Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program

Margaret Anne Hill, Christopher A. Lewis, Frederick M. Lowther, Frank L. Tamulonis III, and Stephen C. Zumbrun

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”

Leveling the Playing Field against Federal Agency Regulatory Interpretation: The Supreme Court’s Kisor Decision and the U.S. Attorney General’s 2018 Memorandum

Margaret Anne Hill, Brett A. Snyder, Frank L. Tamulonis III, and Stephen C. Zumbrun

Last month, the Supreme Court in Kisor v. Wilkie, 139 S.Ct. 2400 (2019) upheld what is known in administrative law as Auer deference: the age-old principle that a court should defer to an agency when the agency is interpreting its own ambiguous language in a regulation. See Auer v. Robbins, 519 U.S. 452 (1997); see also Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). Deference to an agency’s regulatory interpretation has long been a challenge to industry and the broader regulated community. In any situation where an agency is on the other side of an issue—whether negotiations or a lawsuit—the agencies always had the upper hand when regulatory language was ambiguous. And this interpretation could often be the deciding factor between a party being in compliance with or in violation of a regulation.

But, with the Kisor decision the Court attempted to respect decades of precedent in this area yet rein in the frequency of Auer deference’s use and assuage naysayers by establishing clear standards for when a court should defer to an agency’s interpretation of its own regulations. Continue reading “Leveling the Playing Field against Federal Agency Regulatory Interpretation: The Supreme Court’s Kisor Decision and the U.S. Attorney General’s 2018 Memorandum”

In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts

Mark R. Haskell, Frederick M. Lowther, and Lamiya N. Rahman

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.”2 Continue reading “In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts”

Section 401 of the Clean Water Act: Is It Time to Update?

Margaret Anne Hill and Frederick M. Lowther

On Wednesday April 18, 2018, from 1:00 to 1:30 p.m. (EDT), Blank Rome Partners Margaret Anne (“Peg”) Hill and Frederick M. Lowther will present a live webinar where they will discuss adjustments that might be made to the Clean Water Act to restore the originally-intended cooperation between state and federal authorities, and what remedies might be available in lieu of congressional action.

The federal Clean Water Act (“CWA”) has been in existence since 1972. For the states that implemented EPA-sanctioned water quality standards, the CWA (specifically Section 401) gave those states the power to enforce those standards by granting or denying certifications to federally-regulated projects impacting state waters. The concept of state veto power over federally-regulated projects was known as “cooperative federalism.”

By 2005, it became clear that Section 401 rights provided a means for states to delay or frustrate projects on grounds only tangentially related to water quality. In the Energy Policy Act of 2005 (“EPACT”), Congress responded by providing for direct, expedited review of adverse state action in the U.S. Courts of Appeals. Notwithstanding EPACT, several states continued to use Section 401 for purposes broader than originally intended and the direct appellate remedy proved ineffective.

Starting with Islander East in 2007, and culminating recently in Constitution Pipeline, states have effectively blocked a number of federally-approved interstate pipeline projects. The impact of these decisions suggests that it is time to revisit the “cooperative federalism” concept.

For more information about this event or to register, please click here.

SCOTUS Holds that Challenges to the Definition of Waters of the United States Must Be Heard in the U.S. District Courts

Benjamin Stonelake

In a unanimous decision and opinion delivered by Justice Sotomayor on January 22, 2018, in National Association of Manufacturers v. U.S. Department of Defense, the United States Supreme Court (“SCOTUS”) held that challenges to the June 29, 2015 regulation defining the term “waters of the United States” (“WOTUS”) must be filed in the federal district courts. The Court reasoned that the plain text of the judicial review provisions set forth in 33 U.S.C. §1369(b)(1) of the Clean Water Act does not authorize direct challenges to this regulation (the 2015 WOTUS Rule) in the U.S. Circuit Court of Appeals and, therefore, such challenges must be filed in the federal district courts. Continue reading “SCOTUS Holds that Challenges to the Definition of Waters of the United States Must Be Heard in the U.S. District Courts”

Appellate Division Clears Way for Business Entities to Receive Brownfield Innocent Party Grants When Property Is Transferred among Family Members

Kevin R. Doherty

The New Jersey Appellate Division recently lessened the rigidity by which an innocent purchaser may be eligible for a so-called “Innocent Party Grant” to cover costs associated with the remediation of contaminated property. On September 20, 2017, the Court in Cedar Knolls 2006, LLC v. New Jersey Dep’t of Envtl. Prot.[1] reversed the New Jersey Department of Environmental Protection’s (“NJDEP”) attempt to limit Innocent Party Grants to natural persons, and found that an LLC may qualify as a “person” under the Brownfield and Contaminated Site Remediation Act, N.J.S.A. 58:10B-1, et seq. (“Brownfield Act”). Continue reading “Appellate Division Clears Way for Business Entities to Receive Brownfield Innocent Party Grants When Property Is Transferred among Family Members”

Mountain Valley Pipeline: West Virginia Cements the Need for FERC and Congressional Action to Curb State Overreach on FERC Jurisdictional Pipelines

Michael L. Krancer, Frederick M. Lowther, and Margaret Anne Hill

As we have noted in our prior blog posts on the Constitution Pipeline and Millennium Valley Lateral projects, §401 of the Federal Clean Water Act has become a focal point in the growing efforts by States to exercise dominant authority over FERC jurisdictional pipelines. This time, the West Virginia Department of Environmental Protection (“WVDEP”) has taken the unprecedented step of actually revoking a §401 certification it had granted in March 2017 and then reaffirmed in May. This action by WVDEP may be the final straw in State authority to review FERC jurisdictional pipelines as FERC and the Congress will be energized to react to the oversteps by New York in Millennium and now West Virginia in Mountain Valley. Continue reading “Mountain Valley Pipeline: West Virginia Cements the Need for FERC and Congressional Action to Curb State Overreach on FERC Jurisdictional Pipelines”