Vol. 8: Issue 7 | July 2020
New Jersey recently passed the Permit Extension Act of 2020, extending the term of permits and approvals for projects and activities disrupted by COVID-19. Under the law, any government approval in existence on March 9, 2020, is stretched for the duration of the COVID-19 period. The bill aims to prevent the abandonment of already-approved projects.
Wyoming appears to be taking a two-pronged approach to electricity generation. On the one hand, the state is working to keep coal plants operating. Not only does the state generate around 80% of its electricity from coal, but its economy relies heavily on coal mining as well—accounting for around 40% of all coal mined in the U.S. in 2018.
With coal in mind, the state enacted HB 200, establishing a low-carbon electricity standard intended to support retrofitting the existing coal fleet with carbon capture and sequestration (CCS) technologies. On the other hand, the state enacted HB 74, which could influence what replaces the state’s coal plants. The new law authorizes the permitting of small modular nuclear reactors (SMRs) in the state and would allow utilities to apply to replace coal or natural gas-fired plants with SMRs of the same or lesser capacity. The idea is that SMR developers would benefit from existing electric infrastructure at the site, thereby reducing the cost of deployment. During a week-long administrative trial, Wyoming state regulators scrutinized plans from Pacificorp, the state’s largest investor-owned utility, to retire four coal units by 2025 and add 7 gigawatts (GS) of renewables and storage. Pacificorp operates in five other Western states and has proposed to retire 20 of its 24 coal plants by 2038. In other news, the U.S. Department of Energy (DOE) Secretary Dan Brouillette announced $122 million for coal innovation centers to work on developing rare earth elements and critical minerals from coal.
Oklahoma recently passed SB 1875, which designates who owns and is responsible for wastewater resulting from oil and natural gas extraction. The law, known as the Produced Water and Waste Recycling Act, clarifies that produced water and wastewater and other chemicals brought to the surface as a result of oil and natural gas extraction—is the property of the oil and gas producer until it has officially been transferred to another person. The measure also shields from liability those who process wastewater into recycled water and/or transport this recycled water for further use in oil and gas production. According to the bill sponsors, the law will encourage produced water recycling and reuse in the state by alleviating uncertainty surrounding who owns the waste or produced water during oil and gas operations.
Fifteen states—California, Colorado, Connecticut, Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington—along with Washington, DC committed to a 100% zero-emission vehicle (ZEV) sales requirement for new medium- and heavy-duty vehicles by 2050. The memorandum of understanding (MOU) also establishes an interim target for 2030 that requires 30% of new medium- and heavy-duty vehicles be ZEVs. The multi-jurisdiction commitment also had the support of the business community, with dozens of businesses signing a letter in support of the agreement. The MOU also comes after California’s adoption of its Advanced Clean Trucks standard requiring that every new truck sold in the state be zero-emissions by 2045. In addition to signing on to the MOU, New York recently approved a $700 million program supporting transmission system upgrades and work needed to install EV infrastructure in order to build more than 55,000 chargers. The N.Y. Public Service Commission order also supports infrastructure projects located in disadvantaged communities, electrifying commercial fleets and buses, and clean transportation initiatives targeting environmental justice communities.
The Massachusetts Department of Energy Resources finalized rules expanding the Solar Massachusetts Renewable Target Program (SMART) from 1.6 gigawatts to 3.2 gigawatts with heightened restrictions on land use. In response to industry comments, the agency implemented some flexibility regarding the new land-use restrictions by allowing projects that are already underway to follow previous guidelines. The new standards restrict development on three types of land: priority habitat, core habitat and critical natural landscape—which covers a large portion of the state.
One of the many lingering questions as the coronavirus pandemic continues to affect the energy sector is how various jurisdictions will deal with utility losses. The question is starting to rear its head in state regulatory proceedings, with utility commissions granting permission to track costs related to the pandemic for potential recovery at a later time. In many cases, utility commissions appear amenable to allowing cost-recovery on unpaid bills. After all, many states and utilities suspended utility disconnections for nonpayment as a way to ease the financial burdens on individuals and families experiencing economic hardship resulting from the pandemic response. However, there are other questions—such as lost revenue from reduced energy demand—that appear less clear-cut. Indiana regulators voiced their opinion on the subject recently in denying a request made by 10 electric and natural gas utilities to recover lost revenue due to businesses and industry curtailing operations during the pandemic. The commissioners voted unanimously against the request, calling it “beyond unreasonable utility relief.” As utilities track coronavirus-related costs—including cleaning supplies and personal protective equipment, increased business expenses and lost revenue—these questions will continue to come before state regulatory commissions which must decide how much of the burden should be shouldered by customers and how much should be placed on the shoulders of shareholders.
Minnesota is looking to its utilities to help speed up the economic recovery through energy investments and energy-related job creation. In responding to a request from the Minnesota Public Utilities Commission seeking lists of investments to spur job growth and stimulate the economy, Xcel Energy suggested accelerating close to $3 billion in energy investments, estimating its approval would result in 5,000 new jobs and $25 million in savings on customer bills. Policymakers across the nation view the energy sector as a ripe area for boosting economic activity. In fact, the Federal Energy Regulatory Commission (FERC) recently proposed a rule it believes could boost investment in electric transmission projects—long seen as key to meeting ambitious clean energy goals, but also boosting state and local economies. One study found that every $1 billion in transmission investments supports close to 13,000 full-time-equivalent years of employment and $2.4 billion in total economic activity. FERC’s proposal would shift the transmission incentives policy to emphasize economic and reliability benefits over potential risks and challenges and would allow for increased return on equity.
For the first time in over 40 years, the Federal Energy Regulatory Commission (FERC) approved 3-1 significant changes to the regulations implementing the Public Utility Regulatory Policies Act (PURPA). The law, passed in the wake of the Arab Oil Embargo, required electric utilities and states to purchase electricity from qualifying facilities. The changes include reducing the maximum size of qualifying small power production facilities from 20 megawatts to 5 and increasing state flexibility in setting avoided cost rates. The commission also unanimously voted to reject a petition from the New England Ratepayers Association that sought to shift regulatory authority for net metering from states to the federal government. More than 40 states have rules on net metering programs. However, these issues are far from settled as the commission’s order rejected the petition on procedural grounds and did not address the merits of NERA’s claims. In its ruling, the commission determined the petition "does not identify a specific controversy or harm that the commission should address in a declaratory order" leaving the door open for a future petition to be taken up by the commission and receive full review. The commissioners also found themselves on the winning side in a key case at the U.S. Court of Appeals as the court upheld FERC's Order No. 841. The order prevents states from barring electric storage resources on their distribution and retail systems from participating in federal markets. The court ruled that FERC was working within its authority under the Federal Power Act though the ruling did not preempt states from challenging specific actions that affected them. The ruling will allow states to force energy storage resources to decide which market to participate in, as well as impose safety and reliability requirements. Finally, the commission approved a proposal by the New England Independent System Operator (ISO-NE) to pay participating resources for having up to three days of "inventoried energy" onsite during certain weather conditions, noting that the proposal was a "reasonable short-term solution to compensating, in a technology-neutral manner, resources that provide fuel security."
On June 30, the District of Columbia Circuit Court of Appeals, ruled that FERC acted unconstitutionally in its issuance of tolling orders— a practice that delays issuance of a final ruling—in response to requests from landowners who faced the prospect of eminent domain usage against their property by pipeline developers. On July 6, the U.S. District Court for the District of Columbia, ruled the Army Corps of Engineers should have completed an environmental impact review when approving the Dakota Access Pipeline. The pipeline must be emptied and shut down while the Corps completes the review. Although the U.S. Supreme Court provided a bit of relief on July 6, when it temporarily undid a freeze on a nationwide pipeline permit program that had previously been put into effect by the District Court of Montana, the high court’s ruling left in place the freeze on Keystone XL pipeline’s permit, forcing a stop to construction. Finally, all of these rulings came in the same week the developers of the Atlantic Coast Pipeline, a natural gas pipeline from West Virginia to North Carolina, canceled the project after years of legal challenges while Energy Secretary Dan Brouillette signed a secretarial order approving natural gas exports from Oregon's Jordan Cove project, which would be the first to ship LNG from the U.S. West Coast. DOE’s approval of Jordan Cove exports comes amid continued legal challenges for the facility as conservation groups have challenged FERC’s approval of the project and Oregon has not yet approved key permits needed for construction to start.
President Donald Trump recently announced a final rule drastically scaling back National Environmental Policy Act (NEPA) review requirements for certain projects. Specifically, the new rule reduces the number of projects that receive NEPA review and limits the types of project impacts considered “significant” to trigger the review process. Additionally, under the new rule, not all federally funded projects would require NEPA review, instead, those projects with minimal federal funding or involvement would be exempt from review requirements. The new rule would also require comments filed in NEPA review processes to identify negative employment and economic impacts along with environmental impacts of a potential project. The gas and coal industries applauded the changes for speeding up the approval and permitting processes. Wind development also stands to benefit from this streamlined permitting process.
Who, exactly, is considered a “foreign adversary”? This was one of the questions stemming from President Donald Trump’s executive order to restrict the installation of potentially compromised equipment on the U.S. electric grid. The concern is that foreign-sourced equipment could be compromised with hidden vulnerabilities that could be used to threaten the grid. In early July, DOE issued a list of six foreign adversaries under the order: China, Cuba, Iran, North Korea, Russia and Venezuela. However, the rule primarily applies to China due to its manufacturing dominance. DOE has sought information to develop the policy and about which equipment will be under the greatest restrictions. Additionally, the North American Electric Reliability Corp. issued an industry alert on supply chain threats and suggested that utilities adopt a supply chain risk management program. FERC is also seeking input on market incentives that could help utilities incorporate greater cyber-protections and the U.S. Department of Homeland Security unveiled a five-year strategy for countering and staying ahead of the rapidly evolving threats to the U.S. electric grid and energy systems.
Join NCSL’s Fall Energy, Environment & Transportation webinar series, taking place August through October.
The webinar series will include a session on workforce development in the energy sector and explore the biggest challenges and opportunities facing the sector, highlighting how the coronavirus pandemic is shifting the energy jobs landscape and how policymakers can support and train skilled workers to fill these vital positions. Register today on NCSL’s webinar webpage.
Columbia University’s Sabin Center has developed a website of resources related to decarbonization. The website includes information and examples of state legislation related to reducing greenhouse gas emissions, energy efficiency, electric vehicles, carbon capture, sequestration, and much more.