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Bench Report: Top Ten Legal Decisions of 2011

Fortnightly Magazine - November 2011

and which requires other companies not subject to that ceiling to supply allowances, each worth one ton of carbon dioxide, to cover their annual CO 2 emissions.

The regulation will cover some 360 companies representing 600 facilities, and is divided into two phases. The first phase, starting in 2013, will cover all major industrial sources, along with electric utilities, which will be given allowances to be sold at auction for the benefit of ratepayers. The second phase, starting in 2015, brings in distributors of natural gas and transportation fuels.

CARB had first adopted a cap-and-trade regime for carbon dioxide emissions late last year (Resolution 10-42, Dec. 16, 2010) , only to see the plan enjoined by a state superior court, which ruled that the board had failed to consider other program alternatives, such as a carbon tax, that might have the same mitigating effects. (Asso. of Irritated Residents v. Calif. Air Resources Bd., Case CPF-09-509562, Mar. 18, 2011.)

Under the latest iteration, the Air Resources Board initially will provide the majority of allowances to all industrial sources, using a calculation that rewards the most efficient companies. Those that need additional allowances will be able to purchase them on the market, or at regular quarterly auctions run by the board. The first auctions were slated for August and November 2012.

7. Cyber Insecurity

FERC sends NERC back to the drawing board on CIPS Version 4.

Citing what it called a “reliability gap,” FERC sent the North American Electric Reliability Corp. (NERC) back to the drawing board on the latter’s proposed new Critical Infrastructure Protection Standards (CIPS), Version 4, after questioning NERC’s staged approach to cyber security. In that approach, a cyber asset is deemed “critical” and requiring of protection only if essential to the reliable operation of an electric system network asset identified independently as critical on the basis of NERC’s newly approved bright-line test for criticality of bulk power system components, based on voltage or capacity size—a framework that would target 532 control centers as critical, but leave 222 control centers with no obligation to apply cyber security measures.

Instead, FERC asked for more industry comment on whether to incorporate into the CIP standards some or all of the tiered approach to cyber security advocated by NIST, the National Institute of Standards and Technology. The NIST framework calls for at least some baseline level of cyber security protection for all BPS assets.

Citing network connectivity, and the chance that intruders might compromise multiple critical sites by gaining access to a single, isolated non-critical control point, FERC questioned how any control center and its cyber facilities, no matter how small, would not be identified as a critical asset. (Docket No. RM11-11, Sept. 15, 2011, 136 FERC ¶61,184.)

8. Korridor Killer

DOE’s failure to consult states threatens FERC’s backstop transmission siting authority.

In February the U.S. Fourth Circuit Court of Appeals struck down the U.S. Department of Energy’s 2007 decision that designated certain areas of the Mid-Atlantic and Southwest as national interest electric transmission corridors (NIETCs), finding that DOE failed properly to “consult” with