Author: BSW

Supreme Court Deals a Blow to the Administrative State

The Supreme Court has overruled Chevron, its forty-year-old decision which has allowed administrative agencies to impose their regulatory will on industries, small businesses, and individuals by requiring that courts defer to an agency’s interpretation of a statute. According to EPA Administrator Regan, the decision “hits EPA extremely hard.”

In general terms, Chevron provides guidelines for a court to review an agency’s action pursuant to an act of Congress using a two-step framework. First, a court must assess whether Congress, in the statute, has spoken directly to the issue at hand and, if so, that is the end of the inquiry as the clear will and intent of Congress must be followed. However, if the statute is silent or ambiguous as to the agency action at issue, the court must, as the second step, defer to the agency’s interpretation if it is based on a permissible construction of the statute. As many statutes are silent or ambiguous as to an issue, Chevron allowed agencies to wield great power to act as long as the action was based on a permissible reading, even if the court did not necessarily agree with that reading.

In overruling Chevron, the Court relied on the intent of the Framers and its traditional role, finding that it has always been the province of the court to interpret the law. The passage of the Administrative Procedure Act (APA) in 1946 did not change this traditional role as the APA codified the traditional understanding that courts must decide all relevant questions of law. The Court stated: “The APA, in short, incorporates the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions.”

Chevron changed that approach. Instead of a court interpreting a statute and/or deciding relevant questions of law, an agency was allowed to provide a permissible reading of a statute and a reviewing court was required to defer to that reading. In the Court’s view, Chevron “defies the command of the APA” and “triggered a marked departure from the traditional approach.” As a result, Chevron had to be overruled.

But, what is left in its place? The Supreme Court was somewhat unclear. It did state that a court must find a “best reading” of a statute and answer “the question that matters: Does the statute authorize the challenged agency action?” To get to that ‘best reading,’ the Court provided some guidance.

First, a court may “seek aid from the interpretations of those responsible for implementing particular statutes.” An agency interpretation “may constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” Second, an interpretation “issued contemporaneously with the statute at issue, and which have remained consistent over time, may be especially useful in determining the statute’s meaning.” Finally, a statute may provide some authority for an agency to “exercise a degree of discretion.”

The Court also referenced a decision older than Chevron and the APA, Skidmore v Swift, to provide some criteria for accepting an agency interpretation: The weight or deference provided to an agency “would ‘depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.’” Even if there is now some uncertainty in how to determine whether the statute authorizes the agency’s action, a court cannot simply defer to an agency’s reading of a statute as they have done in the decades since Chevron was decided. Instead, the court must interpret the law and owes little, if any, deference to the agency’s interpretation. As a result, an agency will be unable to issue regulations or take actions that go much beyond the relevant statute.

Has EPA’s Environmental Justice Push Peaked?

Upon assuming office, the Biden Administration began an ‘all of government’ approach to securing environmental justice for everyone, especially those living near industrial facilities and contaminated sites. Based on a series of executive orders, federal agencies used existing statutes and regulations, plus new guidance, to advance the new agenda.

EPA was no exception and, in fact, may have set the pace for infusing environmental justice considerations into permitting, regulations, compliance, and remediation activities. Administrator Regan went on a “Journey to Justice” tour in Texas, Louisiana, and Mississippi and created the Office of Environmental Justice and External Civil Rights to enforce several federal civil rights laws, including Title VI of the Civil Rights Act of 1964. Strategic plans, equity action plans, and guidance memos were written to guide EPA’s activities and annual reports extolling EPA’s accomplishments were published.

Emboldened by this new focus, citizen groups began filing complaints with EPA under EPA’s regulations implementing, among other laws, Title VI. Dozens of complaints under Title VI have been filed since January 2021. As part of the resolution process, EPA seeks to enter into an informal dispute agreement with the agency that is the subject of the complaint in order to resolve the issues raised by the complaint. Many of the complaints accepted by EPA are still pending but some have been closed, subjecting EPA to criticism from the complainants.

One example is the series of complaints filed against the State of Louisiana in early 2022. Generally, the complaints focused on permitting and emissions in the Industrial Corridor (along the Mississippi River), the permitting of the Formosa petrochemical facility in St. James Parish, and emissions from the Denka facility in St. John Parish. EPA accepted these complaints for investigation and even issued a public Letter of Concern regarding its preliminary findings that the state agencies had created disparate impacts due to their actions and inactions over the years. During the course of the investigation and informal dispute discussions, the Attorney General for the State of Louisiana filed a suit against EPA in federal court, alleging, among other things, that EPA’s regulations prohibiting disparate impact were not authorized by Title VI. In response, EPA promptly closed its investigation of the complaints.

The Attorney General was not done, though, moving ahead to obtain a preliminary injunction against EPA, which was not appealed. Today, EPA’s EJ’s web-site contains this announcement: “Pursuant to a preliminary injunction issued by the U.S. District Court for the Western District of Louisiana on January 23, 2024, EPA will not impose or enforce any disparate-impact or cumulative-impact-analysis requirements under Title VI against the State of Louisiana or its state agencies.”

This retreat is not a single event. EPA accepted for investigation a complaint against two Mississippi agencies regarding the deterioration of drinking water systems in Jackson, Mississippi. The situation got so bad that emergencies were declared. The complaints alleged that the water crisis was caused by the systematic deprivation of funding and support for modernizing and maintaining water systems in Jackson. However, EPA recently closed its investigation, finding that although “the impacts of the water crisis fell disproportionately on the majority Black community of Jackson,” there was still “insufficient evidence” of a relationship between funding and the racial composition of the community.

Another recent example comes from Texas. A complaint relating to Oxbow Calcinating was accepted by EPA. However, EPA closed that investigation “for prudential reasons,” finding, among other things, that the complainants had also filed a petition for objection to Oxbow’s Title V permit, which was “sufficiently related to the Complaint at hand that it is prudent for OECRC to close the complaint/investigation until the conclusion of the administrative proceedings.” However, a few months later, EPA rejected the petition for objection. It is unknown whether the complaint will be refiled or if EPA will accept it if it is. EPA’s closure of its investigations draws a great deal of criticism from the complainants. This may be because EPA seems to have let people believe that it would use environmental justice actions to address all manner of impacts. However, EPA’s environmental justice authority is limited; plus, the burden under Title VI and/or EPA’s regulations must still be met and not every impact is adverse or disparate. Complainants should not be surprised that EPA cannot, and should not, act beyond its legal authority.

EPA Unleashes the Public on Industry

EPA has issued two final rules that provide significant rights to the public that may, and likely will, increase litigation or otherwise be used against industry.  First, EPA issued the final Risk Management Program revisions which contain requirements to provide voluminous information to the public regarding the regulated substances at a facility. Second, EPA empowered ‘third-party’ notifiers to record and report “super emitter” events. Together, they create a greater possibility of agency enforcement and private litigation.

On February 27, 2024, EPA issued the “Safer Communities by Chemical Accident Prevention” rule, which added numerous provisions to the Risk Management Program. Most concerning is the addition of an obligation for a facility to provide detailed, internal information about the facility to the public.

Upon “request by any member of the public residing, working, or spending significant time within 6 miles of the fence line of a stationary source,” the owner or operator must provide, within 45 days of the request, the information specified in the rule. Of course, there is no definition or indication of how much time a person must spend within six miles to be considered significant.

The facility must provide the names of regulated substances held in a process, safety data sheets for all regulated substances located at the facility, the five-year accident history information required to be reported to EPA, information about the facility’s emergency response program, and LEPC contact information. Additionally, the facility must provide information about “declined recommendations and justifications,” such as those regarding recommendations declined from natural hazard, power loss, and siting hazard evaluations and justifications and from inherently safer technology or design measures.

The owner or operator must also provide an “ongoing notification on a company website, social media platforms, or through other publicly accessible means” that the above information is available to the public. It must also provide instructions as to how to request the information.

On December 2, 2023, EPA issued a final rule related to methane and volatile organic compounds emissions from new and existing sources in the oil and natural gas industry. While there are many problematic provisions, the most problematic could be the “super-emitter” program.

A super-emitter event is defined as any emissions event with a quantified emission rate of 100 kg/hr of methane or greater that is located at or near an oil and natural gas facility and that is detected using remote detection methods. A person may be approved by EPA to become “a third-party notifier of super-emitter events.” A person must submit certain information to EPA, such as a description of the technologies the entity will use, its standard operating procedures, and a quality management plan.

Once so certified, a third-party notifier can use specified detection methods, such as satellite detection, remote-sensing equipment on aircraft, and/or mobile monitoring platforms, to record a super-emitter event. The third-party notifier provides the information of the super-emitter event to EPA and, once EPA determines the notification is complete and accurate to a reasonable degree of certainty, the EPA will make the notification publicly available and provide the super-emitter event notification to the owner or operator. The owner or operator must initiate an investigation to determine the sources of the event and has 15 days to submit a report to EPA.

Providing information to the public relating to regulated substances and the internal operations of a facility and posting information regarding super-emitter events for public review will likely foster litigation against the regulated entities. Indeed, most of the information necessary to support a private litigant’s claim will now be readily available and easy to obtain. Instead of focusing dwindling resources on compliance and ensuring that accidents or emission events do not occur, owners and operators will now be defending lawsuits. This seems to be the result desired by EPA. Regardless, industry will soon be awash in requests, notices, internal investigations, report writing, and unfortunately additional litigation.

The Right Result for The Sunshine Project

By John B. King (John B. King was a member of Formosa’s legal team, submitting portions of the briefs at the district court and First Circuit.)

The Louisiana First Circuit has issued a sweeping decision affirming and upholding the issuance of air emission permits by the Louisiana Department of Environmental Quality (LDEQ) for the Sunshine Project, Formosa’s $9.4 billion petrochemical facility located in St. James Parish (the Facility). RISE St. James, et al v. LDEQ, 23-0578 (La. App. 1 Cir. 1/19/24), — So.3d —, 2024 WL 207859 (the Decision). In doing so, the First Circuit reversed the legally deficient decision of the district court, which had adopted “almost verbatim” the suggested written reasons submitted by the Opponents to the Project.

A.  Facts

FG LA LLC (known as Formosa) sought to construct a petrochemical complex that would take ethane and propane, convert them into ethylene and propylene, and ultimately create high density polyethylene, linear low-density polyethylene, ethylene glycol, and polypropylene. Formosa choose a site in St. James Parish that was designated for industrial use, which was surrounded by industrial and agricultural uses, and which was about one mile from the nearest community on the west bank of the Mississippi River.

As a major source of air emissions, Formosa submitted applications to LDEQ to construct and operate the Facility. LDEQ reviewed the applications, which included the required air quality modeling. A public hearing was held and thousands of public comments were received.

In January 2020, after a review of the applications and all the public comments, LDEQ issued fifteen air emissions permits to construct the Facility. LDEQ issued a Prevention of Significant Deterioration (PSD) Permit and fourteen Title V Permits (the Permits), which together authorized the construction and operation of the Facility. LDEQ also issued a 182-page Basis for Decision and Public Comments Response Summary (Response to Comments), which provided, in detail, LDEQ’s reasons and rationale for granting the Permits. The PSD Permit also provided a detailed discussion of the Best Available Control Technology and the air quality modeling performed by Formosa. [1]

Several environmental organizations, such as RISE St. James, the Louisiana Bucket Brigade, and the Sierra Club (the Opponents), sought judicial review of LDEQ’s decision to issue the Permits. In very general terms, the Opponents argued that:

  • LDEQ violated the Clean Air Act due to its use of significant impact levels (SILs) to determine that the Facility’s emissions did not cause or contribute to a violation of the National Ambient Air Quality Standards (NAAQS);
  • LDEQ violated its constitutionally mandated duties as the public trustee of the environment; and
  • LDEQ failed to properly consider environmental justice issues, such as the alleged disparate impact on Black and minority members of nearby communities.

The appeal was assigned to District Judge Trudy White, now retired. After the matter was briefed and argued before her, she requested that all parties submit draft Written Reasons, in Word format, for her review. In September 2022, she issued her own Written Reasons for Judgment in which she vacated the Permits and remanded the entire matter back to LDEQ. Judge White’s Written Reasons for Judgment were an “almost verbatim” adoption of the draft Written Reason submitted by the Opponents.

LDEQ and FG appealed Judge White’s decision to the First Circuit. After an oral argument to a three-judge panel and another oral argument in front of a five-judge panel (which included the original three), the First Circuit issued its Opinion (the Decision). The First Circuit reversed Judge White’s decision and fully reinstated the Permits.

B.  The Decision

The Decision is a detailed and lengthy explanation of the facts, the arguments by the parties, the applicable law, and LDEQ’s reasoning and rationale. For almost every issue before it, the First Circuit noted the LDEQ’s stated basis for its decision on that issue, the support in the record for that decision, and the vast discretion afforded LDEQ in permitting matters. In doing so, the First Circuit highlighted the need for a complete administrative record and a robust discussion of the issues by LDEQ in its Basis for Decision and Response to Comments.

There are several important aspects to the Decision. This article will include a discussion of the main ones: the standard of review, the Clean Air Act issues, and certain issues associated with the scope and application of the public trust doctrine.

1.  The Standard of Review

The standard of review refers to the guiding principles to be applied by a court in reviewing a decision made by an administrative agency or a lower court. A lax or broad standard of review tends to provide a reviewing court with more latitude to overturn a lower court’s decision. By way of contrast, a more restrictive or narrow standard of review cabins or constrains a reviewing court as it reviews the lower court decision.

The Opponents argued that the First Circuit must give deference to the district court’s decision and factual findings. The First Circuit rejected this notion and applied the standard of review set out in Save Ourselves and Save Our Hills.

First, the First Circuit “reviews the findings and decision of the DEQ and not the decision of the district court” and “no deference is owed to the factual findings or legal conclusions of the district court.” Second, the First Circuit “should not reverse a substantive decision of DEQ on its merits unless it can be shown that the decision was arbitrary or that DEQ clearly gave insufficient weight to environmental protection in balancing the costs and benefits of the proposed action.” The test for determining whether an action was arbitrary or capricious is whether the action was taken “without reason,” a test that “imposes a significant limitation on judicial review.” Third, “considerable weight” must be given to LDEQ’s construction and interpretation of the statutory scheme it is entrusted to administer as well as its construction and interpretation of the rules and regulations under its authority.

When taken together, these principles provide a more restrictive or narrow standard of review. They impose a “significant limitation” on a reviewing court, which is prevented from reversing a substantive decision by LDEQ unless it was arbitrary (i.e., without reason) or there was insufficient weight provided to environmental protection. Throughout the Decision, the First Circuit applied this standard of review and found that the administrative record provided more than sufficient reasons for LDEQ’s decisions.

2.  The Clean Air Act Issues

The Clean Air Act issues relate to the modeling effort conducted by Formosa and the use of SILs (or significant impact levels) to determine that the Facility does not cause or contribute to a violation of the National Ambient Air Quality Standards (NAAQS).

Formosa conducted what the First Circuit described as “extensive air modeling.” Formosa conducted a preliminary impact analysis, a full impact analysis, and detailed refined modeling. The modeling was done in accordance with federal and state guidelines.

However, the model did predict exceedances of 24-hour PM2.5 and 1-hour NO2 NAAQS. Based on those exceedances, the Opponents claimed “that the mere existence of a modeled exceedance violates the Clean Air Act.” The First Circuit simply stated, “we disagree,” finding that the “existence of a predicted modeled exceedance is merely one step in the modeling process.” Because of the modeled exceedances, Formosa followed the approvable air quality modeling procedures and conducted the required detailed refined modeling which showed that the modeled exceedances “are caused by off-site sources.”

The First Circuit also approved the use of SILs as part of the modeling effort to determine whether emissions “cause or contribute”: to a violation of the NAAQS. The NAAQS are health-based standards set by EPA at levels requisite to protect public health with an adequate margin of safety.

Under the Clean Air Act, emissions are not allowed to “cause or contribute’ to a violation of the NAAQS.

The Opponents mounted a vigorous challenge to the use of SILs to make this determination. They essentially claimed that any contribution to a violation, regardless of its size, violated the Clean Air Act. The First Circuit found that LDEQ’s “use of SILs in the PSD program is supported by its interpretation of the Clean Air Act itself, case law interpreting the Clean Air Act, and the regulations and guidance promulgated or issued by the EPA pursuant to the Clean Air Act. Thus, DEQ had a reasonable basis for incorporating the use of SILs in its PSD program, and its use of SILs is neither erroneous nor arbitrary and capricious.”

The First Circuit noted that entire purpose of the PSD program was to prevent “significant” deterioration of air quality and that EPA had incorporated SILs into their own regulations. Importantly, the First Circuit recognized that the use of SILs is based on EPA’s “longstanding policy” and even cited to EPA’s guidance documents. It also noted that LDEQ had incorporated the guidance memoranda “into the administrative/permit record as justification for the use of EPA’s recommended SILS in its PSD program” and “considerable weight” must be given to an agency’s

construction and interpretation of the statutory scheme that it administers and to its own rules.

To reach these conclusions, the First Circuit relied extensively on the documents in the administrative record and LDEQ’s articulation of its reasoning as set out in the Basis for Decision and Response to Comments. Because the record supports LDEQ’s reasoning, the First Circuit could not say that LDEQ’s decisions, such as the use of SILs, were ‘without reason’ and thus arbitrary.

3.  The Public Trust Issues

At the district court and in the First Circuit, the Opponents grouped or styled the rest of their arguments as violations of the public trust doctrine. Essentially, they argued that LDEQ did not fulfill its duty as the public trustee because LDEQ failed to consider a variety of issues raised by the Opponents that they claimed should have been considered as part of the public trust analysis.

The public trust doctrine emanates from the Louisiana Constitution and generally requires that LDEQ, as the primary agency tasked with protecting the environment, articulate in written findings its consideration of three basic issues: whether the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible; a balancing (a cost-benefit analysis) of the environmental impact costs against the social and economic benefits of the project demonstrating that the latter outweighs the former; and whether alternative projects, alternative sites, or mitigating measures offer more protection to the environment without unduly curtailing non-environmental benefits. The consideration of these issues does not mandate a specific result; instead, LDEQ is afforded a great deal of discretion and latitude in individual matters.

Several of the main issues associated with the public trust doctrine are discussed below.

a.  Environmental Justice

LDEQ and Formosa argued that the inclusion of environmental justice concepts in permitting decisions is not mandated by any constitutional provision, statute, regulation, or policy. In this regard, the First Circuit disagreed with LDEQ and Formosa, finding that “the directives from the Louisiana Supreme Court in Save Ourselves, which require consideration of economic, social, and other factors, broad enough to include an analysis of environmental justice, as defined by the EPA.” (Citation and punctuation omitted.)

Based on this decision, then, the consideration of environmental justice concerns is a part of the public trust review. However, as such, LDEQ’s consideration of these issues and its conclusions should be entitled to the “rule of reasonableness” and the same “room for a reasonable exercise of discretion” afforded other components of the public trust review, as set forth in Save Ourselves. In other words, if LDEQ articulates its reasons and there is support in the administrative record for those reasons, LDEQ should not be deemed to have acted arbitrarily (i.e., without reason).

Even so, LDEQ did conduct an extensive environmental justice analysis which was articulated in the Basis for Decision and Response to Comments. The First Circuit summarized LDEQ’s environmental justice analysis, ultimately finding that “we cannot say that [LDEQ’s] decision was in violation of its public trust duty or that its environmental justice analysis was arbitrary and capricious or otherwise without reason.” Indeed, there was “ample documentation in the administrative record” to support LDEQ’s conclusions.

Several key points were made by LDEQ which were highlighted by the First Circuit. First, LDEQ found that emissions from Formosa would not cause or contribute to a NAAQS violation and so the permits “do not allow for air quality impacts that could adversely affect human health or the environment.” EPA had previously regarded compliance with the NAAQS as presumptively protective “and that emissions of a pollutant meeting the NAAQS should not be viewed as ‘adverse’ under Title VI of the Civil Rights Act.” Although EPA did away with that rebuttable presumption, “the determination of whether there were ‘adverse’ impacts was ‘still intrinsically linked to whether a given area is compliant with the NAAQS.’”

Second, LDEQ addressed the alleged cancer risks from emissions of toxic air pollutants, primarily ethylene oxide, as to potentially affected Black and minority populations in the surrounding community. While LDEQ noted that there had been declines in the emission of toxic air pollutants and that there would be no ‘fenceline community,” the First Circuit specifically noted LDEQ’s use and reliance on data from the Louisiana Tumor Registry. That data, which include actual cancer incidences and deaths, indicted that cancer did not affect Black men or women in a significantly different manner. For example, rates “rates for all cancers combined for [W]hite men, [B]lack men, and [B]lack women do not differ significantly from Louisiana rates.”

Third, the First Circuit addressed claims that a disparate impact was created by emissions from the Facility, finding that LDEQ “specifically considered the impact of emissions on the nearby Black and minority communities.” LDEQ had found that there was no adverse impact, that overall emissions had significantly declined, that cancer rates were not significantly different based on data from the Louisiana Tumor Registry, that Formosa sought a site as far away from all people, regardless of race, and that the Facility was at least a mile from residential communities. It concluded that the fact that the Facility “is situated near a minority community alone is insufficient to establish a disproportionate effect on a minority community,” citing a prior case. As a result, and based on these findings, the First Circuit found that “even if there was evidence of an ‘adverse impact,’ there was no evidence of a ‘disparate impact.’”

Finally, the First Circuit highlighted LDEQ’s conclusion regarding the substantial limitations of the use of the EJScreen, as set forth by EPA itself. For example, EJScreen should not be used “to quantify specific risk values for a selected area” and that the screening-level results supplied by the EJScreen “do not, by themselves, determine the existence or absence of environmental justice concerns in a given location.” The Opponents had touted the EJScreen data to establish that “there is a ‘disparate impact’ or a disproportionate effect on a minority community.” The First Circuit supported LDEQ’s determination “based on specific directives from the EPA” that the EJScreen “information remains unsuitable for the use to which the [Opponents] are trying to use it: to quantify specific risk values for a selected area and as a basis for agency decision-making regarding the existence or absence of environmental justice concerns.”

b.  Cumulative Impact Analysis

The Opponents argued that LDEQ failed to require Formosa to model the cumulative or combined

impact of all of its toxic air pollutants. The First Circuit rejected this argument.

The issue had come up in a prior matter (In re: Petroplex, 2010-1194 (La. App. 1st Cir. 3/25/11), 2011 WL 1225871). In that case, a similar argument was made but the First Circuit did not require such modeling because modeling was done in accordance with approval protocols and the facility emissions were lower than the ambient air standards. As a result, additional cumulative modeling was not required.

Similarly, Formosa conducted extensive air modeling in accordance with EPA’s and LDEQ’s approved modeling guidance and protocols. That modeling effort showed, like the modeling effort in Petroplex, that no ambient air standard for any toxic air pollutant would be exceeded. As a result, the First Circuit could not say that LDEQ’s “decision not to require Formosa to model the cumulative or combined impact of all of its toxic air pollutants was arbitrary and capricious or in violation of its duty under the public trust doctrine.”

c.  Alternative Sites

Formosa conducted a robust alternative sites analysis in which sites were eliminated because they were located in what, at the time of site selection, was to be a non-attainment area. A facility to be constructed in such an area must purchase offsets in the form of expensive emission reduction credits. In this case, the amount of offsets that would be required to be purchased by Formosa “effectively precluded construction of the complex” because the requisite number of credits were not available.

The Opponents argued that the elimination of the non-attainment sites was arbitrary. The First disagreed, stating that LDEQ “had a reason, supported by the administrative record, to find that the five sites in Ascension Parish were not feasible alternative sites for the proposed Formosa complex.” As a result, LDEQ’s analysis of alternative sites was not arbitrary.

C.  Conclusion

The First Circuit’s decision upholding LDEQ’s issuance of the Permits provides a powerful precedent and multiple arguments for LDEQ and permittees who seek to fend off judicial challenges to LDEQ’s decision to issue a permit. However, there are two main “takeaways” from this decision:

  • LDEQ should provide robust and detailed reasons for its decision to grant the permit in a Basis for Decision, Response to Comment, and/or other permit documents; and
  • The administrative record should be replete with sufficient evidence to support any and all such reasons.

Here, the administrative record included a vast amount of information to support LDEQ’s decision, much of which was supplied by Formosa as part of the permit process. In turn, LDEQ provided detailed reasons for its conclusions and the decision to issue the Permits. As a result, and faced with such a record and reasoning, the First Circuit could clearly find, and did find, that the decision was not arbitrary (i.e., without reason).

A copy of the decision can be found here.

[1] LDEQ later issued a Supplemental Basis for Decision in response to an order by the district court.  

Enough is Enough

The Corps of Engineers refuses to accept the Supreme Court’s decision in Sackett v. EPA, which substantially reduces the scope of Corps’ jurisdiction over ‘adjacent wetlands.’ The Corps’ “unwillingness to concede its lack of regulatory jurisdiction” prompted the Fifth Circuit to emphatically state “enough is enough” in a recent decision related to adjacent wetlands. 

The Clean Water Act regulates the discharge of dredged or fill material into navigable waters.  42 USC §1344(a) (Section 404).  Navigable waters are defined as “the waters of the United States, including the territorial seas.”  42 USCA §1362(7).  

In Sackett, the Supreme Court held that Corps’ jurisdiction under the Clean Water Act “extends to only those wetlands with a continuous surface connection to bodies that are waters of the United States in their own right, so that they are indistinguishable from those waters.” Sackett, 143 S. Ct. at 1344.  The Court also explained that the Corps must establish “first, that the adjacent [body of water constitutes] … ‘water[s] of the United States,’(i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” Sackett, 143 S. Ct. at 1341.

The Corps has refused to accept this holding and the limitations on its jurisdiction as established by the Supreme Court.  The Corps’ current position is that a ‘continuous surface connection’ exists when wetlands are connected to a jurisdictional water by a discrete feature like a non-jurisdictional ditch, swale, pipe, or culvert.  Further, a continuous surface connection does not require a constant hydrologic connection.  The EPA and Corps echoed this view in guidance released in November 2023 in the form of a PowerPoint presentation.  

However, there are two problems with the Corps’ current position.  First, the case relied on by the Corps in the November 2023 Guidance does not support its claim.  Second, the Fifth Circuit just held that the Corps’ November 2023 Guidance on this point is wrong.  

In the November 2023 Guidance, at p. 48, the EPA and the Corps rely on “prior EPA practice” and a Sixth Circuit case, US v. Cundiff, 555 F3d 200 (6 Cir. 2009), for this position.  However, that case does not specifically make that statement.  The Court actually stated: “Although the term ‘continuous surface connection’ clearly requires surface flow, it does not mean that only perpetually flowing creeks satisfy the plurality’s test.” Cundiff, 555 F3d at p. 212.  The Court went on to discuss seasonal flow “and like water bodies.” Waterways with seasonal flow can be relatively permanent waterways.  Further, one waterway, the South Channel, provided a continuous surface connection between the wetlands at issue and a traditional waterway (the South Channel had flow for all but a few weeks a year).  So, the EPA’s and Corps’ statements regarding non-jurisdictional waters based on Cundiff, if any, are likely dicta.  

On Dec. 18, 2023, the Fifth Circuit decided the case of Lewis v. US (2023 WL 8711318), which negates the EPA’s and Corps’ position in the Fifth Circuit.  Wetlands on two tracts in Livingston Parish were at issue.  The tracts are described as grass-covered, majority dry fields with gravel, logging, and timber roads on the sides of each tract.  The owners harvested and managed timber on the tracts.   As to the first tract (the east tract), waters flowed through roadside ditches to an unnamed tributary (which flowed intermittently), to Colyell Creek (a relatively permanent waterway), and then to Colyell Bay, a traditional navigble waterway about ten to fifteen miles away.  As to the second tract (the west tract), water flowed through roadside ditches to Switch Cane Bayou, to Colyell Creek, and then Colyell Bay. 

At the district court level (2020 WL 4798496), the court was reviewing an approved jurisdictional determination (AJD) initially issued in 2017 after an administrative appeal.  The 2017 AJD found jurisdictional wetlands, noting the above connections to the traditional navigable waterway.  The Plaintiffs argued that there was no jurisdiction under Rapanos (including the Scalia test as to adjacency).  At some point in the district court proceedings, the Corps “acknowledged that the land in question does not meet the adjacency requirement set forth under the Scalia test. Accordingly, it provides no basis for CWA jurisdiction.”  The district court also found that there was no jurisdiction under the significant nexus test.  The matter was remanded back to the Corps. 

After remand, the Corps applied the 2020 Navigable Waters Protection Rule to the wetlands on both tracts.  The Corps indicated in a 2020 AJD that there were no jurisdictional wetlands on the west tract but found wetlands on the east tract by “connecting (a) roadside ditches and (b) a culvert to (c) an unnamed non-‘relatively permanent water’ tributary, then to (d) Colyell Creek (a ‘relatively permanent water’) several miles away, and ultimately to (e) the traditionally navigable waterway of Colyell Bay ten to fifteen miles from the Lewis property.” 

Upon review by the Fifth Circuit and based on these facts, the Court found: “There is no ‘continuous surface connection’ between any plausible wetlands on the Lewis tracts and a ‘relatively permanent body of water connected to traditional interstate navigable waters.’ Recall that the nearest relatively permanent body of water is removed miles away from the Lewis property by roadside ditches, a culvert, and a non-relatively permanent tributary. In sum, it is not difficult to determine where the ‘water’ ends and any ‘wetlands’ on Lewis’s property begin—there is simply no connection whatsoever. There is no factual basis as a matter of law for federal Clean Water Act regulation of these tracts.”  Thus, the Fifth Circuit found no continuous surface connection, even though there was a ditch, a culvert, and a non-relatively permanent tributary. 

The Lewis decision highlights several important points.  First, the Corps admitted under these facts that there was no jurisdiction under the Scalia test in Rapanos (the very same test adopted in Sackett).  Second, there was no continuous surface connection even when water may flow through ditches, a culvert, and a non-relatively permanent tributary.  Finally, the Sackett holding relating to a determination of where waters ends and wetlands begins was specifically incorporated into the Lewis decision.

As a result of the Lewis decision, non-jurisdictional features (ditches, culverts) and non-relatively permanent waterways are not continuous surface connections and cannot serve to link wetlands on a property to a relatively permanent waterway.  On this point, the November 2023 Guidance is not consistent with the Fifth Circuit’s strict and straightforward application of Sackett in the Lewis decision.

Texas and Louisiana Move Towards State Primacy For Carbon Capture Projects

Carbon capture, use, and sequestration (CCUS) projects are regarded as a viable means to reach the ambitious goal of net zero carbon dioxide (CO2) emissions by 2050. Many claim that CCUS provides the only means to achieve that goal.

CCUS captures CO2 at its source, such as a petrochemical facility or a power plant using coal or natural gas. Captured CO2 has been used for enhanced oil recovery (EOR) projects for decades, without major incident. Alternatively, captured CO2 may be injected for permanent sequestration thousands of feet underground in deep rock formations.

The benefits of sequestering CO2 would seem obvious. At the very least, CCUS will reduce the amount of CO2 in the atmosphere and create millions in investments and thousands of good jobs. However, many environmental groups oppose CCUS because it allows the continued use of fossil fuels and slows the growth of renewable energy, such as wind and solar. Additionally, under the Biden Administration, claims are now being made that CCUS creates a disproportionate impact on minority, indigenous, and poor communities.

For the most part, CCUS projects must be approved by EPA and the state in which the project is located. Dual permitting is inefficient and hinders the prompt permitting of sequestration projects. However, EPA may grant a state “primacy,” which will allow the state in which the project is located to become the sole permitting and enforcement authority. This is beneficial to the proponent of the project as only one permit application needs to be filed and one permit obtained.

According to EPA’s web-site, Wyoming and North Dakota are the only two states to achieve primacy over carbon sequestration (Class VI wells) permitting and enforcement. However, Texas and Texas are moving towards obtaining primacy so that projects can more easily move forward.

In 2021, the Texas Legislature passed House Bill 1284, which gave the Railroad Commission sole jurisdiction over CCS projects. In August 2022, the RRC approved bringing the Texas regulations closer in line with federal standards. It is expected that these changes will help to expedite EPA’s processing of Texas’ forthcoming primacy application. EPA’s web-site identifies Texas as being engaged in “pre-application activities.”

Louisiana is farther along in the process. Louisiana submitted its primacy application in September 2021. EPA published a proposed rule in May 2023, which would grant primacy to Louisiana for the Class VI program. A sixty-day public comment period was established and a public hearing was held in Baton Rouge. Over 17,000 on-line comments have been received and dozens spoke at the public hearing. After reviewing the comments, it is expected that EPA will issue a final rule granting primacy by the end of the year.

Louisiana has also made several important statutory revisions to its state program. For example, each application for a Class VI injection permit must include a NEPA-like environmental analysis, which addresses whether environmental effects have been avoided to the maximum extent possible and whether a cost-benefit analysis shows that the social and economic benefits of the proposed activities outweigh the environmental impact costs. Additionally, the length of time to obtain a certificate of completion of injection operations, which serves to transfer liability to the state, has been lengthened from ten years to fifty years.

Obtaining primacy should foster more efficient and timely permitting, unlocking the potential for economic growth and reaching climate goals. Hopefully, EPA will act promptly on primacy applications so all states may receive the benefits.