LEGAL UPDATE

Jean M. Mosites

Kevin J. Garber

PIOGA Tech

Air Quality Compliance Training

December 17, 2019

CLIMATE CHANGE CHALLENGES

TO THE FOSSIL FUEL INDUSTRY

Litigation in federal and state courts

Legislation at state and federal levels

Regulation and enforcement

Fossil Fuels on Trial

• Statutory – CAA, ESA, CWA, NEPA, FOIA

• Constitutional – Commerce, 1st, 5th and 14th

Amendments

• State Law

• Common Law

• Public Trust

• Securities Law

• Consumer Protection

NEPA challenges against FERC orders

• Natural Gas Act• Regulates rates and services for interstate natural gas pipeline

transportation

• Certification for new facilities

• Abandonment of existing facilities

• Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017)

– Challenge to single EIS developed for three pipelines

– Reasonably foreseeable that the gas will be burned, which will

release GHG, that contribute to climate change

– Remanded for EIS to consider effect of combustion of gas transported

by the pipelines to power plants in Florida

FERC GHG policy evolves

• Dominion Transmission, Inc. Docket # CP14-497-

001 (May 18, 2018) – 3-2 panel concluded NGA and NEPA do not require FERC to consider

GHG from production or consumption of natural gas that may be

reasonably foreseeable as a result of a certification decision.

– Dissent – must quantify and consider upstream and downstream

impacts, using full-burn calculations

• Distinguished Sierra Club because the end-uses were

known in Sierra Club, but not in Dominion.

Climate Change Litigation

• Juliana v U.S., 217 F.Supp.3d 1224 (D. Or. 2016)– Alleges that the US government violated substantive due process

and public trust doctrine by causing dangerous concentrations of

CO2.

– CEQ, OMB, DOT, DOI, BLM, EPA, DOE, USDA, DOD, Commerce

– Seek order to cease permitting fossil fuels and take action necessary

to restore Earth’s energy balance and stabilize the climate system

– Order denying the Government motion to dismiss

• Petition for Writ to 9th Cir., arguments held 6/2019, Docket No. 18-

36082. Multiple subsequent filings here:

http://climatecasechart.com/case/juliana-v-united-states/

Recent PA EHB Air Case

• West Rockhill Twp. v. DEP, Docket # 2019-039-L

(Sept. 25, 2019)

– Third party appeal of Air Quality Plan for the Adelphia

Gateway compression station in Bucks County.

– Dismissed for lack of jurisdiction. Third Circuit has original

and exclusive jurisdiction to review federally-delegated

permitting decision associated with natural gas pipelines.

Climate Change Litigation

• Native Vill. of Kivalina v. ExxonMobil, 696 F.3d 849

(9th Cir. 2012)

– Coastal Inupiat village north of the Bering Strait sought damages for

rising sea levels and flooding in a nuisance claim against private

sources of GHG.

– 9th Cir. dismissed, holding federal common law nuisance claim was

displaced by EPA regulation of GHG.

Climate Change Cases by State and

Municipalities against Fossil Fuel Producers

Rhode Island v. Chevron Corp., July 2, 2018 (RI Superior Ct.)

• Defendants include: Marathon Petroleum, Phillips 66, ConocoPHillips, Shell Oil Products

Co, Exxon Mobile, BP, and Chevron.

• State claims that defendants caused Rhode Island’s injuries, including impacts to:– Roads and bridges

– Transportation and energy infrastructure

– Dams, Ports and Beaches

– Water Supplies

– Wastewater management

– Storm and flood management

– Residential and commercial properties

– Marshes and wetlands

– Terrestrial natural resources

• Plaintiffs seek abatement of nuisance, punitive damages, and disgorgement of profits for

world wide production of fossil fuels.

• October 2019 emergency appeals to SCOTUS to stay remands to state courts denied.

Climate Change Litigation – Exxon cases

• People of the State of New York v. ExxonMobil Corporation (N.Y. S. Ct.

10/24/2018)

– State fraud claims alleging climate change-related misrepresentations to

investors – Not an SEC case

– Damages, disgorgement, restitution, injunction

– DISMISSED 12/10/19

• Four year investigation, millions of pages of documents, reams of proprietary

information

• Court concluded that ExxonMobil “has a culture of disciplined analysis, planning,

accounting and reporting.”

• No testimony from any investor who claims to have been misled

• Commonwealth of Massachusetts v. ExxonMobil Corporation (Suffolk Cty. Sup.

Ct. 10/24/2019)

– Mass. Consumer Protection Act, G.L. c. 93A, §§1-11

• Complaint

State and Municipal Cases against Fuel Suppliers

• California:

• Cty. of San Mateo v. Chevron Corp, No. 17-cv-4929 (N.D. Cal.); City of Imperial

Beach v. Chevron Corp., No. 17-cv-4934 (N.D. Cal.); Cty. of Marin v. Chevron

Corp., No. 17-cv-4935 (N.D. Cal.); Cty. of Santa Cruz v. Chevron Corp., No. 18-

cv-450 (N.D. Cal.); City of Santa Cruz v. Chevron Corp., No. 18-cv-458 (N.D.

Cal.); City of Richmond v. Chevron Corp., No. 18-cv-732 (N.D. Cal.); City of

Oakland v. BP P.L.C., No. 17-cv-6011 (N.D. Cal.); City and Cty. of San Francisco

v. BP P.L.C., No. 17-cv-6012 (N.D. Cal.); Pacific Coast Fed. of Fishermen’s

Ass’ns v. Chevron Corp., No. 3:18-cv-07477 (N.D. Cal.)

• Mayor and Cty. Council of Baltimore v. B.P. P.L.C., No. 1:18-cv-02357-ELH (D.

Md.);

• King County v. BP P.L.C., No. 2:18-cv-00758-RSL (W.D. Wash.);

• City of New York v. BP P.L.C., No. 18-cv-00182-JFK (S.D.N.Y.);

• Bd. of Cty. Cmm’rs of Boulder Cty. v. Suncor Energy (U.S.A.) Inc., No. 18-cv-

1672 (D. Colo.).

Pennsylvania Updates and Initiatives

PA Alternative Energy Portfolio

Pennsylvania Alternative Energy Portfolio Standards

Act of 2004 -

• By 2021:

– 8% from Tier I including 0.5% solar

– 10% from Tier II

• From 2006 to 2017, renewables rose from 0 to 6%

of electricity sold to utility customers in PA

PA Climate Change Initiatives

• The PA Climate Change Act of 2008 - triennial Climate Change Action

Plan and GHG Inventory:

– 2018 CAP – strategies to reduce GHGs by reducing emissions from

oil and gas systems

– 2018 PA GHG Inventory: natural gas production process emissions

contributed 10.76 million metric tons of carbon dioxide equivalent in

2015; total emissions statewide were 286.78 MMT

• Energy Efficiency and Conservation Law of 2008

– Requires electricity distribution companies to provide energy

efficiency measures, e.g. rebates and retrofits

• 2016 Wolf Methane Reduction Framework

PA Methane Reduction Strategy: Permits

• GP5 and GP5A for compression stations and

unconventional well sites effective 8/2018

– Regulated methane for new sites

• Draft proposed rulemaking: Control of VOC

Emissions from Oil and Natural Gas Sources

– Proposes to regulate VOCs, reducing methane as a co-

benefit, from existing natural gas facilities • 25 Pa Code Chapter 129

• EQB on December 17, 2019 - Approved

PA 2019 Draft GHG Emission Inventory

• Total statewide GHG emissions from 2000-2016

– Down 22%

• Electricity production emissions down 31%

• Transportation emissions down 13%

• Industrial emissions down 4%

• Electricity production by source from 1990-2016:

– Coal from 95% to 65%

– Natural gas from .7% to 34%

November 27, 2018 Clean Air Council et al

PA Cap & Trade Petition

Economy-wide Pennsylvania program

• Initial cap at .97 of 2016 emissions;

– Declines 3% each year for carbon neutrality by 2052

Scope: 14 identified industries that emit 25,000 tpy

• e.g., power plants, petroleum and natural gas systems, chemical plants

• Covered greenhouse gases include carbon dioxide, methane,

hydrofluorocarbons, and others.

• 287 major facilities in Pennsylvania are now reporting their

emissions to EPA.

– Other entities may opt in.

November 27, 2018 Clean Air Council et al

PA Cap & Trade Petition

• DEP auctions or distributes allowances

• Fossil fuel distributors and emission sources

surrender allowances each year for GHG emissions

• Offset project protocols, California based

• Exemptions for product sales with no emissions

• Proceeds to the General Fund

January 2019 Gov. Wolf Executive Order

November 2019 DePasquale special report

Executive Order 2019-01 (1/8/19)

• Reduce GHG emissions by 26% by 2025 and 80% by 2050 from

2005 levels.

• Reestablishes the GreenGov Council

• Chaired by Secretaries of DEP, DCNR and Dept. of General Services and

other appointees

• Reduce agency energy consumption by 3%/year, increase electric and

hybrid state car fleet, and offset at least 40% of agency electric use by

renewables

• No emissions standards for non-agency sources.

• November 2019, PA Auditor General Eugene DePasquale –

Climate Crisis; the Rising Cost of Inaction

October 2019 Gov. Wolf Executive Order

PA to Join RGGI?

Executive Order 2019-07 (10/3/19)

• Proposed Rule by 7/31/20:

– All fossil-fuel-fired EGUs

– Same stringency CO2 budget

as RGGI

– Annual auctions of

CO2 allowances

• Even though:

– GHG emissions decreased 14% 2000-2015

– PA ~ 1% global GHG emissions

RGGI Overview

• Founded 2005, first auction 2008

• 9 member New England states; NJ and VA to join

• Applies >25 MW fossil-fuel-fired plants

• Current allowance = $5.20/ton

• Reduce emissions by 30% below 2020 by 2030

Pennsylvania Performance

Without RGGI

Since 2009:

• PA emissions decrease = RGGI decrease

• Electricity price increase:

– 27% - RGGI states

– 8% average US

– 5% PA

Some Predicted RGGI Consequences

in Pennsylvania

• Emissions decrease

– 80M tpy (2022) 56M tpy (2030)

• Allowance cost increase

– $5/ton $15+/ton (2030)

• Revenue to PA

– $850-900M/yr between 2022-30

• Wholesale power price cost

– Increase $2.50 MWh (7.5%)

Some Predicted RGGI Consequences

in Pennsylvania

• Coal industry

– 5M ton/yr decrease coal burn

– Competitive advantage to OH and WV

– “Leakage”

• Reduced reliability

– by increased reliance on renewables

• More transmission infrastructure

– Decentralized renewables

Carbon Dioxide Cap and Trade Authorization Act

HB 2025 / SB 950

• Declarations:

– DEP has no legal authority to regulate or tax CO2

– Premature retirement of coal plants poses significant

economic hardship and reliability risk

• Limits on DEP:

– May not control CO2 or join RGGI without legislative

approval

Carbon Dioxide Cap and Trade Authorization Act

HB 2025 / SB 950

• DEP Process:

1. 180 days for public comment period

2. 4 public hearings

3. Comprehensive report to General Assembly, re

a) Compliance costs

b) Effect on electricity price

c) Effects on all industry, including forced retirements

d) Statewide economic and fiscal impacts

e) Less costly alternatives

Local Climate Change Action Plans

• Pittsburgh CAP 3.0

– Sets municipal goals by 2030

• City operations: 100% renewable energy, 100% fossil fuel free

• City of Pittsburgh: 50% energy & water use reduction, 50%

emission reduction, zero waste

• Emission reduction: 20% GHG reduction by 2023, 50% by 2030,

80% by 2050

• Other municipalities:

– Wilkins Twp., Allegheny Count (2010)

– Haverford Twp., Delaware County (~2008)

Thank you!