January 29, 2010
On January 26, 2010, shareholders for twelve natural gas companies requested disclosure of environmental and financial risks associated with extracting gas from the underground Marcellus Shale formation through hydraulic fracturing or “hydofracking. ” This proposed process has received a great deal of attention in recent months. Environmental organizations and others have expressed concern that the fracturing chemicals utilized in the process have not been disclosed to the public and are guarded by companies as a trade secret.
The companies from which shareholders are seeking reports include Cabot Oil & Gas Corp., Chesapeake Energy, Exxon Mobil Corp., Hess Corp., El Paso Corp., Energen Corp., EOG Resources, EQT Corp., Range Resources, Ultra Petroleum Corp., Williams Companies Inc., and XTO Energy Inc. In addition to seeking information about the chemicals to be utilized, shareholders are requesting increased transparency of potential environmental impacts, substitution of less-toxic fracturing fluid, and adoption of best practices for drilling activities. As quoted by BNA, Larisa Ruoff of Green Century Capital Management, one of a group of advocacy organizations leading the new shareholder campaign, said “[s]hareholders believe that through the adoption of best practices and policies to phase out the most toxic chemicals used in this process, companies can ensure that they are both protecting the environment and their balance sheets from unnecessary and potentially devastating risks.”
January 25, 2010
SPR principals Pamela Esterman and Daniel Riesel will serve as co-chairpersons of the upcoming Environmental Law Conference, to be held on February 4-6, 2010 in Washington, DC. The program is co-sponsored by ALI-ABA, the Environmental Law Institute and the Smithsonian Institute. A diverse faculty from government, universities, private practice and advocacy organizations will focus on recent legal developments in the areas of air, energy, water, hazardous materials, environmental review and endangered species.
The keynote address will be given by Scott Fulton, General Counsel for the U.S. Environmental Protection Agency. Panels will also discuss what to expect from the Supreme Court and the Obama administration in the days to come. For more information, please visit ALI-ABA’s website.
January 22, 2010
The promulgation of a proposed rule regulating coal ash has been delayed amid numerous meetings between industry representatives, environmental groups and federal agencies. On October 16, 2009, the Environmental Protection Agency (“EPA”) sent its proposed coal ash rule to the Office of Management and Budget (“OMB”). EPA Administrator Lisa Jackson had promised that a proposed coal ash rule would be published by the end of 2009. The rule may regulate coal ash as a “hazardous waste” under the Resource Conservation and Recovery Act (“RCRA”). However, the “noteworthy” number of meetings between industry groups, environmental groups and OMB, and the over 2,300 pages of documents OMB must review, have delayed the release of a proposed rule.
Industry representatives believe that regulating coal ash under RCRA would negatively impact companies who produce the ash as well as companies who beneficially reuse it (e.g., as structural fill or agricultural uses). Tom Addams, executive director of the American Coal Ash Association, a utility industry group, stated “[a] hazardous determination would make builders reluctant to use coal ash not because of what it may contain, but because of tort activity. If litigation was filed on a national basis, it would be mind-boggling to see what the defense costs were.” Industry representatives also believe that the toxic materials in coal ash are not in high enough concentrations for the ash to be regulated as “hazardous.”
Environmental groups want coal ash to be regulated as a “hazardous waste” because it contains mercury, lead, and other potentially toxic constituents. Representatives of these groups are concerned that industry may influence the outcome of the proposed rule.
The coal ash proposal could be published in the coming weeks.
More information about the meetings between industry, environmental groups and OMB is available at the OMB website.
January 14, 2010
The parties to a lawsuit challenging New York State’s participation in, and its rules to implement, the Regional Greenhouse Gas Initiative (“RGGI”) have reached a settlement. On December 23, 2009, a proposed consent decree in the matter of Indeck Corinth, L.P. v. Paterson, No. 5280-09, was filed with the Supreme Court of the State of New York in Albany. The litigation, which commenced on January 29, 2009, was brought against Governor Paterson, various State entities, and Consolidated Edison (“ConEd”) by Indeck Corinth, the operator of a gas-fired energy co-generation facility that held a long-term contract with ConEd. Two other gas-fired energy co-generation facilities with long-term ConEd contracts later intervened in support of Indeck. As described in the proposed consent decree, Indeck alleged that New York’s participation in RGGI was outside the scope of the State’s lawful authority (ultra vires) and unconstitutional, and that the rules implementing RGGI were arbitrary, capricious, and not supported by a proper record. Indeck contended that its long-term contract prevented it, unlike other generators without such contracts, from passing on to ratepayers the costs of complying with New York’s rules implementing RGGI (“RGGI Rules”).
RGGI is an agreement among ten Northeast and Mid-Atlantic states, including New York, to limit greenhouse gas emissions through a cap-and-trade system. As summarized by the New York State Energy Research and Development Authority (“NYSERDA”), the agreement “calls for states to cap power sector carbon emissions through 2014 and then reduce emissions by 2.5 per year for the next four years, resulting in a 10 percent reduction by 2018.” The RGGI Rules were promulgated by the New York State Department of Environmental Conservation (“DEC”) (codified at 6 NYCRR Part 242) and by NYSERDA (codified at 12 NYCRR Part 507). As summarized by the DEC, the RGGI Rules “require power plant owners in New York to obtain sufficient allowances to cover their annual CO2 emissions,” primarily by purchasing them at auctions or through a secondary market, but with “a limited number of allowances” allocated at no charge to power generators with long-term contracts that prevent them from passing the cost of such allowances to ratepayers.
The settlement provides that ConEd will pay Indeck and the intervenors for the cost of allowances in excess of those allocated to them under DEC rules, and that NYSERDA will allot a portion of RGGI proceeds to offset ConEd’s costs. According to NYSERDA, the settlement “maintains the number of set-aside allowances and the size of the emissions cap,” and is “designed to be ratepayer neutral,” with provisions for NYSERDA to partially fund efficiency and infrastructure improvements for ConEd, which should offset consumer costs.
The Court has not yet entered the proposed consent decree as an order. Although not required by law to do so, the State seeks public comment on the settlement agreement, which will be considered in the Court’s approval process. The 30-day comment period began on December 30, 2009. Comments will be collected by the New York Attorney General’s office; instructions for submitting comments are available here.
January 8, 2010
In addition to the New York City Department of Environmental Protection and the Natural Resources Defense Council, the United States Environmental Protection Agency (“EPA”) has submitted comments on the New York State Department of Environmental Conservation’s (“DEC”) Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) addressing natural gas drilling in the Marcellus Shale formation.
In a letter dated December 30, 2009, EPA expresses several concerns with the DSGEIS. EPA notes that the original GEIS that the DSGEIS supplements was issued in 1992 and expresses concerns that existing conditions may have significantly changed since that time. In addition, EPA asserts that the analysis and discussion of cumulative and indirect impacts in the DSGEIS should be significantly expanded. EPA encourages both the New York State Public Service Commission, which has regulatory authority over the pipelines that would transport the natural gas, and the New York State Department of Health, which has primary enforcement responsibility under the Safe Drinking Water Act, to take a more active role in the SEQRA process.
EPA joins with the DEP in expressing serious concerns over potential adverse impacts to the New York City water supply, and notes that water sources serving upstate communities deserve similar protection. Accordingly, EPA suggests that EPA, DEC and DEP work together to “develop an enhanced oversight approach” that would allow for the coordination of applicable regulatory programs to better protect drinking water supplies that could be impacted by natural gas drilling. EPA also encourages DEC to release information regarding the chemical composition of hydrofracturing solutions, which to date has been closely guarded by industry under claims that such composition represents a trade secret not subject to public disclosure. Access a complete copy of EPA’s comment letter here (pdf).
January 5, 2010
On December 28, 2009, Mayor Michael Bloomberg signed into law four bills that together comprise New York City’s Greener, Greater Buildings Plan. The legislation, which the Mayor described as “the most significant action to date” to achieving the City’s PlaNYC emissions goals—30 percent reduction of annual greenhouse gas emissions below 2005 levels by 2030—is designed to reduce greenhouse gas emissions by 4.75 percent.
The first of the four bills, Intro 476-A, requires private buildings that exceed 50,000 square feet and City buildings that exceed 10,000 square feet to track and asses their energy and water use by utilizing an internet “benchmarking tool” developed by the federal Environmental Protection Agency. Energy and water use will be reported on an annual basis, and the City will make such information available to the public.
Intro 564-A amends the City’s administrative code to establish an energy conservation construction code for the City. The new energy code sets energy performance standards for covered residential and commercial buildings and applies to all renovations to such buildings. This legislation represents a more stringent approach than that of the New York State Energy Code, the standards of which apply to renovation projects only if such projects entail the replacement of at least fifty percent of a particular building system.
Intro 967-A amends the City’s administrative code to require the performance of energy efficiency audits and the submission of energy efficiency reports for buildings that exceed 50,000 square feet. An energy audit must identify all reasonable energy efficiency and retrofit measures that would reduce energy use and the costs and savings of such measures. Building owners must implement energy efficient maintenance practices prior to the filing of the energy efficiency report for their building. Intro 967-A also amends the New York City Charter to require City buildings to implement those retrofits that have been recommended in the buildings’ energy audits that will pay for themselves in seven years in energy savings.
The fourth bill, Intro 973, calls for the upgrade of lighting systems in commercial buildings exceeding 50,000 square feet before 2025. The legislation also requires that electrical consumption by certain commercial tenants be measured by sub-meters.
In addition to the new legislation, the City’s Greener, Greater Buildings Plan establishes a working group designed to assess green workforce training needs and a revolving loan fund to help finance energy efficient retrofits.
January 4, 2010
On December 30, Sive, Paget & Riesel (“SPR”) submitted a comment letter on behalf of the Natural Resources Defense Council (“NRDC”) addressing deficiencies in the Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) prepared by the New York State Department of Environmental Conservation (“NYSDEC”) regarding proposed natural gas extraction from the Marcellus Shale formation in the Southern Tier of New York State. SPR’s comment letter, prepared by Steven Barshov and Jessica Steinberg, focused principally on matters of concern to towns and other units of local government within whose territory such proposed natural gas drilling would occur.
SPR’s comment letter identified multiple deficiencies in the DSGEIS related to potential impacts of concern to units of local government, including traffic, noise, visual, community character and land use impacts. SPR’s comment letter also encouraged DEC to adopt regulations that would provide units of local government with meaningful advisory input to NYSDEC during well permitting. Access a complete copy of SPR’s comment letter—which is attached to NRDC’s comment letter—here (pdf).