Judge rescinds new fuel cell rules

Santa Clara will need to conduct study before approving new regulations

SANTA CLARA >> A judge has ruled in favor of Silicon Valley company Bloom Energy in its dispute with Santa Clara, striking down the city’s requirement that fuel cell users handle only renewable fuels.

In his ruling, Santa Clara County Superior Court Judge Thomas Kuhnle said the city should have done a full environmental analysis before approving the new regulation.

In May, the city passed a resolution requiring new fuel cell users that rely on the city’s utility for backup power to tap solar, wind, biogas or other renewable energy sources within the state. The utility, Silicon Valley Power, has pledged to make all new energy sources renewable and free of greenhouse gases by 2045.

Bloom Energy, a San Jose company that manufactures fuel cells, responded by suing the city. It alleged the City Council violated the California Environmental Quality Act by not fully analyzing the new regulation’s environmental impacts before voting and asked it to rescind the resolution.

Kuhnle granted that request earlier this month, ruling that the city failed to meet the legal standard for skipping a full analysis.

He said the city needs to conduct a full analysis because it hasn’t proven there is “no possibility” the new regulation could significantly affect the environment.

Bloom’s fuel cells combine fuel and hot air to produce a chemical reaction that creates electricity without any burning.

The company argues the city has effectively banned its technology in Santa Clara because renewable fuels such as biogas are expensive and in limited supply in California, and most of its customers use natural gas.

One of its customers in Santa Clara, Equinix, said in a letter to the city it would likely rely more on diesel generators if the use of natural gas for fuel cells is prohibited.

The city counters that its electric grid, which runs on renewable energy, is inherently cleaner than a technology that runs on natural gas 24/7.

The judge disagreed with one of Bloom’s arguments that the new regulation would increase carbon dioxide emissions, but agreed the regulation could influence emissions of nitrogen and sulfur oxides by increasing reliance on diesel generators.

In a statement, Assistant City Manager Manuel Pineda, who also heads Silicon Valley Power, said the city “intends to act swiftly” and likely will do additional studies before taking the

resolution back to the council for another vote.

“Ultimately, the City intends to act swiftly to address the issues identified by the Court with the goal to ensure that energy used in the City today, as well as in the future, helps to achieve California’s reduction

goals,” Pineda said in the statement.

Pineda said “the court has the discretion to leave the regulations in place while the City undertakes further analysis” and the city may ask it to do so to prevent more greenhouse gas emissions in the meantime.

Josh Richman, Bloom’s vice president of business development and policy, applauded the ruling, and in a statement said that environmental policies should be “carefully crafted in consultation with experts.”

“In this case, facts were at best misunderstood by policymakers — and at worst, intentionally ignored to hide the true goal of the policy — all to the detriment of the environment and to the citizens and businesses in the City of Santa Clara,” Richman said in the statement.