On May 26, the Senate Finance Committee voted to advance legislation that would amend certain energy tax provisions in an effort to combat climate change, curtail greenhouse gas emissions, and create jobs. The bill, known as the Clean Energy for America Act, would provide an “emissions-based, technology-neutral tax credit” for facilities with zero or net negative emissions as well as certain energy storage facilities and high-capacity transmission lines. The bill includes several provisions that would benefit hydropower facilities, including an extension of the production tax credit through the end of 2022, which will encourage new hydropower development and a provision that would make pumped storage hydroelectric facilities eligible for the investment tax credit. It would also include tax credits to encourage environmental, safety, and efficiency improvements at existing hydropower facilities and to remove dams that have reached the end of their useful life.

On March 17, 2021, a coalition of environmental organizations and clean energy groups led by the Center for Biological Diversity (CBD) petitioned the Federal Energy Regulatory Commission (FERC) for a rulemaking that would amend the Uniform Systems of Accounts (USofA) requirements to disallow utilities from recovering the cost of membership from ratepayers in associations engaged in lobbying or other influence-related activities. CBD argues that these associations lack transparency, and many engage in “anti-climate” advocacy, including lobbying and campaigning activities, that do not align with the priorities of ratepayers.

On April 15, Judge André Birotte Jr. for the U.S. District Court for the Central District of California determined that the U.S. Bureau of Reclamation’s (Bureau) operation of the Twitchell Dam with certain water flows did not result in an unlawful take of Southern California Steelhead trout, a species listed as endangered under the federal Endangered Species Act. Plaintiffs San Luis Obispo Coastkeeper and Los Padres Forestwatch claimed that the Bureau’s Standard Operating Procedures (SOP) for the Twitchell Dam limit the timing and volume of releases from the dam in a manner that has diminished trout habitat and resulted in harm to the trout population by impairing behavioral patterns including breeding, spawning, rearing, and migrating.

On March 31, U.S. District Judge Christine Arguello found that the Federal Power Act (FPA) is the exclusive authority with regards to controversies related to Federal Energy Regulatory Commission (FERC) -issued hydroelectric licenses, including challenges that stem from the permitting decisions of other federal agencies acting under their independent statutory authority. In Save the Colorado v. Semonite, Civil Action No. 18-cv-03258 (D. Colo. Mar. 31, 2021), the court ruled that it lacked jurisdiction over an appeal of a U.S. Army Corps of Engineers (USACE) Clean Water Act (CWA) Section 404 permit and the associated U.S. Fish and Wildlife Service (USFWS) Endangered Species Act (ESA) biological opinion since these are actions “inhere[d] in the controversy” related to the FERC license.

On May 27, the Environmental Protection Agency (EPA) announced its intent to reconsider the Clean Water Act (CWA) Section 401 final rule issued by the Trump administration in June 2020 (Final Rule).

Following the Council on Environmental Quality’s (CEQ) July 2020 overhaul of regulations implementing the National Environmental Policy Act (NEPA), environmental plaintiffs filed a series of lawsuits challenging the rule in federal courts in California, Virginia, New York, and the District of Columbia. The plaintiffs argued that CEQ violated NEPA itself in promulgating the final rule by failing to prepare an environmental assessment (EA) or environmental impact statement (EIS). They also argued that CEQ ran afoul of the Administrative Procedure Act (APA) by failing to follow notice-and-comment requirements, by issuing a final rule that is “arbitrary and capricious,” and by improperly narrowing both the scope of projects under review and the types of impacts agencies should consider.

In an order dated May 20, 2021, the Federal Energy Regulatory Commission (FERC, or the Commission) terminated the hydropower licenses for three projects located on the Tittabawasee River in Michigan—the Secord (P-10809), Smallwood (P-10810) and Sanford (P-2785) dams.  The termination by implied surrender follows a May 2020 breach at the Sanford dam and the breach and failure of the upstream Edenville dam, which was also operated by the same licensee before the Commission revoked the Edenville license in 2018 due to the licensee’s repeated noncompliance with FERC dam safety orders.  The resultant floods caused significant damage in the communities surrounding the dams and have been estimated by the State of Michigan to have caused economic harm exceeding $190 million.

Addressing environmental justice (EJ) has been an immediate priority for the Biden administration. Within a week of taking the oath of office, President Biden issued a sweeping executive order with a number of EJ initiatives, including creation of a White House Environmental Justice Interagency Council consisting of the heads of each Cabinet-level and independent federal agency. The order also directed federal agencies to “make achieving environmental justice part of their missions” through development of programs and policies aimed at addressing disproportionately high adverse environmental impacts on disadvantaged communities.

The financial world appears to be reeling from the recent board of director election held by Exxon Mobil Corp. (Exxon) in which activist Hedge Fund Engine 1 (Engine 1) garnered enough votes to seat two directors (Kaisa Hietala and Gregory Goff), and potentially more, as the vote count continues. In the grand scheme of things, eight of Exxon’s nominees, including CEO Darren Woods, were re-elected to the 12-member board, and yet still, Engine 1 placing directors while sporting $50 million in holdings among over a $250 billion market cap for Exxon is worthy of note. The efforts of Engine 1 were aided by other large shareholders, such as BlackRock, Inc., Exxon’s second largest shareholder. The debate around the dissident directors centered on climate change issues.

Last week, Washington became the latest state to address environmental justice (EJ) through legislation by adopting the Healthy Environment for All (HEAL) Act and the Climate Commitment Act into law. The HEAL Act, which is the more comprehensive of the two passed laws, was based on recommendations of a state-funded environmental task force issued in fall of 2020 and seeks to remedy the effects of past disparate treatment of vulnerable communities. The Climate Commitment Act is a more targeted law that establishes a greenhouse gas (GHG) emissions cap-and-invest program with the goal of reducing GHG and criteria pollutants in overburdened communities highly impacted by air pollution. Although the laws become effective on July 25, their major EJ-related requirements take effect at later dates.