Tag: renewable energy

Upholding Clean Energy in Colorado—and Hopefully Beyond

McNishBy Samantha Caravello—November 17 at 7:26 a.m.

Acting as laboratories for energy policy, some states have been much more effective than the federal government in promoting renewable energy development, often through the enactment of Renewable Portfolio Standards (“RPS”). RPSs require electricity-selling companies to generate a minimum percentage of their electricity from renewable sources. These minimum targets generally increase over time, growing clean energy development and decreasing reliance on fossil fuels. RPSs are currently in place in 29 states and the District of Columbia, but a number of these state policies have been targeted by legal challenges.

Earlier this year, the pro-free market group Energy and Environment Legal Institute (“EELI”) filed a lawsuit challenging Colorado’s Renewable Energy Standard (“RES”), which was approved by Colorado voters in a 2004 ballot initiative and subsequently codified into state law. The RES creates a “Renewables Quota” for electricity retail utilities, requiring them to “generate, or cause to be generated, electricity from eligible energy resources” in specified amounts.[1]

In the lawsuit, Energy and Environment Legal Institute v. Epel (“EELI”),[2] EELI claimed that the Renewables Quota violates the dormant Commerce Clause, which is a doctrine that courts have implied from Constitution’s Commerce Clause. The dormant Commerce Clause prohibits states from unlawfully burdening or discriminating against interstate commerce. In the Tenth Circuit, there are three ways a statute may violate this doctrine: first, if it clearly discriminates against interstate commerce in favor of intrastate commerce; second, if it has the practical effect of regulating wholly outside the state; and third, if it imposes a burden on out-of-state commerce which is excessive in relation to the local benefits it creates.[3] Plaintiffs’ complaint focused on the second potential violation, alleging that the Renewables Quota improperly regulates wholly extraterritorial commerce.[4]

In May, the federal district court for the District of Colorado ruled in favor of state defendants and intervening environmental and renewable energy organizations and upheld the validity of the Colorado law. The court rejected plaintiffs’ extraterritoriality claims, concluding that the RES regulates only Colorado entities and those extraterritorial entities that choose to do business with Colorado entities.[5] The RES does not require out-of-state entities to do business in any particular manner, but simply determines whether energy purchased from an out-of-state generator will count towards a Colorado utility’s Renewables Quota.[6] Concluding that this did not amount to extraterritorial regulation, the court granted summary judgment in favor of defendant Colorado and intervening environmental and renewable energy organizations.[7]

This decision was a success for clean energy—Colorado’s renewable energy sector is growing, jobs are being created, and public opinion supports the RPS. Unsurprisingly, though, plaintiffs appealed the decision to the Tenth Circuit Court of Appeals. In briefs filed over the past few months, plaintiffs argued that the district court improperly relied on a “factually inapposite, nonbinding case” from the Ninth Circuit instead of a Minnesota federal district court case that would have been more favorable to the plaintiff-appellants. The state and nonprofit respondents in the EELI case argue—convincingly, in my opinion—that plaintiffs have this wrong. (Not to mention that neither the Minnesota nor the Ninth Circuit case is binding on the District of Colorado or the Tenth Circuit.)

In the Ninth Circuit case, Rocky Mountain Farmers Union v. Corey,[8] that court upheld California’s Low Carbon Fuel Standard (LCFS). Although the LCFS encouraged out-of-state entities to offer low carbon ethanol that would allow them access to the California market, the court determined that because there was no requirement for an out-of-state entity to meet particular standards, there was no extraterritorial regulation. In the District of Minnesota case, North Dakota v. Heydinger,[9] that court considered a Minnesota statute prohibiting the importation of electric power that would increase statewide carbon dioxide emissions, and it concluded that the statute did impermissibly regulate wholly out-of-state commerce. As the court held in EELI, the Colorado RES regulates only the Colorado market and affects out-of-state entities only insofar as they choose to respond to RES-created incentives. This feature makes the Colorado RES more similar to the California LCFS than to the Minnesota prohibition.

Both EELI and Heydinger are currently on appeal, and the outcome of these cases may impact similar challenges in other states and determine the likelihood of Supreme Court review on this issue. In June, the Supreme Court declined to hear Rocky Mountain Farmers Union,[10] leaving California’s LCFS in place, and perhaps indicating an unwillingness to decide whether state renewable energy incentives violate the dormant commerce clause. Or perhaps the Court, flooded with petitions warning of economic disaster due to environmental regulations, is just waiting until more circuit courts have spoken—and split—on the issue. Depending on how EELI and Heydinger turn out, these cases could provide sufficient reason for the Supreme Court to get involved. Given the states’ innovative leadership in this arena and Congress’s inability to take comprehensive action on climate and energy policy, the fate of Colorado’s RES may have significant implications for clean energy in this country.

UPDATE: The Tenth Circuit has scheduled oral argument for EELI v. Epel for January 21, 2015.

Harvard Law School’s Environmental Policy Initiative is tracking these cases and more at the State Power Project. The author relied on the State Power Project website to find some of the case briefs cited in this blog.

[1] Colo. Rev. Stat. Ann. § 40-2-124 (West 2013).
[2] No. 11–cv–00859–WJM–BNB, 2014 WL 1874977 (D. Colo. May 9, 2014).
[3] Id. at *3.
[4] Id.
[5] Id. at *6.
[6] Id.
[7] See id. at *7. The court also granted summary judgment for defendants on their claims that the RES does not discriminate against interstate commerce, id. at *5, and does not improperly burden interstate commerce relative to local benefits, id. at 9. The court concluded that plaintiffs had failed to show any burden imposed by the RES on interstate commerce. Id.
[8] Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013), reh’g en banc denied, 740 F.3d 507 (9th Cir. 2014), and cert. denied, 134 S. Ct. 2875 (2014).
[9] No. 11–cv–3232 (SRN/SER), 2014 WL 1612331 (D. Minn. Apr. 18, 2014).
[10] Rocky Mountain Farmers Union v. Corey, 134 S. Ct. 2875 (2014).

The Uncertain Future of the Northern Pass

MOUNTAINS_NH_CaravelloBy Ted Hamilton — Dec. 3, 2013 at 12:11pm

With the recent announcements that the Vermont Nuclear Power Station will go off-line next year and that Brayton Point, the region’s large coal plant, is ceasing operations by 2017, the face of New England energy is going through a rapid transformation. As environmentalists call for a greener grid and policymakers search for new sources to meet their states’ energy demands, ISO-New England, the regional grid operator, estimates the area will need an additional 6,000 megawatts of electricity within a decade.

One possible solution? An ambitious plan to transmit 1,200 megawatts of dam-generated electricity from Quebec to New Hampshire.

The Northern Pass, a joint venture between Northeast Utilities, NSTAR, and the public Canadian utility Hydro-Quebec, was proposed in 2008 as a way to bring cheap, clean energy to New England. The project calls for 187 miles of transmission lines to be built from the Canadian border to southern New Hampshire, with the electricity eventually finding its way to the heavily populated metropolitan areas of Massachusetts, Rhode Island, and Connecticut. Proponents see the Northern Pass as a one-size-fits-all solution, offering reliable, inexpensive energy that’s cleaner than fossil fuels and safer than nuclear power.

But the Northern Pass has run into fierce opposition from many sides, leaving the ultimate fate of the project in doubt. The increasingly rancorous debate over the plan has centered around some of the most vexing problems facing environmental law today: the conflicting demands of conservation and energy production, the true costs of “clean” energy, and the proper role of state and federal regulators in designing the energy regimes of the future.

The most controversial aspect of the proposed project is the feared impact of the Northern Pass on the natural beauty of the White Mountains and surrounding areas. The project’s transmission lines would require rights-of-way hundreds of feet wide to accommodate towers up to 155 feet tall, and would be visible from miles away. Many conservation and recreation groups, such as the Appalachian Mountain Club, have warned that these towers would permanently scar New Hampshire’s wilderness, damaging both local ecosystems and a thriving tourist industry. Critics estimate that at least 40 miles of new transmission corridors would need to be built to run power through the state.

In this atmosphere of increasing indecision over the Northern Pass’s ultimate shape, federal regulators have gone forward with the permitting and approval processes. Because the transmission lines would cross an international border, the utilities must seek a special presidential permit from the Department of Energy. The DoE will consider how the project affects “the public interest,” and must also prepare an Environmental Impact Statement, to be released sometime in 2014 in draft form for public hearing and comment. A decision on the permit is not expected for at least two years. The Northern Pass must also pass regulatory hurdles from an array of other federal and state agencies. These concerns have led to growing calls to bury the lines. While the utilities maintain such a project would be prohibitively expensive, New Hampshire Governor Maggie Hassan made headlines in September by urging the utilities to explore this option more seriously.

Another point of contention is just how clean the Northern Pass’ hydroelectricity would be. A 2012 report by Synapse Energy Economics suggested that the reservoirs that Hydro-Quebec creates to power its dams release greenhouse gases at a rate equivalent to two-thirds of a typical natural gas power plant’s emissions, and that utilities have typically underestimated the carbon dioxide and methane released by decomposing organic matter trapped under the reservoirs. Groups like the Conservation Law Foundation have pointed out that many New England states may attempt to use Northern Pass hydropower as part of their Renewable Portfolio Standards, relieving them of the obligation to seek equivalent power from other, greener sources. The massive influx of Canadian hydroelectricity would not only be dirtier than previously assumed, critics argue, but would also cripple New England’s budding renewable energy sector by undercutting the competitive advantage of smaller utilities producing wind, solar, or tidal power.

What began, then, as an emblematic solution to a set of typically twenty-first century energy problems has morphed into a hard-fought, intensely political battle over how best to balance environmental protection with energy security and local concerns with regional demands. As policymakers at the state and federal levels attempt to wade through the competing interests and contradictory predictions surrounding the Northern Pass, stakeholders will continue to disagree over whose concerns are paramount. The coming months and years will offer a test case for how — or how not — to build the next generation’s grid.

Smart Rules for the Smart Grid (HELR Podcast)

Power lines_Wikimedia Commons Non-dropframe
Photo credit: Non-dropframe, Wikimedia Commons

By Sachin Desai — Oct. 24, 2013 at 8:18am

What makes the Smart Grid “smart”?  Of course the technology plays a role.  Grid-scale batteries allow renewable energy generators to be more competitive.  New smart meters allow homeowners to know which appliances are energy hogs.  However, what also makes the Smart Grid “smart” is legal in nature.  In particular, a unique approach is being undertaken to develop the standards and regulations that will govern the new grid.  Professor Joel Eisen, one of the nation’s energy law experts, leads us through this critical aspect of the renewable energy revolution in an article and podcast published by the Harvard Environmental Law Review (HELR).

The Smart Grid has often been compared to the internet, a giant network, governed by an underlying set of traffic rules, which allows energy to travel, two-way, from place to place just like information.  However, unlike the internet, the Smart Grid is being built in an environment with huge entrenched interests, as well as multiple federal and state regulatory agencies with diverging missions.  The current grid consists of 3,200 electric utilities, interacting with even more suppliers and supporting businesses.  To top it off, citizens groups are resisting the Smart Grid due to privacy concerns.

So how can all these different organizations come together to develop the common foundation of rules and standards that will govern the electric internet?  One traditional route is command and control – where (federal) agencies set the rules after notice and comment.  However, private groups and state agencies have fought against this approach, in large part arguing that federalism prevents the federal government from reaching into private homes and intrastate utility operations.  Another traditional route is self-regulation – where the private sector set its own rules (many internet standards were set this way).  However, getting so many actors with different incentives together on their own has proven difficult, to say the least.

Professor Eisen discusses an alternative: a novel, “democratically-led” process for rule-making.  It’s a two-part process. First, the National Institute of Standards and Technology, through its Smart Grid Interoperability Panel (SGIP), has brought together hundreds of participants to set standards through negotiation and dialogue.  SGIP can leverage its benign, disinterested status (it does not have regulatory power) to bring skeptics to the table.  The Federal Energy Regulatory Commission (FERC) can turn those standards into legally enforceable regulations only once “sufficient consensus” has been reached among the body.  This process, especially in light of recent FERC decisions, has allowed Smart Grid standards to be created and implemented in an environment otherwise resistant to change.  Professor Eisen discusses this and more in his article, “Smart Regulation and Federalism for the Smart Grid,” published by HELR in the fall issue of Volume 37.  Professor Eisen also sat down with Sachin Desai of HELR to talk about this article and the concepts behind it an HELR exclusive podcast, “Smart Rules for the Smart Grid.”

Expediting Innovation

By Sarah Tran

Private incentives to innovate and commercialize many technologies are often inadequate in terms of their social benefits. With America’s economic leadership position at risk of slipping, it becomes increasingly important to consider what measures public entities can take to promote the innovation and commercialization of those technologies that are essential to American welfare. The U.S. Patent and Trademark Office (“PTO” or “Patent Office”) has the potential to reduce the divergence between social needs and private incentives for technological progress. By expediting the review of more socially valuable patent applications, the PTO could respond to critical public needs and better satisfy the constitutional justification for the existence of the patent system. The PTO’s recent implementation of a program that purports to fast track the review of applications pertaining to environmentally beneficial technologies provides a useful, albeit imperfect, model for such beneficial reform.

This Article brings key insights to a variety of weighty issues including: the proper role of the Patent Office and other regulatory bodies in promoting the innovation and commercialization of high-priority technologies; the appropriate measurement of the “value” of technological progress; the interrelationship between the Constitution and the patent review process; and the relevance of fairness and economic objections to the grant of preferential treatment in a monopoly system.

Cite as: Sarah Tran, Expediting Innovation, 36 Harv. Envtl. L. Rev. 123 (2012).

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Expanding Regional Renewable Governance

By Hannah Wiseman

Energy drives economies and quality of life, yet accessible traditional fuels are increasingly scarce. Federal, state, and local governments have thus determined that renewable energy development is essential and have passed substantial requirements for its use. These lofty goals will fail, however, if policymakers rely upon existing institutions to govern renewable development. Renewable fuels are fugitive resources, and ideal property for renewable technology is defined by the strength of the sunlight or wind that flows over it. When a potential site for a utility-scale development is identified, a new piece of property, which I call a “renewable parcel,” is superimposed upon existing boundaries and jurisdictional lines. The entities within the parcel all possess rights to exclude, and this creates a tragedy with anticommons and regulatory commons elements, which hinder renewable development.

In a renewable parcel, numerous rights of exclusion in the form of fee simple ownership, leasing rights, use rights, and regulation make use of a renewable parcel difficult and create anticommons-type problems. The multiple jurisdictions that may underlie the parcel also lead to a regulatory commons, wherein no one government is sufficiently incentivized to create a workable governance regime.

This Article argues that the many exclusion rights within renewable parcels must be consolidated and governed by a regional agency to address these barriers to renewable development, and it analyzes elements of existing regional institutions to begin to suggest the ideal structure of this agency. Once formed, the regional framework
should be applied to other areas of energy planning. States and municipalities share oil and gas reservoirs, electricity transmission constraints, and energy generation needs, and collaborative governance in these areas is necessary for a secure future.

Cite as: Hannah Wiseman, Expanding Regional Renewable Governance, 35 Harv. Envtl. L. Rev. 477 (2011).

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