency action, the California Supreme Court in Voices of Wetlands v. State Water Resources Control Board recently upheld the use of a procedural mechanism that some earlier decisions had held impermissible—the interlocutory remand to an administrative agency.  Use of this procedure can significantly expedite the litigation and the administrative proceedings when an agency makes findings that are not sufficiently supported by the evidence. 

In the case, the owners of the Moss Landing Power Plant applied to the Regional Water Quality Control Board for a National Pollutant Discharge Elimination System (NPDES) permit, which must be reissued every five years, for the existing Moss Landing Power Plant.  At the same time, they sought the California Energy Commission’s approval to modify the plant.

The plaintiffs challenged the approval of the NPDES permit, alleging that it violated Clean Water Act section 316(b) by failing to require the “best technology available” for the plant’s cooling-water intake system.

Before reaching the merits of the plaintiffs’ section 316(b) argument, the Court addressed two procedural questions.  First, the owner of the power plant argued that the case should have been filed directly with the Supreme Court, under the special provisions of the Warren-Alquist Act governing the siting of power plants.  The owner’s theory, supported in an amicus brief that the Energy Commission submitted, was that the Energy Commission evaluated the proposed plant modifications’ consistency with local, state, and federal law, including Clean Water Act section 316(b).  And the Energy Commission’s plant siting or modification decisions are only reviewable by filing a case directly with the Supreme Court.  Therefore, according to the owner, the case was required to be filed directly with the Supreme Court under the Warren Alquist Act. 

Reasoning that the NPDES permit is required by federal law, and is required under California law to be issued by the water boards, the Supreme Court rejected this argument.  According to the court:

Although the Energy Commission must make a general finding, before issuing a powerplant certification, that the project conforms to all applicable local, regional, state, and federal laws, such a certification cannot contravene, subsume, encompass, supersede, substitute for, or operate in lieu of, the federally required NPDES permit.

Second, the Court addressed the plaintiffs’ interlocutory-remand argument.  The trial court had found that one of the Regional Board’s findings was unsupported by the evidence.  But rather than enter judgment in favor of the plaintiffs, it ordered the case remanded to the Regional Board for further findings.  The Regional Board held a publicly noticed hearing on the findings, took new evidence, and affirmed their original finding.  The Superior Court then considered that new evidence, along with the earlier evidence the Regional Board had considered, and upheld the Regional Board’s issuance of the permit. 

This may seem like an arcane nuance that would only interest die-hard civil procedure aficionados.  But in granting the administrative remand, the Superior Court did something extraordinary: it allowed the Regional Board to shore up holes in the record mid-case, transforming what would have been a sure loser for the agency into a winning case. 

The Supreme Court held that this procedure, the interlocutory remand, is permissible.  The Court’s opinion seems even to encourage the use of this procedure in certain circumstances:

such a device, properly employed, promotes efficiency and expedition by allowing the court to retain jurisdiction in the already pending mandamus proceeding, thereby eliminating the potential need for a new mandamus action to review the agency’s decision on reconsideration.

Ultimately, after setting these procedural questions, the Supreme Court upheld the NPDES permit.

In sum, the case raises several issues and leaves several open questions that developers and financers should be aware of:

• Opponents of new power plants are likely to argue that this decision undermines the Energy Commission’s exclusive authority over power-plant siting and that it permits project opponents to file lawsuits in Superior Court instead of the Supreme Court for a broad array of claims related to power plant sitings.  The case should not be read that broadly.  The decision says nothing to undermine the Energy Commission’s authority or the general proposition that any decision the Energy Commission makes as part of siting a plant can only be challenged in the Supreme Court.  It simply holds, unsurprisingly, that NPDES permits required outside of the Energy Commission’s proceedings can be challenged in their normal fashion, even if the Energy Commission analyzed related issues in its siting decision.
• How broadly courts will use the now-Supreme-Court-blessed interlocutory-remand procedure is an open question.  Project opponents will no doubt resist this procedure, because it is relatively efficient, and delay is often synonymous with success for project opponents.
• Another open question is whether the remand procedure applies to cases under the California Environmental Quality Act (CEQA).  The case overruled two CEQA cases that held interlocutory remands are impermissible.  However, the concurring opinion by Justice Wedegar stated that the majority’s analysis on interlocutory remand would not apply to CEQA cases.      

By James L. Arnone, Damon P. Mamalakis, and Janice M. Schneider

On June 30, 2011, District Judge Roger T. Benitez of the Southern District of California issued a decision allowing San Diego Gas and Electronic Company (SDG&E) to proceed with its construction of the Sunrise Powerlink, a 117-mile electrical transmission line that will connect the San Diego area with the vast renewable energy resources of California’s Imperial Valley.  When completed, the Sunrise Powerlink is expected to enhance the reliability of southern California’s electrical system, increase transmission capacity for power generated by renewable sources, and reduce energy costs to consumers.

In 2005, SDG&E began working with state and federal regulators to vet the Sunrise Powerlink under the federal National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA).  This process culminated with the approval of the Sunrise Powerlink by the California Public Utilities Commission (CPUC) in December 2008 and Bureau of Land Management (BLM) on January 20, 2009, after an extensive environmental review.

Several project opponents challenged the BLM’s Record of Decision (ROD) by filing an appeal with the Interior Board of Land Appeals (IBLA) in March 2009.  However, because the IBLA denied a motion to stay, the project opponents proceeded to file an action in federal court to directly challenge the BLM’s ROD.  Plaintiffs coupled their action with additional claims related to BLM’s amendments to the Resource Management Plan, as well as a Biological Opinion (BiOp) issued by the U.S. Fish and Wildlife Service (FWS) in 2009.  Soon after the plaintiffs filed their federal action, the IBLA affirmed the BLM’s decision on the merits, but the plaintiffs insisted that they still had the right to challenge the BLM’s ROD rather than the IBLA’s subsequent decision.

The district court disagreed.  Ruling on cross-motions for summary judgment filed by the plaintiffs, SDG&E, and the federal defendants, the court reasoned that when the IBLA affirmed the approval of Sunrise, that decision became the “final agency action,” not the BLM’s ROD.  To hold otherwise would allow there to be “‘two independent, and potentially conflicting, “final” agency actions,’ which is impermissible.”  Accordingly, the district court held that the plaintiffs’ direct challenge to the BLM’s ROD failed as a matter of law.

The court similarly found that the plaintiffs’ challenge to the BLM’s RMP was not directed at a “site-specific action,” and thus was not amenable to judicial review.  The court explained, “As further review and permits are required for any action, the RMP does not mark the consummation of the agency’s decision-making process, nor does it determine the rights or obligations of any party.  Accordingly, the Court finds that the RMP is not a final agency action and, thus, Plaintiffs’ claims based thereon fail as a matter of law.”

Finally, the court rejected the majority of the plaintiffs’ claims respecting the FWS’s 2009 BiOp as moot in light of a superseding BiOp issued in 2010.  The only claim against the FWS that survived the 2010 BiOp was whether the FWS was obligated to consider various projects that the plaintiffs contended were “connected” to the Sunrise Powerlink under NEPA.  Assuming without deciding that these projects were “connected,” the court concluded that the FWS was not required to consider them.  The court reasoned, “[B]y their plain terms, the regulations that require the BLM to identify ‘connected’ projects when issuing its environmental impact statement do not apply to the FWS.  Had Congress intended for the FWS to analyze ‘connected’ actions during its formal consultation process under the ESA, Congress would have stated so . . . .”  (Citations omitted).

By James L. Arnone, Damon P. Mamalakis, and Winston P. Stromberg

In just six weeks, on July 1, 2011, troubling new rules will go into effect governing the mediation of disputes arising under the California Environmental Quality Act, California Public Resources Code §21000, et seq. (CEQA). These new rules — enacted last fall as part of Senate Bill 1456 (SB 1456) as a substitute for the more substantial CEQA reform many sought — appear at first blush to encourage resolution of disputes prior to the filing of any lawsuit challenging a public agency’s compliance with CEQA. On deeper review, however, the new rules appear to provide a new tool for delay and gamesmanship without meaningfully increasing the chances of settling legitimate disputes.  This can cause trouble for energy projects.

When a lead agency approves a project, the common practice under CEQA is for that agency to file a notice of determination (NOD), as doing so commences a short statute of limitations for any actions challenging the lead agency’s compliance with CEQA.  Short limitations periods under CEQA aim to provide certainty to project applicants and avoid project delay.  Beginning on July 1, 2011, however, project opponents may have a new arrow in their quiver to delay project implementation, an unintended consequence of SB 1456.

New Public Resources Code Section 21167.10, added as part of SB 1456, permits any “person” who wishes to bring a CEQA action challenging a lead agency’s approval of a project to file a notice requesting mediation with the lead agency and real party in interest within five business days from the date the lead agency files its NOD. This provision applies to NODs filed on or after July 1, 2011. If the lead agency accepts the request for mediation, the applicable statute of limitations for filing a CEQA lawsuit is automatically tolled until the mediation is completed.

Although resolution of disputes without litigation can be beneficial to project implementation, there appear to be several problems with Section 21167.10 as drafted.

First, other than the requirement that a person file a request for mediation with the real party in interest and the lead agency, Public Resources Code Section 21167.10 does not specifically require the project applicant’s/real party in interest’s consent to or participation in the actual mediation process. This is a very troubling omission. This creates a potential opportunity for inappropriate delay by project opponents, especially if counsel for the lead agency and counsel for the real party in interest are not in close communication on this issue immediately following the project’s approval. We especially foresee the potential for abuse if project opponents profess a willingness to engage in good-faith mediation efforts, thereby convincing a well-meaning lead agency to accept the request (potentially even over the project applicant’s objections), only to cause a long delay in the resolution of the litigation.

Second, Section 21167.10 does not say when the mediation must be completed, nor does it make clear that mediation can be terminated if the parties reach an early impasse or do not participate good faith. We have observed CEQA litigation being abused by litigants with no legitimate environmental interest but who, instead, merely seek to block projects or press projects to make economic concessions. The fact that the new rules fail to include a clear process for calling off mediation that reaches an impasse or is not being pursued in mutual good faith heightens the risk of CEQA litigation abuse.

Since it was always possible to toll the statute of limitations or to stay litigation to allow mediation to occur among willing parties acting in mutual good faith, it seems unlikely that these new pre-litigation mediation rules will offer any meaningful new tool to help resolve CEQA disputes. Given the risks that these new rules create, it will soon be even more imperative than ever for project applicants to communicate with the lead agency’s counsel immediately after project approval to discuss these issues, and, if warranted, to agree on an appropriate mediation process that maximizes the chances for settlement while avoiding the new rules’ opportunities for delay and gamesmanship.

Latham & Watkins has issued a more detailed Client Alert regarding these issues.  Please visit the Latham & Watkins website or contact any one of the authors of this post directly if you would like a copy of the Client Alert.

By Linda Schilling, Charity Gilbreth, and Shirin Forootan

On April 14, 2011, the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE) will hold a public meeting in Washington, DC to solicit comments on proposed changes to the new International Green Construction Code (IgCC).  There are approximately 1400 proposed changes addressing a wide range of issues—from vegetative roofs, to solar electric issues, to building envelope issues.  Hearings on the proposed changes are scheduled thereafter for May 16-22, 2011, in Dallas, Texas. 

The IgCC was developed by the International Code Council (ICC), which is a U.S. based non-profit organization that allows governmental jurisdictions and other stakeholders around the world to collaborate in the creation of model building codes.  ICC members include state, county and municipal code officials and fire officials, architects, engineers, builders, contractors, elected officials, manufacturers and others in the construction industry.  The ICC has published several comprehensive international codes, such as fire codes, fuel gas codes, residential codes, zoning codes, and plumbing codes.

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David A. Goldberg and Daniel S. Feinberg

The Bureau of Land Management (“BLM”) has extended the public comment period for the Draft Solar Programmatic Environmental Impact Statement (“Draft Solar PEIS”) by thirty days to April 16, 2011.  The Draft Solar PEIS should be of interest to any developer seeking to build utility-scale solar energy projects or associated transmission infrastructure on public lands in the Southwestern United States, as the adoption of any of the study’s proposed plans of action could dramatically influence solar energy development on BLM-administered lands.

The Draft Solar PEIS is a detailed study released in December 2010 by BLM and the Department of Energy that evaluates the environmental, economic and social impacts of solar energy development on BLM-managed public lands in the Southwest.  As part of the study, BLM identified 24 “solar energy zones” (“SEZs”) that it deemed most suitable for environmentally sound, utility-scale solar energy development in six states: Arizona, California, Colorado, Nevada, New Mexico, and Utah.  The study addressed three alternatives for managing utility-scale solar energy development: a solar energy development program alternative and a solar energy zone alternative (collectively, the “action” alternatives), and a no-action alternative.

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Clean energy projects have tremendous potential to create jobs and grow the economy and help the nation meet its energy needs in a more sustainable way, but regulatory and legal barriers to energy projects have substantially reduced job creation and economic growth while impeding efforts to bring new energy generation facilities on line, according to a recent economic study commissioned by the US Chamber of Commerce as part of its Project No Project.  The report, entitled, “Progress Denied: A Study on the Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects,” (PDF) found that legal challenges, threats of legal challenge, and regulatory hurdles caused the delay or cancellation of 333 energy projects which, if constructed and operated for twenty years, would have potential economic and employment benefits of  a projected $3.4 trillion.  These estimated benefits would include $1.4 trillion in employment earnings and one million or more jobs per year.

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The United States Environmental Protection Agency faces an obligation to propose, before June of this year, a rule under the Clean Water Act which will impose reporting requirements upon owners and operators of concentrated animal feeding operations (PDF), or CAFOs, which include certain dairy and poultry farms, horse racing tracks, rodeo facilities, and many other types of operations. 

As EPA estimates that there are thousands of CAFOs which should have applied for National Pollution Discharge Elimination System, or NPDES, permits but did not do so (PDF), EPA is likely to propose that every CAFO—regardless of whether is has a permit or even discharges—provide information which will enable EPA to determine if the facility must obtain a permit and if it is otherwise in compliance with CAFO regulations. 

The expected proposed rule’s reporting requirements will place noncompliant CAFOs at heightened risk of EPA enforcement action.  EPA is also obligated to release to the public the information it collects on CAFOs under the new rule, which could place CAFO owners and operators at risk of citizen suits. 

In light of this expected proposed rule, the window may quickly be closing for CAFOs to come into compliance with CWA requirements, including by contacting EPA to self-report noncompliance, before EPA undertakes what could be a significant enforcement initiative.  Waste-to-energy opportunities may arise as CAFOs evaluate their waste management practices and potentially modify their facilities in response to the CAFO compliance push. 

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On February 7, 2011, a bill was introduced in the California State Assembly aimed at expediting the siting and permitting of renewable energy projects in the state, with special emphasis on the San Joaquin Valley. Assembly Members V. Manuel Pérez, Steven Bradford and Nancy Skinner introduced Assembly Bill 13 (AB13), the Renewable Energy Siting Act, with the goal of building on the successful implementation of Senate Bill 34 (PDF) (SB34) by enacting additional changes proposed by the renewable energy industry, labor, environmentalists and others.

According to the Renewable Energy Siting Act fact sheet (PDF), the Act has four main components:

• Expands the SB 34 process to wind and geothermal plants, including the voluntary use of interim mitigation measures and an advanced mitigation fee, payment of voluntary fees to expedite project review and payment of a one-time permit application fee;
• Requires the Department of Fish and Game to help prepare a regional conservation plan in the San Joaquin Valley for renewable energy development;
• Allows renewable energy project applicants to provide information to the CEQA reviewing agency on the environmental benefits of the project; and
• Provides up to $7 million to desert and San Joaquin Valley counties to revise their local plans to facilitate renewable energy development.

Full text of the act is available at www.leginfo.ca.gov.  The bill is currently in the Assembly Committee on Appropriations.

Eight Years.  That’s how long it took what will likely be the nation’s first offshore wind farm to obtain a federal lease.  It is little wonder, in light of Cape Wind’s struggle, that wind advocates have been pushing for greater federal support.  Earlier this week, the Department of Energy (DOE) and the Department of the Interior continued efforts to answer that call, jointly announcing the release of "A National Offshore Wind Strategy" aimed at developing the tremendous wind resources off the nation’s coastlines.  This interagency effort is backed by 50.5 million dollars in DOE funding to support research and development of offshore wind installations.

The nation’s potential for offshore wind power is impressive: according to DOE, wind resources off the U.S. coastline (including the Great Lakes) could theoretically produce an estimated 4,150 gigawatts (GW) of energy—more than four times the current generating capacity of nation’s electrical system.   As the new strategy recognizes, however, the difference between theory and reality is significant.  Currently, offshore wind farms have considerably higher capital costs than land-based installations, due in part to increased equipment, installation, interconnection, and infrastructure costs.  For example, existing installation and maintenance procedures involve the use of specialized vessels that simply do not exist in the U.S.

Further, as a new industry, offshore wind faces unique and novel permitting challenges.  Multiple state and federal agencies have jurisdiction over the development of offshore wind farms.  In the case of the Great Lakes, for example, DOE notes that eight states and a Canadian province claim jurisdiction—with the U.S. Army Corps of Engineers serving as the “lead agency” for purposes of the National Environmental Protection Act (NEPA).  Adding to the complexity is the relative lack of data regarding the environmental and social effects of offshore wind installations.

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Since the passage of the Global Warming Solutions Act of 2006 (otherwise known as AB 32), the California Air Resources Board (ARB) has met all of the Act’s deadlines for reaching the 2020 goal of reducing California’s greenhouse gas emissions to 1990 levels.  This includes ARB’s December 2008 approval of the Scoping Plan (PDF), which established a blueprint for how ARB intends to meet the 2020 greenhouse gas reduction goal, and its December 2010 approval of cap-and-trade regulations, which would create the most comprehensive greenhouse gas program in the nation. 

A recent development in Association of Irritated Residents v. California Air Resources Board, a case challenging the Scoping Plan, has put into question the Scoping Plan’s approval, and the implementation of ARB’s cap-and-trade regulations by extension.  On January 24, 2011, a San Francisco Superior Court Judge issued a tentative decision that, if entered as the court’s final decision, would delay further implementation of the Scoping Plan.  The tentative decision concluded that ARB acted within its discretion in approving the Scoping Plan, and that its environmental analysis of the Scoping Plan under the California Environmental Quality Act (CEQA) was mostly correct.  However, the petitioners convinced the court that ARB's analysis of alternatives to the Scoping Plan was insufficient, and that ARB acted improperly by adopting the Scoping Plan five months before it published its responses to public comments on the CEQA document. 

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Fossil fuel power plants are critical to California achieving its ambitious goals for a high-renewable, lowcarbon energy future. Today’s Los Angeles and San Francisco Daily Journal has an interesting thought piece (PDF) penned by Michael Carroll and Marc Campopiano that discusses this seeming paradox. 

With the enactment of Senate Bill 1456 (SB 1456) and Assembly Bill 231 (AB 31) on September 29, 2010, the California Legislature has taken preliminary steps to streamline the rigorous environmental review process under the California Environmental Quality Act (CEQA), while also addressing the growing problem of costly and time-consuming lawsuits filed under CEQA.  This legislation is intended to promote a more efficient process for CEQA review and litigation by discouraging frivolous CEQA actions, promoting the use of mediation and expedited litigation schedules, strengthening the requirements for exhaustion of administrative remedies and allowing project applicants and public agencies greater latitude to use prior environmental analyses.  

Hoping to curb abuse of the CEQA process, SB 1456 allows a court to impose sanctions of up to $10,000 if a party is found have filed a claim that is frivolous, or “totally and completely without merit.”  Allowing the imposition of sanctions for frivolous CEQA claims will make it harder for opponents to delay or defeat worthy projects.  SB 1456 also provides a party the option to request mediation prior to the inception of a CEQA action and allows the Attorney General to seek an expedited CEQA litigation schedule when the public interest requires it.  Finally, SB 1456 requires that an organization challenging the approval of a CEQA document that is formed after project approval must include at least one member who had claimed before the approval that the CEQA review was deficient.

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