Three Key Takeaways from the Doing Business in the Northeast: 5th Bi-Annual Current Issues in Environment and Energy Conference
While all major energy projects and environmental clean-up projects in the Northeast face numerous challenges—from changes in the interpretations of regulations and in state-level requirements to legal challenges from non-governmental organizations and pressure from political agencies—support for renewable energy in a number of the states in the region is gaining steam, with New Jersey and Virginia committed to joining the Regional Greenhouse Gas Initiative. These themes resonated at Saul Ewing Arnstein & Lehr’s Doing Business in the Northeast: 5th Bi-Annual Current Issues in Environment and Energy Conference that recently was held in Houston and attended by more than 50 energy industry professionals. Below are three key takeaways from the conference.
1. Opportunities for renewable projects in the Northeast appear to be on the upswing with some states outlining aggressive plans. Panelists identified how the market is showing an increased appetite for renewable projects, technology efficiencies are advancing and stakeholders—millennials in particular—are demanding more sustainability. One panelist predicted that offshore wind turbines will be the base energy source for New Jersey within the next 25 years, while New York is also currently evaluating offshore wind power proposals. The City of Philadelphia outlined its goal to generate or purchase 100 percent of all electricity for the City’s built environment from renewable resources by 2030 in its September 2017 Municipal Energy Master Plan. Additional energy-efficiency initiatives that states are pursuing include community solar, clean energy technologies, micro grids, energy storage, electric vehicles and energy efficiencies for combined heat/power. The panelists discussed how a project can be deemed “100% renewable” through the use of energy contracts rather than through building renewable projects onsite. Notwithstanding the political enthusiasm and goal setting, there remain challenges to building renewable infrastructure in the Northeast, such as scalability, grid connectivity, cost constraints, financing, market risks, permitting, land use, space constraints and local ordinances.
2. Section 401 of the Clean Water Act is being used as a sword to delay or cut off federally approved pipeline projects rather than as a shield to protect state interests. Section 401 of the Clean Water Act states that any applicant for a federal license that may result in any discharge into navigable waters shall provide a state certification that the project will employ measures to protect state water quality based upon federally approved state standards. Some states, including New York, have started to use this as a sword to stop federally approved projects, instead of as a shield of their rights to help ensure that state water quality standards are being followed. During the conference session on this topic, panelists reviewed case law developments and pending projects caught in the cross-hairs on this issue throughout the Northeast. While litigation is currently centered on natural gas pipelines, it will affect other infrastructure development projects, including roads, electric transmission, hydro facilities and flood control. If infrastructure development improvements are to come to fruition in the United States, the Clean Water Act interpretation of state certifications will need to be ironed out first.
3. Last year’s Pennsylvania Supreme Court decision in Pennsylvania Environmental Defense Foundation v. Wolf (PEDF), involving Article 1 Section 27 of Pennsylvania’s Constitution, known as the Environmental Rights Amendment (ERA), raised more questions in Pennsylvania than it answered, with a projected 10-year horizon of litigation ahead to determine its applications. The ERA guarantees Pennsylvania residents the right to clean air, pure water, and the preservation of the natural, scenic, historic and esthetic values of the environment. Our panelists noted that Pennsylvania is one of the few states in the country with this kind of constitutional guaranty for its citizens, although one of our panelists noted a trend involving other states considering adoption of similar provisions. For the last 45 years, consideration of the ERA’s impact has been assessed by a three-part balancing test imposed by the courts in weighing project need and societal benefit against environmental harm, but last June the Pennsylvania Supreme Court reset the analysis on the ERA in its PEDF decision, saying that the text of the ERA has to be given the same deference as other constitutional requirements such as the right to free speech. The panelists disagreed on whether and to what extent this will change the landscape for project development in Pennsylvania. For example, if the state legislature has made a determination that an enacted law is consistent with the ERA, do state agencies have an independent obligation in making their permitting decisions? Panelists estimated that litigation will ensue over the next 10 years as agencies and courts grapple with interpreting PEDF and its applications.