Sometimes, even with a scorecard, “you can’t tell the players.”

The saga of the Obama administration’s moratorium on Gulf of Mexico drillings operations took another strange turn yesterday.  The U.S. Court of Appeals for the Fifth Circuit entered a “LIMITED REMAND” to the U.S. District Court for the Eastern District of Louisiana for the purpose of holding a hearing, “calling witnesses if necessary” and issuing findings of fact and conclusions of law with respect to three specific questions.  Hornbeck Offshore Services LLC v. Salazar, No. 10-30585, slip op. at 2-3 (5th Cir. August 16, 2010)(capitalization in original).  

The court reasoned that it did not have before it a sufficient record on which to determine whether the second moratorium rendered moot the injunction the District Court had entered with respect to the first moratorium.  The three issues on which it ordered the District Court to rule are:

• Whether Secretary Salazar has the authority to terminate the original moratorium filed on May 28^th due to original decisions held by both the District Court and the U.S. Court of Appeals under the Outer Continental Shelf Lands Act and the Administrative Procedures Act;
• Whether the evidence provided for the July 12^th revision of the moratorium was available or unavailable for Secretary Salazar at the time he originally filed the May 28^th moratorium; and
• Describing the differences, if any, between the May 28^th and the July 12^th moratorium memoranda, what circumstances may have changed since the two were made, and if the issuance of the July 12^th moratorium rendered the May 28^th moratorium moot.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

On July 12, the U.S. Environmental Protection Agency (EPA) announced its proposal for 2011 standards for the four fuels categories under its Renewable Fuel Standard Program (RFS2).  The proposed 2011 standards are:

• Biomass-Based Diesel (0.80 billion gallons; 0.68 percent)
• Advanced Biofuels (1.35 billion gallons; 0.77 percent)
• Cellulosic Biofuels (5-17.1 million gallons; 0.004-0.015 percent)
• Total Renewable Fuels (13.95 billion gallons; 7.95 percent)

These standards derive from the Energy Independence and Security Act of 2007 (EISA), which established annual renewable fuel volume goals designed to ultimately reach an overall level of 36 billion gallons in 2022.  EPA calculated the proposed percentages to achieve the target volume for 2011.  As a result, all those involved in the production of commercial transportation fuel must ensure that such fuel contains the requisite minimum volume of renewable fuel. 

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

Both the Senate and the House are making one last effort to pass tailored energy industry reform before the end of the session.  While the new strategy may increase the chance for something to pass, climate legislation will not be part of the package.

After abandoning plans for comprehensive energy and cap-and-trade climate legislation on July 22, 2010, Majority Leader Reid (D-NV) introduced a scaled-down alternative bill the following week, marrying various drilling and oil spill response reforms and a limited package of energy proposals addressing energy efficiency, natural gas vehicle and infrastructure incentives, and conservation.  Though less ambitious than prior iterations, the proposed “Clean Energy Jobs and Oil Company Accountability Act of 2010” still covers considerable ground, including provisions to:

• Remove the liability caps for owners and operators of offshore facilities;
• Establish procedures for processing damage claims;
• Strengthen emergency response planning obligations on regulated industries and establish expedited damage claim procedures;
• Expand and direct funding to oil spill prevention and response research, as well a funding to support land and water conservation projects and programs;
• Reorganize federal oversight of offshore drilling to separate leasing, environmental and safety oversight, and royalty collection efforts;
• Increase criminal penalties for violations of oil spill prevention requirements;
• Override recent case law limiting punitive damages under maritime law; and
• Upgrade federal capabilities to respond to future spills, as well as the ongoing Gulf Spill cleanup;
• Allow states to require, with some limitations, disclosure of substances used in hydraulic fracturing efforts associated with natural gas recovery.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

Washington D.C. will host the first-ever Clean Energy Ministerial on July 19-20, 2010, gathering ministers and official delegations from nearly two dozen governments to collaborate on long-term policies and programs for a global transition to clean energy technologies.  To be hosted by the U.S. Secretary of Energy, Dr. Steven Chu, the Clean Energy Ministerial is an initiative of the Major Economies Forum on Energy and Climate (”MEF”), which is comprised of 17 major developed and developing economies.

In July of 2009, the MEF initiated a Global Partnership to promote the advancement of low-carbon and climate-friendly technologies while simultaneously reducing greenhouse gas emissions.  The MEF requested that the Global Partnership create a set of Technology Action Plans directed to ten clean energy technologies that would address more than 80% of the carbon dioxide (CO2) emissions reduction potential for the energy sector, as recognized by the International Energy Agency (”IEA”).  The MEF also intended for the Technology Action Plans to encourage efforts among interested countries to advance action on technologies such as-

• advanced vehicles
• bioenergy
• carbon capture, use & storage
• cross cutting R&D (i.e., clean energy R&D)
• energy efficiency in the buildings and industrial sectors
• high-efficiency, low-emissions (HELE) coal technologies
• marine energy
• smart grids
• solar energy
• wind energy

In December 2009, the MEF’s Global Partnership released these Technology Action Plans, summarizing the information generated by government experts and describing possible roadmaps to advance the development and deployment of these clean energy technologies.  The Technology Action Plans also propose the foundations for long-term policy commitments that would enable governments and the private sector to speed the adoption of clean energy technologies, as well as the means to overcome current barriers to the adoption of these technologies, such as regulatory barriers and the high costs of adopting the technologies, in pursuit of the common goal of a global, low-carbon economy. 

The MEF’s Clean Energy Ministerial will provide an opportunity to discuss these Technology Action Plans, including the policy obligations needed to accelerate the deployment of clean energy technologies.  The agenda also incorporates specific discussions relating to “Energy Efficiency/Smart Grid,” “Clean Energy Supply,” and “Energy Access” during the Public Forum on July 20. 

For further information about this topic, please contact Akin Gump.

 On July 8, the U. S. Court of Appeals for the Fifth Circuit denied the Obama Administration’s request to stay a lower court’s order lifting a six-month moratorium on offshore drilling. The Department of the Interior issued the moratorium following the explosion of a BP platform in the Gulf of Mexico. The moratorium impacted 33 exploratory drilling projects, but did not interrupt production at established platforms. Hornbeck Offshore Services and other companies that supply vessels and support to offshore drilling rigs quickly challenged the moratorium. These companies argued that the ban unnecessarily compromised much-needed jobs in the Gulf. On June 22, 2010, the U.S. District Court for the Eastern District of Louisiana granted Hornbeck’s motion for preliminary injunction, finding the Interior’s moratorium arbitrary and capricious under the Administrative Procedure Act. The Obama administration immediately appealed to the Fifth Circuit.

The Fifth Circuit’s ruling denied the government’s request to reinstate the moratorium while the Interior’s appeal is pending. According to the court’s brief per curium opinion, Hornbeck Offshore Services, L.L.C. v. Salazar, No. 10-30585, “[t]he motion for stay pending appeal is denied because the Secretary has failed to demonstrate a likelihood of irreparable injury …; he has made no showing that there is any likelihood that drilling activities will be resumed pending appeal.” Judge Dennis dissented in part, indicating that he would have granted the Secretary’s motion to stay. All three judges agreed that the Secretary could apply for emergency relief “if he can show that drilling activity by deepwater rigs has commenced or is about to commence.”

The court set an expedited brief schedule for the Interior’s appeal of the district court’s preliminary injunction. The merits argument will take place the week of August 30.

Some sources have suggested that the Fifth Circuit’s decision will lead the Interior to issue a revised moratorium that addresses the district court’s concerns. The New York Times reported that the Interior is releasing a new moratorium as early as this week.

For further information about this topic, please contact Akin Gump.

The U.S. District Court for the Eastern District of Louisiana yesterday issued a preliminary injunction lifting the Department of Interior’s six-month moratorium on deepwater oil drilling. Hornbeck Offshore Services v. Salazar, E.D. La., No. 2:10-cv-01663, preliminary injunction 6/22/10.  

Following the explosion of the Deepwater Horizon drilling platform on April 20, the U.S. Department of Interior issued the moratorium after completing a report reviewing the safety of deepwater drilling. The Secretary of Interior made a finding that, under current conditions, deepwater drilling poses an unacceptable threat of serious and irreparable harm or damage to wildlife and the marine, coastal and human environment, as set forth in 30 C.F.R. 250.172(b). The Secretary further determined that the installation of additional safety or environmental protection equipment is necessary to prevent injury or loss of life and damage to property and the environment, as set forth in 30 C.F.R. 250.172(c).  The moratorium prohibits drilling at depths greater than 500 feet for the 33 permitted wells located in the Gulf.

Led by Hornbeck Offshore Services, a company that operates vessels and supplies support services needed for deepwater drilling in the Gulf filed suit, alleging that Interior’s action in ordering the moratorium was arbitrary, capricious, an abuse of discretion and otherwise not in accordance with the Administrative Procedure Act (APA), the Outer Continental Shelf Lands Act (OCSLA) and its implementing regulations. Hornbeck sought an injunction precluding the government from enforcing the drilling ban.

The court entered the requested injunction, finding numerous flaws in the study that Interior used as the grounds for the moratorium. The court noted that:

• Interior’s report failed to justify the moratorium in terms of the irreparable harm it would avert or the time it would take to put in place adequate safety measures; and
• there were also unexplained discrepancies between the report’s recommendations and the moratorium, such as the report recommended halting drilling beyond 1,000 feet, not 500 feet as the moratorium required

Finally, the court found that “the blanket moratorium…seems to assume that because one rig failed although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.” This “patent lack of analysis,” in the court’s view, rendered Hornbeck likely to succeed on the merits of its claim.

The court then turned to the harm suffered by Hornbeck. The court noted that 150,000 jobs are directly connected to the drilling industry, adding, “[o]il and gas production is quite simply elemental to Gulf communities.” This public interest, the court concluded, when weighed alongside Hornbeck’s likelihood of succeeding on the merits, supported granting the motion for a preliminary injunction.

Press Secretary Robert Gibbs says the government plans to immediately appeal the decision to the 5^th Circuit. The likelihood of success of this appeal is uncertain. Under the Administrative Procedure Act, courts are required to give Interior’s decision to issue the moratorium a great deal of deference, overturning it only when it finds the agency acted arbitrarily and capriciously. The discrepancies between the report and the moratorium, the scope of the moratorium, its lack of timelines and the immensity of the economic harm to the industry may be enough to satisfy Hornbeck’s heavy burden of proof. Still, the enormity of the environmental damage and the unprecedented nature of this national emergency weigh heavily in the government’s favor.

Industry has applauded the injunction as ensuring a more thoughtful decision-making process. The Sierra Club called lifting the moratorium “one of the worst ideas ever proposed.”  Secretary Salazar announced his intention to issue a new directive, after providing additional factual support for the moratorium.  If that ploy is not effective, the district court’s decision means that until a trial is held or the court of appeals acts to overturn or stay the district court’s ruling, Gulf oil drillers could be going back to work

For further information about this topic, please contact Akin Gump.

It is too early to tell how the oil spill in the Gulf of Mexico will impact efforts to pass climate change legislation in Congress.  Some stakeholders see the spill as a wake-up call to move away from reliance on extractive fossil fuels.  Others believe the increased public, press and political attention will complicate future efforts to expand deepwater offshore drilling that, as part of a climate bill, could have attracted bipartisan support of the bill.  A third possibility is the cacophony of competing political priorities-the Gulf spill, the economy, immigration reform, Afghanistan and the Gaza embargo-could drown out calls for action in the waning days of this Congress. 

Even before the spill, prospects for a final bill went awry when Senator Lindsey Graham (R-S.C), the primary Republican advocate for the legislation, withdrew from bipartisan efforts to craft a bill, citing the Administration’s effort to advance immigration reform.  If the furor over immigration reform increased the political cost of cooperation on climate legislation for moderate Republicans, however, the Gulf oil spill reduced their primary incentive.  Senator Graham predicated his support for climate legislation on receiving support from Democrats to increase drilling off the Atlantic Coast.  In the wake of the spill, Senator Graham acknowledged that “[w]hen it comes to getting 60 votes for legislation that includes additional oil and gas drilling with revenue sharing, the climb has gotten steeper because of the oil spill.” 

Climate bill advocates are doing their best to reverse the tide, investing millions in targeted ads and public service announcements (PSAs) and pressuring the Administration and key senators to support a climate/energy bill.  Recent Natural Resources Defense Counsel (NRDC) and VoteVets.org ads, for example, use the spill as one more reason to support immediate action.  The Democratic leadership in the Senate is taking a similar tack, hoping to use the spill to kick-start debate on the recent Kerry-Lieberman American Power Act.

While the spill may encourage national introspection into the country’s energy and climate policies, it may not push the climate bill to the top of a crowded legislative agenda.  Both parties remain conflicted on whether and how to shape binding national climate policy, as evinced by the surprising bipartisan support Senator Lisa Murkowski is receiving for her pending resolution to bar EPA’s regulation of greenhouse gases under the Clean Air Act (scheduled for vote on June 10).  It is also possible that the health, safety and ecological issues raised by the oil spill may divert attention and resources away from the longer-term climate policy debate.  In the short term, “plugging the hole” in the gulf has supplanted climate change as the most urgent environmental issue for the Administration.  Both issues must compete with a host of other domestic and international issues confronting the Administration and Congress. 

Can the climate bill beat out border security and immigration reform, financial reform, mid-East turmoil, “don’t-ask-don’t-tell” and other issues considered urgent by their respective constituencies? Maybe, but as the old saying goes, its supporters will have to rise early, work hard and strike oil.

For further information about this topic, please contact Akin Gump.

Yesterday GreenLaw and the Southern Environmental Law Center filed five petitions for hearings with the Georgia Office of State Administrative Hearings concerning the state-approved air and water permits issued to two Georgia coal-fired plants-LS Power Group’s proposed Longleaf Energy Station and Plant Washington.  The petitions assert that the permit terms and conditions are not adequate to protect the surrounding community and environment.

GreenLaw challenges the air quality permit and the construction deadline for the Longleaf Energy Station.  GreenLaw opposes the characterization of the 1200-megawatt Longleaf as “a minor source” of pollution, claiming the plant will not be held to sufficiently stringent air pollution standards.  They also oppose a construction extension for the plant, which they argue could enable LS Power Group to build with outdated technologies.

Three petitions, filed by GreenLaw and the Southern Environmental Law Center, for the Washington Plant alleged three basic deficiencies in the permits.  First, they challenge the air permit, asserting that it inadequately controls sulfuric acid mist and particulate matter.  Second, the petitioners argue that the water permits authorize unlawful amounts of water usage from the Ogeechee River watershed.  Third, they claim that the permit insufficiently controls the temperature of wastewater discharge that would flow into the Oconee River.

LS Power Group, supported by a group of six electric membership cooperatives, labeled Power4Georgians, believes that Georgia correctly issued the permits and that petitioners challenges will be rejected.

ClimateIntel has previously written about the Longleaf Power Plant.  To view these posts, please visit the below links.

“Implications of Regulating CO2 as an NSR Pollutant”

“Georgia Appeals Court to Review Rejection of Coal-Fired Power Plant Permit”

“Georgia Court Revokes Air Pollution Permits for Coal-Fired Power Plant”

For further information about this topic, please contact Akin Gump.

Energy Star and Super Star

Started in 1992, Energy Star is a joint program of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy (DOE) to improve energy efficiency practices and products that results in reduced greenhouse gas emissions. Products like computers, household appliances, heating and cooling systems, other electronics and lighting that carry the Energy Star label, use less energy than required by federal standards.

On March 10, 2010, EPA and DOE announced they had made further steps to enhance and strengthen Energy Star with more testing and better enforcement. With regard to testing, DOE will first test approximately 200 basic models across a range of products in third party labs.  DOE will then produce an expanded system that will require all Energy Star approved products to be tested in approved labs and require an ongoing compliance and verification testing program.  EPA and DOE have also recently taken action to enforce energy efficiency standards, specifically against 35 manufacturers in the last 4 months regarding their Energy Star verifications. 

Following a report by the Government Accountability Office which found that Energy Star officials granted certification to fictitious products, EPA and DOE recently finalized new certification procedures to ensure that only those products meeting the program’s requirements will receive the Energy Star label.  Effective immediately, manufacturers wishing to apply the Energy Star label to their products must submit complete lab reports for EPA’s review before they may use the label.  Additionally, EPA will no longer use an automated approval process and will review individually each new qualification application.  Beginning at the end of the year, manufacturers must submit for each product they hope to qualify for the label test results from an approved, accredited lab.  Lab testing is currently required from some, but not all, Energy Star products, and the new certification procedures will apply the requirement to all eligible product categories.

Read the rest of this entry »

For further information about this topic, please contact Akin Gump.

 The U.S. government recently announced that it would award up to $2.3 billion in tax credits under the American Recovery and Reinvestment Act in accordance with Section 48C of the Internal Revenue Code to 183 clean energy manufacturing projects across the United States.  Following a competitive application process that opened in August of 2009, and the submission and review of over 500 applications for clean energy manufacturing projects, these tax credits were awarded to manufacturing projects in order to promote economic growth and encourage a robust domestic manufacturing capacity for renewable and clean energy projects.  The application process considered specific criteria for these projects, including, among others, domestic job creation; the net impact in avoiding or reducing air pollutants or greenhouse gas emissions; the greatest potential for technological innovation and commercial deployment; and the shortest project time from certification to completion.  The Internal Revenue Service has already notified the projects that have been awarded the tax credit, as well as the amount of the tax credit, which will be allocated to these projects until the program funding is exhausted.  Importantly, this investment in the manufacturing tax credit will be matched by up to $5.4 billion in private sector funding. 

Because the clean energy manufacturing tax credit program was substantially oversubscribed by “technically acceptable applications” during the application period, the White House “has called on Congress to provide an additional $5 billion to expand the program” in order to provide further tax incentives to “worthy applicants who are willing to invest private resources to build and equip factories that manufacture clean energy products in America.” The Administration’s statement that recommends expansion of the program includes the observation that “there is already an existing pipeline of worthy projects and substantial interest in this area, [and] these funds will be deployed quickly to create jobs and support economic activity.” 

The pie chart below reflects the individual sectors that received the energy manufacturing tax credit, according to an Excel spreadsheet linked in the Department of Energy press release announcing the tax credits.  The Solar Photovoltaic, Solar Components and Materials, Industrial, and Buildings sectors are the largest recipients, by dollar amount, of the clean energy manufacturing tax credits, and more than a dozen additional clean energy manufacturing sectors also received tax credits under the program. 

(1)  Approximately 137 of the 183 projects were identified by technology sector.  The remaining projects were not identified by a technology sector.  Given the lack of data relating to these projects and their respective sectors, these projects were not included in the chart.

(2) The “Other” category on the pie chart includes the following sectors that represent 2% or less of the total dollar amount awarded: Batteries ($29,360,400, 5 projects); Biomass ($29,304,480, 2 projects); Carbon Capture & Storage ($4,842,438, 2 projects); Fuel Cells ($5,510,100, 2 projects); Geo/Buildings ($8,941,626, 1 project); Smart Grid ($35,652,663, 9 projects); and Solar-Hot Water ($806,501, 3 projects).

For further information about this topic, please contact Akin Gump.