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Comments on Interior’s Offshore Oil and Gas Leasing 2019-2024 Draft Proposed Program
The Department of the Interior’s offshore leasing program must analyze and account for the potential for environmental damage, the potential for the discovery of oil and gas, and the potential for adverse impact on the coastal zone. In addition, offshore oil and gas leases must provide fair market value for private use and development of these publicly-owned oil and gas resources. Our comments to the Interior’s Bureau of Ocean Energy Management (BOEM) explain why its Draft Proposed Program for 2019-2024, which would replace BOEM’s existing Program for 2017-2022, fails to meet its statutory mandates under the Outer Continental Shelf Lands Act (OCSLA).
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Regulation and Distribution
Most regulations seek to improve social welfare, but maximizing overall welfare may not help or protect all groups evenly. Many economists suggest handling unequal regulatory effects through the tax system. But some harms—like the disproportionately high environmental pollution felt by poor and minority communities and loss of the employment base in rural communities due to shifts in the economy—cannot be addressed by monetary compensation alone. A new article by Richard Revesz, published in the NYU Law Review, offers a blueprint for establishing a standing, broadly constituted interagency body charged with addressing serious negative consequences of regulatory measures on particular groups.
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Mineral Royalties: Historical Uses and Justifications
Published in the Duke Environmental Law & Policy Forum
Governments and private landowners have collected royalties on mineral resources for centuries. When comprehensive measures to account for the environmental externalities of mineral extraction are politically or practically unavailable, federal and state governments may consider adjusting royalty rates as an expedient way to account for these externalities and benefit society. One key policy question that has not received attention, however, is whether a royalty rate can and should be manipulated in this way, assuming statutory discretion to do so.
This article, published in the Duke Environmental Law & Policy Forum, fills that gap by evaluating the argument for increasing federal or state fossil fuel royalty rates through historical, theoretical, and practical lenses. To that end, this article in turn considers the meaning of royalties, the economic justifications for royalties, the legislative history of the implementation of federal royalties, and the considerations that private landowners have relied upon in setting royalties. This article concludes that it would be appropriate for governments to adjust mineral royalty rates to account for negative externalities not otherwise addressed by regulation or to otherwise promote public welfare. Such use of royalties is consistent with the historical record. Royalties have been used as pragmatic policy tools from almost their inception, and federal and state governments have often exercised their existing statutory discretion to adjust mineral royalty rates to promote public welfare.
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Royalty Rate Changes for Offshore Drilling
At a meeting in Houston on February 28, the Interior Department’s Royalty Policy Committee recommended lowering the royalty rate that companies pay to the public when they drill for oil and gas in U.S. coastal waters. Such a change would go against the Interior Department’s statutory mandate to earn fair market value for the development of publicly owned natural resources. Our policy director, Jayni Hein, submitted public comments to the Royalty Policy Committee and spoke at the meeting.
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Comments on Clean Power Plan Replacement Advanced Notice of Proposed Rulemaking
Though the Environmental Protection Agency plans to replace the Clean Power Plan, our recent comments to EPA reiterate that there is no compelling legal or economic case for repealing the Clean Power Plan or deviating from its flexible design. The Clean Power Plan is a permissible exercise of the EPA’s rulemaking authority under the Clean Air Act, is consistent with regulatory precedent, and is hugely cost-benefit justified.
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Comments to the Regional Greenhouse Gas Initiative on Virginia’s Proposal
As part of its climate plan, the State of Virginia proposes to join the Regional Greenhouse Gas Initiative (RGGI), a carbon trading program currently including states across the Northeastern US. We submitted comments to RGGI on how it can incorporate Virginia into the program and reduce carbon emission in a cost-effective way. RGGI should carefully assess the effect that Virginia’s initial carbon allowance level will have on the RGGI cap. Adding Virginia electricity generators to RGGI will improve electricity market efficiency. The exact extent of those improvements will be affected by the windfall revenue that Virginia’s power producers may receive through the unique consignment auction process for the allowances. RGGI should therefore ensure that the possibilities for windfall are minimized for Virginia’s regulated power producers.
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Comments to Colorado Public Utilities Commission on Electric Resource Planning
The Colorado Public Utilities Commission is revising their electricity resource planning process. Our comments to the Commission suggest legal language for incorporating externalities, like the climate effects of greenhouse gas emissions, into the state’s electricity policy. We also explain why the Social Cost of Carbon, as developed by the federal government in 2016, is the best tool for incorporating the externalities of carbon emissions into policy. Our response comments rebut the state electric utility’s faulty arguments against using the social cost of carbon in this process, and supports the use of cost-benefit analysis in determining the best policy option.
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Comments to Interior on Offshore Drilling Safety Requirements
The Bureau of Safety and Environmental Enforcement (BSEE) within the Department of the Interior is tasked with setting safety and environmental standards for offshore oil and gas production and exploration in federal waters. While BSEE updated its safety requirements in 2016, it now proposes to weaken and repeal some of these safety requirements in order to encourage more oil and gas production. In our comments on the proposed rule, we argue that the agency has failed to provide a reasoned explanation for repealing these requirements, which were part of a comprehensive update to safety regulations that had not been revised since 1988.
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Comments to New York State on Clean Energy Standards for Existing Generators
Public Comments / January 8, 2018 / DownloadNew York State plans to provide support to some existing small hydro, wind, and biomass generation facilities at risk of closure, in order to prevent the state from backsliding on its ambitious clean energy goals. The New York Public Service Commission released a report on the Clean Energy Standard Tier 2 Maintenance program, which focuses on the criteria a generator should meet in order to receive financial support and how these payments should be determined. Our comments on the report encourage the Commission to harmonize these payments across all proposed review processes for Tier 2 generators.
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Presentation at the Association of American Law Schools
Our Litigation Director, Bethany Davis Noll, and Energy Policy Director, Burcin Unel, recently presented a draft paper on federal carbon pricing in wholesale energy markets at the 2018 Association of American Law Schools Conference. In a panel on legal constraints to implementing clean energy policies, they discussed the legal authority of the federal government, specifically the Federal Energy Regulatory Commission, to price carbon emissions in wholesale energy markets and how this authority interacts with state-level clean energy policy.
