Archive for July, 2011

FERC’s Transmission Planning and Cost Allocation: The Law Firm Analysis Rolls In

Approximately one week ago, FERC published a much-anticipated Final Rule (“Order No. 1000”), which aims to ensure that “Commission-jurisdictional services are provided at just and reasonable rates and on a basis that is just and reasonable and not unduly discriminatory or preferential.” Specifically, the rule amends the transmission planning and cost allocation requirements established by Order No. 890 back in 2007, by requiring public utility transmission providers to a) “improve transmission planning processes and allocate costs for new transmission facilities to beneficiaries of those facilities,” and b) “align transmission planning and cost allocation.”

The folks over at FERC feel confident that the changes laid out in Order No. 1000 could remove barriers to development of transmission facilities, and “provide consumers with greater access to efficient, low-cost electricity.”

That sounds good and all, but what does it mean for you? Legal experts at some of the top-rated law firms are crawling all over each other to break down the requirements and help you comply. Below, you can browse related memos added to Knowledge Mosaic’s Law Firm Memos library so far, or you can even set up a Daily Memo Alert (I recommend using the text string: FERC and 1000) to catch them going forward.

Alston + Bird

Dewey & LeBoeuf

King & Spalding

Mayer Brown

Morrison & Foerster

Van Ness Feldman

Winston & Strawn

BOEMRE Recusals Show Substantial Agency-Industry Coziness

Photo by currybet. Some rights reserved.

Some diligent FOIA handiwork by the Associated Press has dug up quantitative confirmation of the ties between the Bureau of Ocean Energy Management, Enforcement and Regulation (BOEMRE) – the federal agency that regulates offshore energy development – and the companies doing the developing.

The AP obtained forms submitted by employees of BOEMRE requesting recusal from duty because of conflicts of interest or previous employment. Under policy instituted in August of last year, employees of BOEMRE are required to request such recusal from “any inspection or other official duty that relates to a designated operator, contract operator, or drilling contractor who employs a member of the district employee’s family or personal friend of the District employee[.]” Additionally, BOEMRE employees are not allowed to “perform any official duties” involving a former employer “who is a designated operator, contract operator, or drilling contractor” within two years of their last employment by that employer.

And who might these operators or contractors be, to whom BOEMRE has been romantically linked? The AP is reporting major names like Chevron, Shell and BP. Big surprise.

Also unsurprising? There’s nothing related to this story to be found on the BOEMRE website – not in their Newsroom, not on their Ethics page, and not on their FOIA page. But perhaps the sudden spotlight could prompt more transparency and stricter ethics rules going forward – a recent offshore drilling safety bill (currently stalled in the Senate) includes proposed amendments to the Outer Continental Shelf Lands Act (43 U.S.C. 1355) with explicit “Conflicts of Interest” provisions.

Playing Catch-Up on Keystone XL

Photo by US State Department. All rights reserved.

When we last checked in on the Keystone XL Pipeline project, just over a month ago, the House Energy and Commerce Committee had just approved legislation that requested an answer from President Obama on approval of the contoversial $7 billion proposal to build on and extend the original Keystone Pipeline, which would carry oil from wells in northeastern Canada to refineries in the southern United States, by November 1st of this year.

As of Monday night, that legislation officially passed through the House by a vote of 279-147, a split which mostly ran down party lines, even as the White House released an official statement this week calling the sped-up legislation “unnecessary.” Democrats in the House spent Tuesday night trying to get 11 separate amendments to the bill passed, most containing heightened environmental warnings and safety measures, but were ultimately unsuccessful in each, though the bill is sure to have a much more difficult time getting through the Democrat-controlled Senate.

In the time since we’ve covered this story, University of Nebraska professor of environmental and water engineering John Stansbury released a study calling the Keystone XL pipeline project “unrealistically optimistic,” predicting a total of 91 oil spills of 50 barrels or more in the first 50 years of operation, compared to the 11 spills that TransCanada ceded was their predicted figure.

Meanwhile, the State Department announced that they would be conducting their third and Final Environmental Impact Statement on the project and issue their ruling by August 15th. You can find a full briefing on the State Dept. meeting of July 22nd on the subject of the pipeline here.

D.C. Circuit to EPA: Guidance No Substitute for Cold, Hard Rulemaking

D.C. Circuit Court. Photo by Ken Lund. Some rights reserved.

Seattle-based Marten Law walks us through the EPA’s recent headbutt with the Natural Resources Defense Council (NRDC), as the agency tried to defend its actions with regards to Section 185 of the Clean Air Act (CAA). The struggle ended July 1, 2011, when the D.C. Circuit Court of Appeals vacated a Section 185 guidance document that the EPA has previously relied on.

The EPA is required by the CAA to establish national ambient air quality standards (NAAQS) for various pollutants, and to impose deadlines and/or fees on areas that fail to comply. Section 185 (42 U.S.C. § 7511d) addresses ozone nonattainment areas that are classified as “severe” or “extreme,” and the specific enforcement to be levied against the major stationary sources of the offending pollutants in those areas.

When the NAAQS were overhauled in 2004, many areas that were previously classified as “severe” or “extreme” in their nonattainment now only classified as “marginal” or “moderate.” The CAA’s “anti-backsliding” provision (42 U.S.C. § 7502(e)) prevented these areas from getting off the hook completely, but enforcement procedures in these cases were now a bit murky. In order to address the confusion, the EPA issued “Guidance on Developing Fee Programs Required by Clean Air Act Section 185 for the 1-hour Ozone NAAQS,” a document that ostensibly gave states the authorization to implement “alternative programs” in certain nonattainment areas, rather than the usual fee programs mandated by Section 185.

But this didn’t fly with NRDC or the D.C. Circuit. NRDC filed suit, and the Court subsequently found that the EPA violated the Administrative Procedure Act by issuing the guidance without following notice-and-comment rulemaking procedures. Is this becoming a trend? If so, it’s one that will likely not be tolerated. Marten Law concludes that the “EPA has, in recent years, tended to favor the use of interpretive guidance where it can, as the rulemaking process is typically long and arduous. No matter, the D.C. Circuit has joined other courts in holding that guidance is not a substitute for rulemaking.”

Crouching NOA, Hidden EIS: Last Week In Environmental Impact Statements

As discussed a few weeks ago, many of you are familiar with the National Environmental Policy Act (NEPA), which requires federal agencies to prepare detailed reports known as Environmental Impact Statements (EIS). These reports attempt to compel federal agencies to consider the potential environmental impacts of proposed federal actions and any viable alternatives.

Federal agencies are required to prepare EISs in accordance with 40 CFR Part 1502, and to file the EISs with the EPA as specified in 40 CFR 1506.9. Though the EPA doesn’t yet provide a central repository for filing and viewing EISs electronically, each week they prepare a digest of the preceding week’s filed EISs, which is published every Friday in the Federal Register under the title, “Notice of Availability” (NOA).

We’ve done the dirty work for you. Below, we’ve located and linked to the EISs referenced in last week’s NOA (available here). You can read any available EPA comments on these EISs here.

* * *

EIS No. 20110225, Final EIS, FHWA, TN, Interstate 55 Interchange at E.H. Crump Boulevard and South Boulevard Project, To Provide a Balanced Solution for Safety and Capacity Issues at the I55 Interchange, City of Memphis, Shelby County, TN, Review Period Ends: 08/15/2011, Contact: Charles J. O’Neill 615–781–5772.

EIS No. 20110226, Draft EIS, USFS, ID, Little Slate Project, Proposes Watershed Improvement, Timber Harvest, Fuel Treatments, Soil Restoration and Access Changes in the Little Slate Creek, Salmon River Ranger District, Nez Perce National Forest, Idaho County, ID, Comment Period Ends: 09/06/2011, Contact: Tammy Harding 208–935–4263.

EIS No. 20110227, Draft EIS, FWS, 00, NiSource Multi-Species Habitat Conservation Plan, Proposes to Use Adaptive Management to Ensure Flexibility to Adjust Operations to Benefit Species as New Information is Obtained, Application for Incidental Take Permit, Eastern United States, Comprising Portions of 14 States, Comment Period Ends: 10/11/2011, Contact: Lisa Mandell 612–713–5343.

EIS No. 20110228, Final EIS, FHWA, IN, I–69 Evansville to Indianapolis Tier 2 Section 4 Project, From U.S. 231 (Crane NSWC) to IN–37 South of Bloomington in Section 4, Greene and Monroe Counties, IN, Review Period Ends: 08/15/2011, Contact: Michelle Allen 317–226–7344.

EIS No. 20110229, Draft EIS, USFS, OR, Ogden Vegetation Management Project and Forest Plan Amendment, Proposes to Conduct Vegetation and Fuel Management Activities that will Protect, Maintain, and/or Enhance the Forests Natural Resources and Recreational Opportunities, Bend/Ft. Rock Ranger District, Deschutes National Forest, Deschutes County, OR, Comment Period Ends: 09/06/2011, Contact: Beth Peer 541–383–4769.

EIS No. 20110230, Draft EIS, USFS, OR, Marks Creek Allotment Management Plans, Proposes to Reauthorize Cattle Term Grazing Permits, Construct Range Improvements, and Restore Riparian Vegetation on three Allotments, Lookout Mountain Ranger District, Ochoco National Forest, Crook County, OR, Comment Period Ends: 09/06/2011, Contact: Marcy Anderson 541–416–6463.

EIS No. 20110231, Final EIS, BLM, NV, Salt Wells Energy Projects, Proposal for Three Separate Geothermal Energy and Transmission Projects, Implementation, Churchill County, NV, Review Period Ends: 08/15/2011, Contact: Colleen Sievers 775–885–6168.

EIS No. 20110232, Draft EIS, BLM, WY, Draft Visual Resource Management (VRM) Plan Amendment, Implementation, Carbon County, WY, Comment Period Ends: 10/19/2011, Contact: Pamela Murdock 307–328–4200.

EIS No. 20110233, Draft EIS, BLM, WY, Chokecherry and Sierra Madre Wind Energy Project, Proposes to Construct and Operate a Wind Energy Project, South of Rawlins, Carbon County, WY, Comment Period Ends: 10/19/2011, Contact: Pamela Murdock 307–328–4200.

EIS No. 20110234, Final EIS, FHWA, WI, US 41 Improvement Project, Extend from Depere—Suamico (Memorial Drive to County M), Brown County, WI, Review Period Ends: 08/15/2011, Contact: George Poirier 608–829–7500.

Amended Notices

EIS No. 20110215, Final EIS, FHWA, WI, Wisconsin Highway Project, Mobility Motorized and Nonmotorized Travel Enhancements, Updated Information on New Alternatives, and Evaluates a Staged Improvement, US18/151 (Verona Road) and the US 12/14 (Beltine) Corridors, Dane County, WI, Review Period Ends: 08/15/2011, Contact: George R. Poirier 608–829–7500 Revision to FR Notice Published 07/08/2011: Extending Review Period from 08/08/2011 to 08/15/2011.

EIS No. 20110223, Final EIS, FHWA, WA, Alaskan Way Viaduct Replacement Project, Between S. Royal Brougham Way and Roy Street, To Protect Public Safety and Provide Essential Vehicle Capacity to and through downtown Seattle, Updated Information to 2004 DEIS and 2006 DSEIS, Seattle, WA, Wait Period Ends: 08/15/2011, Contact: Angela Angove 206–805–2832.

This Week in Environmental Disclosure: Alcoa’s Decades-Plus Struggle with the Grasse River

Grasse River, NY. Photo by Gary Soup. Some rights reserved.

In yesterday’s 10-Q, Alcoa brought us up to speed on the current status of their Massena plant site – one of more than 100 locations at which the aluminum company is participating in environmental assessments or cleanups – and the reserves slated for the costs associated with its remediation. The Grasse River on which the plant resides has been plagued with toxic pollutants and sediment control issues linked to Alcoa’s operations.

You can keep tabs on the entire “Area of Concern” that includes the Massena site on the EPA’s website, here.

Alcoa’s disclosure was as follows (dollar amounts are in millions):

Massena West, NY – Alcoa has been conducting investigations and studies of the Grasse River, adjacent to Alcoa’s Massena plant site, under a 1989 order from the U.S. Environmental Protection Agency (EPA) issued under CERCLA. Sediments and fish in the river contain varying levels of polychlorinated biphenyls (PCBs).

Alcoa submitted various Analysis of Alternatives Reports to the EPA starting in 1998 through 2002 that reported the results of river and sediment studies, potential alternatives for remedial actions related to the PCB contamination, and additional information requested by the EPA.

In June 2003, the EPA requested that Alcoa gather additional field data to assess the potential for sediment erosion from winter river ice formation and breakup. The results of these additional studies, submitted in a report to the EPA in April 2004, suggest that this phenomenon has the potential to occur approximately every 10 years and may impact sediments in certain portions of the river under all remedial scenarios. The EPA informed Alcoa that a final remedial decision for the river could not be made without substantially more information, including river pilot studies on the effects of ice formation and breakup on each of the remedial techniques. Alcoa submitted to the EPA, and the EPA approved, a Remedial Options Pilot Study (ROPS) to gather this information. The scope of this study included sediment removal and capping, the installation of an ice control structure, and significant monitoring.

From 2004 through 2008, Alcoa completed the work outlined in the ROPS. In November 2008, Alcoa submitted an update to the EPA incorporating the new information obtained from the ROPS related to the feasibility and costs associated with various capping and dredging alternatives, including options for ice control. As a result, Alcoa increased the reserve associated with the Grasse River by $40 for the estimated costs of a proposed ice control remedy and for partial settlement of potential damages of natural resources.

In late 2009, the EPA requested that Alcoa submit a complete revised Analysis of Alternatives Report in March 2010 to address questions and comments from the EPA and various stakeholders. On March 24, 2010, Alcoa submitted the revised report, which included an expanded list of proposed remedial alternatives, as directed by the EPA. Alcoa increased the reserve associated with the Grasse River by $17 to reflect an increase in the estimated costs of the Company’s recommended capping alternative as a result of changes in scope that occurred due to the questions and comments from the EPA and various stakeholders. While the EPA reviews the revised report, Alcoa will continue with its on-going monitoring and field studies activities. In late 2010, Alcoa increased the reserve by $2 based on the most recent estimate of costs expected to be incurred for on-going monitoring and field studies activities as the EPA continues its review during 2011.

The ultimate selection of a remedy may result in additional liability. Alternatives analyzed in the most recent Analysis of Alternatives report that are equally effective as the recommended capping remedy range in additional estimated costs between $20 and $100. As such, Alcoa may be required to record a subsequent reserve adjustment at the time the EPA’s Record of Decision is issued, which is expected in 2011 or later.

Oil & Gas Valuation Regulations Slated for an Upgrade

Photo by Mykl Roventine. Some rights reserved.

You have just less than a week (until July 26th, to be precise) to hand off your comments to the DOI’s Office of Natural Resources Revenue (ONRR) about their proposed changes to regulations governing “the valuation of oil and gas produced from Federal onshore and offshore oil and gas leases, for royalty purposes.”

The regulations in question haven’t been updated since 2000 (for oil) and 1988 (for gas), and – according to a recent King & Spalding Newsletter on the topic – the oil and gas industry has been itching for the kind of change that could lead to less costly valuation.

On May 27th, ONRR published their proposed rulemaking in the Federal Register, requesting comments and suggestions for “possible new methodologies to establish the royalty value of oil and gas produced from Federal leases.” However, they already have some higher-level ideas in mind – they’re aiming for regulations that offer “simplicity, certainty, clarity, and consistency.” Have any ideas? Submit comments to regulations.gov under the docket # ONRR–2011–0005.

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