Thank you for reading our sixth issue of Currents for the year.
We are sponsoring and attending the Energy & Mineral Law Foundation's Annual Institute June 18-20 in Charleston, South Carolina. The event includes three days of networking and continuing legal education on topical issues such as energy market trends, infrastructure security, ESG policy, carbon capture, and new regulations on waters of the United States and gathering lines. Click here to learn more and register.
We also would like to take a moment to note that several of the firm’s practice groups and attorneys were recognized in the 2023 edition of Chambers USA, a directory of leading law firms and attorneys. One of those practice areas was Energy & Natural Resources, and several attorneys were recognized for Energy & Natural Resources and Environment, among others.
Chambers and Partners annually researches the strength and reputation of law firms and individual lawyers across the globe. The research process for the United States includes interviewing lawyers and their clients, including influential general counsel at Fortune 100 companies, high-profile entrepreneurs, and significant purchasers of legal services. Considerable credence is given to the opinions of clients. Click here to learn more.
We hope you enjoy this issue, and, as always, thank you for reading.
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● Balancing Reliability, Affordability, and Renewability in the Energy Transition
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Throughout the United States and globally there is an undisputed trend towards renewable energy as much of the world seeks to decarbonize in response to the risks of climate change. As the article, “Clean energy investment is now nearly 2x that of fossil fuels – here’s why,” from Electrek notes, as of 2023, for every $1 spent on fossil fuels globally, now more than $1.70 is spent investing in clean energy, a ratio that was 1:1 just five years ago. This spending is being driven in the United States, in large part, by federal policy, like the Inflation Reduction Act and environmental regulations that impose additional costs on fossil fuel generators, through legislation in some states mandating that utilities achieve net zero carbon emissions by mid-century, and by utilities that have their own carbon reduction goals.
This “clean energy” transition raises two important questions: (1) what will this transition cost?; and (2) how do we ensure the power is available when people need it?
Click here to read the entire article.
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“Idaho couple Mike and Chantell Sackett have fought for years with the federal government over whether land they own includes a federally protected wetland.”
Why this is important: The article details another ruling by the Supreme Court that seems to be reflecting a trend of reining in the regulatory state. In late May, a divided Court concluded that the 1972 Clean Water Act did not extend to certain “unconnected” wetlands and are not to be governed by EPA oversight and permitting. The plaintiffs had filled the area at issue without obtaining federal permits. As the article notes, the decision by the Court is a victory for “conservative groups and business interests,” but environmentalists decry that “millions of acres of wetlands will no longer be under federal jurisdiction.” With respect to the latter concern, a four-justice minority, including three liberal justices and conservative Justice Kavanaugh, agreed with the subjective outcome of the case, but opposed the majority’s new test as having too broad an impact while also causing previously regulated critical wetlands to be exposed to environmental threat, such as those attendant to the Mississippi River levee system and the Chesapeake Bay. The decision, however, is consistent with the Court’s more recent rulings, such as WV v. EPA, that appear to be taking a stricter approach to assessing the breadth of authorizing statutes for federal agencies. --- Derrick Price Williamson
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“Environmental groups lauded the proposal but stressed that it still could exempt pollution at close to 100 known sites and does nothing to address the toxic material’s use as fill for roadways and berms.”
Why this is important: New EPA regulations will require monitoring of legacy landfills and ponds where coal ash was dumped before 2015 for groundwater contamination, closure, and cleanup. The new regulations will require monitoring of entire sites rather than piecemeal monitoring depending on how the coal ash was disposed of. However, many loopholes to these new regulations exist. For example, coal ash dumped in ponds where no water existed when the material was dumped would not be subject to the regulation. The new regulations potentially will cover 566 legacy landfills at 242 closed coal plants in 40 states. Groundwater monitoring has estimated that 75 percent of all coal ash landfills have caused groundwater contamination. The new regulations will impose significant costs on coal plant and landfill owners. But the new regulations will require significant regulatory oversight, which may not occur any time soon. Coal plant owners with coal ash landfills should review the current requirements to determine their obligations. --- Bryan S. Neft
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“Hanging in the balance is Pennsylvania’s effort to become the first major fossil fuel-producing state to adopt carbon pricing.”
Why this is important: In late May, the Pennsylvania Supreme Court heard oral arguments regarding Pennsylvania's currently stalled implementation of the Regional Greenhouse Gas Initiative ("RGGI"). RGGI is a cap and trade program that imposes a price and declining cap on carbon dioxide emissions from power plants. As detailed in the article, the merits of the challenge to RGGI are based on the way in which Pennsylvania attempted to implement the program. Without the approval of the Legislature, former Governor Wolf tried moving forward with implementing RGGI. Those parties now challenging that implementation, including a group of Republican legislators, argue that Governor Wolf was not permitted to move forward with RGGI because it is a tax on power plants, and the authority to tax is left solely with the Legislature.
While no decision has been made by the Supreme Court at this time, the article indicates the justices appeared split on the issue. The article also notes that, had RGGI not been stalled by this challenge in the courts, RGGI would have raised the Commonwealth more than $1 billion had it been participating in 2022. An additional consideration noted by the article is that Pennsylvania's current Governor, Josh Shapiro, has maintained that he does not support entering RGGI on former Governor Wolf's terms. Despite that, it is unclear how Governor Shapiro would proceed should RGGI be ended by the Supreme Court's decision before it was ever implemented. The upshot of this entire litigation is that the outcome (and Governor Shapiro's subsequent actions) will have a major impact on power plants and electricity consumers in Pennsylvania. --- Steven W. Lee
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“A new NRDC report warns that backlogs at PJM could undermine state decarbonization targets if the grid operator doesn’t undertake decisive reforms soon.”
Why this is important: As renewables continue to grow and projects come online, a huge bottleneck remains on how to get renewable power to utility customers. One of the largest interconnection providers is PJM, which manages high voltage grid connections in 13 states from Chicago to the Mid-Atlantic with 65 million customers. While PJM is working on older connection requests, 1,250 projects are in limbo waiting to be connected. And the Inflation Reduction Act will fund new renewable projects that could provide 1,000 MWs in just the PJM service area. A PJM study is underway to speed up interconnections, including grouping renewable projects to speed up connections. The recent debt limit increase contained proposals to speed up electric grid improvements, but the provisions did not make it into the final bill. This issue will need a federal solution. --- Mark E. Heath
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“Regulators have approved some projects and denied others, without determining whether objections are supported by evidence.”
Why this is important: When deciding whether to approve a solar project, Section 4906.10(A)(6) of the Ohio Revised Code requires the Ohio Power Siting Board to consider whether a project “will serve the public interest, convenience, and necessity.” At least one lawsuit has been filed involving a project denied based on a significant number of comments received opposing the project. Typically, courts defer to administrative agencies’ interpretation of a statute or regulation because of the assumed expertise over the subject matter of the statute or regulation. Based on the current iteration of the rule, it is likely that expressed opposition by community members is a justifiable reason to reject a project for failing to “serve the public interest.” --- Joseph C. Unger
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“Sponsoring U.S. natural gas projects will be a solid bet for years to come as overseas demand grows, and as the fuel supports the energy transition, according to private equity (PE) investors.”
Why this is important: The focus of private equity investors on the upstream natural gas industry demonstrates the role of inexpensive U.S. shale gas in sustaining the energy supply required domestically and internationally for the next several years. Natural gas will be needed to bridge the world’s energy needs during the transition from fossil fuels to renewable energy sources. U.S. producers can supply that gas in a less expensive and more environmentally friendly way than foreign E&P companies. As a result, efforts should continue to responsibly minimize impediments to permitting the new gas pipeline and LNG export facilities necessary to move our shale gas reserves to market. --- William M. Herlihy
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Here is a round-up of the latest statistics concerning the energy industry.
PETROLEUM
NATURAL GAS
COAL
RENEWABLES
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