Within the past month, two federal district courts—one in Colorado and one in Minnesota—have issued important decisions on the constitutionality of state clean energy policies. Both cases raised the same legal issue, namely, whether the state laws in question regulate extraterritorially in violation of the dormant Commerce Clause of the U.S. Constitution. But the courts reached different results in each case and, more importantly, the Minnesota and Colorado policies reviewed by each court were quite different from each other even though both involved efforts to promote clean energy within the state. Some of the recent commentary on the two cases has downplayed the significant differences between the two state policies in question, leading to confusion about the implications of the courts’ rulings.Full text
This entire week, the coal industry and electric utilities have been decrying the EPA’s proposed rule, released today, limiting CO2 emissions from new coal-fired power plants. Experts predict the proposed rule will place limits on coal-fired power plants that will make them impossible to operate in the absence of carbon capture and sequestration (CCS) technology, which will significantly increase the cost of running existing plants and building new plants. These costs, as well as today’s low natural gas prices (and low wind prices in some areas), will transform coal from the low cost option for electricity generation in many parts of the country to a higher cost option. In the press, the coal industry and utilities contend that CCS technology is little more than a pipe dream. They argue that the rules will violate the Clean Air Act because CCS is not a commercially feasible technology.
How times change. Several years ago, many in the industry touted carbon capture and sequestration (CCS) as the potential savior for coal. This technology, which had been used on a much smaller scale for years in the oil and gas industry, would capture, compress, transport, and store underground for thousands of years millions of tons of CO2 emitted from coal-fired power plants and other industrial facilities. CCS had strong support in the Bush Administration and the Obama Administration, from coal-friendly members of Congress, and from industry itself.
Why was there so much support for CCS among so many diverse interests groups at that time? Back around 2006-2008, Congressional limits on GHG emission appeared imminent. In 2009, the House passed the Waxman-Markey Bill, which contained the first federal limits on GHG emissions and Senate passage of a similar bill seemed likely. There were numerous provisions in the Waxman-Markey Bill related to CCS, including free emissions allowances for coal-fired power plants that implemented the technology and tens of billions of dollars in funding for demonstration projects, research, and implementation. In other words, CCS was the silver bullet that would save the coal industry and investments in coal-fired power plants around the country.
Industry response to this predicted new regulatory scheme was promising. As only one example, American Electric Power (AEP) initiated a joint project with government and other partners for a CCS demonstration project at its Mountaineer coal-fired power plant in West Virginia, spending millions of dollars for the pilot project and committing many millions more for a larger demonstration project. The pilot project successfully operated in 2009-2010 and the U.S. government and other parties offered significant funding for the demonstration project to begin in 2011.
Often lost in today’s debates over whether to continue tax benefits for renewable energy is a historical perspective on the significant support the federal government has provided and continues to provide the fossil fuel industry. Tax benefits for the energy industry as a whole totaled over $20 billion in 2011, which is, and historically has been, about 2% of total U.S. tax expenditures. In general, the United States has used tax benefits to first support development of domestic fossil fuel and nuclear production for nearly a century and, more recently, to support the development of domestic renewable energy. Until 2005, virtually all energy-related tax expenditures and benefits went toward stimulating domestic oil and gas production with the amount claimed by renewable energy almost negligible.
In recent years, tax benefits for renewable energy have surpassed that of fossil fuel production. For instance, in 2011, the breakdown of tax expenditures and other tax-related benefits within the energy sector was as follows: 68% to renewable energy (including ethanol and biodiesel), 15% to fossil fuels, 10% to energy efficiency programs, 4% to nuclear energy, and 2% to other. These numbers can be misleading, however, because they do not take into account the decades of continued tax benefits the federal government provided to the fossil fuel sector, which helped those industries become the dominant economic and political forces they are today. For instance, one study shows that over the period of years the federal government has supported the oil and gas industry, the average annual subsidy for that industry sector was nearly $5 billion; for nuclear, the average annual subsidy was $3.5 billion; for biofuels, the average annual subsidy was just over $1 million; and for other renewables, the average annual subsidy was $0.37 billion.Full text
President Obama's focus in his second inaugural address on the need to address climate change was welcome after many months of near silence on this critical issue. While tackling climate change will require significant efforts limiting emissions from power plants, automobiles, and other sources, the President has recognized in the past that improving energy efficiency in general, and setting stricter energy efficiency standards for appliances specifically, can have a major impact on reducing both U.S. greenhouse gas emissions and consumer energy costs. Indeed, according to one recent study:
taking into account products sold from the inception of each national appliance standard through 2035, existing standards will net consumers and businesses more than $1.1 trillion in savings cumulatively. … On an annual basis, products meeting existing standards reduced U.S. electricity use in 2010 by about 280 terawatt-hours (TWh), a 7% reduction. The electricity savings will grow to about 680 TWh in 2025 and 720 TWh in 2035, reducing U.S. electricity consumption by about 14% in each of those years.
Until 2009, with the rise of the Tea Party, energy efficiency had been one of the few bipartisan issues surrounding energy policy, with both Republic and Democratic Congresses and Presidents recognizing that new standards benefit a range of interests, including business groups, consumers and the environment. Moreover, appliance manufacturers and interest groups often favor new standards, which can lead to economies of scale, cost savings, and more predictability for the future development of products. Because of Congressional actions mandating stricter efficiency standards for a range of products, current legislation does not stand as a major barrier to improving appliance efficiency standards. Instead, the problem more often lies within Department of Energy and reviewing agencies such as the Office of Management and Budget. The lengthy and expensive process of setting efficiency standards, and then OMB review of those standards, has consistently resulted in significant delays and less-than-optimal standards, despite Congressional mandates and deadlines. Indeed, a report published last week by the Appliance Standards Awareness Project and American Council for an Energy-Efficient Economy concludes that “[d]elays in updating energy efficiency standards for certain appliances and devices could cost consumers and businesses $3.7 billion in lost savings -- and lead to an extra 40 million metric tons of excess carbon dioxide emissions.” The report found that “[d]uring the first two years of the Obama administration, DOE and OMB worked well to complete new standards on time. But over the past two years, OMB’s reviews have become lengthy—as long as 16 months in one case—and DOE has fallen behind.”Full text
In a CPRBlog post in May 2011, I discussed the lawsuits filed on behalf of children against all 50 states and several federal agencies alleging that these governmental entities have violated the common law public trust doctrine by failing to limit greenhouse gas emissions that contribute to climate change. The suits were filed by Our Children’s Trust, an Oregon-based nonprofit. The claims sought judicial declaration that states have a fiduciary duty to future generations with regard to an “atmospheric trust” and that states and the federal government must take immediate action to protect and preserve that trust. At the time, I opined that although these claims were novel and would likely have little, if any, immediate effect on state climate policy, they relied on what has proved to be a flexible and powerful common law doctrine in at least some states. As a result, I concluded there was likely to be significant variation in results between the states on creating opportunities for a new forum for consideration of climate change harms and potential legal responses. Now, just over a year later, some lower courts have issued decisions in the cases and, as expected, the results vary widely from state to state.
The public trust doctrine is a concept dating back to Roman law which holds that there are certain natural resources that are forever subject to government ownership and must be held in trust for the use and benefit of the public. In the United States, plaintiffs have used the public trust doctrine successfully to prevent states and other governmental entities from conveying public trust resources such as submerged lands or municipal harbors into private ownership, to create public beach access, and to otherwise ensure public access to water-based resources. Until the 1970s, however, the doctrine had little to do with environmental protection and instead was used almost exclusively to prevent the privatization of water-based resources or to preserve public access to fishing, boating, or commerce. Since that time, however, with the help of an influential law review article by Professor Joseph Sax, some states, like California, Louisiana, and Hawaii, have applied the common law doctrine to protect rivers, lakes, and other water-based resources as well as land-based resources such as birds and other wildlife. As I have discussed in my scholarly work on the public trust doctrine, other states have bolstered their common law public trust doctrine by relying on state constitutional provisions and state statutes mandating governmental protection of environmental resources. In this way, these states use the common law, state constitutions, and state statutes together to protect what I call generally “public trust principles.” Despite these developments, however, there are still states that have a much more limited version of the common law public trust doctrine, with courts in those states limiting the doctrine’s reach to ensuring continuing public ownership of water-based resources rather than using it for environmental protection purposes.Full text
Last month, the Nevada Supreme Court held in Lawrence v. Clark County that the public trust doctrine limited the ability of the state to freely alienate certain lands that, though dry at the time of the decision, were submerged under navigable waters at the time of statehood. The case is significant for at least two reasons. First, the court made clear that the public trust doctrine in Nevada places inherent limitations on state power and cannot be easily abrogated by state legislation, thus protecting state resources for present and future generations from the politics of the day. Second, the court clearly grounded its protection for such resources in what I have referred to in earlier scholarship as “ public trust principles.” These public trust principles derive not solely from the common law doctrine but are based on a combination of common law, state constitutional provisions, and statutory provisions that can work in tandem to protect and preserve public trust resources for present and future generations. While courts often rely solely on the common law, state constitutional provisions, or state statutes to protect public trust resources, Nevada joins a small but growing group of state courts that have expressly based public trust decisions on the combination of these authorities and have recognized how they are interrelated.
As background, as I discussed in an earlier post, the public trust doctrine is a concept dating back to Roman Law which holds that there are certain natural resources that are forever subject to state ownership and must be held in trust for the use and benefit of the public. Until the 1970s, the doctrine had little to do with environmental protection and instead was used almost exclusively to prevent the privatization of water-based resources to preserve public access to fishing, boating, and commerce. The doctrine first became a force in environmental law in the early 1970s, and some states, like California, have since applied the doctrine to protect rivers, lakes, and other water-based resources as well as land-based resources such as birds and other wildlife. Other states, however, have a much more limited version of the doctrine, with courts limiting its application to navigable waters and submerged lands under those waters to the extent they invoke the doctrine at all.Full text
On Wednesday, Our Children's Trust, an Oregon-based nonprofit, made headlines when it began filing lawsuits on behalf of children against all 50 states and several federal agencies alleging that these governmental entities have violated the common law public trust doctrine by failing to limit greenhouse gas emissions that contribute to climate change. The claims seek judicial declaration that states have a fiduciary duty to future generations with regard to an “atmospheric trust” and that states and the federal government must take immediate action to protect and preserve that trust. Although these claims certainly are novel and may have limited or no success in many states because of lack of precedent, they rely on what has proved to be a flexible and powerful common law doctrine in some states that has pushed the legal envelope in the name of environmental protection in the past. As a result, these cases bear watching both as to their legal effect as well as the possibility that they will galvanize a broader base of grassroots support for action on climate change.
The public trust doctrine is a concept dating back to Roman Law which holds that there are certain natural resources that are forever subject to government ownership and must be held in trust for the use and benefit of the public. In the United States, plaintiffs have used the public trust doctrine successfully to prevent states and other governmental entities from conveying public trust resources such as submerged lands or municipal harbors into private ownership, to create public beach access, and to otherwise ensure public access to water-based resources. Until the 1970s, however, the doctrine had little to do with environmental protection and instead was used almost exclusively to prevent the privatization of water-based resources or to preserve public access to fishing, boating, or commerce.Full text
The report of the President’s Gulf Oil Spill Commission answered some questions and raised others. But one thing still puzzles: Why didn’t the Gulf Oil Spill start a national conversation about our dependence on oil development and the need for renewable energy?
At first, it appeared it might, but the focus quickly turned to reforming the regulatory agency with oversight for the spill and fixing the technical failures that caused the well blowout in the first place. Both were important areas of inquiry, but the focus on oversight failures and technological quick fixes allowed us to avoid more fundamental questions that had to do with our failure to make the investments necessary to create a future grounded in renewable energy.
We know from history that a larger policy conversation might well have been triggered. In the mid-1970s, Love Canal triggered such a national reexamination, and indeed the name remains a household term today, emblematic of a transformative moment in environmental law and in the nation’s attitude toward chemicals and waste.
So think about the scale of Love Canal versus the scale of the BP oil spill. Love Canal involved 36 square blocks, 21,000 tons of toxic waste, and a few hundred homes. It’s not clear whether any deaths were specifically caused by the toxic waste, although it’s certainly likely that some illnesses or deaths were, and that similar waste dumping elsewhere took lives.Full text
A federal task force of the EPA and a host of federal agencies are currently working on a proposal, due to President Obama by June, on carbon capture and sequestration (CCS) policy; they’re now holding a series of public meetings (for background on CCS generally, see the CPR Perspective I wrote examining some of the arguments for and against). I had a chance recently to discuss with members of the task force the key property rights and takings law issues associated with injecting billions of tons of CO2 into the ground. Here are some of the points I made:
In order to store the billions of tons of CO2 a kilometer below the surface over millions of acres (which is what will be required to use CCS as a viable climate change mitigation technology) lawmakers will need to address the extent to which that subsurface pore space is in private ownership and, if so, how to acquire it. The Fifth Amendment provides that private property can only be taken for a public use, and that just compensation must be paid. So the questions are, first, is there a protectable property interest in subsurface pore space that triggers the takings clause in the first place and, if so, will a government action to use, allow someone else to use, or place restrictions on that pore space be a taking of such property that requires just compensation?
With regard to the first question, simply because someone has a property right in surface lands, does that also mean the owner has property rights in subsurface pore space? We know that there are subsurface property rights in oil, gas, and subsurface minerals, but here we are talking about the subsurface pore space that houses those minerals. There is some precedent with regard to ownership of the airspace above and resources below that may provide some guidance. It used to be said that surface owners had ownership rights up to the heavens and down to the center of the earth. Then came the more frequent use of air travel, and federal government regulation of the air space to facilitate air travel. At that point, the Supreme Court held categorically in Causby v. United States and other cases that property owners do not own “up to the heavens” above their property. We generally control only the airspace that we reasonably use in connection with our surface use. We can prevent nuisances, but we can’t prevent occupation of the higher airspace – that is now in the public domain regulated by the federal government.Full text
This post is the third in a series from CPR Member Scholars examining different aspects of the Boxer-Kerry bill on climate change, which was released September 30.
The Boxer-Kerry bill, like the Waxman-Markey bill that passed the House, provides for funding, study, and emissions allowances for Carbon Capture and Sequestration (CCS). In terms of developing a technology in the short-term to significantly reduce CO2 emissions from power plants, this is sound policy. On the other hand, it will be important to ensure that funding, CO2 allowances, and other support for CCS deployment do not shift the focus away from the imperative need to support and develop the necessary transition toward greater energy efficiency and more sustainable energy production.
In both a CPR Perspectives Piece and an earlier CPRBlog entry, I discussed CCS technology and the pros and cons of CCS. The Boxer-Kerry bill (like Waxman-Markey) requires that the Secretaries of EPA and Energy submit a comprehensive report to Congress setting forth a strategy to address the key legal and regulatory barriers to the commercial-scale deployment of CCS and federal, state, or regional legislation that could address those barriers. The bill also creates a task force to study and report to Congress on laws and regulations related to CCS, including those covering liabilities and risk and subsurface property rights as well as insurance and other risk management provisions available. EPA must develop a process to identify, certify, and permit CCS storage sites while safeguarding water and public health. The bill authorizes fossil fuel-based electricity distribution utilities to hold a referendum on the establishment of a Carbon Storage Research Corporation. If approved by entities representing two-thirds of the nation’s fossil fuel-based delivered electricity, the Corporation would be operated as a division or affiliate of the Electric Power Research Institute and would assess fees totaling approximately $1 billion annually for ten years, to be used by the Corporation to fund the large-scale demonstration of CCS technologies in order to accelerate the commercial availability of those technologies. Finally, the bill imposes performance standards related to CO2 on new coal plants.Full text