Legal Challenges for 'Leaving It in the Ground': Touchstone Developments and Holdings
| Date | 01 April 2017 |
| Author |
47 ELR 10312 ENVIRONMENTAL LAW REPORTER 4-2017
A R T I C L E S
Legal Challenges
for “Leaving It in
the Ground”:
Touchstone
Developments
and Holdings
by Steven Ferrey
Steven Ferrey is a Professor of Law at Suolk University
Law School. He is the author of seven books on energy and
natural resource law, the most recent of which are
(2010);
(7th ed. 2016);
Guide to Electric Market Regulation (2000); and
Independent Power (41st ed. 2017). He also is the author of
more than 100 articles and book chapters on these topics.
Summary
As renewable energy becomes more cost-eective,
there are increasing calls to leave traditional fossil
fuel resources “in the ground.” But our ability to do
so is constrained both by current technology and by
the existing legal and policy structure. is Article
examines the improvements in renewable energy tech-
nologies and their limitations and economic implica-
tions; a nd discusses the challenges facing the Clean
Power Plan and other federal actions, as well as state
attempts to mandate and encourage renewable energy,
as a result of recent federal court and agency deci-
sions. e author concludes that the main challenge
to “leaving it in the ground” is not technological but
legal in nature, due to injunctions of proposed federal
programs, the states’ loss of regulatory authority from
preemption and Commerce Clause rulings, and the
uncertainty surrounding federal policy going forward.
Electric power is technology. Technology changes.
And technological change in energy creates a spring-
board and platform on which law operates as a regu-
lator. We are now at a technological inection point where
it is possible to leave a signicant amount of traditional
energy resources “in the ground.” Rather than urge the
population to do without this traditional electric energy,
a viable option now is to switch to other forms of more
renewable energy.
As a matter of economics, leaving traditional energy
resources in the ground conserves our energy capital stock.
We can save and harbor fossil fuel resources in the ground
for use later, if we so choose. ey are not wasted, they
are conser ved. One cannot save for another day many of
the renewable power resources (today’s sunshine, wind, or
moving water). From a policy perspective, leaving tradi-
tional energy resources in the ground purchases a virtual
“insurance policy” for a nation holding fossil fuel resources
in reserve by consuming today’s renewable resources. e
Barack Obama Ad ministration did so in starts and stops
during the pa st eight years, through its Clean Power Plan
(CPP)1 and other initiatives.
Even more important in terms of new technology, during
the past decade, the price of implementing many renewable
energy alternatives has dropped dramatically. For example,
the cost of wind power has dropped within the range of
being competitive with the price of some more traditional
fossil fuel resources for the production of electricity.2 Wind,
along with natural gas, has dominated new sources of elec-
tric energy deployed in the most recent decade.3 Solar elec-
tric energy is now cost-competitive with traditional fossil
fuels due to substantial subsidies,4 and it is projected to dra-
matically expand in use in the coming decade.5
Policy also is a key factor for whether we leave traditional
fossil fuels “in the ground.” President Obama’s CPP was
delayed for years, and potentially forever, by a preliminary
1. Section III.B.
2. Tara Patel, ,
B, Aug. 31, 2015, http://www.bloomberg.com/news/articles/
2015-08-31/solar -wind-power-costs-d rop-as-fossil-fue ls-increase-iea-says.
3.
Record Highs, E. (Aug. 6, 2013, 8;00am), http://energy.gov/
articles/energy-dept-reports-us-wind-energy-production-and-manufacturing-
reaches-record-highs.
4. I R E A, R P I C-
C (Fact Sheet 07), available at https://www.irena.org/remap/
REmap-FactSheet-7-Cost%20Competitive.pdf.
5. Solar Energy Industries Association,
Growing at a Record Pace, http://www.seia.org/research-resources/solar-
industry-data (last visited Feb. 14, 2017).
Environmental Law Section.
Copyright © 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
4-2017 NEWS & ANALYSIS 47 ELR 10313
injunction issued by the U.S. Supreme Court, in a hig hly
unusual step where the Court enjoined this program even
before the case was heard by the court of appeals.6 With the
recent change in presidential administrations, the agency
action that created the CPP can be reversed by a second,
contrary agency action. With energy, market economics,
as well as government policy, exert a signica nt impact on
the route travelled. e legal, technical, and policy implica-
tions are analyzed in this Article.
Section I lays the technic al foundation on which
“leavin g it in the g round” is based. It examines exactly
what one would leave in the ground, and why this is
important for bot h globa l wa rming and criteria pollu-
tion control tar gets.7 It then traces the implications for
emissions of carbon dioxide (CO2), the principal green-
house gas (GHG), a s well as metha ne, the second most
important GHG, whose impact on climate has be en dra-
matically underestimated. Here, the “what” and “how”
matter. e i mplications of “leaving it in the ground,”
to date in the United States, have been to leave only c oal
in the ground; increasing amounts of natur al ga s and oil
have be en hydrofracked for extrac tion a nd use. e sec-
tion examines the economics of why this is occurr ing,
while the Obama Administration’s legal initiatives, the
Mercury and Air Toxics Standard (MATS) and the CPP,
have both been enjoined at the Supreme Cou rt.8
Section II examines renewable power a lternatives that
would allow more natural gas to be left in the ground going
forward. is section examines the technical cha llenge
posed by the domina nt forms of renewable energy—wind
and solar power—which are intermittent and do not pro-
vide power pursuant to electric system reliability require-
ments. It takes the next step and examines how this is now
compensated by more “ramping” of traditional fossil fuel
resources, which has distinct environmental consequences.
It also analyzes the possibility of advanced options to store
power, which to date has been challenging and expensive.
Finally, this section looks at the option to “virtually” store
electric power through net metering programs that more
than 40 of the 50 states have adopted, as well as the signi-
cant legal eect of net metering.
Section III confronts lega l jurisdictional limits on both
state and federal governments when they decide to leave
6. Greg Stohr & Jennifer A. Dlouhy, Obama’s Clean-Power Plan Put
, B, Feb. 9, 2016, http://
www.bloomberg.com/politi cs/articles/2016-02-09/o bama-s-clean-power-
plan-put-on-hold-by-u-s-supreme-court.
7. For more on the criteria pollutants regulated under the CAA, see S
F, E L: E E 186-89 (7th ed.
2016).
8. C. Boyden Gray & Sam Kazman,
, F N, Sept. 27, 2016, http://www.foxnews.com/
opinion/2016/09/27/its-judgment-day-for-epas-clean-power-plan-america.
html.
it in the ground. On a federal level, the CPP’s attempt to
leave more GHGs in the ground has been arrested by a
multi-year temporary injunction. Even if eventually set free
and not withdrawn by future administrations, what will be
left in the ground? I analyze the uneven impact the CPP, as
drafted, would have because of its deference to state discre-
tion, whereby:
• Approximately one-half the states participate in
obtaining wholesale power through independent sys-
tem operators, and one-half do not.
• e CPP allows the adoption of very dierent mass-
based standards or rate-based standa rds.
• One-quarter of the states have deregulated and made
more competitive their power sectors, while a major-
ity of states have not.
• Some states have the ability to engage in interstate
trading of CPP compliance.
Sect ion IV ana lyzes the lega l issues t hrough se v-
eral 2 016 Supreme C ourt a nd other federal court and
agenc y decisions:
• Decisions of the Federal Energy Regulatory Com-
mission (FERC), which greatly restrict the authority
of state energy regulators a nd public utility commis-
sions to exercise authority over new energy decisions
in energy markets.9
• Decisions of the U.S. Courts of Appeals for the
Eighth Circuit and the Seventh Circuit, additionally
restricting on constitutional grounds the authority of
states over electricity sector decisions.10
• e Supreme Court’s 2016 decision under t he
Supremacy Clause restricting the authority of states
to make decisions on electric power, which aect
what gets left in the ground.11
• Two decisions of the Seventh Circuit restricting
state power.12
• State use of an option that the 2016 Supreme Court
decision left available, state renewable portfolio stan-
dards, inuencing what is left in the ground.13
9. Section IV.B.
10. Section IV.C.
11. Section IV.A.
12. Section IV.D.
13. Section IV.E.
Copyright © 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
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