GTH Energy & Natural Resources Law Blog

In May, the federal courts rejected two more major cases in which plaintiffs sought damages from large emitters of greenhouse gases based on claims of climate-caused property damage. As a result of the U.S. Supreme Court's action, one of the major theories espoused by plaintiffs -- federal common law nuisance -- now appears to be dead. The fate of other major theories, however, remains uncertain because a federal appeals court could not escape a procedural tangle and therefore failed to definitively address those theories.

In the first case, involving the Native Village of Kivalina, Alaska, the Supreme Court denied a petition for certiorari filed by the plaintiffs, whose claim was earlier rejected by the U.S. Court of Appeals for the Ninth Circuit. As reported here previously, the Kivalina plaintiffs claimed that release of greenhouse gases has caused a significant decline of Arctic sea ice. Without the protection of sea ice, wave and storm damage from the Arctic Sea eroded the land underlying the Village. Under the plaintiffs' theory, greenhouse gas emitters are responsible for this property damage because greenhouse gases have caused the sea ice decline. The Ninth Circuit rejected Kivalina's claims, based on the federal common law of nuisance, concluding that federal common law has been displaced by the federal regulatory scheme under the Clean Air Act, which, as interpreted by the Supreme Court's 2007 opinion in Massachusetts v. EPA, reaches greenhouse gases as well as more traditional "criteria" pollutants. The Supreme Court's denial of certiorari appears to be the last gasp for climate lawsuits based on the federal common law. (Native Village of Kivalina v. Exxon Mobil Corp. et al. (Sup. Ct. Docket No. 12-1072).

Continue reading "May: A Tough Month for Climate Plaintiffs, But Odd Fifth Circuit Decision Leaves the Door Ajar" »

In a decision with important implications for both renewable energy and transmission developers, the U.S. Court of Appeals for the Seventh Circuit last week largely upheld a cost-spreading mechanism developed by the Midwest Independent Transmission System Operator ("MISO") to encourage expansion of high-voltage transmission facilities. Written by the renowned Judge Richard Posner, the decision (Illinois Commerce Commission v. Federal Energy Regulatory Commission, 7th Cir. Docket Nos. 11-3421 et al., issued June 7, 2013) may in time be most remembered for lighting the fuse that ultimately brought down the many state renewable energy policies that artificially favor in-state renewable producers at the expense out-of-state producers.

The holding is a response to Michigan's argument that it does not benefit from the high-voltage transmission lines favored by the MISO policy. Because its Renewable Portfolio Standard does not allow Michigan utilities to count out-of-state renewables toward meeting the requirement that they obtain ten percent of their power from renewables by 2015, improving transmission for out-of-state renewables does not benefit Michigan ratepayers. Thus, Michigan argued, it should not be required to bear a share of the cost of these facilities. Judge Posner rejected this argument in strikingly plain terms: "Michigan cannot, without violating the commerce clause of Article I of the Constitution, discriminate against out-of-state renewable energy." This holding threatens to unravel state laws from California to Massachusetts that, in various ways, artificially favor in-state renewable producers over out-of-state producers.

Continue reading "Casting A Constitutional Cloud On In-State Renewable Preferences, Seventh Circuit Upholds Transmission Cost-Spreading" »

The Washington State Court of Appeals today issued an opinion finding that Washington Public Utility Districts ("PUDs") have the statutory authority to condemn state school trust lands in order to construct transmission lines and other utility infrastructure. Today's opinion is the latest chapter in a twisting saga that began in 1996, when Okanogan County PUD began planning a new transmission line between existing substations in Pateros and Twisp in the Methow Valley. The opinion confirms that, unless state lands have been dedicated to a particular public use, PUDs have authority to condemn those lands for utility purposes. By extension, the opinion should allow other Washington municipalities, such as Port Districts, cities, and towns, to condemn state lands for public purposes because they have statutory condemnation authority similar to that of PUDs.

The long and winding road of litigation began with a decade of environmental review, culminating in a Court of Appeals opinion confirming that Okanogan PUD's environmental review met required standards and that the PUD did not act arbitrarily in selecting the route for the transmission line. (Gebbers v. Okanogan County Public Util. Dist. No. 1, 144 Wn.App. 371, 183 P.3d 324, rev. denied, 165 Wn.2d 1004, 198 P.3d 511 (2008)). The PUD then began obtaining easements covering the selected route. After negotiating easements for about 85% of the required land, the PUD then filed a petition for condemnation against the remaining property owners. Among the parcels involved in the condemnation proceeding was a tract of state school trust lands.

Continue reading "Washington Appeals Court Finds PUDs Have Authority to Condemn Public Trust Lands" »

Please join us on January 17 and 18, 2013, for the annual Buying & Selling Power in the West conference. Now in its 18th year, the conference brings together leading energy attorneys, expert consultants, industry executives, government officials, and many others to discuss the most pressing issues facing the energy industry in our region.

On January 18, Eric Christensen will present a lecture entitled "REC Wreck in the WECC: Litigation Challenging California's REC Market." Mr. Christensen will discuss how legislation adopted by the California legislature has strangled the market for renewable power in the Pacific Northwest, current litigation challenging that legislation, and approaches that could be pursued by Northwest renewables developers and owners to reopen the market on fully competitive terms.

Two cases of great importance to operators of dams, storm sewers, and other water works will be decided in the U.S. Supreme Court's current term. The first, Arkansas Fish & Game Commission v. United States (No. 11-597), involves a takings claim for flooding caused by a U.S. Army Corps of Engineers ("Corps") dam. The second, Los Angeles County Flood Control District v. Natural Resources Defense Council (No. 11-460), addresses whether a the operator of a municipal storm sewer system violated its permit under the Clean Water Act ("CWA") where its flood control structures channeled an already-polluted river, passing the polluted water through a man-made structure, but without adding new pollution.

In Arkansas Fish & Game, the state successfully asserted a claim that periodic flooding from a Corps dam, which caused significant damage at a wildlife refuge downstream from the dam, constituted a compensable "taking" under the Fifth Amendment of the U.S. Constitution. The property at issue, the Donaldson Black River Wildlife Management Area ("WMA") in northwest Arkansas, contains rare and important bottomland hardwood habitat. It is located approximately 115 miles downstream from the Corps' Clearwater Dam in Missouri, which was constructed in the 1940s as part of efforts to control flooding in the Mississippi Basin. In the 1990s, the Corps began to deviate from its accepted operating plan for the Clearwater reservoir in order to reduce damage to crops upstream from the dam. Arkansas claimed that the deviations from operating rules increased flooding in the WMA, damaging hardwoods and reducing the value of the habitat in the WMA.

Continue reading "Dams in the Supreme Court: Two Cases To Watch This Term" »

The U.S. Court of Appeals for the Ninth Circuit last week heard oral argument in a challenge brought by a number of out-of-state biofuel producers who assert that California's Low-Carbon Fuel Standard ("LCFS") violates the Commerce Clause of the U.S. Constitution because it discriminates against out-of-state producers and artificially favors in-state producers. The three-judge panel appeared, at times, perplexed, and at other times, to be highly skeptical of the LCFS.

For example, Senior Judge Dorothy Nelson, citing comments from California officials stating the LCFS will increase employment and tax revenue in California, asked, "Isn't this unambiguous evidence that the board was motivated by protectionism?" Similarly, observing that electricity is a major factor in the carbon intensity calculations used by California and that biofuels producers have no control over how the electricity they use is produced, "isn't this the equivalent of discriminating against producers with the 'dirtiest' electricity," who are generally located in the Midwest. Similarly, Judge Mary Murguia, seemed particularly troubled with LCFS regulations that, on their face, apply a higher carbon intensity score to Midwestern biofuels producers than to California producers. The third judge, Senior Judge Betty Fletcher, did not participate heavily in the argument, but observed that she followed the argument closely and, found some of the answers provided by the attorneys "very satisfactory, others not so much." An audio tape of the argument is available here.

(Sadly, Judge Fletcher passed away just five days after the argument. A native of Tacoma, Judge Fletcher had a highly successful legal career here in Seattle, where, among other achievements, she became the first female partner at a major Pacific Northwest law firm. She was appointed to the Ninth Circuit by President Carter in 1979. She will be missed.)

Continue reading "California, Climate Change, and the Commerce Clause: Ninth Circuit Expresses Skepticism in Argument Involving Low-Carbon Fuel Standard" »

In a case involving Golden Valley Electric Association ("GVEA"), an Alaska rural electric cooperative, the U.S. Court of Appeals for the Ninth Circuit yesterday rejected a claim that electric consumption records are private information protected under the Fourth Amendment to the U.S. Constitution. The Ninth Circuit's ruling may create a potentially delicate situation for Washington utilities because the Washington Supreme Court in 1997 reached a different result, ruling that residential consumers have a privacy interest in electric consumption records subject to protection under Article I, Section 7 of the Washington Constitution. Hence, the question whether electric consumption records are constitutionally protected now has a different answer under the U.S. constitution than it does under the Washington constitution.

The GVEA case arose from circumstances frequently encountered by electric utilities. In 2010, the U.S. Drug Enforcement Administration ("DEA"), suspected that several GVEA members were engaged in illegal drug operations. DEA therefore served an administrative subpoena on GVEA, requesting account information, including the name, address, credit card numbers, and power consumption history these GVEA members. GVEA resisted the subpoena, arguing that customer records contain private information protected under the Fourth Amendment, and also that the subpoena was flawed on a number of technical grounds.

Continue reading "Ninth Circuit Rejects Claim of Privacy for Electricity Consumption Records" »

Since last month's landmark U.S. Supreme Court ruling upholding the Affordable Care Act's ("ACA") individual health insurance mandate (National Federation of Independent Business v. Sebelius), the legal blogosphere has been atwitter with speculation that the ruling portends a significant rollback of environmental laws. We believe this view overstates the reach of the Chief Justice Roberts's opinion on the Commerce Clause, which is better understood as a refusal to further expand Congress's Commerce Clause power rather than as a significant contraction of that power.

Although Chief Justice Roberts upheld the mandate as a valid exercise of Congress's power to tax, permitting the imposition of a tax "penalty" on individuals who fail to obtain health insurance, the Chief Justice and four dissenting Justices concluded that the individual mandate could not be upheld pursuant to Congress's power to regulate under the Commerce Clause. In the view of many legal commentators, the alignment of a majority of justices agreeing on a narrow reading of the Commerce Clause signals the beginning of a retrenchment in Commerce Clause jurisprudence, which since the New Deal has interpreted the Commerce Clause to provide Congress with extremely broad power. Because almost all environmental laws are premised constitutionally on Congress's Commerce Clause power, a retrenchment in that power may lead to a significant narrowing of the reach of environmental laws.

Continue reading "Does The Supreme Court's Health Care Decision Augur a Rollback of Environmental Laws?" »