Recently in environmental regulation Category

Complicating "Coal By Wires" Regulation, Minnesota Court Strikes Down Greenhouse Gas Regulation

April 21, 2014

In a ruling with potentially far-reaching consequences for state-level attempts to regulate greenhouse gases, the U.S. District Court for the District of Minnesota on April 18 issued a ruling striking down key elements of Minnesota's Next Generation Energy Act ("NGEA"). For the Pacific Northwest, in particular, the ruling could complicate efforts by Washington, Oregon, and California to limit "coal by wires" -- the importation of coal-generated electricity from plants located in states like Montana and Arizona. State of North Dakota et al. v. Heydinger et al., No. 11-cv-3232 (SRN/SER) (issued April 18, 2014).

Passed by Minnesota's legislature in 2007, the NGEA is aimed at reducing the carbon footprint of electricity consumed in the state. The statute prohibits new power plants within Minnesota that "would contribute to state power sector emissions." To address the "coal by wires" problem, the statute also broadly prohibits importing power generated outside Minnesota if that generation "would contribute to statewide power sector carbon dioxide emissions," and also prohibits long-term power purchase contracts from facilities larger than 50 MW that would contribute to Minnesota's power sector carbon dioxide emissions.

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More Clouds for Coal: Oregon PUC Questions PacifiCorp Expenditures on Coal Fleet

March 24, 2014

March 17 was not a happy St. Patrick's Day for PacifiCorp's coal fleet. Echoing recent actions by the Washington Utilities & Transportation Commission ("WUTC"), the Oregon Public Utility Commission ("OPUC") expressed serious reservations about the assumptions embedded in PacifiCorp's Integrated Resource Plan ("IRP") concerning anticipated expenditures for pollution control equipment at its fleet of coal-fired generators. While the OPUC did not take any specific action, it made clear that PacifiCorp will be required to engage in a substantially more robust modeling of the costs of pollution control and other upgrades for its coal generators.

The stakes for PacifiCorp's coal fleet, which consists of 26 units scattered across five Western states, are substantial. According to current estimates, PacifiCorp will be required to invest more than $4.2 billion for pollution control retrofits before 2023, not including any upgrades that may be required to comply with limits on greenhouse gas emissions. Based on a report from the Commission's staff, as well as comments from interest groups ranging from the Oregon Department of Energy to the Sierra Club, the OPUC raised a number of serious questions about the IRP's economic modeling, baseline assumptions, and timing of proposals for coal-related upgrades embedded in PacifiCorp's 2013 IRP update.

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BPA Attempts to Split the Baby on Oversupply Management Costs

February 28, 2014

In its latest effort to put to rest the years-long controversy that has swirled around its efforts to address excessive electricity production during periods when high winds coincide with high water in the Columbia River system, the Bonneville Power Administration ("BPA") recently issued a draft Record of Decision ("ROD") allocating the costs of such events. While wind generators argued for allocating all such costs to BPA's power customers and BPA's power customers urged BPA to assign all such costs to its transmission customers, BPA chose a third path. In the recent draft ROD, issued by newly-minted BPA Administrator Elliot Mainzer, BPA concluded that it should allocate oversupply costs to those generators operating within its balancing authority area that have scheduled power during an oversupply event. BPA's chosen alternative was supported by only one out-of-region entity, so it is unlikely to end either the controversy or the protracted litigation that has resulted.

As we have previously reported, the oversupply problem is an unintended consequence of the rapid expansion of wind generation in the Pacific Northwest. The wind fleet's capacity in the region now exceeds 7,000 MW, with 4,500 operating in BPA's balancing authority area. The oversupply problem arises when strong spring winds coincide with high spring runoff in the Columbia River Basin. In this situation, the combined electric power produced by federal dams on the Columbia River and wind generators in the region can exceed electrical loads. Further, the obligation to maintain dissolved gases within limits set by environmental authorities in order to avoided gas bubble trauma in fish (especially endangered salmon and steelhead runs), limits the amount of water dam operators can release over spillways, which adds to dissolved gas loads, requiring them instead to run the water through generators.

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Bully for Biomass: Washington Supreme Court Rejects Greenhouse Gas Claims, Upholds Finding of No Significant Environmental Impact for Biomass Facility

February 27, 2014

The Washington Supreme Court today rejected claims that the potential for greenhouse gas ("GHG") from a biomass facility triggers the requirement to prepare a full Environmental Impact Statement under Washington's State Environmental Protection Act ("SEPA"). Today's decision promises to greatly simplify the permitting process for projects planning to use woody biomass and should help clarify how GHG emissions are treated for biomass-fired facilities, a question that has bedeviled courts and regulators in other contexts. PT Air Watchers et al. v. State of Washington et al., No. 88208-8 (issued Feb. 27, 2014).

The controversy arose from Port Townsend Paper Company's plans to modernize the boiler at its paper mill by increasing the use of woody biomass to fuel the boiler, increase the boiler's firing efficiency, and adding a 25 megawatt generator to produce electricity. The paper company prepared a SEPA "checklist" in accordance with WAC 197-11-960. The checklist concluded that, because the project would reduce burning of fossil fuels by burning woody biomass instead, it would produce a net reduction in GHG emissions. The Department of Ecology agreed, concluding that no EIS was required because the project would not produce significant environmental impacts. A coalition of local environmental groups challenged this finding, but the challenges were rejected both in an administrative appeal and by the reviewing courts. The Washington Supreme Court accepted review and today affirmed Department of Ecology's finding that no significant environmental impacts requiring preparation of an EIS would result from the project.

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Beginning of the End for Colstrip? Washington UTC Rejects Puget Sound Energy's Analysis of Coal Plant Economics

February 7, 2014

The Washington Utilities & Transportation Commission ("UTC") yesterday rejected Puget Sound Energy's ("PSE") economic justification for continued operation of its Colstrip coal plant. The UTC's action, while not sealing the fate of Colstrip, sends PSE back to the drawing board and casts doubt on the future of the plant, which is already the subject of legal action brought by a coalition of environmental groups.

The UTC's findings were made in the context of PSE's 2013 Integrated Resource Plan. Under Washington law, the state's investor-owned utilities are required to develop and submit an Integrated Resource Plan to the UTC, which must be updated every two years. The Integrated Resource Plan is intended to analyze the alternatives available to meet the utility's anticipated load, and to identify the least-cost alternatives.

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Over Heated Dissent, Ninth Circuit Rejects Rehearing in Low Carbon Fuel Standards Challenge, Setting Up Possible Supreme Court Commerce Clause Showdown

January 23, 2014

The U.S. Court of Appeals for the Ninth Circuit today rejected petitions for rehearing of its decision in Rocky Mountain Farmers Union v. Corey, the opinion issued last September which rejected constitutional challenges to California's low-carbon fuel standard. Seven judges dissented from the decision and took the unusual step of publishing their dissent which, in strongly-worded language, accused the majority of disregarding "longstanding dormant Commerce Clause doctrine" and placing the circuit "squarely at odds with Supreme Court precedent." This prompted Judge Ronald Gould to take the equally unusual step of issuing a written opinion defending the majority's decision to deny the petitions for rehearing.

As we have previously discussed, last fall, the Ninth Circuit, in a 2-1 split decision, upheld California's low-carbon fuel standard against challenges brought by out-of-state ethanol manufacturers, farmers, and allied interests. The challengers argued that, by using a geographically-based system for assessing the carbon footprint of different sources of ethanol and assigning higher default scores to Mid-Western producers than to California producers, California's system discriminated on its face against these out-of-state producers, and therefore violated the Commerce Clause of the U.S. Constitution. Under a doctrine known as the "dormant Commerce Clause," the courts have long held that states are prohibited from imposing constraints on interstate commerce that discriminate against out-of-state economic interests and artificially favor in-state interests. The panel's majority concluded that the low-carbon fuel standard is not facially discriminatory because California's system for assessing the carbon footprint of different ethanol sources is based on objective scientific evidence rather than on impermissible discrimination against out-of-state producers. Nonetheless, the Court remanded the case to the trial court to review evidence that might prove whether the low-carbon fuel standard discriminates against out-of-state producers in practice.

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Okanagan Odyssey Goes On: Washington Supreme Court to Review Case Involving Condemnation of State Lands for Transmission Right of Way

November 12, 2013

The long litigation road walked by Okanogan County PUD to build a short transmission line has just gotten a bit longer. On November 7, the Washington Supreme Court granted review of a Court of Appeals decision concluding that Washington's Public Utility Districts have statutory authority to condemn state school lands if those lands have not been withdrawn for a particular purpose. As explained here, this is the latest development in Okanagan PUD's attempt to build a segment of lower-voltage transmission line covering roughly 35 miles between Pateros and Twisp. The PUD started planning the line in 1996 in order to maintain reliable electric service in Okanogan County.

The Supreme Court will review the Appeals Court's determination that Washington's PUD statute allows Okanogan PUD to condemn state school trust lands by authorizing PUDs to "condemn . . . public and private property . . . including . . . school lands" for transmission lines and other facilities "necessary or convenient" for the PUD to carry out its statutory purposes and the Department of Natural Resource's countervailing argument, based on its own statute, that school trust lands are not subject to condemnation. The question is important not just to PUDs, but also to other Washington municipalities such as cities, towns, and Port Districts, all of which have similar statutory condemnation authority. The Court will hear oral argument in late February of 2014, with a decision likely following several months thereafter.

If you have any questions about the Court of Appeals opinion discussed in this post, the Washington PUD statutes, condemnation, or Washington real property law, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group or Environment & Natural Resources practice group. These practice groups are consistently recognized as among the best, both nationally and in the Pacific Northwest. In addition, our Real Estate & Land Use practice group is recognized as one of the region's best and our partner Warren Daheim, who specializes in condemnation and eminent domain matters, was recently recognized as the best lawyer in the South Puget Sound region by South Sound Magazine.

California Throws Down Challenge to Energy Storage Entrepeneurs: Bring Us Cost-Effective Options

November 1, 2013

The California Public Utilities Commission ("CPUC") has thrown down the gauntlet, creating a 1325-MW market for energy storage in California, but requiring California's regulated utilities purchase storage only if cost-effective options are available. The CPUC's novel approach upends the usual after-the-fact prudency review of utilty purchase decisions, forcing energy storage sellers to leap the cost-effectiveness barrier in order to access the new CPUC-mandated market.

The CPUC's order, adopted in response to legislation enacted in 2010 (AB 2514), is a new approach to an old idea -- technology forcing. Environmental legislation dating back to the 1960s aimed to force manufacturers to develop new pollution control technology by imposing health-based standards even if those standards could not be achieved with known technology. Rather than following this command-and-control regulatory approach, the CPUC order imposes only general requirements for energy storage: storage must (1) optimize the grid, contribute to reliability needs, or defer upgrades on the T&D system; (2) help integrate renewable resources; and, (3) help achieve greenhouse gas reduction goals. The order requires California's regulated utilities to purchase 1325 MW of storage meeting these requirements by 2024, but allows them to defer these obligations if no cost-effective options can be found. The CPUC order, then, uses the incentive of a huge, mandated market to try to force rapid development and deployment of new energy storage technologies.

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Ninth Circuit Rejects Petition Seeking Regulation of Greenhouse Gases in Washington

October 25, 2013

Two October decisions of the federal courts are likely to have significant implications for regulation of greenhouse gases ("GHG") under the Clean Air Act. Of greatest note for the State of Washington, the Ninth Circuit last week overturned a lower court's order that would have required the Washington Department of Ecology ("Ecology") to set standards limiting GHG emissions from Washington's five oil refineries. The Court of Appeals concluded that the environmental plaintiffs lacked standing to bring their complaint. (Washington Environmental Council v. Bellon, No. 12-35323 (issued Oct. 17, 2013)).

In that case, two environmental groups filed a lawsuit in U.S. District Court under the Clean Air Act's citizen suit provisions arguing that Ecology, which administers the Clean Air Act in Washington under an EPA-approved State Implementation Plan, is obligated to set GHG emissions limits on the five refineries under the Act's "Reasonably Available Control Technology" requirements. The District Court agreed, ordering Ecology to develop GHG emissions limits for the five oil refineries by 2014.

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Getting a CLEW About Climate Legislation: Report to Governor's Climate Workgroup Suggests Future Course of Greenhouse Gas Regulation in Washington

October 18, 2013

Earlier this week, Leidos (formerly SAIC International) delivered its final report evaluating greenhouse gas ("GHG") reduction policies from other jurisdictions to the Climate Legislative and Executive Workgroup ("CLEW"). The CLEW was created by ESSB 5802, the first piece of legislation sponsored by Gov. Jay Inslee, which is intended to establish the future legislative agenda for climate issues in our state. Leidos was retained as the CLEW's technical consultant. This week's Leidos report aims to help the CLEW quantify both the need for new climate legislation and the effectiveness of several approaches taken in other jurisdictions. The CLEW is scheduled to release its final report and recommendations at the end of 2013.

The Leidos report incorporates the GHG emissions reduction targets adopted by the legislature in 2008. Those targets are: (a) to reduce Washington's GHG emissions to 1990 levels by 2020; (b) to reduce GHG emissions to 25% below 1990 levels by 2035; and, (c) to reduce overall emissions to 50% below 1990 levels by 2050, or 70% below the state's expected emissions in that year. Evaluating current policies at both the state and federal level, the report concludes that existing policies (for example, Initiative 937 and policies encouraging energy efficiency) will achieve substantial reductions in Washington's GHG emissions, but will fall well short of the 2008 targets.

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Updated EPA Standard for Phase I Environmental Assessments On the Way

September 25, 2013

The U.S. Environmental Protection Agency ("EPA") is proposing that prospective purchasers of real property may use a revised standard (ASTM E1527-13) for determining whether to conduct Phase I Environmental Assessments of potential purchases. Because a Phase I Environmental Assessment is a key requirement for real property purchasers who wish to limit their exposure to potentially crippling liability for hazardous waste clean-up, the proposed regulation is important for real estate transactions at any site that may be contaminated.

The proposed regulation is the most recent development in the nation's long-running effort to address the problem of "Brownfields" by limiting and clarifying the exposure of real property developers and financiers who seek to re-develop contaminated properties. The effort began with the Small Business Liability Relief and Brownfields Revitalization Act of 2002, more commonly known as the "Brownfields Amendments." The Brownfields Amendments added language to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") to limit the liability of certain categories of real property purchasers, most importantly "bona fide prospective purchasers" ("BFPPs"). To qualify as a BFPP, the prospective purchaser must conduct "all appropriate inquiries" into the prior use and ownership of the property before taking ownership.

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Ninth Circuit Upholds California's Low Carbon Fuel Standard, Finding No Discrimination Against Out-of-State Fuel Producers

September 18, 2013

The U.S. Court of Appeals for the Ninth Circuit today issued what may prove to be a landmark decision concerning California's efforts to regulate emissions of greenhouse gases ("GHG"). The Appeals Court concludes that California's Low-Carbon Fuel Standard ("LCFS") does not violate the Commerce Clause even though California uses a life-cycle analysis of carbon intensity that penalizes, for example, ethanol from the Midwest produced using coal-fired electricity, and favors ethanol using less carbon-intensive methods of production. Concluding that California's ambitious efforts to address GHG emissions should not be limited by "archaic formalism," the opinion allows states considerable room to experiment with new approaches to GHG regulation. That being said, the opinion also makes clear that environmental protection cannot be used as an excuse to arbitrarily burden interstate energy transactions. Rocky Mountain Farmers Union et al. v. Corey et al., No. 12-15131 (issued Sept. 18, 2013).

The LCFS, adopted as part of the Global Warming Solutions Act of 2006 (commonly referred to as "AB 32"), is aimed at reducing GHG emissions from California's transportation sector, which account for about 40% of the state's total GHG emissions. Using 2010 carbon intensity as a baseline, the LCFS requires fuel producers and blenders to meet specific carbon intensity limits, which decline annually from the 2010 baseline through 2020. Producers that exceed the limits are awarded credits that can be sold to producers that fail to meet the limits. For gasoline producers, blending gasoline with ethanol is the only practicable way to meet the LCFS.

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Feds Propose Simplified Transmission Siting Process

September 5, 2013

The U.S. Department of Energy recently requested comment on a proposed "Integrated Inter-Agency Preapplication Process" for electric transmission projects that may simplify the notoriously difficult transmission siting process. If adopted as proposed in the DOE draft, the IPP would create a new opportunity for transmission project sponsors to meet with federal regulators and interest groups prior to formally submitting a transmission proposal in order to identify and avoid issues that have the potential to slow or stop a proposal.

The draft proposal envisions a series of four meetings in which a project proponent would meet with federal regulators with the aim of identifying potential constraints on the proposed route arising from environmental considerations, cultural and historical resources, military operations, protected areas, and similar considerations. The process would also identify alternative routes that could avoid or minimize such conflicts. In additional, the process would lay the groundwork for future permits by, for example, identifying the kinds of information the project proponent will need to provide and assigning the lead agency for NEPA evaulation and consultation under the National Historical Preservation Act.

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A Fair Wind Blows: Washington Supreme Court Rejects Challenge to Whistling Ridge Wind Project

August 30, 2013

Yesterday the Washington Supreme Court rejected a challenge to former Governor Christine Gregiore's approval of a 35-MW wind farm in Skamania County proposed by Whistling Ridge Energy, LLC. Gov. Gregoire approved the project following a lengthy administrative process conducted by the state's Energy Facility Site Evaluation Council ("EFSEC") and EFSEC's favorable recommendation to the Governor. The Court's decision is important because it helps define what energy developers must do to mitigate impacts when a project is located near, but not in, a protected area and has potential spillover effects on the protected area. In addition, the decision is important to renewable energy developers in Washington because they have the option of using EFSEC to obtain project approval, which may be especially important where strong local opposition is at odds with state and national goals regarding renewable energy development. The decision is also important to many other types of energy facilities subject to EFSEC jurisdiction, including electric and natural gas transmission projects, LNG facilities, nuclear plants, and large thermal power plants.

The dispute arose because the Whistling Ridge project is near, but not in, the Columbia River Gorge National Scenic Area. The environmental petitioners object to Whistling Ridge primarily because it may be seen from some parts of the Scenic Area, and therefore may interfere with the aesthetic values that the Scenic Area was designed to preserve. In response to these concerns, EFSEC reduced the number of windmills allowed at the project from 50 to 35, and required "micro-siting" to further reduce the aesthetic impacts of the project. With these mitigation measures, EFSEC recommended that Gov. Gregiore approve the project. Gov. Gregiore followed this recommendation.

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A Pair of D.C. Circuit Decisions Portend Increased Regulation of Sewage Treatment Plants, Biomass Energy, and Other Stationary Sources of "Biogenic" Carbon

August 23, 2013

A recent decision of the U.S. Court of Appeals for the District of Columbia Circuit (more popularly known as the D.C. Circuit) portends increased regulation of biomass power plants, as well as landfills, sewage treatment plants, and similar facilities that produce greenhouse gases ("GHG") through "biogenic" processes. The decision is critical both to the forest products industry, which frequently burns wood waste and other byproducts to produce energy, and the owners of landfills, sewage treatment plants, wastewater treatment plants, and similar facilities, both public and private. A second recent D.C. Circuit decision, although narrower in scope, similarly upholds stricter regulation of sewage treatment plants under the Clean Air Act.

Considered together, the decisions underscore the importance of "thinking outside the box," to escape treating wastes as a traditional regulatory problem, and exploring ways to, for example, convert waste into valuable commodities. One innovative solution was recently undertaken by Pierce Transit, the public transit agency for Pierce County, Washington, which is now using methane produced from the Cedar Hills landfill to fuel its bus fleet. Another approach is the advanced waste-to-energy technologies now widely adopted in Europe, which simultaneously maximize recover of useful materials, convert the remaining materials to useful energy, and minimize emissions of GHG and other pollutants. Innovative approaches like these can turn expensive and burdensome regulatory and waste treatment problems into economic and environmental assets.

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