December 8, 2011
On November 17, 2011, the New York State Public Service Commission (“PSC”) decided to postpone its decision on Covanta Energy Corp.’s (“Covanta’s”) petition to classify waste-to-energy power as “renewable” under New York’s Renewable Portfolio Standard (“RPS”). New York’s RPS aims to produce 30% of the state’s electricity from “renewable sources” by 2015, up from approximately 21% in 2009.
To attain that goal, the RPS provides production incentives for renewable electricity generation, funded through a surcharge on ratepayers’ electricity bills and administered by the New York State Energy Research and Development Authority (“NYSERDA”). Eligible renewable electricity generators participate in a competitive solicitation process for the incentives, which are provided based on the megawatt-hours of renewable electricity delivered toNew York ratepayers or used on site. Additionally, the generator transfers all rights to the “RPS attributes” to NYSERDA, so the generator cannot benefit from the resulting pollution reductions under other emissions trading programs.
Most of the incentives to date have gone to wind, hydroelectric, biomass, and landfill gas projects, though a range of other sources – from solar, tidal and wave energy to anaerobic digesters converting agricultural biogas into electricity and heat – are also eligible. Covanta’s prior requests to include waste-to-energy facilities in the RPS, in 2004 and 2010, were both denied by the PSC.
Covanta’s petition presents a controversial question, as waste-to-energy plants provide an alternative to fossil fuels, but simultaneously present a number of environmental issues that are different from those associated with traditional renewable energy sources. Environmentalists and the New York Attorney General’s Environmental Protection Bureau have opposed the petition, citing, among other things, concerns regarding mercury emissions.
Proponents of waste-to-energy facilities argue that incineration for power production is better for the environment than transporting the waste to landfills. Covanta submitted a letter to the PSC on December 6th clarifying its position and highlighting the greenhouse gas benefits of waste-to-energy facilities. Covanta reasons that environmental benefits from waste-to-energy production make waste-to-energy a more environmentally-attractive option than landfill gas recovery, a method which is currently RPS-eligible.
A middle ground approach has been adopted in other states, including Connecticut, New Jersey, Massachusettsand Pennsylvania, whereby waste-to-energy facilities may receive subsidies, but not to the same degree as their zero emissions renewable generator counterparts. DEC officials have supported this compromise as an appropriate measure in the event that the PSC decides to allow waste-to-energy plants in the RPS.
For more information on the firm’s practice in the areas of energy and waste-management, contact Jeff Gracer and Paul Casowitz.
Update (December 14, 2011): In a recent letter to the PSC, Covanta withdrew its petition to classify waste-to-energy power as renewable under the New York RPS.
June 23, 2011
As part of a deal at the end of the current legislative session, the New York Legislature has passed the “Power NY Act of 2011,” a sweeping energy bill negotiated between Governor Andrew Cuomo and legislative leaders. Section 12 of the new law reauthorizes and modernizes Article X of the Public Service Law, which expired on January 1, 2003, governing the siting and approval of power plants in New York.
The absence of a power plant siting law has been cited by some as one important reason why there has been scant development of power plants in New York in recent years, including alternative energy sources. (Others have cited the poor economy as the primary roadblock to new power plant development.)
Like its predecessor, the new version of Article X aims to centralize and streamline the siting approval process, although the threshold for application of the law has been lowered from 80 to 25 megawatts. The law creates and vests permitting authority with the New York State Board on Electric Generation Siting and the Environment (“the Board”). Seeking to balance the need for local input in siting decisions with the obstacles posed by “NIMBY” opposition to new power plants, the statute provides that two local residents will be part of the Board for each proceeding. The other five members of the Board will all be State officials. The law also provides for “intervenor funding” which will enable municipalities and other local parties to participate in all phases of the administrative review, including the mandated adjudicatory hearing.
The Board is given authority to override local laws and ordinances if they are “unreasonably burdensome.” Unless otherwise agreed to by an applicant or extended due to a “material and substantial amendment to the application” or “extraordinary circumstances,” Board decisions must be rendered within a year of the application being deemed complete.
Article X displaces the State Environmental Quality Review Act (SEQRA) process for covered projects, but mandates several environmental analyses of the facility’s impacts. These analyses include a “cumulative air quality analysis” of the combined effects from the proposed facility, other proposed sources and all existing sources; a description of the demographics of the surrounding community; and a description of “reasonable and available” alternative locations. It also requires the Board to find that the project minimizes or avoids disproportionate impacts on the surrounding community.
There are significant differences between the new version of Article X and the expired version. The lower 25 megawatt threshold will allow smaller projects to be covered by the law and may particularly benefit developers of wind projects, which in most cases would not have been covered by the expired version. The increased emphasis on environmental justice impacts addresses concerns stated by environmental groups. Current applicants for local and state permits for a power plant may elect to be covered by the new law.
In what appears to be the first legislative enactment that specifically and directly addresses greenhouse gas emissions, Section 21 of the Power NY Act requires the Department of Environmental Conservation to promulgate regulations “targeting reductions in emissions of carbon dioxide” for new power plants with a capacity of 25 megawatts or more.
Mark LeBel is a Summer Associate at Sive, Paget & Riesel, P.C.
June 20, 2011
Dealing a blow to climate change tort litigants, the Supreme Court ruled 8-0 on June 20, 2011 that Congressional authorization of greenhouse gas (“GHG”) limits has displaced federal common law suits seeking GHG reductions. The Court’s decision in American Electric Power v. Connecticut reversed the Second Circuit Court of Appeals’ ruling that allowed a group of states, cities and land trusts – including New York State and New York City – to pursue federal public nuisance claims against the nation’s largest electric utility GHG emitters.
Justice Sotomayor, who sat on the Second Circuit panel that initially heard the case, recused herself from the Supreme Court’s deliberations. Although the ruling on displacement of federal common law claims was unanimous, the remaining justices were equally divided over whether federal jurisdiction even existed. Four members of the Court (presumably Justices Alito, Roberts, Thomas and Scalia) would have barred the suit on standing or other jurisdictional grounds, while four others (presumably Justices Kagan, Breyer, Ginsburg and Kennedy) affirmed plaintiffs’ standing. (Slip. Op. at 6.) This split – which upholds the Second Circuit’s finding of the plaintiffs’ standing – dates back to the Supreme Court’s 2007 climate change decision, Massachusetts v. EPA, where by a 5-4 margin the Court affirmed the state petitioners’ standing and upheld EPA authority to regulate GHGs under the Clean Air Act.
Justice Ginsburg – part of the five-member majority in Massachusetts v. EPA – authored the latest climate decision. Without deciding whether federal common law could redress GHG-related claims in the absence of Congressional action, she wrote that “any such claim [in this case] would be displaced by the federal legislation authorizing EPA to regulate carbon-dioxide emissions.” (Slip. Op. at 9.) Rejecting the states’ argument that displacement should not apply until EPA actually regulated the sources in question, which it has yet to do, Ginsburg answered: “The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law.” (Slip. Op. at 12.)
The Supreme Court decision does not necessarily foreclose all future climate change tort suits. The Court did not determine whether federal law has preempted state common law remedies, as this issue was not decided below or briefed before the Supreme Court. (Slip. Op. at 15-16.) That issue was left open for consideration on remand. Moreover, the Court’s displacement-based decision could be revisited should Congress withdraw or otherwise interfere with EPA’s existing climate change authority, as several opponents of EPA regulation have proposed in recent years.
On Thursday, June 30th, the New York City Bar Association’s Environmental Law Committee and International Environmental Law Committee, the Environmental Law Institute, and the Center for Climate Change Law at Columbia Law School are sponsoring a debate on the Supreme Court’s decision at 6:00 p.m. in the Great Hall of the New York City Bar Association. Event information and registration are currently available online.
June 1, 2011
New Jersey Governor Chris Christie announced Thursday, May 26 that New Jersey would withdraw from the Regional Greenhouse Gas Initiative (“RGGI”), a cap-and-trade initiative of 10 northeastern and Mid-Atlantic states to reduce greenhouse gas emissions from the power sector. New Jersey is the first state to withdraw from RGGI.
At a news conference announcing his decision, Governor Christie stated that a review of RGGI showed that “this program is not effective in reducing greenhouse gases and is unlikely to be in the future. . . . [T]he whole system is not working as it was intended to work.” He stated further that the reduction of greenhouse gases in New Jersey was due to the state’s increased use of natural gas and decreased use of coal, which were driven by “the market and not RGGI.” Governor Christie also stated that RGGI “does nothing more than tax electricity and tax our citizens and tax our businesses with no discernible or measurable impact upon our environment.”
In response to Governor Christie’s announcement, the remaining 9 states issued a statement affirming their commitment to RGGI and confirming that the next carbon allowance auction, scheduled for June 8, will take place. However, the states will have to evaluate how the withdrawal will affect those of New Jersey’s allowances that are currently in circulation.
Several of the member-states issued individual statements reiterating their support for RGGI. For example, New York Department of Environmental Conservation Commissioner Joseph Martens stated that “[t]he RGGI program has been extremely successful in supporting clean energy, reducing electricity bills and lowering greenhouse gas emissions throughout the region,” and that it has led “to savings for thousands of New York residents and businesses and to the creation of thousands of high quality jobs.”
The following are the current member-states of RGGI: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.
April 19, 2011
On April 19, 2011, the U.S. Supreme Court heard oral arguments in American Electric Power v. Connecticut, a highly anticipated case that will determine whether states and land trusts may pursue reductions in power plant greenhouse gas (GHG) emissions under a federal common law public nuisance theory. The Supreme Court is reviewing a 2009 Second Circuit decision that found no jurisdictional bar to the climate change tort suit.
At oral argument, the Supreme Court justices focused largely on whether legislative and regulatory action on climate change had displaced federal common law remedies and whether the federal courts were competent to make the policy determinations required for the states’ desired injunction, lines of questioning that could present obstacles for the state plaintiffs. Justice Ginsburg, who joined a prior Supreme Court decision holding that the Environmental Protection Agency (EPA) could regulate GHGs under the Clean Air Act, noted skeptically that “the relief [the states are] seeking seems … to set up a district judge, who does not have the resources, the expertise, as a kind of super EPA.”
In what may be a silver lining for the plaintiffs, the industry defendants acknowledged that a decision under Article III standing or displacement grounds could allow future plaintiffs to pursue similar relief in state courts under state common law theories. Of course, any such challenges would be subject to potential standing and preemption constraints. As explained in a prior post, the Obama Administration also argued for reversal of the Second Circuit decision on behalf of defendant Tennessee Valley Authority, albeit on different grounds than the other defendants.
New York Solicitor General Barbara D. Underwood argued the case on behalf of the states and land trusts. Justice Sotomayor, who sat on the Second Circuit panel that originally heard the case but was nominated to the Supreme Court before the appellate court’s decision, has recused herself from the Supreme Court’s review and did not participate in the oral argument.
April 13, 2011
While the use of hydraulic fracturing to extract natural gas from shale has generated substantial concerns about its water quality and conventional air pollution impacts, such opposition has rarely focused on greenhouse gas (“GHG”) emissions. Instead, it has been widely assumed, including by some environmental organizations, that natural gas is the least harmful “bridge fuel” to reduce GHG emissions during a transition from coal to alternative energy sources. That core assumption was called into question this week following the release of a new study finding that total GHGs from natural gas extracted through hydraulic fracturing (“shale gas”) may match or exceed those from coal. The validity of these conclusions, however, is already the subject of intense debate.
The study, by three Cornell University researchers, reported that the primary GHG emissions from hydraulic fracturing are not carbon dioxide from the burning of natural gas, but methane released during the fracturing process, the operation of the wells, and the transportation and storage of the fuel. Because methane is a far more potent greenhouse gas than carbon dioxide, the study concluded that over a 20 year time frame “the GHG footprint for shale gas is at least 20% greater than and perhaps more than twice as great as that for coal.” Carbon dioxide remains in the atmosphere for longer than methane, but even over a 100-year period the study found that shale gas emissions were “comparable” to coal emissions. The study’s data and methodology have already been disputed by the oil and gas industry, principally because the assumed rate of fugitive emissions is at odds with industry standards and practices. The report’s authors acknowledge that better data is needed on the amount of methane emissions that leak or are otherwise lost during and after hydraulic fracturing operations, which is now likely to become a focus of increased attention.
Additional obstacles for fracturing proponents surfaced during a Senate Environment and Public Works Committee hearing yesterday, as an Environmental Protection Agency (“EPA”) official affirmed that drilling companies that use diesel fuel in hydraulic fracturing operations without a permit are in violation of Safe Drinking Water Act. A 2010 report revealed inconsistent positions among state environmental regulators concerning the use of diesel as a fracturing fluid, and last year EPA posted a statement on its website that: “Any service company that performs hydraulic fracturing using diesel fuel must receive prior authorization …” The Independent Petroleum Association of America and U.S. Oil & Gas Association are challenging that posting in the D.C. Circuit Court of Appeals, alleging that EPA imposed new substantive requirements without undertaking the rulemaking procedures required by the Administrative Procedures Act (“APA”).
In New York, a bill that would have required the disclosure of hydraulic fracturing chemicals was rejected in the Senate Environmental Conservation Committee yesterday. The legislation, S. 425, drew support from a majority of Committee members voting, but fell one vote short of the eight required to bring it to the Senate floor. Fracturing disclosure legislation is also pending in the United States Congress. While such disclosure is not currently required nationwide, a new website from the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, funded in part by the Department of Energy, has collected chemical data voluntarily submitted by participating oil and gas companies and published it in a searchable database.
March 17, 2011
On March 16, 2011, the Environmental Protection Agency (“EPA”) proposed long-anticipated limits on power plant emissions of mercury and other hazardous air pollutants (“HAPs”) under Section 112 of the Clean Air Act (“CAA”). Along with recent emissions standards for industrial and commercial boilers and a new proposal for power plant GHG controls due out in July, EPA is undertaking a series of major CAA rulemakings at the same time its authority under that statute is facing legal and legislative attacks.
EPA’s latest rule would establish the first nationwide standards for power plant emissions of mercury, arsenic and other HAPs, with numeric limits based upon “maximum available control technology” as required under the 1990 CAA Amendments. The George W. Bush administration attempted to create a cap-and-trade program for power plant mercury emissions, which the D.C. Circuit Court of Appeals struck down in 2008. EPA’s new proposal would reduce mercury from approximately 525 coal and oil-fired power plants by 91 percent once fully implemented, and it covers a range of other pollutants that were not regulated under the Bush-era mercury rule.
Last month, under the pressure of a court deadline, EPA also finalized new emissions regulations for more than 200,000 industrial, commercial, and institutional boilers, covering sources ranging from power plants and refineries to apartment buildings and hospitals. Owners of smaller boilers with a heat input capacity of less than 10 million Btu per hour will not need to install new pollution controls, but are instead required to perform and document biennial boiler “tune-ups.” Moreover, while EPA released its boiler regulations pursuant to its judicially-imposed deadline, it simultaneously announced that it is formally reconsidering parts of those rules and that further changes may be forthcoming.
Finally, under a settlement with New York and other states, cities and non-profit organizations, EPA committed to proposing New Source Performance Standards (“NSPS”) for power plant greenhouse gas emissions (“GHG”) by July 26, 2011. The EPA is currently holding listening sessions to solicit input for that proposal, although legislation recently passed by the House Energy and Commerce Committee would preempt this and other EPA efforts to regulate GHG emissions under the CAA.
EPA’s upcoming NSPS proposal may also factor into a pending case before the Supreme Court, which will determine whether a coalition of states and land trusts may sue power plants to compel GHG reductions under a public nuisance theory. Responding to arguments that recent EPA climate regulations had displaced federal common law remedies, this week the state plaintiffs conceded that implementation of NSPS covering power plants GHG emissions would bar their suit, but argued that until such rules were finalized the case should be returned to the lower court and stayed pending EPA’s regulatory decision. Oral arguments in American Electric Power v. Connecticut are scheduled for April 19, 2011.
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