The Nickel Report

On October 13, the US Environmental Protection Agency published the final rule authorizing Colorado’s Energy and Carbon Management Commission to regulate all underground injection of carbon dioxide for long-term geological sequestration within the state. The final rule followed a comprehensive technical and legal review to ensure the state’s Underground Injection Control program met all requirements under the Safe Drinking Water Act section 1422.

Across the country, municipalities are reassessing how existing zoning rules apply to large-scale data centers, including facilities designed to support artificial intelligence and other computing-intensive applications. As developers move to secure suitable sites, adequate power capacity, and necessary approvals, cities and towns are considering whether current ordinances adequately address the scale, infrastructure demands, and operational features of these projects. In some jurisdictions, that process has led to the enactment of moratoriums, zoning amendments, or use restrictions. In others, it has prompted litigation. For practitioners advising developers, municipalities, and landowners, this is a space worth watching closely. Many of the issues surfacing now are familiar land-use questions in a new setting: how local governments classify emerging uses, when they may revise zoning rules in response to new development pressures, and what process is required when those changes affect pending or anticipated projects.

On September 15, 2026, the US Court of Appeals for the Fifth Circuit vacated the US Environmental Protection Agency’s risk management rule for methylene chloride, a widely used solvent, under the Toxic Substances Control Act. East Fork Enterprises, Inc. v. EPA, Nos. 24-60227 & 24-60256 (5th Cir. 2026). The rule prohibited 40 uses of methylene chloride and imposed numerous workplace requirements on the remaining 13 industrial and commercial uses, including exposure monitoring and an existing chemical exposure limit roughly ten times more stringent than OSHA’s standards. After a ten-year process of EPA evaluating extensive data on methylene chloride, publishing and then revising a determination that the substance presents an unreasonable risk to human health, and imposing bans on a majority of uses of the substance, including industrial uses and uses in finished products, the Fifth Circuit scrapped the rule, finding EPA exceeded its statutory authority and lacked sufficient evidence to support its rule.

Many environmental statutes have narrowed as streamlined permitting and efficient project development are prioritized. Rather than shrinking alongside the other major environmental statutes, the jurisdictional reach of the Endangered Species Act has continued to expand as more species are listed and more critical habitats are designated each year.

The definition of “waters of the United States” (WOTUS) establishes the geographic reach of the Clean Water Act (CWA), including the Section 404 permitting program. The Supreme Court set the parameters within which the agencies may treat aquatic features as WOTUS when it decided Sackett v. EPA. In November 2025, the US Environmental Protection Agency and US Army Corps of Engineers issued a WOTUS proposed rule to implement Sackett. Last month, the agencies issued a supplemental proposed rule “to supplement and seek additional comment on certain aspects” of the 2025 proposal. In this post, we examine how the 2025 Proposed Rule and 2026 Supplemental Proposed Rule line up with the findings of Sackett.

The Endangered Species Act (ESA) prohibits “take,” which the Act defines to include (among other things) “harm,” “harass,” “shoot,” “wound,” “capture,” and “kill.” A violation of the take prohibition can result in civil or criminal enforcement or an ESA citizen suit for an injunction and litigation costs. For decades, regulations issued by the US Fish and Wildlife Service and National Marine Fisheries Service defined one form of take—“harm”—to include significant habitat modification that actually kills or injures wildlife. The Services repealed the harm definition in July, and on September 14 issued internal memos addressing the scope of the ESA “take” prohibition. The July rule and September memos raise questions that extend well beyond removal of the regulatory definition of harm. Agencies still need to evaluate the effects of agency actions on listed species and designated critical habitat during ESA section 7 consultation—even if none of those effects constitute “take” under the Services’ current interpretation. But the critical question for project proponents and federal agencies going forward is whether incidental take coverage is available through an ESA section 7 incidental take statement or an ESA section 10 incidental take permit under the Services’ new reading.

Virginia remains at the center of the rapidly growing data center industry, with Northern Virginia representing the world’s largest data center market and significant growth occurring elsewhere in the Commonwealth. Against that backdrop, data center regulation was a hot topic during the 2026 Virginia General Assembly session. While the legislature imposed relatively few new requirements directly on data center developers or operators, several measures direct state agencies to study data center impacts or develop additional environmental requirements. 

The geologic sequestration of carbon dioxide (CO₂) is a billion-dollar industry and is only projected to grow over the next decade. The key environmental permit needed for these projects is an Underground Injection Control Class VI permit for the injection wells used for geological sequestration. While some states have obtained authority to issue Class VI permits (including, recently, Texas and West Virginia), in most states, the US EPA is the Class VI permitting agency. EPA has permitted 11 CO₂ storage projects since the inception of the Class VI program in 2010 and currently has over 100 Class VI permits under review. As EPA clears this backlog and ramps up its issuance of Class VI permits, we are likely to see an increase in challenges to these permits before the EPA Environmental Appeals Board (EAB), a process that is often new for Class VI operators. This is a short primer on what Class VI operators can expect if their permit is appealed to the EAB.

On July 3, 2026, the administration released its “2026 Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions.” Historically released twice per year, the unified agenda provides a snapshot of numerous regulatory proposals from across federal agencies, including their expected timeframes for finalization. The US Environmental Protection Agency’s share of the agenda includes multiple proposals under the Toxic Substances Control Act (TSCA) as well as proposals related to per- and polyfluoroalkyl substances (PFAS). That subset largely comprises proposals that appeared on the most recent agenda (“Spring 2025,” released in September 2025), although most have updated timeframes. While some proposals may be further from becoming final rules, several are expected in the near term. When final, these rules could have significant implications for the regulated community.

On August 18, 2026, the D.C. Circuit upheld EPA’s designation of PFOA and PFOS as hazardous substances under CERCLA. See Chamber of Commerce v. EPA, No. 24-1051 (D.C. Cir., Aug. 18, 2026). The court rejected industry challenges to EPA’s analysis of contamination, cleanup costs, and broader economic impacts. It held that EPA reasonably explained its decision in the face of uncertainty because CERCLA response actions are discretionary, contingent, and site-specific, with multiple procedural safeguards before liability attaches. Further discretionary review is available, but, unless and until review is sought, and the panel’s decision reversed or vacated, the designation remains in force.