Environmental Update April 2021
Deadlines for federal and state governments to limit methane emissions from municipal landfills are back in place after a US appeals court rejected a Trump-era US Environmental Protection Agency effort to delay the deadlines on April 5.
The Obama EPA issued a rule strengthening methane standards for both new and existing landfills in 2016. States had to submit plans by August 2019. The federal government would impose a plan on any state that failed to come up with its own plan.
After Trump took office, the EPA said it would delay imposition by two years or more of federal plans in states that do not act on their own.
EPA concluded in 2020 that 42 states failed to submit landfill methane reductions plans.
A federal plan is now expected from EPA in May. States that do not have their own plans in place will probably have to adopt that plan.
The same US appeals court also set aside a new rule issued in the waning days of the Trump administration that would have prevented the agency from regulating greenhouse gas emissions from stationary sources other than power plants.
The court said EPA failed to follow a normal notice-and-comment process before issuing the rule.
The vacated rule said EPA could not regulate greenhouse gas emissions for any category of stationary sources whose emissions are less than 3% of total US emissions. While that threshold would have allowed EPA to regulate power plant emissions, it basically prohibited it from regulating greenhouse gas emissions from the oil and gas industry, manufacturers of steel, iron, chemicals and cement, and other industries.
State GHG regulation
The Biden administration is moving to reverse the Trump-era effort to override state vehicle greenhouse gas programs that are more stringent than federal law.
The National Highway Traffic Safety Administration, or "NHTSA," sent a proposal to reverse course to the White House Office of Management and Budget on March 24. OMB generally takes about 90 days to review such proposals, but this one could be put on a fast track.
The Trump administration argued that federal law on vehicle emissions and fuel economy preempts any state regulations absent "compelling and extraordinary conditions" justifying separate state rules.
The Trump EPA withdrew a long-standing waiver granted to California under the Clean Air Act to regulate vehicle emissions. Meanwhile, NHTSA asserted that state regulation is preempted by a prohibition against separate state programs "related to" fuel economy.
Since the Trump attacks against state vehicle greenhouse gas programs were the product of rulemakings by both EPA and NHTSA, both agencies will probably have to take action before states can proceed. EPA will probably have to re-grant permission for individual states to act.
State regulators will be watching what legal basis the Biden administration uses to decide the issue. For example, will it decide narrowly that NHTSA lacked authority to issue its rule blocking state programs or will it affirm states' rights more broadly by suggesting such state programs do not conflict with federal law? In other words, it remains to be seen whether the Biden administration will try to take the preemption issue off the table temporarily or permanently by affirming the right of California and other states under Clean Air Act section 177 to implement programs more stringent than the federal government standards.
The Trump rollback of federal standards and the gutting of stricter state standards through preemption claims are being litigated in court.
A coalition of states led by California, environmental groups and some industry stakeholders are in one court with an assertion that some state regulations that are more stringent than required under federal law are specifically authorized by the Clean Air Act.
The Biden Department of Justice asked the US appeals court that has the case to suspend work on it while the federal government reassesses its position. The court granted the request on April 2.
The case is Competitive Enterprise Institute v. National Highway Traffic Safety Administration.
The new EPA Administrator, Michael Regan, has pledged "aggressive" vehicle regulations that are expected to encourage widespread electrification of the US vehicle fleet. The new infrastructure plan that Biden unveiled in late March includes numerous incentives to spur deployment of zero-emissions vehicles.
The US Securities and Exchange Commission is moving forward with an array of initiatives related to climate and other environmental, social and governance matters.
The new rules are expected to require public companies to disclose risks related to climate change and other environmental, social and governance issues.
The SEC in March asked for input from business leaders and investors on what the SEC should require. The SEC has also formed a task force focused on ESG issues and climate-related disclosures and hired the commission's first senior policy adviser for climate and ESG.
Acting SEC Chair Allison Herren Lee, who was appointed as a commissioner by President Trump in 2019, announced that the SEC would take a closer look at its climate-related disclosure requirements and said the commission should also require new disclosures of political spending. Lee said, "Investors are demanding more and better information on climate and ESG, and that demand is not being met by the current voluntary framework." She added, "Not all companies do or will disclose without a mandatory framework . . . ."
Gary Gensler, President Biden's nominee to lead the SEC, has signaled support for climate and other disclosure requirements. His nomination is set for Senate debate in mid-April.
Senator Pat Toomey (R-PA), the senior Republican on the Senate Banking Committee, asked in a March 24 letter to the SEC for a briefing on its plans for a new task force and enforcement priorities regarding climate-related financial risks. The banking committee oversees the SEC.
Toomey wrote, "These announcements appear to presage major changes in longstanding practices on disclosure and enforcement matters at the SEC. Such changes would be premature." He urged the SEC not to "use enforcement actions as a backdoor for imposing new regulations on ESG and climate change issues."
Bitcoin mining requires more electricity annually than is used by the entire nation of Argentina.
A recent analysis by Cambridge University researchers suggests that Bitcoin consumes around 121.36 terawatt-hours (TWh) per year of power.
As a virtual cryptocurrency, Bitcoin is run by a massive peer-to-peer computer network that uses a ledger system called blockchain to keep track of Bitcoin accounting and to keep the network safe. Blockchain records all transactions, and everyone in the network gets a copy. Each copy is linked to other copies. Anyone with a high-powered, purpose-built computer can become a part of the network and perform "mining" operations that can yield new Bitcoin to miners, but that also require significant energy use.
In order to "mine" Bitcoin, computers are connected to the cryptocurrency network to verify transactions made by people who send or receive Bitcoin and to prevent fraudulent edits to the global record of those transactions. The "mining" of cryptocurrencies uses complicated computer calculations to verify transactions and solve increasingly difficult math problems, or puzzles, to keep the blockchain secure and functioning. Miners occasionally receive small amounts of Bitcoin in a sort of lottery, thus making the venture profitable if the price is high enough.
To increase profits, more and more miners connect more and more power-hungry computers to the network that are constantly at work. To avoid overheating, the machines that are performing these complex puzzles must be powered to do the work and must be kept cool, which draws significant power.
As the price of Bitcoin has increased, so has the energy consumption as more miners deploy. According to Michel Rauchs, the researcher at the Cambridge Centre for Alternative Finance who co-created an online tool to estimate Bitcoin-related electricity consumption, the annual consumption has surpassed Argentina (121 TWh) and could soon exceed the electricity load in Norway (122.20 TWh). If Bitcoin itself were a country, it would be in the top 30 in terms of electricity consumption.
All of this electricity demand has implications for greenhouse gas emissions. Unless new renewable energy capacity additions keep pace, the electricity will come partly from dirty sources. Governments have not endorsed cryptocurrencies and regulatory risks remain not only from its use to shield currency exchanges from regulators, but also from possible emissions regulation, such as through a carbon tax.
This is also a potential opportunity for renewable energy companies that want to supply power. However, the challenge will be finding creditworthy offtakers so that projects with such offtake contracts can be financed.
New York renewables
New York is moving to make siting and permitting of new renewable energy projects in the state easier.
The state Office of Renewable Energy Siting issued final regulations on March 3 to implement the "Accelerated Renewable Energy Growth and Community Benefit Act" the state legislature passed last year to streamline the state's cumbersome "article 10 process" for siting renewable energy projects. The new statute created a new state agency called ORES for short dedicated exclusively to the siting of renewable energy projects.
The final regulations should improve the siting process for renewable projects that are 25 megawatts and larger.
New York law now requires the state to generate at least 70% of its electricity from renewable sources by 2030.
The article 10 siting process has been overly complex and burdensome. ORES was ordered to establish a uniform set of standards and conditions for the siting, design, construction and operation of each type of major renewable energy facility. The new regulations are an attempt to do that.
Applicants for permits must now do five things as part of the pre-application process.
First, an applicant must meet with the chief executive officer of the municipality within which the project will be sited, along with any local agencies identified by the CEO, at least 60 days before filing the application. The applicant must share certain information with the municipality, including a summary of local laws that apply to the project and the plans for complying with them. In a change from the draft regulations, the final version clarifies that applicants must include summaries of substantive provisions of local laws on decommissioning, as well as on construction, operation and maintenance.
Second, the applicant must also meet with community members that may be adversely affected by the project at least 60 days before the application is filed. The applicant must provide copies of transcripts, presentation materials and a must of questions asked during the meeting.
Third, the applicant must submit a wetlands study for ORES review identifying any wetlands on the project site and within 100 feet of areas to be disturbed by construction.
Fourth, it must also identify all federal, state and local waters present on site and within 100 feet of areas to be disturbed by construction, as well as 100 feet beyond the limit of disturbance that may be hydrologically or ecologically influenced by site development.
Finally, the applicant must submit a report on any species listed as threatened, endangered, or of special concern to ORES that will be affected by the project. The report must document species and suitable habitat for protected species at the project site and within five miles of it. ORES is supposed to identify any mitigation measures it will require within 30 days after receiving the report.
The regulations also establish uniform setback requirements for wind turbines and solar arrays from residences, property lines and centerlines of public roads.
The new regulations also establish clearer regulatory requirements to minimize project impacts, including to viewsheds, wetlands and aquatic resources, protected species and cultural resources and from noise.
The article 10 process allowed various state agencies to impose requirements on applicants that were sometimes in conflict and were not nearly as clear as the new single set of rules. ORES was created to function as the regulatory nucleus in the siting of large-scale renewables, avoiding multiple regulatory masters each with potentially divergent demands.
ORES must make a "completeness determination" within 60 days after receiving a complete application. ORES must then issue a permit within another year. Permits must be issued within six months for projects proposed for a "repurposed site." A repurposed site is an existing or abandoned commercial or industrial use property, such as brownfields, landfills, dormant electric generating facilities or other previously disturbed locations.
The new rules aimed at reducing effects on threatened and endangered species are more stringent than those that applied previously.
Applicants must now identify any migratory bird and bat routes over the project site and adjust the scope of disturbance or construction schedule in certain circumstances. The mitigation-requirement calculations have changed in certain situations.
For example, if an active nest of a bird species considered threatened or endangered under New York law is discovered on a project site, the applicant will have to engage further with ORES. To the extent an applicant proposes a bird habitat conservation plan in lieu of paying a mitigation fee, the regulations establish the basis for the required mitigation.
Public review and comment are still required, as are adjudicatory hearings when substantive issues are identified.
With respect to geological studies of a project site, the applicant must now provide results of borings or test pits and representative mapped soil and bedrock formations. Wind developers must also provide a final geotechnical engineering report that includes results of boring or test pits at each turbine location.
Finally, projects currently in the article 10 process may seek a transfer to the new ORES process.