Same Old WOTUS

EPA and the Corps of Engineers have finalized their latest iteration of the definition of ‘waters of the United States.’ It is seemingly straightforward, consisting only of a list of jurisdictional waters, exclusions, and internal definitions. Although the agencies claim that the new definition “provides clear rules of the road” regarding the scope of jurisdiction, the agencies incorporate prior expansive jurisdictional principles into the rule. 

The history of the regulatory definition of WOTUS is one of ever-increasing regulation of the nation’s waters. The original definition was relatively narrow, generally including traditional navigable waters (TNW). That definition was struck down by a federal district court, who held that the Congress intended to regulate more than TNW in enacting the Clean Water Act. Since then, and even though the statutory definition in the Clean Water Act has not changed, the agencies have embarked on a decades-long effort to increase the scope of jurisdiction.

The Supreme Court’s decision in the 2006 Rapanos case only served to fuel the regulatory expansion of jurisdiction. Justice Scalia enunciated a narrow view of the scope of jurisdiction, generally limiting jurisdiction to TNWs, relatively permanent tributaries, and truly adjacent wetlands.  Justice Kennedy, in his concurring opinion, generally included additional waters and wetlands that had a “significant nexus” to TNWs. After Rapanos, the agencies issued a guidance document (the Rapanos Guidance) which incorporated both views. Not surprisingly, the Rapanos Guidance includes a rather expansive view of what constitutes a ‘significant nexus.’

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The Focus On Environmental Justice

Although the concept of environmental justice has been around for decades, it has never been more pervasive. Since the advent of the Biden Administration, EPA has infused environmental justice principles into all its activities. It has also invigorated and encouraged citizen groups to file complaints alleging environmental justice issues.

Since January 2021, EPA has issued multiple pronouncements related to environmental issues in permitting, compliance, and remediation matters. For example, in August 2022, EPA released guidance entitled Interim Environmental Justice and Civil Rights in Permitting Frequently Asked Questions. In it, and for the first time, EPA suggested that a “permit denial may be the only way to avoid a Title VI violation” if there are no mitigation measures an agency can take to address disparate impacts. 

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The New ESG Wave

Environmental, social, and governance (ESG) is a broad and not well-defined term that seems to have become associated with non-financial factors investors use to measure an investment or a company’s sustainability. Companies that may have ignored, resisted, or ‘green-washed’ ESG disclosures may be forced into such disclosures by large investors or the government. It may prove impossible to not be caught up in the coming wave of ESG requirements, both private and public.

As its name implies, there are three ‘pillars’ of ESG. An exact definition of each is difficult as each has been generally described to include any number of factors or criteria. The environmental pillar relates to the impact a company may have on the environment, such as its carbon footprint, including its direct and indirect greenhouse gas emissions, the chemicals involved in its manufacturing processes, or its overall stewardship of natural resources. The social pillar relates to a company’s relationships with its stakeholders or how it deals with people within the company and in the broader community, including diversity programs, hiring practices, and even how a company advocates for social good with its supply chain partners or in the wider world. The governance pillar refers to how a company is led and managed, including how leadership’s incentives are aligned with stakeholder expectations and the types of internal controls which exist to promote transparency and accountability by leadership.

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Hazardous Substance Response Plans Are Coming

Over thirty years after the requirement was first included in the Clean Water Act and after a suit was filed to force EPA to act, EPA has published a proposed rule relating to planning for worst-case discharges of hazardous substances. The comment period is open to May 27, 2022.

The Clean Water Act was amended by the Oil Pollution Act of 1990. As part of that amendment, a provision was added requiring the issuance of regulations mandating that certain facilities prepare and submit a plan “for responding, to the maximum extent practicable, to a worst case discharge, and to a substantial threat of such a discharge, of oil or a hazardous substance.” CWA Section 311(j)(5); 33 USCA 1321(j)(5). Of course, both the EPA and the U.S. Coast Guard have promulgated various regulatory requirements relating to discharges of oil, such as those in 40 CFR Part 112, as well as some requirements relating to hazardous substances. However, according to EPA, no single program covered all the requirements of CWA Section 311(j)(5).

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Is CCUS The Path to Net Zero?

Carbon capture, utilization, and sequestration (CCUS) offer a known and readily available method to reduce the net emissions of carbon dioxide and meet ambitious climate goals. The regulatory framework, and the multiple protections built into it, ensure that it is safe. However, as the number of requests for authorizations of CCUS projects increases, it is uncertain whether that very regulatory framework and the agencies in charge of permitting and regulating the injection of carbon dioxide will facilitate or inhibit our ability to meet those climate goals.     

Upon rejoining the Paris Agreement on January 20, 2021, the United States announced ambitious climate goals: reduce greenhouse gas emissions 50-52 percent from 2005 levels by 2030, create a carbon-free power sector by 2035, and reach net-zero greenhouse gas emissions economy-wide by no later than 2050. The State of Louisiana, through the Governor’s Climate Initiatives Task Force, has also announced its own climate goals: reduce emissions 26-28 percent from 2005 levels by 2025; reduce emissions 40-50 percent from 2005 levels by 2030, and reach net-zero emissions by 2050.

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Is CCUS The Path to Net Zero?

Carbon capture, utilization, and sequestration (CCUS) offer a known and readily available method to reduce the net emissions of carbon dioxide and meet ambitious climate goals.  The regulatory framework, and the multiple protections built into it, ensure that it is safe.  However, as the number of requests for authorizations of CCUS projects increases, it is uncertain whether that very regulatory framework and the agencies in charge of permitting and regulating the injection of carbon dioxide will facilitate or inhibit our ability to meet those climate goals.     

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Preparing for Enhanced Enforcement in Overburdened Communities

In response to President Biden’s executive order requiring all federal agencies to embed equity into their programs and services, Michael Regan, EPA’s Administrator, directed all EPA offices to “strengthen enforcement of violations of cornerstone environmental statutes and civil rights laws in communities overburdened by pollution.” Internal memoranda were then issued regarding strengthening civil, criminal, and clean-up enforcement in communities with environmental justice concerns.

These internal memos are fairly general in nature but do have enough information to provide some insight into EPA’s direction as to environmental justice and enforcement. Essentially, the overall message is that EPA will use all available statutory and regulatory methods and mechanisms to minimize potential risks from ongoing or historic pollution in or near overburdened communities.

As to enforcement, EPA will increase the number of inspections in overburdened communities, resolve non-compliance using remedies with tangible benefits to that community, such as environmental projects, preventing further pollution, or fence-line monitoring, and increasing engagement with overburdened communities about enforcement cases. EPA’s Office of Land and Emergency Management also announced in December 2021 that it will analyze compliance patterns of Spill Prevention, Control, and Countermeasure (SPCC) and Facility Response Plan (FPC) facilities in overburdened communities and identify locations that are more likely non-compliant in order to focus future inspections and compliance efforts on these areas. In other words, SPCC/FRP facilities with past violations which are located in or near overburdened communities will likely be faced with increased inspections and scrutiny.

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Uh OOOO! More Regulation for Oil and Gas Production

The EPA has published a proposed rule to regulate methane and other emissions from new and existing oil and gas production sites and other portions of the oil and gas industry. The proposed rules are to be revisions and additions to the rules in Subparts OOOO and OOOOa and are the Biden Administration’s first entry into the back-and-forth regulation of this sector during the Obama and Trump Administrations. The proposed rules, however, go farther and are more expansive than even the Obama-era regulations.

The Biden Administration has famously imposed an “all of government” approach to addressing climate change. The effort began on President Biden’s first day when, among other things, he revoked the permit for the Keystone XL pipeline, paused new oil and gas leasing on federal lands, and re-entered the Paris Agreement. These, and other actions, contrasted sharply with the Trump Administration’s full-throated support of oil and gas production. 

According to the U.S. Energy Information Agency, the United States produced more petroleum in 2020 than it consumed and exported more petroleum than it imported, making the United States a net annual petroleum exporter for the first time since at least 1949. As to natural gas, total annual exports generally increased each year from 2000 through 2019 as increases in natural gas production contributed to lower natural gas prices and the competitiveness of natural gas in international markets. In 2019, the United States exported natural gas to about 38 countries and total annual natural gas exports were 4.66 trillion cubic feet, the highest on record, and the United States was a net exporter of natural gas for the third year in a row.  For more information about Trump-era oil and gas production, click here.

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Back to the Future!!

The scope of regulatory jurisdiction over navigable waters and wetlands has again come into question under the Biden Administration. Over the course of four administrations, this jurisdiction has been explained, expanded, enjoined, restricted, and remanded to the point where the public has little confidence in continuity over time. Now, to determine jurisdiction over waters and wetlands, we go back to prior guidance while the future of regulatory jurisdiction is determined through yet another rulemaking.

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Energy Consumption Data During the Pandemic Year Reveals China’s Growth

2020 is a year that most people would likely soon forget, both in terms of personal impacts and the overall economic downturn caused by the pandemic. While it hopefully will prove to be an anomaly, economic and energy usage data and statistics from 2020 still provide some useful insights and glimpses of future issues. BP recently released its annual Statistical Review of World Energy, covering through the end of 2020.

Although declines in use were noted for coal and natural gas, oil had the sharpest decline in global consumption: 9.1 million barrels per day, or 9.3 per cent. The decline is the largest ever seen and accounts for about three-quarters of the total decline in energy consumption. Oil demand fell the most in the US (2.3 million barrels per day), followed by the decline in the European Union of 1.5 million barrels per day. China saw an increase in oil consumption of 220,000 barrels per day.

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