On May 25, 2023, the U.S. Supreme Court issued a 9-0 decision ending a nearly 16-year battle over the Clean Water Act’s (CWA) applicability to certain wetlands. In a five-justice majority opinion, the Court found that the CWA applies only to wetlands that are “as a practical matter indistinguishable” from “relatively permanent, standing or continuously
Introduction
President Biden signed the Inflation Reduction Act of 2022 (the Act) into law on August 16, 2022. The Act represents an expansive investment in the energy industry, with many provisions targeting clean energy and climate change issues through funding and tax credits. However, several notable provisions from an environmental permitting and compliance standpoint are buried amongst the financial and tax provisions. These environmental provisions relate to permitting and compliance that the regulated industry, especially energy companies, should watch closely.
Funding for Permitting and Programmatic Development
The Act provided significant funding to regulatory authorities for a number of permitting-related activities.
For example, the National Oceanic and Atmospheric Administration (NOAA) received $20 million to assist with permitting and project review. The funds are meant to result in more efficient, accurate, and timely reviews for planning, permitting and approval processes through hiring and training personnel and obtaining new technical and scientific services and equipment.
The United States Environmental Protection Agency (U.S. EPA) received $40 million for its permitting and project review efforts. The funds will be utilized to develop efficient, accurate, and timely reviews for permitting and approval processes through hiring and training of personnel, development of U.S. EPA programmatic documents, procurement of technical or scientific services for reviews, development of environmental data and new information systems, purchase of new equipment, developing new guidance documents, and more.
The Act provided over $62.5 million to the Council on Environmental Quality to develop programmatic documents, tools, guidance, and improvement engagement. These funds will also support collection of data regarding environmental justice issues, climate change data, development of mapping/screening tools, and tracking and evaluation of cumulative impacts.
Several other federal agencies received millions in funding for review and planning of electricity generation infrastructure, like the Federal Energy Regulatory Commission, the Department of Energy, and the Department of the Interior. Funding will be used to facilitate timely and efficient reviews, as well as generate environmental programmatic documents, environmental data, and increase stakeholder and community involvement.
In sum, regulators involved in environmental and energy permitting received a substantial boost in funding targeting the permitting process, including supporting the development and build out of programmatic documents and capabilities. The funding could improve the timing of the permitting processes for these agencies, but it could also lead to additional administrative burdens in the form of new application and compliance materials and increased regulatory scrutiny where a regulator has more time and money to invest in the regulatory process.
Continue Reading Environmental aspects of the Inflation Reduction Act of 2022
As anticipated, on Friday the U.S. Environmental Protection Agency (EPA) issued a proposed Risk Management Program (RMP) Safer Communities by Chemical Accident Prevention rule pursuant to the Clean Air Act. The proposed rule would reinstate certain provisions newly introduced to the RMP rule (originally promulgated in 1991) late in the Obama administration and subsequently removed by the Trump administration in 2019. The EPA has additionally added significant new requirements not originally in the 2017 draft RMP rule, including provisions aimed to further current policies on environmental justice and climate change. The proposed RMP rule also appears to draw influence from recommendations made by the Chemical Safety Board (CSB) as well as state updates to process safety regulations in the past decade, most notably the California Accidental Release Prevention Program (CalARP) and the California Refinery Process Safety Management (PSM) Standard.
These changes, including the addition of requirements regarding employee participation, public availability of information, inherent safety, third party auditing, facility siting and natural hazards consideration, as well as emergency response planning, will result in covered RMP facilities having to significantly revisit and revise their RMP programs and plans. Certain requirements also appear to be directly aimed at limiting stationary sources’ ability to privately manage their internal risk management decisions. For example, covered facilities would now be required to document any revisions between draft and final compliance audits and provide justifications for rejected RMP program recommendations.
According to EPA Administrator Michael Regan, “protecting public health is central to EPA’s mission, particularly as we adapt to the challenges of climate change, and the proposal announced today advances this effort, especially for those in vulnerable communities. This rule will better protect communities from chemical accidents, and advance environmental justice for communities that have been disproportionately impacted by these facilities.” EPA estimates the rule will cost approximately $77 million a year.
Comments on the proposed rule are due to EPA within 60 days of its publication in the Federal Register and may be submitted online, via mail, or hand-delivery.
Continue Reading EPA Proposes Expansive Changes to EPA RMP Rule
The agencies regulating industrial chemical processes are taking a second look at modernizing regulations aimed at preventing chemical accidents in the near future. The Occupational Safety and Health Administration’s (OSHA) Process Safety Management (PSM) standard and the Environmental Protection Agency’s (EPA) Risk Management Program (RMP) rule were practically identical for processes containing threshold levels of
During 2021, the U.S. Environmental Protection Agency (EPA) collected discharge data for PFAS as part of its Multi-Industry PFAS Study. The purpose behind the study was to identify facilities producing or using PFAS, look at their wastewater characteristics, estimate PFAS in their discharges, and identify control practices and treatment options. As part of the study, EPA collected data from various EPA data sets and obtained information from other federal agencies (the U.S. Department of Transportation, Federal Aviation Administration (FAA), U.S. Department of Health and Human Services, and the Food and Drug Administration), states and EPA regions, as well as information from industrial users. After EPA collected its data, it categorically broke down the results of its study into the following groups:
The information collected by EPA during its study will be used to further identify companies and facilities that manufacture, import, or process PFAS.
Continue Reading EPA PFAS testing targeted industry and will now look to public water systems
In response to President Biden’s Executive Order entitled, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” the Environmental Protection Agency (EPA) recently issued a proposed rule taking aim at greenhouse gases (GHG) and volatile organic compounds (VOC) emissions from new and existing oil and natural gas production, processing, transmission, and storage facilities. The proposal contains three basic components. In a break with precedent, EPA did not provide proposed regulatory language.
First, the proposed rule would revise the new source performance standards (NSPS) for GHGs and VOCs for new, modified, and reconstructed sources, including the production, processing, transmission, and storage segments. Specifically, EPA proposes to a new subpart OOOOb that would update and expand the current requirements under CAA Section 111(b) for methane and VOC emissions from sources constructed, modified, or reconstructed after November 15, 2021. NSPS OOOOb would include standards for emission sources not regulated previously under the 2016 NSPS OOOOa. Among other changes, EPA proposes to apply to VOC emissions thresholds to storage vessel tank batteries as opposed to individual storage tanks. EPA has also suggested a change to the definition of legal and practical enforceability which could impact the utilization of state-level permitting previously used to reduce the potential to emit to below the 6 ton per year VOC-threshold.
Second, the proposed rule would create a new subpart OOOOc that would contain the first nationwide emissions guidelines (EG). The EG would be a state model rule that states could use to develop, submit, and implement state plans that establish performance standards to limit GHGs from existing sources.
On October 18, 2021, the U.S. Environmental Protection Agency (EPA) announced a per- and polyfluoroalkyl substances (PFAS) Strategic Roadmap (the Roadmap) detailing steps that the EPA plans to take to address PFAS contamination. PFAS are largely unregulated, but studies linking certain PFAS to health issues and their persistence in the environment and human body are driving the push for increased regulation. Currently, the EPA has established only a non-enforceable health advisory level for two PFAS, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS). Additionally, some states have been moving forward at different speeds to establish state-specific PFAS regulations, including drinking water standards and cleanup levels for soil and groundwater remediation. However, the EPA’s Roadmap suggests increased federal regulation looms.
The EPA’s approach under the Roadmap considers the lifecycle of PFAS, focusing not only on remediating PFAS-contaminated sites and regulating PFAS discharges or emissions, but also regulating PFAS at the upstream level where they are produced and incorporated into products. Other areas of focus called out in the Roadmap include (1) an emphasis on enforcement actions at PFAS-contaminated sites and placing responsibilities for limiting exposure on manufacturers, processors, distributors, and similar users; (2) research into PFAS over health effects and remediation technologies; and (3) an environmental justice focus on prioritization of PFAS effects on disadvantaged communities.
Continue Reading U.S. EPA releases Roadmap to address PFAS contamination
Many public companies are keeping a close watch on potential GHG regulations because the shape of these regulations can significantly affect their regulatory and reporting obligations and thus affect their ESG obligations. There is a significant difference between two recent proposals on that front.
CARBON TAX: The concept of a carbon tax is simple: fossil fuels bear a cost — climate change, as well as air pollution — that is not reflected in their price and thus “hidden”. A carbon tax would increase the price to reflect that hidden cost — by, say for example, $50 per ton of carbon dioxide emitted — and the market would work its magic to move the entire economy away from fossil fuels.
Yet for all their elegance and push for by economists, carbon taxes are politically unpopular.
Opponents of carbon taxes argue that a carbon price affects all of society, and therefore it increases costs for every energy consumer, without providing an immediate alternative. That means a publicly traded company that would not normally worry about – or report regarding – EPA obligations in the abstract turns out would have reporting and compliance obligations under a carbon tax regime and, therefore, a larger ESG burden.
This is likely why Biden’s climate plan leaves out a domestic tax on carbon, which for decades economists have championed as the gold standard of climate change mitigation.
Continue Reading ESG Watch: Carbon Tax vs. Clean Energy Standard
On Friday, June 25, 2021, the U.S. Supreme Court reversed a Tenth Circuit Court decision that had vacated an Environmental Protection Agency (“EPA”) exemption relieving small refineries from the fuel blending requirements of the Renewable Fuel Program (“RFP”), codified by 42 U.S.C. § 7545(o). The decision represents a huge victory for small refineries.
In an effort to reduce greenhouse gas emissions and reduce America’s dependence on imported oil, Congress created the Renewable Fuel Program in 2005, and expanded it in 2007, to require gasoline sold in the United States to contain a certain blend of renewable fuels. However, Congress created a temporary small refinery exemption to avoid disparately impacting small refiners (defining a “small” refiner as one with an average daily crude oil throughput of 75,000 barrels or less). Although the exemption applied through 2011, any small refinery could petition the Department of Energy for a two-year extension of the exemption. After two years, Congress permitted small refineries to petition for additional extensions of the exemption in circumstances of “disproportionate economic hardship,” as determined by the EPA.
The Court’s decision in HollyFrontier Cheyenne Refining, LLC, et al. v. Renewable Fuels Association et al. considered whether the EPA could grant an extension to small refineries that did not continuously receive a hardship exemption each year since 2011. Renewable fuel producers argued that small refineries must have a continuous, unbroken exemption to be eligible for an extension. However, the Court held that the statutory language of the RFP, under 42 U.S.C. § 7545(o), imposed no continuity requirement upon small refineries, confirming that a small refinery that previously received a hardship exemption may obtain an extension even if it did not continuously receive the exemption.
The U.S. Chemical Safety Board (“CSB”), the federal agency created under the Clean Air Act Amendments of 1990 and charged with investigating industrial chemical releases, has announced that it will draw up a new board following a recommendation to do so by the Environmental Protection Agency (“EPA”) Office of the Inspector General (“OIG”). The CSB