Author: Journal Editor Page 7 of 11

Complaint with FERC Points to Looming Battle Over Demand Response in Wholesale Markets

Voltus Inc., an energy resource aggregator, has filed a complaint against the Midcontinent Independent System Operator (“MISO”) with the Federal Energy Regulatory Commission (“FERC“).[1] The complaint takes issue with MISO’s recent order that allows states to opt out of FERC’s 2008 order allowing demand response programs in wholesale markets.[2]

Demand response programs give consumers the opportunity to substantially affect the electric grid by shifting their electricity usage from peak demand times to lower electricity use periods, thereby preventing the grid from overloading.[3] Demand response programs also pay consumers based on how much they reduce their electricity use once they have chosen an energy reduction plan.[4] However, MISO has allowed states within its territory to withhold energy resource aggregators from freely participating in the MISO wholesale market through its opt out provision.[5]

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Consent Decree Requires EPA to Comply with Clean Air Act Obligations

A California federal court recently approved an agreement between the United States Environmental Protection Agency (“EPA”) and the Center for Biological Diversity (the “Center”) that requires EPA to take affirmative steps to ensure that eight states have plans in place to reduce emissions from their oil and gas extraction areas as mandated by the Clean Air Act (“CAA” or “Act”).[i]

Emphasizing health hazards like asthma and reduced lung function that can develop in people who endure prolonged exposure to ground-level ozone (i.e., smog), the Center noted that the agreement will likely improve the health of residents who live closest to the extraction areas.[ii] The Center estimates that as many as 70 million people live in these areas and are at the greatest risk of exposure to harmful asthma-causing smog from oil and gas extraction operations.[iii]

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A Tale of Two Energy Bills in Springfield

Illinois legislators are evaluating two different proposed clean energy bills that would accelerate renewable energy growth in the state. One bill, the Clean Energy Jobs Act (CEJA) would focus on consumer protection, expanding energy efficiency programs, increasing EV charging stations and protecting existing clean energy jobs in the state.[1] The second bill, Path to 100, focuses more on funding clean energy jobs.[2] Both bills seek to ensure Illinois achieves 100 percent renewable energy by 2030.[3]

CEJA would continue to fund and expand programs established by the 2014 Future Energy Jobs Act (FEJA),[4] which has lowered the cost of Illinois energy bills from some of the highest in the country to some of the lowest.[5] Funding from the 2014 Act is running low, and CEJA would protect thousands of clean energy jobs by bolstering funding for those programs.[6] The most ambitious provisions in the bill seek to achieve 100 percent carbon-free electricity by 2030 and 100 percent renewable energy by 2050.[7]

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FERC Asserts Jurisdiction Over State-Determined Carbon Pricing

The Federal Energy Regulatory Commission (FERC) has released a policy statement declaring it has jurisdiction to “incorporate a state-determined carbon price in [wholesale] markets.”[1]

FERC released the policy statement following a virtual technical conference it held on September 30 on the subject of carbon pricing in wholesale electricity markets.[2] The conference covered a range of topics, including an overview of current carbon pricing mechanisms used by states and regional coalitions, as well as operational and design issues that may arise when incorporating a carbon price into a wholesale market structure.[3]

The conference also featured a panel on the legal implications of integrating carbon pricing into wholesale markets. There, as is so often the case with a novel legal issue, the threshold question was one of jurisdiction—specifically whether and under what authority FERC has jurisdiction to implement carbon pricing.[4] Answering that question in the affirmative, FERC has taken a significant step by signaling it will not reject carbon price proposals brought by states “out of hand.”[5]

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U.S. EPA to Revise Lead and Copper Rule, but Questions Remain on its Effectiveness

In October 2019, U.S. EPA proposed a revision to the 1991 Lead and Copper Rule (LCR).[1] The New York Times obtained a final draft of the proposed revision on September 27.[2] Interest in the LCR grew after residents of Flint, Michigan were widely exposed to lead through their drinking water supply in 2014.[3]

The original rule, adopted pursuant to the Safe Drinking Water Act, requires “drinking water systems to implement corrosion control measures when the lead level is above the ‘action level’ of 15 parts per billion (ppb).”[4] The rule mandates the collection of household tap water samples, and if more than ten percent of samples exceed the lead action level of 15 ppb, municipal and regional water suppliers must begin to address the issue.[5] But if just ten percent or fewer of samples exceed the 15 ppb action level, water suppliers are not required to address those households with lead concentrations above 15 ppb–leaving some households with elevated lead levels but no corresponding requirement for water suppliers to act.[6]

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Tongass National Forest

Trump Administration Moves to Open More Public Land to Industry in Tongass National Forest Proposal

The state of Alaska’s 2018 request to exempt Tongass National Forest from environmental protections has cleared a major step in its evaluation process.[1]  The U. S. Forest Service released a study indicating that loosening protections would not have significant impacts on Tongass, though environmental advocates are skeptical of its conclusions.[2] The Service’s Final Environmental Impact Statement considered several alternatives, but ultimately recommended a full exemption to the Roadless Rule for Tongass.[3]

Seeking Exemption to the Roadless Rule, a Clinton-Era Protection of National Forests  

National Forest System lands are protected by the 2001 Roadless Rule, which “establishes prohibitions on road construction, road reconstruction, and timber harvesting on 58.5 million acres” of public land.[4] After weighing national policy concerns against giving discretion to local decisionmakers, the final rule was adopted in 2001 with the intention of providing lasting protection.[5] It concluded that local exemptions to nationwide protections could have significant negative impacts on lands subject to roadless protections.[6] The rule therefore opted for complete protection of 58.5 million acres of “roadless” areas, comprising just two percent of the United States’ continental landmass.[7] Successive Alaskan administrations, however, have pushed for Roadless Rule exemptions, and the current proposal would open 9 million of Tongass’ 16 million acres to commercial activity.[8]

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A drone video showed how the dust cloud spread from the Crawford demolition site and descended onto Little Village homes. (Alejandro Reyes/YouTube)

Illinois Attorney General, Residents Sue Hilco Over Little Village Dust Cloud Implosion

Hilco Development Partners (“Hilco”) is facing several lawsuits as a result of the recent implosion of a smokestack in April, when a dense plume of dust covered the Little Village Neighborhood.[1]

The Illinois Attorney General (“AG”) filed a lawsuit in May alleging that the smokestack demolition emitted, “mercury, sulfur dioxide, nitrogen oxides, particulate matter, and other pollutants.”[2] The effects of pollutants such as mercury can have severe effects on human health, depending on age and exposure.[3] The AG seeks to enjoin Hilco to take “all necessary corrective action that will result in a final and permanent abatement of violations.”[4] Although the complaint was filed in May 2020, Hilco has been granted several extensions to build its case.[5]

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California Governor’s Executive Order Pushes Phase-Out of Gas-Powered Cars by 2035

On September 23, California Governor Gavin Newsom issued an executive order (“Order”) directing that “all new cars and passenger trucks sold in California be zero-emission vehicles by 2035.”[1] The order’s public announcement emphasizes concern over smog and toxic diesel emissions and notes that half of California’s carbon pollution originates from the transportation sector.[2] The Order prioritizes deploying zero emissions technologies to “reduce both greenhouse gas emissions and toxic air pollutants that disproportionately burden our disadvantaged communities of color.”[3]

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U.S. Scheduled to Exit Paris Climate Agreement on November 4

Amid raging wildfires, heavy rains, and tornadoes— all of which  have been linked to climate change—the United States is set to exit the Paris Agreement on November 4, one day after the presidential election.[1] President Trump, who has said that the global agreement to confront catastrophic climate change was a “total disaster” for the United States, formally issued the required one-year notice of withdrawal last November.[2] Former Vice President Joe Biden has stated that he would  re-enter the U.S. into the Paris agreement if he wins the 2020 election.[3]

The 2015 Paris Agreement seeks to limit the “global temperature rise this century well below 2 degrees Celsius above pre-industrial levels,” and ideally less than 1.5 degrees Celsius.[4] Nations set their own goals for reducing greenhouse gas emissions through nationally determined contributions (NDCs).[5]

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Bureau of Land Management Reduces Royalty Rates for Onshore Drilling Operators

In April, the U.S. Department of Interior’s Bureau of Land Management (“BLM”) issued guidance reducing the royalty rate for energy companies that drill for oil and gas on public land.[1] The announcement came as analysts began to understand the dire financial consequences of the COVID-19 pandemic on the oil and gas industry. BLM’s guidance aimed to provide a lifeline to the already struggling industry.[2]

The Mine Leasing Act of 1920 (“MLA”) governs the development of oil and gas on federal land.[3]  It authorizes the Secretary of the Interior to hold auctions for the subsurface rights of federal lands that contain fossil fuel deposits.[4] Under this arrangement, an energy company submits a bid for the lease, and, if successful, pays the federal government rent and royalties for its use.[5]

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