One of President Trump’s early campaign promises was to dismantle the 2015 Clean Water Rule, the Obama administration’s regulation asserting federal power over navigable bodies of water and aiming to replace polluting coal-fired power plants with clean energy facilities. Now, thanks to a district court ruling in D.C., Trump may be one step closer to actualizing that promise. To learn more about this ruling and its impact, read on!
Congress returns this week from the President’s Day recess to a changed landscape with the death of Supreme Court Justice Scalia. The Supreme Court vacancy has important ramifications for the EPA’s Clean Power Plan, which was stayed by the Supreme Court earlier this month. The stay had led many to believe that the plan was in danger, but a 4-4 ideological split on the court until a successor is confirmed means that the U.S. Court of Appeals for the District of Columbia may be the final arbiter for the plan.
Meanwhile, Senate Energy and Resources Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) and their staff continued working to overcome an impasse on the bipartisan energy bill. While there is no break on the impasse yet, there are a number of hearings scheduled for this week at the various committees. Elsewhere, on February 17 the Department of Energy announced $3 million in 10 new projects to apply high-performance computing to manufacturing challenges. The same day, the agency issued a release touting “5 Big Wins in Clean Energy from the Loan Programs Office.” For more on the week in Washington, read this week’s update from ML Strategies!
The bipartisan energy bill, which Congress has focused on since the start of the new year, has been put on hold following a disagreement over federal aid to address the water crisis in Flint, Michigan. The energy bill was debated on the Senate floor the past two weeks before coming to a halt last Thursday when senators could not agree on the size and scope of an aid package offered by Senators Debbie Stabenow (D-MI) and Gary Peters (D-MI) to help Flint, Michigan.
Meanwhile, President Obama released his fiscal year 2017 budget request on February 9, which includes $32.5 billion for the Department of Energy. The request calls on the agency to increase clean energy efforts and spending, including $7.7 billion for clean energy across several agencies, about 76 percent of which would go to the DOE for vehicle and building efficiency programs, weatherization, and ARPA-E. Also on February 9, the Supreme Court stayed the Environmental Protection Agency’s Clean Power Plan until all legal challenges are complete, thereby reversing the U.S. Court of Appeals for the District of Columbia Circuit’s January 21 decision. Lawsuits over the rule will continue at least into 2017, and the Supreme Court is expected to be the final arbiter of the regulation. For more on these developments and the latest from D.C., read this week’s update from ML Strategies.
Last week, the Supreme Court handed down a ruling affirming that federal regulators may encourage large electricity users to reduce consumption at peak times in exchange for price breaks, a practice known as “demand response.” The 6-2 ruling overturned a federal appeals panel ruling issued last year, and was hailed by environmentalists as a major victory. Demand response promotes electricity conservation and has been heavily supported by the Obama administration. For more on the ruling and what it means for the energy industry, read on.
Tom Burton, Chair of Mintz Levin’s Energy Technology Practice, will publish a weekly installment providing insight into the challenges and possible solutions that, if implemented, promise a bright future as clean energy moves America forward. In this series, Tom will include one challenge per week and the potential solution(s). This is the second installment of the series. To read Part 1, click here.
The Problem: Supply and Demand Geographic Mismatch
Because much of America’s renewable energy supply is inland and demand is on the coasts (about 52% of the U.S. population is coastal), demand cannot meet supply without extensive transmission networks. For instance, about 60% of the nation’s wind energy is produced inland – Texas alone accounts for 25%. However, states and localities have many different rules regarding the siting of these lines, making project development complex. While the Federal Power Act (FPA) grants the Federal Energy Regulatory Commission (FERC) authority to regulate electricity transmission in interstate commerce as well as the sale of electricity for resale, it reserves all other authorities to the states.
- Recently, the D.C. Circuit Court of Appeals used the FPA to invalidate a FERC Order encouraging demand response because states have jurisdiction over interstate transmission.
- In 2014, Ohio enacted a bill to revise the setback distance to a minimum of 1,125 feet from the nearest property line. Several proposed wind farms were immediately off the table, and had the Blue Creek Wind Farm not been grandfathered in, only 12 of its 152 turbines would have been able to be built. The case shows that the complicated nature of regulations has implications for renewable energy development beyond transmission alone.
- CapX2020 was a Minnesota project involving several utilities that wanted to expand transmission for wind development. It took over 11 years to complete, in part due to a state law known as “Buy the Farm,” which allows landowners to require utilities purchase their entire property outright. CapX required negotiations with over 2,000 landowners, about 100 of whom requested buy the farm and have negotiated over many years. If this continues, renewables will truly “buy the farm.”
Obviously, the rules need to change, but how?
The recent 7-2 U.S. Supreme Court decision in Oneok, Inc. et al. v. Learjet, Inc. et al. ruled that state law antitrust claims brought against interstate pipeline companies by a group of manufacturers and other retail buyers of natural gas are not pre-empted by the Natural Gas Act. The two dissenting voices, Justice Scalia and Chief Justice Roberts, set forth in their opinion that the Court “smudges” the “firm line” drawn by the Court’s prior cases between national and local authority over the natural gas trade. Though the battle over pre-emption and the division of power between federal and state regulators under the Natural Gas Act is not new, this case, as discussed in this alert, revives an issue that the dissent asserts was “settled beyond debate” by Public Util. Comm’n of Ohio v. United Fuel Gas Co., 317 U.S. 456 (1943) and its progeny.
By David Leiter, Sarah Litke, Jean Cornell, Bryan Stockton, Jordan Collins and Neal Martin
As we’ve been predicting, tax reform will not happen this year. With 2013 coming to a close, preparations are being made to resurrect the effort in 2014, and comprehensive reform looks as difficult for the coming year as it has been for this year. As a result, Representative Richard Neal (D-MA) said last week that extenders, and particularly energy-related tax extenders, could come up early next year. Senate Finance Chairman Max Baucus (D-MT) has also suggested the same thing. Chairman Baucus is expected to unveil tomorrow his energy tax concept paper, his proposal for reforming the energy section of the tax code.
Members of the House Sustainable Energy and Environment Coalition sent a letter to the House Ways and Means Committee December 16 calling for key energy tax previsions to be extended since broader tax reform efforts will not be finalized before the end of the year. Their list includes the renewable energy production tax credit, the investment tax credit, the 48C Advanced Energy Manufacturing Tax Credit, efficient home and appliance credits, and hybrid vehicle credits. Congressional tax writers had hoped to avoid an extenders package in favor of addressing the issues as part of a broader tax reform effort, but delays have clean energy advocates concerned. The same day, Senator Ed Markey (D-MA) was joined by 19 of his colleagues in sending a companion letter to the Senate Finance Committee.
In a December 9 letter, 68 advanced biofuel companies urged Senate Finance and House Ways and Means leadership to prevent certain tax credits from expiring at the end of the year. The groups promoted the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit, the Biodiesel and Renewable Diesel Fuels Credits, the Second Generation Biofuel Producer Tax Credit, and the Special Depreciation Allowance for Second Generation Biofuel Plant Property.
Before recessing for the holidays, and with the end of the year approaching, the House voted 350-69 to approve the National Defense Authorization Act and 332-94 in favor of the Ryan-Murray budget agreement. Both bills include energy and environment related topics. The NDAA includes compromise language on biofuels procurement while the budget deal increases overall spending and discretionary levels for agencies such as the Department of Energy. The Senate is focusing on these two bills this week, with passage of the budget imminent and the Defense Authorization Bill expected to be approved, as well as nominations before it also recesses for the holidays. Additionally, Senate Agriculture, Nutrition, and Forestry Committee Chair Debbie Stabenow (D-MI) said late last week that House and Senate agriculture leaders are close to finishing a final framework for the multiyear farm bill reauthorization, with the hope of having it ready to go in January. The current farm bill expired after fiscal year 2012, but Congress negotiated a one-year extension for it into the American Taxpayer Relief Act in January 2013. The House passed a one-month extension on December 12, but Senator Stabenow is hopeful that lawmakers will reach a final agreement before the price of milk is impacted.
By David Leiter, Sarah Litke, Jean Cornell, Bryan Stockton, Jordan Collins and Neal Martin
When the President outlined his Climate Action Plan on June 25, he stressed the importance of federal leadership on emissions reduction efforts. A little over five months later, he signed a presidential memorandum directing the federal government to obtain 20 percent of its electricity from renewable energy by 2020. The December 5 directive creates an action item for the Climate Action Plan and builds upon the 2009 Executive Order 13514, Federal Leadership in Environmental, Energy, and Economic Performance. A fact sheet on the memorandum can be found here.
In the week after Thanksgiving, the Senate was in recess while the House addressed legislation on patent litigation and private equity fund advisers. Members of the farm bill, budget, and Water Resources Development Act conference committees continued to meet. Many do not believe that all three will be finished by the end of the year, with one or two being pushed back into 2014.
The House this week will consider the Medicare sustainable growth rate. Should they become available, conference committee reports on the farm bill and the budget might also be considered. On the other side of the Capitol, the Senate will resume debate on the National Defense Authorization Act. Across the street, the Supreme Court will hear oral arguments on Tuesday on a case questioning the federal government’s authority to regulate new power plant emissions.
Senate Energy and Natural Resources Chairman Ron Wyden (D-OR) and Ranking Member Lisa Murkowski (R-AK) led a November 26 letter to Environmental Protection Agency Administrator Gina McCarthy, urging the agency to make its Energy Star program more transparent. The letter said the agency should ensure it is collaborating with stakeholders. Other signatories were Senators Al Franken (D-MN), Rob Portman (R-OH), Tammy Baldwin (D-WI), Kay Hagan (D-NC), Tom Harkin (D-IA), and Jeff Merkley (D-OR).
By: Sahir Surmeli
California lawmakers passed the “California Global Warming Solutions Act,” AB32, which included regulations known as the Low Carbon Fuel Standard. The standard required the oil industry to reduce the carbon intensity of industrial fuels such as diesel and gasoline by a minimum of 10 percent by 2020. The standard was challenged by a group of fuel makers, trucking interests, and farming interests. Although the challenged was initially successful, just this week California appealed and won that appeal to keep the new standard in place. Continue Reading California’s Low Carbon Fuel Standard Upheld after Initial Defeat in Federal Court