A leader in stringent auto emission regulations, the State of California recently took additional steps in its effort to further protect the environment. On August 25, 2022, the California Air Resources Board (“CARB”) voted to require all new cars and light trucks sold in the state to be “zero-emission” by 2035. The plan, officially known as the CARB Advanced Clean Cars II rule, was originally introduced via executive order by Gov. Gavin Newsom nearly two years ago.
The plan mandates that “[i]t shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.”
After seven years, three presidential administrations, and two appearances before the Supreme Court, the Obama Administration’s “Clean Power Plan” (“CPP”)—a Clean Air Act regulation designed to limit carbon emissions from existing coal-fired power plants (and later revised by the Trump-era “Affordable Clean Energy” (“ACE”) rule)—was struck down by the Supreme Court on June 30, 2022. SeeWest Virginia et al. v. Environmental Protection Agency et al., No. 20-1530.
Relying on Section 111(d) of the Clean Air Act (“CAA”), the Environmental Protection Agency’s (“EPA’s”) CPP set a carbon emission limit that was essentially unattainable for existing coal-fired power plants. Consequently, EPA determined that the “best system of emission reduction” for carbon from these plants was to cause a “generation shift” from higher carbon emitting coal-fired sources to lower-emitting sources, such as natural gas plants or wind or solar energy facilities. Compliance with the CPP would have required a plant operator to: (1) reduce the amount of electricity the plant generated to reduce the plant’s carbon emissions; (2) build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility and increase generation there; or (3) purchase emission allowances as part of a cap-and-trade regime. SeeWest Virginia at 8.
On July 2, 2021, the Department of Energy’s Office of Fossil Energy (“DOE/FE”) issued a Notice of Intent (“Notice”) to Prepare a Supplemental Environmental Impact Statement (“SEIS”) for the Alaska LNG Project (“Project”). DOE/FE will evaluate potential environmental impacts of upstream natural gas production on the North Slope of Alaska, and will conduct a life cycle analysis to calculate greenhouse gas (“GHG”) emissions for liquefied natural gas (“LNG”) exported from the Project.
The $38.7 billion Project includes a proposed gas treatment plant on the North Slope of Alaska, 800-mile pipeline, and a liquefaction facility with a planned liquefaction capacity of 20 million metric tons per year. The Federal Energy Regulatory Commission (“FERC”) has issued an order approving the construction and operation of the Project. On August 20, 2020, DOE/FE authorized Alaska LNG Project LLC’s (“Alaska LNG”) request to export LNG to any country with which the United States has not entered into a free trade agreement (“FTA”) requiring national treatment for trade in natural gas (“Non-FTA countries”) in a volume equal to the Project’s planned liquefaction capacity (equivalent to roughly 929 Bcf per year or 2.55 Bcf per day).
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The energy industry has been at the forefront of the 2020 election, and energy development is an issue that polarizes Americans and our businesses and political leaders in choosing the path for the future. Energy developments are inextricably linked to our economy and national security, and the decisions and policies that will be implemented over the next four years are critical to the nation and our participation and role in world affairs.
At the outset of 2019, Pennsylvania Governor Tom Wolf set a goal for Pennsylvania to significantly reduce greenhouse gas emissions. Now, Governor Wolf plans to achieve that goal by taking the bold step to establish a carbon dioxide cap-and-trade program through executive action. On October 3, 2019, Governor Wolf issued an Executive Order directing the Pennsylvania Department of Environmental Protection (“DEP”) to begin the process for Pennsylvania to join the Regional Greenhouse Gas Initiative (“RGGI”, pronounced “Reggie”). RGGI is a market-based cap-and-trade program implemented by several Northeast states to reduce power sector CO2 emissions. Governor Wolf’s Executive Order made national headlines because of the potential implications of Pennsylvania—a state known for its coal and natural gas reserves—joining RGGI. But this news is only the start of a long regulatory process, one that could realistically take years to become implemented. At this stage, Pennsylvania fossil-fuel power generators should familiarize themselves with RGGI’s requirements and procedures as well as the rulemaking process by which the Commonwealth might join RGGI.
The RGGI Program
RGGI is a collective effort by its member states to create a Northeast regional cap-and-trade program affecting fossil-fuel power plants greater than 25 megawatts. Member states—currently Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont, with New Jersey in the process of rejoining—each enact statutory or regulatory programs in their respective states that are RGGI compliant. CO2 emitting power plants then participate in RGGI regional auctions to purchase CO2 emission allowances for usage, or to sell on secondary markets. RGGI caps the total amount of CO2 emission allowances, measured in tons of carbon, with the most recent cap being 80.2 MM-tons. Beginning in 2021, the cap will be set at 75.1 MM-tons, which will then be reduced by 30 percent between 2020 and 2030. Proceeds from the auctions are distributed to the respective states for investment in programs to further reduce CO2 emissions, such as energy efficiency, renewable energy, or consumer benefit programs. Continue reading “Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program”
The Council on Environmental Quality has published Draft Guidance to federal agencies to evaluate the effects of greenhouse gas emissions under the National Environmental Policy Act. The Draft Guidance is largely consistent with the approach taken by the Federal Energy Regulatory Commission in recent natural gas infrastructure orders. Comments are due on July 26, 2019.
On June 26, 2019, the Council on Environmental Quality (“CEQ”) published new draft guidance to clarify the scope of review federal agencies should undertake when considering the effects of greenhouse gas (“GHG”) emissions under the National Environmental Policy Act (“NEPA”) and related regulations.1 The Draft Guidance is intended to replace CEQ’s prior GHG-related guidance, which was adopted in 2016 and later rescinded pursuant to an Executive Order in 2017.2 The Draft Guidance is largely consistent with the approach taken by the Federal Energy Regulatory Commission (“FERC”) in recent natural gas infrastructure orders.
CEQ’s Draft Guidance
NEPA is a procedural statute that requires federal agencies to analyze the environmental impacts of any major federal action significantly affecting the quality of the human environment.3 Although NEPA does not mandate any particular substantive outcomes, it requires an agency to consider the direct and reasonably foreseeable indirect effects of a proposed action.4
The Draft Guidance states that “[a] projection of a proposed action’s direct and reasonably foreseeable indirect GHG emissions may be used as a proxy for assessing potential climate effects.”5 While direct effects are caused by an action and occur at the same time or place, indirect effects are caused by the action and are later in time or farther removed in distance but are still reasonably foreseeable. Thus, the proposed guidance suggests that quantification of emissions is sufficient to meet an agency’s obligation to assess effects of emissions.
With the May 1 order, the Commission reaffirms its view that it has concurrent jurisdiction over debtors’ efforts to reject their FERC-jurisdictional contracts in bankruptcy. Further developments in judicial proceedings in the Sixth and Ninth Circuits are expected.
On May 1, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) denied Pacific Gas and Electric Company’s (“PG&E”) requests for rehearing of two Commission orders asserting concurrent jurisdiction with bankruptcy courts over the disposition of wholesale power contracts PG&E seeks to reject through bankruptcy.1
In its Rehearing Order, the Commission acknowledged a circuit split regarding the relative authorities of the Commission under the Federal Power Act (“FPA”) and the bankruptcy courts under the Bankruptcy Code as they relate to the review and disposition of FERC-jurisdictional contracts in bankruptcy proceedings. However, the Commission affirmed its prior holdings that that “the way to give effect to both the FPA and the Bankruptcy Code is for a party to a Commission-jurisdictional wholesale power contract to obtain approval from both the Commission and the bankruptcy court to modify the filed rate and reject the contract, respectively.”2Continue reading “In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts”
On February 21, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued an order authorizing Venture Global Calcasieu Pass, LLC (“Calcasieu Pass”) to site, construct, and operate a new liquefied natural gas (“LNG”) terminal and associated facilities (the “Export Terminal”) pursuant to section 3 of the Natural Gas Act (“NGA”).1 The Certificate Order also authorized TransCameron Pipeline, LLC (“TransCameron”) to construct and operate a new interstate pipeline under NGA section 7. Although the Certificate Order drew favorable conclusions in its environmental review of the projects, a concurrence by Commissioner LaFleur and a dissent by Commissioner Glick signaled growing dissatisfaction among half of the current Commission with respect to FERC’s practice of evaluating a project’s greenhouse gas (“GHG”) emissions.
Right now, cases involving climate change are being heavily litigated in courts across the United States. Hundreds of climate change-related cases have been filed in both federal and state courts, where parties are challenging governments’ and industry’s knowledge of and contribution to climate change. In the abstract, one would think that litigation involving emissions of greenhouse gases (“GHG”) linked to climate change would largely focus on the federal Clean Air Act. Yet, climate change-related cases now involve ever-expanding causes of action, including not only claims under the federal Clean Air Act and other federal statutes, but claims under the U.S. Constitution, state law claims, and common law claims.
There are several active cases that may have major implications on the government’s role in determining the direction of climate change policy, and on private companies’ past and future liability for alleged contributions to climate change, as well as knowledge of climate change impacts on business decision-making. This article discusses notable current cases involving climate change. Continue reading “Charting Climate Change Cases: A Survey of Recent Litigation”
The Republican majority of the Federal Energy Regulatory Commission (“FERC” or “Commission”) has drawn a clear distinction with how and when the Commission will analyze upstream and downstream greenhouse gas (“GHG”) emissions when reviewing natural gas pipeline projects. But with the recent announced resignation by Republican Commissioner Robert Powelson, a pending Notice of Inquiry issued by the Commission, a separate advanced Notice of Proposed Rulemaking issued by the Council on Environmental Quality (“CEQ”), and a recent petition to the D.C. Circuit Court, this current established protocol may not last and by this time next year we may see a whole new approach to pipeline GHG analysis coming out of FERC. Continue reading “Pipeline Update: Here Today, Gone Tomorrow? FERC’s Natural Gas Pipeline Greenhouse Gas Analysis Policy”