LPDD December Newsletter
New LPDD Model Laws
In the last month, the LPDD published two new model laws: one addressing the tax treatment of coal projects, and another addressing the permitting of offshore renewable energy under the Coastal Zone Management Act.
Our Model Law on the Removal of Favorable Tax Treatment for Coal proposes amendments to the Internal Revenue Code to eliminate favorable treatment of coal mining and production. Amendments include changing coal royalty contracts from capital gains to ordinary income; removing a number of tax deductions related to coal investments; removing certain tax credits for coal-related projects, including the renewable energy production tax credit; and more.
Our Model Law Amending the Coastal Zone Management Act (CZMA) to Facilitate Offshore Renewables Permitting provides a brief overview of the relevant provisions of the CZMA, and then proposes amendments to facilitate the permitting of offshore renewable energy facilities. Specifically, the model law proposes exempting renewable energy projects from the CZMA's consistency provisions, or else incorporating language encouraging planning for renewable energy projects and allowing for easier federal agency override of state objections to a project. The proposed amendments are directed at renewable energy facilities broadly, so as not to limit the effect of the proposed amendments to offshore wind projects.
New External Resources
modelclimatelaws.org is being continually updated with new, external legal resources. Below is a selection of recently added resources:
A Role for State Attorneys General in a Just Transition: A December report by the State Energy & Environmental Impact Center and the State and Local Enforcement Project at the Harvard Labor and Worklife Program considers how state AGs can help ensure that the shift to renewable energy supports communities and leads to good climate jobs. The report provides insight into the role of AGs, highlights recent AG enforcement of workers’ rights and environmental protection, and offers additional ideas for what state AGs can do in relation to a just transition.
**IMT Model Building Performance Standard Update:**Building off the publication of last year's first model Building Performance Standard (BPS), the team at the Institute for Market Transformation recently published additional materials helping jurisdictions, particularly states, consider and implement such a code. In a new Implementation Guide, IMT recommends strategies, processes, and rules that local and state jurisdictions can use to implement equitable BPS policies. And in a revised Short Model BPS, IMT offers a streamlined version of their 2021 Model with a greater reliance on rulemaking, making it particularly well-suited for states passing a BPS. The package of model codes is a first-mover in a field of rapidly developing law.
Proposed Federal Supplier Climate Risks and Resilience Rule: In November, federal agencies proposed a new rule regulating the federal supply chain, and requiring large federal contractors to publicly report their Scope 1, 2, and 3 emissions (which includes emissions associated with their supply chain) and set science-based emissions reductions targets. Given the size of the federal supply chain and the reach of Scope 3 emissions analysis deep into supply chains, this federal procurement rule may have profound impacts in pressuring private companies to decarbonize. The proposed rule is open to public comment through January 13.
Federal Reserve Guidance on Climate Risks to Large Banking: In December, the Federal Reserve released draft guidance that could push major banks to assess their climate exposure. The proposed guidance would apply to lenders with more than $100 billion in assets. If finalized, the guidance would prod those institutions to take steps to assess and manage their exposure to the clean energy transition and physical climate impacts. Doing so would entail ensuring their boards and executives understand climate-fueled threats as well as assessing climate factors in their business strategies and risk management practices.
Montgomery's County's Natural Gas Ban: In November, Montgomery County, Maryland unanimously passed new building decarbonization legislation, making Montgomery County the first county on the East Coast to ban natural gas as a source of heat in new buildings.
Electrification of Federal Buildings: In December, the CEQ and DOE announced complementary policies applying to new and existing federal buildings. For new or newly renovated federal buildings, DOE announced a proposed rule to help electrify and cut emissions from this sector. Under the proposed rule, beginning in 2025, these facilities will be required to reduce their on-site emissions associated with energy consumption by 90% relative to 2003 levels. In 2030, the proposed standard would fully decarbonize the on-site emissions in new federal buildings and major renovations. For existing buildings, CEQ released a Federal Building Performance Standard. That standard will seek to cut energy use and electrify equipment and appliances in 30 percent of the building space owned by the Federal government by 2030.
New Mexico Interconnection Rules Order: In November, the New Mexico Public Regulation Commission issued a ruling on interconnection policy, which reflects national best practices for energy storage interconnection and smart inverter adoption. One of the most important developments in the new rules is that they now recognize a class of projects called non- and limited-export projects, in which controls are used to limit whether or how much electricity is sent from Distributed Energy Resources to the grid. Recognizing and enabling this capability is a key part of capturing the benefits of energy storage in particular.
BLM Proposes New Methane Rules at Oil and Gas Sites: In November, the Bureau of Land Management released draft rules to stem the release of methane from oil and gas drilling on public lands. The proposed rules would mandate that operators maintain leak detection and repair plans for their operations on federal or Native American leases. BLM would also limit how much gas can be flared from a well site due to lack of pipeline to carry the gas to market — the primary reason companies cite for flaring on public lands. The proposed regulations would replace the BLM’s current requirements governing venting and flaring, which are more than four decades old.
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This update highlights and summarizes recent additions to the Legal Pathways to Deep Decarbonization (LPDD) website, which houses actual and model laws addressing the causes of climate change in the United States.
The Legal Pathways to Deep Decarbonization Model Law Project (LPDD-MLP) is a pro bono effort to draft model laws for use by legislators at the federal, state and local levels to support their efforts to achieve deep reductions in fossil fuel use and greenhouse gas emissions. The project is based on recommendations from the groundbreaking book Legal Pathways to Deep Decarbonization in the United States (Michael Gerrard and John C. Dernbach, eds., 2019). The work is supported by Columbia University's Sabin Center for Climate Change Law and Widener University Commonwealth Law School’s Environmental Law and Sustainability Center. Dozens of law firms and individual lawyers are contributing to this pro-bono effort as drafters, peer reviewers or in reaching out to policymakers.
Our website, modelclimatelaws.org, contains over 60 model laws that are a starting place for discussion and collaboration among elected officials, non-profit groups, and the private sector for enabling the U.S. to address climate change by reducing U.S. GHG emissions to zero by 2050 or earlier. The site includes several Top 10 lists for some of the key categories, like electric vehicles, PUC’s, buildings and other topics as a short-hand introduction. In addition, the site references hundreds of other actions that states and other governmental bodies have taken to move towards decarbonization more rapidly. By providing policymakers the tools to achieve deep decarbonization, the Project will help achieve a restructuring of the energy economy, thus alleviating the worst effects of climate change, which are disproportionately suffered by marginalized communities, while providing such positive benefits as economic security, social equity, and environmental justice (EJ).
Please contact us to talk about getting involved in drafting and peer reviewing legislation, to provide suggestions and feedback on the drafts and to talk about how we can help you support your climate change efforts.