Archive for the ‘Energy’ Category

Burning Water

April 17, 2014

By John Howell, Esq., Vice President

blog - burningwater

The debate surrounding hydraulic fracturing, or “fracking”, is hot…almost as hot as burning water. At the federal, state, and local levels a battle is being waged and there seems to be no middle ground, no room for negotiation. While fracking has been around for decades, this battle over its future viability is just beginning. Pitting the environment against energy independence, a stream of documentaries and even a feature film, has certainly led to greater awareness and, perhaps, greater vitriol on both sides of the issue. If nothing else, watching this debate and monitoring the regulatory activity across the country is a fascinating exercise as the federal government, state legislatures, governors, local municipalities and courts are all active participants.

Last month, the U.S. Department of Energy’s Secretary of Energy Advisory Board (SEAB) published its Task Force Report on FracFocus 2.0. FracFocus is the reporting mechanism through which companies engaged in fracking disclose the chemicals added to their respective fracking fluid. This disclosure is intended to provide stakeholders with sufficient information to make informed decisions concerning environmental impacts due to fracking. FracFocus is maintained by the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (IOGCC) lending credibility to the data contained in FracFocus.

The Task Force Report is informative and I believe it is a good tool to limit the environmental impacts of fracking fluid…but, absent a willingness to find a middle ground concerning fracking, will it be effective? Claims of sickness, higher concentrations of cancer, undrinkable water, and even earthquakes have been attributed to fracking by its opponents. Will detailed and effective reporting of chemical use somehow lessen the import of these claims when those same claims are based on the use of chemicals? Not in Butte County California.

Last week, the Butte County Board of Supervisors voted to draft an ordinance that could ban fracking in the county. If this ordinance is ultimately passed Butte County will be the first county in California to enact a ban. One Supervisor, speaking in support of drafting an ordinance, cited a concern that fracking “is moving a lot of stuff underneath us that’s holding us up…by taking the foundation away, we’ll crumble”. Can middle ground exist if people are concerned with falling into the earth? It is worth noting that there have been no fracking operations in Butte County to date so, perhaps, everyone is safe.

Texas – a solidly pro-fracking state – utilizes a framework of sophisticated industry-friendly regulation that governs recycling practices for fracking flowback fluids and for casing, cementing, and well control of fracking well holes. Similarly, the Texas Commission on Environmental Quality adopted rules in 2013 to regulate disposal of certain radioactive tracers used in the exploration, development, and production of oil and gas resources. In Flower Mound Texas that may not be enough. Last week the Flower Mound City Council convened to “discuss and consider action related to gas drilling and development” with a focus on “community health issues related to hydraulic fracturing.” In Denton, Texas, a local activist group is working to place an ordinance banning fracking on ballots. The ordinance may result in a possible legal battle over the authority of local governments to ban fracking in Texas. In New York State, the November elections appear to be keeping the fracking discussion to a slow crawl. Now in the 6th year of a moratorium to study the effects of high-volume hydraulic fracturing, New York is not expected to issue final regulations anytime soon….certainly not before the elections. Despite dozens of bills sitting in the State Legislature and claims that the lack of movement in New York on the issue is having a significant economic impact and stunting job creation, final regulations are not expected from the Department of Environmental Conservation until at least April 2015. As a result, in February, a pro-fracking group filed suit against Governor Andrew Cuomo (D) to compel the state to complete its review of high volume hydraulic fracturing. In addition, the New York Court of Appeals is expected to hear cases soon regarding whether municipal governments have the authority to ban fracking within their borders.

While the fracking battle is being waged in these states and others across the country, money is flooding into North Dakota due to roughly 1 million barrels of oil production per day from the Bakken shale formation. This oil boom transformed North Dakota into the second largest oil producer in the country, only surpassed by Texas in terms of oil production. As a result, the unemployment rate in North Dakota is the lowest in the nation and the state has the most counties with increases to median household income. While North Dakota supports disclosure of fracking fluid chemical use in FracFocus and has recently adopted rules addressing oil and gas exploration, neither the court of law nor the court of public opinion seem to be impeding the state’s economic velocity.

Effectively monitoring state legislative and regulatory activity surrounding fracking is a true national effort. We are aware of the same dynamic playing out in Maryland, Minnesota, Los Angeles and everywhere else in between. Rarely have we monitored an issue this polarizing and divisive. Federal activity and the jurisdictional battles being waged in courtrooms across the country only add complexity and dimension to this effort. While issues often start out contentious and resolve with a predictable compromise, we do not see a compromise on the fracking horizon. Rather, we see the hydraulic fracturing debate being waged for years to come by two sides firmly entrenched in their beliefs.

About that burning water: in certain localities across the country, tap water can be lit on fire due to the level of methane in the water. Opponents of fracking claim methane in tap water as direct evidence that fracking fluid is poisoning groundwater and is not worth the environmental risks. Supporters of fracking point to the fact that tap water has been lit on fire since the 30’s – predating the first fracking operation. How, then, is fracking to blame? If we cannot agree on burning water, what can we possibly agree on?

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John Howell is Vice President of Regulatory Services at Stateside Associates. With substantial policy and legal experience, Mr. Howell guides Stateside Associates’ regulatory counsel and provides clients with hands on Regulatory Issue Management support from strategic planning, regulatory advocacy, and working with groups of state and local officials.

Why EPA Swarmed States’ Meeting

April 8, 2014

By Mark Anderson, Esq., Senior Vice President and Sarah Hunt, Esq., Manager State Issues and Ethics Officer

United States Environmental Protection Agency (EPA) Administrator Gina McCarthy pledged to ECOS last fall that she will “listen to the states” during her tenure at the agency’s helm. If actions speak louder than words, McCarthy underscored this message by sending 30 EPA regional and headquarters staffers to the Spring 2014 Environmental Council of the States (ECOS) meeting held March 31-April 2 at the Cavallo Point Lodge in Sausalito, California. McCarthy’s EPA, in an unprecedented move, also co-sponsored the meeting.

The current commitment of McCarthy’s EPA to ECOS surpasses anything we have witnessed since we began attending ECOS meetings in 1996. As recently as 2012, EPA was all but absent at ECOS meetings, leaving state environmental regulators feeling marginalized by the federal agency and its previous administrators. Despite McCarthy’s promise last fall, EPA’s suddenly stepped-up engagement with ECOS left some states speculating that EPA was only present to promote the federal position on two new and controversial rulemakings, both Obama Administration priorities.

The federal agency recently sent its Clean Air Act 111d rule on carbon pollution standards for existing power plants to the Office of Management and Budget (OMB) for pre-publication review. EPA and the Army Corps of Engineers also just jointly promulgated a draft rule on the definition of the Waters of the United States, a Clean Water Act rulemaking necessitated by a string of US Supreme Court cases that started with Rappanos v. United States (2006).

These two rulemakings are poised to reshape not only American environmental policy, but perhaps energy and land development policy as well. Given their significance, it is unsurprising that a broad spectrum of stakeholders, including many states, have loudly criticized both of these rules. The EPA did not reveal much about the new Clean Air Act 111d rulemaking at ECOS, but a large number of states fear the rule may result in the shuttering of numerous existing coal-fired utilities, resulting in job losses and energy cost spikes. The Waters of the United States rule, as drafted, has the potential to assert EPA jurisdiction over waters previously thought to be outside of federal regulatory authority. This rulemaking has serious implications for state water programs and land development.

At the Spring ECOS meeting, EPA staff held closed-door meetings with state regulators to discuss both of these rulemakings. The only clear outcome from these meetings is that EPA is determined to move forward with controversial aspects of both rulemakings, despite questions and concerns from several states. During the closed-door Clean Air Act 111d meeting, the EPA told states they will not use a state implementation plan (SIP) process to implement the forthcoming existing source rule, leaving states to wonder what mechanism EPA will use to enforce the rules. Interestingly, while EPA staff did discuss some details of the new 111d rule at this meeting, they did not mention to the states that the rule was complete and about to be sent to OMB that afternoon.

The limited public discussion on these important rulemakings at the conference was as unusual as EPA’s ramped-up involvement. Frank discussion of federal rulemakings in public sessions is an ECOS tradition. This time, however, the Air committee skipped over a scheduled 111d item on its public meeting agenda. There was also only one significant mention of the important water rulemaking during public sessions. EPA Deputy Administrator Bob Persciape told a public session that the new Waters of the United States rule “won’t be a big change” in actual EPA policy.

EPA staff made clear their interest in reaching out to state officials at ECOS last week. The question is why. Many states quietly expressed doubt that this new dialogue will actually shape EPA policy. States welcomed this EPA engagement, but it remains to be seen whether EPA is working toward true collaborative dialogue or merely using this opportunity to inform itself about the coming opposition from some states. States will therefore be watching closely to see if EPA continues its ECOS engagement when these significant Air and Water rulemakings conclude. States will also notice if EPA listened to their concerns when the agency rolls out 111d new source final rule and the 111d existing source proposed rule later this year. If EPA has listened, it will be obvious, and a new era of state and federal collaboration will start on solid ground.

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Mark Anderson, Esq. is Senior Vice President working at Stateside Associates managing the Regulatory Services Division. He advises clients on engagement strategy and directs educational and “grasstops” campaigns directed at governors and regulatory officials. Mr. Anderson also has created issue advocacy coalitions and facilitates work group meetings of state and federal stakeholders addressing environmental issues.

Sarah E. Hunt, Esq. is Manager, State Issues and Ethics Officer at Stateside Associates. She works with clients on a wide range of state and local government affairs issues. Sarah also helps Stateside and its clients navigate lobbying ethics, comply with campaign finance laws, and develop political giving strategies. She practiced campaign finance, election law, and non-profit management with a boutique political law firm for several years before her work at Stateside Associates.

Greetings From Hotel California

February 20, 2014

By John Howell, Esq., Vice President

cell towersThe National Association of Regulatory Utility Commissioners (NARUC) Winter Committee Meetings presented an interesting blend of discussion concerning both long-standing issues such as broadband deployment and E9-1-1 location accuracy and more recent “hot topics” such as Net Neutrality, Hydraulic Fracturing and the future of the Electric Grid. Depending on the room you were in it either felt like you were at the Renaissance Washington Hotel…or “Hotel California.”

Those of us who have worked in the telecommunications industry and, more specifically, emergency communications understand that E9-1-1 is like living at Hotel California, a fictional place made famous by The Eagles. “You can check out any time you like but you can never leave.” Having spent the better part of a decade at a national wireless carrier and then at a firm dedicated to building a nationwide wireless broadband network for public safety communications, I had “checked out” of the industry and the debate for the past 5 years. Apparently, I never left because there I was at NARUC, in Hotel California, listening to a panel discussion about the need for better accuracy of wireless 9-1-1 calls outdoors and for new accuracy standards for wireless calls indoors to include elevation/altitude.

Such discussions are immensely worthwhile and the presentation at NARUC was no exception. Anything industry or regulators can do to foster greater location accuracy of 9-1-1 calls is potentially life-saving and, therefore, of the highest importance. However, the discussions at NARUC were the same exact discussions I participated in almost 10 years ago within industry groups as well as while I served as steering committee chair of the Federal Communications Commission’s Network Reliability and Interoperability Council (VII).

While I am encouraged that emergency communications held such a prominent position at the NARUC meetings, 10 years is more-than-enough time for discussion. It is time for action and NARUC should be applauded for passing a resolution in support of enhanced location accuracy.

Perhaps the most lively discussion, if not debate, centered around the recent net neutrality decision handed down by the U.S. District Court of Appeals for the D.C. Circuit. The decision held that the FCC overstepped its authority when it prohibited broadband providers from blocking or discriminating against certain types of traffic. The NARUC panel, spiritedly represented by advocates for both sides, disagreed on what the decision meant and even disagreed on who won and lost. What the panel agreed on, though, is that the net neutrality debate is not close to being decided. All panelists agreed that the FCC would respond quickly, perhaps promulgating new rules. On Wednesday the FCC did just that as Chairman Wheeler announced the Commission will be proposing new net neutrality rules that conform to communications laws.

No discussion at the NARUC meetings was better-attended than those centered on the future of energy generation and distribution. Topics included “Beyond Net-Metering Wars: Real Solutions for Real Challenges” and “Developing Distributed Energy and Smart Grid Value through Collaborative Stakeholder Engagement and Policymaking.” During a panel discussion on “The Value of the Integrated Grid”, Mike Howard, President and CEO of the Electric Power Research Institute (EPRI) announced EPRI’s publication of the “The Integrated Grid – Realizing the Full Value of Central and Distributed Energy Resources.” Mr. Howard stated that the grid is expected to change to incorporate new stakeholders and that careful analysis is required to consider the associated costs as well as the impact new technologies will have on existing technologies.

Mr. Howard encouraged NARUC to base their regulation on informed policy and fact-based information while working to incorporate all sources of energy in the transformation to an integrated grid. In a separate presentation during the NARUC meetings, Senator Lamar Alexander (R-Tennessee) warned regulators to learn from issues Germany has experienced regarding price, reliability and quality in order to incorporate additional sources into their grid. The Senator called Germany an “energy mess” that if emulated in the U.S. would cause 25% of the nation’s nuclear power plants to shut down.

The NARUC winter meetings are, perhaps, best summarized by two distinct presentations to the General Assembly. Gregg Kantor from the American Gas Association provided an impassioned call for hydraulic fracturing (“fracking”) and the benefits of natural gas. He likened fracking to the computer revolution when describing what he believes to be a “shale gas revolution” that the country is about to embark upon. From the benefits of shale gas to fuel natural gas vehicles with significantly lower carbon emissions to the potential for significantly reduced reliance on foreign fuel sources – at lower costs – Mr. Kantor made a compelling case for fracking and natural gas exploration.

At the same time, Senator Joe Manchin (D-West Virginia) in a refreshingly apolitical presentation cautioned that regulators and industry alike should learn from the recent chemical contamination of the water supply in his state. The takeaway from Senator Manchin’s presentation was that progress is good and working to develop sources of energy is encouraged, but we cannot allow something as critical as drinking water to be contaminated; that there is a role for regulators and regulation in managing the use of chemicals (for such things as fracking) – but it might have to be accomplished at the state level. On a somber note, the Senator stated that while he hoped that progress could be made in Congress on all the issues being discussed at NARUC, that the reality is Congress is divided to the point that there are no guarantees progress will be made on the Federal level anytime soon.

It would appear that progress is stalled. I hope that in 10 years that none of us will find ourselves in a wing of Hotel California where energy issues, intelligence, advocacy and unrealized solutions reside.

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John Howell is Vice President of Regulatory Services at Stateside Associates. With substantial policy and legal experience, Mr. Howell guides Stateside Associates’ regulatory counsel and provides clients with hands on Regulatory Issue Management support from strategic planning, regulatory advocacy, and working with groups of state and local officials.