Massachusetts Energy Bill Emerges from Senate Committee on Ways and Means

windmill-640x426-1Last Friday, the Senate Committee on Ways and Means released its version of the energy bill that passed the House earlier this month. Whereas the House bill would require distribution companies to procure 1,200 MW of offshore wind power by 2027 and 9,450,000 MWH of hydroelectric power by 2022, the Senate’s version would require 2,000 MW of offshore wind by 2030 and 12,450,000 MWH of “clean energy generation” by 2018. Importantly, the Senate defines “clean energy generation” more broadly to permit new Class… More

I Have Seen the Future and It Is Hot and Wet

The City of Boston has just released its “Climate Projections Consensus.”  It’s not a pretty picture.  Here are the lowlights:

  • Average summer temperatures will be 4-5 degrees F. warmer by 2050 Boston temps
  • Even with “moderate” emissions reductions, see level rise is likely to be between 1.5 feet and 2.5 feet by 2070.
  • The number of “extreme precipitation” events has been increasing and that increase will continue.

On this day after the Brexit, one wishes that we could just take a vote to leave.  Unfortunately, as Ben Franklin said, I think we must all hang together, or assuredly we shall all hang separately.  join or die

 

 

BLM Has No Authority To Regulate Fracking, At Least For Now

Yesterday, Judge Scott Skavdahl of the District of Wyoming held that the Bureau of Land Management did not have authority to regulate the environmental impacts of fracking.  frackingI think Judge Skavdahl probably got it right, but I also think it’s a much closer question than the Judge acknowledged and I could imagine either the 10th Circuit or the Supreme Court reaching a different conclusion.

Judge Skavdahl first reviewed the various statutes cited by BLM as providing authority for the rule.  He concluded that none of them specifically authorize fracking regulation by BLM and, moreover, than none seem to provide BLM with any kind of environmental regulatory authority.  However, as the Judge recognized, through the Federal Land policy and Management Act of 1976:

Congress authorized the BLM, “by regulation or otherwise,” to “take any action necessary to prevent unnecessary or undue degradation of the lands” and to promulgate regulations necessary to achieve FLPMA’s goals.

Absent anything else, that seems to me unambiguously to provide BLM with sufficient authority to regulate fracking.  One might even say that the very purpose of statutes such as the FLPMA is to provide such general authority – precisely because Congress is aware that it cannot anticipate every specific evil that might make itself known in the future.

Here’s where it gets more tricky.  The Safe Drinking Water Act authorizes EPA to regulate “underground injection.”  Until 1997, EPA took the position that its authority over UI did not give it power to regulate fracking.  In 1997, in Legal Envtl. Assistance Foundation v. EPA, the 11th Circuit Court of Appeals rejected EPA’s position, concluding that the SDWA unambiguously did give EPA such authority.

Congress responded to the LEAF case in the Energy Policy Act of 2005, explicitly excluding fracking from the definition of UI (unless the fracking involves diesel fuel).  To Judge Skavdahl, the Energy Policy Act was determinative.  How could Congress forbid EPA from regulating fracking, but still allow BLM to do so?  Judge Skavdahl was particularly persuaded by the fact that EPA had specific authority over fracking, whereas BLM does not, and EPA is the environmental regulatory agency, whereas BLM is a land management agency.

These arguments have some force, and they may be right, but they are not as compelling to me as they were to the Judge.  I would pose the question a different way.  Congress obviously knew how to limit EPA’s authority.  It could have done the same for BLM as it did for EPA.

Isn’t it equally possible that Congress precluded EPA from regulating fracking, precisely because it preferred to leave authority over fracking on federal lands with BLM?  Perhaps it wanted BLM, rather than EPA, in charge of fracking, because BLM has a statutory obligation to balance productive use of federal lands with preservation of those lands, while EPA’s only mandate is environmental protection.

I don’t know if BLM made those arguments before Judge Skavdahl, but that’s the case I’d make on appeal, were I in BLM’s unenviable position.

Minnesota May Not Prohibit Power Sales That Would Increase Statewide CO2 Emissions. Why Not? Pick Your Reason.

If you needed any further proof that energy elec_mag_fieldlaw is very complicated, Wednesday’s decision in North Dakota v. Heydinger should convince you.  The judgment is simple – the 8th Circuit Court of Appeals struck down a Minnesota statute which provides in part that:

no person shall . . . (2) import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or (3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions.

Why, you ask?

  • The panel  opinion, by Judge Loken, stated that the Minnesota statute violates the dormant Commerce Clause, by regulating purely “extraterritorial” economic activity.
  • Judge Murphy, in the first concurrence, disagreed with Judge Loken’s conclusion that the statute violates the dormant Commerce Clause, but joined the judgment, because she concluded that the statute is preempted by the Federal Power Act.
  • Judge Colloton, in the second concurrence, agreed with Judge Murphy that the statute does not violate the dormant clause, but also concurred in the judgment. Judge Colloton concluded that, to the extent that the “statute bans wholesale sales of electric energy in interstate commerce,” it is preempted by the Federal Power Act.  However, Judge Colloton wrote separately, because he at least partially disagrees with Judge Murphy (as well as with Judge Loken) and does not believe that the Minnesota statute constitutes a complete ban on wholesale sales of energy that increase CO2 emissions.  However, Judge Colloton concluded that, to the extent that the statute is not preempted by the Federal Power Act, it is preempted by the Clean Air Act.

Is that sufficiently clear?

I do feel compelled to add two final notes.  First, I don’t understand why Judge Loken wrote the panel opinion, when his rationale did not command a majority.  Indeed, as Judge Colloton pointed out, the Court should not even have reached the constitutional issue, since a panel majority existed that was prepared to strike down the Minnesota statute on statutory grounds.  (Preemption is considered a statutory, not a constitutional, rationale.)

Second, don’t analogize the electric energy transmission to the flow of water in a pipe, at least before Judge Murphy.  Here’s your electricity and magnetism primer for the day, courtesy of the Judge.

In the electricity transmission system, individual electrons do not actually “flow” in the same sense as water in a pipe. Rather, the electrons oscillate in place, and it is electric energy which is transmitted through the propagation of an electromagnetic wave.

Certainly brought me back to course 8.02 at MIT.  Not one of my favorites.

NEPA Does Not Require An Agency To Guarantee Project Compliance with Environmental Laws

In an interesting decision last week, the 9th Circuit Court of Appeals rejected challenges to BLM’s decision to issue a right-of-way permit for Tule Wind’s plan for a wind farm southeast of San Diego.  tule-support-buttonIt’s not exactly earthshattering, but it is a helpful decision both for decisionmakers reviewing wind farm applications and for wind farm developers.  Here are some of the highlights:

  • BLM’s inclusion of DOI’s goal under the 2005 Energy Policy Act to increase nonhydropower renewable energy on federal lands as part of the “purpose and need” statement under NEPA was appropriate.
  • Exclusion of a distributed generation alternative was appropriate, at least in part because use of rooftop solar to generate the same amount of power would have required 100,000 new rooftop solar units and BLM reasonably concluded that such a massive expansion of rooftop solar would be “speculative.”
  • Use of an “adaptive management plan” as part of the mitigation measures was reasonable.
  • BLM approval of the right of way did not violate the Migratory Bird Treaty Act, even assuming that the project would result in migratory bird fatalities, where BLM was acting in a “purely regulatory capacity” and nothing BLM did would be a proximate cause of any “take” of migratory birds.

This last is probably the most important aspect of the case.  As BLM noted, its approval of the right-of-way is contingent upon Tule Wind complying with all applicable laws – meaning that, if operation of the wind farm might cause a take, it had better comply with the MBTA and the Bald and Golden Eagle Protection Act.

The potential significance of this aspect of the case is indicated by the fact that, within a day of the Court’s decision, both the plaintiffs and the defendant in the Cape Wind litigation had sent letters to the court in that case discussing whether the holding in the Tule Wind case applied to the Cape Wind appeal.  Plaintiffs there distinguished Cape Wind from Tule Wind, so time will tell, but it is certainly an issue that may recur.

One Final Word on Peterborough Oil: Yes, MTBE Is An Additive

The final answer to the critical issue raised by the recent Peterborough Oil Company decision is that MTBE is an additive and is not, in MassDEP’s view, subject to the “oil exemption” under the Massachusetts Contingency Plan.

I have to say that I’ve done few posts in recent years that have prompted more immediate responses than those on this case.  After yesterday’s little birdie suggesting that MassDEP might be taking the position that MTBE is subject to the oil exemption, another little birdie, this time from MassDEP, quickly contradicted the first one.

Not only is the second little birdie from the horse’s mouth, bird horseas it were, but she pointed me to the following MassDEP MCP Q&A from 2008:

QUESTION: 793. I have two release sites in Zone II’s whose groundwater is categorized as GW-1 solely because of the Zone II. They are a former and a current gasoline station located in a commercial district served by municipal water supply. There are no on-site or offsite impacts, however we have not achieved GW-1 standards at either location. We are trying to achieve closures via Method 3 risk characterizations. At one of the sites, all gasoline-related contaminants have been reduced to less than GW-1 standards except for MTBE. In regard to the new section dealing with Zone II’s under 40.0924(2)(b)3.a., which is applicable to Oil contamination, does Oil include MTBE associated with gasoline? (i.e. can this section be used for a site with residual MTBE contamination above GW-1 standards?)

ANSWER: It is not explicit in the definition of Oil that MtBE is excluded, but it is the Department’s intent that MtBE not be included. The attached link [which I’ve deleted because it appears to be broken] contains MassDEP’s response to comments on the proposed regulations. On page 7 of the comments you will see that MassDEP was asked to consider including MtBE under the proposal and our response indicates that we chose not to include MtBE. The reasoning for not including MtBE is because it does not biodegrade readily and within a short distance from the source area as do the petroleum constituents.

Seems right to me.  End of story, finally?

More on the Peterborough Oil Case: Is MTBE An “Additive”?

Since yesterday’s post on the Peterborough Oil case, a little birdie told me that MassDEP may be taking the position that MTBE mtbeis covered by the “oil exemption”, because it is a hydrocarbon.  If so, that would be good news for PRPs, because most cleanups don’t involve third parties.  If MassDEP says that MTBE is covered by the exemption, then a PRP cleaning up a site with an “oil” release containing MTBE could still close out the site based on the MassDEP interpretation.

However, I think that that interpretation is at best on shaky ground and if I were litigating a private action where the scope of an MTBE cleanup was at issue, I know which side I’d rather represent.  EPA’s MTBE web site states that:

MTBE(methyl tertiary-butyl ether) is a chemical compound that is manufactured by the chemical reaction of methanol and isobutylene. MTBE is produced in very large quantities (over 200,000 barrels per day in the U.S. in 1999) and is almost exclusively used as a fuel additive in motor gasoline.

I don’t think anyone would dispute that the environmental concerns with MTBE relate to its use as an “additive” in gasoline to increase octane.  The SJC decision certainly seems to take the position that additives are not subject to the oil exemption.

If MassDEP believes that MTBE in gasoline poses different risks of migration than lead in gasoline, and that those different risks justify different regulatory treatment, that would be excellent news for PRPs – but that’s not the exemption that MassDEP promulgated.

When Is Gasoline Not Oil (At Least In Massachusetts)? When It’s Leaded, Of Course.

Unlike CERCLA, the Massachusetts Superfund law, Chapter 21E, does include oil within its ambit.  However, oil is not treated exactly the same as hazardous materials.  One difference is that, in 2007, MassDEP revised the Massachusetts Contingency Plan to provide that, in certain circumstances, where “Contamination is limited to oil,” the exposure point concentration is measured at the Public Water Supply well, rather than in each of the monitoring wells, as is otherwise the case.

It is understood that oil includes gasoline, but what if the spill was in 1994 and the gasoline was leaded?  leaded gasYesterday, the SJC ruled in Peterborough Oil Company v. DEP that “additives” are not covered by the oil exemption, so that compliance with MCP standards for lead must be measured at the monitoring wells and not at the Public Water Supply wells.

I think that this would have been a close question, but for one fact.  The exemption was promulgated by MassDEP by regulation in 2007.  At the time, MassDEP received a comment requesting that the regulation apply explicitly to additives, and MassDEP replied to the comment by stating that the “proposal was not extended to additives.”  I think that MassDEP gets to interpret its own regulatory proposals, at least in this context.

It’s important to note that the decision in Peterborough Oil applies to any additive, mtbeso it would appear that the oil exemption also would not apply to MTBE – and any other hazardous substances that are not present in oil or products refined from oil, but which instead are added to the oil for some functional purpose.

If You Don’t Like Nukes, Petition Congress: The D.C. Circuit Affirms the NRC’s GEIR On Nuclear Waste Storage

On Friday, the D.C. Circuit Court of Appeals rejected challenges by several states and the NRDC to the Nuclear Regulatory Commission’s Generic Environmental Impact Statement analyzing the impacts of continued on-site storage of spent nuclear fuel.  Yucca MountainThe decision is largely a plain vanilla application of Administrative Procedure Act deference to agency decisionmaking, but there were a few interesting nuggets.

  • The Court agreed with the NRC that the GEIR itself was not a licensing action, and thus did not require that the NRC consider alternatives to licensing.
  • The GEIS discussion of mitigation for pool fires did not violate NEPA’s “rule of reason.”  The Court also noted that site-specific mitigation measures can be addressed in facility-specific licensing decisions.
  • The Court did not require that the NRC utilize “conservative bounding assumptions.  Instead, the Court concluded that the

NRC may generically analyze risks that are ‘essentially common’ to all plants so long as that analysis is ‘thorough and comprehensive.’

  • The NRC’s “qualitative analysis of the likelihood of a failure to site a [permanent] repository” was sufficient.

The decision’s real interest lies in its conclusion, which I’ll reproduce in full:

We acknowledge the political discord surrounding our nation’s evolving nuclear energy policy. But the role of Article III courts in this debate is circumscribed. “The scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency.” To the extent that the petitioners disagree with the NRC’s current continued storage of spent nuclear fuel, their concerns should be directed to Congress.

To which I can only say, good luck with that.

Corps Jurisdictional Determinations Are Final Agency Action: Now What?

In a decision that was not a surprise based on oral argument, the Supreme Court today ruled that Army Corps of Engineers Jurisdictional Determinations concerning “waters of the United States” Wetlandsare final agency action subject to judicial review under the APA.  As we previously noted, this continues the Court’s emphasis on the practical consequences of Corps decisions.  Indeed, Chief Justice Roberts noted that the Court’s decision:

Tracks the ‘pragmatic’ approach we have long taken to finality.

Because there is no denying the practical impact of JDs, today’s decision was predictable.  However, I still wonder about its consequences.  Chief Justice Roberts acknowledged the Corps’ argument that JDs are not statutorily required, so that the Corps could simply promulgate a new regulation eliminating the JD process, in which case property owners would be forced to risk enforcement action or apply for a permit.

Roberts did not seem to care.  His response?

True enough.  But such a ‘count your blessings’ argument is not an adequate rejoinder to the assertion of a right to judicial review under the APA.

Really?  Why not?  It certainly seems at least a little odd that the Court would focus so much on the practical effects of JDs, but ignore the practical result of its decision today.  If I ran the Corps, and given a time of declining agency budgets, I would at the very least strongly consider eliminating the JD process.  Where would we be then?

5th Circuit Vacates Verdict for ExxonMobil in CAA Citizen Suit: Still Not Much of a Win for the Plaintiffs

Last Friday, the 5th Circuit Court of Appeals vacated a District Court decision which had refused to impose penalties on ExxonMobil for various violations of the Clean Air Act at ExxonMobil’s Baytown refinery.  baytown-night-lights_supporting_image (1)While the trade press has focused on the remand, I think that this is largely a win for ExxonMobil and, on balance, helpful to the regulated community.  Here’s why:

  • The Court agreed that “deviation reports”, without more, do not constitute evidence of violations by a facility.
  • The Court agreed that no declaratory judgment was necessary, because it served no “useful purpose”.
  • The Court agreed that the number of emissions events “does not alone mean Exxon did not make a good faith effort to comply.”
  • The Court agreed that ExxonMobil’s settlement with the state after the plaintiffs gave notice of intent to sue could still be evidence of a good faith effort to comply. This is particularly noteworthy since such settlements are a frequent component of a strategy in response to such notices.
  • While the Court remanded on the economic benefit of noncompliance issue, because the District Court failed to consider the benefit of delaying implementation of projects ExxonMobil agreed to implement under the state settlement, it rejected the plaintiffs’ expert’s opinions about other necessary projects.
  • The Court refused to enter an injunction prohibiting future violations, deferring to the District Court’s conclusion that an injunction would be “excessively intrusive.”

I’m sure that the plaintiffs will be declaring victory, but I’ll bet ExxonMobil is breathing a sigh of relief.  And other members of the regulated community might reasonably do so as well.

Draft Released of Highly Anticipated Massachusetts Energy Bill

This week a draft of the long-awaited Massachusetts energy bill was reported out of the Joint Committee on Telecommunications, Utilities and Energy. The bill would require the Commonwealth’s distribution companies to competitively solicit long-term, fifteen- to twenty-year contracts for large-scale offshore wind and hydroelectric power. Notably absent from the bill are provisions addressing resources such as solar, onshore wind, nuclear, energy storage, and energy efficiency.

The bill seeks to jumpstart the development of offshore wind in federal lease areas by directing distribution companies to enter into contracts for 1,200 MW of offshore wind power before July 1, 2027. The bill permits staggered solicitations, so long as each individual solicitation is for at least 400 MW of aggregate nameplate capacity and each subsequent solicitation occurs within twenty-four months of a previous one. The first competitive solicitation for offshore wind power would be required to occur before July 1, 2017.

The bill also directs distribution companies to solicit proposals for 9,450,000 MWh of firm hydroelectric power beginning on January 1, 2017. The bill alternatively allows utilities to couple their hydro procurements with new Class I renewable portfolio standard (RPS) resources. Thus, under the bill’s current language, if other renewable resources such as onshore wind and solar are to be included in the proposed procurement requirements, they would need to be paired up with hydro.

The provisions addressing hydro power do not contain language allowing for a staggered procurement schedule. Another notable difference between the Committee’s treatment of offshore wind and hydro is that the hydro provisions permit the utilities to solicit long-term delivery commitment agreements predicated upon the completion of an associated transmission line.

If the bill is passed, the Department of Public Utilities (DPU) and the Department of Energy Resources (DOER) would be tasked with promulgating implementing regulations. Among other things, these regulations would allow transmission costs to be incorporated into proposals and recovered through federal transmission rates. The DPU would also be responsible for the ultimate review and approval of all proposals. As part of this process, the DPU would be required to consider the attorney general’s recommendations. The bill authorizes the DPU to terminate a solicitation if the agency determines that it received no reasonable proposals.

Distribution companies would likewise be permitted to reject unreasonable proposals. However, if the utilities reject all of the proposals received in response to a solicitation, then the bill requires the DPU to initiate a docket to assess the companies’ rationale. In addition, if distribution companies cannot agree on a winning bid, then the DOER, in consultation with the DPU, will issue a final determination of the winner.

The bill’s next stop is the House Committee on Ways and Means. Once approved there, the bill will head to the House floor. Thereafter, the Senate will likely address its own bill. There is therefore considerable opportunity for the bill’s language to change. But the clock is ticking, as the formal legislative session ends on July 31.

The Global Warming Solutions Act Requires MassDEP to Promulgate Declining Annual GHG Emissions Limits for Multiple Sources: Yikes!

On Tuesday, the Supreme Judicial Court ruled that MassDEP had violated the Global Warming Solutions Act progress-on-2020-planby failing

To promulgate regulations that address multiple sources or categories of sources of greenhouse gas emissions, impose a limit on emissions that may be released, limit the aggregate emissions released from each group of regulated sources or categories of sources, set emissions limits for each year, and set limits that decline on an annual basis.

Phew.

The SJC gets the final word, so I won’t spend much time explaining why the SJC got it wrong, though I will note that to suggest that the legislature’s use of the phrase “desired level” of GHG emissions unambiguously requires MassDEP to establish hard targets was at best overenthusiastic.

The bigger question at this point is what the decision means.  First, it’s clear that MassDEP must establish hard declining emissions limits for more than one, but less than all, categories of GHG emitting sources.

Second, MassDEP must promulgate regulations that limit total emissions – not emission rates.

Third, the regulations must truly control Massachusetts sources.  The SJC specifically found that RGGI doesn’t satisfy the GWSA requirement, in part because Massachusetts sources can purchase allowances from out of state facilities.

But where does this leave MassDEP?  In a deep hole, for sure.  Unless it wants to ditch RGGI, it can’t regulate power generation, because the type of program that the SJC said is required would simply be incompatible with RGGI.

How about mobile sources?  They are the largest growing source of GHG emissions.  Unfortunately, we come back to the SJC’s injunction that MassDEP must regulate total emissions, not emission rates.  You tell me how MassDEP is going to issue regulations setting a cap on mobile source emissions.

The only obvious candidates I see are buildings and industrial sources other than power generation.

I don’t envy MassDEP – and the nature of the task only emphasizes the extent of the SJC’s overreach here – but I said I wouldn’t get into that.

Three Strikes and the Commonwealth Is Out: The Natural Gas Act Preempts Article 97

Last week, Judge John Agostini ruled that the Natural Gas Act preempts Article 97 of the Massachusetts Constitution, which otherwise would have required a 2/3 vote of the Legislature before Article 97 land could be conveyed to Tennessee Gas Pipeline Company for construction of a gas pipeline to be built in part through Otis State Forest.  otis-state-forest-entrance-bc84d8e7cbd761ea

Not only did Judge Agostini conclude that Article 97 is preempted, he found preemption every which way.

  • Explicit preemption – “Congress has explicitly preempted state laws and regulations with respect to construction, maintenance and expansion of interstate natural gas lines.”
  • Field preemption – “Congress creat[ed] a comprehensive regulatory framework through which, among other things, the movement of natural gas through the interstate pipelines could be coordinated. Simply stated, Congress intended to ‘occupy the field’ through pervasive and comprehensive federal laws and regulations.”
  • Conflict preemption – “It is beyond cavil that Article 97, by giving the Commonwealth an unfettered right to stop this and similar projects, would directly and substantially conflict with federal law. In fact, permitting the states to exercise the unilateral ability to interfere with federal policy in this area would eviscerate the NGA.”

The Commonwealth tried to argue that Article 97 is somehow unique and not subject to preemption because it implicates core public trust authority of the Massachusetts as sovereign.  Judge Agostini wasn’t buying it.

The argument of the Commonwealth is so expansive that it would preclude any activity by the federal government that would seek to intrude on such conservation territory. Moreover, with such power on the side of the Commonwealth, it could simply thwart preemption for any purpose by bringing any land under the umbrella of Article 97.

***

To the extent that the Commonwealth seeks support from the fact that Article 97 is a constitutional provision and, thereby, afforded greater deference from the Supremacy Clause, the law is littered with numerous state constitutional provisions felled by federal preemptions.

Sorry, Massachusetts conservationists, but Judge Agostini got it right.

Judge Agostini did stay the resulting injunction until July 29, 2016, to give the Legislature time to act, but the opinion is firm.  The stay is not an opportunity for the Commonwealth to figure out how to avoid preemption; it is an opportunity for the Commonwealth to figure out how to concede defeat gracefully.

EPA’s Final Methane Rule: Fighting Climate Change Up to January 20, 2017 — And Beyond

Dylan Thomas dylan-thomas-chair_2891799csaid “Do not go gentle into that good night.”  Obama’s EPA is taking that advice to heart, pushing forward aggressively on its climate change agenda, even as January 2017 approaches.  On Thursday, EPA issued its final rule promulgating New Source Performance Standards for methane emissions from oil and gas facilities.  The lengthy and complex rule is too long to summarize here, but you can find the Cliff Notes version in EPA’s fact sheet.

What’s notable about the final rule is that it is decidedly more stringent than the proposed rule, increasing the frequency of required leak-detection monitoring.  EPA also telegraphed a similarly aggressive posture towards existing facilities.  Together with the final NSPS rule, EPA issued a draft Information Collection Request that would be issued to 22,000 existing facilities.  It seems unlikely that EPA could actually issue the ICR, receive and process the responses, and issue a draft set of standards to regulate methane emissions from existing oil and gas facilities by January 20, but EPA will at the very least have the issue teed up for the next administration.

At that point, either President Clinton can move on from putting coal miners out of work to putting oil and gas workers out of work or President Trump can act on his views that climate change is a hoax and make our oil and gas industry great again by deep-sixing all of these efforts.