Seventh Circuit Upholds Illinois ZEC Program for Struggling Nuclear Units

On September 13, 2018, the Court of Appeals for the Seventh Circuit affirmed the trial court’s dismissal of claims that the zero-emission credit (ZEC) program enacted by the Illinois legislature in 2016 violated the U.S. Constitution’s dormant Commerce Clause and was preempted by the Federal Power Act. The Court took the unusual step of requesting an amicus brief from the Federal Energy Regulatory Commission (FERC).  FERC and the Department of Justice jointly filed a brief in response, arguing that the Illinois’ program neither interferes with interstate auctions nor is otherwise preempted by federal law.  Once FERC weighed in on the side of Illinois, a result in favor of the State was a likely conclusion.

Similar to the framework used for or “RECs,” Illinois’ ZEC program directs state regulators, based on defined criteria, to select certain nuclear plants to generate ZECs and then requires utilities to purchase those ZECs for a predetermined purchase price. The state-developed ZEC price is derived from the social cost of carbon, but is adjusted based on an index tied to wholesale power prices. The Electric Power Supply Association (EPSA), the national trade association comprised of many of the large, non-nuclear competitive power producers in the U.S., brought suit. The lower court dismissed those claims and the appeal ensued.

The crux of EPSA’s preemption argument rested on the premise that: (1) by propping up uneconomic nuclear units with ZECs, the state’s program impermissibly altered the total supply within the wholesale market, thus decreasing the amount ultimately paid to all generators in the annual capacity auction; and (2) that because the ZEC payments are made in connection with energy sales in the wholesale markets, over which FERC has exclusive jurisdiction, states may not interfere with that regulation. The court, however, rejected EPSA’s preemption argument, concluding instead that, “a state policy that affects price only by increasing the quantity of power available for sale is not preempted by federal law.” In reaching this result, the court distinguished the Illinois law from the state program rejected by the U.S. Supreme Court in Hughes v. Talen Energy Marketing. In upholding the ZEC program, the Seventh Circuit joined the Second Circuit in Klee, along with the Third Circuit’s pre-Hughes decision in Solomon, to rule that federal law does not preempt state policies that provide incentives to new or existing capacity.

Nor, according to the court, was the fact that the Illinois law tied the price for ZECs to capacity prices in FERC-regulated auctions a fatal flaw.  Unlike the state program rejected in Hughes, which incentivized new natural gas-fired generation facility by “tethering” state contract payments to the unit’s participation in the federally-regulated wholesale market auction, the receipt of the ZEC is not dependent on wholesale market participation.  Moreover, because, under the Illinois’ statute, every producer of power receives the same price for the ZEC, it did not impermissibly intrude on federal jurisdiction over the markets, even if that price may adjust based on market auction rates.  The Court determined that, “’[S]o long as a State does not condition payment of funds on capacity clearing the [interstate] auction, the State’s program [does] not suffer from the fatal defect that renders Maryland’s program unacceptable.’”

Neither was the court swayed by EPSA’s argument that the Illinois’ program violated the Constitution’s dormant Commerce Clause.  The Court stated that the “Commerce Clause does not ‘cut the States off from legislating on all subjects…[just because] the legislation might indirectly affect the commerce of the country.’” Instead, the court determined that the Federal Power Act calls for a balancing of federal and state interests with respect to the regulation of electricity.  Because the ZEC program did not overtly discriminate against out-of-state power producers, and the effects of the statute would be felt wherever power is used, the court concluded that the statute did not violate the dormant Commerce Clause.

The effect of the Seventh Circuit’s decision should not be underestimated.  One day following the release of the Seventh Circuit’s decision, the Ninth Circuit determined that Oregon’s low-carbon fuel standard did not unconstitutionally favor in-state versus out-of-state power producers.  So far, every decision since Hughes has distinguished Hughesand upheld such state regulatory programs.

Moreover, while not binding, the decision will likely play heavily into the case currently pending before the Second Circuit evaluating New York’s ZEC program.  While EPSA has not announced whether it will appeal the Seventh Circuit’s decision to the U.S Supreme Court, given FERC’s participation in the proceeding, and the fact that that the impact of state-sponsored programs can be mitigated through changes to the wholesale market rules, any appeal will face an uphill battle.  Indeed, the more interesting developments from the Seventh Circuit’s decision will not likely come from the federal courts, but will be what, if any, market reforms related to price formation FERC will institute as a result.

A Leaking Settling Pond Is Not A Point Source

On Wednesday, the 4th Circuit Court of Appeals reversed a District Court ruling and rejected the Sierra Club’s citizen suit against Virginia Electric Power alleging that releases of arsenic from a coal ash landfill and settling ponds at its Chesapeake Energy Center power plant violated the Clean Water Act and the plant’s NPDES permit.  Notably, the issue that most concerned me at the time of the District Court opinion, whether discharges to groundwater are subject to the CWA, it is now settled law in the 4th Circuit and the Court did not revisit it.  Discharges to groundwater with a direct hydrological connection to surface water are subject to the CWA in the 4th Circuit.

Instead, the 4th Circuit reversed on the ground that the landfill and settling ponds are not “point sources” under the CWA.  The Court concluded that neither a landfill nor a settling pond would constitute a:

discernable, confined and discrete conveyance.…  “Conveyance” is a well-understood term; it requires a channel or medium — i.e., a facility — for the movement of something from one place to another.…  [T]he landfill and ponds were not created to convey anything and did not function in that manner; they certainly were not discrete conveyances, such as would be a pipe or channel, for example. Indeed, the actual means of conveyance of the arsenic was the rainwater and groundwater flowing diffusely through the soil.

This all makes a certain amount of sense.  However, as the court itself noted:

The definition includes, “but [is] not limited to[,] any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft.” (My emphasis.)

I haven’t reviewed the briefs and I don’t know if it was argued, but if I were the Sierra Club attorney in this case, I would certainly have noted that a concentrated animal feeding operation, included by statute in the definition of a point source, would not constitute a point source under the 4th Circuit’s approach of focusing on a traditional understanding of the meaning of the word “conveyance.”

This case is not likely to be a one-off and I’ll be interested to see if other courts take a similarly narrow view of the “conveyance” language in the statute.

We May Not Always Have Paris, But Perhaps We Can Do Better Than Paris

Earlier this week, the Climate Leadership Council released an analysis demonstrating that the “Baker Shultz Carbon Dividends Plan” would result in greater reductions in greenhouse gas emissions than the US committed to attaining under the 2015 Paris agreement.  I don’t doubt that the CLC analysis is right.  If I had to guess, I’d predict that they probably underestimate the reductions that would be reached with a robust carbon tax.

I understand the difficulty in convincing what passes for the GOP base at this point – and the GOP members of Congress – to endorse the carbon tax.  Oops, I meant dividend.  I’m hopeful that enough members will come around at some point.  My real worry is that the environmental movement will reject the plan because it calls for elimination of current regulations concerning carbon.

Years ago, Gina McCarthy used to say quite freely that the Obama administration would get most of its carbon reductions, not from direct regulation of GHG emissions, but instead from all of the other air regulations it was promulgating, such as the power plant MACT standards.

What environmentalists have to remember is that the reverse is also true – any robust program to reduce carbon emissions will also lower emissions of conventional pollutants.  Indeed, in defending the Clean Power Plan, environmentalists have made that very argument.  Why not acknowledge the same point in connection with a carbon tax and give up on a set of regulations that have always been clunky at best, are nowhere near as efficient a regulatory tool as a carbon tax, and which, as compared to a carbon tax, really benefit no one other than environmental lawyers and consultants?

God, wouldn’t it be a breath of fresh air to see Congress actually get something big done for the American people?  Let’s not screw this one up.

Municipalities May Regulate the Local Impacts of Pipelines Without Violating the Commerce Clause

On Friday, Judge John Woodcock held that an ordinance enacted by the City of South Portland, Maine, that prohibited loading crude oil from a pipeline terminating in South Portland onto tankers in South Portland Harbor, in order to prevent certain adverse local impacts, did not violate the Constitution’s Commerce Clause.  It’s potentially a very important decision in this area.  Congratulations to my partner Jonathan Ettinger and our entire team that worked on the case.  You can read more about it here.

EPA Proposes To Replace the Clean Power Plan. How About a Proposal To Replace Its Benefits?

EPA has finally released its proposed replacement for the Clean Power Plan, dubbed the Affordable Clean Energy Rule.  More affordable than clean, I’d say.

What’s really telling is that EPA’s own analysis shows that the CPP would have delivered significantly more benefits than ACE.  And that goes for both direct benefits in GHG emissions reductions and indirect benefits related to reductions in traditional criteria pollutants.

First, with respect to GHG emissions, the ACE Rule Fact Sheet states that it will reduce CO2 emissions by up to 30 million short tons in 2025, yielding $1.6 billion “in monetized domestic climate benefits.”  This statement is interesting for at least two reasons.  First, it acknowledges that reducing CO2 emissions results in “monetized domestic climate benefits.”  I guess climate change isn’t a hoax, after all.  Second, ACE will yield less than 1/10 the CO2 reductions that the CPP would have done, making that $1.6 billion seem fairly paltry.

Second, the Regulatory Impact Analysis prepared for the proposed rule makes clear that lost indirect benefits resulting from replacing the CPP with ACE are quite substantial.  Substantial, as in hundreds of additional premature deaths each year due to higher particulate emissions rates in the ACE.

I’ve always been sympathetic to the argument that the CPP was legally vulnerable in attempting to regulate outside the fence line.  However, shouldn’t that be a moot point?  If the Clean Power Plan would deliver significantly more “monetized domestic climate benefits” than ACE and if it would deliver substantial indirect public health benefits – and there seems little doubt it would do both – then shouldn’t EPA be figuring out a way to get the authority it needs to implement it?

If EPA were an agency that actually cared about it mission to protect the public health from environmental risks, then the debate would be over how to give it the authority it needs to do its job; EPA would not be trumpeting that is doing less to protect the public health.

Another Day, Another Reversal of an EPA Regulatory Delay

On Friday, the D.C. Circuit Court of Appeals vacated EPA’s “Delay Rule”, which postponed compliance with EPA regulations governing preparation of Risk Management Plans under the Clean Air Act.  The decision comes only one day after another court decision vacating the “Suspension Rule” which postponed the Waters of the United States Rule.

Memo to EPA General Counsel’s office.  If something labeled “Delay Rule” or “Suspension Rule” comes across your desk, you might want to give it a careful read.

This case in particular makes clear the sad irony in this Administration’s approach to statutory implementation.  For years, the GOP has complained that a runaway EPA has ignored the plain text of the statutes it is charged with implementing.  In this case, the statute could not be clearer that, presented with a petition to reconsider a rule under this section of the Clean Air Act, EPA may stay implementation of the rule for up to 90 days.

Here, EPA first stayed the rule for 90 days, but then stayed the rule for 20 months.  In doing so, EPA pointed to its general rulemaking authority under the Act, ignoring the plain language of the provisions directly governing the regulations at issue.  The Court was having none of it:

But regardless whether EPA “believe[s] that three months [is] insufficient to complete the necessary steps in the reconsideration process,” that is not EPA’s call. Congress saw fit to place a three-month statutory limit on “such reconsideration,” and this court “must give effect to the unambiguously expressed intent of Congress.”

Sounds like a court reining in an out-of-control agency in order to ensure that the agency actually follows the law.

Can you say “hoist on its own petard?”

How Much Does Trump Even Care About Deregulation?

On Thursday, the Trump Administration’s “Suspension Rule,” which delayed implementation of the Obama Waters of the United States Rule for two years was struck down.  Judge David Norton of the District of South Carolina issued a nationwide injunction against the rule.

It’s important to note that the case was not about the merits of the WOTUS rule.  It was simply about the Trump administration’s failure to comply with the Administrative Procedure Act in promulgating the Suspension Rule.

Which brings me to the point of this post.

The Administration’s failure to comply seems so obvious that one has to wonder whether the Administration even cared whether the Suspension Rule could survive judicial review.  Indeed, this case seems part of a clear pattern.  The Court noted as much in quoting a summary of such cases from the plaintiffs’ brief:

Clean Air Council v. Pruitt (vacating the EPA’s attempt to temporarily stay a Clean Air Act regulation without “comply[ing] with the … APA”); Open Communities All. v. Carson, (enjoining the defendant agency’s attempt, “without notice and comment or particularized evidentiary findings, … [to] delay[] almost entirely by two years implementation of a rule” adopted by the previous administration); Pennsylvania v. Trump (enjoining two new “Interim Final Rules” based on the defendant agencies’ attempt to “bypass notice and comment rule making”); Nat’l Venture Capital Ass’n v. Duke (vacating the defendant agency’s “decision to delay the implementation of an Obama-era immigration rule … without providing notice or soliciting comment from the public”); California v. U.S. Bureau of Land Mgmt. (holding that the defendant agency’s attempt to postpone a regulation’s compliance dates “after the rule’s effective date had already passed … violated the APA’s notice and comment requirements by effectively repealing the [r]ule without engaging in the process for obtaining comment from the public”); Becerra v. U.S. Dep’t of the Interior, (holding that the defendant agency violated the APA in “fail[ing] to give the public an opportunity to weigh in with comments” before attempting to postpone a rule that had already taken effect).

To which the Court added its own footnote:

To this litany of cases, the court adds two more from the last several months— Nat. Res. Def. Council v. Nat’l Highway Traffic Safety Admin. and Children’s Hosp. of the King’s Daughters, Inc. v. Azar. As these cases make clear, this court is but the latest in a series to recently find that an agency’s delay of a properly promulgated final rule circumvented the APA.  (My emphasis.)

I find it hard to believe that numerous smart lawyers, across a range of agencies, all suddenly forgot what the APA requires.  Isn’t it more likely that the Administration simply doesn’t care about the outcome?  The government of the most powerful nation on earth, that likes to think that it taught the world about democracy, doesn’t care about governing.  All it cares about is having Twitter material, to feed to its adoring fans and, equally importantly, to bait its many critics.

Court Orders EPA to Ban Chlorpyrifos: No Escaping Jurisdiction After 10 Years of Delay

Last week, the 9th Circuit Court of Appeals ordered EPA to revoke all tolerances for chlorpyrifos within 60 days.  It’s another fairly devastating indictment of the Trump administration.

First of all, the merits were pretty clear.  Clear enough that the administration did not attempt to defend the case on the merits!  The statutory language requires EPA to ban pesticides from use on food products unless:

There is a reasonable certainty that no harm will result from aggregate exposure to the pesticide.

After many years of delay in responding to a petition to ban chlorpyrifos (the Bush and Obama administrations were not exactly covered in glory in this case, either), the Obama administration did propose to ban chlorpyrifos.  However, before the proposal was finalized, the Trump administration changed course and denied the petition.  Why?  Because:

The science addressing neurodevelopmental effects remains unresolved.

How the administration thought that it could justify denying the petition on the basis of scientific uncertainty, when the statute requires a ban unless the science shows with “certainty” that the product will not cause harm is just one of those sweet mysteries of how a bureaucracy responds to a force of nature such as Trump or Pruitt.  One might have thought that at least one lawyer at EPA would have pointed out that the rationale for denying the petition was actually an admission that EPA had an obligation to grant the petition!

The outcome turned on whether the Court had jurisdiction to hear the case.  EPA argued that there was an administrative process for appealing the denial of the petition, that petitioners had failed to exhaust that administrative remedy, and thus that the Court was deprived of jurisdiction.

Distinguishing between jurisdictional rules and claim-processing rules, the Court concluded – rightly, I think – that the failure to exhaust administrative remedies did not deprive the Court of jurisdiction.  The Court’s frustration with years of EPA delay certainly played a role in its conclusion:

Over the past decade and more, the EPA has stalled on banning chlorpyrifos, first by largely ignoring a petition properly filed pursuant to law seeking such a ban, then by temporizing in response to repeated orders by this Court to respond to the petition, and, finally, in its latest tactic, by denying outright our jurisdiction to review the ultimate denial of the petition, even while offering no defense on the merits. If Congress’s statutory mandates are to mean anything, the time has come to put a stop to this patent evasion.

Justice delayed is justice denied.

Winston Churchill and Fuel Economy Standards

So the Trump administration has formally proposed to roll back CAFE standards for model years beginning in 2021.  And California has announced its intention to start separately enforcing its own standards if the federal standards are weakened.  Trying to sort it all out, I was somehow reminded of the famous Winston Churchill statement:

Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…

No one who’s thought seriously about the environmental impacts of emissions from cars can really argue that CAFE standards are a good way to go about it.  They are just a way to tax emissions by subterfuge.  In one of the few statements in the proposed rulemaking with which I agree, NHTSA and EPA state that:

There remains no single technology that the majority of vehicles made by the majority of manufacturers can implement at low cost without affecting other vehicle attributes that consumers value more than fuel economy and CO2 emissions.

Well, sure – but consumers don’t face the actual costs imposed by their driving, because the externalities resulting from motor vehicle fuel consumption aren’t factored into the price.  Of course consumers don’t value reductions in emissions.  If emissions were factored into the price of gasoline, consumers would by definition “value” emissions, because they’d be paying for them.

In the power plant context, I’ve long been a supporter of some kind of grand bargain that would trade elimination of New Source Review for either a cap-and-trade program or a carbon tax.  Why not an even grander bargain.  Let’s call it the grandest bargain – an economy-wide carbon tax at really meaningful levels in return for elimination of both NSR and CAFE standards.

I admit that some details would have to be worked out, but I’m just an ideas man.  I’ll leave implementation to Congress.  After all, isn’t the U.S. Senate the world’s greatest deliberative body?

Dog Bites Man: Scott Pruitt Edition

According to Greenwire (subscription required), EPA has acknowledged that it possesses no records providing a factual basis for claims made by Scott Pruitt that GHG emissions are not a primary contributor to global warming.

As we noted in June, EPA opposed a FOIA request seeking documents supporting Pruitt’s statements, and the Court ordered EPA to provide responsive documents.  Except that, apparently, there aren’t any.

Gosh, I’m surprised.  I guess EPA was just waiting for the Red Team – or perhaps it would have been the Blue Team – to complete its work compiling the evidence against anthropogenic climate change.

Massachusetts Passes “Minibus” Clean Energy Bill

On July 31, the Massachusetts Legislature passed H.4857, An Act to Advance Clean Energy.” The bill, released late on July 30, was the result of a compromise between the Senate’s broad, omnibus bill passed in early June and the House’s more modest proposals, passed piecemeal in mid-July. Among other things, the bill:

  • increases opportunities for energy efficiency by expanding the definition of qualifying programs;
  • increases the Renewable Portfolio Standards (“RPS”) from 1% to 2% annually from 2020 through 2029, bringing the overall RPS to 35% by 2030;
  • establishes a Clean Peak Standard (“CPS”);
  • sets a storage target goal of 1,000 megawatt hours (“MWh”) by 2025;
  • creates a path for the solicitation of an additional 1,600 megawatts (MW) of off-shore wind;
  • clarifies what information distribution companies must provide to solar net metering customers prior to imposing demand charges;
  • allows distribution companies to consider and solicit for non-wire alternatives for the resiliency of their distribution systems; and
  • requires the Department of Energy Resources (DOER) to study the feasibility of mobile battery storage systems.

While the bill touches upon many issues of interest for stakeholders in the energy arena, the most significant aspects of this bill are the provisions that establish a CPS, create the energy storage target program, and create a path for additional procurements under Section 83C that would double the currently authorized amount of off-shore wind procurements from 1,600 MW to 3,200 MW.

In adopting the CPS, the legislation requires that every retail electric supplier shall provide a “minimum percentage of kilowatt-hours sales to end use customers from clean peak resources.” The concept is similar to the framework currently used for RPS purposes, but in addition to the “clean” requirement, the resource must also be delivered during a defined peak period.  The legislation defines a clean peak resource as “a qualified RPS resource, a qualified energy storage system or a demand response resource that generates, dispatches or discharges energy to the electric distribution system during seasonal peak periods, or alternatively, reduces load on said system.” Details related to the implementation of the CPS program are not well developed in the legislation itself; instead, the Legislature granted broad authority to DOER to promulgate rules to implement the program, including but not limited to the methodology for determining clean peak values, the process by which distribution companies procure clean peak certificates, and alternative compliance mechanisms for retail suppliers. Given the broad discretion afforded DOER in the development of these program rules, and the relatively short time-frame in which to accomplish the task, the stakeholder process around CPS will likely be robust.

In addition to the storage opportunities created by the CPS, the bill also establishes an energy storage target of 1,000 MWh by December 31, 2025. The bill again grants DOER discretion to implement a range of policies to achieve the 1,000 MWh target and to “encourage the cost-effective deployment of energy storage systems.” It also requires distribution companies to report annually, beginning in February 2019, on energy storage installations in their service territories. It is evident from the bill that the Legislature sees storage as a major player on the road to a renewable future, and this program affords storage another opportunity to fulfill that role.

With respect to the authorization to solicit an additional procurement of off-shore wind, the bill directs the DOER to investigate “the necessity, benefits, and costs” of requiring the electric distribution companies to procure an aggregate of 1,600 MW of offshore wind, “in addition to the solicitations and procurements required by section 83C…and may require said additional solicitations…by December 31, 2035.” This section of the legislation also allows DOER to impose additional requirements for these procurements, and expressly mandates that any selection of off-shore wind energy transmission “shall be the most cost-effective mechanism for procuring reliable, low-cost off-shore wind energy transmission service for ratepayers in the commonwealth.” With the regulatory proceedings related to the first 1,600 MW tranche of off-shore wind just getting underway at the Department of Public Utilities, stakeholders will likely be watching and waiting for a sign from DOER of its intent to seek additional procurements under this newly enacted law.

Overall, the bill developed by the House and Senate conferees and ultimately passed by the bodies, is far more modest than that proposed by the Senate in S.2545; the final legislation drops provisions in the Senate version that would have:  eliminated the caps on net metering; established interim CO2 emission targets; potentially expanded the Section 83D procurements; and established market-based mechanisms for CO2 reduction across all sectors, including transportation. Even in its pared down version, the legislation ultimately adopted by the bodies still cements the Commonwealth’s reputation as a leader in energy efficiency and renewable resource development. There can be no doubt, however, that the cumulative effect of increases to the RPS, the creation of the CPS and the potential for doubling the off-shore wind procurements will affect the competitive wholesale electricity markets. The next few years will be interesting as the Commonwealth continues to implement its clean energy policies and the regional electric grid transitions toward a renewable future.

Score One For Rational Regulation: The 2nd Circuit Rejects Environmental and Industry Challenges to EPA’s Cooling Water Intake Structure Rule

On Monday, the 2nd Circuit Court of Appeals rejected all challenges to EPA’s cooling water intake structure rule.  Notwithstanding the Court’s rejection of the industry challenges, it’s a big win for industry.  As I noted when the rule was promulgated, industry dodged a major bullet when EPA decided not to require closed-cycle cooling at existing facilities.

The decision is really all about Chevron deference and is another bit of evidence in support of my ongoing effort to demonstrate that conservatives might want to be careful what they wish for when they discuss overruling Chevron.

The most significant element of the decision was the holding that EPA’s use of cost-benefit analysis in the rule was consistent with the CWA.  While at some level this was merely an extension of the Supreme Court’s holding in Entergy v. Riverkeeper, it’s nonetheless an important decision in its support for EPA’s approach to cost-benefit analysis in the rule.

Overall, I think the case represents a rare breath of good news on the environmental front.  EPA’s rule was, on balance, a model of good rulemaking.  EPA spent a lot of time taking comment from and listening to the regulated community.  It ultimately issued a rule that imposed stringent standards on the facilities that – literally – use 99.8% of all water withdrawn for industrial purposes in the United States, while giving those facilities substantial flexibility in how to meet the standards.  The Court applied Chevron deference to EPA’s statutory interpretation and traditional APA deference to EPA’s conclusions from the record, and affirmed EPA across the board.

Might I suggest that this is how rulemaking and judicial review are supposed to work?

The D.C. Circuit Holds that Hydroelectric Facilities May Not Ignore Historic Impacts In Relicensing

Earlier this month, the D.C. Circuit Court of Appeals issued a decision that is a must-read for anyone who will be needing at some point to relicense an existing hydroelectric facility.  The short version is the status quo may no longer be good enough and dam operators may have to improve on existing conditions in order to succeed in relicensing.  At a minimum, facility operators will have to take the cumulative impacts of dam operation into account in performing environmental assessments under NEPA required for relicensing.

The case involves a series of dams on the Coosa River operated by the Alabama Power Company.  The licenses were due to expire in 2007.  Alabama Power timely applied to renew the licenses.  FERC duly issued an environmental assessment and issued a FONSI, a Finding of No Significant Impact.  Later, in 2012, the Fish & Wildlife Service, issued a biological opinion that relicensing would not “jeopardize” any threated or listed species.  In 2013, FERC issued a new license.  In response to a request from Alabama Power, FERC granted a request by Alabama Power to loosen a critical condition in the license concerning the maintenance of dissolved oxygen levels.  The litigation followed.

It’s a long and complicated opinion.  Here are the highlights.

First, with respect to the biological opinion, FWS “acknowledged the precarious state of certain species in the area.”  Nonetheless, FWS “failed to incorporate the environmental baseline into its jeopardy analysis.”  The Court concluded that this was a no-no:

Even where baseline conditions already jeopardize a species, an agency may not take action that deepens the jeopardy by causing additional harm.

It did not help that the Biological Opinion predicted 100% mortality for certain listed species.  Notwithstanding this conclusion, the court held that BiOp failed to “explain how a one hundred percent incidental take for multiple species is not likely to result in jeopardy.”

FERC’s NEPA environmental assessment did not fare any better; the Court concluded that it was “rife with flaws.”  In its analysis of fish passage issues, the Court could not resist this pithy summary:

The Commission’s acceptance, hook, line, and sinker, of Alabama Power’s outdated estimates, without any interrogation or verification of those numbers is, in a word, fishy. And it is certainly unreasoned.

The most important aspect of the Court’s decision probably concerns its discussion of cumulative impacts, because it is the one that may be more broadly applicable to other relicensing proceedings.  The Court made clear that cumulative impacts include “all past impacts of the dams’ construction and operation, including the enduring or ongoing effects of past actions.”  Because the analysis of the Coosa River dams failed to do so, the Court concluded that it violated NEPA.

These cases are fact-intensive and what the Court found here may not be applicable in other situations.  I don’t see the Supreme Court thinking that it needs to hear this case.  Thus, whatever one might think of it on the merits, it’s going to be an important case in this area for some time.

Two Strikes Against Climate Plaintiffs; the New York Case Is Dismissed.

On Thursday, Judge John Keenan dismissed New York City’s climate damages law suit against five oil majors.  The basis for the decision was the same as in last month’s decision dismissing similar claims in California:

  • Because climate change is an interstate and international problem, such claims cannot be resolved under state law; if such claims are valid, they must be brought under federal common law.
  • The City’s claims interfere with the separation of powers and the conduct of foreign policy, because the claims relate to international emissions of greenhouse gases.

That’s pretty much it.  Two more points.  First, as in California, the City argued that its claims were not displaced by the CAA, because they related to the oil companies’ production and marketing of fossil fuels, not the emissions that resulted from their combustion.  The Court wasn’t buying it:

Regardless of the manner in which the City frames its claims in its opposition brief, the amended complaint makes clear that the City is seeking damages for global-warming related injuries resulting from greenhouse gas emissions, and not only the production of Defendants’ fossil fuels.

Second, the City argued that, if federal claims are displaced, then it should be able to bring state law claims.  However, as the Court noted:

The City has not sued under New York law for claims related to the production of fossil fuels in New York.  The City brings claims for damages caused by global greenhouse gas emissions resulting from the combustion of Defendants’ fossil fuels, which are produced and used “worldwide.”

Case dismissed.  I expect plaintiffs to keep trying, certainly as long as the administration blocks federal regulatory action.  Still, it’s hard to see the path forward for these cases at this point.  Only two strikes, but the plaintiffs seem to be out for now.