Tag: Energy Law

The Truth about Clean Energy Jobs

Recently posted in the National Law Review an article by U.S. Department of Energy in response to The Washington Post’s assertions  about the Department of Energy’s loan programs:

The Washington Post’s assertions today about the Department of Energy’s loan programs are both incomplete and inaccurate.

Here are the facts: over the past two years, the Department of Energy’s Loan Program has supported a robust, diverse portfolio of more than 40 projects that are investing in pioneering companies as we work to regain American leadership in the global race for clean energy jobs. These projects include major advances for our renewable power industry including the world’s largest wind farm, several of the world’s largest solar generation facilities, and one of the country’s first commercial-scale cellulosic ethanol plants. Collectively, the projects plan to employ more than 60,000 Americans, create tens of thousands more indirect jobs, provide clean electricity to power three million homes, and save more than 300 million gallons of gasoline a year, all while investing in American competitiveness. What matters to the men and women who have those jobs is that the investments that this Administration is making are helping to keep factories open and running.

When the Washington Post claims that the program has created 3,500 jobs, here is what the reporters are excluding:

  • 33,000 American auto jobs saved at Ford. The Post article does acknowledge that the program enabled Ford to modernize its factories to produce more fuel efficient vehicles, which a Ford spokeswoman credits for “helping retain the 33,000 jobs by ensuring our employees can build the fuel-efficient cars people want to drive.”
  • More than 7,300 construction jobs. Many of the projects funded by the program are wind and solar power plants, which create significant numbers of construction jobs but once built can be operated inexpensively without a large workforce. But the Washington Post chose to ignore all of those jobs. If a community built a new highway or a bridge that employed 200 workers directly during construction – and many more in the supply chain — and that also strengthened the local economy by making it faster to transport goods, would anyone say that the project created zero jobs?
  • Supply chain jobs. While these jobs aren’t reflected in official government estimates because of the difficulty in obtaining a precisely accurate count, that doesn’t mean they don’t exist. When a company spends $100 million or $200 million building a wind farm or a solar power plant, most of that economic value actually goes into the supply chain – creating huge manufacturing opportunities for the United States.

In fact, when you look at the Washington Post’s graphic, you can see that the program has already created or saved roughly 44,000 jobs.  Many of the projects it has funded are just getting going, and many of the loans won’t even go out the door until the next few weeks. Others have not ramped fully up to scale. But we are on pace to achieve more than 60,000 direct jobs – and many more in the supply chain.

Here’s a simple example:

Last year, the Department awarded a loan guarantee to build the Kahuku wind farm in Hawaii. It employed 200 workers during construction. Those wind turbines were built in Cedar Rapids, Iowa. The project also features a state of the art energy storage system supplied by a company in Texas. The supply chain reached 104 U.S. businesses in 21 states. But by the Washington Post’s count, none of those jobs – not even the 200 direct construction jobs – should count.

What’s critically important and completely ignored by the Washington Post, is that the value of this program can’t be measured in operating jobs alone. The investments are helping to build a new clean energy industry here in America. We are now on pace to double renewable energy generation from wind and solar from the time the President took office. Yet we are still in danger of falling behind China and other nations that are competing aggressively for leadership in these technologies. This is a race we can and will win, but only if we make these investments today. These investments will pay dividends not just in today’s jobs but in entire industries and supply chains – and in cleaner air and water for our children and grandchildren.

One of the goals of the program is to create projects that will encourage the private sector to take the financing risk on other, similar projects on its own. If we can show, for example, that a commercial scale cellulosic biofuel plant in Iowa can succeed, the private sector will likely finance many more of them around the country.

America’s economic strength has been built on technological leadership. The next great technological revolution is the clean energy revolution, and this Administration is committed to making sure that America will continue to lead the world.

Department of Energy – © Copyright 2011

What To Expect From a President Perry on the Environment? Some Texas-Sized Clues

Posted on August 19, 2011 in the National Law Review an article by Jim Morris and Evan Bush of Center for Public Integrity regarding  Texas Gov. and Republican presidential candidate Rick Perry’s environmental stance: 

From climate change denial to stances against EPA and Supreme Court, candidate resists feds, aids businesses and helped a billionaire donor

What would President Rick Perry’s environmental agenda look like?

As Texas governor, Republican presidential candidate Rick Perry often relied on Bryan Shaw, chairman of the state’s environmental regulatory agency, second from right. Harry Cabluck / Associated Press

For clues, one need only examine Perry’s record as governor of Texas, where the chairman of the state environmental agency writes vitriolic letters to the U.S. Environmental Protection Agency and questions the science behind climate change.

Bryan Shaw , a 2007 Perry appointee to the Texas Commission on Environmental Quality who became the agency’s chairman in 2009, opined in a guest column in the El Paso Times last month that a new EPA rule designed to reduce cross-state air pollution from coal-fired power plants was in fact “aimed at cutting Texas jobs, cutting Texas economic growth, increasing Texas energy costs, and harming Texas energy security.”

The column closely followed a statement by Perry himself, who called the rule “another example of heavy-handed and misguided action from Washington, D.C.”

Perry’s gubernatorial campaign received more than $5 million in contributions from energy companies and their employees during the 2009-2010 election cycle, according to data compiled by the nonpartisan National Institute on Money in State Politics . Among Perry’s largest contributors during the cycle: Houston oilmen Jeffrey Hildebrand and Gary Petersen , and Valero Energy Corp . Oil and gas companies consistently are among the state’s biggest polluters.

Perry recently told the Christian Broadcast Network that he prays for President Obama every day, asking in particular that “his EPA back down these regulations that are causing businesses to hesitate to spend money.”

Shaw, in June 30 testimony before the a Senate clean air and nuclear safety subcommittee, attacked another EPA rule meant to limit emissions of mercury and other toxic compounds from coal- and oil-fired power plants. Shaw maintained, among other things, that “any health benefits [from the rule] would be insubstantial compared to the cost of regulation” and expressed concern that “the reliability of the Texas electrical power system will be severely compromised.”

And in a testy letter to EPA Administrator Lisa Jackson and Regional Administrator Al Armendariz a year ago, Shaw and Texas Attorney General Greg Abbott said they would defy EPA regulations – stemming from a 2006  U.S. Supreme Court decision , Massachusetts v. EPA – requiring Texas to begin issuing permits for greenhouse gas emissions from industrial sources.

Shaw declined Wednesday, through a spokeswoman at the agency he chairs, to be interviewed byiWatch News . Catherine Frazier, a spokeswoman in the governor’s office, said “the governor is proud of [Shaw’s] leadership and expects he will put Texas’s interests at the top of his decision-making.”

Frazier said that Perry, like Shaw, finds the science linking human activities to climate change to be “very questionable.” The EPA, she said, “continues to impose burdensome, job-killing mandates on Texas and the governor believes there needs to be a balanced approach to protecting jobs and protecting the environment. Texas has created a model for how to accomplish that goal.”

Environmental activists in Texas say they grew worried about Shaw when he disclosed during his 2009 confirmation hearing that he didn’t believe the science on climate change was “fully settled.”

“He denies the science no matter what it is – climate change, ozone, mercury,” Jim Marston, director of the Environmental Defense Fund’s Texas office, said of Shaw. “All the other scientists around the world are wrong. Somehow, the laws of physics and chemistry don’t apply in Texas, apparently.”

“Adhering to the party line is [Shaw’s] guiding compass,” said Matthew Tejada, executive director of Air Alliance Houston , an environmental group that closely follows the commission Shaw chairs. “Every decision, policy, program or position that the TCEQ takes at the commission level is being guided by that compass – what can it do to strike back at an imaginary federal foe and what can it do to coddle industry here in the state.”

Shaw is a former associate professor in Texas A&M University’s Biological and Agricultural Engineering Department. His views on global warming contrast sharply with some of his former A&M colleagues – notably, the entire Department of Atmospheric Sciences, which declared in a statement several years ago that it is “very likely that humans are responsible for the recent warming.”

Loathsome though it may be to environmentalists, Shaw’s and Perry’s anti-EPA posture sits well with at least some members of the Texas business community.

“I think our political leaders in the state have done an excellent job protecting the environment while allowing the state’s economy to flourish in the past 10 years,” said Alex Mills, president of theTexas Alliance of Energy Producers. The EPA, under Obama, has “gone wacko,” Mills said, adding that a Perry administration would feature a “much more hands-off approach” to environmental regulation.

What some critics find most worrisome is Perry’s apparent willingness to reward major donors.

In 2009, the TCEQ approved a low-level radioactive waste dump for Andrews County in West Texas. The dump, expected to open next year, will accept waste from Texas and other states and be operated by Waste Control Specialists, owned by Dallas billionaire Harold Simmons.

Records show that Simmons and his wife have donated roughly $1.2 million to Perry’s campaigns since 1998, according to the National Institute on Money in State Politics. In 2004, Simmons helped finance the “Swift Boat” ads attacking the military record of Democratic presidential candidate John Kerry.

Karen Hadden, executive director of the Austin-based Sustainable Energy and Economic Development (SEED) Coalition , fought licensing of the dump, saying radioactive leakage threatens groundwater and could lead to serious transportation accidents. The term “low-level” is a misnomer, Hadden said; in fact, the dump will take everything but uranium fuel rods from nuclear power plants and plutonium components of nuclear bombs.

An eight-member TCEQ team unanimously advised against licensing the facility in 2007 but was overruled by top-level managers (not including Shaw). Three members of the team, including Glenn Lewis, left the agency in protest.

“We came to the conclusion that it was an unsuitable site geologically because of the immediate vicinity of groundwater,” Lewis told iWatch News . Nonetheless, he said, “We were immediately instructed to begin drafting a license” for Waste Control Specialists.

Asked if he believed Simmons’s relationship with Perry was behind the order, Lewis said, “I’m 99 to 100 percent sure. From the first day I reported for duty on this team, the other members were quite resigned to the fact that if Simmons is behind this, he’s going to get his license.”

The company and the candidate deny any favorable treatment.

“I think the record’s pretty clear there is absolutely no evidence of special treatment of any kind,” said Chuck McDonald, a Waste Control Specialists spokesman. “The licensing process was a long and arduous one. It took five years.”

Frazier, Perry’s spokeswoman, said the Andrews County dump “is supported by that community. It’s a project that will create jobs and bring them economic development opportunities.”

Questions also were raised about a 2005 Perry executive order expediting the state permitting process for coal-fired power plants. At the time, a Dallas-based utility and major Perry contributor, TXU, wanted to build 11 such plants; plans for eight of the 11 were scrapped in 2007 after TXU was acquired by two private equity groups.

In 2008, The Center for Public Integrity and Fort Worth Weekly reported that TXU’s coal plants exceeded federal emission limits nearly 650 times between 1997 and 2006, putting more than 1.3 million pounds of lung-damaging sulfur dioxide into the air.

A growing body of science suggests greenhouse gases produced by human activities – chiefly deforestation and the burning of fossil fuels – are responsible for shifting temperatures and other changes in climate across the globe that could threaten people and wildlife and exacerbate international frictions over scarce resources.

Reprinted by Permission © 2011, The Center for Public Integrity®. All Rights Reserved.

Power NY Act of 2011 Swings the Door Open for Renewable Development

Posted in the National Law Review on August 17, 2011 an article written by attorneys: David A. Domansky, Joseph G. Tirone and Brian J. Kelly of Bracewell & Giuliani LLP regarding Power NY Act of 20ll which Gov. Cuomo recently signed into law:

 

On August 4, 2011, Governor Cuomo signed into law the Power NY ACT of 2011 (A. 8510/S. 5844), a comprehensive energy bill that, among other things, reimplements and significantly revises Article X of the New York State Public Service Law. As revised, new Article X provides power project developers a more efficient, streamlined “one-stop” siting process. The new law was sought and supported by both business and environmental groups to remedy a patchwork of inconsistent local siting rules throughout New York, which have hampered project development efforts. Old Article X, which expired on January 1, 2003, was limited to power plants with 80-megawatts or more of nameplate generating capacity. New Article X reduces the capacity threshold to 25-megawatts, thereby allowing smaller generation projects, such as wind, solar and other renewable project developers, an opportunity to take advantage of the streamlined siting process.

Creation and Composition of the Review Board

Following the expiration of former Article X, developers were required to seek the requisite regulatory and environmental permits mandated by state and local laws from the various state and municipal regulatory authorities who had jurisdiction over the site where the proposed power project was to be developed. Under new Article X, the siting and licensing of electric generation facilities of at least 25-megawatts, or the increase in nameplate capacity by 25-megawatts or more of a current power facility, will fall within the purview of the New York State Board on Electric Generation Siting and the Environment (“Board”).The seven member Board will consist of five state agency officials (Department of Environmental Conservation, Department of Economic Development, Department of Health, Department of Agriculture and Markets and the New York State Energy Research and Development Authority), as well as two ad hoc members who are required to reside in the community in which the proposed facility is to be located. The Board will be tasked with determining if the contemplated project should receive a Certificate of Environmental Compatibility and Public Need (“Certificate”), which must be obtained before commencement of any site development or facility construction.

Filing Process

New Article X separates the Certificate process into two distinct phases, a pre-application preliminary scoping statement (the “Pre-Application”) and the actual Certificate application. In  the Pre-Application, an applicant is required to provide the Board with, among other things: (a) a description of the proposed facility and its environmental setting; (b) potential environmental and health impacts resulting from the construction and operation of the proposed facility; (c) proposed studies or programs of studies designed to evaluate the potential environmental and health impacts; (d) measures proposed to minimize environmental impacts; and (e) identification of all other state and federal permits required for the construction, operation or maintenance of the proposed facility.

Prior to submission of the Pre-Application, the applicant must meet with interested parties, including community groups and interested state agencies to address these groups’ concerns  with regard to the proposed facility. Following the applicant’s submission of the Pre-Application, the applicant has the ability to enter into side agreements or stipulations to address any concerns regarding the siting and location of the proposed facility. Once completed, the applicant is then required to file a Certificate application with the Board, which includes: (a) a description of the site and facility to be built; (b) an evaluation of the anticipated environmental and health impacts and safety and security ramifications that the facility will have on the surrounding community; (c) a comprehensive environmental impact analysis; and (d) a comprehensive demographic, economic and physical description of the community within which the facility is to be located, compared and contrasted with the county and with the adjacent communities in which the facility is proposed.

Board Decision Process and Timeline

New Article X requires that the Board issue a final decision on a Certificate application no later than: (a) 12 months after submission of a Certificate application deemed complete by the Board for a new-build facility, and (b) six months after the submission of a complete Certificate application deemed complete by the Board for modifications to (1) an existing facility, or (2) the site of a new facility adjacent or contiguous to an existing facility, provided the new facility would result in greater operating efficiencies and lower environmental impact than the original facility.

New Article X also requires that the Board schedule a hearing on the Certificate application no later than 60 days after the date the Board determines the Certificate application is complete. After conducting and taking testimony at the hearing, the Board may grant the Certificate if it finds that: (a) the facility is a beneficial addition to or substitution for the electric generation capacity of New York; (b) the construction and operation of the facility will serve the public interest; (c) the facility’s environmental impact has been minimized or eliminated to the maximum extent practicable; and (d) the facility complies with all state and local laws and regulations.

Any appeal of the Board’s decision denying or granting a Certificate is first heard by the Board itself. The application for rehearing must be filed no later than 30 days after issuance of the Board’s decision. The Board is required to render a decision on the application no later than 90 days after the expiration of the period for filing rehearing petitions. Thereafter, an aggrieved party may seek judicial relief in the Appellate Division of the New York Supreme Court. Such proceeding must be initiated within 30 days after the issuance of a final decision by the Board on the application for rehearing.

© 2011 Bracewell & Giuliani LLP

IRS Defends Discretion to Withhold Section 1256 Exchange Designation for ISOs

Recently posted at the National Law Review by William R. Pomierski of  McDermott Will & Emery an article about the IRS defending its decision not to designate independent system operators as qualified board or exchange:

The IRS defended its decision not to designate independent system operators asqualified board or exchange (QBE) principally on the grounds that, as a matter of law, it is not required to designate any exchanges as QBEs under Category 3 of Section 1256 Contracts.

In Sesco Enterprises, LLC (Civ. No. 10-1470, D.N.J. Nov. 16, 2010), the Internal Revenue Service (IRS) defended its discretion to refrain from extending qualified board or exchange status under Code Section 1256 to U.S. Federal Energy Regulatory Commission (FERC)-regulated independent system operators.  The district court dismissed the taxpayer’s claim that the IRS acted arbitrarily and capriciously when it refused to classify electricity derivatives that traded on independent system operators as “Section 1256 Contracts.

Section 1256 Contracts in General

For federal income tax purposes, a limited number of derivative contracts are classified as Section 1256 Contracts.   Absent an exception, Section 1256 Contracts are subject to mark-to-market tax accounting and the 60/40 rule.  The 60/40 rule characterizes 60 percent of the net gain or loss from a Section 1256 Contract as long-term and 40 percent as short-term capital gain or loss.  Corporate taxpayers often view Section 1256 Contracts as tax disadvantageous, relative to economically similar derivatives that are not taxed as Section 1256 Contracts, such as swaps, unless the business hedging or some other exception is available.

Section 1256 Contract classification is limited to regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options and dealer securities futures contracts, as each is defined in the Internal Revenue Code.   Unless a derivative falls within one of these categories, it is not a Section 1256 Contract, regardless of its economic similarity to a Section 1256 Contract.

Except for foreign currency contracts, Section 1256 Contracts are limited to derivative positions that trade on or are subject to the rules of a qualified board or exchange (or QBE).  QBE status is extended only to national securities exchanges registered with the U.S. Securities and Exchange Commission (SEC) (a Category 1 Exchange); domestic boards of trade designated as contract markets by the U.S. Commodities Futures Trading Commission (CFTC) (a Category 2 Exchange); orany other exchange, board of trade or other market that the Secretary of the Treasury Department determines has rules adequate to carry out the purposes of Code Section 1256 (a Category 3 Exchange).

Category 1 and Category 2 Exchange status is automatic.   Category 3 Exchange status, however, requires a determination by the IRS.  In recent years, Category 3 Exchange designation has been extended to four non-U.S. futures exchanges offering products in the United States: ICE Futures (UK), Dubai Mercantile Exchange, ICE Futures (Canada) and LIFFE (UK).

Sesco Challenges IRS Discretion to Withhold Category 3 Exchange Designation

According to its website, the taxpayer in Sesco (Taxpayer) is an electricity and natural gas trading company. The facts of the case indicate that it traded electricity derivatives (presumably INCs, DECs, Virtuals and/or FTRs) on various independent system operators or regional transmission organizations regulated by the FERC (collectively, ISOs).  Because ISOs are not regulated by the SEC or the CFTC, they cannot be considered Category 1 or Category 2 Exchanges for purposes of Code Section 1256.  To date, no ISO has been designated as a Category 3 Exchange by the IRS.

According to the facts in Sesco, the Taxpayer took the position on its return that derivatives trading on ISOs were Section 1256 Contracts eligible for 60/40 capital treatment.  The IRS denied Section 1256 Contract status on audit.  Somewhat surprisingly, a footnote in Sesco suggests, without any further discussion, that the IRS agreed with the Taxpayer’s position that these electricity derivatives qualified as “regulated futures contracts” under Code Section 1256 except for satisfying the QBE requirement.

During the examination process, the Taxpayer apparently requested a private letter ruling from the IRS that the relevant ISOs were Category 3 Exchanges.   According to the district court, “The IRS refused, asserting that the request for a QBE determination must be made by the exchange itself.”  The Taxpayer then asked one of the ISOs to request Category 3 Exchange status, but the ISO declined to do so.  Taxpayer then filed suit challenging the IRS’s adjustments and asserted that the IRS “acted arbitrarily and capriciously and abused its discretion when it refused to make a QBE determination except upon request from the ISO.”  In essence, the Taxpayer was attempting to force the IRS to designate the ISOs at issue as QBEs.

The IRS defended its decision not to designate the ISOs as QBEs principally on the grounds that, as a matter of law, it is not required to designate any exchanges as QBEs under Category 3.   After briefly considering the wording of Code Section 1256 and the relevant legislative history, the court agreed with the IRS position and dismissed the case on procedural grounds (lack of jurisdiction).

Observations

Although the District Court’s decision in Sesco may be of little or no precedential value due to the procedural aspects of the case, the decision nevertheless is important in that it reflects what has long been understood to be the IRS’ position regarding Category 3 Exchange status, which is that Category 3 Exchange status is not automatic and requires a formal determination by the IRS.  Sesco also confirms that the IRS believes QBE classification can only be requested by the exchange at issue, not by exchange participants.

Unfortunately, Sesco does not address the separate question of whether the IRS could have unilaterally designated the ISOs at issue as QBEs without the participation of the exchanges.  Sesco also raises, but does not address, the issue of whether derivatives traded on exchanges that are not “futures” exchange can be considered “regulated futures contracts” for purposes of Code Section 1256.  These are critical questions that will become more relevant in the near future as the exchange-trading and exchange-clearing requirements imposed by the Dodd-Frank derivatives reform legislation begin to take effect.

© 2011 McDermott Will & Emery

California and Florida Lead Trend of New State-Level Iran Sanctions

Posted this week at the National Law Review by Reid Whitten  of Sheppard, Mullin, Richter & Hampton LLP a good summary of recent  state legislation targeting potential contractors that deal with Iran.  

On June 2, 2011, Florida Governor Rick Scott signed a new state law prohibiting Florida government entities from contracting with companies invested in Iran’s petroleum energy sector.  Florida’s law, and a similar California law that went into effect on June 1, 2011, announce a coming trend of state laws targeting potential contractors that also deal with Iran.  These two laws, and several others on the horizon, present pitfalls for unwary companies as well as unique opportunities for informed, well-advised businesses.

On July 1, 2010, President Obama signed the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”) into law.  CISADA targets companies invested in Iran’s petroleum sector through provisions prohibiting the U.S. Government from contracting with such companies.  CISADA also permits the states to enact similar prohibitions against state contracts with companies invested in the Iranian petroleum sector.  Within months of enactment of the U.S. law, California and Florida passed their own laws, citing the desire to put further economic pressure on such companies. The legislatures of Oregon, Kansas, and other states are considering similar actions. Arizona also has a prohibition on contracting with companies invested in Iran that became law as part of a 2008 divestment act. Companies, particularly non-U.S. companies, intending to bid on state government contracts need to pay close attention to individual state statues, and review their own investments for connections to Iran’s petroleum energy sector.  U.S.-organized companies are unlikely to have such investments because (except in very narrow circumstances) the pre-existing U.S. economic embargo against Iran prohibits them.

On September 30, 2010, California passed the Iran Contracting Act of 2010 (“California Act”) requiring, among other actions, that the California Department of General Services compile a list of persons or companies involved in business or investment activities in Iran.  The California Act also declares that any person identified as having business or investment activities of $20 million dollars or more in the energy sector of Iran “is ineligible to, and shall not bid on, submit a proposal for, or enter into or renew, a contract with a public entity for goods or services of one million dollars ($1,000,000) or more.”  See Cal. Pub. Contr. § 2203(a)(1) (West 2010). Companies that are notified of their designation as doing significant business in Iran’s petroleum energy sectors must demonstrate to the government’s satisfaction that they should not be so designated. If they fail to do so, they will be subject to the contracting prohibition.

Similarly, the Florida Scrutinized Companies law (“Florida Act”) will take effect July 1, 2011. Under a 2008 Iran divestment act, Florida’s State Board of Administration maintains a “Scrutinized Companies with Activities in the Iran Petroleum Energy Sector List” (“Scrutinized Companies List”). The Florida Act prohibits a Florida state agency or local governmental entity from contracting for goods and services of more than $1 million dollars or more with any company on the Scrutinized Companies List.

The Florida Act requires contractors to certify that they are not on the Scrutinized Companies List before submitting a bid for, entering into, or renewing a contract with, a state agency or local government entity. In addition, any contract entered into or renewed on or after July 1, 2011 must contain a provision allowing for termination of that contract if the company is found to have submitted a false certification. Further, the bill would require the Florida state government to bring a civil action against any company that does not disprove a determination of false certification within a specified time.

The state laws present both a concern and an opportunity for contracting companies. Concerns, in particular, arise because states lack substantial experience in administering international sanctions policy. As a result, Companies may be mistakenly designated as a business significantly invested in Iran’s energy petroleum industry. Individual state resources, already spread thin, may not provide the means accurately to designate the correct companies falling under the new laws’ prohibitions. States are likely to borrow names of possible target companies from Federal CISADA actions and from one another, sometimes without independently verifying the alleged reasons for designating a company. Additionally, we have seen instances of private groups (such as human rights and anti-nuclear activists groups) distributing inaccurate lists of companies alleged to be violating CISADA.

Contracting companies may be presented with an opportunity, however, to get ahead of this trend of state sanctions in a number of ways. If a company receives notice that it is under scrutiny from one state, that company and its counsel can prepare a response that is both tailored and general;  a response that not only answers the initial notice but that can also be repeated to respond to any other notices it might receive from other states in the future. Companies may also have opportunities to communicate with the state administrators of these new laws about their application. Many of these administrators may not have extensive substantive experience with international sanctions policy;  therefore, companies and their counsel, particularly counsel with experience in international sanctions work, would be in a strong position to discuss with state officials the laws and the means of implementation.

Companies intending to contract with any state agencies need to pay close attention to the changing landscape of state-level sanctions laws and remain aware of the continuing risks and opportunities that landscape presents.

Copyright © 2011, Sheppard Mullin Richter & Hampton LLP.

 

Bill Allowing More Offshore Drilling Introduced to Congress

Posted today at the National Law Review by Sabrina Mizrachi of Greenberg Traurig, LLP – news on the Infrastructure Jobs and Energy Independence Act introduced in Congress yesterday……

The Infrastructure Jobs and Energy Independence Act was introduced on May 12, 2011, and seeks to allow more offshore drilling in order to reduce U.S. reliance on imported fuels and create jobs. The bill was introduced by a bipartisan group of four congressmen, Democrats Jim Costa of California and Tim Walz of Minnesota in collaboration with Pennsylvania Republicans Tim Murphy and Bill Shuster.

The bill contains no new taxes or increase of existing taxes, and would allow drillers to reach natural-gas reservoirs that could fuel industry in the U.S. for 63 years and the U.S. oil industry for 80 years, and also create 1.2 million jobs per year.

©2011 Greenberg Traurig, LLP. All rights reserved.

EPA, Clean Air Act & Climate Change: Consider the Facts

This week’s guest blogger at the National Law Review is Jon D. Sohn of  McKenna Long & Aldridge LLP.  Jon provides a great overview of some recent hearings and proposed legislation impacting greenhouse gas regulations at both the state and federal levels:

The U.S. Environmental Protection Agency (EPA) has taken a lot of hits from those opposed to greenhouse gas regulations in the past week.  In the House of Representatives, tough hearings led by U.S. Rep. Ed Whitfield, (R-KY), Chairman of the House Subcommittee on Energy, were held with EPA Administrator Lisa Jackson. Jackson’s testimony followed that of lead witness Senator James Inhofe (R-OK) who promoted his upcoming book, “The Hoax,” which takes aim at the science of climate change.  The House subsequently passed an amendment to the proposed Continuing Resolution that would strip EPA of its authority to regulate GHG emissions and significantly decrease funding for environmental and clean energy programs. Meanwhile, outside of Washington, D.C., the first two permits considered by EPA suggest cleaner facilities and job creation can be compatible with new regulations as opposed to some of the concerns expressed in the hearings and continuing resolution.

This past week, South Dakota issued a draft permit for Best Available Control Technology for greenhouse gases under the Clean Air Act (CAA) to the Hyperion Energy Center. Project owners describe the facility as a “HEC is a 400,000-barrel per day (BPD) highly-complex, full-conversion refinery which will produce clean, green, transportation fuel such as ultra-low sulfur gasoline (ULSG) and ultra-low sulfur diesel (ULSD).” South Dakota regulatory officials found that significant energy efficiency improvements to the refinery were the most cost-effective manner to move forward.  The officials considered carbon capture & storage as an alternative path, but decided that while the technology is technically feasible it is not cost-effective or environmentally appropriate in this instance.  EPA will now have 30-days to review the decision, but don’t expect any radical changes to the State-level decision. Construction will create an estimated 4,500 jobs and when finished, 1,826 permanent jobs will be created for the ongoing operation of the refinery and associated utility plant according to company officials.

In Louisiana, State regulators recently approved an air quality construction and operating permit that includes emissions control requirements for greenhouse gases as well.  The permit clears the way for an iron production facility, the initial phase of the construction of a larger Nucor iron and steelmaking facility in St. James Parish. Under the permit granted, the greenhouse gas limits rely on energy efficiency measures and set a 13 million British thermal units of natural gas per metric ton of direct reduced iron. State regulators estimate the plant will emit 3.39 million metric tons of carbon dioxide per year.  500 construction jobs and 150 permanent jobs will be created according to Nucor, although they would like the facility to be larger and note regulatory uncertainty as a cause of concern. On the other hand, some environmental groups including the Tulane Law Clinic may challenge that the permit is not strict enough. EPA will now conduct a review here as well.

Congress would be well-advised to consider these case studies as it moves forward in its deliberations.

© 2011 McKenna Long & Aldridge LLP

EPA Redefines “Solid Waste” to Incentivize Creative Fuel Technology: Garbage to Gold

Recent Guest Blogger at the National Law Review  Kim K. Burke  of  Taft Stettinius & Hollister LLP highlights how the EPA recently changed the definition of Solid Waste and how this can lead to new fuel technology: 

Since the Resource Conservation and Recovery Act (RCRA, 42 U.S.C. §6901, et seq.) first became law, consternation among the regulated community has grown as a principal purpose of RCRA, namely, to encourage discarded material reuse as fuel, appears to have been ignored in EPA’s rulemaking.  Perhaps that discouraging trend is coming to an end.  On February 21, 2011, EPA released a pre-publication version of a proposed Final Rule amending the definition of “solid waste.”  What is particularly encouraging about the Final Rule is that innovative technologies for creating fuels from materials that would have previously been characterized as a “solid waste” are excluded from the definition.  This opens the door to creative technologies to transform municipal garbage into useable fuels for utilities and industrial boilers.  Not only does this technology reduce the amount of precious landfill space being consumed by valuable organic material, but it also offers the prospect of reduced and more easily controlled emissions from industrial boilers and fossil-fueled electric utilities that promise to be large consumers of this significantly cheaper, high BTU content fuel.

In this Final Rule, EPA spells out how previously discarded non-hazardous secondary materials may be used in combustion units for fuel.   40 CFR §241.3(b)(4).  The Final Rule is careful to spell out the criteria for assuring the “legitimacy” of the non-hazardous secondary materials which are used as “fuel” or “ingredients” in combustion units.  40 CFR §§241.3(d)(1) and (d)(2).  With this change in approach by EPA to encourage development of fuels from discarded materials, entrepreneurs in the wings with off-the-shelf recycling technologies are now given EPA’s blessing to pursue a green solution to some of our country’s energy and emission reduction problems.

Copyright © 2011 Taft Stettinius & Hollister LLP. All rights reserved.

April 8-10 the First Annual Young Professionals in Energy International Summit takes place in Las Vegas, Nevada

Young Professionals in Energy (“YPE”) is the first and only interdisciplinary networking and volunteer organization for people in the global energy industry – a place where bankers can connect with engineers, accountants with geologists and so on.  Their mission is to provide a forum for knowledge sharing and camaraderie among future leaders of the energy industry. This April 8-10, the first annual YPE International Summit takes place in Las Vegas, Nevada at the Tropicana Hotel, bringing together over 10,000 members and over 40 chapters for the energy’s industry’s biggest networking event of the year.  

The Young Professionals in Energy International Summit has been approved by the Nevada Board of Continuing Legal Education for 6.0 credits Continuing Legal Education  Attorneys and judges who attend this activity may claim up to the maximum credits indicated based on actual attendance at the event, to be held April 8-10, 2011 .

March 1st is the last day to save $50 on registration! For more information and to register – please click here:


EPA Defers GHG Permitting Requirements for Biomass Industries

An update from the National Law Review’s friends at Michael Best & Friedrich, LLP – Linda Bochert, Michelle Wagner & Anna Wildeman:  

In a move designed to encourage clean energy and the use of biomass as a fuel, on January 12, 2011, the U.S. Environmental Protection Agency (“EPA”) announced a 3-year deferral of the newly enacted Greenhouse Gas (“GHG”) permitting requirements for biomass-burning industries and other biogenic sources.

Effective January 2, 2011, large GHG emitters – e.g., power plants, refineries – must obtain air permits and implement energy efficiency measures or cost-effective technologies to reduce GHG emissions when building new facilities or making major modifications to existing facilities.  EPA plans to complete the rulemaking to implement the deferral of the GHG permitting requirements for biomass-burning industries and other biogenic sources by July 2011. To cover the six-month gap until the deferral rule becomes effective, EPA is expected to issue guidance allowing state and local permitting authorities to conclude that the use of biomass is the best available control technology for GHG emissions.

EPA is implementing the deferral to enable it to seek and consider scientific research on carbon dioxide (“CO2”) emissions from biomass sources, including evidence that biomass based energy generation can be carbon-neutral. During the deferral period, EPA will seek input from other governmental agencies as well as from independent experts. EPA will also consider more than 7,000 comments it received from its July 2010 “Call for Information,” requesting public comment on approaches to account for GHG emissions from biomass-burning sources. Before the three year deferral ends, EPA expects to develop a second rulemaking that addresses how GHG emissions from biomass-burning and other biogenic sources should be treated under the Clean Air Act GHG permitting requirements.

In a separate, but related matter, EPA notified the National Alliance of Forest Owners (“NAFO”) that the agency will grant NAFO’s petition to reconsider the portion of EPA’s “Tailoring Rule,” finalized this past May 2010, which addresses the treatment of biomass carbon emissions. The biomass industry at large, including NAFO, was taken aback when EPA finalized its Tailoring Rule without any exemption for biomass-burning facilities.

© MICHAEL BEST & FRIEDRICH LLP