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.

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.

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.

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.

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.

• Read more on climate change law

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.

• Read more on hydrofracking

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.

• Read more on Climate Law and the Clean Air Act

EPA’s GHG Reporting Program arose out of a provision in the Consolidated Appropriations Act of 2008, requiring “mandatory reporting of greenhouse gas emissions above appropriate thresholds in all sectors of the economy of the United States.”  EPA first proposed reporting requirements in March 2009 and finalized its initial regulations six months later, on October 30, 2009.  Since then, the agency has issued a series of regulations expanding and clarifying the scope of reporting for various industries and activities, such as the mandatory disclosure of reporting facilities’ co-generation power units.

The GHG Reporting Program primarily covers GHG-emitting facilities, fossil fuel suppliers, and industrial gas suppliers whose aggregate GHG emissions exceed 25,000 metric tons carbon-dioxide equivalent (CO₂e) per year, though facilities in certain emissions intensive source categories (e.g., cement manufacturing and petroleum refining) are universally covered.  EPA has projected that the rule would cover approximately 10,000 sources, which are collectively responsible for 85-90 percent of total U.S. GHG emissions.

Covered facilities were required to begin monitoring their GHG emissions on January 1, 2010, and the deadline for their first annual reports was set to be March 31, 2011.  EPA plans to make much of the data it collects publicly available, and the reported information is expected to inform recent and forthcoming efforts to regulate stationary source GHG emissions under the Clean Air Act.  Earlier this year, EPA began phasing in the first GHG permitting requirements for certain new and modified major stationary sources, and the agency is legally obligated to propose GHG New Source Performance Standards (“NSPS”) for power plants by July 26, 2011.

EPA still plans to publish data submitted under the GHG Reporting Program “later this year,” though it is not clear when facilities will have to report their 2010 emissions.  Instead, the agency promised to provide additional information on its deadline changes over the coming weeks.

EPA’s recent announcement comes on the heels of a Congressional vote which cast further uncertainty over the future of the agency’s suite of GHG regulations.  On February 18, 2011, the House of Representatives passed a seven-month budget “continuing resolution” that would largely de-fund EPA’s GHG reporting registry and prevent EPA from spending any funds to implement its stationary source GHG regulations.  The Senate has not taken up that bill, however, and the House has since passed a two week stop-gap resolution without the GHG provisions.

For more information on EPA’s GHG Reporting Rule and other climate-related initiatives, contact Jeffrey Gracer.

In the motion for a stay, coalitions of industry, state, and other challengers argued that the climate rules were unlawful and would cause irreparable injury if not enjoined.  Without addressing the merits of the regulations themselves, the D.C. Circuit Court of Appeals found that the challengers had not shown that “certain” harm would “directly result” from the rules’ implementation, as required for a stay.

This ruling means that EPA’s rules are likely to take effect as scheduled, as legislation that would delay or freeze funding for EPA’s stationary source GHG regulations is not expected to pass before Congress adjourns this month.  The incoming Congress may take up similar legislation next year, either as a stand-alone measure or an amendment to a spending bill.  In the meantime, EPA is in the process of finalizing rules to ensure that its forthcoming stationary source GHG controls only affect certain new and modified facilities emitting at least 75,000 tons of GHGs annually.  These implementing rules are currently being reviewed by the White House Office of Management and Budget, and are scheduled to take effect before EPA’s January 2 regulatory deadline.

The suits against EPA’s suite of greenhouse gas regulations will be heard by a single three-judge panel on the D.C. Circuit, with briefing scheduled to begin next year.  While that litigation is pending, the Supreme Court will hear arguments on whether EPA’s challenged climate rules displace federal common law remedies aimed at addressing global warming.

For more information on climate-related litigation and regulations, contact Jeffrey Gracer.

Justice Sonia Sotomayor, who presided over oral arguments in the case while a judge on the Second Circuit, did not participate in the Supreme Court’s consideration of the petition for review.  Justice Sotomayor is expected to recuse herself when the case comes before the Court.

The case arises out of a 2004 suit filed by eight states (including New York), three land trusts and New York City against five electric utilities and one of their subsidiaries, alleged to be the “five largest emitters of carbon dioxide in the United States.”  The plaintiffs claimed that the power companies’ greenhouse gas (GHG) emissions constituted a public nuisance under federal common law and the common law of 20 states where the defendants operated power plants, and sought an injunction requiring “each defendant to … cap its carbon dioxide emissions and then reduce them by a specified percentage each year ….”

In 2005, United States District Judge Loretta A. Preska dismissed the suit under the political question doctrine, reasoning that the policy determinations required to set and implement a GHG emissions cap were of the type reserved for Congress and the President.  Connecticut v. Am. Elec. Power Co., 406 F. Supp. 2d 265, 272 (S.D.N.Y. 2005), vacated and remanded 582 F.3d 309 (2d Cir. 2009).  In a footnote, the Court withheld judgment on whether the plaintiffs would have been able to establish standing to bring their suit.  Id. at 271, n. 6.

The Second Circuit heard an appeal from the dismissal order in 2006, with then-Circuit Court Sotomayor sitting on the three-judge panel.  Following a three-year delay and Sotomayor’s nomination to the Supreme Court, the remaining two judges reversed the District Court and remanded the case for further consideration, ruling that: (a) the suit was not barred by the political question doctrine, (b) the plaintiffs had standing to litigate the dispute, and (c) the common law claims had been not been displaced by EPA’s then-unfinalized proposals to regulate GHGs under the Clean Air Act.  Connecticut v. Am. Elec. Power Co., 582 F.3d 309 (2d Cir. 2009).

The defendants petitioned for Supreme Court review of the Second Circuit decision last August.  In a move that took many by surprise, the Obama Administration filed a brief in support of the utilities’ petition, arguing that the plaintiffs lacked “prudential standing” and that the finalization of the EPA climate regulations which were pending at the time of the Second Circuit decision had displaced the federal common law relief sought by the states.

The Supreme Court’s decision could set key precedent for other pending climate tort suits and for environmental litigation more broadly.  The standing doctrine – which requires litigants to establish a particularized injury caused by the opposing party and redressable by judicial action – is often highly contested in environmental cases, especially those involving harms like global warming which have broad impacts and multiple causes.  While the Supreme Court found that a similar set of state plaintiffs met the constitution’s standing requirements in its 2007 climate change decision Massachusetts v. EPA, a rejection of the current suit on “prudential standing” grounds could give lower courts broad discretion to dismiss pending and future climate litigation.  If Justice Sotomayor recuses herself, the Court may end up deadlocked between the four Massachusetts v. EPA dissenters and the four remaining justices, a split which would leave the Second Circuit decision on the books but would not set binding precedent for other courts.

The Supreme Court could also conclude that EPA climate regulations finalized since the Second Circuit decision have displaced the common law remedies sought by the plaintiffs.  Many of those regulations are currently facing their own legal challenges, however, creating the possibility that the rules central to this displacement argument could themselves be overturned.

Oral arguments and a decision in the Connecticut v. AEP case are expected over the coming year.  For more information on pending global warming litigation and EPA’s climate rules, please contact Jeffrey Gracer.