The Western States’ Plan for EV Charging Infrastructure – Lessons Learned and Things to Watch

Introduction

On October 4, 2017, the Governors of a number of western states signed a memorandum of understanding (“MOU”) to lay the foundation for work on a regional electric vehicle (“EV”) infrastructure development plan called the Regional Electric Vehicle Plan for the West (“REV West Plan”). The MOU was initially entered by Colorado, Utah, Nevada, Montana, Wyoming, Idaho and New Mexico, and later Arizona. [1]  The MOU calls for the participating states to work cooperatively to establish policies that will support the development of EV charging stations along 11 major transportation corridors that link their states together, spanning a total of 5,000 miles.[2] The MOU mainly focuses on interstate highway infrastructure including East-West Interstate 10, 40, 70 76, 80, 84, 86, 90, 94 and North-South Interstates 15 and 25.

The signatories to the MOU anticipate a future with much higher levels of EV usage. To support this greater EV usage, the MOU calls for efforts by the states to:

  1. Coordinate station locations, thereby maximizing use and minimizing inconsistency across charging station infrastructure;
  2. Develop practices and procedures that will encourage more people to adopt EVs, including addressing “range anxiety”;
  3. Develop operating standards for charging station uniformity;
  4. Explore ways to incorporate EV charging stations in the planning and development processes;
  5. Encourage automakers to stock a variety of EVs in participating states; and
  6. Collaborate on funding and finding opportunities for the network.[3]

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When the Big One Hits, We’ll All Be Thankful for Grid “Resiliency”

Or so Secretary Rick Perry and the DOE would have us believe.  Approximately three weeks ago, the DOE made its pitch to FERC and the energy industry that a lack of “resiliency” threatens the U.S. power grid.  The responses are in.  And the shock and bewilderment that immediately followed the release of the Secretary’s surprising proposal has, in some cases, turned into a Comedy Central Roast of Secretary Perry and this fanciful thing called grid “resiliency.”  In just a matter of weeks, over 500 companies, individuals, industry groups, trade associations, and RTOs/ISOs have filed comments. And aside from the unsurprising positive responses from companies that would see financial benefits from the proposal, the response has been overwhelmingly negative.

Besides the usual suspects that one would expect to come out against a proposal to subsidize nuclear and coal facilities, the ISO/RTO Council argued against the proposal, stating bluntly that DOE’s proposal “would degrade the efficiency and effectiveness of existing organized wholesale markets, would provide improper incentives and disincentives to current and future market participants, would not promote the goals stated in the NOPR (i.e., enhancement of electric reliability and resilience), and would reverse the progress the Commission and the nation’s [RTOs] and [ISOs] have made in developing robust and reliable competitive markets.”  The National Association of Regulatory Utility Commissioners argued that the proposal could usurp state jurisdiction over generation and seeks to push through a significant change in policy without sufficient study. A group of former FERC Commissioners even joined together to question the proposal.  And one individual shed formalities and offered that Secretary Perry had been correct when he once suggested that the DOE should be abolished—ouch.

Even among coal and nuclear interests, there was not uniform agreement on DOE’s grid policy. For example, Exelon (which is already set to receive subsidies from New York and Illinois for its nuclear facilities) attacked the PJM tariff and advocated for changes to RTO/ISO price formation, but did not actually recommend that the DOE’s proposal be adopted. In contrast, FirstEnergy (which has faced rejection from Ohio regarding nuclear subsidies) argued for the DOE proposal to be adopted largely as written.

While FERC followed DOE’s timeline for receiving comments on the proposal, it remains to be seen if FERC will issue a final order on DOE’s timeframe and what would be included in any such final order. Commissioner Powelson (who was previously Chairman of the Pennsylvania Public Utility Commission) has already said that FERC “will not destroy the marketplace” in ruling on DOE’s proposal—a statement that was endorsed by Commissioner LaFleur. Acting Chairman Chatterjee (who was previously an aide to Senator McConnell of Kentucky) has similarly stated that FERC will not “blow up the market.”

 

Reply comments are due on November 7, so stay tuned.

U.S. EPA Moves to Repeal Clean Power Plan

In a much-anticipated move, the U.S. Environmental Protection Agency (EPA) is proposing repeal of the Clean Power Plan (CPP).  The draft proposed rule outlines EPA’s revised interpretation of its authority under Clean Air Act section 111(d) to regulate greenhouse gas (GHG) emissions from power plants only within the fenceline.  EPA concludes in the proposed rule that the CPP “system of emission reduction” for GHGs is inconsistent with section 111(d), given that only one of the three “building blocks” of the CPP directly applies to or at fossil fuel-fired power plants themselves, rather than to the owners or operators of plants, who could take action outside the fenceline to meet the CPP GHG performance standards.

To arrive at the revised interpretation, the proposed rule looks to how certain terms and phrases in section 111, particularly ‘application of the best system of emission reduction’ and similar terms, are used in other sections of the Clean Air Act and related legislative history of the language.  The proposed rule also takes stock of the Agency’s prior “understanding” of section 111 as applying to physical or operational changes to a source, reflected in previous regulatory actions.  EPA noted that the revised interpretation will avoid illogical results in light of other provisions of the Clean Air Act and avoid a policy shift in the relationship between federal and state government and conflicts with other federal legislation and the jurisdiction of the Federal Energy Regulatory Commission.  The proposed rule’s Regulatory Impact Analysis provides a revised accounting of the costs and benefits of the CPP, versus its repeal.  EPA has also proposed the express rescission of the legal memorandum that detailed the Agency’s previous legal analysis in support of the CPP.

Anticipating criticism of its about-face in the legal arguments underpinning the CPP, the proposed rule notes judicial precedent, including Chevron v. NRDC, in support of reconsidering prior decisions “on a continuing basis.”  The draft proposed rule directly addresses several perceived legal flaws with the CPP as it was adopted, but this will not head off legal challenges to the final rule, assuming the repeal goes forward as proposed.  Multiple states, as well as environmental groups that stepped into the fray in the current litigation over the CPP, are expected to bring suit once a final rule is adopted.  Opponents would likely challenge the repeal based not only on the arguments EPA advanced in 2015 on why the Agency is required under the Clean Air Act to regulate GHGs from existing power plants, but they are also expected to take issue with EPA’s unabashed change in stance driven by policy preferences rather than a legislative change or new scientific evidence.  The revised Regulatory Impact Analysis is another anticipated target for lawsuits.  With the likelihood that the Supreme Court would eventually hear any lawsuits challenging a repeal, in one twist of interest to SCOTUS watchers, Justice Gorsuch, the newest member of the Court appointed by President Trump and a strident critic in his appellate decisions of deference to agency action under Chevron, could hear arguments from EPA underpinned by Chevron deference.

EPA is not proposing or taking comment on a CPP replacement, but is considering whether to propose a new rule under section 111(d) to address GHGs from existing fossil fuel-fired power plants.  Per the draft proposed rule, EPA intends to solicit information on systems of GHG emission reductions that would be consistent with EPA’s revised interpretation of section 111(d) in a forthcoming Advanced Notice of Proposed Rulemaking.

The proposed rule notes that the New Source Rule issued under Clean Air Act section 111(b) – that is, the regulation of GHGs from new and modified power plants – is also undergoing review and reconsideration pursuant to President Trump’s March 28, 2017 Executive Order that launched the reexamination of the CPP.

Tax Equity Investors Wave Goodbye to FPA Section 203

Tax equity investments, and potentially other passive investments, in renewable energy just became that much easier to make.  Today, in response to a petition for declaratory order filed in January 2017 by a coalition of investors and project sponsors, FERC ruled that tax equity investments in public utilities does not trigger section 203 of the Federal Power Act provided the interests acquired by investors are “passive” according to the test set forth in FERC’s AES Creative Resources order.  But other investments are equally passive, at least according to the AES Creative Resources standard, and so today’s decision would arguably relieve those transactions of having to seek FERC’s approval.

Today’s order is available here.  Ad Hoc Renewable Energy Financing Group

DOE Directs FERC to Enact Special Compensation Rule for Coal Power

By a notice issued yesterday, September 28, Rick Perry, the Secretary of Energy, utilized section 403 of the DOE Act to require FERC to cause organized energy market operators (ISOs/RTOs) to compensate “fuel secure generation”, i.e., coal power, for grid “resiliency”–something that apparently puts Americans at risk despite statements by NERC to the contrary or the existence of RMR resources.  (The term “fuel secure generation” could also include nuclear power, but who are they kidding?  It’s crafted for coal.)  The notice surgically carves natural gas generators out of the money by referring to the natural gas shortages that affected power generation during the Polar Vortex.  This rare action by DOE gives FERC only 60 days to take final action or to issue the proposed rule as an interim final rule.  This of course means the timeline for FERC to solicit feedback is quite short–perhaps intended to allow Interim Chairman Chatterjee and Commissioner Powelson to take action on this notice alone before FERC has a full set of commissioners.  This morning, former NARUC President Travis Kavulla called the notice, if adopted, “the largest change to electricity regulation in decades.”

This is a big deal.  For those interested, the notice is found here:  DOE Grid Resiliency Notice.

5 Things Reflected in the ITC’s Suniva Injury-Phase Vote and What Comes Next

The U.S. International Trade Commission (ITC) voted unanimously on September 22, 2017, for an affirmative determination of injury to U.S. producers of crystalline silicon photovoltaic (CSPV) products, such as solar cells, modules and panels, from increased imports of those products into the U.S. market.  The vote concludes the “injury phase” of the investigation which began on May 17 with the acceptance of a petition for relief from imported CSPV products filed by solar manufacturer Suniva, Inc. (later joined by SolarWorld Americas, Inc.) pursuant to Sections 201-202 of the Trade Act of 1974.  As we reported in an earlier blog post, the ITC held a public injury-phase hearing on August 15, 2017, in which the Commissioners heard testimony and received statements and briefs from petitioners and their supporters and opponents of the petition.  Meanwhile, ITC staff was busy summarizing and analyzing data collected during the investigation, which efforts produced an injury phase report (Staff Report) that runs more than 500 pages.  Here are five key things reflected in the September 22 vote.

1.  The ITC’s Vote Was Directed Toward 13 Existing U.S. Producers – The ITC collected data from the five-year period from 2012 through 2016 and identified 13 operating domestic producers of CSPV cells, including petitioners Suniva and SolarWorld.  The Staff Report noted that three domestic producers, tenKsolar,  Motech and Silicon Energy, had ceased operations during the period.  The Staff Report stated that these 16 (13+3) producers accounted for 100% of domestic CSPV cell production, and 63.9% of domestic CSPV module production during 2015. (See Report pages I-53 to I-55) The remaining domestic module production was contributed from various assembly operations and excluded modules made from imported CSPV cells. (See Report page III-33) U.S. producers are defined as companies with production facilities in the U.S. territory; foreign ownership or control, financial solvency and volume of production are irrelevant for defining U.S. producers under the statutory language.  Further, other industry players are irrelevant to the injury analysis, including investors, utilities, state and local interests, installers and those employed in these downstream and supporting sectors.  Only domestic producers and those directly working for them are protected parties in the injury phase.

2.  Statutory Language Matters – ITC trade investigations are not subject to creative statutory interpretation. The Commission reads and follows the relevant statutory language.  Here, the statute is straightforward.  The ITC mandate is to investigate “whether an article is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported article.”  The statute further defines domestic industry as “the producers as a whole of the like or directly competitive article or those producers whose collective production of the like or directly competitive article constitutes a major proportion of the total domestic production of such article.”  The “article” is the merchandise defined in the petition and deemed to be the scope of the investigation, which was published in the ITC’s notice of initiation of the Section 201 investigation on June 1 (82 FR 25333 2017).  A “substantial cause” is “a cause which is important and not less than any other cause.”  Finally, “serious injury” is “a significant overall impairment in the position of a domestic industry.”   Unlike some statutes with general or undefined language that allows a court or agency significant room for interpretation, Congress provided specific guidance to ITC in this one.  The Commissioners have little room for creative interpretation. Continue Reading

Transaction Structuring Matters: North Carolina Rejects Third-Party Rooftop Solar Power Purchase Agreements

A North Carolina appeals court has reminded energy developers in the state of the importance of structuring a transaction so as not to trigger the state’s utility franchise laws. For one unfortunate developer, that reminder came in the form of disgorged revenues and potential monetary penalties.

Earlier this month, on September 19, 2017, a North Carolina appeals court (in a 2-1 decision) upheld a decision of the North Carolina Utilities Commission (“NCUC”), which found that an environmental non-profit organization (NC WARN) was impermissibly operating as a North Carolina “public utility” when NC WARN entered into a power purchase agreement to own and operate solar panels on a church’s property and to charge the church based on the amount of electricity generated by the solar panels. (State of North Carolina ex rel. Utilities Commission et al. v. North Carolina Waste Awareness and Reduction Network, Case No. COA16-811). The North Carolina court found that such service by NC WARN infringed on the franchised utility’s electric service territory, contrary to North Carolina’s policy prohibiting retail electric competition and establishing regional monopolies on the sale of electricity. According to the court, NC WARN’s activities (in owning and operating the solar panels on the church’s roof and selling electricity from those solar panels to the church) were in direct competition with the franchised utility’s services as both entities were selling electricity to the franchised utility’s customer.   Continue Reading

Updates to Energy Related Bills in the 2017-2018 California Legislative Session

Stoel Rives’ Energy Team has been monitoring and providing summaries of key energy-related bills introduced by California legislators since the beginning of the 2017-2018 Legislative Session. Legislators have been busy moving bills through the legislative process since reconvening from the Summer Recess. For any bill not identified as a two-year bill, the deadline for each house to pass the bill and present it to the Governor for signature or veto was September 15, 2017. Below is a summary and status of bills we have been following.

An enrolled bill is one that has been through the proof-reading process and is sent to the Governor to take action. A two-year bill is a bill taken out of consideration during the first year of a regular legislative session, with the intent of taking it up again during the second half of the session.

  • Of particular note here is SB 100, California’s pitch for 100 percent renewable energy, failed to move to the next stage of the process and is kicked to next year.
  • Our next blog post, after October 15, will provide an update on whether those bills sent to Governor Brown were signed or vetoed.

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Recent Federal Actions to Streamline the NEPA Process

There has been a string of actions in the past few weeks addressing the federal government’s policy goal of streamlining the NEPA review process.  Although a number of actions have been taken, it presently boils down to this:  the federal government seems to genuinely be pursuing ways to make the NEPA process for infrastructure projects (including energy projects) faster, more predictable, and more efficient.  Whether and how this will be implemented in practice remains to be seen.  The Dept. of Interior and CEQ have been the first to take (aspirational) actions to implement this policy.  The following summarizes the recent actions.

President Trump issued Executive Order 13807, titled “Establishing Discipline and Accountability in Environmental Review and Permitting Process for Infrastructure Projects. Among other things, EO 13807 directs the following:

  • Development of a “performance accountability system” to track milestones and deadlines “major infrastructure projects,” score agencies’ ability to meet those deadlines, establish best practices for the permitting/review of infrastructure projects.  Projects would also be tracked through a “dashboard” that is updated monthly.
  •  Implement “One Federal Decision” for major infrastructure projects.  Under “One Federal Decision,” a project would have a single lead agency that will coordinate all necessary federal approvals and issue a single record of decision to address all those approvals.
  • The completion of all permit decisions should occur within 90 days of the ROD, and “not more than an average of approximately 2 years” after issuance of the notice of intent to prepare an EIS.
  • CEQ’s development of a list of initial actions that it will take to modernize the federal environmental review process, which can include issuing new regulations, guidance, and other directives.

For purposes of the EO, “major infrastructure project” essentially includes energy, water, and transportation projects for which multiple federal authorizations are required and for which an EIS is required.  The EO is fairly general and ambiguous and leaves room for exceptions to just about all of its directives.  The EO can be viewed here:  https://www.whitehouse.gov/the-press-office/2017/08/15/presidential-executive-order-establishing-discipline-and-accountability.

CEQ responded by issuing a notice listing the actions it plans to take to implement EO 13807, as follows: Continue Reading

ITC Prepares to Vote on the Suniva/SolarWorld proceeding re Crystalline Silicon Photovoltaic Cells

As we approach the critical September 22  vote of the U.S. International Trade Commission (ITC) for the U.S. solar industry, here is a brief review of how we arrived at this point and what to expect.  This vote will constitute the injury determination in the ITC global safeguard investigation into the effect of imported crystalline silicon photovoltaic (CSPV) products on the U.S. domestic solar manufacturing industry.

Overview

As reported widely in the solar industry press, on August 15, 2017, the ITC in Washington D.C. conducted a public hearing for the injury phase of the trade investigation (Inv. No. 201-075) into CSPV product imports.  The hearing generated more than 400 pages of hearing transcript and thousands of pages of briefing materials and statements submitted both in support and in opposition of the need for trade protection remedies to  support the U.S. domestic solar manufacturing industry.  A public version of some hearing testimony is available here.  The stakes are high.  This investigation could lead to  increased tariffs, quotas, or both, against all U.S. imports globally of CSPV cells whether or not partially or fully assembled into other products. CSPV cells are the most common form of raw power-generating material used in solar panels.  This investigation is being conducted pursuant to U.S. trade statutes and U.S. obligations under the World Trade Organization (WTO) terms of the Agreement on Safeguards. Continue Reading

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