2015

Recent Developments Affecting the “Fracking” Industry

February 11, 2015
Environment, Environmental Law

Neal Rasmussen, MJLST Staff Member

In “Notes from Underground: Hydraulic Fracturing in the Marcellus Shale” from Volume 12, Issue 2 of the Minnesota Journal of Law, Science & Technology, Joseph Dammel discussed the then current state of hydraulic fracturing (“fracking”) and offered various “proposals that protect public concerns and bolster private interests.” Since publication of this Note in 2011, there have been major changes in the hydraulic fracturing industry as more states and cities begin to question if the reward is worth the risk.

Since 2011, required disclosures of the fluids used in fracking have become effective in fourteen additional states, increasing the overall number of states that require disclosures to twenty. While required disclosures have alleviated some concerns, many believe this is not enough and have pushed to ban fracking outright. Vermont was the first state to do so in 2012. Although progressive, the ban was more symbolic as Vermont contains no major natural gas deposits. However, in late 2014 New York governor Andrew Cuomo made a landmark decision by announcing that fracking would be banned within New York State. Many cities have begun to pass bans as well, including Denton Texas, right in the heart of oil and natural gas country. Citing concerns about the potential health risks associated with the activity, Florida could be the next state to join the anti-fracking movement. In late 2014, two Florida senators introduced a bill that sought to ban all fracking activities and a state representative introduced a similar bill in the beginning of 2015.

The bans have not been without controversy. The fracking industry has challenged many of the local bans arguing the bans are pre-empted by state laws and exceed the cities authority. After Denton passed its local ban, the Texas Oil & Gas Association filed an injunction arguing the city did not have authority to implement such a ban. It yet to be seen if the injunction will be successful but if the results in Colorado are any indication, where local fracking bans have been overturned due to state preemption, the fracking industry should be confident. Until or unless there is a major federal decision on fracking regulations, the fracking industry will be required to juggle the various state and local regulations, which are becoming less friendly as fracking becomes more controversial nationwide.

Privacy in the Workplace and Wearable Technology

February 11, 2015
Privacy

Jessica Ford, MJLST Staff Member

Lisa M. Durham Taylor’s article, The Times They Are a-Changin’: Shifting Norms and Employee Privacy in the Technological Era, in Volume 15 Issue 2 of the Minnesota Journal of Law, Science & Technology discusses employee workplace privacy rights in regard to new technologies. Taylor spends much of the article focusing on privacy concerns surrounding correspondence in the workplace. Taylor states that in certain cases, employees may be able to expect their personal email account correspondence to be private as seen in the 2008 case Pure Bower Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC. However, generally employers can legally monitor email messages and any websites an employee visits, including personal accounts.

Since Taylor’s article, new technologies have emerged, bringing new privacy implications for the workplace with them. Wearable technologies such as Google Glass, smart watches, and fitness bands find themselves in a legal void, particularly in regard to privacy concerns. Several workplaces have implemented Google Glass through Google’s Glass at Work program. While this could help productivity, especially in medical settings, it could also mean that an employer could review every recorded moment, even those containing personal conversations or experiences.

Smart watches could also have a troubling future due to the lack of legal boundaries. At the moment, it would be simple for a company to require employees to wear GPS-enabled smart watches and use the watches to track employees’ locations, see if an employee is exceeding his break time, and instantaneously communicate with employees. Such uses could be frustrating, if not invasive. All messages and activities also could be tracked outside of the office, essentially eliminating any semblance of personal privacy. Additionally, as Taylor notes in her article, there is case precedent upholding a “public employer’s search of text messages sent from and received on the employee’s employer-issued paging device.” This 2010 case, City of Ontario v. Quon, further allowed the employer to search personal messages.

For the moment, it appears that employers are erring on the side of caution. It will take some time to see whether the legal framework Taylor discusses will be applied to wearable technologies and whether it will be more permissive or restrictive for employers.

Could Changes for NEPA Be on the Horizon

February 11, 2015
Environment, Environmental Law

Allison Kvien, MJLST Staff Member

The National Environmental Policy Act (NEPA) was one of the first broad, national environmental protection statutes ever written. NEPA’s aim is to ensure that agencies give proper consideration to the environment prior to taking any major federal action that significantly affects the environment. NEPA requires agencies to prepare Environmental Impact Statements (EISs) and Environmental Assessments (EAs) for these projects. NEPA is often criticized for its inability to be effective in the courts for environmental plaintiffs looking for review of federal agency actions. Environmental petitioners who have brought NEPA issues before the Supreme Court have never won.

The Court has never reversed a lower court ruling on the ground that the lower court failed to apply NEPA with sufficient rigor. Indeed, as described at the outset, the Court has not even once granted review to consider the possibility that a lower court erred in that direction and then heard the case on the merits. The Court has instead reviewed cases only when NEPA plaintiffs won below, and then the Court has reversed, typically unanimously.

Because environmental plaintiffs have never won before the Supreme Court on a NEPA issue, many view the statute as a weak tool and have wanted to strengthen or overhaul NEPA.

According to a recent report from the Environmental Law Reporter, President Obama is now “leaning on NEPA” for the work he hopes to accomplish in improving the permitting process for infrastructure development, but it does not look like he is working to improve NEPA itself,

The president’s initiative has identified a number of permitting improvements, but it does not include a serious effort to force multiple agencies to align their permitting processes. A key to forcing multiple agencies to work together on project reviews and approvals is found in an unlikely place: NEPA. The statute is overdue for a makeover that will strengthen how it identifies and analyzes environmental impacts for federal decisionmakers. In doing so, it can provide the framework that will require multiple agencies to act as one when reviewing large projects.

Though Obama’s proposal may not address improvements for NEPA itself, could it help those who have long wished to give NEPA an overhaul? This is not the first time in the last couple years that the President has talked about using NEPA. In March 2013, Bloomberg released news that Obama was, “preparing to tell all federal agencies for the first time that they should consider the impact on global warming before approving major projects, from pipelines to highways.” With NEPA being key to some of President Obama’s initiatives, could there be more political capital to address some changes for NEPA that have been long-wanted? There might be some hope for NEPA just yet.

Admission of Scientific Evidence in Criminal Case Under the Daubert Standard

February 2, 2015
Uncategorized

Sen “Alex” Wang, MJLST Staff Member

In Crawford v. Washington, the Supreme Court, in a unanimous decision, overruled its earlier decision in Ohio v. Roberts by rejecting the admission of the out-of-court testimony due to its nature as “testimonial” evidence. However, it was not clear if the constitutional right of confrontation only applied to traditional witnesses (like the statement in Crawford) or if it also applied to scientific evidence and experts. Subsequently, the Court clarified this point in Melendez-Diaz v. Massachusetts and Bullcoming v. New Mexico, where the Court upheld the confrontation right of the defendants to cross-examine the analysts who performed the scientific tests. However, compare to traditional testimony from eyewitnesses, scientific evidence (e.g., blood alcohol measurement, field breathalyzer, genetic testing) is a relatively new development in criminal law. The advancement of modern technologies creates a new question, namely whether this evidence would be sufficiently reliable to avoid triggering the Confrontation Clause.

This question is discussed in a student note & comment titled The Admission of Scientific Evidence in a Post-Crawford World in Volume 14, Issue 2 of the Minnesota Journal of Law, Science & Technology. The author Eric Nielson pointed out that the ongoing dispute in the Court about requiring analysts to testify before admitting scientific findings missed the mark. Specifically, scientific evidence, especially the result of an analytical test is an objective, not subjective, determination. In the courtroom, testimony of a scientific witness is mainly based on review of the content of the witness’s report, not his memories. Thus, according to the author, though Justice Scalia’s boldly statements in Crawford that “reliability is an amorphous, if not entirely subjective, concept[,]” may be right in the context of traditional witness, it is clearly wrong in the realm of science where reliability is a measurable quantity. In particular, the author suggested that scientific evidence should be admitted under the standard articulated by the Court in Daubert v. Dow.

As emphasized by the author, a well-drafted, technical report should answer all of the questions that would be asked of the analyst. Given that there is currently no national or widely-accepted set of standards for forensic science written reports or testimony, the author proposed the following key components to be included in a scientific report conforming to the Daubert standard: 1) sample identifier, including any identifier(s) assigned to the sample during analysis; 2) documentation of sample receipt and chain of custody; 3) analyst’s name; 4) analyst’s credentials; 5) evidence of analyst’s certification or qualification to perform the specific test; 6) laboratory’s certification; 7) testing method, either referencing an established standard (e.g., ASTM E2224 – 10 Standard Guide for Forensic Analysis of Fibers by Infrared Spectroscopy) or a copy of the method if it is not publicly available; 8) evidence of the effectiveness and reliability of the method, either from peer reviewed journals, method certification, or internal validation testing; 9) results of testing, including the results of all standards or controls run as part of the testing; 10) copies of all results, figures, graphs, etc; 11) copy of the calibration log or certificate for any equipment used; 12) any observations, deviations, and variances, or an affirmative statement that none were observed; 13) analyst’s statement that all this information is true, correct, and complete to the best of their knowledge; 14) analyst’s statement that the information is consistent with various hearsay exceptions; 15) evidence of second-party review, generally a supervisor or qualified peer; 16) posting a copy to a publicly maintained database; 17) notifying the authorizing entity via email of the completion of the work and the location of the posting.

Per the author, because scientific evidence is especially probative, the current refusal to demand evidence of reliability, method validation, and scientific consensus has allowed shoddy work and practices to impersonate dependable science in the courts. This is an injustice to the innocent and the guilty alike.

Mechanics or Manipulation: Regulation of High Frequency Trading Since the “Flash Crash” and a Proposal for a Preventative Approach

February 2, 2015
Uncategorized

Dan Keith, MJLST Staff Member

In May of 2010, the DOW Jones plummeted to Depression levels and recovered within a half an hour. The disturbing part? No one knew why.

An investigation by the Securities Exchange Commission (SEC) and the Commodity Futures trading Commission (CTFC) determined that, in complicated terms, the Flash Crash involved “a rapid automated sale of 75,000 E-mini S&P 500 June 2010 stock index futures contracts (worth about $4.1 billion) over an extremely short time period created a large order imbalance that overwhelmed the small risk-bearing capacity of financial intermediaries–that is, the high-frequency traders and market makers.” After about 10 minutes of purchasing the E-mini, High Frequency Traders (HFTs) began selling this same instrument rapidly to deplete its own reserves which had overflowed. This unloading came at a time when liquidity was already low, meaning this rapid and aggressive selling increased the downward spiral. As a result of this volatility and overflowing inventory of the E-mini, HFTs were passing contracts back in forth in a game of financial “hot potato.”

In simpler terms, on this day in May of 2010, a number of HFT algorithms had “glitched”, generating a feedback loop that caused stock prices to spiral and skyrocket.

This event put High Frequency Trading on the map, for both the public and regulators. The SEC and the CTFC have responded with significant legislation meant to curb the mechanistic risks that left the stock market vulnerable in the spring of 2010. Those regulations include new reporting systems like the Consolidated Audit Trail (CAT) that is supposed to allow regulators to track HFT activity by the data it produces as it comes in. Furthermore, Regulation Systems Compliance Integrity (Reg SCI), a regulation still being negotiated into its final form, would require that HFTs and other eligible financial groups “carefully design, develop, test, maintain, and surveil systems that are integral to their operations. Such market participants would be required to ensure their core technology meets certain standards, conduct business continuity testing, and provide certain notifications in the event of systems disruptions and other events.”

While these regulations are appropriate for the mechanistic failures of HFT activity, regulators have largely overlooked an aspect of High Frequency Trading that deserves more attention–nefarious, manipulative HFT practices. These come in the form of either “human decisions” or “nefarious” mechanisms built into the algorithms that animate High Frequency Trading. “Spoofing”, “smoking”, or “stuffing”–there are different names, with small variations, but each of these activities involves a form of making large orders for stock and quickly cancelling or withdrawing those orders in order to create false market data.

Regulators have responded with “deterrent”-style legislation that outlaws this type of activity. Regulators and lawmakers have yet, however, to introduce regulations that would truly “prevent” as opposed to simply “deter” these types of activities. Plans for truly preventative regulations can be modeled on current practices and existing regulations. A regulation of this kind only requires the right framework to make it truly effective as a preventative measure, stopping “Flash Crash” type events before they can occur.

Expert Testimony May Put BP in Deepwater as It Enters the Trial’s Penalty Phase

January 29, 2015
Environmental Law

Catherine Cumming, MJLST Staff Member

Though the Deepwater Horizon spill occurred nearly five years ago, the civil trial over disaster’s environmental and economic effects continues. This past week, the U.S. government continued to build its case against BP, arguing that BP should pay the maximum Clean Water Act penalty of $13.7 billion. The Federal prosecutor brought in expert witnesses to describe the spill’s devastating environmental and economic effects on the Gulf. In addition to arguing that BP deserves to pay the $13.7 billion penalty, the Federal prosecutors believe that BP can pay this fine. To support its argument, the U.S. government brought in financial expert Ian Ratner to testify that BP is financially able to pay the Clean Water Act Penalty. While BP is fighting for a lower penalty of approximately $3.19 billion, the statutory minimum, Ratner’s financial analysis supports a higher penalty. In fact, BP’s assets have increased since the 2010 spill. As of June 30, 2014, BP’s assets totaled $315 billion, “up from the $236 billion the year before the spill.”

On Monday, January 26, the trail resumes and BP begins calling its witnesses. It is likely that BP will continue to argue, “that the court should consider BP XP and its resources, rather than those of the larger parent group [BP], when determining a penalty. The smaller drilling subsidiary [BP XP] is the named defendant in the case.” Anadarko, a co-owner of the failed oil well, argues “it had no role in the operation of the well and should not have to pay anything.” The briefs are expected to be filed in April with a ruling from U.S. District Judge Carl Barbier to follow.

As the trial progresses and Deepwater Horizon spill nears its five year anniversary, readers should look at The BP Blowout and the Social and Environmental Erosion of the Louisiana Coast, which discusses the troubles the Gulf and its communities faced before the spill as well as how the spill exacerbated these issues. Daniel A. Farber believes that the situation of the Gulf is a preview of future problems that the United States and world will face in years to come. Farber writes “there are many small initiatives that can cumulatively begin to make inroads on the Gulf’s problems, including, most obviously, efforts to ensure that the BP oil spill is not followed by similar disasters.” Though MJLST published this article in 2012, Farber’s analysis and proposal are pertinent in today’s environmental and economic discussions, particularly those related to the legislature’s actions regarding the Keystone XL Pipeline.

State Agency Deference Under PURPA

January 29, 2015
Administrative Law, Environmental Law

Doug Kincaid, MJLST Staff Member

Recently, in Exelon Wind L.L.C. v. Nelson, 766 F.3d 380 (5th Cir. 2014), the Fifth Circuit Court of Appeals (Fifth Circuit) held that state agencies are entitled to deference under the Public Utilities Regulatory Policies Act of 1978 (PURPA) – a cooperative federalism regulatory scheme. The case revolved concerned the Texas Public Utilities Commission (PUC), which claimed that under state law a wind farm generating intermittent power (“non-firm”) power could not enter into a legally enforceable obligation (LEO) under Texas law, and that such an obligation was not required under PURPA. Unable to enter into a fixed price agreement, the generator was subject to highly variable market prices, increasing the financial risk of the project dramatically.

The Federal Energy Regulatory Committee (FERC) responded by declaring that federal law required all qualifying facilities under PURPA have the option to enter into a LEO. The Fifth Circuit, faced with competing state and federal interpretations, upheld the state interpretation despite the fact that FERC authored the relevant statutes. Because wind and solar energy, by nature, cause scheduling difficulties and extra costs to state agencies overseeing regional energy grids, an incentive may exist for other state agencies to follow the PUC’s lead. The Fifth Circuit’s holding in Exelon frustrates renewable energy development by refusing renewable generators the option to enter into LEOs and expands the deference state agencies are entitled to in a cooperative federalism regulatory scheme.

To the extent federal and state agencies disagree on the interpretation of a cooperative federalism statute, district courts are fragmented and little scholarship exists regarding how to resolve these conflicts. In determining whether to defer to a state agency’s interpretation of federal law, five out of six federal circuits which have considered the issue elected to give state agencies no deference. The underlying basis for federal deference in these cases was a sentiment favoring federal supremacy. The Fourth Circuit, an outlier, granted deference to state agencies citing state agency expertise in tailoring federal regulations to local conditions. Here, the Fifth Circuit in Exelon v. Nelson created a novel line of reasoning on this issue.

In relevant part, PURPA states that “Each qualifying facility shall have the option either: (1) To provide energy. . . based on the purchasing utility’s avoided costs calculated at the time of delivery; or (2) To provide energy or capacity pursuant to a legally enforceable obligation.” The plain meaning of this language, under traditional principles of statutory interpretation, creates a mandatory choice vested in the qualifying facility. The Fifth Circuit, however, read the statute as a bare-bones framework on which state agencies can project any regulation not expressly denied by the statutory language. Because PURPA contains no specific language addressing the obligation of firm or non-firm generators to form LEOs, the PUC regulation presents no facial conflict with PURPA.

The creative judicial interpretation employed to circumvent the mandatory choice interpretation reveals that the Fifth Circuit treated state sovereignty as a controlling concern in the examination of conflicting state and federal agency interpretations. A previous holding in F.E.R.C. v. Mississippi, 456 U.S. 742 (1982), held that PURPA subtly circumvents the anti-commandeering doctrine by allowing states to “comply with the statutory requirements by issuing regulations, by resolving disputes on a case-by-case basis, or by taking any other action reasonably designed to give effect to FERC’s rules.” Perceiving a potential Tenth Amendment conflict caused by forcing state governments to implement FERC’s PURPA regulations, the court hesitated to “wade unnecessarily into such murky waters” and instead elected to defer to the PUC. Exelon v. Nelson may remain an outlier, but considering the importance of state and federal agency cooperation in the energy sector, granting deference to state agency interpretations on constitutional grounds could have a significant effect on energy law. Nonetheless, in terms of implementation of PURPA, the court’s ruling is a setback for renewable energy and may require legislative action to clarify the intent of the law.

PURPA serves to promote renewable generation by creating a mandatory purchase provision for small generation facilities, an increasingly important function considering the massive carbon footprint of the power sector. The holding in Exelon v. Nelson reduces FERC’s power to promote renewable power. A simple legislative fix would preserve state implementation authority under PURPA while eliminating the state’s ability to frustrate renewable energy development through state regulations dictated by purchasing utilities.

Congress sets forth in PURPA’s text three express purposes: “to encourage (1) conservation of energy supplied by electric utilities; (2) the optimization of the efficiency of use of facilities and resources by electric utilities; and (3) equitable rates to electric consumers.” Congress should enact a fourth purpose for PURPA: “to encourage” renewable resources and long-term reduction of carbon emissions. Pursuant to this change, the purpose of PURPA would in fact change very little as renewable energy is already a key component of the statute. State regulations singling out renewable generators would be necessarily rejected in federal or state court pursuant to the express will of Congress. The amendment would honor the structure of cooperative federalism inherent to PURPA by balancing the state role of implementation with the federal role of enforcement, while strengthening the benefits derived by renewable generators from the mandatory purchase requirement.

In sum, Exelon v. Nelson presents a new and potentially significant holding on cooperative federalism – a staple legislative tool in today’s agency intensive power sector. It remains to be seen whether this case will bear significantly on future agency deference or remain an outlier, but the holding certainly calls into question the ability of renewable energy generators to enter into LEOs under PURPA. To counteract this negative effect, Congress should make “encouraging renewable resources and long-term reduction of carbon emissions” an express goal of PURPA, cementing the purpose that the statute already serves.

Revisiting the Constitutionality of the Emergency Medical Treatment and Active Labor Act

January 29, 2015
Healthcare, Privacy

Mickey Stevens, MJLST Staff Member

If a person requires emergency medical treatment and shows up at any hospital that accepts payments from Medicare, that person will receive emergency health care treatment without regard to ability to pay, citizenship, or legal status. This happens because the Emergency Medical Treatment and Active Labor Act (EMTALA), enacted in 1986, requires such treatment as a method of preventing the practice of “patient dumping,” where hospitals would refuse to treat people because of inability to pay, among other reasons. A recent circuit court decision and subsequent petition for writ of certiorari to the Supreme Court of the United States has challenged this part of the EMTALA as constituting a taking in violation of the Fifth Amendment.

In February 2014, E. H. Morreim published an article discussing the EMTALA in volume 15, issue 1 of the Minnesota Journal of Law, Science and Technology. In that article, Morreim argued that EMTALA violates the Fifth Amendment’s Takings Clause. According to Morreim, the EMTALA satisfies the three elements of a taking – property, taking, and public use. The article argues that the property taken is both personal property (pharmaceuticals, medical devices, and paid staff time) and the physical invasion of spaces in the hospital, for the public use of ensuring immediate emergency care without regard to the ability to pay. Furthermore, Morreim suggests that the EMTALA may resemble what Justice Scalia has termed a “Robin Hood Taking” where the government takes wealth from those who have it and transfers it to indigent defendants. See Brown v. Legal Found. Of Wash., 538 U.S. 216, 252 (2003) (Scalia, J., dissenting).

At the time of the article’s publication, neither the Supreme Court nor any of the circuit courts had addressed the constitutionality of the EMTALA. That is no longer the case. The Eleventh Circuit addressed the issue and upheld the EMTALA as constitutional in Baker County Medical Services, Inc. v. U.S. Attorney General, 763 F.3d 1274 (11th Cir. 2014). There, the Appellant hospital appealed the lower court’s grant of a motion to dismiss a claim seeking a declaratory judgment that EMTALA was an unconstitutional taking. The Eleventh Circuit upheld the law on the basis that voluntary participation in a regulated program defeats a takings clause challenge. The decision concluded by saying that the Hospital should turn to Congress for a remedy, instead of the courts.

Morreim’s article addresses this so-called “voluntariness” of participation in EMTALA, arguing that the steep financial losses that would occur – the loss of all Medicare funding – render acceptance of the EMTALA obligations far from voluntary. In Baker County Medical Services, the court responded to these concerns, as raised by the Appellant hospital, by stating that economic hardship is not the same as compulsion.

The Eleventh Circuit’s decision prompted the hospital to file a petition for writ of certiorari with the Supreme Court. 2014 WL 6449709. The petition, which cites to Morreim’s article, was filed in November and may soon receive a response from the Supreme Court. As Morreim wrote, “[s]tay tuned . . . the conversation is likely to become quite interesting.”

Small-Scale Hydropower Provides Renewed Hope for Energy Policy

January 20, 2015
Environmental Law

Catherine Cumming, MJLST Staff Member

As 2015 begins, many worry that the Republican majority in both the House and Senate will adversely effect energy policy over the next few years. With a scheduled Senate committee hearing and vote this week on the Keystone XL pipeline and pledges to “delay or derail the Obama administration’s clean air proposals,” these worries are justified. However, hydropower, the United States’ largest renewable energy resource provides hope for U.S. energy policy through bipartisan legislature and industry aimed at harnessing small-scale hydropower on existing infrastructure.

In 2013, the legislature unanimously passed the Hydropower Regulatory Efficiency Act (H.R. 267) and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act (H.R.678). H.R. 267 was passed in an effort to streamline the Federal Energy Reserve Commission’s (FERC) regulatory process and promote the development of small-scale hydropower projects. H.R. 267 and H.R. 678 “hit a rare bipartisan sweet spot” because they “shrank federal bureaucracy” and increased the potential for renewable energy production through the utilization of existing infrastructure. H.R. 678 was passed to expedite “small hydropower development at existing Bureau of Reclamation-owned canals, pipelines, aqueducts, and other manmade waterways.”

While proponents of hydropower are pleased with the Act, many, especially small-scale producers, are looking for more from the Republican-controlled legislature. The bills and their legislative history focus heavily on the number of unutilized dams in the U.S. as well as the potential for micro hydropower production. While the bills are helpful in increasing the development of small-scale hydropower, further legislature is needed to ease the regulatory process. In a recent NPR story on hydropower legislation, Kurt Johnson, head of the Colorado Small Hydropower Association, described the bills as “a kitchen knife gently cutting the government’s red tape, when what is really needed is a machete.” However, even with a Republican controlled House and Senate, taking a “machete” to FERC’s regulatory process is unlikely. This February, FERC’s amended regulations conforming to the bills become effective, easing the regulatory process for qualifying small-scale hydropower facilities.

Despite recent reform to the hydropower regulatory regime and bipartisan recognition that hydropower is an underdeveloped resource, 2014 showed a shift in hydropower and energy policy. Traditionally, hydropower has been the United States’ largest renewable energy source, but in 2014, annual non-hydropower renewable generation usurped hydropower generation for the first time. In a recent report, the U.S. Energy Information Administration (EIA) projected decrease of 4.4% in conventional hydropower generation, but a 5.1% increase in non-hydropower renewables, including wind, solar, and geothermal. The 2014 removal of the Elwha Dam on the Olympic Peninsula in Washington State highlighted another shift in hydropower, as large-scale hydropower projects and their externalities are under scrutiny. As a result of this heightened scrutiny and the potential for unutilized infrastructure on America’s waterways, the hydropower industry and legislature is looking to implement smaller, noncontroversial projects.

Though hydropower generation decreased in 2014, the legislature recognizes that there is tremendous growth potential for hydropower in America’s future. In fact, the new Chair of the Senate Committee on Energy and Natural Resources, Senator Lisa Murkowski, is on the record for calling hydropower an “undeveloped resource.” Senator Murkowski’s statement is supported by many recent studies, which indicate the potential for increased hydropower generation and job growth in the United States. In addition to its potential for the development of new, clean energy generation and jobs, small-scale hydropower legislation provides renewed hope for energy policy in a Republican-controlled legislature.

Commercial Drones: What’s a Business to Do?

January 16, 2015
Uncategorized

Neal Rasmussen, MJLST Staff Member

Since the March 2014 decision by administrative law judge Patrick Geraghty, the legality of using a drone for commercial purposes has been up for debate. Geraghty held that the Federal Aviation Administration (FAA) could not regulate the use of drones for commercial purposes under the current regulatory regime because a drone could not be considered an “aircraft” under 14 C.F.R. § 91.13(a) therefore could not be in violation of the Federal Aviation Regulations.

The FAA’s ability to regulate commercial drones came to the forefront when Raphael Pirker, a professional photographer, was paid by the University of Virginia to provide aerial photographs and video, which was accomplish by using a small drone. The FAA claimed the drone was operated in “a careless or reckless manner so as to endanger the life or property of another” in violation of 14 C.F.R. § 91.13(a) and assessed a $10,000 penalty. Pirker promptly challenged this penalty arguing his drone was not an “aircraft” and could not be in violation of the Federal Aviation Regulations. Geraghty agreed, finding that the definition of “aircraft” as defined in 49 U.S.C. § 40102(a) (6) (“any contrivance invented, used or designed to navigate or fly in, the air”) and 14 C.F.R. § 1.1 (“a device that is used or intended to be used for flight in the air”) did not include model aircraft or drones.

This decision left a gaping hole in the FAA’s enforcement power and was welcomed by businesses using commercial drones due to their ability to now fly without fear of penalties. Understandably, the decision was immediately appealed by the FAA. On appeal the National Transportation Safety Board (NTSB) reversed the decision by finding that drones did meet the definition of “aircraft” as defined in 49 U.S.C. § 40102(a)(6) and 14 C.F.R. § 1.1, thus Pirker could be subject to penalties for violation of 14 C.F.R. § 91.13(a). The NTSB remanded the case in order to determine if Pirker’s operation was in a careless or reckless manner warranting the $10,000 penalty.

In an effort to legally integrate drones into the National Airspace System (NAS), the FAA has since allowed businesses to file for exemptions under Section 333 of the FAA Modernization and Reform Act of 2012. These exemptions are acting as a gap filler until the FAA releases their proposed regulations for small drones, which are expected later this year. To date, thirteen Section 333 exemptions have been granted by the FAA. The most prevalent industry to be granted an exemption is the film industry, totaling seven of the thirteen. Other industries include construction, real estate, agriculture, and surveying. The number of exemptions is expected to grow, as the FAA has received over 200 applications for exemptions. However, the number of drones in the sky is not expected to skyrocket anytime soon due to the length of time and expense needed in order to obtain a Section 333 exemption which limits the number of companies that can apply and be granted an exemption.

Although not ideal, the exemption process is a major step in the right direction for the FAA as it finally begins to work with, not against, businesses to fully integrate drones into the NAS. Full integration into the NAS, however, will not occur until final regulations are released later this year. Even after regulations are released it could take a few years to work out all of the logistics of using drones for commercial purposes. In any event, don’t expect your Amazon package to be delivered by drones anytime soon. Stay tuned!

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