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Washington Post on Electric Vehicles: Coal Generates Electricity

Last week the Washington Post exposed electric cars’ dirty secret: they use electricity! The piece makes the astute point an electric vehicle (EV) is only as clean as the electricity that is used to power it. It is true that in many parts of the world that still heavily rely on coal, such as China, the climate benefit from an EV charging from the grid may be slim or even slightly negative. While it is important to remember that EVs do have a climate impact, EVs offer other advantages over gasoline-powered cars that need to be part of the discussion when evaluating the technology:

1)    EVs shift pollution from many mobile sources to a manageable number of point sources. It is much easier to regulate a handful of coal power plants than it is to regulate a million cars. You don’t have to worry about implementing vehicle emissions tests or removing older, heavier-polluting vehicles from the road. Instead, you can require these specific point sources to employ the best pollution control technology available and easily confirm that the plants are in fact using that technology. In the U.S., for example, stricter pollution regulations and competition from other sources of electricity has encouraged the rapid demise of coal-fired power plants.

2)    EVs shift pollution from population centers to less-populated areas. In addition to carbon dioxide, cars emit other pollutants that are harmful to human health. When most people walk outside their front door, they do not see a coal-fired power plant. Almost everyone sees cars. Moving pollution outside of city centers can improve air quality and bring corresponding health benefits to city residents. The Chinese government apparently recognized the benefits of reducing pollution from cars in 2008 when it banned diesel trucks from driving in Beijing and required city residents to alternate their driving days during the Olympics.

3)    EVs can be integrated into the smart grid to store electricity when it is cheap and sell it back to the grid when it is expensive. As Tesla understands, EVs are really made up of two new useful technologies: (1) an electric motor and (2) a battery. The EV battery can be charged at times when electricity is typically cheaper to produce (i.e., at night). During the hottest days of the year, when electricity demand is at its highest, EV owners could sell some of the electricity stored in the EV battery back to the grid. This could help reduce the need to build additional power plants to meet those high demand periods and reduce the cost of electricity for all customers.

4)    Electric grids are getting cleaner in most parts of the world. The electric vehicle industry is still a fledgling industry. EVs are not likely to substantially reduce global greenhouse gas emissions in the next ten years. However, as electric grids across the world are transformed into cleaner, smarter systems, EVs could play a key role in reducing both greenhouse gas emissions and conventional pollution around the world.

As the Post piece suggests, it may be the case that in some parts of the world, EVs do not currently make sense as a climate solution.  It is difficult to accept, however, that widespread EV adoption would make climate change a more difficult problem.   


SolarCity’s Antitrust Case Survives Motion to Dismiss

When the Salt River Project utility in Arizona decided to impose new charges for its customers with rooftop solar installations in February, it opened another front in the solar war being waged across the country. Normally, these fights play out before state administrative agencies tasked with setting utilities’ rates and rules. Solar supporters argue that the fees discourage cost-beneficial investments into rooftop solar, while utilities argue that rooftop solar customers still rely on the grid and are not paying their fair share of the costs to support that grid.

Unlike most utilities, however, Salt River’s rates are not set by the state authority charged with setting electric rates, which in Arizona is the Arizona Corporation Commission (ACC). Under Arizona law, Salt River is a political subdivision of the state that is allowed to set its own rates for retail electric service. As many rooftop solar supporters see it, Salt River has a natural monopoly over retail electric service, has no regulatory oversight, and is abusing its market power to crush its distributed solar competition.

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Count ME In

Count Maine “in” as one of the 18 states filing a motion to intervene to defend the federal Environmental Protection Agency’s (“EPA” or “Agency”) Clean Power Plan (“Rule”). A coalition including 24 states wasted little time filing suit against the much-anticipated final Rule after it was posted in the Federal Register on October 23. The coalition alleges that the Rule is an overreach of the authority delegated to the Agency by Congress and more specifically, Section 111(d) of the Clean Air Act cannot be used to regulate greenhouse gases. The petitioners are asking the court to stay the Rule while the suit is pending and ultimately, invalidate it as ultra vires.

In Maine, the final Rule will require the State to reduce its greenhouse gas emissions by 10.8 percent by 2030 from 2012 levels, a reduction from the 14 percent target set forth in the initial draft. This reduction should not be difficult for the State to achieve given that its fleet of power plants infrequently burns coal, the State is already a member of the Regional Greenhouse Gas Initiative (“RGGI”), and it possesses access to an abundance of clean energy sources such as wind, solar, and tidal power.

Stay tuned to this suit which is undoubtedly destined for certiorari.


Coalition opposing the rule: West Virginia, Texas, Alabama, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Missouri, Montana, Nebraska, Ohio, South Carolina, South Dakota, Utah, Wisconsin, Wyoming, and the Commonwealth of Kentucky, the Arizona Corporation Commission, the State of Louisiana Department of Environmental Quality, the State of North Carolina Department of Environmental Quality, and Attorney General Bill Schuette on behalf of the People of Michigan.

Coalition supporting the rule: New York, California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Mexico, Oregon, Rhode Island, Vermont, Virginia, Washington, the District of Columbia, the City of New York, Philadelphia, Chicago, Boulder, South Miami and Broward County (FL).


PUC Regulation: Headed in the Right Direction?


Maine’s High Court Upholds Bangor Gas Rate Plan Ruling

By Katie Gray and Nora Healy

In an opinion issued this August, the Law Court upheld a Maine Public Utilities Commission order approving a new rate plan for Bangor Gas Company, LLC. 

A principal issue before the Law Court was whether Bangor Gas should be entitled to recover in its natural gas delivery rates the unimpaired, “original cost” of Bangor Gas’s assets, or the impaired “acquisition cost” of those assets.  In December 2006, Energy West, Inc. offered to purchase Bangor Gas from Sempra Energy, LLC in December 2006 for approximately $500,000, and it later purchased Bangor Gas for that amount. Bangor Gas considered the $500,000 purchase price to represent the fair value of its assets, and therefore wrote down the book value of its assets to zero for accounting purposes. This resulted in an impairment loss of approximately $38 million. 

The Office of Public Advocate and Bucksport Mill, LLC appealed the PUC’s order. OPA and Bucksport Mill argued that Bangor Gas’s ratepayers should be responsible for paying only the impaired cost of Bangor Gas’s assets—$500,000, and not the $38 million that was written down for accounting purposes.

Applying its usual administrative deference, the Law Court agreed with the Commission that the impaired book value “would not accurately reflect the current use of the utility’s assets.” The justices found that the PUC’s ratemaking statute “plainly does not mandate one valuation methodology over another,” and gives the Commission broad discretion in setting a reasonable value for utility assets for ratemaking purposes. 

The second issue on appeal was whether the Commission erred in permitting Bangor Gas to recover 50% of its regulatory proceeding expenses in rates.  The Law Court did not reach the merits of this question because, it determined, the issue did not affect the PUC’s decision to adopt Bangor Gas’s rate plan.

The decision, Office of the Public Advocate et al. v. Public Utilities Commission et al., 2015 ME 113, — A.3d —may be found here.


EPA and States Locked in Funhouse Litigation over WOTUS Rule

Eighteen states that are suing the EPA and the Army Corps of Engineers to block the regulation attempting to identify jurisdictional waters of the United States under the Clean Water Act have filed a motion for a preliminary injunction with the U.S. Court of Appeals for the Sixth Circuit. At the same time, the 18 states filed a motion to dismiss the litigation, arguing that the Sixth Circuit does not have original jurisdiction over the challenges to the WOTUS rule and that the challenges should be heard at the district court level.  

The motions before the Sixth Circuit follow a preliminary injunction issued on August 28 by the U.S. District Court for North Dakota. The scope of that injunction was clarified in a September 4 order from the district court as applying only in the 13 states that are plaintiffs in that litigation. The district court did not impose its preliminay injunction nationwide, as urged by the plaintiffs, primarily out of deference to other federal courts, in particular the Sixth Circuit, where many, but not all, of the challenges to the WOTUS rule have been consolidated by the U.S. Judicial Panel on Multidistrict Litigation.

Meanwhile, today the EPA renewed its request to the North Dakota District Court to stay its preliminary injunction (i.e. stay the stay) until the Sixth Circuit rules on whether to consolidate all of the challenges to the WOTUS rule. A hearing on the issue is scheduled to be held by the Sixth Circuit on October 1.

Many have remarked at the irony of this procedural morass of litigation and patchwork regulatory framework resulting from the government’s attempt to enact a rule that would bring clarity to Clean Water Act jurisdiction.

What appears to be lost in all of the hyperbole is that the WOTUS rule is not really that big of a change from the status quo. In many ways, the rule is an attempt to codify existing criteria that the EPA and Army Corps have been applying for some time on a case-by-case basis. The current barrage of litigation, mostly pitting lawyers for state attorneys general against lawyers for the federal government (with lawyers for a few issue-oriented NGOs thrown in), appears to be more about states’ rights activism than about clean water.         



EPA WOTUS Rule Takes Effect in Most States - Or Does It?

The rule enacted by the EPA and the Army Corps of Engineers intended to clarify the scope of jurisdictional waters of the United States (often referred to as the WOTUS Rule or Clean Water Rule) was set to take effect on August 28. One day prior to that, a judge in the U.S. District Court for North Dakota issued a preliminary injunction in North Dakota v. EPA, No. 3:15-cv-59, prohibiting application of the rule based on the court’s view that the rule likely exceeded the agencies’ statutory authority and suffered from procedural defects. 

Now the same federal judge, Ralph Erickson, must determine whether the injunction he issued applies nationwide, thereby completely barring application of the WOTUS rule even though the rule’s validity is the subject of litigation pending before several other federal courts. (Not only that, but it is not clear whether Judge Erickson’s district court had jurisdiction to hear the case. Two district courts have held that the Clean Water Act requires that a challenge to the WOTUS rule be heard solely by one of the U.S. Courts of Appeals and the U.S. Judicial Panel on Multidistrict Litigation has consolidated challenges to the rule before the Sixth Circuit.)  

The EPA and the Army Corps argue that the preliminary injunction should apply only in the thirteen states that were plaintiffs before Judge Erickson. The plaintiff states argue that the injunction should apply nationwide. The parties have submitted briefs on the proper scope of the injunction and are awaiting Judge Erickson’s ruling.

The case has highlighted an interesting jurisdictional question arising from the fact that there is no set rule governing what happens when a federal district court invalidates a federal agency regulation. Does the court’s holding apply only within the geographic boundaries where the district court has jurisdiction? Does it apply to the jurisdictions where the succesful plaintiffs are located? Does the holding apply to the rule itself, invalidating the agency action irrespective of geographical factors (i.e. nationwide)?

The answer is that it could be any of the above, depending on two factors: what the court believes is required to provide adequate relief to the prevailing parties and what is required to abide by the somewhat nebulous concept of comity between federal courts. When an “injunction has the effect of precluding other circuits from ruling” on the validity of a federal regulation, “such a result conflicts with the principle that a federal court of appeals’s decision is only binding within its circuit.” Virginia Soc’y for Human Life, Inc. v. Fed. Election Comm’n, 263 F.3d 379, 393 (4th Cir. 2001).    

Although the Eighth Circuit (in which North Dakota is located) has little or no helpful case law on the issue, the fact that identical litigation is pending before both district and circuit courts in multiple jurisdictions should weigh heavily in favor of Judge Erickson ruling that his preliminary injunction does not apply nationwide.

In the meantime, the only thing guaranteed to apply nationwide will be regulatory confusion.