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November 20, 2024

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Lawyers: West Va. v. EPA is ‘Seizure of Power from Congress’

While the U.S. Supreme Court decision in West Virginia v. EPA has been called “devastating” for the agency’s ability to curb carbon emissions from existing power plants, its impact could also place tight constraints on congressional efforts to address major issues such as climate change, a panel of legal experts said last week.

Lisa Heinzerling (Georgetown University Climate Center) Content.jpgLisa Heinzerling, Georgetown Law | Georgetown University Climate Center

“The most dangerous point of the court’s decision actually is the court’s seizure of power from Congress, not the agency,” Lisa Heinzerling, a professor at Georgetown University Law Center, said during a webinar hosted by the school’s Climate Center on July 5. “Under the opinion, Congress may no longer enlist agencies’ help in addressing major issues, as it’s done throughout U.S. history, unless it speaks clearly enough for a hostile Supreme Court to hear it. It’s perverse.”

Heinzerling was one of five environmental lawyers on the panel parsing out the details of the decision, the court’s motivations and reasoning, and how environmental and other federal regulations may be able to overcome the obstacles the court’s conservative justices have now put in place.

The 6-3 decision released June 30 ruled that EPA lacks authority to compel generation shifting to reduce carbon emissions, saying the agency failed to provide “clear congressional authorization” for the rulemaking, specifically under the decades-old Clean Air Act. (See Supreme Court Rejects EPA Generation Shifting.)

William Buzbee (Georgetown University Climate Center) Content.jpgWilliam W. Buzbee, Georgetown Law | Georgetown University Climate Center

But Heinzerling and other panelists also said the decision will have impacts beyond congressional or EPA efforts to regulate carbon emissions. William W. Buzbee, who also teaches at Georgetown Law, sees the case as “a major arrogation of power by the Supreme Court to itself and the courts, undercutting the power of agencies to do as Congress instructs.”

“This is a terrible problem,” Buzbee said. “The court sort of hamstrings agencies and actually makes it hard for Congress.

“The court repeatedly says Congress had to be more clear and more specific,” he said. “The problem there is that agencies often need flexibility, so you don’t want to have very particularized language. And then second, to pass laws, compromises are often needed, and so sometimes, broader language is a  way for Congress to pass laws that are needed.”

Jonathan Adler (Georgetown University Climate Center) Content.jpgJonathan H. Adler, Case Western | Georgetown University Climate Center

Jonathan H. Adler, director of the Coleman P. Burke Center for Environmental Law at Case Western Reserve University, said the decision sends a message to all federal courts to be “very wary when federal agencies seek to pour new wine out of old bottles. That is to say, when a federal agency takes a statute that may have been last enacted or reauthorized or amended years ago and seeks to use the provisions to address a new or contemporary problem … that has not been addressed before or to do something in a way that has not been done before.”

“This is an enormously important case when it comes to administrative law,” agreed Jeffrey Holmstead, who served at EPA under former President George W. Bush and now leads the Environmental Strategies Group at Bracewell. “In terms of the current debate over climate change, I think it could end up being important for the [Securities and Exchange Commission] in terms of its efforts to mandate additional disclosures regarding greenhouse gas emissions. Maybe it could impact what FERC is trying to do with natural gas pipelines.”

Kirti Datla, director of strategic legal advocacy at Earthjustice, a nonprofit environmental law firm, also sees the decision as having impacts on the regulatory process in general, well beyond EPA. “It’s going to affect everything, from what people ask [an] agency to do in their comment letters, to what agencies think that they can do, to the arguments people will raise when challenging what agencies end up doing,” she said.

The Major Questions Doctrine

At the core of West Virginia v. EPA is Chief Justice John Roberts’s invocation of “the major questions doctrine,” which all the panelists saw as problematic, though for different reasons.

“Precedent teaches that there are ‘extraordinary cases’ in which the ‘history and the breadth of the authority that [the agency] has asserted,’ and the ‘economic and political significance’ of that assertion, provide a ‘reason to hesitate before concluding that Congress’ meant to confer such authority,” Roberts wrote in the decision.

“The agency must point to ‘clear congressional authorization’ for the authority it claims,” Roberts said.

In terms of EPA’s ability to regulate carbon emissions through generation shifting, what this means, Adler said, is that the agency is not losing a power it didn’t exercise; “it’s rather that the court is expressing skepticism that the power ever existed.”

“The court automatically is skeptical of national regulations where agencies address a new problem,” Buzbee agreed. “That’s always the nature of national regulation; agencies step in to address a problem that hasn’t been handled. So, the whole frame of the major questions doctrine is a major problem.”

Kirti Datla (Georgetown University Climate Center) Content.jpgKirti Datla, Earthjustice | Georgetown University Climate Center

Datla pointed to Justice Neil Gorsuch’s concurring opinion as potentially layering on even more constraints for regulation, noting that he said the major questions doctrine is important “because it prevents swings in policy” between different administrations.

“The administrative state, in his mind, should be a set of agencies carrying out very limited duties that are so detail oriented that they wouldn’t shift from one president to the next,” Datla said. Justice Elena Kagan’s dissent counters this narrow view as not “what the administrative state currently looks like,” Datla said.

But for Datla, the more pressing problem with the decision is that after setting out the major questions challenge, ‘the majority doesn’t provide any sort of test as to what might be adequate to overcome it. It’s hard to imagine a case where, when this doctrine applies, the agency will be able to overcome the kind of clear statement rule that is being put forth in this case,” she said.

“Congress has two options going forward,”  said Heinzerling, who also served at EPA during the Obama administration. “One, it can make major policy decisions itself, or two, it can give clear congressional authorization to an agency to regulate in a particular manner. In fact, I don’t think there’s a real choice.”

The decision “would not allow Congress to pass off a major decision to an agency, even if it really, clearly, in crystal terms passed off that decision to an agency,” she said.

For example, if Congress passed a law specifically authorizing EPA to determine if and how to curb GHG emissions, “I think the court would say that such a statute does clearly authorize EPA to decide a major question,” Heinzerling said. “That would just take the regulatory action out of the statutory frying pan, so to speak, and hurl it into the constitutional fire.”

The Limits of Regulation

Adler sees yet another aspect of the decision’s approach to the major questions doctrine that could have significant impacts on future climate-related litigation. “This concern about showing clear warrant, clear authority in the statute for a major exercise of power is something [Roberts said] the courts should look at upfront” as part of a statutory analysis, he said. “It creates a much broader opportunity for litigants to try and invoke this theory. It gives courts more flexibility in terms of when to consider whether something is a major question.”

Still, Holmstead echoed many other industry analysts who have argued that the decision will have minimal immediate impact on EPA’s ability to regulate carbon emissions under the Clean Air Act. The decision’s rejection of limiting emission reduction regulations to “inside the fence line” of individual generation plants and its seeming endorsement of some form of emissions trading “actually give EPA more flexibility that they thought it had,” he said.

He also said the agency has solid authority to regulate carbon emissions from the transportation sector, provided it sticks with the incremental approach it has adopted in the new standards announced at the end of 2021. (See EPA Rules Will Slash Vehicle Emissions, Rev up EV Market by 2026.)

The challenge ahead for the agency is “if you look at the other industrial sectors,” Holmstead said. “There’s not some way that EPA can gradually shift production of cement or iron and steel to newer, cleaner plants. It’s a technological problem, not a regulatory problem, and I don’t think, beyond the power sector, EPA has really ever developed an effective way to do regulation of industrial sources.

“I don’t think the answer for all of the questions we face with climate change are necessarily regulatory,” he said.

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California Wealth Tax for EVs Heads to Ballot

A measure to tax high-income Californians to provide a dedicated funding source for electric vehicle rebates and charging recently qualified for November’s ballot, with most of its financial support coming from ridesharing service Lyft (NASDAQ:LYFT).

Proposition 30, the Clean Cars and Clean Air Act, is intended to reduce greenhouse gas emissions, according to proponents. If passed by voters, the measure would assess a 1.75% tax on individuals and couples with more than $2 million in annual income, raising up to $4 billion a year.

Nearly half the revenues would go toward rebates and incentives for zero-emission vehicle purchases, while 35% would fund ZEV fueling and charging stations. At least half of those funds would benefit low-income households and communities.

The rest would pay for wildfire prevention and suppression. Hiring and training firefighters would take priority.

“To achieve the state’s carbon goals and avoid the worst impacts of climate change, action is needed now regarding two of the largest sources of greenhouse gas emissions in our state: transportation and wildfires,” the measure says.

The California secretary of state’s office reported the initiative had qualified for the ballot June 28, after proponents submitted 720,238 valid signatures, about 100,000 more than required.

Lyft’s involvement has caused some to call the measure a corporate giveaway in disguise. The company has contributed $8 million of the $8.4 million raised so far in support of Prop. 30.

Ridesharing companies in California must “ensure 90% of their vehicle miles are fully electric” by 2030 under the Clean Miles Standard adopted last year by the California Air Resources Board. Drivers for companies such as Lyft and Uber are independent contractors who drive their own vehicles, leaving in question who will pay for their switch to EVs. Prop. 30’s rebates and incentives could help.

Even though the state has dedicated billions of dollars to transportation decarbonization, EV rebates, especially for middle-class drivers, have not been as well funded as advocates think is necessary to meet Gov. Gavin Newsom’s mandate that all new cars sold in-state must be ZEVs by 2035. (See Calif. to Halt Gas-powered Auto Sales by 2035.)

The ballot measure would establish a dedicated revenue stream for rebates, including for Lyft drivers.

“We’re supporting the Clean Cars and Clean Air Act because we’re committed to accelerating the transition to clean vehicles in order to reduce air pollution in California and curb climate change,” Lyft said in a statement. “To meet our state’s bold climate goals, we must do more to help people afford zero-emission vehicles and develop a more robust and convenient charging network.”

Lyft committed in 2020 to reach 100% electric vehicles using its platform by 2030.

“We have no plans to require drivers to switch to EVs,” the company says on its website. “Instead, we believe we can help make driving an EV a profitable choice and are committed to helping drivers transition to these types of cars over time” by expanding its vehicle rental program and promoting cost savings by switching from gasoline-powered cars to EVs.

“Combining lower fuel costs with affordable rental rates, we anticipate that individual drivers can save hundreds of dollars per month, and thousands of dollars per year, on fuel costs alone,” Lyft said.

Earlier this year, environmental, labor and business groups joined together to form Clean Air California, the group backing the measure, to which Lyft contributed.

The Clean Cars and Clean Air Act will “provide consumer subsidies to make electric vehicles more affordable and accessible, particularly to low- and middle-income Californians,” Mary Creasman, CEO of California Environmental Voters, and Joel Barton, secretary-treasurer of the State Association of Electrical Workers, wrote in a joint opinion piece supporting the initiative and touting the formation of Clean Air California.

The initiative would “develop zero-emission vehicle charging infrastructure in residential, commercial and public spaces so that driving a ZEV is as convenient as driving a gas-powered car,” they wrote.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said revenues for the EV transition should come from the state general fund, which has a record surplus this year, and not from additional taxes. He said he believed the initiative was meant to help ridesharing companies at the expense of taxpayers.

“I think that’s certainly the case,” he said.

Opponents will likely make the corporate-giveaway argument in television ads, which tend to proliferate starting in September, he said. The ballot measure could meet with opposition from voters concerned about raising taxes, even on the wealthy, for fear that they’ll be next, he said.

Progressives “are coming after other revenue sources,” he said. “This Lyft initiative is an example of that.”

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Entergy Offers Regulators $588M to End Grand Gulf Complaints

Entergy has extended a $588-million settlement offer to regulators in Arkansas, Louisiana and Mississippi over allegations it took advantage of customers through its Grand Gulf Nuclear Station’s energy sales, although some in oversight roles are unhappy with the proposed deal.

The settlement offer stands to resolve more than a dozen FERC dockets filed since 2017 relating to performance and accounting issues at the 1,428-MW Grand Gulf plant in southwestern Mississippi. Entergy said it was making the settlement public as soon as possible because of the dockets involved.

The arrangement would have Entergy admitting no wrongdoing and remitting $235 million to the Mississippi Public Service Commission, $142 million to the Arkansas Public Service Commission, $116 million to the New Orleans City Council, and $95 million to the Louisiana Public Service Commission

The settlement also stipulates that effective July 1, Entergy won’t roll its executives’ bonuses into costs it passes on to customers. Entergy called the proposal a “comprehensive and reasonable effort” to resolve its legal disputes at FERC.

It’s unclear how much of the refunds would ultimately flow to ratepayers. Entergy said it offered the settlement to address uncertainty and further legal expenses.

Grand Gulf station boasts the largest nuclear reactor in the nation. Majority owner and Entergy subsidiary System Energy Resources, Inc. (SERI) sells most of the output at wholesale to Entergy’s Arkansas, Louisiana, Mississippi and New Orleans operating companies.

For years, the Louisiana, Arkansas Public Service Commission and New Orleans regulators have complained about mismanagement and substandard operations at Grand Gulf and sought more than $1 billion in refunds and rate reform for costs passed on to Entergy customers. They said that despite expensive upgrades, the plant has been plagued by frequent outages at customers’ expense. (See Entergy Regulators Ask FERC to Settle Grand Gulf Dispute.)

The regulators also accused Entergy and SERI of massaging accumulated deferred income tax numbers to overcharge customers, overbilling ratepayers for Grand Gulf’s sale-leaseback arrangement, and recovering the costs of lobbying, image advertising and private airplane use in rates through the plant’s sales agreement.

The Nuclear Energy Institute’s data show Grand Gulf is the nation’s worst-performing nuclear plant, with a 66.3% capacity factor from 2018 to 2020. Grand Gulf’s last-place finish is well below the 77.9% capacity factor of Michigan’s Fermi 2, the next least reliable unit in the country.

Mississippi Accepts, NOLA Scoffs

Louisiana’s PSC, which has spearheaded many of the grievances, plans to discuss the settlement offer during its July 27 meeting. The commission doesn’t yet have a stance on the settlement.

“While financial settlements could benefit customers short term, the reason we take on these legal battles at FERC is to ensure that the practices of utilities we regulate are aligned with what is best for their customer’s long term,” Commissioner Craig Greene tweeted Thursday. “I personally want to ensure any settlement, or decision not to settle, focused on that principle.”

In a press release late last month, Entergy said Mississippi regulators have agreed to the settlement. Entergy said $200 million of Mississippi’s refund would offset customers’ high fuel prices from other Entergy generation. It has reserved $35 million for distribution as part of an $80 bill credit per ratepayer.

“By resolving these issues, we can focus on the long-term future of Grand Gulf Nuclear Station to ensure it remains the critical, emissions-free power source it is to serve our customers,” Entergy Mississippi CEO Haley Fisackerly said. “With natural gas prices having tripled over the last year, raising customer power bills as a result, the low-cost power we get from Grand Gulf is a financial lifeline to our customers right now.”

Entergy said it hoped other states involved in the dispute will “follow Mississippi’s lead and seek to settle the remaining claims.” The utility’s other regulators could take the settlement or hold out for larger refunds through the 13 FERC proceedings, many of which the commission has yet to act on.

The New Orleans City Council has not accepted the settlement. In a statement, Council Vice President and Utilities Committee Chair J.P. Morrell said the offer was “deemed well below what the ratepayers were entitled to based upon the council’s litigation posture.”  

“This filing was a ridiculous attempt by Entergy to sandbag the city council and mislead the other regulatory agencies in Louisiana and Arkansas into a bad settlement,” Morrell said. “As utility bills continue to spiral out of control in New Orleans, for Entergy and Entergy New Orleans to try to manipulate us into taking less than ratepayers are entitled to is beyond offensive.”

Morell also questioned Entergy’s tactic of publishing the settlement during legal negotiations. He said it gave him “great pause in whether further negotiations are in the public’s best interest.”

In an emailed statement to RTO Insider, the Arkansas commission said it’s currently reviewing Entergy’s offer. It noted that it has until Aug. 1 to file comments on the matter at FERC.

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SPP Sets Demand Record amid Midwest Heat

With heat advisories and warnings in place for much of its footprint, SPP set a record for peak load last week.

The grid operator successfully handled demand from a record 51.1 GW of load at 4:30 p.m. CT on July 5, breaking the previous mark of 51 GW set last July. The RTO and its members also maintained reliability last Wednesday and Thursday, when load peaked about 49.9 GW both days.

SPP said a conservative operations advisory issued July 1 alerted its member utilities to operate the regional grid with “extra care” by postponing maintenance on critical facilities and increasing reserve requirements. The advisory was effective Wednesday — the day after the record was set — through last Friday. (See SPP Calls for Conservative Ops This Week.)

“Periods like this week, with extreme heat affecting so much of the country where we operate, underscore how much value there is in regional collaboration,” said Bruce Rew, SPP senior vice president of operations. “We’re proud of the job we do coordinating among our member utilities to keep the lights on.”

SPP highlighted its fuel diversity that is heavy on coal, gas and renewables in helping meet demand fueled by the extreme heat. It said demand response contributed 1.1 MW to the fuel mix.

The RTO kept a resource advisory in place through 10 p.m. Wednesday because of the extreme heat, high regionwide electricity use and uncertainty in SPP’s wind forecast. Neither of the advisories requires consumer conservation.

The Weather Channel says July temperatures are expected to be above average from the Texas Gulf Coast through the Central Plains and into Wyoming.

An RTO spokesperson said it was continuing to watch system conditions during the weekend and into this week, as it will do as the summer progresses.

SPP members serve about 18 million people in the grid operator’s 14-state region, which covers 550,000 square miles.

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‘Strength of Sunshine’ Brings Solar Projects to Wash. County

Solar farms are set to proliferate in a sun-soaked county in central Washington.

In May, a Yakima County Planning Division hearing examiner approved a conditional use permit for the 94-MW Black Rock Solar project, which will be able to power about 20,000 homes at full output.

Construction of the project is expected to begin in the first half of 2023 and be completed in mid- to late 2024, Brandon Reinhardt, development director for BayWa r.e. Americas said in an interview. Reinhardt declined to discuss the project’s budget.

The project is targeted for roughly 1,000 acres in eastern Yakima County, an area that has been attracting several solar ventures. BayWa plans to lease the land from a farmer, and the project’s solar panels will co-mingle with sheep that graze on the grass on the site. That would make the project Washington’s second agrivoltaic site, in which panels are located among crops and lands dedicated to grazing livestock.

The state’s first agrivoltaic project is scheduled to go online this month on the Colville Indian Reservation north of the Grand Coulee Dam. Two geodesic domes filled with various crops will be located adjacent to solar panels used to power the domes’ heat and water as well as some nearby homes.

At least four solar projects have targeted eastern Yakima County, a dry shrub-steppe area. “It’s essentially the strength of the sunshine,” Reinhardt said.

In December, Gov. Jay Inslee approved the 80-MW Goose Prairie project on 625 acres in eastern Yakima County at the recommendation of the state’s Energy Facilities Siting Evaluation Council (EFSEC).

Two more projects are going through reviews by EFSEC. In April, Cypress Creek Renewables applied to EFSEC for permission to build two 80-MW solar farms — High Top Solar and Ostra Solar — in the same eastern Yakima County region.

In Washington, solar and wind developers have the option of choosing to handle project permitting through either EFSEC or the appropriate county government.

While three of the projects chose the EFSEC route, BayWa wanted to work with the Yakima County government. “We had a supportive county staff. We didn’t feel much in the way of opposition,” Reinhardt said.

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MISO Stakeholders Push to Keep LOLE Working Group

MISO stakeholders say the grid operator’s plan to fold a stakeholder group dedicated to loss-of-load estimates into its resource adequacy subcommittee by year’s end will result in papering over a full risk picture.

They said there’s good reason to keep the Loss of Load Expectation Working Group (LOLEWG) because it helps shape the annual LOLE study and the Resource Adequacy Subcommittee (RASC) reviews the results with little opportunity for stakeholder input.

Travis Stewart, representing the Coalition of Midwest Power Producers, said LOLE discussions are “proactive” in the working group and “reactive” in the subcommittee.

“The intention is not to decrease transparency, but this move certainly will,” Stewart said. “Stakeholders are not asking for a yeoman’s work here. We’re really just asking for three to four meetings per year.”

Lynn Hecker, MISO’s senior manager of resource adequacy policy, said there’s substantial overlap of LOLE issues between both groups. She said MISO would be more efficient if it retires the LOLEWG by the end of the year and rolls discussion into RASC meetings, adding that staff already double-posts its study progress to both groups. (See MISO Moves to Disband Stakeholder Loss of Load Group.)

“This is not intended to reduce transparency or discussion by any means,” Hecker told the working group during a teleconference Thursday. She said MISO could schedule additional workshops to tackle the LOLE study’s more technical aspects.

Multiple stakeholders asked that MISO host the LOLEWG for at least another year.

Xcel Energy’s Kari Hassler pointed out that the RTO has already cut the number of RASC meetings from 12 to eight each year and that the meetings frequently run over agenda timeslots. She said she didn’t see how the RASC could take on another working group’s tasks.

“It seems like we have a lot of LOLE issues to address if the [seasonal auction and accreditation] is approved,” she said. “I very much want to maintain the LOLE working group.”

Hecker said staff will collect more stakeholder feedback on retiring the working group over the next two weeks and factor that into a final decision.

The grid operator is morphing its LOLE study into a seasonal calculation that includes four separate planning reserve margin requirements. It’s adding seasonal inputs to its LOLE model for the 2023/24 planning year, assuming FERC approval of seasonal capacity auction and resource-accreditation design proposals.

MISO resource adequacy engineer Darius Monson said staff will now calculate additional cold-weather outages by adding a forced outage adder for extremely cold temperatures. Previous LOLE estimates didn’t include extra generation outages brought on by plummeting temperatures, leading to an undercount of generation outages.

Some stakeholders said it’s still unclear how MISO will crunch LOL estimates to wind up with four separate planning reserve margin requirements.

With its recent capacity auction shortfall, MISO has an annual value of a one-day-in-5.6 years loss-of-load risk instead of its one-day-in-10 years target.

The LOLEWG is scheduled to meet again Sept. 6.

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Court Blocks Pennsylvania from Joining RGGI

A Pennsylvania judge on Friday blocked Gov. Tom Wolf’s effort to enter the Regional Greenhouse Gas Initiative (RGGI), saying opponents were likely to win their argument that the administration’s plan required legislative approval.

Commonwealth Court Judge Michael Wojcik issued a temporary injunction in response to petitions by the coal industry, operators of the Keystone and Conemaugh plants, and others.

Wolf in 2019 ordered the state’s Department of Environmental Protection (DEP) to develop a rulemaking to enter RGGI, and the Environmental Quality Board (EQB) adopted it in July 2021. But the Republican-dominated Senate and House of Representatives approved resolutions rejecting the rulemaking under the Regulatory Review Act. Their action prompted a veto by Wolf, which the GOP was unable to override.

Opponents — including the Pennsylvania Coal Alliance, the United Mine Workers and other unions — then turned to the court.

The challenge centers on whether the proceeds resulting from the rulemaking’s required purchases of CO2 allowances constitute a tax or a regulatory fee. The rulemaking required fossil fuel-fired electric generating units (EGUs) of 25 MW or larger to purchase allowances for each ton of CO2 emitted through quarterly auctions, with a declining CO2 allowance trading budget.

Pa. Department of Environmental ProtectionPa. Department of Environmental Protection

The Air Pollution Control Act (APCA) allows the executive branch to impose fees to cover the costs of administering its air pollution control program, but only the General Assembly has the authority to levy taxes.

“We reject [former DEP] Secretary [Patrick] McDonnell’s argument that the allowance auction proceeds do not constitute a tax because covered sources pay RGGI Inc. for the allowances purchased and not the commonwealth,” Wojcik wrote. “It is undisputed that the auction proceeds are remitted to the participating states.”

Wojcik said McDonnell was “unpersuasive” because the auction proceeds will go to the Clean Air Fund “and DEP anticipates significant monetary benefits from participating in the auctions.” He cited DEP’s estimate that only 6% of the proceeds from the CO2 allowances auctions would be for the costs of administering the CO2 Budget Trading Program: 5% for DEP and 1% for RGGI.

From 2016 to 2021, the Clean Air Fund annually maintained between $20 million and $25 million. But estimated receipts for the 2022/23 budget year, with RGGI, exceed $443 million — more than double DEP’s total budget of about $169 million.

The court considered several questions, including whether the injunction is necessary to prevent immediate harm that cannot be compensated by money damages. The petitioners said their injuries would not be recoverable because DEP and EQB have sovereign immunity. They also had to show that refusing the injunction would cause more harm than granting it.

The petitioners said the rule would have compliance costs of about $200 million that would be passed along to consumers, and that RGGI supporters’ claims that the rulemaking would cause meaningful GHG reductions were undercut by DEP’s modeling.

“There is no dispute that petitioners will face increased costs as a result of the rulemaking,” Wojcik wrote. “There is also no dispute that this increase in costs will ultimately be passed on to consumers.” A DEP witness testified that the rulemaking would increase wholesale power prices by 2.4% and retail prices by 1.2%.

Wojcik cited the rulemaking’s recognition that it would result in “leakage” of additional fossil fuel emissions outside of the state. DEP’s modeling found that a reduction of 97 million short tons of CO2 by 2030 in Pennsylvania would result in only a net 28 million ton reduction across PJM.

Crucially, the respondents needed to show that they were likely to prevail on the merits.

Wojcik said he agreed with the petitioners. “While the General Assembly may delegate the power to tax, the delegation must be clearly conferred via statute, and any such delegation appears absent from the APCA.”

Appeal Expected

Wojcik dismissed as “insufficient” testimony by environmental groups on the effects of CO2 emissions on climate change and human health.

While Keystone and Conemaugh emitted about 15.5 million tons of CO2 in 2021, “the record lacks evidence of the CO2 emission levels of the remaining Pennsylvania-covered sources or suggesting that the covered sources would be required to reduce emissions based on the available allowances,” Wojcik said.

“Even accepting for preliminary injunction purposes that implementation of the rulemaking would result in an immediate reduction in CO2 emissions from Pennsylvania’s covered sources, we conclude that implementation and enforcement of an invalid rulemaking would cause greater harm if the rulemaking is determined to violate the constitution or a statute.”

“While only temporary, the court’s decision is yet another roadblock and stalling tactic from RGGI opponents,” responded Jessica O’Neill, lead attorney for PennFuture, Clean Air Council, Sierra Club, Environmental Defense Fund and Natural Resources Defense Council. “The impact that RGGI will have on the health, safety and welfare of our members, our climate and our environment cannot be overstated. Simply put, RGGI will save lives, create jobs and lower Pennsylvania’s carbon footprint at a time when we need it most.”

O’Neill said the groups expect DEP to appeal the ruling, “which means the Supreme Court will have the opportunity to reinstate the RGGI rule.”

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FHWA Proposes New GHG Reduction Rules for US Highways

A new proposed federal rule released Thursday aimed at cutting greenhouse gas emissions from the nation’s highways raised immediate questions about whether it would pass muster under the new judicial review standards for regulations set by the Supreme Court’s decision in West Virginia v. EPA.

The Federal Highway Administration (FHWA) issued a Notice of Proposed Rulemaking (NPRM) that would require state departments of transportation and municipal planning organizations (MPOs) to set goals for reducing greenhouse gas emissions from motor vehicles traveling on any parts of the National Highway System (NHS) within their states.

The NHS includes about 2,200 miles of interstate and other key highways across the country and is the most heavily used of the nation’s 4 million miles of public roads, according to Joung Lee, deputy director and chief policy officer of the American Association of State Highway and Transportation Officials (AASHTO).

Based on 2019 figures, the NPRM says, transportation accounts for 34.6% of total U.S. carbon dioxide emissions, with 83.2% of that total coming from on-road sources. The FHWA anticipates that transportation will continue to be the nation’s largest source of GHG emissions through 2050. The proposed rule would set a national framework for measuring carbon emissions from vehicle travel on the NHS, a performance standard that would be integrated into existing federal performance standards that states already report on to the FHWA, according to an agency press release. The NPRM lays out the FHWA’s argument for the new standard, noting that existing law authorizing it to set and collect data on highway performance standards includes “environmental sustainability” as a key goal.

“Measuring and reporting complete, consistent and timely information on GHG emissions from on-road mobile source emissions is necessary so that all levels of government and the public can monitor changes in GHG emissions over time and make more informed choices about the role of transportation investments and other strategies in achieving GHG reduction targets,” the NPRM says.

At the same time, states would have the flexibility to set their own declining emission goals, based on a reference year of 2021, the most recent for which complete data are available, according to the NPRM. But the targets would have to be in line with the U.S. commitments of reducing GHG emissions 50 to 52% by 2030 and to net zero by 2050.

The targets would have to be reviewed and possibly updated every two years for the state DOTs and every four years for the MPOs.

The notice has been submitted to the Federal Register, and a 90-day comment period will begin once it has been published, according to the FHWA.

“With today’s announcement, we are taking an important step forward in tackling transportation’s share of the climate challenge, and we don’t have a moment to waste,” Transportation Secretary Pete Buttigieg said. “Our approach gives states the flexibility they need to set their own emission-reduction targets, while providing them with resources from [the Infrastructure Investment and Jobs Act] to meet those targets and protect their communities.”

The FHWA pointed to the IIJA’s Carbon Reduction Program, which will provide $6.4 billion in formula funding to states and local governments “to develop carbon-reduction strategies and fund a wide range of projects designed to reduce carbon emissions from on-road highway sources.”

Lee praised the U.S. Department of Transportation and FHWA for being “forthright about this not being a one-size-fits-all approach.” But, he said, AASHTO and its members would be using that 90-day comment period to drill into the details of the proposed rule and talk with federal officials.

“I think state DOTs recognize that the transportation sector is the largest sector when it comes to GHG emissions in the United States, and we all want to be part of the solution when it comes to the climate change imperative,” he said during a Thursday media call. While noting the diverse nature of AASHTO’s membership, Lee said, “we are generally in alignment with the U.S. DOT that transportation-focused GHG-reduction efforts have to be done in a holistic way that involves all stakeholders in the community. …

“We hope what we come up with will be reflected in the final rule,” he said.

Defining ‘Performance’

The rule issued Thursday is essentially an update of a proposed rule the FHWA released in the closing days of the Obama administration in 2017, which was put on hold and then rolled back by the Trump administration in May 2018. At the time, the agency justified the rollback on the grounds that it had reconsidered the legal basis of the proposed rule and found that it was too expensive and replicative of other federal GHG-reduction efforts.

In West Virginia v. EPA, the Supreme Court ruled that federal agencies could not repurpose yearsold legislation to justify new rules for issues not covered in the original law. Lee was careful in answering questions as to whether the new rule is specifically authorized under current law.

“We have to look to see if their statutory rationale is consistent with the Federal-aid Highway Program,” he said. “That’s part of what we’re trying to figure out.”

Lee cited two laws that could be critical in that determination: the Moving Ahead for Progress in the 21st Century Act (MAP-21) passed in 2012, and last year’s IIJA. According to the NPRM, MAP-21 allowed the FHWA to develop “national performance management measure rulemakings,” which resulted in standards on highway safety performance, infrastructure performance and system performance to assess freight movement, traffic congestion and on-road mobile source emissions affecting air quality.

While acknowledging that Congress did not specifically define “performance” to include environmental sustainability, the agency argues in the NPRDM “that Congress has directed FHWA to determine the nature and scope of the specific performance measures. … Accordingly, FHWA is proposing that the performance of … the NHS includes environmental performance.”

In support of this interpretation, the agency also cites the IIJA, which includes highway resilience and protection as one of the performance goals for federally funded highway aid programs.

Kate Zyla, executive director of the Georgetown University Climate Center, believes that “the FHWA’s proposed GHG performance measure is part of its well established Transportation Performance Management program. … FHWA has issued performance measures for safety, congestion, bridge and pavement conditions, for example. The newly proposed GHG performance measure would be similar.”

But at an online panel sponsored by the Climate Center on Tuesday, environmental law experts cautioned that following West Virginia v. EPA, such arguments will have to be strategically made. “Policies that look like the agency is doing one thing, but it’s doing it for the reason of reducing greenhouse gas emissions” could be a red flag for the conservative justices now dominating the Supreme Court, said Jonathan H. Adler, a law professor at Case Western Reserve University in Cleveland.

Federal agency officials may need to scrub “every document, every speech, every talking point to make sure that any climate benefits are ancillary, secondary,” Adler said.

Deron Lovaas, senior advocate at Natural Resources Defense Council, said the rule a “would help states and localities move toward a transportation system that’s equitable and clean. By measuring emissions and developing plans to cut them, states and localities can determine how to build a resilient and efficient transportation system that will serve us all for decades to come.”

But Sen. Shelley Moore Capita (R-W.Va.) called the new rule “unauthorized.”

The IIJA “included provisions to address climate change and the resiliency of transportation infrastructure in a bipartisan way,” Capito said. “This greenhouse gas performance measure announced today was not part of that legislation. Unfortunately, this action follows a common theme by both DOT and the administration, which is implementing partisan policy priorities they wish had been included in the bipartisan bill that the president signed into law.”

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Proposals Due in APS Solicitation for 1,500 MW

Arizona Public Service (APS) is soliciting proposals for energy projects providing up to 1,500 MW to help meet the utility’s reliability and clean energy goals.

The 1,500 MW of new resources will include up to 800 MW of renewable energy. APS issued the request for proposals in May and applications are due July 8.

Arizona’s summers are getting hotter while the state’s population and economy are growing rapidly, increasing the demand for electricity, the company said.

In addition, APS made a commitment to provide 100% carbon-free electricity by 2050, with an interim goal of 65% clean energy and 45% renewable energy by 2030. APS’s current energy mix is 50% clean.

“This broad market solicitation will help APS exit from coal-fired generation by 2031 and maintain adequate power supply to serve customers,” APS said in a release.

The company’s clean energy transition is “anchored by the Palo Verde Generating Station’s carbon–free nuclear power,” APS said in a clean energy report. Palo Verde is the largest nuclear plant in the U.S., with a capacity of 3,990 MW.

Storage Projects Welcome

APS is accepting applications for projects such as solar, wind, biomass, geothermal, landfill gas or storage, as well as combination projects such as solar plus storage.

In its request for proposals, APS said it would accept proposals providing at least 5 MW per site, but that it prefers projects larger than 200 MW.

The utility is looking for projects that will be in service starting in 2025 or 2026. Proposals will be accepted for projects being completed in phases, starting as soon as Dec. 1, 2024, and as late as Dec. 31, 2026.

According to the RFP, the resources may be offered through a power purchase agreement, a build-transfer agreement or a load management agreement. Examples of load management projects include behind-the-meter demand response programs or energy efficiency programs.

APS is seeking projects that would interconnect directly to the utility’s transmission system.

For renewable resources, APS said it would prefer projects that maximize the amount of energy generated and delivered from June through September and between 3 p.m. and 9 p.m. For energy efficiency proposals, APS would prefer projects that reduce demand during those same periods.

For storage projects, APS said it would prefer a project that can deliver the full proposed capacity for more than four consecutive hours.

“In addition, clean, flexible, dispatchable resources are increasingly important in helping APS meet its clean energy goals [and] maintain system reliability, and will be valued accordingly,” the RFP said.

Clean Energy Additions

The new resources that APS acquires from this year’s request for proposals will be in addition to 1 GW of clean energy secured through an all-source RFP and separate battery energy storage solicitation issued in 2020.

Those new resources, which will be in service by 2024, include 425 MW of solar power nameplate capacity, 238 MW of wind power nameplate capacity and 635 MW of battery storage nameplate capacity.

The Resource Planning Advisory Council, an APS stakeholder group, helped design the RFP. The group includes representatives of environmental groups, public interest organizations and universities, as well as consumer advocates.

In addition, an independent third party is monitoring the RFP process.

For this year’s RFP, APS plans to notify short-list applicants in August and make a final selection in September.

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Battelle: Multi-state Hydrogen Hubs Will Be Favored by DOE

Ohio, Pennsylvania and West Virginia will have a better chance of winning a $2 billion U.S. Department of Energy grant to develop a “hydrogen hub” if they apply together, say top directors at the Battelle Institute, the world’s largest independent research and development organization and manager of eight DOE national labs.

“Battelle believes very strongly, and we’re not alone in this belief, that the best opportunity for success for Ohio and the region is for the three states to work together,” Don LaMonaca, a veteran Battelle director, told Ohio Gov. Mike DeWine and Lt. Gov. Jon Husted Wednesday in a public virtual meeting organized by the 150-member Ohio Clean Hydrogen Hub Alliance.

The purpose of the meeting was to give the governor’s office an update, and, as it turned out, ask for an assist in creating a tristate DOE grant application.

DeWine said his administration is “very interested” in the project and the efforts of Battelle and the hydrogen coalition but did not give a clear commitment to work with the governors of Pennsylvania and West Virginia to win the massive DOE grant.

“Our policy has been, in regard to energy, ‘all of the above.’  We’re very, very interested in in the work that you’re doing in regard to hydrogen and certainly want to hear or more about that. And we’re going to be very, very, very supportive,” he added.

The problem is that a coalition of West Virginia elected officials, including Gov. Jim Justice (R) and U.S. Senator Joe Manchin (D) have already said in an initial filing to the DOE that any hydrogen hub in the region should be in West Virginia.

“West Virginia is the place where this all-important hydrogen hub belongs. As one the world’s energy powerhouses for generations, West Virginia has long served as the home of all kinds of cutting-edge technological advances in energy production, thanks to our rich natural resources and our skilled and dedicated workforce,” Justice wrote in March.  (See DOE Gets Hydrogen Hub Advice from Industry and Others.)

Better Together …

That assertion has not been overlooked by the DeWine administration.

LaMonaca asked DeWine and Husted “to help us get Ohio, Pennsylvania and West Virginia on the same page.”

In response, Husted wanted to know how interested Pennsylvania and West Virginia were in joining with Ohio. He said he suspected Manchin would not have voted for the infrastructure bill “without some kind of reassurance that his state was going to be funded.”

“We’re making good progress,” LaMonaca responded. “I would say Pennsylvania is very interested in a tristate collaborative approach. West Virginia is as well,” he said of businesses that Battelle had already contacted.

LaMonaca also noted that Battelle is aware of West Virginia’s previously announced position and knows that the DOE intends to make awards to proposals represented by a single entity.

He said Battelle understands that the DOE intends to make six to 10 initial grants (not just four) for the “initial launch” of about $400 million to $500 million, up to $1.25 billion, and will reserve $1 billion or $2 billion for future payments “depending on how impressed they are with the applicants,” he explained.

“There will be a 50% cost match that will need to come from the applicants’ team to match the government funding,” he said.

“So that’s why I think it’s important to get West Virginia, Pennsylvania and Ohio [governments] talking because all three states want to have a substantial presence as it relates to the hydrogen hub.

“But I think the only way that all three states get what they want is if all three states work together to coordinate an application that benefits the entire region and each of the three states individually as well.

“The strength of the region grows exponentially if you are able to pull together the resources … that exist within the three states for tristate unified application,” LaMonaca said.

… Or Going It Alone

Justice doesn’t seem to agree with that strategy. His press secretary Nathan Takitch said the governor is now focused on making sure West Virginia is awarded the DOE grant.

“Gov. Justice is one of several signatories to the West Virginia Hydrogen Hub Coalition’s official proposal to the DOE, which was submitted in March 2022,” Takitch said in an email.  “The Coalition’s efforts are currently focused on working together to bring a Hydrogen Hub to West Virginia, as outlined in the agreement.”

A spokesperson for Sen. Manchin also pointed to the efforts the senator has made since February to help the West Virginia Hydrogen Coalition prepare to apply for the grant.

Pennsylvania Gov. Tom Wolf (D) is not ruling out a joint application. “Governor Wolf is certainly open to a joint application that builds on the strengths of the Appalachian [region],” Wolf’s press secretary Elizabeth Rementer said in an email. “The governor remains committed to working with industry stakeholders and partnering regionally to achieve this win for Pennsylvania’s economy, workers and the environment.”

The Biden administration’s objective is to incentivize the development of low-cost hydrogen production and use it in place of coal and natural gas in heavy industry, trucking, trains and buses. The $8 billion in initial funding was authorized by the bipartisan Infrastructure Investment and Jobs Act approved by Congress in 2021.

In Ohio, the Stark Area Regional Transit Authority (SARTA), which operates 20 hydrogen fuel cell buses in its fleet, and an alliance of Ohio industries and gas utilities organized initial support to apply for a hydrogen hub grant. An economic study produced by Cleveland State University found that by diverting just 15% of Ohio’s shale gas output to hydrogen production would meet initial demand. (See Ohio Hydrogen Study: Blue Now, Green in 2050.) Battelle is providing the technical assistance for the grant application.

The meeting with DeWine and Husted represented the first time the coalition had briefed the administration. “We are glad that they participated to learn more about our efforts and are willing to help us out in the future,” SARTA Executive Director Kirt Conrad said.

Another alliance called Appalachian Energy Future (AEF), organized by Pittsburgh-based non-profit IN-2-Market, is taking an industry-led approach to promoting a tri-state solution for a hydrogen hub.  That group was founded with regional shale gas producers and heavy industries, including Marathon Petroleum (NYSE: MPC) which is headquartered in Ohio. Other members included gas producers Equinor (NYSE: EQNR) and EQT Corp. (NYSE: EQT); Mitsubishi Power, U.S. Steel (NYSE: X), GE Gas Power (NYSE: GE) and Shell Polymers (NYSE: Shell).

Michael Docherty, executive director of IN-2-Market and AEF, said that the three-state collaboration should be focused on addressing key enablers across the region.

“There’s going to be intense competition among companies and among the states for projects and funding, but there [are] also important foundational elements that we can work on together to help this region achieve its potential as an important clean-energy ecosystem,” he said.

Toby Rice, CEO of EQT, recently made a major pitch for liquified natural gas and hydrogen made from gas in the region before the D.C.-based Center for Strategic and International Studies. EQT has operations in all three states (See EQT CEO: Shale Gas Key to National Security, Hydrogen Economy.)

The plan in each state is to produce hydrogen from locally sourced natural gas for use in the region and sequester the resulting carbon dioxide in deep injection wells. At least one gas turbine power plant has already indicated it intends to blend small amounts of hydrogen with the natural gas it burns and heavy industry in the region has shown an interest as well.