FERC Approves Electric Storage Resource Practices in Two Regions

As described previously in this blog, FERC in 2018 adopted a rule aimed at clearing away obstacles to participation by electric storage resources in wholesale markets administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).[1]  FERC has issued orders addressing the compliance filings of two RTOs: the PJM Interconnection (PJM) and Southwest Power Pool (SPP).  The FERC compliance orders will be of keen interest to storage resources and other market participants in PJM and SPP. Continue Reading

CARB Continues Global Leadership Role on Climate with Adoption of Tropical Forest Standard

After nearly a decade of work, on September 19, 2019, the California Air Resources Board (CARB) endorsed its much anticipated Tropical Forest Standard (TFS). The TFS is a first-of-its-kind framework for assessing jurisdiction-scale offset credit programs that reduce emissions from tropical deforestation and degradation. It is widely expected to serve as a replicable model for adoption by other international greenhouse gas mitigation programs that utilize tropical forest reductions as offsets, including the International Civil Aviation Organization (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

The TFS framework ensures that reductions produced by a subnational jurisdiction’s systemic efforts to conserve its tropical forests are real, quantifiable, permanent, additional and enforceable – the hallmark criteria to ensure the environmental integrity of offset credits within emissions trading schemes, such as California’s Cap-and-Trade Program. It requires rigorous, independent third-party verification of both the emissions avoided by the jurisdictional plan and the jurisdiction’s adherence to social and environmental safeguards designed to protect indigenous communities.

Under the TFS, subnational jurisdictions wanting to issue offset credits for their overall forest conservation efforts must adhere to guiding principles endorsed by indigenous community leaders and state and regional governments whose territories include more than one-third of the world’s tropical forests. These principles mandate that indigenous communities are involved in plan development and implementation and share in the resulting economic benefits.

CARB’s endorsement of the TFS does not authorize emitters to use tropical forest offsets for compliance with its Cap-and-Trade Program at this time; CARB would need to amend its regulation to authorize such use and has no immediate plan to do so. Advocates for indigenous communities and environmental justice nevertheless opposed CARB’s action, arguing that it made it all but inevitable that CARB would soon adopt such an amendment and that doing so would allow emitters to continue emitting and consuming fossil fuels in California.

Against such opposition, leading scientists and environmental groups strongly supported CARB’s endorsement of the TFS as a critical near-term step to slow the loss of tropical forests and limit global warming to no more than two degrees Celsius. According to a recent estimate, tropical deforestation now amounts to more emissions each year than 85 million cars over their entire lifetime, dwarfing California’s own anthropogenic emissions and those of all nations but the U.S. and China. As a consequence, no serious effort to mitigate climate change can exclude measures to avoid continued deforestation and degradation of tropical forests.

CARB’s action comes at a timely moment, as the impacts of climate change and slash-and-burn agriculture are resulting in an unprecedented surge in uncontrolled fires throughout the Amazon rainforest. Although the political situation in Brazil may make it difficult to crack down on illegal burning and deforestation, CARB’s adoption of the TFS may amount to one small step towards counterbalancing the incentives that promote deforestation.

FERC Proposes Changes To PURPA Rules

The FERC recently issued a Notice of Proposed Rulemaking (NOPR) to reform its regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA), which encourages the development of certain small generation and cogeneration facilities.  PURPA and FERC’s rules implementing it over the years establish a number of benefits to those facilities and set obligations for electric utilities to purchase electricity from them.  FERC now concludes that, due to changes in the electric power industry over the last several decades, it is time to revise some of its PURPA rules.  But FERC’s proposals are certain to be controversial.  Notably, one of the three FERC Commissioners dissented from the NOPR.

The NOPR should be of interest to a wide range of electricity market participants, including utilities and investors in cogeneration and certain types of small scale generation facilities. Continue Reading

The Environmental Protection Agency’s (EPA) Proposed Changes to State and Tribal Certification Authority under Clean Water Act Section 401

Companies seeking approval for pipelines got some encouraging news from a Trump Administration proposal to cut back on states’ authority to block pipelines by withholding state water quality approvals, but environmentalists and states continue to express skepticism and are likely to sue. On August 22, the EPA proposed its Updating Regulations on Water Quality Certification  (“Proposed Rule”) to replace and update the existing water quality certification process under Section 401 of the Clean Water Act (“CWA”). The EPA’s Proposed Rule comes in response to Executive Order 13868, Promoting Energy Infrastructure and Economic Growth, issued on April 10, 2019 to “reduce regulatory uncertainties that currently make energy infrastructure projects expensive and that discourage new investment.” To ensure “the timely construction of the infrastructure needed to move our energy resources through domestic and international commerce,” the Administration directed the EPA to update Section 401 for purposes of achieving a more “efficient permitting process.” Continue Reading

FERC Lowers Regulatory Burdens for Electricity Sellers in RTO/ISO Markets

FERC has streamlined its rules so that generators in the organized markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) no longer need to demonstrate a lack of horizontal market power in order to charge flexible market-based rates.  Instead, FERC will rely on existing market monitoring and mitigation measures in place in those markets to guard against exercises of market power.  This rule will be of interest to power generators; it will significantly simplify the market power filings required of generating resources in RTO/ISO markets.

The new rule was proposed earlier this year, as described in a post on this blog.  FERC adopted the rule as proposed but made a few minor clarifications. Continue Reading

Kisor v. Wilkie Creates Significant Uncertainties Regarding Deference to EPA

The Supreme Court’s much-awaited decision in Kisor v. Wilkie will have significant ramifications for the Environmental Protection Agency (“EPA”) and environmental law.  While the decision upheld the concept of Auer deference, which instructs courts to defer to agencies’ interpretations of their own regulations, it also imposed a number of limitations and restrictions on when Auer deference applies.  The decision leaves open many questions about what EPA guidance will qualify for Auer deference, and whether any statements that do qualify for deference are subject to immediate challenge as final agency action.  The decision thus presents opportunities for regulated parties to challenge EPA interpretations, but also challenges in that regulated parties may not necessarily rely on EPA’s interpretations as controlling. Continue Reading

Supreme Court Decision Expands Scope of FOIA’s Exemption for Confidential Information, with Significant Implications for EPA

The Supreme Court’s June 24 decision in Food Marketing Institute v. Argus Leader Media has significantly expanded the confidential commercial information protected from disclosure under the Freedom of Information Act (“FOIA”)—an issue that recurs repeatedly with respect to information submitted to EPA and other environmental regulatory agencies.  Continue Reading

President Trump Issues Executive Order Directing Significant Changes to the Regulation of Genetically-Engineered Organisms

On June 11, 2019, President Trump issued an Executive Order that would require the Department of Agriculture, the Environmental Protection Agency, and the Food and Drug Administration—the three main agencies with regulatory authority over genetically-engineered (“GE”) plants and animals in the United States—to revise their regulations governing GE organisms.  These changes follow closely on the heels of the Animal and Plant Health Inspection Service’s (“APHIS”) recent proposed regulations that would increase the number of genetically-engineered organisms that may be produced without undergoing APHIS review, and are likely of interest to biotechnology companies, agricultural organizations, and other entities interested in GE organisms. Continue Reading

APHIS Proposes Sweeping Revisions to the Regulation of Genetically-Engineered Organisms

On June 6, 2019, the Animal and Plant Health Inspection Service (APHIS) proposed a significant restructuring of the agency’s regulations governing genetically-engineered organisms.  Public comments on the proposal are due by August 6, 2019.  APHIS’s proposed changes, which will increase the number of genetically-engineered organisms that may be produced without undergoing APHIS review, are likely to be of interest to biotechnology companies, agricultural organizations, and other entities interested in genetically-engineered organisms.

Continue Reading

FERC Denies Rehearing on Electricity Storage Rule

The Federal Energy Regulatory Commission (FERC) has issued an order denying all requests for rehearing of its rule aimed at clearing away obstacles to participation by electric storage resources in wholesale markets administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).[1]  Electric storage resources often complement renewable resources when the sun is not shining and the wind is not blowing.  Easing the entry of storage is likely to have a growing impact on electricity markets and the mix of resources used to meet demand in those markets.  Accordingly, FERC’s action should be of interest to a wide range of electricity market participants including utilities, generation companies, and investors in storage and other electricity resources and electricity customers. Continue Reading

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