The Nickel Report

Agency guidance will be subject to certain standards and procedures under a proposed rule published by EPA in the Federal Register on May 22, 2020.  According to EPA, the proposed rule is “intended to increase the transparency of EPA’s guidance practices and improve the process used to manage EPA guidance documents.”  EPA will accept written comments on the proposed rule until June 22, 2020.

On May 21, 2020, the Federal Energy Regulatory Commission (“FERC”) issued Opinion No. 569-A1 – the latest step in the recent evolution of FERC’s policies governing the determination of public utilities’ base return on equity (“ROE”) under Section 206 of the Federal Power Act (“FPA”). In recent years, FERC has been revising its long-standing policies when addressing complaints challenging the base ROEs of transmission-owning, FERC-jurisdictional public utilities in the ISO New England, Inc. (“ISO-NE”) and Midcontinent Independent System Operator (“MISO”) regions. In particular, FERC has modified its policies regarding the use of various models to estimate ROE to account for various changes in capital market conditions since the 2008-09 recession.

Last week, the U.S. Environmental Protection Agency (“EPA”) issued its final report addressing the input received by various stakeholders relating to the management of wastewater from the oil and gas industry.  The report entitled Summary of Input on Oil and Gas Extraction Wastewater Management Practices Under the Clean Water Act is the culmination of a stakeholder engagement process that began in 2018 (“Final Report”) [1].

On May 19, 2020, President Trump issued an Executive Order (EO) intended to combat the unprecedented effect COVID-19 has had on the American economy, by directing agencies to remove or ease regulatory barriers to spur economic growth.  In general, the EO directs agencies to ease regulatory and enforcement burdens that may inhibit economic recovery, provide guidance on what the law requires, recognize the efforts of regulated industries to comply with the law, and ensure fairness in administrative enforcement and adjudication. Perhaps most notably, the EO is written broadly enough that agencies may look beyond COVID-19-related impacts when considering how to implement the EO.

The largest market for CO₂ captured from industrial sources through carbon capture utilization and storage (CCUS) is enhanced oil recovery (EOR), using the CO₂ to produce oil.  Captured CO₂ can be used for cement, algae production, and other uses, but EOR has vast potential.  Moreover, it has a nearly 50-year track record in the US, where it was pioneered.  Carbon dioxide injected into oil formations becomes permanently stored as part of the process.

Yesterday, the Railroad Commission of Texas (“RRC”) voted by a 2-1 margin to dismiss the request that had been filed in late March of this year by two producers to determine reasonable market demand for oil and the need for curtailment of oil production in Texas.[i]

The California State Water Resources Control Board (“State Board”) is poised to become “the first regulatory agency in the world to specifically define ‘Microplastics in Drinking Water.’”[1] In September 2018, the California legislature adopted Health and Safety Code section 116376 via Senate Bill No. 1422, adding microplastics regulations to California’s Safe Drinking Water Act (“SDWA”).^[2] This provision requires the State Board to adopt a definition for Microplastics in Drinking Water by July 1, 2020. Additionally, before July 1, 2021, the State Board must: (1) adopt a standard methodology for testing drinking water for microplastics; (2) adopt a requirement for four years of testing and reporting of microplastics in drinking water, including public disclosure of the results; (3) consider issuing a notification level or other guidance to help consumers interpret the testing results; and (4) accredit laboratories in California to analyze for microplastics. The State Board can implement these requirements through adoption of a Policy Handbook, rather than through the formal rulemaking process.

Under the requirements of Health and Safety Code section 116376, water suppliers in California will be the first in the nation to test for microplastics in drinking water.

The Commonwealth of Massachusetts is pursuing various regulatory actions to implement state policy to reduce greenhouse gas emissions from electric generation resources. As we previously reported, the Commonwealth is planning to implement a Clean Peak Standard (“CPS”) program this summer, which is designed to have renewable electricity generation resources “show up at the right time” on the grid to coincide with times of peak demand. In a complementary action, the Commonwealth has now doubled the size of its Solar Massachusetts Renewable Target (“SMART”) incentive program, along with new  performance standards for the siting of these renewable generating resources. While these changes to the SMART program were adopted as emergency regulations—making them effective immediately—the Commonwealth will go through the notice and comment rulemaking process over the next few months to provide for continued input from stakeholders on the new regulations and associated guidance.