The Nickel Report

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.

Below are some key points from two CCUS-related events in Texas last week: the annual CO₂-EOR Conference in Midland, which has been going on for almost 30 years; and a symposium our firm hosted with the University of Houston on CCUS risk management. We’ll start with the latter.

The lesser prairie-chicken (LPC) is a grouse that occupies a five-state range, including the western areas of Kansas and Oklahoma, the Texas Panhandle, eastern New Mexico, and southeastern Colorado.  As we explained in a previous article, in response to litigation and following a nearly thirty-year history of regulatory listing and delisting, the US Fish and Wildlife Service (FWS or Service) proposed to re-list two distinct population segments (DPS) of the LPC under the Endangered Species Act (ESA) in June, 2021.[1]  86 Fed. Reg. 29,432 (June 1, 2021).  The Service has now issued a final rule listing the Southern DPS of the LPC (covering southwest Texas Panhandle and eastern New Mexico) as endangered and the Northern DPS of the LPC (covering southwestern to southcentral Kansas, western Oklahoma, northeast Texas Panhandle, and southeast Colorado) as threatened under the ESA.  87 Fed. Reg. 72,674 (Nov. 25, 2022).  The rule becomes effective on January 24, 2023. 

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]

On November 16, 2022, the California Air Resources Board (CARB or the Board) proposed a new Scoping Plan for the reduction of greenhouse gas (GHG) emissions.  Generally, the Scoping Plan is a means by which the Board can assess California’s progress toward achieving carbon neutrality by 2045, and issue new policies and strategy to meet that goal.  The Board is required by law to update the Scoping Plan every five years, and this is the third such update since the California legislature enacted the California Global Warming Solutions Act in 2006.  CARB staff are touting the Scoping Plan not only as reducing GHG emissions, but also as leading to the creation of four million new jobs and the avoidance of $200 billion in pollution-related health expenditures.

On November 28, 2022, the Council of the European Union (EU) formally adopted the Corporate Sustainability Reporting Directive (CSRD), following the European Parliament’s formal adoption of the directive earlier last month. The CSRD is a broad environmental, social, and governance (ESG) reporting framework that will impose uniform, mandatory reporting requirements on many companies with European operations, including companies not based in Europe.

Carbon Capture and Sequestration Will Be Necessary to Meet State Climate Targets

On November 16, 2022, the California Air Resources Board (CARB) released its proposed final “2022 Scoping Plan for Achieving Carbon Neutrality” (Scoping Plan). The proposed final Scoping Plan—California’s fourth roadmap for mitigating climate change—lays out a path for California to achieve carbon neutrality and reduce anthropogenic emissions to 85 percent below 1990 levels by 2045.

On 6 September, the US EPA released its proposed rule to add perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) to the list of hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund.

If finalized, these hazardous substance designations could have a significant impact on many industries, from creating new reporting obligations to increased compliance, enforcement and litigation risks related to site cleanup.

Click here to read the full article, published in Chemical Watch.

In Executive Order 14008 President Biden paused oil and gas lease sales on public lands and offshore waters. Thereafter, the Bureau of Ocean Energy Management (BOEM) canceled Lease Sales 258 (in Alaska's Cook Inlet) and 259 (in the Gulf of Mexico). Congress, however, required BOEM to hold both lease sales in the Inflation Reduction Act (IRA).

Below, we briefly summarize recent developments for each lease sale and subsequent opportunities available to upstream oil and gas companies.

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.