In a decision issued on May 1, the DC Circuit vacated a U.S. EPA rule that allowed backup generators to operate up to 100 hours/year without emission controls as part of so-called emergency power demand/response programs intended to address short-term capacity shortfalls in the electrical grid.  Delaware DNREC v. EPA, No. 13-1093, (D.C. Cir. May 1, 2015).  In these programs, owners/operators of backup generators enter into contracts with electricity distribution companies to sell power back into the grid under emergency power shortage conditions.  The more sophisticated efforts by “aggregators” appeared to be aimed at creating “virtual” power plants by coordinating the distribution of electricity from backup generators.

These programs were becoming popular with owners/operators of large industrial, commercial or institutional buildings with backup generators, as they provided an opportunity for revenue from an otherwise rarely used asset (particularly  when compared to the traditional demand/response option, which was often simply a mandate to reduce energy consumption).  While the DC Circuit’s decision does not prohibit demand/response agreements, it effectively makes them impractical or uneconomical, because the backup generators would now need pollution control equipment to operate at those levels.

While the DC Circuit vacated the rule, the court did note that if this decision would cause administrative or other difficulties, EPA (or any of the parties) could petition the court for a stay of the mandate to allow the current standards to remain in place while EPA figures out what, if anything, to do next.

This decision may signal where the DC Circuit might end up in a challenge to a related EPA rule that allows backup generators to run up to 50 hours/year to sell electricity into the grid even in the absence of a capacity shortfall/emergency.  The 50-hour rule for non-emergency situations rule has also allowed owners/operators of industrial/commercial/institutional buildings to extract revenue from their backup generators.

 

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Photo of Michael Cooke Michael Cooke

Board Certified in State & Federal Government and Administrative Practice, Michael G. Cooke concentrates his practice in administrative law, including environmental, utility, and land use law. He represents industrial, agricultural, banking, government, and developer clients on matters involving clean air, climate change, electric…

Board Certified in State & Federal Government and Administrative Practice, Michael G. Cooke concentrates his practice in administrative law, including environmental, utility, and land use law. He represents industrial, agricultural, banking, government, and developer clients on matters involving clean air, climate change, electric generating facilities, renewable energy, telecommunications, utility plant and transmission line siting, water, and wastewater issues and permitting and zoning matters.

From 2003 to 2006, Michael was the Director of the Division of Air Resource Management for the Florida Department of Environmental Protection. In this position, he managed the air quality program for the State of Florida, interacting with federal and local agencies and over-seeing permitting and enforcement matters and the development of state air regulations. Michael also served as General Counsel for the Florida Public Service Commission in Tallahassee from 2006 through 2008. His responsibilities at the Public Service Commission included conduct of rate cases, rulemaking, enforcement proceedings, and decision-making involved with policy issues regarding nuclear facility site cost recovery and renewable energy.

Michael has represented clients in connection with numerous environmental regulatory matters, particularly in air permitting and compliance issues. He has represented electric utilities, manufacturing, and agricultural entities in connection with various Title V and New Source Review matters. He is well versed in CERCLA, RCRA, TSCA, water, and solid waste matters.

Photo of Christopher Bell Christopher Bell

Chris Bell represents clients in civil and criminal enforcement and investigations, litigation, compliance counseling, emergency incident response, and legislative and regulatory advocacy (including appellate challenges to rulemakings) under all of the major environmental, health, safety and natural resource laws. His enforcement experience includes…

Chris Bell represents clients in civil and criminal enforcement and investigations, litigation, compliance counseling, emergency incident response, and legislative and regulatory advocacy (including appellate challenges to rulemakings) under all of the major environmental, health, safety and natural resource laws. His enforcement experience includes internal investigations, responding to grand jury investigations and agency information requests, and negotiating consent, probation, and debarment agreements. He is currently the EPA Independent Monitor overseeing the nation’s largest investor-owned energy company’s compliance with complex debarment and probation agreements arising from the resolution of a criminal enforcement case brought under the Clean Water Act.

Chris assists buyers, sellers, investors and financial institutions on the environmental aspects of transactions, including conducting due diligence, negotiating the environmental provisions of transactional documents, and identifying and executing insurance-based risk management opportunities. His transactional experience has included upstream, midstream and downstream energy projects, alternative energy projects, and transactions in the manufacturing, logistics, consumer products and chemicals sectors.

He helps clients evaluate and implement compliance and ethics programs (e.g., under the Sentencing Guidelines), and environmental, health and safety management systems (including based on ISO 14001). Chris advises clients on sustainable development, climate change, product and chemical stewardship and regulation, and value chain management. He recently served on an independent committee advising the senior management of a Fortune 50 company on its global sustainability strategy and reporting.