The Nickel Report

For federal agencies seeking to complete rulemaking before the end of the Biden Administration, the clock is ticking, and a number of important deadlines are fast approaching. One of the most important deadlines could be the Congressional Review Act’s (CRA’s) so-called “look-back” provision.

The CRA mandates agencies provide Congress an opportunity to review and possibly overturn rules. To overturn a rule, both houses of Congress must pass a joint resolution of disapproval, and it must be signed by the President. If a CRA resolution is enacted, it invalidates the rule in question and bars the agency from issuing another rule in “substantially the same form” as the disapproved rule. 5 U.S.C. § 801(b)(2). If a rule has already taken effect by the time it is set aside via the CRA, it will no longer be in effect and “shall be treated as though such rule had never taken effect.” 5 U.S.C. § 801(f).

On September 8, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) (together, the Agencies) published a final rule in the Federal Register to amend the Agencies’ January, 2023 “waters of the United States” (WOTUS) definition (Amended Rule). 88 Fed. Reg. 61,964 (Sep. 8, 2023).[i] According to the Agencies, these amendments conform that definition to the Supreme Court’s Sackett decision. 

On August 14, EPA published its proposed modifications to regulations establishing the requirements for a state or tribe to assume the Clean Water Act (CWA) section 404 permit program, including necessary state program elements, EPA responsibilities (e.g., approval and oversight of assumed programs), and requirements for review, modification, and withdrawal of state programs.  88 Fed. Reg. 55,276 (Aug. 14, 2023).  The proposal provides helpful clarifications but does not resolve a number of key issues faced by states considering assumption and by permittees in those States. 

On July 10, 2023, California Governor Gavin Newsom signed into law a suite of bills intended to facilitate the permitting and approval processes for clean energy and other infrastructure projects in California.

Enactment of these measures in conjunction with the state’s budget bill marked the culmination of negotiations between the governor and state legislators that began on May 19, 2023, when the governor’s office announced a number of legislative proposals to streamline approval and permitting processes for clean infrastructure projects in California. On the same day, Governor Newsom issued Executive Order N-8-23, creating an Infrastructure Strike Team to work across state agencies to maximize federal and state funding opportunities for California innovation and infrastructure projects. The governor’s legislative proposals and executive order reflect the administration’s commitment to infrastructure development in California.

On June 5, 2023, the US Department of Energy (DOE) published its US National Clean Hydrogen Strategy and Roadmap. This report addresses the Infrastructure Investment and Jobs Act (IIJA) requirement that the DOE “develop a technologically and economically feasible national strategy and roadmap to facilitate widespread production, processing, delivery, storage, and use of clean hydrogen.” Notably, in developing this strategy, Congress instructed the DOE to focus on clean hydrogen production and use from a variety of sources—including natural gas, coal, renewable energy, nuclear energy, and biomass.

In May 2023, Minnesota’s Governor Walz signed into law HF 2310, which bans the sale of certain products containing “intentionally added” per- and- polyfluoroalkyl substances (PFAS) in 2025 and then all products in 2032, and also establishes reporting requirements for products containing PFAS starting in 2026. Following Maine’s lead, Minnesota has now become the second state in the country to pass a broad ban on PFAS-containing products sold in the state. While reporting requirements apply to product manufacturers, the bans on sale, offer for sale, or distribution in the state apply to “persons,” including retailers. Companies who manufacture products for sale (and who sell) products in the state of Minnesota will need to prepare to assess the presence of PFAS in their supply chains in order to comply with these new requirements.

On June 3, 2023, President Biden signed the bipartisan Fiscal Responsibility Act of 2023 (FRA) to suspend the United States’ debt limit until January 2025. The legislation also imposes changes to the environmental review process for infrastructure projects. Most notably, the FRA amends key provisions of the National Environmental Policy Act (NEPA), a touchstone environmental statute that imposes procedural requirements for the approval of major federal actions. The amendments to NEPA are the first major changes to the statute in almost 40 years. These changes signal Congress’s intent to streamline the environmental review of projects and improve the federal permitting process for energy projects. The amendments to NEPA will likely influence (and may delay) the Council on Environmental Quality’s (CEQ) Phase 2 revisions to NEPA’s implementing regulations which are currently undergoing interagency review. The FRA also expedites the approval process for all permits for the Mountain Valley natural gas pipeline project in West Virginia.

On May 17, 2023, the US District Court for the District of Massachusetts granted summary judgment to federal government defendants and intervenor Vineyard Wind in the first of four lawsuits pending in that court challenging the development of Vineyard Wind, a 62-turbine offshore wind project being built off the coast of Massachusetts, approximately 14 nautical miles south of Nantucket and Martha’s Vineyard at its nearest point. Vineyard Wind—which is slated to be the nation’s first commercial-scale offshore wind project, with capacity to power over 400,000 homes and businesses—has been under development for several years and has met opposition from a range of constituencies, including local residents and the fishing industry.

On April 6, 2023, President Biden issued Executive Order 14094, Modernizing Regulatory Review. This Executive Order (EO) makes several important changes to the Office of Management and Budget’s (OMB) regulatory review process for federal agency regulations. The EO significantly affects which regulations qualify for interagency review, modifies the OMB gatekeeping function by which meetings are granted on proposed rules, and requires the Office of Information and Regulatory Affairs’ (OIRA) to amend policies underlying how the federal government conducts cost-benefit analysis. In addition, OIRA has released a suite of new draft guidance documents that serve to implement the EO that, if finalized, will impact the review process for regulations. These guidance documents are open for comment as described below.

On April 6, 2023, President Biden issued Executive Order 14094, Modernizing Regulatory Review. This Executive Order (EO) makes several important changes to the Office of Management and Budget’s (OMB) regulatory review process for federal agency regulations. The EO significantly affects which regulations qualify for interagency review, modifies the OMB gatekeeping function by which meetings are granted on proposed rules, and requires the Office of Information and Regulatory Affairs’ (OIRA) to amend policies underlying how the federal government conducts cost-benefit analysis. In addition, OIRA has released a suite of new draft guidance documents that serve to implement the EO that, if finalized, will impact the review process for regulations. These guidance documents are open for comment as described below.

President Biden signed a new Executive Order (E.O.) to advance environmental justice (EJ) late last week, just in time for Earth Day. E.O. 14096, Revitalizing Our Nation’s Commitment to Environmental Justice for All, aims to carry out its title through a bevy of actions, including requiring agencies to create EJ strategic plans, directing research on EJ issues, expanding notifications for toxic chemical releases, and increasing coordination on EJ by establishing a new EJ Interagency Council and White House Office of Environmental Justice. The new E.O. builds on the Biden Administration’s “whole-of-government” approach to EJ, making clear that the obligation to consider and address EJ applies across federal agencies. The E.O.’s directives are likely to guide federal agency permitting, funding grants, and other authorizations for projects or activities that may have implications for EJ communities. On the same day as the E.O. was signed, the administration also announced a handful of other steps to further its EJ priorities.

President Biden issued his second veto late last week. The President’s second veto protects a U.S. EPA rule that went into effect on March 20, 2023. That rule redefines “waters of the United States” (WOTUS), and at a high conceptual level, returns the Agency’s interpretation of WOTUS to that of the Obama administration, an interpretation that was revoked and replaced by the Trump administration.

This matter has been hotly contested in the federal courts. Indeed, the U.S. Supreme Court is poised to issue a ruling within the next several weeks on Sackett v. EPA, a decision which could substantially revise and narrow the Agency’s definition of “waters of the United States.” The Court’s decision here could send the Biden administration’s revised definition of WOTUS back to EPA for changes needed in-line with the Court’s decision, if and when issued.

On March 21, 2023, the US Department of Energy (DOE) released a series of reports aimed at advancing President Biden’s ambitious goal of achieving  a decarbonized electricity sector by 2035 and net-zero emissions economy-wide by 2050. (See Executive Order 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, Dec. 8, 2021.) The reports come on the heels of the Intergovernmental Panel on Climate Change’s March 20, 2023, Synthesis Report for the Sixth Assessment Report, calling for urgent action on climate change. 

Last Friday, March 24, the White House Council on Environmental Quality (CEQ) announced the rosters for two task forces charged with providing input for the development of Carbon Capture, Utilization, and Sequestration (CCUS) programs. The task forces are a requirement of the Utilizing Significant Emissions with Innovative Technologies (USE IT) Act, passed in 2020 as a part of the Consolidated Appropriations Act, 2021, and will focus on CCUS with regard to permitting on private and federal  lands, including the Outer Continental Shelf. Members of the task forces include state and ...

President Biden issued his first veto today. Biden’s veto returns to Congress a joint resolution that attempts to nullify a recent rule from the Department of Labor regarding consideration of Environmental, Social, and Governance (ESG) factors when investing in retirement accounts. This rule went into effect on January 30, 2023, and allows for retirement plan fiduciaries to consider ESG factors when selecting investments and exercising shareholder rights. Some have said ESG investing is controversial because it allows for retirement plan fiduciaries to consider factors such as climate change and equity instead of focusing solely on maximizing financial returns; while others have argued that past measures prohibiting the consideration of ESG factors are equally problematic.

On February 23, 2023, the US Department of Energy (DOE) published two Funding Opportunity Announcements (FOA) titled Carbon Capture Large-Scale Pilot Projects and Carbon Capture Demonstration Projects Program.  

Both programs provide incentives for the power and industrial sectors to develop carbon capture technologies. Together they will award more than $2.5 billion in funding to eligible projects at new and existing industrial facilities. As carbon capture utilization and storage (CCUS) continues to develop and grow, this funding presents opportunity for a broad range of stakeholders that operate in various industrial sectors.

As previously forecast, the winds of change are heading to the home of America’s offshore energy industry. On February 22, 2023, the US Department of the Interior’s (DOI) Bureau of Energy Management (BOEM) announced the first-ever offshore wind lease sale in the Gulf of Mexico (GOM). The proposed GOM sale comes in the middle of the comment period on the agency’s proposed changes to the offshore wind regulations.

The Proposed Sale Notice (PSN) includes 102,480 acres near Lake Charles, Louisiana, and two areas near Galveston, Texas, one comprising 102,480 acres, and the other comprising 96,786 acres (see the below image). BOEM appears to be interested in comments on regulations that would limit leasing near Galveston to a single area or potentially eliminate the sale of leases in either area.

As we described in a recent post, the Department of the Interior’s (DOI) Bureau of Ocean Energy Management (BOEM) announced the signature of its proposed Renewable Energy Modernization Rule in mid-January 2023. The proposed rule – which is intended to update and modernize the regulations governing wind energy development on the Outer Continental Shelf (OCS) – was published in the Federal Register on January 30, opening a 60-day comment period. 

As we described in a recent post, the Department of the Interior’s (DOI) Bureau of Ocean Energy Management (BOEM) announced the signature of its proposed Renewable Energy Modernization Rule in mid-January 2023. The proposed rule – which is intended to update and modernize the regulations governing wind energy development on the Outer Continental Shelf (OCS) – was published in the Federal Register on January 30, opening a 60-day comment period. 

On December 13, 2022, the US Department of Energy (DOE) published a Notice of Intent (NOI) to issue a Funding Opportunity Announcement (FOA) titled, BIL-Carbon Utilization Procurement Grants Under Bipartisan Infrastructure Law Section 40302.

The Carbon Utilization Procurement Grant program provides incentives for the use of products developed from the conversion of carbon oxides emitted from human activity. Carbon capture, storage, and reuse opportunities have traditionally been designed to address a narrow scope of issues and be available exclusively to targeted industries and subsectors. The broad eligibility outlined in this NOI suggests a vast applicability to all industry sectors and segments of the supply chain.

On January 12, 2023, the U.S. Department of the Interior’s (DOI) Bureau of Energy Management (BOEM) announced the signature of a Notice of Proposed Rulemaking (NOPR) addressing the regulations governing wind energy development on the Outer Continental Shelf (OCS). As BOEM notes in the NOPR, the first OCS renewable energy regulations were promulgated in 2009 by the Minerals Management Service, the predecessor to BOEM.  Through the NOPR, BOEM intends to modernize its regulations by implementing reforms identified by the agency and recommended by stakeholders since 2010, when BOEM was established. 

Yesterday, the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (Corps) (together, the Agencies) published a final rule revising the definition of “waters of the United States” (WOTUS) subject to federal regulation and permitting requirements under the Clean Water Act (CWA).  This rule is the latest attempt by the Agencies to craft a durable rule defining WOTUS.  The new rule, which largely mirrors the 2021 proposal, asserts a broader geographic scope of federal jurisdiction than the 2020 Navigable Waters Protection Rule (NWPR).  In particular, the Agencies adopt the broadest possible interpretation of the Supreme Court’s decision in Rapanos (through incorporation of both the plurality’s “relatively permanent” test and Justice Kennedy’s “significant nexus” test).  The final rule would, for the first time, codify aspects of the Agencies’ 2008 Rapanos Guidance and would rely on the significant nexus test’s case-by-case approach for evaluating jurisdiction for tributaries, wetlands, and other waters.  The Agencies released the final rule while the Supreme Court considers the scope of CWA authority over a major category of WOTUS, “adjacent wetlands,” in Sackett v. EPA, and the Supreme Court could hand down a decision in the coming months that could require changes to the rule.

The US Environmental Protection Agency (“EPA”) announced its enforcement and compliance results for Fiscal Year 2022 (“FY2022”) in late December. In the Annual Results report prepared by EPA’s Office of Enforcement and Compliance Assurance (“OECA”), OECA highlights EPA’s efforts to target the most serious violations of the country’s core environmental statutes and civil rights laws—effectuating the mission and principles set forth in its FY2022 to 2026 EPA Strategic Plan. According to OECA, EPA’s enforcement and compliance program used “a range of tools and best practices” to specifically target water, air, land and chemical violations that impacted communities the most. In so doing, EPA reportedly reduced, treated or eliminated approximately 95 million pounds of pollutants and compelled violators to pay over $300 million in fines, restitution or penalties. The enforcement and compliance trends highlighted below continue an overall decline seen in the last decade, yet provide evidence that EPA is succeeding in its enforcement and compliance efforts in areas that are the biggest priority for the Biden administration.

This article follows up on two prior articles published by Hunton Andrews Kurth LLP attorneys focusing on the Department of the Interior’s (“DOI”) funding of state orphaned well programs[1] and the Biden Administration’s promise of a greater emphasis on consulting with indigenous people and acknowledging their communities’ cultures, customs, sacred sites, and historical knowledge in the contexts of environmental planning, sustainability, and justice, and in ongoing and forthcoming federal decision making and regulatory rulemaking.[2]

The Biden-Harris administration is taking new steps to put some teeth into its emphasis on addressing environmental justice (EJ). Two recent developments are worth noting given the potential impact on projects and communities. 

One, EPA announced on September 24, 2022 that it is launching its new Office of Environmental Justice and External Civil Rights (OEJECR or EJ Office). Establishing the EJ Office on par with other key EPA offices, such as the Office of Air and Radiation, the Office of Enforcement and Compliance Assurance, and the Office of Land and Environmental Management, signals the emphasis that the Biden-Harris administration is placing on EJ.

Two, in August 2022, EPA’s Office of General Counsel (OGC) issued a guidance document entitled Interim Environmental Justice and Civil Rights in Permitting Frequently Asked Questions (EJ FAQs) that outlines EPA’s current views as to how federal, state, and local permitting agencies can meet the requirements of civil rights laws when they are administering environmental permitting requirements. The FAQs document signals greater focus on environmental justice in permitting, even noting that denial of permits based on environmental justice or civil rights concerns may be appropriate in some cases.

The Texas Commission on Environmental Quality (TCEQ) is inviting informal public comment on the draft TCEQ Regulatory Guidance Document for Evaluation of Regionalization for Potential New Wastewater Systems (“Draft Regionalization Guidance”). Under Section 26.081 of the Texas Water Code, TCEQ is required to implement a policy to “encourage and promote the development and use of regional and area-wide waste collection, treatment and disposal systems to serve the waste disposal needs of the citizens of the state and to prevent pollution and maintain and enhance the quality of the water in the state.”

On September 30, the US Fish and Wildlife Service (USFWS or Service) published proposed rule that would revise the regulations governing the issuance of eagle take permits (ETPs) under the Bald and Golden Eagle Protection Act.  87 Fed. Reg. 59,598 (September 30, 2022). In the preamble to the proposed rule, the Service acknowledges that its current ETP regulatory process, first established in 2009 and revised in 2016, is not working as intended.  In particular, the Service notes that “[w]hile there are more than 1,000 wind-energy projects on the landscape, the Service has received fewer than 100 applications from those projects and has currently issued only 26 permits since the promulgation of the 2016 Eagle Rule.”  87 Fed. Reg. at 59,602.

Beginning with the inauguration of Ronald Reagan in 1983, each newly inaugurated president from a different political party than his predecessor has ordered the withdrawal from the Office of the Federal Register (OFR) of all pending regulations that have not yet been published.  86 Fed. Reg. 7425 (Jan. 28, 2021) (Biden); 82 Fed. Reg. 8346 (Jan. 24, 2017) (Trump); 74 Fed. Reg. 4435 (Jan. 26, 2009) (Obama); 66 Fed. Reg. 7702 (Jan. 24, 2001) (Bush); 58 Fed. Reg. 6074) (Jan. 25, 1993) (Clinton); 46 Fed. Reg. 11,227 (Feb. 16, 1981) (Reagan). The incoming presidents have used this approach to advance their policies as opposed to being constrained by the policies of their predecessors reflected in such “midnight rules.” The D.C. Circuit, in Humane Society v. U.S. Dept. of Agric., No. 20-5291 (D.C. Cir. July 22, 2022), has limited the rules that can be withdrawn under this long-standing approach. 

On July 28, 2022, the US Environmental Protection Agency (EPA)  published the 2021 Toxics Release Inventory (TRI) preliminary dataset that provides public access to data about chemical releases, waste management, and pollution prevention activities that took place in calendar year 2021 at more than 20,000 federal and industrial facilities across the country. The 2021 preliminary dataset, which for the second year includes reporting on per- and polyfluoroalkyl substances (PFAS) added to the TRI by the 2020 National Defense Authorization Act (NDAA), has not yet undergone the complete TRI data quality process. EPA plans to publish the quality-checked dataset in October 2022, at which time it will be the basis for the 2021 TRI National Analysis interpreting the information and examining trends that is expected to be published in early 2023. Companies should bear in mind that information collected under the TRI program can be used not only to inform regulatory action, but also as a basis for enforcement by EPA and citizen suits.

On July 20, 2022, in Naturaland Trust v. Dakota Finance, LLC, No. 21-1517, a split Fourth Circuit panel held that a state agency’s notice of violation did not “commence an action” within the meaning of 33 U.S.C. § 1319(g)(6)(A)(ii). That provision states that a Clean Water Act violation “shall not be the subject of” a citizen suit for civil penalties if a state “has commenced and is diligently prosecuting” an action with respect to the violation “under a State law comparable to” the Clean Water Act. The court also held that this provision is not jurisdictional.

Yesterday, June 23, 2022, The Biden Administration announced the launch of a Federal-State Offshore Wind Implementation Partnership (“Partnership”) to expedite and foster the growth of wind energy, tackle the climate crisis, strengthen American energy security, and achieve the goal of deploying 30 gigawatts (GW) of offshore wind by 2030. 

On May 3, 2022, the Railroad Commission of Texas (Railroad Commission) voted to approve three actions that represent a major step forward in facilitating the deployment of carbon capture, use and sequestration activities (CCUS) in Texas. Specifically, the Railroad Commission approved:

• Publication of proposed amendments to its rules implementing the state program for geologic storage of anthropogenic CO₂ and incorporating federal requirements;
• Submittal to the US Environmental Protection Agency (EPA) of a pre-application to gain regulatory authority over Class VI underground injection control (UIC) wells that are used for injection of CO₂ into deep subsurface formations; and
• A request that the Governor formally ask EPA for Class VI UIC well program approval. [i]  

On May 18, 2022, in York et al. v. Northrop Grumman Corp. Guidance and Electronics Co. Inc. et al., No. 21-cv-03251 (W.D. Mo.), a federal district court dismissed state-law tort claims for alleged groundwater contamination, finding that they were preempted by an existing Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) consent decree. The court rejected the plaintiffs’ argument that two CERCLA “savings clauses” allow their claims to proceed.

Last week, in Residents of Gordon Plaza, Inc. v. Cantrell, the Fifth Circuit denied a petition for rehearing en banc of a recent decision affirming the dismissal of a Resource Conservation and Recovery Act (RCRA) citizen suit. The key issue in the underlying appeal, 25 F.4th 288 (5th Cir. 2022), was whether certain maintenance activities qualify as a “removal” action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court affirmed that the maintenance activities do indeed constitute a “removal action.” Therefore, the suit was barred under 42 U.S.C. § 6972(b)(2)(B)(iv), which precludes RCRA citizen suits where a “responsible party is diligently conducting a removal action” pursuant to a CERCLA consent decree with EPA.

Two recent actions by the Biden Administration will identify areas of focus for environmental justice (EJ) and therefore influence environmental enforcement priorities, federal permitting and licensing, and federal spending, among other actions. On February 18, the White House Council on Environmental Quality (CEQ) released the beta (or draft) version of its Climate and Economic Justice Screening Tool (CEJST), a key component of President Biden’s Justice40 Initiative and mandated by the same Executive Order 14008. As we described last year, the Justice40 Initiative set the goal of “delivering 40 percent of the overall benefits of relevant federal investments” to disadvantaged communities. The CEJST serves a specific purpose: to help agencies identify disadvantaged communities in order to direct federal benefits and help agencies measure whether 40 percent of benefits are being received by those communities.

On the heels of the November 2021 Tribal Nations Summit, a flurry of memoranda was signed by the White House and many government agencies. These memoranda seek to further the Biden administration’s promises of consulting with indigenous people and acknowledging their communities’ cultures, customs, sacred sites, and historical knowledge in the contexts of environmental planning, sustainability, and justice, and in ongoing and forthcoming federal decision making and regulatory rulemaking.

Center stage in the ongoing discussion is Indigenous Traditional Ecological Knowledge (ITEK), and the need for including and consulting with Tribal communities on the front end of planning as part of the environmental review process under the National Environmental Policy Act (NEPA)—something that inconsistently occurred in the past. Stakeholders from developers and investors to Tribes and regulators, among other parties, should expect increased focus and guidance from the Biden administration in 2022 on these issues. The additional focus on these issues will present opportunities, but also challenges, as it adds another step in the already time-consuming NEPA process.

Under a process known as Sunset Review, the Texas Commission on Environmental Quality (TCEQ) will be abolished in 2023 unless a bill is passed in the 88th Texas Legislative Session reauthorizing the agency. Sunset Review is performed by the Sunset Commission, and the process takes approximately two years. The TCEQ review process began last year with the preparation of the Self Evaluation Report (SER), completed by TCEQ in September of last year. The general public is encouraged to participate in the process. Public input is confidential and not passed on to the agency at this stage. Public comments should be provided by February 1, 2022 to be fully considered.

On January 11, the Bureau of Ocean Energy Management (BOEM) announced the beginning of a scoping period to prepare a draft environmental assessment (Draft EA) for the Gulf of Mexico (GOM) Call Area to assess potential impacts associated with offshore wind leasing. The area includes approximately 30 million acres of federal lands on the outer continental shelf (OCS) in the GOM, and covers areas in what is commonly known as the Western and Central Planning Areas of the GOM. This is the same area described in the Call for Information and Nominations published in the Federal Register on November 1, 2021. Comments will be received through February 9, 2022. BOEM anticipates completing the Draft EA this summer.

On December 15, 2021, the Texas Commission on Environmental Quality (TCEQ) approved the publication of proposed changes to its compliance history rules to allow the agency to reclassify a site’s compliance history classification if an emergency incident results in significant impacts to the public and the environment.[1] In describing the background and reasons for the rulemaking, the agency noted the occurrence of a number of emergency incidents at industrial facilities in the state and resulting scrutiny of the facilities involved in those incidents. The proposed rulemaking is intended to “communicate to the regulated entity and the public that a review of such a site’s performance is underway, provide a more immediate and accurate measure of a site’s performance in light of such an event, and make compliance history a more effective tool to provide oversight and ensure regulatory consistency.”[2] If the rules are adopted as proposed, facilities involved in significant emergency incidents would face heightened regulatory scrutiny in agency decisions.

The American Bar Association published an article, Navigating Environmental Justice Issues in Federal Permitting, which discusses Environmental Justice in federal permitting by Hunton Andrews Kurth attorneys Kerry McGrath, Andrew Turner, John Bobka, and Mayer Brown attorney Lauren Bachtel.

To continue reading this article, originally published by the American Bar Association, please visit the ABA website here or download a PDF version of the article here. 

Published in Natural Resources & Environment Volume 36, Number 2, Fall 2021. © 2021 by the American Bar ...

The US Fish and Wildlife Service’s (USFWS or the Service) revocation of the Trump administration’s Migratory Bird Treaty Act (MBTA) rule took effect last Friday, December 3.  On the same date, the public comment period closed on the Service’s Advanced Notice of Proposed Rulemaking (ANPR), in which USFWS announced its plan to issue a proposed regulation codifying an interpretation of the MBTA that prohibits incidental take, and to propose a system of regulations to authorize the incidental take of migratory birds under certain conditions.

On October 4, 2021, the US Fish and Wildlife Service (FWS or the Service) published a final rule revoking its January 7, 2021, Migratory Bird Treaty Act (MBTA or Act) rule. 86 Fed. Reg. 54,642  (Oct. 4, 2021) (Rule or Revocation Rule). The January 7 rule was issued at the end of the Trump administration and established that the MBTA does not prohibit incidental (unintentional) take of migratory birds.  86 Fed. Reg. 1134 (Jan. 7, 2021). In the preamble to the Rule, which lists an effective date of December 3, 2021, the Service explained that “[t]he immediate effect of this final rule is to return to implementing the MBTA as prohibiting incidental take and applying enforcement discretion, consistent with judicial precedent and longstanding agency practice prior to 2017.” 86 Fed. Reg. at 54,642.  On the same day it published the Revocation Rule, FWS also published an Advanced Notice of Proposed Rulemaking (ANPR), requesting public input that will be used to develop proposed regulations to authorize the incidental take of migratory birds under prescribed conditions, 86 Fed. Reg. 54,667 (Oct. 4, 2021), and issued a Director’s Order clarifying the Service’s current enforcement position.

Recent federal court decisions continue to show that Article III standing can be a formidable defense to environmental citizen suits, particularly following the Supreme Court’s decision Spokeo v. Robins, 578 U.S. 330 (2016) (vacating decision below and emphasizing that an alleged injury in fact must be “concrete and particularized”).  Just last week, for example, a North Carolina federal court dismissed on standing grounds almost all of the plaintiffs’ Clean Air Act citizen suit claims asserted against the University of North Carolina at Chapel Hill (UNC).  Center for Biological Diversity v. University of North Carolina, No. 1:19-CV-1179, 2021 U.S. Dist. LEXIS 163459 (M.D.N.C. Aug. 30, 2021).  In their complaint, the plaintiffs asserted nine claims, including seven for alleged failures to maintain records, inspect equipment, report permit deviations to government authorities, and monitor pollution controls, as required by UNC’s Title V permit.  On summary judgment, the plaintiff citizen groups offered declarations from two members who alleged “health, aesthetic, and recreational interests in air quality in Chapel Hill and the areas around UNC’s campus.”

As we have reported previously in this blog, in March 2021, the Massachusetts Governor signed historic climate legislation designed to effectuate the Commonwealth’s goal of net-zero emissions by 2050 (Chapter 8 of the Acts of 2021 or the “Act”). Some of the more controversial items in the Act were the provisions to incorporate requirements into the state’s building code to advance construction and/or retrofitting of buildings with energy systems designed to reduce emissions. In general, the efforts to facilitate a transition away from fossil-fuel energy systems in buildings continue to prove difficult as existing programs and policies are not necessarily designed to prompt the shift away from traditional energy systems at the pace that some argue is required to meet the aggressive emission targets of the state goals.

In the face of accelerating EPA and state regulatory activity on per- and polyfluoroalkyl substances (“PFAS”)[i], Congress is pressing forward with measures that would address or impose limitations on these “forever chemicals.” More than thirty such legislative measures are currently pending in Congress covering a number of subjects related to PFAS including, but not limited to, those involving military uses, funding assistance, detection and research, product stewardship, site remediation, and regulatory mandates. Of these, the most comprehensive initiative ...

After a disappointing showing in Mexico’s recent mid-term elections, President Andrés Manuel López Obrador (commonly referred to as AMLO) and his party (i.e., Movimiento Regeneratión National or MORENA, commonly referred to as Morena) will face greater hurdles to unwinding “la Reforma Energética” (2013 Energy Reforms), the energy policy reforms adopted by the then-ruling party, the Partido Revolucionario Institucional (PRI).

Environmental justice (“EJ”) is a central focus of the Biden administration’s environmental agenda.  On Day One in January, the administration emphasized the importance of EJ in the federal government’s efforts to tackle climate change and to address the disparate impact of decisions affecting natural resources.  In addition, many states are implementing their own EJ requirements.  In the wake of issuance of new and enhanced EJ policies by both the federal government and states, it behooves lawyers in multiple disciplines to account for EJ issues in their legal practice.  The focus of most commentary on EJ issues has been on facility siting and the impacts of “polluting” activities on minority and economically disadvantaged communities.  This article, in contrast, addresses EJ in transactional practices.  Specifically, we identify some of the EJ issues practitioners may confront and seek to manage in merger and acquisition, asset purchase and sale, real estate purchase and sale, facility siting and/or construction, Brownfields development, financing and underwriting contexts.

The Railroad Commission of Texas (RRC) has made known its commitment to expedited filings and approvals for the regulated community as well as public access to information and improved transparency for all parties. This effort is exemplified by the recently announced Pipeline Inspection, Permitting and Evaluation System (PIPES) program. Organizations can now file reports, inspections, and other documents as well as pay fees online. Organizations can also upload documents for RRC review. In addition, PIPES provides public users access to publicly available RRC documents. As the online availability of reports and other documents expands, it becomes even more important for organizations to focus on timely accurate filings as well as an organization’s online public profile.

In response to judicial remand of its Cross-State Air Pollution Rule (CSAPR) Update, EPA published a revised CSAPR Update – the latest of EPA’s interstate transport rules using its CSAPR methodology – at the end of April 2021, slashing ozone-season budgets for emissions of nitrogen oxides (NOx) for a dozen states.[1]  By the end of the 60-day period for filing petitions for judicial review on June 29, a single petition for judicial review had been filed in the US Court of Appeals for the DC Circuit.

The White House announced on July 22, 2021, President Biden’s nomination of David Uhlmann to be the Assistant Administrator for Enforcement and Compliance Assurance (OECA) at the US Environmental Protection Agency (EPA). Uhlmann is currently the director of the Environmental Law and Policy Program at the University of Michigan Law School and was previously a federal prosecutor for 17 years, including as the Chief of the Environmental Crimes Section of the US Department of Justice. His nomination signals the White House’s clear intent to reinvigorate EPA’s enforcement program after what the EPA’s Inspector General found in its March 31, 2020 report to be years of declining case statistics across multiple administrations.

In April 2020, the Supreme Court issued its opinion in County of Maui v. Hawaii Wildlife Fund et al., 140 S. Ct. 1462 (2000), vacating the Ninth Circuit’s decision.  The appeals court had affirmed a district court’s finding of Clean Water Act (“CWA”) liability for the County’s alleged failure to obtain a discharge permit for subsurface releases of pollutants that reach navigable waters by way of groundwater.  In vacating the judgment below, the Supreme Court rejected the Ninth Circuit’s conclusion that a discharge permit is required where pollutants reaching navigable waters are “fairly traceable” to a point source.  It set forth a new standard for determining when a source needs an NPDES permit:  “the statute requires a permit when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.”  Id. at 1468 (emphasis added).

Waterfront development in Massachusetts has a new problem.  In particular, projects that rely on a municipality’s approved municipal harbor plan and a corresponding building height exemption from what the Massachusetts waterfront development law otherwise requires will likely be blocked, at least for now.  The impact is not limited to Boston, as municipal harbor plans reach deep into waterfront zoning and development statewide.

The topic of infrastructure has been front and center in recent weeks, following the Biden Administration’s unveiling of the American Jobs Plan, a massive investment plan to “Build Back Better” the country’s infrastructure.  A critical infrastructure component is water systems—drinking water, wastewater, and stormwater—many of which have deteriorated with age and lack of funding.  The renewed focus on infrastructure proposes to funnel massive investment into upgrading the nation’s water systems, under the American Jobs Plan and a slate of bills now before Congress.  We take a look at what the new infrastructure developments could mean for water systems.

Last week, among many actions taken by the Biden-Harris Administration on Earth Day 2021, one may have flown under the proverbial radar, though it does have significant legal implications for greenhouse gas regulation and the whole-of-government(s) approach:  the U.S. Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) notice proposing to repeal the preemption portions of NHTSA’s 2019 rule entitled “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program,” 84 Fed. Reg. 51,310 (Sept. 27, 2019) (SAFE I Rule).  NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking (signed Apr. 24, 2021) (Proposed Rule).

In Southern Appalachian Mountain Stewards et al. v. Red River Coal Co., Inc., 2021 WL 1182464 (4th Cir. Mar. 30, 2021), a unanimous Fourth Circuit panel recently affirmed a district court holding that an operator cannot be held liable under the Surface Mining Control and Reclamation Act (Surface Mining Act) for a discharge that is otherwise shielded from liability by the Clean Water Act (CWA).  The court’s opinion expressly relied on the Sixth Circuit’s decision in Sierra Club v. ICG Hazard, LLC, 781 F.3d 281 (6th Cir. 2015), which reached the same conclusion.

On March 18, 2021, the Massachusetts House joined the Senate in passing a revised, historic climate legislation that appears to finally have enough support from the Governor’s office to be signed into law.  As we have highlighted in this blog previously, complete agreement between the Commonwealth’s executive and legislative branches on the Next-Generation Roadmap for Massachusetts Climate Policy S.9 (the “Bill”) has proven elusive.  When we last left this topic, the Governor of Massachusetts was faced with a decision to: (1) sign the Bill; (2) veto it for a second time; or (3) return the Bill to the Legislature with recommended amendments.  On February 7, 2021, the Governor did the latter, returning the Bill to the Legislature with approximately 50 recommended changes to various sections within the Bill.  On March 15, the Senate adopted certain further amendments to the original Bill, which the House then likewise adopted on March 18^th, and again laid the Bill before the Governor. This leaves the Governor another ten days to either sign the Bill or veto it for the third time and face the possibility of a Legislative override.

In April 2020, the Supreme Court issued its opinion in County of Maui v. Hawaii Wildlife Fund et al., 140 S. Ct. 1462 (2000), vacating the Ninth Circuit’s decision.  The appeals court had affirmed a district court’s finding of Clean Water Act (“CWA”) liability for the County’s alleged failure to obtain a discharge permit for subsurface releases of pollutants into groundwater that conveys pollutants to navigable waters.  In vacating the judgment below, the Supreme Court rejected the Ninth Circuit’s “fairly traceable” test and set forth a new standard for determining when a source needs an NPDES permit:  “the statute requires a permit when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.”  Id. at 1468 (emphasis added).  In other words, “an addition falls within the statutory requirement that it be ‘from any point source’ when a point source directly deposits pollutants into navigable waters, or when the discharge reaches the same result through roughly similar means.”  Id. at 1476 (emphasis added).

On January 28, 2021, and for the second time in a month, the Massachusetts Legislature passed historic legislation designed to holistically address issues associated with the effects from climate change.  Governor Baker has 10 days to sign it, veto it, or return it to the General Court with recommended amendments.

Among the flurry of executive actions signed by President Biden last week on inauguration day was a presidential memorandum aiming to revise the regulatory review process.  Titled “Modernizing Regulatory Review,” the memo is directed at the heads of executive departments and agencies and has dual focuses that show the Biden Administration’s commitment to strengthening key tenets of regulatory review while enhancing the focus on equitable and other considerations in the process.  Though it garnered less attention than other actions issued simultaneously, this memo signals President Biden’s ambitious regulatory agenda and may have far-reaching effects that pervade the regulatory process.

On January 15, 2021, the Texas Commission on Environmental Quality (“TCEQ”) received approval to implement the National Pollutant Discharge Elimination System (“NPDES”) program for oil and gas discharges. [1]  Generally, as a result of this approval, applicants for NPDES permits for produced water, hydrostatic test water, and gas plant effluent will only require a single TCEQ authorization rather than authorizations from both the Railroad Commission of Texas (“RRC”) and the U.S. Environmental Protection Agency (EPA) as previously had been required. [2]

Recently certain policy advocates have suggested that the Federal Energy Regulatory Commission (FERC) should attempt to revitalize the Federal Power Act Section 216 “backstop siting” authority as a means of addressing climate change.  Their objective is to facilitate the construction of more long-haul transmission lines from areas with excess renewable generation, so zero-emitting generation can reach more markets.

A January 12, 2021 US Department of Justice (DOJ) memorandum extends and provides additional legal analysis to support the government’s increasing drumbeat against settling cases and reducing environmental penalties in recognition of Supplemental Environmental Projects or “SEPs.”  The new memo addresses the limited circumstances under which attorneys in DOJ’s Environment and Natural Resources Division (ENRD), the division of DOJ that represents EPA and other federal agencies in enforcing environmental laws, may include certain mitigation requirements in settlement agreements.  Issued last week by ENRD Assistant Attorney General Jeffrey Bossert Clark on the same day that he announced his departure from the Department, the memo bolsters the previously provided rationale for ENRD’s policy prohibiting SEPs in settlement agreements.  It also distinguishes SEPs from “equitable mitigation,” which the memo defines more narrowly and considers to be both permissible and appropriate.  The memo also lists criteria to guide ENRD attorneys evaluating whether equitable mitigation measures are appropriate in a given civil enforcement case.

A flurry of asbestos-related activity in the last weeks of 2020 will require the United States Environmental Protection Agency (EPA) to devote significant regulatory attention to asbestos in 2021.  The incoming Biden Administration will need to address these Toxic Substances Control Act (TSCA) developments, and the scope of that response will determine whether regulatory implications extend beyond asbestos to other chemical substances.

On January 7, the US Fish and Wildlife Service (USFWS or Service) published a final rule providing that the scope of the prohibition of take under the Migratory Bird Treaty Act (MBTA or Act) applies “only to actions directed at migratory birds, their nests, or their eggs,” and does not prohibit incidental take (i.e., take that is not the purpose of an activity).  86 Fed. Reg. 1134 (January 7, 2021).  The rule, which lists an effective date of February 8, 2021, represents the latest in a series of efforts by recent presidential administrations to implement competing interpretations of the MBTA.  If it stands under the incoming administration, this rule will have important implications for the wind energy industry, among other sectors.

A December 2020 final rule defining “habitat” could have important consequences for future designations of lands and waters as “critical habitat” under the Endangered Species Act (ESA). Designation of critical habitat by the U.S. Fish and Wildlife Service or National Marine Fisheries Service (jointly, the “Services”) can affect projects that require federal agency permits or funding, because ESA section 7 requires federal agencies to ensure through consultation with the Services that their actions are not likely to adversely modify or destroy designated critical habitat.

On December 16, 2020, the Services adopted, for the first time, a regulatory definition of habitat, as follows:

For the purposes of designating critical habitat only, habitat is the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.

On November 27, 2020, the US Environmental Protection Agency (“EPA”) published notice that the Texas Commission on Environmental Quality (“TCEQ”) has applied to the US EPA for National Pollutant Discharge Elimination System (“NPDES”) program authorization for discharges of produced water, hydrostatic test water and gas plant effluent. [1] TCEQ’s application (“Application”) was filed in response to a bill passed during the last Texas legislative session that required TCEQ to submit to EPA no later than September 1, 2021, a request for NPDES permitting authority for discharges of produced water, hydrostatic test water and gas plant effluent associated with oil and gas activities currently under the jurisdiction of the Railroad Commission of Texas (RRC). [2] Under this legislation, state authority to regulate these discharges will transfer from the RRC to TCEQ upon EPA’s grant of NPDES permitting authority to TCEQ. Should EPA grant NPDES permitting authority to TCEQ for these discharges, a prospective permittee would generally only need to obtain a single TCEQ authorization (rather than an authorization from both the RRC and EPA). [3]

The Commonwealth of Massachusetts is poised to outline its planned steps to achieve the goals of its climate change-focused policies.  On December 7, 2020, the Massachusetts Executive Office for Energy and  Environmental Affairs (“EOEEA”) hosted a webinar to discuss the development and pending release of the Massachusetts Decarbonization Roadmap to 2050 (the “Roadmap”), which EOEEA indicates it will publish this month. The Roadmap constitutes the plan of the Commonwealth to identify cost-effective and equitable pathways and strategies for Massachusetts to reach Net Zero emissions by 2050, and the priorities to achieve an on-pace interim goal by 2030. In addition to the development of the Roadmap, the Commonwealth is in the process of preparing the 2020 update to the Clean Energy and Climate Plan (“CECP”), which is mandated to receive updates every five years under the Global Warming Solutions Act (“GWSA”).

On November 9, 2020, EPA’s Office of Research and Development (ORD) released its long-awaited draft handbook that details the office’s process for developing chemical hazard assessments for its Integrated Risk Information System (IRIS) Program. The ORD Staff Handbook for Developing IRIS Assessments (IRIS Handbook) gives useful insight into ORD’s process to develop its IRIS assessments, which provide important toxicological information that federal and state environmental agencies consider when making regulatory and cleanup decisions under multiple statutory programs. EPA will accept comments on the draft handbook and charge questions until March 1, 2021.

Last month, the Texas Commission on Environmental Quality (“TCEQ”) launched a temporary “Find It and Fix It” program effective through January 31, 2021 to facilitate air quality compliance for companies with oil and gas operations in the Permian Basin.  Regulated entities that comply with the requirements of the temporary program may be eligible for enforcement discretion. 

One of the most frequent terms heard in conjunction with President-Elect Biden’s energy and environmental agenda is “environmental justice,” which is often described as an overarching objective as well as a key component of the incoming administration’s climate agenda.  This post looks at how the Biden Administration may translate environmental justice principles into concrete executive actions, and how project proponents can prepare for increased focus on environmental justice in their permitting.

On November 29, Voters in Switzerland narrowly rejected the “Responsible Business Initiative” (RBI), which would have extended liability to multinational corporations and their subsidiaries and suppliers for noncompliance with international environmental and human rights standards, not just in Switzerland but also when doing business abroad. The majority of Swiss voted in favor of the RBI, but the referendum failed due to unique requirements associated with Switzerland’s direct democracy.

While the election results are not yet final, this article will proceed from the assumption that former Vice President Biden will become President in January and that Republicans will win at least one of the two U.S. Senate seats in Georgia to be decided by runoff, and thus will have a majority in the U.S. Senate.

The United States Environmental Protection Agency recently published a final rule on “EPA Guidance; Administrative Procedures for Issuance and Public Petitions.” 85 Fed. Reg. 66,230 (Oct. 19, 2020). The Guidance Rule clarifies the location on the web of certain EPA guidance; provides requirements for guidance development, including for development of particularly significant guidance; and specifies procedures for the public to petition for modification, withdrawal, or reinstatement of guidance. The Guidance Rule is EPA’s response to Executive Order 13891 by President Trump on Promoting the Rule of Law through Improved Agency Guidance Documents and related guidance from the Office of Management and Budget (OMB). The Executive Order and the OMB Guidance both emphasize the need for accessibility and transparency of the guidance process.  The provisions of the Guidance Rule – and their impact on accessibility and transparency– are discussed below.

On October 19, 2020, the New York State Department of Environmental Conservation (“NYSDEC”) will begin enforcing the state’s ban on single-use carryout plastic bags. Enforcement was delayed from earlier this year due to a legal challenge, which has since been resolved. Those persons found to be in violation of the ban face a range of consequences from a simple warning for a first offense and civil penalties thereafter. Grocery stores, retailers, and other establishments in New York that may be the target of enforcement will want to carefully review the provisions of this ban and their obligations going forward.

Following a public review process, the Massachusetts Department of Energy Resources (“DOER”) recently found, among other factors, that the costs of a solicitation for independent offshore wind energy transmission outweigh the potential benefits.  Accordingly, the agency decided not to require the Massachusetts Electric Distribution Companies (“EDCs”) to pursue a joint competitive transmission only solicitation.  The DOER’s findings were presented in a letter to the state legislature’s Joint Committee on Telecommunication, Utilities and Energy, as a supplement to the DOER’s prior findings in its Offshore Wind Study, which was published just over a year ago.  This action appears to close the latest chapter in a several year effort to advance a coordinated transmission for offshore wind resources.  How this fits into the Commonwealth’s long term energy strategy remains an open question, which may need to be revisited as the Commonwealth aims to keep pace with its Global Warming Solutions Act greenhouse gas emissions limits.

The US Securities and Exchange Commission (SEC) has adopted amendments to modernize its Regulation S-K and thereby change the rules related to environmental disclosure requirements and increase the reporting threshold for disclosure of actual or potential environmental penalties.[1]  In doing so, the SEC is updating rules that have not been revised significantly in 30 years.  Proposed last year as part of the SEC’s Disclosure Effectiveness Initiative, [2] the amended rules, which were adopted on August 26, 2020, are intended to improve disclosure for investors and simplify compliance for registrants.  As described in the rule preamble, the amendments are “intended to improve the readability of disclosure documents, as well as discourage repetition and disclosure of information that is not material.” [3]

In March of this year, we provided an update regarding how lower courts were applying the Supreme Court’s landmark decision in Kisor v. Wilkie, 139 S. Ct. 2400 (2019), which addressed the question of whether the Court should overrule the Auer doctrine, named after the 1997 Supreme Court case Auer v. Robbins.  The Auer doctrine rests on the premise that agencies are in a better position than courts to interpret their own regulations.  Under the doctrine, courts generally defer to an agency’s reasonable readings of its own “genuinely ambiguous” regulations.  In a 5-4 decision, the Court declined to abandon the Auer doctrine on grounds of stare decisis but seemed to outline restrictions on the scope and applicability of the doctrine, including the rule that deference to an agency’s interpretation of an ambiguous regulation is not appropriate if the interpretation does not reflect the “fair and considered judgment” of the agency.  This means that deference may not be appropriate if the interpretation creates “unfair surprise,” such as when the agency’s interpretation conflicts with a prior interpretation or upends a party’s reliance on established practices.  Kisor, 139 S. Ct. at 2417-18.

On August 11, the US Department of Justice (DOJ) released a new report that promotes constructive recommendations to modernize and improve the Administrative Procedure Act (APA).  In 1946, Congress enacted the APA to establish procedures as a check on administrative power, and to provide the public with some degree of due process in the face of regulatory action.  As it relates to the Clean Water Act, Clean Air Act, Endangered Species Act, and other relevant environmental regulatory programs, the APA provides the framework under which federal agencies develop and promulgate regulations to implement these programs.  Since Congress passed the APA over 70 years ago, the size and scope of federal regulatory authority has ballooned in size, leading at times to inefficiencies in the rulemaking process and a lack of accountability.  To address these shortcomings, DOJ hosted a summit in December 2019 that brought together leading regulatory practitioners, scholars, and policymakers to discuss possible reform.  Although legislative action in the near future is unlikely given the polarized political climate in Congress, the report puts forward a “rich menu of options” for Congress to revise the APA.

On July 16, 2020, the Council on Environmental Quality (CEQ) published its highly anticipated final rule to improve its National Environmental Policy Act (NEPA) regulations.  The update, which largely mirrors the proposed rule, is the first comprehensive amendment to the regulations since their original publication in 1978.  The final rule is designed to streamline the NEPA review process, clarify important NEPA concepts, and codify key guidance and case law. 

On June 30, 2020, Democratic members of the House Select Committee on the Climate Crisis unveiled a 538-page report that calls for reaching net-zero greenhouse gas (GHG) emissions economy-wide by 2050. The report, titled “Solving the Climate Crisis: The Congressional Action Plan for a Clean Energy Economy and a Healthy and Just America,” includes over a hundred policy recommendations to meet the 2050 goal.

As states are seeing an increase in COVID-19 cases and pausing reopening efforts, the US Environmental Protection Agency (EPA) has forged ahead with setting a definite termination date for its temporary COVID-19 enforcement policy.

On June 1, the U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, signed a final rule seeking to increase predictability for applicants by clarifying the regulations that govern the Clean Water Act (CWA) Section 401 water quality certification process.

The Treasury Department and IRS have issued long-awaited Proposed Regulations regarding the tax credit for carbon capture and sequestration under Section 45Q of the Code1 (the “section 45Q credit”).

Generally, the amount of the section 45Q credit and the party that is eligible to claim the credit depend on whether the taxpayer captures qualified carbon oxide using carbon capture equipment originally placed in service at a qualified facility before February 9, 2018 (“Old 45Q Facility”), or on or after February 9, 2018 (“New 45Q Facility”), and whether the taxpayer disposes of the qualified carbon oxide in geological storage (“sequestration”), uses it as a tertiary injectant in a qualified enhanced oil or natural gas recovery project (“EOR”), or utilizes the carbon oxide in certain specified ways (“utilization”). The effective date of the amendments to the Code extending and expanding the section 45Q credit is February 9, 2018 (the “Credit Effective Date”). The Credit Effective Date appears throughout the Proposed Regulations to distinguish between Old 45Q Facilities and New 45Q Facilities and establishing the effective date for certain provisions.

Agency guidance will be subject to certain standards and procedures under a proposed rule published by EPA in the Federal Register on May 22, 2020.  According to EPA, the proposed rule is “intended to increase the transparency of EPA’s guidance practices and improve the process used to manage EPA guidance documents.”  EPA will accept written comments on the proposed rule until June 22, 2020.

On May 21, 2020, the Federal Energy Regulatory Commission (“FERC”) issued Opinion No. 569-A1 – the latest step in the recent evolution of FERC’s policies governing the determination of public utilities’ base return on equity (“ROE”) under Section 206 of the Federal Power Act (“FPA”). In recent years, FERC has been revising its long-standing policies when addressing complaints challenging the base ROEs of transmission-owning, FERC-jurisdictional public utilities in the ISO New England, Inc. (“ISO-NE”) and Midcontinent Independent System Operator (“MISO”) regions. In particular, FERC has modified its policies regarding the use of various models to estimate ROE to account for various changes in capital market conditions since the 2008-09 recession.

Last week, the U.S. Environmental Protection Agency (“EPA”) issued its final report addressing the input received by various stakeholders relating to the management of wastewater from the oil and gas industry.  The report entitled Summary of Input on Oil and Gas Extraction Wastewater Management Practices Under the Clean Water Act is the culmination of a stakeholder engagement process that began in 2018 (“Final Report”) [1].

On May 19, 2020, President Trump issued an Executive Order (EO) intended to combat the unprecedented effect COVID-19 has had on the American economy, by directing agencies to remove or ease regulatory barriers to spur economic growth.  In general, the EO directs agencies to ease regulatory and enforcement burdens that may inhibit economic recovery, provide guidance on what the law requires, recognize the efforts of regulated industries to comply with the law, and ensure fairness in administrative enforcement and adjudication. Perhaps most notably, the EO is written broadly enough that agencies may look beyond COVID-19-related impacts when considering how to implement the EO.

The largest market for CO₂ captured from industrial sources through carbon capture utilization and storage (CCUS) is enhanced oil recovery (EOR), using the CO₂ to produce oil.  Captured CO₂ can be used for cement, algae production, and other uses, but EOR has vast potential.  Moreover, it has a nearly 50-year track record in the US, where it was pioneered.  Carbon dioxide injected into oil formations becomes permanently stored as part of the process.

Yesterday, the Railroad Commission of Texas (“RRC”) voted by a 2-1 margin to dismiss the request that had been filed in late March of this year by two producers to determine reasonable market demand for oil and the need for curtailment of oil production in Texas.[i]

The Commonwealth of Massachusetts is pursuing various regulatory actions to implement state policy to reduce greenhouse gas emissions from electric generation resources. As we previously reported, the Commonwealth is planning to implement a Clean Peak Standard (“CPS”) program this summer, which is designed to have renewable electricity generation resources “show up at the right time” on the grid to coincide with times of peak demand. In a complementary action, the Commonwealth has now doubled the size of its Solar Massachusetts Renewable Target (“SMART”) incentive program, along with new  performance standards for the siting of these renewable generating resources. While these changes to the SMART program were adopted as emergency regulations—making them effective immediately—the Commonwealth will go through the notice and comment rulemaking process over the next few months to provide for continued input from stakeholders on the new regulations and associated guidance.

Uncertainty. Today nearly everything we thought we knew is uncertain. It’s good, then, that at least one regulatory program in California remains certain: Proposition 65. Plaintiffs continue to serve 60-day notices alleging violations, and the Office of Environmental Health Hazard Assessment (OEHHA) continues to tinker with safe harbor warning requirements. (Maybe certainty isn’t all that it’s cracked up to be).

When can Supreme Court precedent be overruled? Two recent decisions carry on a recent and lively debate among the Justices over the concept of “stare decisis,” and provide significant guidance on how Justices Thomas and Kavanaugh approach the question.

In the midst of an oil market experiencing an extraordinary downturn but citing a need for further review and coordination with other states and the federal government, the Railroad Commission of Texas (RRC) delayed a vote on oil production cuts at an open meeting held yesterday.[i] As previously reported, the RRC held a ten-hour long meeting on the issue of production cuts last week, hearing from more than 50 witnesses with wide-ranging opinions on the merits of moving forward with proration, a remedy that has not been employed since the 1970s.

Although no decision on proration was made, the establishment of a Blue Ribbon Task Force for Oil Economic Recovery (Task Force) was announced. The Task Force will be comprised of various Texas oil and gas trade associations charged with expeditiously exploring options that can be undertaken at the state level to assist operators and save jobs.[ii] During the meeting, a number of initiatives undertaken to date that provide relief to oil and gas operators were also highlighted, including those involving extensions of deadlines for various requirements and the consideration of enforcement discretion under certain circumstances. While discussing whether to prorate production, each of the three commissioners placed emphasis on different aspects of the overall issue.

This article was originally published on Law360.

On March 11, the U.S. Environmental Protection Agency completed an important rulemaking under Title VI of the Clean Air Act Amendments of 1990, revising its requirements applicable to the management of refrigerants in appliances and industrial process refrigeration.

The rulemaking corrects what the EPA states was an incorrect Obama-era interpretation of the Clean Air Act, that would have allowed the agency to issue sweeping and costly regulations for refrigerants that companies had invested in to alleviate the problem of ozone-layer depletion pursuant to the 1987 Montreal Protocol.

On April 15, 2020, the California Environmental Protection Agency (CalEPA), the umbrella agency for California’s environmental boards, departments, and offices (e.g., CARB, DPR, DTSC, OEHHA, SWRCB), issued a Statement on Compliance with Regulatory Requirements During the COVID-19 Emergency (CalEPA Statement). CalEPA’s Statement comes in the wake of numerous questions regarding environmental compliance obligations for California facilities impacted by COVID-19. It follows COVID-19 guidance issued by the United States Environmental Protection Agency (U.S. EPA) and various announcements by the state boards and local districts that are on the front lines of administering state, local, and federal environmental programs affecting public health and the environment, as well as companies operating facilities in California, like refineries, oil and gas terminals, mining, food processing, and other manufacturing operations.

The U.S. Environmental Protection Agency (EPA) is attempting to thread the needle in responding to the COVID-19 pandemic: offering clarity about ongoing federal environmental obligations to the broad swath of regulated entities faced with the threat of significant disruptions and other challenges, while contending with intense opposition from others who perceive its temporary enforcement policy as a “free pass to pollute” and a failure to enforce legal requirements. Notwithstanding the mounting scrutiny from U.S. Senators, states, and citizens groups, and now a legal challenge, EPA’s Office of Enforcement and Compliance Assurance (OECA) has continued implementing its temporary policy regarding the exercise of enforcement discretion due to the COVID-19 pandemic via issuance of additional guidance on National Pollutant Discharge Elimination System (NPDES) reporting. Other state and federal agencies, including the U.S. Department of Justice (DOJ), the Texas Commission on Environmental Quality (TCEQ), the Railroad Commission of Texas (RRC), and the California Environmental Protection Agency (CalEPA) (addressed in a separate blog post) have followed EPA’s lead in issuing their own temporary policies related to the pandemic.

With oil prices plummeting and markets battered by the disruptions caused by the COVID-19 pandemic, two oil and gas producers filed a joint motion late last month for the Railroad Commission of Texas (“RRC”) to consider curtailing oil production (“Joint Motion”), an extraordinary remedy that has not been employed since the 1970’s.[1] In response, the RRC convened an initial public meeting yesterday to consider the request and comments filed by more than 50 stakeholders with, not surprisingly, wide-ranging views on the subject.[2] The RRC took care to include in the notice of meeting a statement that the initial meeting would not be “a meeting to conduct a hearing under the Administrative Procedure Act” signaling that no determinations would be made at the initial meeting.[3] Nevertheless, due to the significance of the issues under discussion and the potential impact on not only oil and gas producers, but also the midstream and downstream sector, the ten-hour long meeting drew a substantial audience across the country and the globe.[4]

Facing growing criticism that they impede sustainable development goals, investment protections afforded by traditional international investment agreements (IIAs) are steadily eroding. Increasingly, the trend is toward provisions allowing host states greater flexibility to regulate environmental, transparency, human rights and other social impacts. At the same time, enhanced corporate social responsibility (CSR) obligations have become more common in recent IIAs.

Commentary regarding the US Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance (OECA) memorandum articulating a temporary policy applying enforcement discretion in light of the COVID-19 pandemic has been significant this week. Proponents and critics alike have misinterpreted the scope of the policy as reaching far beyond what OECA’s memorandum actually stated. As we stated in Deciphering EPA’s Temporary Enforcement Discretion Policy for COVID-19 and as the EPA has now confirmed, the “temporary policy” of exercising enforcement discretion for noncompliance “resulting from the COVID-19 pandemic” is not a free pass to pollute, despite opponent’s musings to the contrary.

Joining a growing chorus of states, several Northeastern states, including Massachusetts, Maine and Rhode Island, have recently announced their intentions to impose a ban on the use of hydrofluorocarbons (HFCs). The looming regulatory actions by these states are generally anticipated to follow an HFC ban rulemaking model established by the members of the US Climate Alliance.[1] It remains to be seen, however, whether the states will look to additional regulatory options, as it was a worldwide product ban in the late 1980s that inadvertently set the stage to now limit alternatives containing HFCs due to their climate forcing potential as a greenhouse gas (GHG).