Perhaps The Next Coastal Project Won't Take 10 Years: The First Circuit Preempts Some State Authority

Posted on October 27, 2009 by Seth Jaffe

Public and private developers spend a lot of time talking about NIMBY, or Not In My Backyard. With the increasing number of coastal development projects, ranging from wind farms to LNG facilities to plans for casinos, we should perhaps be talking about another acronym: NIMO, or Not In My Ocean. Yesterday, a decision from the First Circuit Court of Appeals in Weaver's Cove LNG v. Rhode Island Coastal Resources Management Council gave some hope that NIMO will not mean that states can simply squelch development of ocean resources.

Weaver’s Cove, as originally proposed in 2003, was to be an LNG terminal  located up the Taunton River, in Fall River, Massachusetts. To address safety and related concerns, the proposal has been moved off-shore.

The only element of the project that is subject to the jurisdiction of Rhode Island authorities is dredging that would be necessary in Rhode Island waters. That dredging requires a federal consistency determination by the Rhode Island Coastal Resources Management Council, or CRMC. In addition, Rhode Island state law requires that the CRMC provide a license to the project, known as an Assent. Here, the CRMC refused to provide either the federal consistency determination or the state law Assent. Weaver’s Cove LNG sued, won in the District Court, and won again yesterday at the Court of Appeals.

The facts of the case are complicated and the Court limited the decision as far as it could to the case-specific facts. Nonetheless, there are two points to be gleaned from the decision that may be of broader import

The Coastal Zone Management Act contains a provision, specifically intended to prevent states from frustrating the purposes of the CZMA, which provides that, if a state fails to act on a consistency request within six months, the state’s concurrence is “conclusively presumed.” Here, Rhode Island argued that the clock hadn’t begun to run, because Weavers’ Cove hadn’t provided all of the information necessary for CRMC to make a consistency finding. The Court didn’t buy it. Again, the facts here won’t translate to other cases, but what will transfer is the Court’s refusal simply to accept Rhode Island’s request that the Court defer to a state agency’s interpretation of its own law. Calling the CRMC’s interpretation of Rhode Island law “untenable” and “clearly erroneous,” the Court rejected it and held that, because of the CRMC’s failure to act, consistency would indeed be “conclusively presumed.”

Perhaps even more significantly, the Court concluded that the Rhode Island law which would require that the CRMC issue an Assent before the project could move forward is preempted by the Natural Gas Act (NGA). While the Court did not find that the NGA explicitly preempted Rhode Island law or that it occupied the field, it did conclude that, in this case, state law conflicted with the NGA. 

Notwithstanding the Court’s efforts to limit its preemption holding, I think it will provide grist for preemption arguments in other cases, as will its reluctance to defer to state agency interpretation of state law, where such deference might create obstacles to the accomplishment of federal objectives.

It’s too much to say that this decision represents the end of NIMO. However, it’s also difficult to see this as totally abstracted from an awareness by the Court of the delays experienced by the Cape Wind project. We’ve got to figure out a way to get to an answer more quickly. The answer my be “no” to some projects, but it shouldn’t take six years to get an answer.

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The House Climate Bill: More Details on Federal Cap and Trade

Posted on April 3, 2009 by Amy Boyd

 As we mentioned yesterday, the discussion draft of the Waxman-Markey “American Clean Energy and Security Act of 2009” which was released on Tuesday is notable both for what it includes and the significant portions it leaves to be decided at a later date. 

In summary, the bill contains four titles:

1) a “clean energy” title, which promotes renewable energy through a portfolio standard of 6% in 2012 rising to 25% by 2025, additional funding for carbon capture and sequestration, a low-carbon transportation fuel standard, and authorization for federal agencies to enter into long-term contracts with renewable energy providers;

2) an “energy efficiency” title, which calls for a nationwide building efficiency code, and directs EPA to set emission standards for locomotives, marine vessels and non-road sources;

3) a “global warming” title, which specifies that greenhouse gases are not to be treated as criteria pollutants or regulated in new source review under the Clean Air Act (the authorities currently viewed to be EPA’s best tools in regulating greenhouse gases), lays out up to 83% cuts in greenhouse gas emissions from 2005 levels by 2050 and creates the framework for a cap-and-trade auction system to be overseen in part by FERC, but does not specify how allowances would be allocated or auctioned, nor how auction proceeds would be spent, other than giving a portion to preventing international deforestation; and

4) a “transitioning” title which establishes a new council within NOAA to prepare an adaptation plan and fund, but does not provide details on where the funds come from, and lays out various programs creating release valves to be triggered by increasing prices, but again withholds critical details, such as how the programs will provide assistance to consumers.

After the jump, we provide more detail about Title 3, the Global Warming section.

 

Here are more specifics on Title 3, the Global Warming title:

  •  Modeled closely on the recommendations of the US Climate Action Partnership (USCAP), a coalition of electric utilities, oil companies, chemical companies, automobile manufacturers and environmental organizations
  • Preemption: the bill explicitly preempts state and regional cap-and-trade programs after 2012, but provides for the exchange of existing allowances. The bill also specifies that CO2 and other greenhouse gases may not be regulated as criteria air pollutants or hazardous air pollutants on the basis of their effect on global warming, nor would they apply to New Source Review.
  • Cap + Trade Program:
    • Who: the electric utilities, fuel distribution companies, geological sequestration sites, and large industrial sources included under the cap are similar to those included in EPA’s recently released reporting regulations, individually emit more than 25,000 tons of CO2e, and are collectively responsible for 85% of US global warming emissions
    • What: must annually surrender allowances equivalent to their emissions, beginning with the first tier of entities’ 2012 emissions, or pay a penalty equal to twice the market value of the missing allowances, plus offsetting those emissions within the next year. The downward trajectory of the cap begins with 3% reductions from 2005 levels by 2012.
    • How to get allowances: the bill sets up the framework for quarterly auctions, similar in details to the RGGI auctions now occurring, except that the names and amounts of winning bids would be announced. The program allows unlimited banking and borrowing from the next year’s vintage allowances. The bill leaves blank the proportions of allowances that would be sold at auction and those that might be allocated directly to covered entities.
    • Alternative Compliance: offsets may be surrendered at 5:4, but nationwide use is limited to 2 billion tons; the bill also allows use of international allowances and compensatory allowances (for instance, from the destruction of CFCs)
    • Safety valves: the draft directs EPA to create a “strategic reserve” of 2.5 billion allowances (equivalent to 1/3 of US annual emissions), from which allowance will be made available through closed auctions to covered entities, if allowance prices rise to high levels. The proceeds of the auction will be used to purchase allowances to replenish the reserve.
  • Additional Deforestation Initiative: a portion of the allowances/proceeds will go to creating supplemental reductions through agreements to prevent international deforestation. By 2020 the reductions must be equivalent to 10% of US’s 2005 emissions.
  • New Regulations for Hydroflurocarbons (HFCs) and Black Carbon: the bill authorizes EPA to act under the Clean Air Act to create new regulations specifically for these contributors to global warming
  • Citizen Suits under CAA: adds a citizen suit provision to section 304 of the Clean Air Act allowing anyone who is harmed by air pollution or climate change (even a general harm) to bring suit against the EPA for a failure to act
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Waxman and Markey Release House Climate Bill: Some Details, But a Long Way From the Finish Line

Posted on April 2, 2009 by Seth Jaffe

I finally found time to review the 648-page “discussion draft” of the “American Clean Energy and Security Act of 2009” released by Representatives Waxman and Markey this week. It is fair to way that, though release of the draft may be an important way-station on the road to a climate change bill, there remains a lot of work to do. While the draft includes some important markers that are likely to set boundaries on what might be included in the final bill, it is at least as notable for what is omitted than for what is included. Here are some highlights of Title III of the bill, which addresses climate change: (We hope to post soon about the energy titles as well.)

·  No surprise here – the bill would create a cap and trade program requiring facilities with emissions of more than 25,000 tons per year of CO2 equivalents to have allowances in order to continue such emissions.

·  Allowances would be allocated so that emissions would decrease 20% from 2005 levels by 2020 and 83% from 2005 levels by 2050

·  The bill contains a framework for an auction system, but it does not specify what percentage of allowances will be auctioned or what will happen to the proceeds.

·  There are several measures designed to address concerns about multiple, conflicting, or inefficient regulatory programs:

o  The President is directed to “harmonize” “to the extent practicable” DOT fuel efficiency standards, EPA regulations, and California regulations regarding motor vehicle emissions

o  Other than regulations implementing the act, EPA is precluded from using existing authority to regulate greenhouse gases as hazardous air pollutants or under NSR rules (unless they have non-climate change related impacts) and precludes listing of greenhouse gases as criteria air pollutants based on their impact on climate change

o  State cap and trade programs would be preempted, at least from 2012 through 2017. It appears as though allowances already issued under RGGI will be folded into the federal program

Overall, this looks like a measured approach designed to win support from both sides. Environmentalists will be pleased by firm caps, including a 2020 cap more stringent than some have proposed. Regulated industries will be pleased by the attempts to harmonize standards on motor vehicles, preclude Clean Air Act regulation of greenhouse gases, and to preempt state or regional cap and trade programs.

If I had to guess, I’d say that this bill marks the death knell for regulation of greenhouse gases under existing Clean Air Act authority (assuming that a bill gets passed; if Congress fails to act, then EPA certainly will use existing authority); it is probably also the beginning of the end of state and regional programs.  On both of these issues, If Representatives Waxman and Markey are already staking out this position, then it seems difficult to imagine a final bill that doesn’t incorporate these elements of the draft bill.  As to the rest, time will tell.

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