DOE Announces Funding for Nuclear Investments, Grid Modernization

Posted on January 19, 2016 by Jessica Bell

Last week, the U.S. Department of Energy (DOE) announced awards to X-energy and Southern Company to work on advanced nuclear reactor designs, in support of the Administration’s goal to move toward carbon-free generation.  This funding ($80 million over multiple years possible) is meant to support research that will address technical challenges to the design, construction, and operation of next generation nuclear reactors.  Additionally, DOE announced a $220 million award over three years to DOE’s National Labs and partners to support several key grid modernization areas, including advanced storage systems, clean energy integration, and standards and test procedures.  DOE Secretary Ernest Moniz highlighted the importance of grid modernization to reducing carbon emissions, safeguarding against attacks on infrastructure, and keeping the lights on.

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Other CPP Challenges: Petitions for Reconsideration

Posted on January 14, 2016 by Jeff Bayne

As previously discussed, many parties have turned to the courts to challenge the Clean Power Plan, but this is not the only venue parties opposing the CPP have turned to for relief.  Parties are also challenging EPA directly through petitions for reconsideration.

Ordinarily, objections to a rule promulgated under the Clean Air Act must be raised during the public comment period; otherwise they cannot later be raised in a petition for judicial review.  However, there is an exception in the Clean Air Act for objections that were impracticable to raise within the time for public comment or when the grounds for objections did not arise until after the public comment period.  If an objection satisfies this requirement, and is of central relevance to the outcome of the rule, a petitioner can ask EPA to convene a proceeding for reconsideration.  This section also allows, but does not require, EPA to stay the effectiveness of a rule for up to three months pending reconsideration.

In late December, multiple states, including Kentucky, Montana, and Wyoming, filed petitions for reconsideration of the CPP before the EPA, joining New Jersey who filed a petition for reconsideration and administrative stay back in September.  While the specific arguments made by each state differ, all claim that their objections were impracticable to raise during the comment period because of the extent that the final rule differs from the proposed one.  Several states also argue that the final rule relied on data that was not available during the comment period.

States are not the only parties filing petitions for reconsideration.  As an example, the National Rural Electric Cooperative Association filed a petition in late December asking EPA to reconsider and take public comment on the reliability safety valve issue.

So far EPA has not responded to these petitions for reconsideration, and the statute does not impose a timeline for EPA to do so.

This post will likely be updated as more petitions for reconsideration are available.

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TransCanada Mounts Two-Fold Legal Challenge Over Keystone XL Permit Denial

Posted on January 12, 2016 by Amber Martin

On Wednesday, January 6, 2016, TransCanada filed a 50-page complaint in the U.S. District Court for the Southern District of Texas, asking the court to declare unlawful the State Department’s November 2015 decision denying a Presidential permit for the Keystone XL Pipeline.  Because the northern segment of the Pipeline was to run from the U.S.-Canadian border to Steele City, Nebraska, TransCanada was required to obtain a Presidential permit before constructing and operating the cross-border portion of the pipeline.

In the complaint, TransCanada argues that the State Department exceeded its constitutional authority and usurped Congressional power to regulate trade and commerce with foreign nations by denying the permit for the Steele City segment of the pipeline. More specifically, TransCanada claims that the permit denial was motivated by the “symbolic role a permit denial would play abroad,” and public perception as to the effect the pipeline may have on greenhouse gas emissions rather than “the traditional regulatory concerns underlying prior Presidential permitting decisions.”  TransCanada further asserts that the permit denial is “incompatible with Congress’s own exercise of its express powers,” and “depart[s] markedly from any established practice to which Congress could have acquiesced.” The lawsuit seeks a judgment declaring the permit denial null and void and enjoining the State Department from taking any action to enforce the denial.

Also on January 6, 2016, TransCanada filed a Notice of Intent to submit a claim to arbitration under Chapter 11 of the North American Free Trade Agreement (NAFTA). In the Notice of Intent, TransCanada asserts that the U.S. breached Articles 1102, 1103, 1105 and 1110 of the NAFTA by “delaying the processing of the application for an extraordinarily long period, denying the application for symbolic reasons rather than the merits of Keystone’s application, and applying new and arbitrary criteria to deny Keystone’s application.”  TransCanada is seeking monetary damages from the United States in excess of $15 billion for the alleged violations.

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EPA to Provide More Information on the Clean Power Plan

Posted on January 7, 2016 by Anjali Patel

EPA recently announced that it will be holding webinars [link eliminated] to provide further information on particular aspects of the CPP.  Currently scheduled topics include:

  • Emissions Trading 101, Monday, January 11, 2016, 2:00-3:30 PM ET, in which EPA will provide a basic overview of emissions trading, an explanation of common terms (including budgets, set-asides, etc.), a general description of how mass-based and rate-based trading works, and a discussion of tools and resources.  EPA may add additional training webinars if there is interest.
  • Energy Efficiency and Evaluation, Measurement and Verification (EM&V), Thursday, January 14, 2016, 2:00-3:30 PM ET, in which EPA will discuss how energy efficiency can be used as a compliance measure in the Clean Power Plan, and what the rule says about EM&V.
  • Renewable Energy and the Clean Power Plan, Thursday, January 28, 2016, 2:00-3:30 PM ET, in which EPA will explain how renewable energy was used in the Best System of Emission Reduction, and how states can use renewable energy to reduce emissions as part of a state plan.
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Energy Law Journal – Is EPA The New Energy Regulator?

Posted on January 7, 2016 by Jeff Bayne

In The Environmental Protection Agency and the Clean Power Plan: A Paradigm Shift in Energy Regulation Away from Energy Regulators, published in the current issue of the Energy Law Journal, William S. Scherman (former FERC general counsel) and Jason J. Fleischer theorize that the Clean Power Plan will upset the balance of energy regulation in the U.S.  The two authors, both currently in private practice, argue that if the CPP survives legal challenges, it will result in EPA becoming the nation’s new energy regulator, fundamentally shifting the nature of energy regulation by undermining the powers of state regulators and FERC.

Scherman and Fleischer argue that historically there have been two foundations of energy regulation in the U.S. The first foundation is a regulatory compact, in which utilities receive a fair rate of return while consumers obtain reliable power free from monopolistic prices.  The second foundation is a line separating state and federal energy regulation (even if there are ongoing questions of where exactly that line should be drawn).  The authors claim that the CPP upends both.  According to their analysis, the math of the CPP will constrain state regulators and FERC-approved energy markets by effectively mandating the market shares for different generation fuel types.  Scherman and Fleischer conclude that this will both change the basis of the traditional regulatory compact and cross the federal-state regulatory line, disrupting the existing paradigm of energy regulation.

Their arguments echo what some of the petitioners have been urging in front of the D.C. Circuit. While it remains to be seen how these arguments fare in court, the article provides an interesting take on this perspective.

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