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What will be the top green stories of 2014?

8 Jan 2014

greatlakesAs this new year kicks off, we thought we’d look ahead at what we think may be the big stories of 2014 at, in no particular order:

Wetlands – Will EPA and the Army Corps of Engineers finalize guidance regarding the scope of waters regulated under the Clean Water Act? Or will there be new rules or even new legislation?  There are members of Congress on  both sides of this issue and it is unclear which way this issue will go, although the federal trend is to try and govern as many bodies of water no matter what. This fall, EPA published a draft connectivity analysis which many view as a prelude to new regulations attempting to vest the federal government with broad jurisdictional over virtually every drop of water in the country. It will be interesting if the federal government tries to delete the “significant” portion of the Rapanos “significant nexus” test.

• Hydraulic Fracturing –  this continues to be a lightning rod for controversy.  At the end of 2013, the Associated Press reported on both alleged and confirmed environmental problems in 4 states including Ohio and Pennsylvania.  Michigan looks to beef up its oversight of, and its communications regarding, fracking proposals and operations.  The University of Michigan continues to study the technical issues.  The focus on this issue seems to be shifting toward the volumes of water used in fracturing and monitoring withdrawals used for oil and gas production. It appears that the 2012 U.S. Department of the Interior draft rules for fracking on federal and Indian lands remain draft – will they ever be finalized?

• MDEQ Brownfield Process Streamlining.  MDEQ has promised to convene a short-term task force to work on harmonizing, improving and streamlining the various funding mechanisms currently used to incentivize brownfield redevelopment. This can only be a plus.

• MDEQ Cleanup Rules – as required by the Legislature, MDEQ proposed adopting its previously informal standards as formal cleanup rules late in 2013.  The MDEQ will continue to work on improving and in some cases broadening its cleanup rules and criteria – we expect more work on the assumptions of exposure underpinning the standards, more work on vapor intrusion standards and more work on standards and processes applicable to groundwater venting into surface waters.  MDEQ also continues to discuss more rules and standards defining what constitutes “due care” which is an issue for property owners who are not liable pursuant to a BEA and for other reasons.

• Keystone Pipeline.  As we predicted, President Obama and Congress continue to be locked in a politically charged dispute over the Keystone XL pipeline, a proposed 1,700-mile oil pipeline from Canada to Texas.  The President deferred it and lately the pundits have argued that pipelines are safer than transporting shale oil by truck and train.

• Energy Policy In Michigan – at the end of the year, and after a year of “listening” sessions and collecting information, Governor Snyder indicated that he intends to seek legislation improving Michigan’s energy policies, focusing on lowering costs, improving reliability and minimizing environmental impacts.  This will be interesting.

Will 2014 be the year that Michigan Brownfields take off?

30 Dec 2013

brownfieldFor the last 20 years, we have seen the innovative and aggressive Michigan brownfield liability and redevelopment laws move redevelopments forward.   While some of these projects have been big, all of them have been what I like to characterize as “low hanging fruit.”   This makes sense because, for all the incentives available, at the end of the day, if you rehab a building that no one wants to occupy, the incentives available won’t make the difference.  While not easy to redevelop, these sites have been redeveloped while other major environmental sites (either very large, very contaminated or in less desireable locations) continued to lay fallow.

So, it is logical that downtown Detroit and areas of Ann Arbor and Grand Rapids and Lansing have seen major brownfield redevelopment pushes and that smaller projects in outer ring suburbs with sound economies have also benefited from the State’s brownfield programs.

But now, we have some major projects that are not “low hanging fruit.”  The Packard Plant is paid for and soon will be owned by a Brazilian developer with big plans. He calls it the “best opportunity in the world” and he sounds serious.  Work on the long-stalled Uniroyal site is reportedly moving forward.  DTE recently sold its Marysville Michigan Plant to a St. Louis developer with experience in Brownfields.  There has been talk for years about Detroit looking at Turin Italy as a model for post-industrial redevelopment and the TV show, Morning Joe recently came to Detroit to tout its urban revival.  I saw this article about the creative redevelopment of a Spanish cement plant, and now I wonder whether we will see this sort of investment and creativity in Detroit and southeast Michigan brownfields which are not the easiest of sites to redevelop.  If so, it will be a very exciting time in Michigan.  Michigan clearly has the supply; now it is time to see if there is sufficient demand.

Payback is a b*tch

12 Jun 2013

As regular MichiganGreenLaw readers know, about 18 months ago, we added insulation to our home.  While three years of data (one before, one of and one after) is not a big enough database, I spent time evaluating at the last three years of our DTE and Consumers Power invoices.  What I learned is that our sense that our house was warmer in the winter and stayed cooler in the summer appears to be accurate.  We saw a reduction in our usage and, while rates vary over time, it does appear that we are saving money.  Now we find ourselves asking how long before this improvement pays for itself in savings?

This is the question that many businesses ask before making alternative energy investments – “How long before I recoup my investment?”  Often, in the post-2007 era, businesses will insist on less  than three years.  Savvy investors know that there are many different methods used to analyze capital projects including net present value (NPV), internal rate of return (IRR), cash flow, profitability index (PI), and payback period.

The payback period method does not take into account the time value of money, the likely increase in costs of energy ($4.30 a gallon of gas, anyone?) and this method doesn’t consider cash inflows after the initial investment is recovered (except the recognition that it’s “all gravy” conclusion).  The payback method’s biggest advantage is it is easy to apply and understand.  However, as more and more authors are writing, this method is misleading and often unfair – as this author notes, no one asks for the payback on home amenities. In short, when making these investments, one must treat them as investments and, taking into account incentives, cash flow, cost of money, projected increases in the cost of energy, (not to mention the ability to market the greener approach or the societal value of a smaller carbon footprint)  consider whether investing in greener equipment or processes is the best use for the company’s funds when compared to other investment opportunities. In many cases it may be the best investment, despite a longer than desired payback period.

Top Green Stories of 2012

31 Dec 2012

As we race toward the end of the year, we thought we’d look back at what we thought were the big stories of 2012 on, in no particular order:

Wetland Rules – EPA and the Army Corps of Engineers submitted final guidance to clarify the scope of waters regulated under the Clean Water Act to the Office of Management and Budget for federal interagency review. The EPA and the Corps have been the subject of “inquiries” from Congress, industry organizations, environmental groups, states and the public for rulemaking to further clarify the requirements of the Clean Water Act consistent with decisions of the Supreme Court. We continue to wait.

Fracking– something that was little heard of before 2011, received a lot of notoriety as dueling reports were released and a flurry of rules and guidance including: an EPA rule to require well developers to institute “green completion” procedures which phases in over the next two years; EPA guidance when diesel fuel is included as a component of the fracking fluid used to free the trapped gas; and U.S. Department of the Interior draft rules for fracking on federal and Indian lands.  The comment period closed in September and the Department recently announced that the rules would not be finalized until sometime in 2013. Finally, the petition drive to amend the State Constitution to ban the use of horizontal hydraulic fracturing fell flat and did not make the ballot.  Given the voters’ response to Constitutional amendments and in particular, how Proposal 3 relating to the clean energy renewable portfolio standard failed, it seems likely that this would’ve failed too.

MDEQ reorganization – the Director shook up the staff at the MDEQ. There was a CSI process intended to streamline the cleanup program and, in the last month, the Department’s cleanup division got a new chief, Bob Wagner, and the Governor signed legislation that was developed in part through the CSI process.

EPA Greenhouse Gas Rules vs. Congress. – a federal appellate panel approved EPA’s rules under the 1990 Clean Air Act  aimed at coal burning power plants.

• Coal Ash – Hazardous Materials – while EPA had proposed rules to more heavily regulate ash from the combustion of coal, it ran into a political buzz saw and the regulations went nowhere.  Luckily, the coal industry avoided the sorts of accidents that plagued them in 2011.

Keystone Pipeline.  As we predicted, President Obama and Congress started 2012 locked in a politically charged dispute over the Keystone XL pipeline, a proposed 1,700-mile oil pipeline from Canada to Texas.  The President deferred it, catching some election year heat, and will likely have to deal with it again in 2013.

Governor Snyder focuses on Environment/Energy – at year’s end, the Governor issued a policy statement on these two interrelated issues and we expect next year to see a focus on improvements in both.

Change at the EPA? Lisa Jackson announced on December 27, 2012, that she’d be stepping down as head of the EPA early next year.


Smart Grid – brought to you in part by Michigan?

5 Dec 2012

In January, I blogged about the so-called “Smart Grid” and what it may mean for the future of the electric system in this Country.   And, while alot of the Smart Grid is about better information for both utilities and consumers, another part is about improving efficiencies.

Last week, the MEDC announced that a Michigan Company, Grid Logic, received a $3.8 Million federal grant to develop a low-cost superconducting wire for use by electric utilities and others.  This project, which sounds very cool, will involve embedding very fine superconducting particles in a combination of metals to induce superconductivity. If successful, the wire would reduce the cost of transmission lines, motors for wind turbines, and other electric devices.  I wonder if the technique will have other applications as well.

This was part of a series of 66 grants totaling $130 Million  by the US Energy Department to foster the development of various cutting edge energy-related technologies.

While the current administration calls it a good example of “economic gardening” – it seems to me that the Government is doing what it has always done, take chances on encouraging technological advancement.  When it pays off, it’s touted as common sense investment in the future – when it fails, it’s perjoratively called “picking winners and losers.”  The New York Times has been running a series on incentives (where it appears only one state has given more incentives than Michigan) – personally, I’m in favor of incentives when they’re well designed, well thought out and planned to foster future-looking efforts – that’s what the federal government did when it incentivized the railroads and oil drilling in the 1800s and 1900s respectively.  Is this program a boondoggle? It depends on politics and results and those are yet to be seen.  I favor investments in the future and  the Energy grants (while having some problems) seem to fall into that category.

Bill Could Make Brownfield Redevelopment Easier

30 Nov 2012

Michigan Senate Bill 1210, which would amend the state’s Brownfield Redevelopment Financing Act, was recently passed by the Senate and is now on its way to the House.  If enacted, the Bill could further promote urban development throughout the state.  Some of the Bill’s highlights include:

  • creating a “State Brownfield Redevelopment Fund” which would, among other things, support a grant and loan program to fund the costs of eligible activities on eligible property,
  • expanding the definition of “infrastructure improvements” to specifically include underground parking, multilevel parking structures, and urban storm water management systems – allowing, for the first time, TIF funding of these often-critical components to a development,
  • adding historic resources to the Act’s definition of “eligible property” and “eligible activities,”  which will assist in Michigan’s redevelopment program taking a more wholistic approach,
  • eliminating the requirement for municipalities to pay the Michigan Strategic Fund or the Department of Environmental  Quality to review work plans,
  • removing the requirement that a plan be approved before January 1, 2013, thereby allowing the program to continue to support new developments,
  • allowing for approval of either a work plan or a combined brownfield plan, which will reduce the amount of work developers must do, and
  • providing mechanisms to respond to the failure of a project to occur.

Michigan’s brownfield redevelopment law helps to preserve undeveloped property for agriculture, wilderness and recreational use, and also benefits urban centers by returning contaminated, blighted, or obsolete property to productive use and providing for the generation of tax revenue.  We believe that Senate Bill 1210 will improve the law, remove barriers and streamline brownfield redevelopment.

Governor Snyder marries energy and environmental policy

28 Nov 2012

Today, Governor Snyder announced his Special Message on Energy and the Environment. True to his nature, he focused on strategic plans and smart decisionmaking with a long term view – something that I agree with.

The Governor focused on three “pillars” relating to energy: (1) reliability; (2) affordability; and (3) environmental protection.  Possibly to the chagrin of  some, he proposed a 2013 legislative dialogue to set goals for energy efficiency and renewable energy, certainly reviving hopes of the people who unsuccessfully  pushed Proposal 3 on the 2012 ballot.  He also bemoaned the lack of a federal energy strategy.

He didn’t discuss every one of the many points of his 19 page message but did talk about the following:

1. expanding the successful Michigan Saves program to help small businesses with energy efficiency;

2. figuring out how to expand development of Michigan’s natural gas resources  (he touted Michigan’s successful fracking practices) and announcing a partnership with UM’s Graham Sustainability Institute to work with industry and environmentalists to ensure that fracking is done safely; and

3. He discussed revamping and strengthening Michigan’s program’s to provide at-risk people maintain utility services.

As to environmental policy, he urged an ecosystem approach and he:

1.  proposed a strategic plan for all of Michigan’s publicly owned lands – building off his blue ribbon parks paneland including a plan for abandoned urban lands and pushed for better methods to aggregate and plan for them;

2. said it was time to resolve the conflict between urban farming and the Right to Farm Act;

3. announced that he was going to co-chair the Great Lakes Governor’s Council and would call a summit to discuss many issues including invasive species (both focusing on prevention and control) – this will likely be a thorny issue particularly in dealing with Illinois on the issue of Asian Carp;

4. asked for a proactive strategy for Michigan’s inland lakes and sustainable water usage; and

5. a surprise to me, he talked about improving recycling programs across the State.

There’s a lot more in there which we will be discussing in the future. But even treating energy and environmental issues as integrally related is a welcome new and dynamic approach.