On September 29, 2017, the Department of Energy (“DOE”) filed a Notice of Proposed Rulemaking (“NOPR”) at the Federal Energy Regulatory Commission (“FERC”) in order to require additional compensation to baseload generators that provide reliability and resiliency benefits to the electric grid.  In order to qualify for additional compensation, generators must have 90 days of fuel on-site, meaning the new rule would apply almost exclusively to nuclear and coal generators, and perhaps some hydroelectric dams.

The filing by DOE was unusual because, although the FERC is technically a branch of the DOE, it operates almost entirely independently of its parent agency.  The Secretary of Energy, Rick Perry, cited to a little-used provision of the Department of Energy Organization Act for authority to file the NOPR.  That provision authorizes the Secretary of Energy to propose rules for FERC action and to set reasonable time limits for FERC completion of the proposed action.

The NOPR was also unusual for the 60-day time limit mandated by Secretary Perry.  Typically, FERC takes months, if not years, to finalize rule affecting the wholesale electric markets.  Once FERC finalizes a rule, it typically takes Independent System Operators (“ISOs”) and Regional Transmission Organizations (“RTOs”), which operate the markets, several more months to implement the rules.  There is good reason for the long lead time before implementing new rules: the electric markets are extremely complex, their proper function is vital to the reliability of the grid, and the due process rights of numerous stakeholders must be satisfied.  The NOPR filed by Secretary Perry calls for final action by FERC within 60 days, an effective date 30 days thereafter, and compliance filings by the ISOs and RTOs 15 days after the effective date.  Relative to typical FERC NOPRs of this magnitude, this is warp speed.

Several industry groups asked for an extension of time to file comments on the NOPR, but FERC denied their requests.  Therefore, initial comments are due October 23, 2017 and reply comments are due November 7, 2017.  Despite FERC’s unwillingness to extend the comment period, all three of the current Commissioners have hinted that they will not rush into a decision on new market rules for baseload generators.

Acting Chairman Neil Chatterjee has expressed sympathy for some of the issues raised by the NOPR, but has also stated that he wants a final rule that preserves the existing market structure and that will withstand legal scrutiny.  He stated that FERC has “numerous tools at its disposal” other than implementing the rule as proposed within 60 days.  “We could do an advanced notice of proposed rulemaking, we could do a notice of proposed rulemaking superseding the DOE NOPR, we could issue a final rule or an extension of the comment period and a solicitation of further comments,” Chatterjee said.  “We could convene technical conferences, we could do a notice of inquiry, we could initiate Federal Power Act Section 206 review proceedings, so there are many tools available to the commission to act within 60 days.”

Meanwhile, Commissioner Robert Powelson vowed that FERC “will not destroy the marketplace” in response to the DOE NOPR and has questioned the validity of using power outages during the Polar Vortex as justification for the proposed rule.  Commissioner Cheryl LaFleur has stated that the DOE NOPR is not detailed enough to form a final rule and that anything other than an outright rejection “would require more work.”

Therefore, despite the anxiety caused by the announcement of the NOPR, it appears that the current version of FERC will maintain its independence from DOE and will not make any snap judgements with regard to the NOPR.  It is possible that the dynamic could change when FERC nominees Kevin McIntyre and Richard Glick are confirmed by the Senate, but it is also unlikely that those nominees will rush to judgment on the NOPR.  McIntyre is a veteran FERC attorney with a deep understanding of FERC independence and process.  Glick is also a veteran of the energy industry and is currently serving as an aide to the Senate Committee on Energy and Natural Resources.

No matter how one feels about the merits of the proposed rule, FERC’s commitment to deliberate and independent decisions is good for the energy industry.  With so much at stake in our energy markets, having an apolitical, data-based agency calling the shots is absolutely essential.

Andrew Schulte guides energy industry clients through the complex and dynamic regulatory environments at the local, state, and federal levels. Andrew has significant experience with matters set for hearing before regulatory bodies, including preparing filings and testimony, negotiating multi-party settlements, managing discovery, presenting oral arguments, cross-examining expert witnesses, and drafting motions and briefs for presentation to regulatory decision-makers.

In our last post, we discussed an emerging trend of corporations and local governments taking decisive action on climate change in the absence of federal leadership.  Since that post, several excellent examples of this commitment have been announced, with perhaps the most compelling coming from the U.S. Conference of Mayors‘ 85th annual meeting this week.  Climate change and renewable energy were among the topics discussed at the meeting by leaders from more than 250 cities, and a number of powerful resolutions were adopted.  The full list of resolutions is well worth a read, but there are two in particular that warrant highlighting.

First, the assembled city officials overwhelmingly adopted a resolution that set a goal for member communities to adopt 100% renewable energy by 2035.  Tellingly, only two mayors recorded votes in opposition to this resolution.

Second, the assembled officials adopted a motion in support of both onshore and offshore wind energy generally, and for extension of the federal Investment Tax Credit more specifically.

The text of both of these resolutions are set forth in full below.  Though largely symbolic, these resolutions highlight a very real ground swell of support for renewable energy, energy efficiency and strong but fair environmental policy in local communities across the country.  These commitments are seen in both red and blue states, because they are founded upon a recognition that these policies create jobs, promote local economies, and help protect the health, welfare and safety of local citizens.  I’m proud that Mayor, Sly James of Kansas City, was among those that supported these excellent resolutions.

Mayor Sly James at US Conference of Mayors

100% Renewable Energy in American Cities

WHEREAS, renewable energy represents an enormous economic opportunity for our nation and our nation’s cities to create jobs in an emerging industry, increase economic security, expand prosperity for local residents, reduce air pollution and associated public health risks, reduce the strain on water resources, save consumers money, and address environmental justice challenges in communities; and

WHEREAS, “renewable energy” includes energy derived from wind, solar, geothermal, and wave technology; and

WHEREAS, some forms of biomass may be considered “renewable energy” after being evaluated for sustainability and environmental justice implications; and

WHEREAS, “renewable energy” specifically excludes energy derived from fossil fuels, nuclear, incineration of municipal and medical waste, and any large-scale future hydroelectric development; and

WHEREAS, the transition to renewable energy will improve air and water quality and protect the health of our families, particularly the most vulnerable across our communities; and

WHEREAS, according to the Department of Energy, the cost of wind power is down 41 percent since 2008 and solar costs are down between 54 percent and 64 percent in that same period; and

WHEREAS, more than twenty-five U.S. cities, including Columbia, SC, San Diego, CA, Salt Lake City, UT, and San Jose, CA have already adopted ambitious 100 percent clean, renewable energy goals, and six U.S. Cities, including Aspen, CO, Burlington, VT, Greensburg, KS, Kodiak Island, AK, and Rock Port, MO have already hit their targets to generate 100 percent of the energy used community-wide from clean, non-polluting and renewable sources; and

WHEREAS, individuals, families, businesses, and institutions throughout the nation seek greater energy freedom through the expansion of local and distributed energy resources like photovoltaic solar and electric vehicles; and

WHEREAS, rooftop solar, low-income community solar, energy efficiency, and demand control technologies offer the opportunity to equitably distribute resources, address poverty, stimulate new economic activity in our nation’s cities, and lift up those most impacted by high energy costs; and

WHEREAS, actions by local government and businesses are already a significant driver of renewable energy growth and can put the country on track to meet its commitment to the Paris Agreement under the United Nations Framework Convention on Climate Change,

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors supports cities establishing a community-wide target of powering their communities with 100 percent clean, renewable energy by 2035; and

BE IT FURTHER RESOLVED, that The United States Conference of Mayors proclaims its commitment to equity, affordability, public participation, and access for all people in America as cities pursue this transition to 100% clean, renewable energy; and

BE IT FURTHER RESOLVED, that priority should be given to the lowest cost measures to meet energy needs including efficiency, weatherization, cogeneration, district heating and cooling, decentralized electricity generation and smart grids/micro grids, the use of industrial waste heat, building controls, automated lighting, solar-powered hot water heaters and programs that create an energy-saving culture in our nation’s cities; and

BE IT FURTHER RESOLVED, that given the economic development, job creation, and job training potential of clean, renewable energy, the transition to 100% clean, renewable energy should include structured mechanisms to include low-income citizens in the benefits to be derived from the transition, including creating quality careers adhering to local source hiring, a just transition for workers displaced by fossil fuel reduction, equitable access through ownership and benefits to create new opportunity for historically marginalized communities, and affordable clean energy options.


Supporting Onshore and Offshore Wind Energy Production

WHEREAS, wind energy can help the nation reduce its greenhouse gas emissions, diversify its energy supply, provide cost‐competitive electricity, and stimulate revitalization of key sectors of the economy by investing in infrastructure and creating skilled jobs; and

WHEREAS, according to the U.S. Department of Energy wind accounted for 31% of all new generation capacity installed in the U.S. from 2008 through 2014; and

WHEREAS, this metric is proof that the renewable energy sector is capable of boosting economic growth while enhancing our energy supply; and

WHEREAS,  when it comes to America’s energy future, we should be doing everything we can to generate as much of our power from domestic sources as possible; and

WHEREAS, America needs a secure and diverse supply of home-grown energy resources to power the nation and to create high skilled jobs; and

WHEREAS, despite this booming expansion of onshore renewable energy facilities, the United States still lags industrialized countries when it comes to development of an offshore wind industry; and

WHEREAS, America’s costal cities, with their complex infrastructure, are major consumers of power; and

WHEREAS,  America’s cities need new sources of job growth to reduce high unemployment rates that persist in many of the nation’s urban areas; and

WHEREAS, the Bush and Obama Admiistrations alike expressed their intention to close the gap in offshore wind capacity and took proactive steps in faurtherance of this objective, including a robust permitting system to make land on the outer continental shelf  available for offshore wind development; and

WHEREAS, the development of the wind energy industry including, the offshore wind energy industry, has great potential to become a new sector that can add billions of dollars to the U.S. economy and create tens of thousands of high-skilled jobs that cannot be outsourced overseas; and

WHEREAS, wind energy is developing an impressive record of job creation, and the majority of wind turbines installed in the U.S. last several years were built in the U.S.; and

WHEREAS, in Northern Europe, there are more than eighty active offshore wind farms that supply electricity to millions and have created tens of thousands of jobs; and

WHEREAS,  in May of this year, Senators Edward J. Markey and Sheldon Whitehouse, along with Congressman Jim Langevin, introduced the Offshore Wind Industries for New Development Act (the “Offshore WIND Act”), which would extend the Investment Tax Credit (“ITC”) through 2025, a measure that would hasten the development of the offshore wind industry by helping to defray the significant upfront capital costs of  wind farm development; and

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors supports greater federal, state and local investment in the development of wind energy; and

BE IT FURTHER RESOLVED, that The United States Conference of Mayors supports a continuation of the ITC for as long as necessary to secure the long-term viability of the domestic wind energy industry, including the offshore wind energy industry, and more specifically, the passage of the Offshore Wind Act.

President Trump’s decision to withdraw the United States from the Paris Accords is disheartening for many that work in and around the renewable energy industries, and believe in the importance of a truly diversified energy portfolio.  While it is certainly not a perfect agreement, 195, now 194, countries from around the world recognized a pressing need to take steps to cut carbon emissions and attempt to turn the tide on climate change.  That level of unity across cultural and national boundaries is unprecedented, and underscores the importance of the ultimate goal.  The withdrawal of the United States from that coalition is disappointing on many levels.

However, out of that disappointment, an uplifting trend is beginning to emerge.  Where the United States federal government has refused to act, state and local governments are picking up the slack.  There are several fantastic examples.  On June 1, Hiroki Tabuchi and Henry Fountain of the New York Times reported that a group of 30 mayors, 3 governors, more than 80 university presidents and more than 100 businesses are negotiating with the United Nations to enter into an individual commitment that could equal or even exceed the United States’ previous commitment under the Accord.  In that same vein, just yesterday, the New York Times reporter Jonah Engel Bromwich’s published an article on Hawaii’s passage of two pieces of legislation committing to a reduction in greenhouse gas emissions in line with the Paris Agreement.

In many ways, this shift to more locally-driven climate policy is not surprising.  Over the last decade, state and local governments have been arguably the most significant drivers of encouraging renewable energy developments in the United States.  Currently, 29 states have adopted renewable portfolio standards that require a certain percentage of the electricity produced by local utilities come from renewable sources, and 8 more states have adopted voluntary renewable energy goals.  Hawaii and California stand out as particular leaders in this regard.  Hawaii has passed legislation requiring 100% of its net electricity sales to be derived from renewable resources by 2045.  In California, which currently has a 50% renewables by 2030 requirement, the State Senate just last week passed legislation that would require 100% renewables by 2045, with 50% by 2026.  The U.S. federal government, by contrast, has entertained several federal renewable portfolio standard bills since 2009, but has failed to gain any serious traction.

All in all, perhaps it makes sense for state and local governments to take the reins on climate policy.  After all, the economic case for vigorously pursuing a more diversified energy portfolio is strong, and it is the individual localities that host projects that can best gauge the economic benefits received through increased tax revenues, landowner payments, and new jobs.  Where the federal government has dropped the ball, the answer might very well be for state and local governments to take the lead.

As always, if you have any questions about any of the issues discussed herein, please don’t hesitate to reach out to me at lhagedorn@polsinelli.com or give me a call at (816)572-4756.

I am excited to announce that several members of the Polsinelli Energy Group (myself included) will be attending the AWEA Wind Project Siting & Environmental Compliance Conference this week in Austin, TX.  Our energy team has been hard at work with AWEA over the last few months to develop a few exciting new offerings for AWEA members, which we hope to roll out shortly (more on that soon).  We’ll be on the floor throughout the conference, so feel free to flag us down if you’d like some more information.  Also, we’ll be hosting a casual happy hour on Tuesday night, so feel free to reach out or find us on the conference floor for details!

I’m looking forward to seeing you there!

I wanted to provide a quick heads-up to let you all know that I will be participating as a panelist at the Linda Hall Library’s “Second Saturday Conversation”  tomorrow, March 11th, from 11 AM to noon Central Time.  The topic will be the hopes, concerns, and possibilities for research funding, infrastructure projects, and energy development under the new Trump administration, which should prove to be a fruitful topic. I’m looking forward to an excellent discussion.  I will be joined by Gretchen Ivy, ‎Planning Group Director and Associate Vice President for HNTB Corporation and Sarah Zanders, PhD, Assistant Investigator for the Stowers Institute for Medical Research.

For those of you that are not familiar with the Linda Hall Library, it is one of the world’s foremost independent research libraries devoted to science, engineering, and technology, located in Kansas City.  It is a fantastic organization with an admirable mission statement, and I’m thrilled that they’ve asked me to participate in this conversation.

For more information about the event, please visit http://www.lindahall.org/event/second-saturday-conversation-science-outlook-2017/.  I’m also told that the discussion will be live-streamed, so if you are not able to attend in person, feel free to check out their website and view the proceedings online.

Recently, Alan Anderson and I were thrilled to be invited to present to a class at the Washburn University Law School.  For those of you that don’t know, Washburn has developed a truly exceptional energy and oil & gas law program (something that I dearly wish I could have had in law school), thanks in large part to the efforts of Prof. David Pierce.  When Prof. Pierce’s invites us to do just about anything, we usually jump at the chance.

For this presentation, our goal was to provide a high-level but fairly comprehensive overview of the types of legal issues that arise during the main stages of a wind project’s design, construction and operation phases.  Interestingly, after we sat down to plan out the basic categories of information that we wanted to cover, we realized the rough outline of our presentation could be converted into an interesting one-page resource.  With a little coaxing, we were able to distill our notes down into the following chart:

Polsinelli - Wind Project Chart

When it came to preparing the presentation itself, however, we obviously had to provide quite a bit more detail on each of the three main phases of project development.  Our environmental law colleague, Adam Troutwine, proved to be invaluable (as he so often does) by providing an overview of the various state and federal permits that are required for a wind project.  A copy of our PowerPoint is available here:


I know that I speak for Alan in once again thanking Washburn, Prof. Pierce, and the students for inviting us to speak., and we are very much looking forward to the opportunity to do it again soon.

As always, if you have any questions about any of the materials that we’ve linked to above, or any of the issues discussed therein, please don’t hesitate to reach out to me at lhagedorn@polsinelli.com or give me a call at (816)572-4756.



On May 28, 2015, Kansas Governor Sam Brownback signed legislation that will have a significant impact on the future of wind generation in the state.  The history of the political struggle underlying this legislation is a topic worthy of its own post, but suffice it to say that SB 91 represents a compromise between the wind industry and a faction of legislators that have attempted to reduce the state’s support of wind energy over the course of the last several legislative sessions.

On a political level, this deal largely revolved around the future of Kansas’ 20% by 2020 Renewable Portfolio Standard, which has been subjected to a number of attacks over the last few legislative sessions.  All of these previous efforts failed, but the political pressure to reduce or repeal the RPS appears to have been steadily ratcheting up for an increasingly motivated faction of the Kansas legislature.

Ultimately, however, the Kansas RPS battle has turned out to be much ado about nothing.  While the legislature was fighting over the ideology of the RPS, Kansas public utilities acquired huge amounts of low-cost renewable capacity.  By the start of 2015 legislative session, every one of the Kansas public utilities had acquired sufficient renewable capacity to satisfy their 2016 RPS requirements, as well as essentially satisfying their 2020 threshold.  Thus, while the RPS was a significant component of the political drama, in reality its fate does not have as much of an impact on current and future wind projects in Kansas as other portions of the legislative package that accompanied the RPS legislation.

Of particular concern for future wind developers in Kansas, one of SB 91’s key components is to introduce a cap on the statutory property tax exemption for future wind projects.  Historically, wind generation assets in Kansas have benefitted from a property tax exemption for the entire life of the project (K.S.A. 79-201).  This exemption, originally enacted in 1999 (pre-dating Kansas’ first wind farm), was originally enacted to provide an incentive to encourage wind development in the state, and there can be no dispute that it has been very effective in that regard.

Under SB 91, existing projects have been grandfathered-in under the old lifetime exemption language, and therefore will continue to receive the full tax exemption (barring any future legislative efforts).  However, any new wind projects will only receive a property tax exemption for the first ten years of the project’s life.  Beginning in year 11, the project will be subject to taxation at its full value.  Specifically, the capped exemption will apply to any projects that 1) have not filed an application for exemption with the Kansas Department of Revenue by December 31, 2016, or 2) have not received a conditional use permit from the applicable county by December 31, 2016.

In addition the property tax exemption cap, there is one final component of the SB 91 package that impacts both current and future wind projects, a reclassification of the tax rate that applies to wind generation assets.  While wind generation assets have not historically been subject to property tax in Kansas, other components of the project (for example, transmission equipment) have been taxed at as “public utility” assets at a 33% tax rate, as opposed to the standard 25% commercial rate.  For true public utilities, the burden of paying this higher 33% tax rate is mitigated by the fact that those costs are ultimately passed on to ratepayers during the utility’s next rate case.  Wind projects are not traditional utilities, and do not recover costs through rate cases.  Thus, the burden of a 33% tax rate can substantially impact the economics of a particular project.  Now that SB 91 will subject future wind project to property taxation, it was important to wind advocates that this tax rate discrepancy be remedied.

With this in mind, as part of the package of legislative amendments in SB 91, an exemption has been added to definition of “public utilities” subject to the 33% tax rate, for any entity that:

  1. generates, markets or sells electricity only at wholesale;
  2. has no retail customers; and
  3. generates energy from an electric generation facility that is actually and regularly used to predominantly produce and generate electricity utilizing renewable energy resources or technologies.

Importantly, this exemption will apply to both current and future projects, so any wind project assets that are subject to taxation will be taxed at a 25% rather than a 33% rate.  For existing projects, this lower tax rate will apply to non-generation assets, such as transmission equipment.  For new projects that will be subject to the 10-year exemption window, the lower rate will apply to all project assets.

Ultimately, wind developers’ views of the changes ushered in by SB 91 probably depends upon whether they have wind projects currently operating or in-development in the state, or alternatively are hoping to construct projects in the future.  Broadly speaking, for existing wind projects, the changes to the RPS and property tax exemptions should not have a significant impact, and the lower tax rates for non-generation assets should be net positive.  For new projects, and for the state’s efforts to continue attracting new projects, the increased tax burden from the property tax exemption cap will have an unavoidable impact on a potential project’s economics.  Only time will tell whether this new burden is severe enough to jeopardize Kansas’ reputation as a wind-friendly state.

If you would like any information about Kansas wind projects or renewable policies, please don’t hesitate to contact the Polsinelli Energy group at:

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

Last week the White House released its first installment of the Quadrennial Energy Review (QER) recommending investments in energy transmission, storage and distribution infrastructure.  While the U.S. is now the largest producer of oil and natural gas and is rapidly expanding renewable energy like wind and solar power, this energy must now travel across millions of miles of outdated infrastructure.  Ultimately, the QER envisions ensuring resilience, reliability, safety and security of the transmission, storage and distribution infrastructure by funding various state grant programs.

White House officials tout the QER as a two-pronged tool:

  1. Assess the effect of recent developments such as widespread hydraulic fracturing and the decreasing costs of renewable energy technologies like solar and wind.
  2. Recommend various policies that would improve the reliability of the electric grid, secure domestic supplies of oil and gas, and drive the types of GHG reductions that will be necessary for the president’s overall climate goals.

The QER makes several specific recommendations.

  • Given how renewables and fossil fuels have developed away from population centers, establish a new grant program called the Actions to Support Shared Energy Transport Systems (ASSETS), dedicated to improving energy transportation infrastructure connectors. Estimated cost: $2 billion to $2.5 billion over 10 years.
  • Create a DOE program to support state energy assurance plans to help respond to current and future energy disruptions. Estimated cost: $350 million to $500 million over 10 years.
  • Establish a DOE grant program to award states for creative approaches to infrastructure hardening and resilience. Estimated cost $3 billion to $5 billion over 10 years.
  • Create a program to award states that cooperate with public utility commissions, energy offices and environmental regulators; other states; and infrastructure owners and operators to modernize the grid. Estimated cost $300 million to $350 million over 5 years.
  • Create a competitive program at DOE to accelerate pipeline replacement and enhance maintenance programs. Estimated cost: $2.5 billion to $3.5 billion over 10 years.
  • Coordinate between federal agencies and states to mitigate the loss of electric transformers—in part by creating a “transformer reserve” in case of emergency.
  • Improve grid communication through standards and interoperability by increasing cooperation amongst DOE, NIST, industry, state officials, and other stakeholders to identify efforts to promote open standards that enhance grid connectivity and interoperability.
  • Enact financial incentives for the construction of CO2 pipelines, such as the Administration’s proposed Carbon Dioxide Investment and Sequestration Tax Credit which would authorize $2 billion in refundable investment tax credits for carbon capture technology and associated infrastructure at electric generating units that capture and sequester CO2.

While the QER touches on concerns regarding the siting and permitting requirements associated with building new transmission, it does NOT propose an overhaul of the National Environmental Policy Act (NEPA).  The QER also does not address the controversial issue of granting FERC “backstop” authority to site powerful transmission lines along high priority corridors.

Going Forward

In the long term, the need for a more resilient grid is necessary not only because of climate-related threats, but also because of potentially more disastrous dangers from cyber or physical attack. These efforts will be part of a formal national strategy—planned for release later this year—for strengthening the security and resilience of the entire electric grid.

Republican energy leaders in both the House and Senate welcomed the QER as an important contribution to the broader energy policy debate and said they are eager to keep working with the administration.  Chairman Upton’s House Energy and Commerce Committee has already begun a series of legislative hearings with the goal of completing a comprehensive measure this year.  Senate Energy Chairwoman Lisa Murkowski (R-AK) has asked her panel’s members to introduce legislation they’d like to see in a broad energy bill in short order to allow for hearings and markups, so that an energy bill can reach the Senate floor this summer.  In addition, five members of Murkowski’s committee, including Ranking Democrat Maria Cantwell (D-WA), are expected to drop legislation in the coming days to modernize the grid and bolster storage to help stabilize the generation of intermittent renewable energy.

A bipartisan, comprehensive energy bill is still considered a long shot in the 114th Congress, but the reactions from Capitol Hill to the QER may have improved the odds.  Although the QER calls for billions in new spending, its overarching focus on energy infrastructure needs—to capitalize on domestic production, secure a reliable electric grid, and ensure safe transport of renewables as well as fossil fuels—coincides with many of the priorities being addressed by bipartisan lawmakers.

If you would like any information about the federal renewable energy policy, please reach out to the Polsinelli Public Policy or Energy practice groups, or contact us directly at:

Tracy Hammond, 202.626.8322, thammond@polsinelli.com

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

On Nov 4th, Congressional Republicans beat back their Democratic opponents in nearly every part of the country.  Because of this resounding victory, Republicans have a tighter control of Congress than they’ve enjoyed since America teetered into the Great Depression at the end of the 1920s.  (Hopefully this is not foreshadowing).

Although Republicans already enjoyed a solid, governing majority in the House heading into the 2014 midterms, the party still managed to gain more than a dozen seats (a few contests sill remain too close to call, so a final tally isn’t yet known).  The Senate—as is generally the case—is a bit tighter, but Republicans managed to pick up at least 8 seats with the possibility of a 9th if Bill Cassidy (R) defeats Mary Landrieu (D) in the Louisiana runoff on December 6th (as he’s expected to do).  While legislating is much more difficult to do in the Senate, particularly when the majority party lacks the 60 votes necessary to overcome filibusters, Republicans will now have effective control over the Senate floor and all committee work, where the party can set priorities and push favored legislation.

So, what does this all mean for renewable energy?  In a word: Trouble.

It’s no secret that Republicans generally view renewable energy less favorably than their Democratic colleagues.  While it’s true that several Republicans have voted in the past to support renewable incentives and programs, many in the GOP have more recently opposed government support for renewable energy.

Renewable energy’s first test will come during the current Lame Duck session when Congress must decide whether or not to approve a package of tax “extenders” that includes the Production Tax Credit for wind and geothermal energy; as well as separate credits for cellulosic ethanol and biodiesel fuels.  These credits expired at the end of 2013, and have been stuck in limbo since.  Since November 4th, several conservative organizations and some lawmakers have called for an end once and for all to the PTC. Although it’s ultimately likely that Congress passes this suite of tax extensions, pressure is mounting to end, or at a minimum phase out, the PTC.  Republican leadership in the next Congress will likely look for ways to make this happen.

If history is any guide, Congressional Republicans will also attempt to trim spending on renewable energy programs.  These include the now-solvent loan guarantee programs at the Departments of Energy and Agriculture; as well as ongoing efforts at the Department of Defense to incorporate more renewable power into its own energy mix.  The GOP-controlled House has continually tried to shift money from renewable energy over to fossil-fuel programs, and it’s expected the incoming Republican Senate will do the same

Besides tax incentives, the two biggest federal programs driving renewable energy development will be the ongoing Renewable Fuels Standard (RFS) and the Environmental Protection Agency’s proposed Clean Power Plan to limit greenhouse gas emissions from the utility sector.  With many Midwestern Republicans and Democrats alike supporting the RFS, repeal is all but impossible.  Substantial revisions could be on the way; however, as reformers are looking to scale back the mandates for as-yet-to-be produced advanced (cellulosic) fuels and perhaps even opening up the standard to nonconventional petroleum products.

Unlike the RFS, EPA’s efforts face near-unanimous Republican opposition.  Speaker Boehner and incoming Majority Leader McConnell have already promised action to stop the agency from moving forward with GHG regulations.  It’s very unlikely McConnell will have the 60 votes needed to overcome a certain filibuster—much less 67 votes to overcome a veto—but he does have alternative ways to get at his goal.  First, Republicans could attempt to use the Congressional Review Act (CRA) to override agency action.  Although using the CRA is immune from Senate filibuster and only needs 51 votes for passage, this tactic has only been used successfully a single time since its creation.  Further, the CRA can only be implemented once a rule has been finalized (at least 18 months away in this case) and Republicans will not want to wait until then before acting.  Their second alternative is to use the appropriations process to prevent EPA from implementing rules related to reducing GHG emissions.  This tactic faces better odds, although success isn’t guaranteed.   It’s unlikely a full repeal of the Clean Power Plan would be enacted, but Republicans might find some bipartisan support—and a less confrontational White House—if they craft more targeted changes that could lead to additional state flexibility or longer compliance timelines.

With Congress unable to move significant legislation, the RFS and the Clean Power Plan could still push renewable energy development; however, Congressional interference or repeal of these efforts could create additional uncertainty and drive away investment.

If you would like any information about the federal renewable energy policy, please reach out to the Polsinelli Public Policy or Energy practice groups, or contact us directly at:

Tracy Hammond, 202.626.8322, thammond@polsinelli.com

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

Even though the administration is likely to raise its targets for both ethanol and advanced biofuels while finalizing 2014’s Renewable Fuels Standard (RFS) levels, the RFS has provided anything but certainty for biomass developers.  Seven months into the year, it also remains unclear when the EPA will even publish the final targets for obligated parties since the White House’s Office of Management & Budget hasn’t even received the rule for review which can take several months.

Thus, with the EPA showing increased deference to the “blend wall” and a recognition of the slower-than-expected deployment of fueling infrastructure, it is worth taking a look at what other policies can help bring more biomass products into the marketplace.

EPA’s GHG Rules

EPA’s proposal for reducing greenhouse gas (GHG) emissions from existing power plants will likely be the biggest single federal policy driver for renewable energy implemented by the Obama Administration.  In its draft rule released in June, the EPA stated that “biomass fuels can yield climate benefits as compared to burning conventional fossil fuels.

Although there is still some uncertainty over permitting for new biomass facilities in the wake of the U.S. Supreme Court’s decision to thrown out EPA’s tailoring rule, preconstruction permitting won’t be required for biomass plants if the only pollutant that would trigger Prevention of Significant Deterioration (PSD) regulations is carbon dioxide.  Only if a biomass facility is large enough to trigger permitting for other pollutants, will it have to get permitting for CO2 emissions.

Algae is seen as a potential win-win for energy development and the environment.  Although neither EPA’s proposal for new or existing power plants includes carbon capture and reuse technologies as strategies for reducing GHG emissions, these proposals have not been finalized.  Time remains for the agency to recognize the role algae can play in reducing carbon emissions from any number of power sources, which could create incentives for power plants to use new technologies that capture waste carbon and feed it to algae.


According to the Energy Information Agency, the Pentagon is requesting that biofuels be included in its annual request for fuels that are delivered to its facilities. This is the first time the request has included biofuels, which would be blended with military-specified diesel fuel and jet fuel.  The request is part of the Navy’s request to reach its goal of generating 50% of its energy from alternative sources by 2020.

Electric Vehicles

In a final rule issued earlier this year, the EPA said it would allow renewable electricity made from certain biomass sources to qualify under the RFS if it is used to power electric vehicles (EVs). Under the rule, entities would be allowed to generate credits for that electricity and sell them to refiners.  The standard applies broadly to biomass-derived transportation fuel, and EPA has determined that renewable electricity made out of biogas from landfills, municipal wastewater treatment and solid waste digesters, and agricultural digesters meets the 60% GHG reduction threshold to qualify as a cellulosic biofuel.

Green Banks

Three years ago, Connecticut started to lend money to fund commercially viable green projects. The goal was to combine public financing with private loans from community banks and other financial institutions to help create a renewable energy marketplace.  New York started its own green bank in 2013 and is now evaluating proposals to fund.  California, Hawaii, and New Jersey have plans to create similar enterprises.


The Farm Bill enacted this year provides rural energy programs with $881 million in mandatory funding over the next five years.  This legislation reauthorized the 9003 Biorefinery Assistance Program with mandatory funding of $100 million for fiscal 2014 and $50 million each for fiscal 2015 and 2016. It also allows renewable chemicals to qualify for funding for the first time.  The Biomass Crop Assistance Program (BCAP), created to help farmers grow crops for energy and fuels, was reauthorized at $25 million per year for five years.

So, even though EPA’s implementation of the RFS has been frustrating to the biomass community, several other federal and state policies remain in place to help bring this feedstock into America’s energy market.