Power, Oil, Gas, and Minerals

We discuss key regulatory trends and strategies to consider when pursing US transmission and interconnection opportunities.

By Tyler Brown, Marc T. Campopiano, and Jennifer K. Roy

Renewable energy production has grown at an exponential clip over the past decade, with continued strong expansion expected because of declining costs, numerous governmental incentives, and long-term decarbonization policies. This trend has driven a tremendous demand for new transmission infrastructure in the US and globally, yet new transmission lines often take years to develop due to regulatory hurdles and litigation challenges.

An unprecedented investment in transmission will be needed over upcoming decades to keep pace with demand and meet decarbonization goals. Companies and investors will need to factor into their strategies these key regulatory trends when pursuing US and global transmission and generator interconnection opportunities.

The US Department of Energy has committed $1 billion to support clean hydrogen offtakers to kickstart the hydrogen economy.

By Joshua T. Bledsoe and Kevin A. Homrighausen

On July 5, 2023, the US Department of Energy (DOE) released a Notice of Intent (NOI) to invest up to $1 billion in a mechanism to develop reliable demand for hydrogen at DOE-funded Regional Clean Hydrogen Hubs (H2Hubs). DOE hopes this mechanism will help a diverse range of entities leverage the full potential of clean hydrogen and facilitate the use of clean hydrogen across a variety of economic sectors.

The move represents a step forward for the small modular nuclear reactor industry, but legislative uncertainty over new nuclear facilities in the US remains.

By Marc Campopiano, Lucas Quass, and Shawna Strecker

As part of long-range plans to address climate change, many states have adopted policies to spur the transition to a low-carbon future. Renewable sources like solar, wind, and geothermal energy have garnered considerable attention, but nuclear power is the largest domestic source of carbon-free power. Nuclear power plants have supplied about 20% of total annual US electricity since 1990.[1] Yet, even as the US and many states seek to decarbonize their energy sectors, nuclear reactors in the US are being decommissioned because of age, and new nuclear facilities often face public opposition.

EPA’s long-awaited proposal would set aggressive emission reduction targets with many different approaches and timelines to achieve them.

By Stacey L. VanBelleghem and Jennifer Garlock

On May 11, 2023, the US Environmental Protection Agency (EPA) released its proposed rule[1] to regulate carbon dioxide (CO2) emissions from electric generating units (EGUs) at power plants under Section 111 of the Clean Air Act (CAA) (the Power Plant GHG Rule or the Proposed Rule).

The Power Plant GHG Rule consists of five proposed actions:

  1. determinations and updates to current CO2 standards of performance (promulgated in 2015) for new and reconstructed stationary combustion turbines (generally natural gas-fired) pursuant to Section 111(b) of the CAA;
  2. determinations and updates to current CO2 standards of performance (promulgated in 2015) for modified fossil fuel-fired steam-generating EGUs (generally coal-fired) pursuant to Section 111(b) of the CAA;
  3. determinations and CO2 emission guidelines for existing fossil fuel-fired steam-generating EGUs (generally coal-fired) pursuant to Section 111(d) of the CAA;
  4. determinations and CO2 emission guidelines for large, frequently used existing fossil fuel-fired stationary combustion turbines (generally natural gas-fired) pursuant to Section 111(d) of the CAA; and
  5. a repeal of the Trump-era Affordable Clean Energy (ACE) Rule.

EPA is also soliciting comment on a number of topics, including potential options and emission guidelines for existing fossil fuel-fired stationary combustion turbines not otherwise covered by the Proposed Rule (generally natural gas-fired units that are either smaller or less frequently used).

The state must dramatically expand its energy infrastructure and renewable energy sources to satisfy growing demand for electricity while meeting ambitious climate goals, according to California Independent System Operator’s Draft 2022-2023 Transmission Plan.

By Marc Campopiano, Joshua Bledsoe, Julie Miles, and Shawna Strecker

California has committed to ambitious carbon reduction targets and pledged to become carbon neutral no later than 2045.[1] However, to meet these lofty goals while providing reliable energy for millions, the state must commit to an unprecedented degree of renewable power and transmission line development.

The challenge is highlighted by the Draft 2022-2023 Transmission Plan (Draft Transmission Plan) published on April 3, 2023, by the California Independent System Operator (CAISO), the independent energy grid operator that serves approximately 80% of California and a small part of Nevada. As of 2018, California had about 80 gigawatts (GW) of total electric generating capacity.[2] CAISO predicts that California will need to almost double that total capacity in the next decade with new renewable generation and greatly expand the transmission grid in order to achieve clean power targets and vast electrification programs as California attempts to phase out fossil fuel usage. This scale of infrastructure buildout will require unprecedented investments, vastly expedited environmental permitting and review by regulatory agencies, and sustained political will to substantially incentivize and streamline priority projects.

This blog post examines the ambitious roadmap outlined in the Draft Transmission Plan, and CAISO’s long-term transmission planning more broadly, to advance California’s climate goals by undertaking 46 transmission projects and adding at least 40 GW, mostly from renewable sources, to the CAISO grid over the next 10 years.

The proposal would auction off almost 375,000 acres of the Outer Continental Shelf offshore California for wind energy development.

By Nikki Buffa, Janice M. Schneider, Nathaniel Glynn, and Brian McCall

On May 31, 2022, the Bureau of Ocean Energy Management (BOEM) published a Proposed Sale Notice (PSN) for a pair of renewable energy lease sales offshore California. The PSN — which is the third offshore wind auction under the Biden-Harris Administration — represents a major inflection point in the complex and sometimes contentious process to bring wind power to the Outer Continental Shelf (OCS) offshore California. The timing of the PSN also dovetails with the California Energy Commission’s May 2022 announcement of the nation’s most ambitious target for offshore wind development: the state is seeking to construct 3 gigawatts of offshore wind capacity by 2030, with the potential for 10 to 15 gigawatts by 2045.

The decision clears a path for President Biden’s climate priorities, striking down a Trump Administration rule that had repealed the Obama Administration’s power plant greenhouse gas regulations.

By Stacey L. VanBelleghem and Devin M. O’Connor

On January 19, 2021, on the eve of President Biden’s inauguration, in American Lung Association, et al. v. EPA, the US Court of Appeals for the District of Columbia Circuit overturned the Environmental Protection Agency’s (EPA’s) Affordable Clean Energy (ACE) Rule, which sought to replace the Obama Administration’s Clean Power Plan (CPP). Both rules would regulate carbon dioxide (CO2) emissions from existing electric generating units (EGUs) under Section 111(d) of the Clean Air Act (CAA).[1]

The ACE Rule (summarized in this Latham blog post), took three key actions:

  1. It formally repealed the Obama Administration’s CPP, finding that the CPP exceeded the EPA’s statutory authority by employing generation-shifting (shifting electric generation from higher to lower emitting sources) as a Best System of Emission Reduction (BSER). In the ACE Rule, the EPA concluded that the agency’s authority to define BSER is limited to measures that can be applied “to or at” an individual stationary source, that generation-shifting conflicts with the CAA’s unambiguous statutory requirement, and the ACE Rule interpretation is the only permissible reading of the statute.
  2. It established EGU heat rate improvements as the BSER for CO2 emissions, identifying much weaker targets for these existing sources.
  3. It updated the foundational implementing rules for existing source emissions guidelines under Section 111(d) by extending compliance timelines.

The newly published Energy White Paper establishes a domestic trading scheme and sets out plans to clean out energy. 

By Paul A. Davies and Michael D. Green

On 14 December 2020, the UK Government published its Energy White Paper (the Paper). The Paper builds on previous green economy plans, setting them “in a long-term strategic vision, […] consistent with net zero emissions by 2050”.

The Paper further details ambitions unveiled by the Prime Minister in mid-November, in his Ten Point Plan. Moreover, the Paper sheds more light on previously established initiatives, such as the UK Emissions Trading Scheme, previously set into law through the Greenhouse Gas Emissions Trading Scheme Order 2020.

California appeals court decision increases the potential for CEQA challenges to power plant projects under the CEC’s jurisdiction.

By Marc T. Campopiano, Charles C. Read, and Kevin A. Homrighausen

In Communities for a Better Environment v. Energy Resources Conservation & Development Commission, the California First District Court of Appeal recently held that the State Legislature violated the California Constitution by limiting the scope of judicial review for California Energy Commission (CEC) decisions involving power plant siting to the California Supreme Court. Although the California Constitution gives the Legislature express authority to limit the scope of judicial review for California Public Utilities Commission (CPUC) decisions, the court found there is no similar authority regarding appeals of CEC decisions.

The Supreme Court has rarely, if ever, agreed to hear CEQA challenges of CEC power plant decisions. Now, developers seeking to construct new power plants or modify existing power plants under the CEC’s jurisdiction may see an increase in legal challenges — including California Environmental Quality Act (CEQA) challenges — in California’s trial courts. As a result, CEQA challenges to power plants may closely resemble other land use challenges in the state.