IRA Incentives for Carbon Sequestration and Low Carbon Fuels

Yesterday, President Biden signed the Inflation Reduction Act, creating a law that contains the most significant climate-related incentives in U.S. history. In the few short weeks since the bill was introduced in the Senate, a flurry of economic activity has already begun, with entities already beginning to align their business practices to the incentives laid out in the bill.

Among the many programs enhanced or created by the legislation,… More

Coming soon to Massachusetts cities and towns: all electric buildings

As we’ve discussed before, multiple cities and towns in the Commonwealth of Massachusetts have tried to ban fossil fuel hookups for new buildings by zoning or other ordinance over the past few years.  But in July 2020, the Massachusetts Attorney General’s Municipal Law Unit struck down the first such ban that came across its desk as inconsistent with other state law.  As we noted then, in order for municipalities to restrict or ban fossil fuel connections,

[T]he legislature must move first.  Don’t be surprised if the next big piece of climate legislation to come out of the Massachusetts State House addresses the issue of municipal authority in this area – if it doesn’t directly impose statewide restrictions.

“Crystal Ball / Glaskugel” by manoftaste.de is licensed under CC BY 2.0

It looks like our crystal ball was working!  While last week’s climate bill signed into law by Governor Baker did not impose statewide restrictions, it did provide a pathway for up to ten municipalities to ban fossil fuel hookups through zoning or ordinance, under a demonstration project managed by the Department of Energy Resources.

As the legislature, advocates, and the governor’s office weighed in on the scope of the pilot program, two issues generated significant disagreement:  (1) whether this was the right time to implement the program given that the grid is not yet sourced by mostly zero-carbon energy; and (2) how to ensure the program would not discourage the production of housing, including affordable housing.  Baker had pushed to delay implementation until 50% of the Commonwealth’s annual electricity consumption is generated from clean energy sources, and to exclude multi-family housing (along with hospitals, research laboratories, and health care facilities) from the municipal bans.  In the end, most of Baker’s proposed amendments to the program were rejected by the legislature.  But the final version does include certain protections for housing production, including a requirement that municipalities must meet the state’s 10% affordable housing requirements before they can participate in the program.

So what’s next?  Ten municipalities have already filed home rule petitions to enable them to participate in the program, including Brookline, whose first attempt at a fossil fuel ban was the subject of the Attorney General’s ruling two years ago. Yesterday, Boston’s Mayor Wu announced an intent to join the pilot program.  Although late to the game, Boston may be able to participate if the other municipalities are unable to meet the 10% affordability requirement.  The Department of Energy Resources will make the final determination as to which municipalities may participate and will produce an annual report analyzing impacts on emissions, building costs, operating costs, the number of building permits issued, and other matters.  Stay tuned to see what form these municipal bans end up taking and what impact they have.

The Inflation Reduction Act: Investments in Environmental Justice

The Biden administration has made it a priority to target environmental justice issues as part of the administration’s broader economic agenda. On August 7, the Senate passed the Inflation Reduction Act of 2022 (Act), which would provide about $369 billion to reduce greenhouse gas emissions to 40 percent below their 2005 levels by 2030 as well as reduce carbon emissions and invest in renewable energy. A small but potentially mighty component of the Act focuses on strengthening environmental justice.… More

NEPA Is Indeed Posing a Really Big Obstacle to Coal Mining On Public Lands

On Friday, I posted about a decision invalidating BLM Resource Manage Plans for failure to comply with NEPA.  My caption was “NEPA Is Still Going to Pose an Obstacle to Leasing Public Lands for Fossil Fuel Extraction.”  Little did I know how prescient I was, because later on Friday, Judge Brian Morris – the same judge who invalidated the RMPs – went farther and reinstated the moratorium on leasing of public lands for coal mining that had been implemented by then-Secretary Jewell in 2016. 

Once more, Judge Morris found DOI’s NEPA analysis inadequate.  When Secretary Zinke terminated the moratorium in 2017, litigation ensued and, in 2019, the Court ruled that the Zinke Order was subject to NEPA.  In response, DOI completed an environmental assessment and issued a finding of no significant impact with respect to the Zinke Order.

However, the EA only examined four specific leases that were directly affected by the original moratorium.  Furthermore, it assumed that the moratorium would have been terminated after three years, even absent the Zinke order.  Judge Morris was not pleased.

The EA did not take the “hard look” NEPA requires with respect to restarting the federal coal leasing program. Under NEPA, the “no action” alternative describes baseline conditions. These conditions reflect the “status quo” against which the impacts of the proposed action and its alternatives are to be measured. BLM improperly cabined its NEPA analysis for ending the coal leasing moratorium to the leases granted during the estimated PEIS timeline. BLM’s attempt to curtail the potential environmental impacts of lifting the moratorium, by failing to consider a potential alternative that provided a baseline of an indefinite moratorium, proves arbitrary and capricious.  (Emphasis added.)

And in case there was any lingering doubt about whether the Zinke Order was in fact likely to have a significant impact on the environment, Judge Morris noted that:

BLM had pending lease applications encompassing at least 1.8 billion tons of federal coal that would be mined from 28 mines across nine states at the time of the Zinke Order. BLM’s own analysis states that cumulative greenhouse gas emissions from the coal lease applications that were suspended under the Jewell Order would amount to more than one billion tons/year.

Time to chalk up DOI’s handling of the Zinke Order as just one more example of an administration that cared more about getting its press release out on twitter than it cared about providing any kind of sound legal basis for the actions that it took.

NEPA Is Still Going to Pose an Obstacle to Leasing Public Lands for Fossil Fuel Extraction

Earlier this month, Chief Judge  Brian Morris made clear that NEPA remains a powerful weapon against the leasing of public lands for fossil fuel extraction.  It’s déjà vu all over again for the projects at issue.  In 2018, Judge Morris ruled that two resource management plans (RMPs) prepared by the Bureau of Land Management concerning potential expansions of coal mines in Wyoming and Montana violated NEPA for a variety of reasons, including the failure:  (1) to consider alternatives the would involve reducing the amount of available coal and (2) to adequately assess environmental impacts resulting from the downstream combustion of the extracted coal.

After BLM revised the RMPs in 2019, plaintiffs sued again.  Once more, Judge Morris found that the RMPs violated MEPA, again for the same two reasons.

With respect to consideration of alternatives, Judge Morris found that BLM’s refusal to consider alternatives that preclude the expansion of existing mines violated NEPA.  BLM and Wyoming both argued that the so-called “multiple use” approach of the Federal Land Policy and Management Act precludes BLM from considering a no-leasing alternative.  Judge Morris disagreed.

Put simply, NEPA requires BLM to bookend its analysis by considering a no-future-leasing alternative and at least one alternative that further reduced leasing by reducing the potential for expansion.  FLPMA’s “multiple use” directive requires BLM to manage public lands and resources in a manner that “takes into account the long-term needs of future generations for renewable and nonrenewable resources [. . .] without permanent impairment of the productivity of the land.” Coal mining represents a potentially allowable use of public lands, but BLM is not required to lease public lands. The multiple use mandate does not bar BLM from considering a no leasing alternative for public lands.

In short, the need to balance different uses does not allow BLM to avoid assessing whether that balance may require an alternative that limits future fossil fuel extraction.

Judge Morris also faulted BLM for failing to consider the downstream impacts of coal combustion, including impacts not related to GHG emissions:

NEPA requires agencies to analyze “any adverse environmental impacts which cannot be avoided should the proposal be implemented.” These impacts include “direct” and “indirect” effects. Indirect effects are “caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable.” Without a full analysis of non-GHG downstream emissions, the EIS fails to “foster informed decision-making” required by NEPA.

In all of the recent discussions of Senator Manchin’s efforts to facilitate fossil fuel projects, it seems worth noting that, while procedural changes may help nibble around the edges of NEPA, absent meaningful substantive revisions to NEPA requirements, citizen suits will remain a powerful weapon against further development of fossil fuel resources on public lands.

Massachusetts Passes Climate Bill Focused on Clean Energy and Offshore Wind

Governor Baker signed the climate bill (H.5060), titled An Act Driving Clean Energy and Offshore Wind, into law on Thursday August 11, 2022. The act combines and modifies provisions from the House’s proposed offshore wind bill (H.4524) and the Senate’s proposed omnibus climate bill (S.2819). The legislation covers a wide range of policy changes focused on electrifying vehicles and transit, reducing fossil fuel connections in new construction,… More

Massachusetts Clean Energy Bill Turbocharges the Adoption of Zero Emission Vehicles and Clean Transportation

Based on numerous sources, Governor Baker has now signed an Act Driving Clean Energy and Offshore Wind.  This bill includes a number of key advancements for increased adoption of zero emission vehicles and clean transportation throughout the Commonwealth.  The law:

  1. Outlaws the sale of internal combustion vehicles by any dealership after January 1, 2035 by making it an unfair or deceptive act or practice under Chapter 93A;…
  2. More

Inflation Reduction Act Aims to Propel EV and Clean Fuel Vehicle Adoption

The Inflation Reduction Act looks to accelerate the adoption of clean vehicles by reforming the related tax credits in a number of key ways.  Specifically, the bill does the following.

  1. Eliminates the 200,000 clean vehicles sold quota per manufacturer.
    • Previously, Tesla, GM, and Toyota were all over the 200,000 vehicle threshold and thus ineligible for the tax credit.
  2. Preserves the existing up to $7,500 tax credit for new qualified vehicles including electric,…
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The Battle Over PFAS Continues to Heat Up. The Assessment of Costs and Benefits Remains Undone.

Last month, EPA issued interim health advisories for PFOA and PFOS that took many people’s breath away.  It is rather amazing how quickly we’ve moved from parts per billion past parts per trillion to the low parts per quadrillion range. 

At the same time, EPA issued a final health advisory for GenX compounds, setting the level at 10 parts per trillion.  Although the GenX advisory is roughly three orders of magnitude higher than that for PFOA or PFOS, it still had a seismic effect.  It’s important to remember that PFOA and PFOS have been phased out and that GenX was developed as a safer replacement.  Moreover, its importance in manufacturing cannot be overestimated.

The EPA health advisory prompted a law suit earlier this month by Chemours, which manufactures GenX.  In its petition to the 3rd Circuit Court of Appeals, Chemours emphasized the importance of its products:

Fluoropolymers are used in every car, airplane, and cellphone. They are also critical to maintaining the integrity and quality of the vast majority of prescription drugs; to producing medical equipment such as catheters, saline bags, and filtration devices for newborns; and to manufacturing computer chips.

Fluoropolymers are also necessary for the advancement of green technology: They are used to produce hydrogen from renewable sources and are at the heart of the hydrogen fuel cell. In sum, the responsible manufacturing of fluoropolymers in the United States is critical to furthering U.S. technology leadership; onshoring key industries (including semiconductor manufacturing); and enabling American supply chain resiliency and security.

EPA’s health concerns and Chemours’ economic concerns may be why, in reporting on the suit, Greenwire (subscription required) described the upcoming battle over PFAS as likely to be “ferocious”.  Nice word choice and probably not far off the mark.

I don’t really have a view about the substantive merits of the petition, but I’ll note two points.  First, health advisories have no regulatory impact and it’s not at all obvious that the issuance of the advisories constitute final agency action.

Second, and more importantly, the dispute over the health advisories points out a recurring weakness that we see in our environmental health statutes.  Health advisories are different from national ambient air quality standards, since NAAQS do have regulatory consequences.  However, they are similar in that EPA goes through a scientific process to determine the risks posed by some type of exposure to some type of chemical.  That process evaluates risk, but it does not address benefits.

Once the “standard” or “advisory” is published, real-world consequences follow – regardless of the formal legal impact.  And we still haven’t figured out a way to balance costs and benefits.

Sometimes, I despair that we ever will.  The ferocious battles will resume, but little will be resolved.  Déjà vu all over again.

Is Momentum Building To Change the Way We Manage Plastic?

There has been a reasonable amount of recent activity related to management (or lack thereof) of plastic waste.  Two more developments this month have me wondering whether we might be near the proverbial tipping point in our approach to managing plastics.

First, California enacted a fairly sweeping statute, S.B. 54, that will impose extended producer responsibility requirements on producers of plastics.  The statute has at least three significant pieces:  (1) a requirement to increase the percentage of single-use packaging that is recycled, reused, or composted to 65% by 2032; (2) imposition of significant taxes, $5 billion over the next ten years, to fund efforts to address plastic pollution; and (3) the creation of “producer responsibility organizations”, which will establish “producer responsibility plans … for the source reduction, collection, processing, and recycling of covered material.”  Producers will not be permitted to sell covered materials unless the PRO has approved the producer to participate in the PRP.

The federal government is nowhere near implementing anything so ambitious, which is why the General Services Administration just issued an advanced notice of proposed rulemaking in order to take comment on a range of issues that go to the feasibility of reducing single-use plastics in government procurements.  The ANPR not only doesn’t propose anything, it doesn’t even suggest possibilities.  It is purely an information-gathering tool.  Comments will be due on September 5, 2022.

So, are these two developments a harbinger of things to come?  I do think that pressure is going to continue to build for action to reduce plastic pollution.  No one likes to see pictures of marine mammals tangled in plastic fishing gear or read stories that microplastics and nanoplastics are detectable in human blood and lungs.

That being said, before these individual efforts can add up to a comprehensive plan, policy makers are going to have to wrestle with the fact that plastics are pervasive for a reason – they’re damn convenient.  We’re going to need some technological breakthroughs that find ways to deliver the convenience that plastics provide without the costs that waste plastics impose.

I hope that all of the smart materials scientists at MIT are hard at work.  If I believed it was possible to beat the market, I’d be investing in startups with smart ideas for replacing plastics with alternatives that don’t come with the same level of negative externalities.

Wondering How States Will Respond to West Virginia v. EPA? Massachusetts Provides An Early Answer

Those wondering what states can do to at least partially ameliorate the impacts of West Virginia v. EPA need look no farther than Massachusetts, which issued its Clean Energy and Climate Plan for 2025 and 2030 the same day that the Supreme Court extended its crusade against the modern world by limiting EPA’s authority to regulate in the absence of a clear delegation by Congress.

First, a caveat.  There is no panacea.  Whatever states do, they can’t do everything, and they certainly cannot fully replace federal regulations.  The fundamental problem of climate change remains economic – we don’t have regulations in place forcing those whose products emit GHG to internalize the costs imposed by those emissions.  Until we do, everything else is just a patchwork.

That being said, states such Massachusetts can do a lot, and the CECP for 2025 and 2030 gives some sense of the ambition.  First, the goals.  Massachusetts will – it says here – reduce GHG emissions by 33% from 1990 levels by 2025, and will reduce them 50% by 2030.  Here are three important parts of the plan, addressing electrification, buildings, and transportation:

  • Continued rapid buildout of offshore wind. Massachusetts will continue to enter into PPAs with wind project developers.  It will also take a number of steps to build the broader offshore wind marketplace through a range of downstream efforts, including workforce development.
  • “Rapid, cost-effective deployment of heat pumps by 2030.”
  • Buildout of EV charging infrastructure.

All of this is great, and I’m confident that the steps Massachusetts takes will help incentivize innovations that will drive these technologies down the cost curve.  What’s important to note here, though, is that all of these developments rely on a combination of economic incentives and good old-fashioned, government regulation.

 

  • Offshore wind incentives are paired with regional and state limits on GHG emissions.
  • The deployment of heat pumps will be encouraged, not just by economic incentives, but also by regulations, effective as early 2024, that will impose limits on GHG emissions from buildings.
  • The massive shift to electric vehicles will be encouraged through government programs to facilitate EV charging infrastructure – and by regulations that will prohibit sales of non-electric vehicles after 2035.

States can do a lot.  And Massachusetts is doing a lot and will continue to do so.  And the Massachusetts economy will benefit.  But if our eyes are on the prize of driving net emissions down to zero economy-wide, the federal government is going to have to have tools to do so – tools that are blessed by the Supreme Court.

West Virginia v. EPA Limits the Federal Government’s Power to Promote Clean Energy and Combat Climate Change

The Supreme Court decided West Virginia v. EPA on Thursday, June 30, 2022, curbing the power of the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions from power plants across the country.  The decision focuses on EPA’s authority under a specific section of the Clean Air Act.  But a closer read suggests more sweeping, longer-term implications for incentivizing the development of clean energy projects nationwide.

What is the case about? 

The case resolves a years-long dispute over EPA’s authority to issue the Clean Power Plan, which set limits on greenhouse gas emissions for power plants in all fifty states.  In setting those limits, EPA had to consider the “best system of emission reduction” that “has been adequately demonstrated.”  EPA determined that the “best system” was “generation shifting,” that is, shifting power generators off coal to natural gas or renewables such as wind and solar.

What did the Court decide?

The Court ruled that EPA lacked the authority under the Clean Air Act to issue the Clean Power Plan.  The Court found that EPA’s use of “generation shifting” was a sweeping new authority EPA had assumed over the nation’s electricity generation sector, an authority that was not clearly delegated to the agency by Congress.

The Court relied on a legal principle known as the major questions doctrine.  The doctrine’s precise meaning is hard to pin down in the Court’s opinion, but the gist is that some policy questions are just too big for federal agencies to address in the first instance, absent clear and explicit congressional authority.  The Court determined that regulating the country’s power grid and phasing out coal presented a major question.  It also determined that the Clean Air Act did not clearly give EPA the authority to address that question through generation shifting under the Clean Power Plan.

What does this mean for clean energy projects?

Make no mistake:  the Court’s opinion will have major implications for how the federal government addresses climate change nationally.  The Court’s ruling means that federal agencies, such as EPA, are strictly limited in how they can use existing laws, like the Clean Air Act, to implement new climate policies.  The responsibility for enacting those policies will fall to Congress.  Yet Congress has been deadlocked on climate for years.

The imminent impacts on clean energy projects are uncertain.  Likely, there won’t be a significant, immediate effect.  The Clean Power Plan’s emissions limits were never operative.  Yet as the government noted in oral argument, that did not deter industry from achieving the Plan’s “emission limits a decade ahead of schedule in the absence of any federal regulation.”  In other words, market forces, not federal regulators, were responsible for shutting down coal plants in favor of cleaner sources of electricity.

The decision also does nothing to deter states from setting their own aggressive emissions limits.  Instead, it seems to affirm state leadership in the realm of public utilities regulation.  It is telling that on the same day the Court decided West Virginia v. EPA, the Massachusetts Secretary of Energy and Environmental Affairs, acting pursuant to the state’s 2021 Climate Roadmap Act, announced new commitments to reducing greenhouse gas emissions, including by “electrifying non-electric energy uses” and by “decarboniz[ing] the electric grid.”

Yet the longer-term impacts may prove more problematic.  One benefit of the Clean Power Plan was its national effect.  All fifty states would have had to engage in some amount of generation shifting to meet the Plan’s requirements.  Now it is largely up to individual states whether to incentivize clean energy projects, but many states may opt to protect traditional fossil fuel generation instead.  There is only so much that New England, New York, California, and other likeminded states can accomplish on their own.  Project proponents would certainly benefit from a unified national policy that promoted clean energy projects everywhere.

We’ll be taking a closer look at decision and how it might affect the market in the coming weeks. Stay tuned for updates.

Biden-Harris Administration Announce New Proposed Rules for National Electric Vehicle Charging Network

On June 9, 2022, the Biden-Harris Administration announced a notice of proposed rulemaking to set minimum standards and requirements for projects funded through the National Electric Vehicle Infrastructure Formula Program (“NEVI”), which was created by the Infrastructure Investment and Jobs Act.  Generally, NEVI will distribute $1 billion per year, for FY 2022-2026, in appropriations to help fund the construction of EV charging stations and related infrastructure. … More

FWS and NOAA Decide That “Habitat” Should Not Be Defined By Regulation: I Hope This Is Good News

This week, the Fish and Wildlife Service and the National Oceanic and Atmospheric Administration issued a rule rescinding the rule issued in 2020 defining “habitat” for the purposes of determining what constitutes “critical habitat” under the Endangered Species Act.  You see, in a piece of expert legislative drafting in 1973, Congress defined the term “critical habitat” without defining “habitat” in the first place.  Sigh.

This came to a head in 2018 in Weyerhaeuser v. USFW, in which the Supreme Court, in its wisdom stated that :

An area is eligible for designation as critical habitat under §1533(a)(3)(A)(i) only if it is habitat for the species.

The question in Weyerhaeuser was whether the FWS could designate land as critical habitat for the dusky gopher frog even if no dusty gopher frogs were actually present.  I still don’t quite understand why the case even got to SCOTUS, because the ESA explicitly provides that: 

The term “critical habitat” for a threatened or endangered species means—

(i) the specific areas within the geographical area occupied by the species, at the time it is listed in accordance with the provisions of section 4 of this Act, on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection; and

(ii) specific areas outside the geographical area occupied by the species at the time it is listed in accordance with the provisions of section 4 of this Act, upon a determination by the Secretary that such areas are essential for the conservation of the species.

It seems to me that the italicized language pretty clearly gives the Secretary precisely that authority.  In any case, the Trump Administration seized on the Weyerhaeuser remand and promulgated a regulation in 2020 defining the term “habitat” and, in so doing, excluded areas which might be necessary to the survival of a species, if those areas do not currently or periodically do so.  In other words, areas that could be restored would not qualify has “habitat”.

Based on the science as I understand it, the new rule is clearly appropriate.  However, the decision to rescind the 2020 definition, but not replace it – and the agencies’ rationale – pretty much adds up to “we know it when we see it.”

We know it when we see it may in fact be the most scientifically justifiable approach to protecting critical habitat.  However, if the Supreme Court uses its imminent decision in West Virginia v. EPA to revive the non-delegation doctrine, I wonder what it will think of ESA provisions that refer to an undefined word – “habitat” – when the agencies themselves concede that they cannot come up with a workable definition of the term.

I guess that:

It is emphatically the province and duty of the judicial department to say what the law is.

Parts Per Trillion, We Hardly Knew Ye; Sell Hello to Parts Per Quadrillion

Just when we environmental old-timers were just getting used to talk about PFAS concentrations in the low parts per trillion range, EPA has moved us squarely into uncharted territory.  EPA has released new, interim, lifetime drinking water health advisories of 4 parts per quadrillion for PFOA and 20 parts per quadrillion for PFOS.  I’ll just note a couple of points: 

  • I think it sort of charming that EPA still states the health advisories in the units of parts per trillion (0.004 ppt for PFOA and 0.020 ppt for PFOS, for arithmetically challenged readers). I can only imagine that EPA concluded it would be less terrifying to continue to use parts per trillion.
  • These are interim standards (though EPA did issue a Final health advisory of 10 parts per trillion for GenX Chemicals today as well). Also, it’s worth a reminder that, as EPA noted, health advisories “are not regulations and should not be construed as legally binding.”
  • On the other hand, EPA’s Federal Register notice states that EPA is working on development of Maximum Contaminant Level Goals and expects to propose them later this year.

Whatever the regulatory status of health advisories, it would be wise to assume, absent a successful legal challenge, that parts per quadrillion concentrations for at least these two PFAS are going to work their way into regulations under both the Safe Drinking Water Act and CERCLA.

That’s when the real fun will begin.