Coming Soon To a Major City Near You — Building Energy Efficiency Standards

Members of the New York City Council have introduced a proposal to impose mandatory building energy efficiency standards.  The standards, which vary by building type and use, would apply to buildings greater than 25,000 square feet, though rent-regulated buildings would be exempt.  

The real estate industry is a powerful force in New York City and I believe that our current President may have some views on this legislation.  Nonetheless, the bill does have 25 sponsors, including the Speaker.

The standards are expressed as annual limits on carbon dioxide equivalent emissions, based on different emissions intensity limits applicable to different categories of buildings.  The limits would first be effective in 2022, with increasingly stringent limits over time.  There are variance provisions, including one related to economic hardship.

We are not long removed from the advent of requirements on building owners to report energy usage.  When the reporting obligations were first imposed, including Boston’s Building Energy Reporting and Disclosure Ordinance, local governments were quick to reassure the real estate industry that this was merely a reporting obligation, intended to ensure that market participants had information about building energy use.

Nonetheless, property owners understood that such reporting requirements were merely the nose of the camel.  It now appears that, as in the parable, the camel is politely suggesting that it follow its nose into the tent.

SMART is Open!

November 26th was a big day for solar energy in Massachusetts.  As promised, the Massachusetts Department of Energy Resources (“DOER”) opened the application portal for the long-anticipated SMART Program.  Applications received between November 26th and November 30th will be considered to have been received at the same time.  Starting on December 1st, applications will be reviewed on a first come, first served, basis.

Also on November 26th, the Massachusetts Department of Public Utilities approved a model tariff to implement the SMART Program.  The Massachusetts electric distribution companies now have until December  3rd to file company-specific tariffs, which should be a formality.  A few days earlier, on November 23rd, the Department cleared up some lingering issues relating to the SMART tariff, clarifying the process for setting application fees (which will be overseen by both DOER and the Department), allowing the capacity blocks and compensation rates for the former NSTAR and WMECo service territories to remain separate (but with instructions to combine them by January of 2020), and confirming that the distribution companies cannot register certain solar facilities in the wholesale energy market as settlement only generators (at least until a forthcoming decision addresses issues related to solar participation in capacity markets more generally).

A lot of people have been waiting for and working towards this date for a long time.  The authorizing legislation for the SMART Program was signed in April of 2016.  DOER has been working with stakeholders to design and refine a post-SREC program for at least that long, as documented in gory detail on DOER’s website.

Like many new regulatory programs, the SMART Program can seem complex.  And it can be frustrating to participants when there is no past experience to use as a guide for program implementation.  But there is excitement about SMART for good reason.  The big question now is how quickly the 1,600 MW of the SMART Program will fill up, especially the capacity available in the National Grid territory.   The 400 MW threshold for a DOER review of the program is likely to be reached quickly.

Another issue to watch is what types of solar facilities are developed.  The SMART Program was designed to support a diverse array of different solar facilities, including community shared solar, qualifying facilities, solar + storage, low-income solar, and agricultural solar.  In part, the SMART Program uses differentiated compensation to achieve that goal.  Now that the program is open, it will be interesting to see what types of facilities are actually developed.

Two Strikes Against the Administration’s WOTUS Suspension Rule

In August, a judge in South Carolina issued a nationwide injunction against the “Suspension Rule,” which delayed the effective date of the 2015 Waters of the United States rule.  Now, a judge in Oregon has gone even further.  Judge John Coughenour has vacated the rule.

The core of the new decision is the same as that in South Carolina.  By refusing to take comment on the impact of the delay in the effective date of the WOTUS rule, the Administration acted arbitrarily and capriciously and thus violated the Administrative Procedure Act.

For my non-lawyer readers wondering what the difference is between a nationwide injunction against the Suspension Rule and vacatur of the Rule, I’m picturing a petulant President Trump, sitting in a corner.  First, his teacher tells him that he can’t play with his shiny new toy – that’s an injunction.  Then, still not satisfied, another teacher comes by and takes the toy away completely.  That’s vacatur.

The National Climate Assessment Projects Major Economic Impacts. The President Doesn’t Believe It. Must Not Be True.

Last week, the government released the Fourth National Climate Assessment. Not surprisingly, it’s largely consistent with the prior assessments. As other commenters have noticed, the primary difference from prior reports is one of emphasis; the Assessment now includes substantial information about the likely cost to the economy if we fail to address climate change.

I had been wondering whether it was worth doing a post about the assessment – and then I saw that the President, when asked about the cost analysis specifically, said simply “I don’t believe it.”

Well, if the President, who, the last time I checked, was the person constitutionally responsible for the output of the Executive Branch, says that he doesn’t believe it, it must not be so.

I guess there’s no need for a blog post.

Internalize Externalities. How Difficult Can That Be?

Being a poor country environmental lawyer, I don’t often delve into the academic world.  I therefore just recently caught up to the article written last year by my friend Dan Esty.  Red Lights to Green Lights:  From 20th Century Environmental Regulation to 21st Century Sustainability, is a wonderful synthesis of a lot of work on how to build a better regulatory mousetrap.

The title does not exactly roll off the tongue, so I’ll do my best to shorten it.  And I can’t quite attain the one-word perfection of “plastics,” from The Graduate, but I think I can bring it down to two:  “Internalize externalities.”

It’s not a new idea, but that doesn’t minimize its importance.  For blog purposes, I’ll highlight just two points Dan makes.

  • Setting emission limits stifles innovation, because regulated industries have no incentive to attain continuous improvement.
  • Technological advances since the development of most of our environmental regulations in the 1970s and 1980s facilitate the use of market mechanisms and make them much more efficient and trustworthy.

And so I say, there’s a great future in internalizing externalities.  Think about it.

DOER: SMART on Track for November 26 Rollout

In a series of October presentations, the Massachusetts Department of Energy Resources (DOER) reiterated that it plans to launch SMART on November 26, opening an online portal at http://masmartsolar.com/ to begin accepting applications. All applications received between November 26 and 11:59 PM EST on November 30 will be considered as submitted at the same time with respect to capacity block assignment.

For applications received in the initial one-week window, projects will be ranked according to when the contract between the installer and the customer was executed (for projects less than or equal to 25kW AC) or when the project’s Interconnection Service Agreement was signed (for projects larger than 25kW AC).

Beginning on December 1, however, DOER will assign projects to capacity blocks on a first-come first-served basis.

While DOER will accept applications beginning November 26, don’t expect to receive Preliminary Statements of Qualification (SOQs) right away. DOER aims to release the first round of SOQs about a month after program launch. In the interim, it hopes to gather information about program uptake and to finalize details like the size of the adder tranches. It remains uncertain when final tariffs to implement the SMART program will be approved by the Department of Public Utilities.  Following the Order in D.P.U. 17-140 on September 26, the Distribution Companies filed a revised model tariff on October 16, but a further revised version is expected to be filed on November 16.

The big question is how quickly each capacity block and adder tranche will fill. In that regard, your guess might be as good as DOER’s — but DOER says it will release data on the capacity represented by submitted applications after the initial one-week enrollment period, and daily thereafter.

Check back for more information on the SMART program in the lead up to its launch and for updates on the capacity block shakeout once the program is underway.

Deja Vu All Over Again — The Trump Administration Refuses to Provide “Good Reasons” For Its Change in Course on Keystone XL

Yesterday, Judge Brian Morris granted summary judgment to plaintiffs on some of their claims challenging the State Department’s new Record of Decision for the Keystone XL project.  Whatever our Tweeter-in-chief may say, it’s actually a fairly balanced decision, which ruled in the Administration’s favor on a number of issues.

The most noteworthy part of the decision takes the State Department to task for failing to provide “good reasons” for the change in the ROD concerning climate change.  The Department’s failure even to try to justify the change is so stark that the Court’s explanation is worth some detail:

The Department possesses the authority to give more weight to energy security in 2017 than it had in 2015.  [H]owever,“even when reversing a policy after an election, an agency may not simply discard prior factual findings without a reasoned explanation.” The Department did not merely make a policy shift in its stance on the United States’s role on climate change. It simultaneously ignored the 2015 ROD’s Section 6.3 titled “Climate Change-Related Foreign Policy Considerations.”

Section 6.3 of the 2015 ROD determined that the United States’s climate change leadership provided a significant basis for denying the permit. The Department acknowledged science supporting a need to keep global temperature below two degrees Celsius above pre-industrial levels. The Department further recognized the scientific evidence that human activity represents a dominant cause of climate change. The Department cited trans-boundary impacts including storm surges and intense droughts.  And finally, the Department accepted the United States’s impact as the world’s largest economy and second-largest greenhouse gas emitter. The 2017 ROD initially tracked the 2015 ROD nearly word-for-word. The 2017 ROD, without explanation or acknowledgment, omitted entirely a parallel section discussing “Climate Change-Related Foreign Policy Considerations.” The 2017 ROD ignores the 2015 ROD’s conclusion that 2015 represented a critical time for action on climate change. The 2017 ROD avoids this conclusion with a single paragraph. The 2017 ROD simply states that since 2015, there have been “numerous developments related to global action to address climate change, including announcements by many countries of their plans to do so.” Once again, this conclusory statement falls short of a factually based determination, let alone a reasoned explanation, for the course reversal.

I have previously noted the Administration’s apparent unwillingness to meet even the lenient standard established by the Supreme Court in FCC v. Fox Television Stations for the review of changes in policy by a new administration.  The new administration merely must provide a “reasoned explanation” for the change.  However, as in the prior cases I have discussed, the State Department did not even try to do so.  In California v. BLM, the Court stated that BLM was “casually ignoring” its previous findings.  So too here.

And I am left wondering once more whether Trump even wants Keystone XL to be built or whether he actually prefers the opportunity to rile up his base by complaining about another disgraceful decision thwarting his goals.

The UCS Wants to Preserve Existing Nuclear Plants — You Know that Means the Climate Situation Must Be Dire

The Union of Concerned Scientists just released a report, The Nuclear Power DilemmaAs Ken Kimmell, UCS’s President, said in a blog about the report, it:

calls for proactive policy to preserve nuclear power from existing plants that are operating safely but are at risk of premature closures for economic reasons or to ensure that lost nuclear capacity is replaced with carbon-free sources.

Anti-nuke greens should chill for a moment before committing harakiri.  The report does not call for the development of new nuclear capacity.  It makes clear that, if there is a path to replacing nuclear power with renewable energy, that would be fine.

UCS’s concern is a really practical one.  A significant percentage of existing nuclear capacity is at risk of closure and, as matters currently stand, that capacity is not going to be replaced by 100% renewable energy.  It’s going to be replaced by fossil fuels.

UCS’s preferred policy approach would be either to tax carbon or to promulgate a low carbon electricity standard.  Both options would improve the economics of existing nuclear plants, but would of course also stimulate development of additional renewable energy sources.

And here’s the really sticky part.  If there are no federal remedies, what should states do?  They can create or strengthen similar policies at the state level, but what happens in the short run if individual nuclear plants threaten to shut down.  Here’s UCS’s tempered recommendation, which probably won’t satisfy either proponents or opponents of nuclear power:

The UCS report does not argue for subsidies for any specific plants. That case will have to be made in state-specific forums. Should states decide to support nuclear power plant subsidies, our report calls for them to be temporary and subject to periodic reassessment. And companies seeking subsidies must open their books and allow the public and regulators to make sure that the subsidies are needed and cost-effective, and that the same level of carbon free power cannot be provided during the relevant time period with less costly options.

Full disclosure – UCS is a client of Foley Hoag (and we have done work for some nuclear plants), so take this for what it’s worth.  To me, it’s a balanced perspective and a generally reasonable approach – something seen all too rarely in these dismal times.

And Then There Were Three: Why Is Massachusetts Still Refusing to Seek NPDES Delegation?

As readers of this space know, I have been mystified by the opposition in Massachusetts to obtaining delegation of the NPDES Program.  In my temperate way, I have called it an embarrassment.

I have just learned that Idaho was recently delegated authority to operate the NPDES program.  Now, only Massachusetts, New Mexico, and New Hampshire remain undelegated.

The Boston Globe said that the current arrangement has worked.  Someone apparently failed to tell the Globe editorial staff that, for permits of any complexity, delays of more than 10 years happen routinely.  It’s a new maxim – If it’s broke, don’t fix it.

It saddens me that environmental groups oppose delegation.  It annoys me that they gave Governor Baker an F grade for supporting delegation.  It’s not just that they are wrong; it’s that their opposition indicates that they remain stuck in the past, unable to overcome the historic stereotype of state regulators as being in the pocket of bad-guy polluters.

It’s not where we should be in 2018.

A Mixed Bag For Climate Litigation Plaintiffs

Last week there were two court decisions on cases in which groups of citizens are seeking court orders requiring the government to act on climate change.  The biggest news was that the Supreme Court denied the stay requested by the United States in Juliana v. United StatesThis “Case of the Century” was supposed to go to trial on October 29.

If I were the plaintiffs, I wouldn’t count my chickens yet.  The stay was denied without prejudice and the Order at least suggests that the 9th Circuit Court of Appeals might want to reconsider its denial of mandamus in the case.  Of course, plaintiffs almost certainly have multiple objectives and, while they would presumably like to win, just getting to trial and having the opportunity to put on their case would itself presumably be considered a major public relations victory.

On the state litigation front, a judge in Alaska has dismissed similar claims under State law.  As other courts have done, Judge Miller dismissed certain of the counts as raising non-justiciable political questions and others on prudential grounds, concluding that the Court should not entertain declaratory judgment counts, because:

declaratory relief would not advance Plaintiffs’ interests in obtaining a reduction in greenhouse gas emissions….

These cases remain very much uphill battles for plaintiffs.  Nonetheless, it will be interesting to see whether a public trial of the plaintiffs’ claims in the Juliana case will have any impact on the public perception of climate change science.

The Rubber Begins to Hit the Road on Adaptation

I gave up some time ago on the idea that focusing on adaption was just a means of weaseling out of necessary measures to mitigate climate change.  As the extraordinary becomes commonplace, it’s evident that we’ve ignored the externalities of carbon longer than was prudent.

It’s thus great to see Boston’s Mayor Walsh release Resilient Boston Harbor.  Even for those who follow these issues for a living (and I have a personal stake, since my wife and I are about to move to Fort Point Channel, ground zero for climate change flooding impacts in Boston), what’s really amazing is the granularity of both the analysis and the recommendations.

If you want to understand just how granular the analysis must be in order to develop specific recommendations, you might take a look at this figure from the full Climate Ready South Boston report.  Don’t just skim the Executive Summary on this one.

I find this work both inspiring and discouraging.  There is so much to do.  Among other tasks, environmental lawyers have to figure out how to make these recommendations feasible in light of existing environmental regulations that would actually prevent implementation of some of the recommended adaptation measures.

I had thought of closing with a nice climate-inspired haiku.  Instead, I think I’ll leave you with this:

It is not your responsibility to finish the work of perfecting the world, but you are not free to desist from it either.

A Short Rant Concerning Transportation Sector GHG Emissions

The Energy Information Administration today released CO2 emissions numbers through 2016.  While I could rant about the 21.4% increase in GHG emissions in Florida since 1990, as compared to the 23.7% decrease in Massachusetts over the same period, when Florida faces even great climate risk than Massachusetts, I won’t do that.

Today’s rant is about transportation GHG emissions.  While there’s a lot of fun data in the EIA report, I’ll keep this short.  Since 1990, electric generation sector emissions in Massachusetts have declined by 58% — that’s not a typo.  Over the same period, transportation sector emissions have increased by 10%.  Transportation Climate Initiative, you’ve got your work cut out for you.

‘Nuff said.

EPA’s Latest Particulate Review Shows Impacts Below the Current NAAQS. How Will Trump Avoid Doing Something About It?

Last week, EPA posted its draft Integrated Science Assessment for Particulate MatterIt’s the foundational document for EPA’s periodic review of its National Ambient Air Quality Standard for PM.  The current standard for PM2.5, promulgated in 2012, is 12 ug/m3.

Section 109 of the Clean Air Act requires the Administrator to set the NAAQS “requisite to protect the public health” with “an adequate margin of safety.”

The new ISA states that:

Evidence from U.S. studies examining short-term PM2.5 exposure and mortality indicate a linear relationship at concentrations as low as 5 µg/m3 with cut-point analyses providing no evidence of a threshold.

There is some uncertainty in the discussion in the ISA, but it seems pretty clear to me that the current standard of 12 ug/m3 does not protect the public health with an adequate margin of safety.

Before Scott Pruitt left EPA, he instructed the Clean Air Scientific Advisory Committee to consider adverse economic and energy impacts resulting from changes to NAAQS.  I have a hard time seeing how that direction comports with the statutory language.  I suspect that the current Supreme Court may explain that to me at some point.

A Carbon Tax Twofer. A Meat Tax? No, Sir.

It’s probably not news that the immediate prospects for a carbon tax aren’t great.  I still think that it’s going to seem impossible until, fairly suddenly, it actually happens.  Hope springs eternal.

In any case, there has been some news on the carbon tax front this month.  Here’s the quick summary.  The Climate Leadership Council, everyone’s favorite collection of Republicans who used to matter, released The Dividend Advantage, which provides an excellent and concise summary of 10 reasons why the fee and “dividend” approach that they propose is the best approach.  I agree with everything in it.  I particularly like point 5, about what they call “regulatory simplification.”  I’ll only note that, while I don’t believe the term can be copyrighted, I have long called for a “grand bargain” that would put a price on carbon in exchange for eliminating some of the more cumbersome current air regulations.

If the CLC is not persuasive enough, another conservative group, the Alliance for Market Solutions, has its own report on a carbon tax, prepared by Ernst & Young.  The E&Y analysis looks a carbon tax initially priced at $31/ton.  E&Y recommends against the CLC dividend, concluding that making the most recent tax cuts permanent would have the greatest positive impact on long-term GDP.

Finally, we have a late entrant, a meat taxA meat tax would respond to concerns that production of meat, particularly red meat, is a significant contributor towards climate change.  I’m all for taxing externalities and I don’t doubt that meat production is more carbon-intensive than other food sources.  However, it does appear that at least some of the claims about the carbon intensity of meat production may not be valid.

My vote is for the CLC tax (let’s call a spade a spade) and dividend model, but I’m open to anything that puts a price on carbon.  (Should dishes that are charred cost more than steak tartare?)

A Sliver of Hope for the Government’s Remaining NSR Enforcement Cases?

Earlier this month, the 5th Circuit Court of Appeals granted something of a reprieve to EPA’s New Source Review enforcement initiative.  The Court first confirmed what everyone other than EPA and DOJ already knew – that failure to get a pre-construction permit is a one-time offense, so that penalty claims for alleged violations more than five years prior to filing are barred by the statute of limitations.

However, the Court then surprised most observers by holding that expiration of penalty claims did not doom the government’s claim for injunctive relief.  Specifically, the Court ruled that the “concurrent remedies doctrine,” which bars equitable remedies when no legal remedy is available, cannot be applied to a sovereign.

I’m not going to provide an exegesis of the doctrine, which carries more than a whiff of Jarndyce v. Jarndyce I’ll settle for three points.  First, it may not be a legal doctrine, but I’d apply the doctrine of common sense, rather than the doctrine of concurrent remedies.  Given that all courts agree that NSR does not impose ongoing operational requirements, it doesn’t even make sense to me to think of ongoing forward-looking injunctive relief with respect to a one-time violation that may have occurred twenty years or more ago.

I’ll add to that a related point.  As other NSR cases have noted, many of these facilities have changed hands since the projects at issue were constructed.  In those cases, the former owners aren’t subject to injunctive relief, because they don’t own the facilities and thus have no ability to install BACT.  The new owners aren’t subject to injunctive relief, because they did not violate the Clean Air Act.  In these circumstances, are we really going to make the availability of injunctive relief subject to the random circumstance of which facilities have been sold and which have not?  That just seems nuts.

Finally, I’ll emphasize that EPA and DOJ shouldn’t get too excited over this decision.  The Court was very clear that it was not deciding whether injunctive relief was appropriate, only that it wasn’t barred by the statute of limitations.  The Court’s language was unlike any I’ve ever seen before and is worth a read:

On remand, the district court must further consider whether any equitable relief is appropriate and proper under the legal and factual circumstances of this case in which the legal relief has been time barred. We recognize that we are not giving the district court much guidance in this task. … Perhaps the answer to this knotty question of injunctive relief will reveal itself after a full hearing and the presentations of the parties. And we hope that we are not being too cowardly when we sincerely wish the district court good luck.

And I’m sure that the District Court will appreciate the 5th Circuit’s good wishes.