US Supreme Court considers EPA greenhouse gas emissions regulations

May the U.S. Environmental Protection Agency regulate greenhouse gas emissions from power plants and industry under the Clean Air Act?

The Supreme Court of the United States heard oral argument on this issue yesterday, in the case Utility Air Regulatory Group v. Environmental Protection Agency, Docket No. 12-1146.  How the court rules on the case will shape federal regulation of carbon dioxide and other greenhouse gas emissions in the nation.

The case arises from EPA's decision in 2010 to regulate greenhouse gas emissions from power plants and industrial facilities.  That decision stemmed from a 2007 Supreme Court ruling, Massachusetts v. EPA, requiring EPA to regulate greenhouse gas emissions from motor vehicles under Title II of the Clean Air Act.  Since 1980, EPA has held that once it regulates one type of air pollution (e.g. greenhouse gases from motor vehicles), it may (or must) broaden its regulations to cover all such emissions (e.g. greenhouse gases from all sources).  Applying this precedent in 2010, EPA found that regulating motor vehicle greenhouse gas emission standards under Title II of the Clean Air Act also compelled EPA to regulate greenhouse gas emissions under the Clean Air Act's Title I "prevention of significant deterioration" or PSD program, as well as under its Title V stationary-source permitting program.

Building on its Title II regulation of greenhouse gas emissions from cars and trucks, EPA then promulgated its Title I and Title V regulatory programs for stationary sources.  These rules regulated stationary sources emitting 75,000 tons of carbon dioxide or more per year, but triggered challenges from several states, over 70 non-governmental advocacy groups, and business interests.  While challengers raised a host of objections, one of the key substantive issues raised was whether EPA may truly regulate carbon dioxide as a "pollutant."  Challengers also mounted attacks rooted in law, questioning whether EPA's 2010 decision to regulate motor vehicle greenhouse gas emissions could legally trigger permitting requirements for stationary sources.

After the U.S. Court of Appeals for the D.C. Circuit upheld EPA's rules, challengers appealed that decision to the Supreme Court.  While the Court declined to address most of the issues challengers raised, it decided to entertain argument on one point: "Whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases."

The Court's official docket for Utility Air Regulatory Group v. Environmental Protection Agency can be found here, and unofficial copies of many of the pleadings can be found on SCOTUSBlog.  While the Court has not indicated when it will rule on the case, energy and other industries are watching closely for the ultimate outcome.

Wave energy project in Australia advances

What may become the world's largest electricity generation project to rely on the power of ocean waves is moving forward in Australia, as Lockheed Martin has announced that it has signed a contract with Victorian Wave Partners Ltd. to develop a 62.5-megawatt project off the coast of Victoria, Australia.

Waves off the coast of Maine.

The world's oceans contain significant amounts of energy, embodied in waves, tides, and currents.  Winds blowing over the seas also contain substantial energy.  Given the immense size of these marine renewable energy resources, extracting useful power from the oceans offers significant potential to serve society's needs without relying on fossil fuels.  Early projects, like the 2008 Aguçadoura Wave Farm off Portugal, sought to demonstrate the feasibility of wave energy conversion, but the rigors of the marine environment, need for advanced technologies, and costs of developing a wave energy project have limited development of wave and other hydrokinetic energy resources.

Today's announcement by Lockheed Martin of a project development agreement with Victorian Wave Partners Ltd. envisions a much larger project than has previously been developed anywhere in the world.  Victorian Wave Partners is an Australian special purpose company owned by Ocean Power Technologies Australasia Pty Ltd., an affiliate of U.S. company Ocean Power Technologies or OPT.   OPT's PowerBuoy wave generation technology uses a buoy that moves up and down in ocean waves to capture mechanical energy.  This mechanical energy is used to power an electrical generator, whose electricity is transmitted to shore via an underwater cable.  OPT has proposed projects relying on its PowerBuoy technology off the coast of Oregon in the U.S., and has tested its technology off Hawaii, New Jersey, and Scotland.

The Victoria project is scheduled to be developed in three stages.  The first stage is expected to produce approximately 2.5 megawatts of peak power by 2014 or 2015, with subsequent stages designed to build up to 60 additional megawatts of peak capacity by 2018 or 2019.  The project relies in part on funding from the Australian Renewable Energy Agency or ARENA.  Australia has established a goal of relying on renewable energy for 20 percent of its needs by 2020.  ARENA offers funding to qualified renewable energy projects capable of helping the island nation meet this goal.

While the Victoria project may become the world's largest wave energy project to date, other projects in Australia, Scotland, and the United States are moving forward.  Will waves soon contribute meaningfully to the world's portfolio of energy resources?

Norman Bay tapped as next FERC chairman

In a move that portends continued intense enforcement of federal energy laws, President Obama has nominated Norman Bay to serve as the next chairman of the Federal Energy Regulatory Commission. Currently the Director of the Commission's Office of Enforcement, since 2009 Mr. Bay has led that office through a series of high-profile investigations and enforcement actions, culminating in record fines for alleged violations of federal energy law -- over $440 million in 2013, plus hundreds of millions more in penalties levied but not yet collected due to legal challenges. His nomination for chairman illustrates the growing importance within the Commission of enforcement, and suggests enforcement would continue to remain aggressive if he is confirmed.

The Federal Energy Regulatory Commission, or FERC, is an independent federal agency charged with regulating the interstate transmission of electricity, natural gas, and oil. The Commission also licenses hydropower projects and reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines. The Commission is composed of up to five commissioners appointed by the President with the advice and consent of the Senate, each of whom serve five-year terms.

While the Commission has enforced federal energy laws since its inception, enforcement has become a higher priority for the Commission in recent years.  The Energy Policy Act of 2005 increased the Commission's enforcement powers, giving it the authority to levy fines of up to $1,000,000 per day for some violations. Following that law's enactment and a restructuring of the Commission's Office of Enforcement, the Commission has ramped up its enforcement activities. For example, in its 2012 fiscal year the Commission ordered penalties for over 904 possible or confirmed violations, including over $5.8 million in refunds, over $148 million in civil penalties and disgorgement of over $119 million in unjust profits.  Activity increased in 2013, with the Commission assessing over $304 million in civil penalties and ordering disgorgement of almost $141 million in unjust profits. 

Last year also brought record-high individual penalties.  Charged with market manipulation, a J.P. Morgan subsidiary agreed to pay a civil penalty of $285 million and to disgorge $125 million in unjust profits.  In another case, the Commission assessed its largest civil penalty ever: finding that Barclays Bank PLC and four traders violated the Commission’s rule against market manipulation, the Commission imposed civil penalties of $435 million against Barclays and $18 million against the traders, and disgorgement of $34.9 million plus interest in unjust profits. Barclays has challenged the order, and the case is now before the U.S. District Court for the Eastern District of California.

Mr. Bay led the Office of Enforcement through this escalation in enforcement activity.  An alumnus of Dartmouth College and Harvard Law School, prior to joining the Commission he served as a U.S. Attorney and as a law professor.  He now faces confirmation by the U.S. Senate. While some confirmation hearings move quickly, the confirmation process for President Obama's last nominee to replace former Commissioner Jon Wellinghoff -- Ron Binz -- became controversial, leading the President to withdraw his nomination last year.

Mr. Bay may be viewed as less controversial than the previous nominee, but the outcome of the confirmation process remains uncertain.  Whether Mr. Bay becomes a Commissioner -- and if so, how he leads the Commission -- will play out over the coming months and is likely to provoke further discussion on the role of enforcement in U.S. energy policy.

Energy and the 2014 State of the Union

Last night, President Obama delivered his 2014 State of the Union address.  As in his previous four annual addresses, energy and environmental issues featured prominently in this year's remarks.  Here's a closer look at some of the highlights from the transcript of his remarks as prepared for delivery:

The U.S. Capitol, site of the President's annual State of the Union address.

Energy development as economic development: As in previous years, President Obama promoted an "all-of-the-above" energy strategy as a foundational element of the nation's economy.

Now, one of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we've been in decades.

Natural gas revolution: President Obama highlighted the economic value of increased domestic natural gas production.  Calling natural gas the "bridge fuel" to reduced carbon emissions, he pledged to expedite the development of factories and transportation fueling stations reliant on domestic natural gas, while continuing to demonstrate environmental stewardship:

One of the reasons why is natural gas – if extracted safely, it's the bridge fuel that can power our economy with less of the carbon pollution that causes climate change. Businesses plan to invest almost $100 billion in new factories that use natural gas. I'll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas. My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities. And while we're at it, I'll use my authority to protect more of our pristine federal lands for future generations.

Renewable energy: Solar power is among the nation's fastest-growing energy resources.  President Obama called for reformed tax policies to level the playing field for solar and other renewable energy technologies:

It's not just oil and natural gas production that's booming; we're becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can't be outsourced. Let's continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don't need it, so that we can invest more in fuels of the future that do.

Energy efficiency: As in previous speeches, President Obama touted his administration's efforts to improve the nation's energy efficiency.  In particular, he focused on tighter fuel efficiency standards for the transportation sector:

And even as we've increased energy production, we've partnered with businesses, builders, and local communities to reduce the energy we consume. When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I'll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.

Climate change: President Obama reiterated his belief that climate change driven by carbon dioxide emissions is not only a threat but is a present harm.  With Congress apparently unwilling to act, President Obama pointed to his administration's proposed new standards on power plant emissions of carbon:

Taken together, our energy policy is creating jobs and leading to a cleaner, safer planet. Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth. But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods. That's why I directed my administration to work with states, utilities, and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air. The shift to a cleaner energy economy won't happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our children's children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.

While the positions and initiatives announced last night may not be new, President Obama's renewed commitment to these energy policies signals his continued approach to growing the American economy through improved use of our nation's energy resources, all while addressing environmental challenges.  Consistent with last year's State of the Union address, President Obama appears to acknowledge a lack of congressional consensus around energy policy, and the corresponding need for executive action.  Over the course of 2014, expect his administration to pursue goals like facilitating the production and use of domestic natural gas and renewable energy, improving energy efficiency, and addressing climate change.  Exactly how these initiatives take shape -- and whether they succeed -- will play out over the coming year.

Electricity and Super Bowl XLVIII: Will the lights stay on?

Fans will soon pack MetLife Stadium for Super Bowl XLVII.  The National Football League's 2013-2014 season championship game will be held on February 2 at 6:30 PM (Eastern). Following the power outage during last year's Super Bowl, organizers of this year's event are taking extra precautions to avoid disruptions to the East Rutherford, New Jersey stadium's electricity supply.  At the same time, organizers are promoting the environmental aspects of the power supply for this year's game.

During Super Bowl XLVII at the Mercedes-Benz Superdome in New Orleans, Louisiana, a power outage moments after the beginning of the second half of play caused many of the stadium lights and systems to go dark.  Between restoring power supply, rebooting computer systems, and letting stadium lighting cool and return to full power, it took 34 minutes for play to resume.  Subsequent investigation revealed that the outage occurred when load-monitoring equipment had opened a breaker after detecting an abnormality in the system.

Organizers hope this year's championship is free from such disruption.  MetLife Stadium and the rest of the Meadowlands Sports Complex is served by utility Public Service Electric & Gas Co. or PSE&G.  Two power lines feed into the substation serving the complex, and on-site generators add additional capacity.  PSE&G has been reported as expecting the game to draw as much as 20 megawatts of power, and the utility, NFL, and stadium owner have collaborated on measures and testing to ensure continuity of service during the big game.

Meanwhile, PSE&G's parent PSEG has partnered with the NFL Environmental Program to source renewable energy for the game.  PSEG has agreed to purchase and retire a renewable energy credit, or REC, for every megawatt-hour of electricity used at the stadium, the AFC and NFC team hotels, and Super Bowl in Times Square.  240 solar RECs are slated to come from PSE&G's nearby 3-megawatt Kearny solar farm, as well as 5,700 additional RECs from the 7.5-megawatt Jersey Atlantic Wind Farm near Atlantic City.

Beyond electricity, event organizers have committed that all the waste oil generated from food production during the game will be processed into biodiesel fuel by Tri-State Biodiesel, and that all other food waste will be composted.

Presumably, most fans' attention will be focused on the game.  Will the organizers' measures prevent power outages in an environmentally friendly manner?

Previewing energy issues in Obama's 2014 State of the Union

President Obama will deliver his 2014 State of the Union address on January 28, at 9 PM (Eastern).  His audience -- Congress, as well as millions of people in the United States and elsewhere -- will listen closely for indications of the President's upcoming policy initiatives.  In past years, issues related to energy and climate change have featured prominently in these addresses.  What energy- and climate-related issues will he address in his fifth State of the Union remarks?

Likely themes include:

• Climate change.  Last year, President Obama urged Congress to pursue a bipartisan, market-based solution to climate change.  When Congress did not act, the Obama administration proposed new limits on carbon emissions from new and existing power plants.  While the regulations implementing these limits remain on the U.S. Environmental Protection Agency's drawing board, next week's speech may shed new light on the Obama administration's climate change plans.


• Renewable energy.  The Obama administration has pushed for increases in the production and consumption of renewable energy in the U.S.  On the production side, the Department of the Interior has highlighted the development of renewable energy resources on federal lands and waters as a regulatory priority for 2014.  The Bureau of Ocean Energy Management held the first competitive auctions for leases for offshore wind project sites last year, with additional auctions expected in 2014.  On the consumption side, in December President Obama ordered the federal government to use renewable sources for 20 percent of its electricity by 2020. 


• Natural gas.  The production of natural gas from unconventional resources such as shale plays has revolutionized the U.S. energy economy.  Compared to other fossil fuels, natural gas is widely considered to be more environmentally benign.  Readily dispatchable natural gas-fired power plants can be a powerful complement to renewable resources, balancing out variations in power production from intermittent resources like wind.  At the same time, the low cost of producing natural gas domestically is driving interest in exporting gas through pipelines and liquefied natural gas or LNG export terminals.  


• Oil.  As with natural gas, unconventional oil resources have similarly revolutionized the U.S. energy economy.  In recent years, the U.S. has become a net exporter of oil, gasoline, and other petroleum fuels.  Meanwhile, the proposed Keystone XL pipeline would increase shipments of Canadian oil to U.S. refineries, but the project relies on federal approvals that remain pending.


• Energy efficiency.  President Obama has supported increases in energy efficiency in homes, industry, and transportation.  In his 2013 State of the Union, he proposed to cut in half the energy wasted by our homes and businesses over the next twenty years.  Energy efficiency continues to be a popular theme.

The 2014 State of the Union will be streamed at http://WhiteHouse.gov/SOTU.

US Department of Interior features energy as a priority

The United States Department of the Interior has updated its regulatory priorities for the coming six months, with energy issues featured prominently.  The nation's principal steward of federal public lands and resources, the Department manages more than 500 million acres of Federal lands, including 401 park units, 560 wildlife refuges, and approximately 1.7 billion of submerged offshore acres on the Outer Continental Shelf.  These lands and waters are home to significant energy and mineral resources, including renewable energy sources such as solar, wind, and hydropower, as well as oil, gas, coal, and minerals such as uranium.  The Interior Department's recently-announced priorities highlight the importance of energy issues in its regulatory agenda for 2014.

The Parker River National Wildlife Refuge, managed by the Department of the Interior's U.S. Fish and Wildlife Service.

Energy issues are not new to the Interior Department.  Its mission statement, captioned, "Protecting America’s Great Outdoors and Powering Our Future", reads:

The U.S. Department of the Interior protects America’s natural resources and heritage, honors our cultures and tribal communities, and supplies the energy to power our future.

Twice a year, the Interior Department publishes a statement of its regulatory priorities.  The most recent statement, issued November 26, features several initiatives designed to promote the development of renewable resources on public lands.

As noted in the Department's statement, under the Obama Administration, the Department has focused on renewable energy issues and has established priorities for environmentally responsible development of renewable energy on public lands and the Outer Continental Shelf.  Energy producers and developers are investing in the development of wind farms off the Atlantic seacoast and solar, wind, and geothermal energy facilities throughout the West.  The Department announced its intent to continue its intra- and inter-departmental efforts to move forward with the environmentally responsible review and permitting of renewable energy projects on public lands, and to streamline regulatory processes to facilitate the responsible development of these resources.

Like most federal agencies, the Interior Department is organized as a collection of bureaus and offices.  These agencies include the Bureau of Land Management, which manages the 245-million-acre National System of Public Lands, located primarily in the western States, including Alaska, and the 700-million-acre subsurface mineral estate located throughout the nation.  The Bureau of Land Management's regulatory priorities include creating a competitive process for offering lands for solar and wind energy development.  Specifically, the Bureau is proposing competitive bidding for lands within designated solar and wind energy development leasing areas.  The proposed rule is designed to enhance BLM's ability to capture fair market value for the use of public lands, ensure fair access to leasing opportunities for renewable energy development, and foster the growth and development of the renewable energy sector of the economy.

If the Bureau of Ocean Energy Management's recent auctions for offshore wind sites on the Outer Continental Shelf are any example, the Bureau of Land Management may soon be holding competitive auctions for land-based renewable energy sites.  These auctions will likely seek to balance support for responsible resource development against conservation, as the Department also includes conservation-oriented agencies such as the U.S. Fish and Wildlife Service and the National Park Service.

Yet how these regulatory priorities translate into regulatory action -- and how that regulatory action affects the development of renewable resources -- remains to be seen.