EPA Moves Forward With Greenhouse Gas Regulation

Posted on December 26, 2010 by Caleb Holmes

From Stephen C. Jones of GT Philadelphia:

The Environmental Protection Agency (EPA) took another dramatic step toward comprehensive regulation of greenhouse gases (GHGs) last week when it committed to issue sector-wide New Source Performance Standards (NSPS) to control GHG emissions from fossil-fuel based power plants and petroleum refineries.  Responsible for almost 40% of GHGs emitted in the United States, application of the new NSPS to these two industries is expected to have a significant impact on GHG emissions in this country.  While Congressional efforts over the past few years to control GHGs through comprehensive cap and trade programs generated much public discourse and awareness, federal, state, regional, and local governments and regulatory agencies have been working behind the scenes to limit GHG emissions, largely through regulation.  To the surprise of many, because of these regulatory efforts, the death of federal cap and trade in Congress has not meant the end of GHG regulation in the United States.  Instead, it is the beginning of what promises to become a comprehensive, mandatory regulatory scheme, involving all levels of government, that within the next three to five years will control GHGs in all sectors of the economy.  Instead of the flexible, market-based controls contemplated by federal cap and trade, however, businesses will face more stringent, and likely more costly, compulsory mandates requiring reductions in GHG emissions.

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Marcellus Shale Update: NY Moratorium Bill Vetoed, NY Executive Order, DRBC Draft Regs, and DRBC Hearing Curtailed

Posted on December 12, 2010 by David Mandelbaum

with Mark Glaser, GT Albany

Last week was an active week for those following regulation of Marcellus Shale natural gas development.

On December 11, New York Governor David Paterson vetoed AB 1143 / SB 8129, that would have banned all new permits for natural gas wells to be stimulated by hydraulic fracturing until May.  Instead, he issued an Executive Order establishing a moratorium on new horizontal, high-volume, hydraulic fracturing until July 1, 2011.  His counsel's statement is here.

Update:  The Governor's veto message was released on December 14.

On December 9, the Delaware River Basin Commission published its long-awaited draft natural gas well pad regulations.  It did so against the advice of New Jersey DEP Commissioner Bob Martin stated in a letter of December 7 and over the objection of New York Governor Paterson stated in a letter of December 6.  New York voted against release of the draft regulations at the Commission meeting of December 8.  Comments on the draft are due by March 16, 2011, and the Commission plans three public hearings in February.

On December 8, the Delaware River Basin Commission also adopted a resolution drastically curtailing, and possibly terminating, planned January hearings on natural gas exploratory wells -- that is wells intended for investigation and not production.  Most of the issues to have been addressed in that hearing are now to be considered in the pending rulemaking.  This resolution also avoided having the hearing address the adequacy of Pennsylvania state regulatory program, an issue that opponents of natural gas development had advanced in expert reports filed in the proceeding.  The Commission Chair's instructions to the hearing officer of December 3 reflect the difficulty of that issue.

The DRBC draft regulations would govern a number of issues, such as bonding and setbacks, also regulated by Pennsylvania and New York.  If adopted, they would impose different rules for identical natural gas development in different watersheds, including different watersheds within the same state.  The December 10 Philadelphia Inquirer quoted Commission Executive Director Carol Collier as analogizing this distinction to the regulations administered in the New Jersey Pinelands by the Pinelands Commission.  Those are quite explicitly land use regulation.  Whether the Interstate Compact Commissions intend to regulate each wave of land development, or just to focus on the current natural gas "boom," remains to be seen.

 

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Renewable Energy Cash Grant Program in Danger After Tax Cut Deal

Posted on December 10, 2010 by Caleb Holmes
 
Alternative energy projects in the U.S. that were depending on a renewal of a cash grant program as part of their financing package might be facing some disappointment. The new tax cut extension deal struck between the White House and congressional Republicans will not extend the cash grant election in lieu of the 30% tax credit for projects that generate electricity with renewable energy (solar, wind, geothermal).
 
As part of the American Recovery and Reinvestment Act of 2009, developers of U.S. renewable energy plants were given a choice under the cash grant program. They could take a 30% tax credit for the cost of the investment in the plant, or they could opt for a cash grant in lieu of the credit when the plant is placed in service. The cash grant has been a major incentive to renewable energy projects, since there is no need to bring in investors who can use the tax credit, and since the cash grant can come much earlier than the benefit of the tax credit (because the tax credit is not claimed until the tax return for the project is filed, which could be many months after the project is placed in service). The problem is that the cash grant election is scheduled to come to an end on December 31. It was hoped that this cash grant election in lieu of the tax credit would be extended as part of the tax cut extension deal, but this does not appear to be the case.
 
UPDATE: Language extending the cash grant program was included in the Tax Relief, Unemployment Innsurance Reauthorization and Job Creation Act amendment to H.R. 4853, introduced in the Senate last night.  The language can be found in Section 707 of the Bill.
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Goverment Dancing With Itself: Permits for Remediation

Posted on December 5, 2010 by David Mandelbaum
The Court of Appeals for the Fourth Circuit recently decided that the West Virginia Department of Environmental Protection needed a wastewater discharge permit for a mine drainage reclamation project it was running on an abandoned mine.  West Virginia Highlands Conservancy Inc. v. Huffman, No. 09-1474 (4th Cir. Nov. 8, 2010).   In my November column in The Legal Intelligencer / Pennsylvania Law Weekly, I consider whether this approach, although entirely conventional and probably in line with the Clean Water Act, misses the point.  A permit is an opportunity for third parties to have input, and ultimately to litigate, over the way an activity is carried out.  Under the Superfund, HSCA, and Act 2 contamination programs, we do not allow third-party input or litigation, at least not before the remedy is complete.  When do we want to impose that impediment on new activity, and when do we want to get some clean up, even when it is not a perfect clean up?  The full column is here. 
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