A Return to Regulation?

The prospect of a Biden Administration signals the likely return to active and aggressive regulation of environmental matters. In a fashion similar to the Trump Administration’s approach to Obama-era regulations, the Biden Administration has already vowed to not only reverse Trump-era de-regulation but go beyond the Obama Administration’s regulatory efforts.

Perhaps the most glaring example is addressing what the Biden-Harris Transition web-site calls the “existential threat of climate change.” Mr. Biden promises to “recommit the United States to the Paris Agreement on climate change” and to “go much further than that” by “lead[ing] an effort to get every major country to ramp up the ambition of their domestic climate targets.” Indeed, Mr. Biden pledges to “put the United States on an irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.”

The Paris Agreement calls for “holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels” through nationally determined contributions (NDC) to carbon emission reductions. The United States’ NDC was a 26-28 per cent reduction below its 2005 level by 2025. According to EPA, gross GHG emissions were reduced between 2005 and 2018 from 7,392 MMT CO2 Eq. to 6,677 MMT CO2 Eq.

It is unknown at this time to what extent Mr. Biden will “ramp up” the United States’ already ambitious climate targets or exactly how Mr. Biden intends to achieve the “ramp up.” He has stated that he would invest billions in clean energy development, that he would transition away from the oil industry by 2050, and that he would phase out or end fracking on federal lands. It is also likely that Mr. Biden would reverse the Trump Administration’s roll-back of the oil and gas sector methane rule.

Another example relates to environmental justice. Mr. Biden states that he wants to “ensure that environmental justice is a key consideration in where, how, and with whom we build” the clean energy infrastructure and go about “righting wrongs in communities that bear the brunt of pollution.” EPA defines environmental justice as the “fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.”

Mr. Biden does not provide specifics but does state that a Biden Administration will create “good, union, middle-class jobs in communities left behind,” presumably in clean energy endeavors. The creation of jobs in the clean energy sector may be how he intends to right the wrongs in potentially over-polluted communities, but it is more likely that there will be a greater push to limit or restrict industrial development in such areas.

There are numerous other Trump-era executive orders and regulations that a Biden Administration will likely address. As to the executive orders, they are easily reversed and Mr.; Biden has signaled he plans to do so. As to promulgated regulations, EPA must proceed through the notice-and-comment requirements imposed by the Administrative Procedure Act. However, regulations that are finalized in the last days of the Trump Administration may be subject to repeal under the Congressional Review Act, which was used in 2017 to repeal several Obama-era regulations. Although there is much speculation at this time, it is likely that the de-regulatory agenda pushed by the Trump Administration will be replaced with a re-regulatory agenda under a Biden Administration. To ensure some growth opportunities remain, industrial concerns will have to oppose the Biden agenda as assertively as the environmental groups opposed the Trump agenda.

The End of Regulation by Guidance Document?

EPA has issued a final rule governing its issuance of guidance documents, declaring that the Rule will lead to enhanced transparency and help ensure that guidance documents are not improperly treated as legally binding requirements by the EPA or by the regulated community. In many instances over the years, guidance documents were issued without public input, even though the policy or interpretation in the guidance document created binding requirements applicable to the regulated community. This Rule ends that practice.

On October 9, 2019, President Trump issued an executive order, “Promoting the Rule of Law Through Improved Agency Guidance Documents.” It declared that agencies sometimes used guidance documents “to regulate the public without following the rulemaking [that is notice and comment] procedures of the” Administrative Procedure Act. It directed that agencies must treat guidance documents as non-binding both in law and in practice, take public input into account in formulating guidance documents, and make guidance documents readily available to the public.

According to EPA, the Rule meets these requirements, and more. The Rule provides definitions of “guidance document” and “significant guidance document,” minimum requirements for a “guidance document” and additional requirements for “significant guidance documents,” procedures for the public to petition the Agency for modification or withdrawal of guidance documents, and an online portal (the EPA Guidance Portal) to identify EPA guidance documents for the public.

A “guidance document” is a statement of general applicability, intended to have future effect on the behavior of regulated parties, that sets forth a policy on a statutory, regulatory, or technical issue, or an interpretation of a statute or regulation. There are a few exclusions form this broad definition, such as rules subject to notice and comment and rules of agency procedure and practice or internal guidance not intended to have substantial future effect on the behavior of regulated parties. Generally, a “significant guidance document” is one that may reasonably be anticipated to lead to an annual effect on the economy of $100 million or more.

All guidance documents must, among other things, include the term “guidance,” include the citation to the statute or regulation to which the guidance document applies or which it interprets, and avoid mandatory language such as ‘shall’ or ‘must.’ Further, it must include a disclaimer that the contents do not have the force and effect of law and that it does not bind the public in any way. Importantly, any guidance document issued by an EPA Regional Office must receive concurrence from an appointed EPA official at EPA headquarters. A significant guidance document must adhere to these requirements, plus it must be subject to notice and comment before finalization.

EPA also included a provision allowing any member of the public to petition EPA for the modification, withdrawal, or reinstatement of a guidance document. EPA will make information about petitions received available to the public and indicated that it should respond to a petition in no more than 90 calendar days after receiving the petition.

Finally, the Rule requires that all guidance documents be included in the EPA Guidance Portal. The Portal currently exists (www.EPA.gov/guidance) and contains the documents meeting the definition of a “guidance document.” The web-page contains the disclaimer that EPA’s guidance documents lack the force and effect of law agency and that it may not cite, use, or rely on any guidance that is not included in the Portal. The executive order and the Rule allow the issuance and use of guidance documents while providing public input and access and general procedures for issuance. Of greater significance and importance to the regulated community, there is some relief from the use of binding guidance documents issued without public knowledge or input.

EPA Announces Major Changes In Oil and Gas Regulations

With the election looming, EPA has finalized a three-year effort to revise, amend, or repeal the 2012 and 2016 new source performance standards regulating volatile organic compound and methane emissions from the oil and gas production, processing, and transmission and storage segments. EPA has issued two rules that make sweeping changes to these Obama-era regulations.
The 2012 rule established NSPS for VOC emissions from these three segments of the oil and natural gas industry. The 2016 rule established NSPS for the three segments for greenhouse gases in the form of limitations on methane. In the 2012 and 2016 rules, EPA interpreted the source category to also include the natural gas transmission and storage segment. Prior to that, it only had included the production and processing segments.
In the current rules, EPA takes aim at the expansion of regulation to the natural gas transmission and storage segment, the regulation of methane from all three segments, and numerous VOC requirements in the oil and gas production and processing segments. To accomplish this, EPA issued two rules. The Policy Rule addresses the regulation of the natural gas transmission and storage segment and the regulation of methane from all three segments. The Technical Rule addresses VOC requirements in the oil and gas production and processing segments.
The Policy Rule contains three main parts. First, it finalizes a proposed rule that the source category includes only the production and processing segments of the industry. EPA reviewed the original scope of the source category published in 1979 and found that it did not include this segment. Instead, the natural gas transmission and storage segment is its own source category. EPA explained that, under CAA Section 111, it can only list a source category for regulation by making a cause-or-contribute-significantly and endangerment finding, which EPA has never done. As a result, EPA rescinded the standards (VOC and methane) applicable to the transmission and storage segment of the industry.
Second, EPA rescinded the methane requirements of the NSPS applicable to sources in the production and processing segments. EPA concluded that the methane requirements are redundant with the existing NSPS for VOC and, thus, establish no additional health protections. EPA stated that rescinding the methane requirements while leaving the VOC emission requirements in place will not affect the amount of methane emission reductions.
Third, EPA included an interpretation of CAA Section 111 which requires thatEPA must make a finding that emissions of an air pollutant from the source category cause or contribute significantly to air pollution which may endanger public health or welfare prior to newly regulating any air pollutant that the EPA did not consider when initially regulating the source category. While seemingly innocuous, this interpretation would seemingly require a finding that methane would ‘cause or contribute’ prior to re-regulating methane from the transmission and storage segment, an unlikely finding under the current administration.
The Technical Rule is somewhat more straightforward and applies to existing requirements applicable in the oil and gas production and processing segments. In general, they address a range of technical and implementation issues in response to administrative petitions for reconsideration and other issues brought to EPA’s attention, including fugitive emissions requirements, provisions to apply for the use of an alternative means of emission limitation, pneumatic pump standards, storage vessel standard applicability determinations, and engineer certifications.
The Policy Rule is effective when published in the Federal Register and the Technical Rule is effective sixty days after publication. With the election pending, the provisions of the Congressional Review Act may play a role in the survival of the two rules. In general terms, the Act allows Congress to vote to disapprove of the regulation (thus preventing it from going into effect) within 60 days after Congress receives the rule.
Taken together, the two rules free the transmission and storage segment from NSPS regulation, establish a framework for regulating new source categories, and substantially revise existing regulations in the production and processing segments. However, it remains to be seen whether these rules will survive a change in administration.

Oil and Gas Pipelines are Clogged, at Least for Now

A recent ruling by a single federal district judge in Montana has sent a shockwave through the oil and gas industry. By vacating the U.S. Army Corps of Engineers’ (USACE’s) Nationwide Permit (NWP) 12 and then issuing a nationwide injunction against its use for constructing oil and gas pipelines, the judge has effectively halted new construction of those pipelines and sparked a renewed discussion about the propriety of issuing such injunctions.

The ruling arises out of litigation related to the Keystone XL pipeline, an 882-mile pipeline running from Canada to Nebraska. The construction has been mired in controversy from its inception, mainly due to the need for a “presidential permit” to construct a transnational pipeline and criticisms of the sufficiency of the environmental impact statement. The plaintiffs claimed that, in reissuing NWP 12 in 2017, the USACE did not engage in “formal programmatic consultation” with other agencies, as required under the Endangered Species Act (ESA). As a result, any approval of the Keystone XL pipeline under NWP 12 was in violation of law and must be set aside.

General permits, such as NWP 12, are issued by the USACE to streamline the permitting process. NWP 12 applies to the “construction, maintenance, repair, and removal of utility lines and associated facilities” and defines “utility line” broadly to include oil and gas pipelines. Versions of NWP 12 have been in effect since 1977. The USACE specifically consulted with the appropriate federal agencies prior to the reissuance of NWP 12 in 2007 and 2012, but did not in 2017 based on its position that the ESA did not require such consultation because issuing the permit itself has no effect on listed species or critical habitat. Additionally, the permit requires a pre-construction notice from the applicant of any activity that “might affect” a listed species or critical habitat, which prompts an activity-specific determination by the USACE.

In April, the federal judge ruled that the plaintiffs had provided “resounding evidence” that the USACE’s reissuance of NWP 12 may affect listed species and their habitats, and the pre-construction notice essentially delegated the USACE’s duties under the ESA to prospective permittees. Surprisingly, as no party had yet asked for such broad relief, the judge also vacated NWP 12 in its entirety and enjoined the USACE from authorizing any further activities under NWP 12. The judge then modified his initial ruling, limiting it to the construction of new oil and gas pipelines, but allowing nonpipeline construction activities such as electrical utility lines. Several major oil and gas pipeline projects were to be permitted under NWP 12.

The USACE appealed the ruling to the 9th U.S. Circuit Court of Appeals and asked for a stay, which was denied. The USACE has requested a stay from the Supreme Court. If granted, the appeal may proceed, and the USACE may continue to authorize activities under NWP 12. If denied, the use of NWP 12 for authorization of oil and gas pipelines will be prohibited until the appeal is resolved.

Federal judges have issued similar nationwide injunctions in other cases, a practice which has been questioned by several Supreme Court justices in the past few years. The sweeping injunction issued in this case is questionable at best and the modification more so, as exempting nonpipeline activities from the injunction is somewhat illogical if both pipeline and nonpipeline activities may impact listed species and critical habitats. Regardless, until there is a ruling on the stay or a decision on the appeal, the authorization of oil and gas pipelines under NWP 12 is on hold.

A Sea of Uncertainty in Navigable Waters

Three recent actions have roiled the otherwise calm “navigable waters of the United States,” creating a sea of uncertainty for regulated entities and administrative agencies. Charting an appropriate course to address these actions will likely prove difficult.

The Navigable Water Protection Rule was issued, which substantially narrows the scope of jurisdiction over navigable waters. A court vacated the Corps of Engineers’ Nationwide Permit No. 12, which is widely used for pipelines and transmission lines. The Supreme Court ruled that a permit is required in certain circumstances for discharges to navigable waters that travel through groundwater. Continue reading “A Sea of Uncertainty in Navigable Waters”

UPDATE 2 – Regulatory Relief in the Environmental Arena Lags Behind

LDEQ issued an amended Declaration of Emergency and Administrative Order on March 27, 2020. In terms of regulatory relief, it offers little more than prior orders.

LDEQ extended the deadline for submitting Title V Semiannual Monitoring and Deviation reports and Annual Compliance Certifications, which are ordinarily required to be submitted on March 31. They must be submitted no later than May 1, 2020. LDEQ did state that it maintains the capability to physically receive reports to the extent that the reports can be submitted to the Department by the March 31st deadline. Continue reading “UPDATE 2 – Regulatory Relief in the Environmental Arena Lags Behind”

UPDATE – Regulatory Relief in the Environmental Arena Lags Behind

After several national trade organizations, such as the American Petroleum Institute, petitioned EPA for regulatory relief during the COVID-19 crisis, EPA provided some relief on March 26, 2020. Susan Bodine, EPA’s Assistant Administrator for Enforcement and Compliance Assurance, issued a memorandum to “all governmental and private sector partners” announcing that EPA “will exercise [its] enforcement discretion … if regulated entities take the steps applicable to their situations, as set forth in this policy.” For noncompliance that occurs during the time the policy is in place, the policy announced in the memorandum “will apply to such noncompliance in lieu of an otherwise applicable EPA enforcement response policy.”

Importantly, the policy is retroactive to March 13, 2020. EPA will apply the policy to actions, inactions, or omissions that occur while the policy is in effect even after the policy terminates.

Although the policy announces that EPA will utilize its enforcement discretion, it placed numerous conditions on the application of that discretion. A failure to meet the necessary conditions will likely result in an enforcement action by EPA. If you need help and assistance regarding compliance obligations during the COVID-19 crisis, please contact us or seek other legal assistance. Continue reading “UPDATE – Regulatory Relief in the Environmental Arena Lags Behind”

Regulatory Relief in the Environmental Arena Lags Behind

At this time, the primary environmental regulatory agencies have done very little to assist regulated entities address the impacts of COVID-19 on personnel and compliance. While the governors urge or mandate that people stay at home, EPA, the Louisiana Department of Environmental Quality (LDEQ), and Texas Commission of Environmental Quality (TCEQ) have, for the most part, not relaxed monitoring and reporting requirements. However, the American Petroleum Institute (API) has petitioned EPA for regulatory relief.

In Texas, Governor Abbott has urged people to stay at home but, as of this writing, has not issued an order. In Louisiana, though, Governor Edwards did issue an order on March 22, 2020. Proclamation No. 33 JBE 2020. It states that “all individuals … are under a general stay-at-home order and are directed to stay home unless performing an essential activity.” To determine what is an essential activity, the Governor adopted the Department of Homeland Security’s guidance issued through the Cybersecurity & Infrastructure Security Agency (CISA). See www.cisa.gov/identifying-critical-infrastructure-during-covid-19. Continue reading “Regulatory Relief in the Environmental Arena Lags Behind”

Are SEPs On Their Way Out?

The US Department of Justice announced it will no longer include environmental projects in settlements of environmental cases in which civil penalties are sought. This decision casts great doubt on the future of Supplemental Environmental Projects, or SEPs. Over the years, SEPs have been popular with EPA and industry, proven valuable in settling cases, and directed resources in a manner that benefits the environment.

In its 2015 Update of its SEP Policy, EPA defined a SEP as “an environmentally beneficial project or activity that is not required by law, but that a defendant agrees to undertake as part of the settlement of an enforcement action.” The project goes beyond what could legally be required in order for the defendant to return to compliance and secures environmental and/or public health benefits in addition to those achieved by compliance with applicable laws. Continue reading “Are SEPs On Their Way Out?”

The Scope of Jurisdictional Waters Has Been Narrowed

Image result for water clipartNearly three years after issuing an executive order on the subject, the Trump Administration has finalized the Navigable Waters Protection Rule to narrow the scope of waters subject to federal regulation under the Clean Water Act.

In 2015, the Obama Administration finalized the Clean Waters Rule which generally expanded the jurisdiction of EPA and the Corps of Engineers over “waters of the United States.” The rule was challenged in district and appellate courts throughout the country. After various court rulings, including one by the Supreme Court, the Clean Waters Rule became effective in only about half the states, creating a patchwork of regulation. Upon assuming office, President Trump issued an executive order in which he directed that a new rule be considered which mirrored the more limited jurisdictional view announced by Justice Antonin Scalia in prior rulings. Not surprisingly, the Navigable Waters Protection Rule adopts the narrower view.

Continue reading “The Scope of Jurisdictional Waters Has Been Narrowed”