Energy & Environmental Law Blog

Energy & Environmental Law Blog

Analyzing the critical energy and environmental issues of the day

Anticipating Washington State’s New Industrial Stormwater General Permit

Posted in Northwest, Rulemakings, Water Law

The Washington Department of Ecology is in the process of renewing the current Industrial Stormwater General Permit (ISGP), which is set to expire on January 1, 2015.  Current permit holders will need to reapply for continued coverage by July 1, 2014.  The 2015 version of the ISGP will mean little or minor changes for some permittees, but will have significant changes for others.  Read More

FERC Provides Important Guidance Regarding Confidentiality Agreements and “Duty to Support” Clauses

Posted in Federal, FERC, Oil & Gas, Rulemakings

Yesterday, I wrote a blog post describing a FERC order that, for the first time ever, would have allowed an interstate oil pipeline to grant preferential rates and capacity rights to shippers making volume commitments through an open season process conducted outside the context of a pipeline project. 

FERC’s order is also noteworthy for the general guidance it provides with respect to the confidentiality agreements and “duty to support clauses” that pipelines routinely employ in their open season processes and transportation agreements. 

First, the FERC order recognizes the need for confidentiality agreements during an open season to protect the pipeline from the competitive harm that would result from the disclosure of rates, discounts, and contract terms being discussed, but states that confidentiality agreements are to be “narrowly tailored and should not prevent potential shippers from bringing to the FERC’s attention issues arising from the open season or proposed contract provisions that may conflict with applicable law, precedent or policy.” 

Second, as to “duty to support clauses” (i.e., contract clauses that require the shipper to support the pipeline’s associated FERC filing), FERC states that it will look with disfavor on clauses that require too broad a waiver of a shipper’s statutory rights to seek redress before FERC.  While FERC does not question the reasonableness of “duty to support clauses” that require contract shippers to support the pipeline’s efforts to obtain authorization for construction and approval of the rates the shipper specifically agreed to, the FERC order indicates that requiring the shipper to waive its statutory rights as to other rates, terms, and conditions likely goes too far.

FERC Rejects Preferential Rates and Capacity Rights for Committed Shippers on Pre-Existing Oil Pipeline Capacity

Posted in Federal, FERC, Oil & Gas, Rulemakings

The Federal Energy Regulatory Commission (FERC) issued an order on March 20, 2014, rejecting Colonial Pipeline Company’s (Colonial) petition for a declaratory order (PDO) that, for the first time ever, would have allowed an interstate oil pipeline to grant preferential rates and capacity rights to shippers making volume commitments through an open season process conducted outside the context of a pipeline project. 

FERC has issued numerous declaratory orders since 1996, allowing pipelines to grant such preferential rights where volume commitments were necessary to support the financing and construction of a project, including new construction, capacity expansions, line reversals, and system realignments.  Colonial sought to extend that precedent.

FERC rejected Colonial’s attempt to extend its precedent for granting preferential rights by distinguishing between situations in which shippers make volume commitments to support the long-term viability of a new project and situations such as that posed here, where the volume commitments would do nothing but ensure the pipeline a “legally unassailable revenue stream whether or not committed shippers make any shipments and without any commitment that new capacity will be added to a constrained system.”  The order also emphasizes that existing shippers who decline to make a volume commitment would have their service rights degraded by virtue of the superior rights accorded to the volume-committed shippers.  Accordingly, FERC rejects Colonial’s proposal as unduly discriminatory.

DOI Secretary Jewell Announces Two Utility-Scale Solar Projects in California and Nevada

Posted in California, Electric Power, Federal, Land Use, Renewables

Secretary Jewell, of the Department of Interior, announced approval of two utility-scale solar projects located on the California-Nevada border. The Stateline Solar Project will be located in the Mojave Desert in San Bernardino County, California, and supply 300-megawatts of renewable energy to power 90,000 homes and create an estimated 400 jobs during constructions and 12 permanent jobs for ongoing operations. The second project, the Silver State South Solar Project located just across the border in Nevada, will provide 250-megawatts to power 80,000 homes and create 15 permanent jobs. Read More

California Low Carbon Fuel Standards Survive Ninth Circuit Petition for Rehearing

Posted in California, Climate Change, Environmental Quality, Natural Resources, Oil & Gas, Rulemakings

On January 22nd, the Ninth Circuit Court of Appeals declined petitions to reconsider their decision upholding of enforceability of California’s Low Carbon Fuel Standard (LCFS).  The petitions were spearheaded by various trade groups and energy groups, including the Rocky Mountain Farmers Union and the American Fuel and Petrochemical Manufacturers, who argued that the LCFS’s strict requirements — which seek to greatly reduce greenhouse gas emissions in the state — discriminate against businesses importing fuel into California from other states.

The LCFS requires all transportation-fuel selling businesses in California to reduce their fuels’ “carbon intensity” — a number calculated based upon a fuel’s greenhouse gas emissions resulting from its production, distribution and use — by ten percent by the year 2020. Those opposing the LCFS argued under the U.S. Constitution’s Commerce Clause that it discriminated against non-California businesses and their fuels because the carbon intensity calculation factors in the added emissions from transporting the out-of-state fuel to California. The consequently higher carbon intensity of out-of-state fuel made it more difficult for the businesses to adapt to the state’s emission lowering requirements.

The original complaint against the LCFS was filed in 2009, with a 2011 ruling determining the requirements were discriminatory and thus unconstitutional. That ruling was appealed by the California Air Resources Board, and the Ninth Circuit held last September that the LCFS’ requirement were in fact not discriminatory.

Is Carbon Capture and Sequestration the Best or Even an Achievable Control Technology To Reduce Carbon Dioxide Emissions from Coal-Fired Power Plants?

Posted in Environmental Quality, EPA, Federal, Rulemakings

EPA’s proposed greenhouse gas emission standards for new power plants rest on the agency’s finding that carbon capture and sequestration (CCS) technologies are “achievable” and the “best system” for the reduction of carbon dioxide emissions from coal-fired power plants.  This finding is highly debatable and will likely be the focal point of political and legal challenges to the regulations, if adopted.   Read More

Square Pegs in Round Holes

Posted in Federal, Natural Resources, Water Law

The Western states face two reciprocating and overarching problems in water resources policy.  First, water is an increasingly scarce resource facing sharply competitive needs.  Climate change is projected to put even more strain on water supplies.  Second, most streams listed as water-quality impaired in the West are designated as such for issues related to the biological integrity of the waterway.  The combination of aggressive human use of waters, manipulation of stream channels, and failure to control agricultural runoff has resulted in widespread degradation of aquatic habitat.  Read More

EPA Issues Assessment of Bristol Bay and Large-Scale Mining

Posted in EPA, Natural Resources, Northwest, Rulemakings, Water Law

On January 15, the Environmental Protection Agency (“EPA”) issued its final Assessment of Potential Mining Impacts on Salmon Ecosystems of Bristol Bay, Alaska, concluding that large-scale mining in the region poses risks to salmon, wildlife, and Native Alaska cultures. Read More

West Virginia Chemical Spill Likely to Bring Oil and Chemical Inspections and Perhaps Regulatory Changes for Facilities with Large Above Ground Storage Tanks (“AST’s”)

Posted in Environmental Quality, Federal, Health and Safety

Last Thursday residents of Kanawha County reported a foul licorice odor in the air. State and local officials traced the smell to a leak from a 35,000-gallon above ground storage tank along the Elk River.The chemical had overflowed a containment area around the tank, then migrated over land and through the soil into the river. The leak happened about a mile upriver from the intake for a water supply. Read More

EPA Reissues Greenhouse Gas Emission Standards for New Power Plants

Posted in Climate Change, EPA, Federal, Renewables, Rulemakings

The U.S. Environmental Protection Agency (EPA) has re-proposed greenhouse gas (GHG) emission standards for new fossil-fuel power plants, exercising existing authority under section 111(b) of the Clean Air Act.  Proposed rule re Electric Utility Generating Units.  The key proposal is an emission standard for new coal-fired power plants that would require the incorporation of substantial (but not complete) capture and sequestration of carbon dioxide emissions.  This proposal is controversial because the GHG emission standard is based on carbon capture and sequestration technology that is not widely deployed and has not been demonstrated to be cost-effective for electric generation, absent government subsidies and location-specific opportunities to use sequestered carbon dioxide to enhance oil production (with its attendant, unsequestered GHG emissions).   Read More