Latham's Clean Energy Law Report

Massachusetts Unveils Three Offshore Wind Farm Proposals

Posted in Finance and project development

New England wind farms poised to lead the way in utilities converting from fossil fuel to wind generation.

By Tommy Beaudreau, Janice Schneider, and David Amerikaner

The race is on to build the first utility-scale offshore wind farm in the United States (US) on the federal Outer Continental Shelf. In December, three companies — Bay State Wind, Deepwater Wind, and Vineyard Wind — submitted bids in response to the Request for Proposal (RFP) issued by the Massachusetts Electric Distribution Companies (Distribution Companies), in coordination with the Massachusetts Department of Energy Resources, to enter into long-term contracts for offshore wind energy generation off of the coast of Massachusetts. The RFP was issued pursuant to Section 83C of Massachusetts’ Act to Promote Energy Diversity. Under the RFP, the Distribution Companies required developers to submit projects of at least 400 megawatts (MW) of offshore wind power generation, while also considering projects generating up to 800 MW. This initial solicitation is part of a staggered procurement plan, in accordance with Section 83C, to acquire approximately 1,600 MW of aggregate offshore wind nameplate capacity by June 30, 2027.

Each of the submitting wind farm ventures holds a federal lease from the Bureau of Ocean and Energy Management (BOEM) for areas in federal waters 15 to 25 miles offshore. All three bids propose wind farms south of the island of Martha’s Vineyard that would provide 400 MW of power, though some bids include alternate proposals on smaller or larger scales. Each bid also includes storage and transmission proposals, as the RFP required. Continue Reading

Wholesale Capacity Market in New England Aims to Better Accommodate State-Sponsored Generation Resources

Posted in Energy regulatory

The regional transmission organization’s proposal seeks to reconcile the increasing deployment of state-sponsored subsidized clean energy resources with competitive forward auctions.

By Michael Gergen and Tyler Brown

Proposed New Auction Process in New England

energy pylonThe ISO New England Inc. (ISO-NE), the regional transmission organization serving Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont has filed proposed changes to its Transmission, Markets and Services Tariff with the Federal Energy Regulatory Commission (FERC).  The proposal would create a two-stage capacity auction designed to balance competitive pricing in its three-year Forward Capacity Market (FCM) with the entry of state-sponsored renewable electric energy resources into the FCM. ISO-NE’s proposal, known as Competitive Auctions with Sponsored Policy Resources (CASPR), emerged from the New England Power Pool (NEPOOL)’s Integrating Markets and Public Policy (IMAPP) initiative. IMAPP sought to reconcile states’ efforts to deploy new generation with existing generators’ concerns that resources receiving out-of-market revenues will suppress capacity prices. ISO-NE filed the CASPR proposal on January 8, 2018 even though it fell short of the support it needed to win endorsement by a vote of the ISO’s Participants Committee on December 8, 2017. Stakeholders have until January 29, 2018 to submit comments.

ISO-NE’s existing FCM rules subject new capacity resources to a Minimum Offer Price Rule (MOPR), which requires that subsidized generation resources bid into the FCM’s Forward Capacity Auction (FCA) at their unsubsidized cost. The FCM contains a Renewable Technology Resource (RTR) exemption to the MOPR, which allows for up to 200 MW per year of certain renewable resources to bid into the FCA at their subsidized (i.e., below market) cost. New England state regulators have argued that the MOPR can cause electricity consumers to “pay twice”: once for the cost of capacity that clears in the FCA, and a second time for additional capacity from subsidized resources that did not clear in the FCA (because those subsidized resources were required to bid at their unsubsidized cost). Continue Reading

California Adopts Rules for Evaluating Multiple-Use Energy Storage Resources

Posted in Energy storage

By Michael Gergen, David Pettit and Christopher Randall

The CPUC’s market-shaping decision provides guidance regarding the “stacking” of multiple electricity system services.

A new decision from the Public Utilities Commission of the State of California (CPUC) has set the stage for improved economic viability for California’s energy storage industry. The January 17 decision — Decision 18-01-003 in Rulemaking 15-03-011 (the Decision) — establishes a set of rules to guide utilities on how to “promote the ability of storage resources to realize their full economic value when they are capable of providing multiple [or ‘stacked’] benefits and services to the electricity system.”

To advance this objective, the CPUC has adopted 11 stacking rules to govern the evaluation of multiple-use energy storage applications, as well as associated definitions of services and service “domains.” The agency also established a working group to develop certain issues further and directed the CPUC’s Energy Division to prepare a report in 2018 on the state of the energy storage industry. Continue Reading

Interior Department Excludes Incidental Take Liability Under the Migratory Bird Treaty Act

Posted in Environmental and approvals

By Janice Schneider, Sara Orr, Jennifer Roy and James Erselius

Reversing a long-standing federal legal position, the US Interior Department recently stated that the Migratory Bird Treaty Act (MBTA) does not impose liability for the incidental take of protected birds. The 41-page Solicitor’s Opinion (number M-37050) withdraws and replaces a prior Solicitor’s Opinion (number M-37041), issued during the Obama administration. The prior Solicitor’s Opinion had interpreted the MBTA to prohibit “incidental take,” and concluded that “the MBTA’s broad prohibition on taking and killing migratory birds by any means and in any manner includes incidental take and killing.” The new legal position means that the Trump administration will not consider the non-directed and unintentional death of birds by energy companies and other businesses in the course of their otherwise lawful activities to be a crime under the MBTA.

The MBTA, enacted in 1918, prohibits the take of over 1,000 species of birds, and the take of any migratory bird’s parts, nest, or eggs without a permit. The regulations define take as “to pursue, hunt, shoot, wound, kill, trap, capture, or collect” or to attempt any of these acts. Violations of the MBTA are criminal offenses, and courts have held that the MBTA imposes strict liability, regardless of intent. Courts have debated, however, whether the scope of strict liability under the MBTA extends to the incidental take of migratory birds resulting from otherwise lawful activities. As discussed in a previous post, the Fifth Circuit joined courts in the Eighth and Ninth Circuits in ruling that the MBTA does not prohibit incidental take. In contrast, other circuits, such as the Second and Tenth, have extended liability under the MBTA to incidental take in at least some instances. Continue Reading

California Air Resources Board Clarifies 2018 LCFS Targets and POET II Case Approaches Major Milestone

Posted in Environmental and approvals, Permitting

By Joshua Bledsoe and Kimberly Farbota

Recent guidance published by the California Air Resources Board (ARB) clarifies the treatment of diesel fuels under the Low Carbon Fuel Standard (LCFS) in light of the Court of Appeals’ May 30, 2017 decision in POET I. Meanwhile, in POET II, ARB recently filed a Motion for Judgment on the Pleadings (MJOP), in an attempt to have the lawsuit dismissed as moot before a hearing on the merits occurs. While the MJOP addresses all of the claims in POET II and various other filings have been made by the parties in connection with the motion (e.g., Requests for Judicial Notice, a Motion to Strike, etc.), this blog entry focuses only on the key aspects of the MJOP and POET’s opposition thereto.

New Guidance Regarding Implications of the POET I Decision

On November 22, 2017, the ARB posted regulatory guidance to clarify the scope of the writ of peremptory mandate issued by the Fresno County Superior Court on October 18, 2017 (the Modified Writ) to implement the May 30, 2017 POET I decision.

As we have discussed in previous posts, the POET I case arose from Petitioner POET, LLC’s challenges to the original LCFS regulation adopted by ARB in 2009. On April 10, 2017, the Court of Appeal ruled that ARB had failed to faithfully execute a writ of peremptory mandate requiring it to remedy violations of the California Environmental Quality Act (CEQA) that occurred during adoption of the original LCFS. In response to a petition for rehearing filed by ARB, the Court of Appeal reissued its opinion on May 30, 2017. Continue Reading

California Continues to Drive Toward Lower NOx Standards for Heavy-Duty Diesels

Posted in Energy regulatory

By Arthur Foerster and Jamie Friedland

On January 12, 2018, the California Air Resources Board (CARB) will conduct a public workshop regarding CARB staff’s potential amendments to California’s heavy-duty vehicle (HDV) emission warranty requirements. According to CARB staff, the workshop will focus on potential changes to Title 13, California Code of Regulations, Section 2036, and specifically, amendments to required emission warranty periods and manufacturer-scheduled maintenance. CARB staff will present the workshop as a webcast (available here).

Background

Under United States law, the federal Clean Air Act (CAA) generally preempts individual states from adopting their own emission standards. The Act, however, grants California the ability to seek authorization to set the state’s own more stringent standards. See 42 U.S.C. § 7543(b). Manufacturers generally prefer a single national standard and, as a practical matter, often follow CARB standards when they are stricter.

Under current CARB rules, the applicable warranty period for heavy-duty diesel vehicles and engines (i.e., class 4 through 8) is whichever of the following comes first: five years, 100,000 miles, or 3,000 operation hours. See 13 CCR § 2036(c)(4). CARB staff’s proposal would maintain the five-year limit, while eliminating hour limits and lengthening mileage limits. Specifically, the proposal would increase the mileage limits to the following:

  • 350,000 miles, for class 8 vehicles;
  • 150,000 miles for class 6 and 7 vehicles; and
  • 110,000 miles for class 4 and 5 vehicles.

Continue Reading

DOI Identifies Burdens to Energy Development on US Tribal Land

Posted in Environmental and approvals, Finance and project development

By Janice M. Schneider, Tommy P. Beaudreau, Stacey L. VanBelleghem, and Nikki Buffa

Stakeholders interested in energy development on US tribal lands will welcome recent Department of Interior (DOI) efforts that identify a key burden to energy development on these lands — as well as the Bureau of Indian Affairs’ (BIA’s) plans to address it. DOI issued the Review of the Department of the Interior Actions that Potentially Burden Domestic Energy report (DOI Burden Report) in response to Executive Order (EO) 13783, Promoting Energy Independence and Economic Growth, which required agencies to evaluate and report on all existing agency actions that “potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” (For more on the DOI Burden Report, please see this November 2017 Latham & Watkins Client Alert.)

The BIA, a federal agency within DOI, is charged with managing trust assets of American Indians, Indian tribes, and Alaska Natives. As BIA noted in the DOI Burden Report, royalty income from energy production on tribal lands totaled US$534 million in 2016 and constitutes the largest source of revenue generated from tribal trust lands. BIA identified its existing regulations governing Tribal Energy Resource Agreements (TERAs) as a policy that potentially burdens domestic energy. Continue Reading

BOEM Renewable Energy Task Force Discusses Potential New Wind Energy Areas Offshore New York

Posted in Finance and project development

By Tommy Beaudreau, Janice Schneider, and David Amerikaner

The Bureau of Ocean Energy Management (BOEM) convened the Intergovernmental Renewable Energy Task Force for the New York Bight to discuss BOEM’s draft Call for Information and Nominations (Call) on December 4, 2017. The meeting, which was held via a webinar, marked an important step in the process to identify potential new wind energy areas (WEAs) in federal waters off of New York. BOEM plans to publish the Call in the Federal Register for formal public comment in late January or early February 2018 after considering inter-governmental input on the draft Call areas. With publication of the Call, BOEM will initiate the area identification process to delineate up to four potential new WEAs in the New York Bight, each with the estimated potential to generate at least 800 megawatts of electricity in support of the state’s renewable energy goals.

BOEM issued the draft Call, including the four new potential WEAs, in response to the New York State Research and Development Authority’s (NYSERDA) request to review proposed WEAs in the waters off New York and to expedite the permitting process for offshore wind development. More information, including maps of New York’s Area for Consideration, is available on NYSERDA’s website.

New York is prioritizing the development of renewable energy, and adopted a Clean Energy Standard (CES) in 2016. The CES mandates that 50% of New York’s electricity come from renewable sources by 2030, with a phase-in schedule beginning in 2017. Offshore wind energy stands to play a key role in meeting New York’s CES goals, which include a target of 2.4 gigawatts (GW) of offshore wind power. New York is currently preparing an offshore wind Master Plan that outlines information about project siting and environmental and use conflicts within a 16,740 square-mile study area. The State is expected to issue the Master Plan soon.

Continue Reading

US Climate Science Special Report Reveals Significant Findings

Posted in Energy regulatory

By JP Brisson, Michael Dreibelbis, and Chris Antonacci

The  US Global Change Research Program (USGCRP) has released the Climate Science Special Report (CSSR or the Report). Published on November 3, 2017, this US-focused authoritative climate change science assessment  serves as a foundation for assessing climate-related risks and informing decision-making.

As Volume I of the Fourth National Climate Assessment (NCA4), the CSSR provides:

  • Updated analyses of climate change findings
  • Executive summary and other materials providing the basis for discussion of climate science found in Volume II  (forthcoming in 2018)
  •  Foundational information and projections for climate change ranging from “likely” to “worst case” scenarios

A previous draft of the CSSR was leaked to the New York Times in August 2017, in what some commentators saw as a way to prevent the Trump Administration from drastically altering the final version’s findings . With the exception of wording changes intended to water down some of the report’s conclusions, the final CSSR’s substance and core discussion was not materially different  from the August version — and reports indicate that there was no political interference with its drafting. For more information, please see Lisa Friedman and Glenn Thrush’s New York Times commentary, U.S. Report Says Humans Cause Climate Change, Contradicting Top Trump Officials.  The CSSR comes on the heels of the Government Accountability Office’s  climate change report, released on October 23, 2017 [GAO Releases Climate Change Report] which provides economic valuations, and policy recommendations associated with US climate change risks.
Continue Reading

GAO Releases Climate Change Report

Posted in Energy regulatory

By J.P. Brisson, Michael Dreibelbis, and Chris Antonacci

On October 24, 2017, the Government Accountability Office (GAO), the auditing agency of the US Congress, released a report on climate change titled, “Information on Potential Economic Effects Could Help Guide Federal Efforts to Reduce Fiscal Exposure” (the Report). GAO prepared the Report at the request of the US Senate’s Committee on Energy and Natural Resources to review potential economic effects of climate change and risks to the federal government. The Report represents the latest installment of GAO’s attempt to monetize and frame climate change’s risk to the federal government, following the GAO’s inclusion of “Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks” on its “High-Risk List” in 2013 and its 2015 “High-Risk Update” on climate change adaptation.

The Report finds that climate change could result in significant impacts to the US economy that may be unevenly distributed across US sectors and regions, and recommends that the Executive Office of the President work with appropriate federal entities to identify significant climate risks and develop appropriate responses. The Report highlights that the federal government has already incurred direct costs of more than US$350 billion dollars due to extreme weather and fire events over the past decade.

Report

In preparing the Report, GAO reviewed two national-scale studies and 28 other available studies and interviewed 26 experts and knowledgeable stakeholders, and compared government-wide efforts to manage climate risks with leading practices for risk management. This performance audit was conducted from December 2015 to September 2017. The Report notes the inherent uncertainties of climate modeling and the difficulty of forecasting climate change’s effects due to the confluence of two erratic factors – weather and economics. It is somewhat surprising that GAO, in 2017, could not find more than two reliable and comprehensive national studies on climate change, given its primacy in national and world politics in the last decade or longer.

Economic Impacts

The Report concludes that economic impacts associated with climate change could be significant and could increase over time as the end of the century approaches. The Report cites a study finding that the estimated net economic costs increase over time and that the likely combined direct economic effects of climate change on six sectors analyzed (health, labor, coastal communities, energy, agriculture, and crime) could reach between 0.7 and 2.4 percent of the US gross domestic product per year by the end of the century. For example, the Report adds, estimated costs for coastal property losses from sea level rise and increases in frequency and intensity of storms would result in US$4-6 billion per year in the near term to as great as US$51-74 billion per year by end of the century. The Report also cites another study finding similar potential economic impacts across its broad spectrum of sectors analyzed, including health, infrastructure, electricity, water resources, agriculture, and forestry.

Uneven Impacts Across Sectors

The Report, relying on the same two studies, states that potential economic effects of climate change will be likely be unevenly distributed across sectors. The human health, labor, coastal infrastructure, and energy sectors would likely be more heavily impacted than others such as agriculture and crime. For example, the Report suggests that infrastructure in coastal areas faces higher financial risks than other sectors or geographic regions.

The disparity is attributable to a combination of factors, chief of which include: (i) an increase in premature mortality from higher temperatures; (ii) reduced number of hours worked because of high temperatures; (iii) infrastructure damage from increased flooding and storm surge; and (iv) increased energy demand. The CCIRA study similarly suggested that emissions reductions would generally generate larger effects on sectors related to human health, water resources, and electric power, with driving factors including: (i) lost labor hours and premature mortality from poor air quality and extreme health in the health sector; (ii) costs to water users when sufficient water is not available; (iii) and costs to expand power system capacity in the energy sector.

Climate Change: Information on Potential Economic Effects Could Help Guide Federal Efforts to Reduce Fiscal Exposure, GAO (Oct. 24, 2017), https://www.gao.gov/products/GAO-17-720.

The Report notes that each sector’s ability to adapt to its climate change risk will produce uneven impacts on sectors. For example, “protective adaptation measures – such as beach nourishment, property elevation, shoreline armoring, and property abandonment – can reduce projected coastal property damage.”

Uneven Regional Impacts

The Report suggests that potential economic effects of climate change will be likely be unevenly distributed across regions as well. To illustrate, ACP reported that individual states could experience uneven impacts. By the end of the century, Vermont could possibly see a 0.8 to 4.5 percent annual benefit to economic output compared to Florida’s 10.1 to 24% net annual economic costs.

The Report also identifies anticipated types of climate impacts specific to different regions of the US, ranging from increases in coastal infrastructure damage and heat-related mortality in the Southeast, to a decreased agricultural yield and decreased cold-related mortality in the Midwest. A key study cited by the report notes that the Southeast, Midwest, and Great Plains regions will likely experience the greatest economic impacts in coming years.

Report’s Recommendations

The Report finds that collecting and identifying information on potential economic impacts of climate change is the first step toward effective climate risk management at the federal level. The Report points out the absence of any government-wide strategic planning efforts to help set clear priorities for managing significant climate risks before they become federal fiscal exposures, suggesting that, “climate change risk management efforts need to be focused where immediate attention is needed and that, by prioritizing federal climate risk management activities well, the federal government can help to minimize negative impacts and maximize opportunities associated with climate change.” The Report calls for more comprehensive information on economic effects to better understand potential costs of climate change to society to better inform decision maker’s cost-benefit analysis of different adaptation options. GAO recommended that the appropriate entities within the Executive Office of the President, including the Council on Environmental Quality, Office of Management and Budget, and Office of Science and Technology, use the information presented in the Report to help identify significant risks and craft appropriate responses to climate change on the federal level.

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