The Nickel Report

In a decision issued on April 12, 2018, a Fourth Circuit panel held (2-1) that (1) even though a pipeline leak has been repaired and remediation is ongoing under the supervision of the state environmental agency, environmental groups have standing to sue the pipeline owner, and (2) plaintiffs’ allegation that groundwater continues to carry discharged pollutants to jurisdictional waters through a “direct hydrological connection” supports liability under the Clean Water Act.

Read the full report on PipelineLaw.com.

Two notable developments in the past few weeks signal potential changes ahead to the policies and timeframes for pipeline approvals, particularly natural gas pipelines under Federal Energy Regulatory Commission oversight. These developments reflect both the increased public scrutiny of the pipeline approval process seen in recent years and the emphasis placed by the current administration on expediting review and approval of major infrastructure projects, two factors that are in some tension with each other.

See the full report on PipelineLaw.com.

Recent press reports indicate that a cyber-attack disabled the third-party platform used by oil and gas pipeline company Energy Transfer Partners to exchange documents with other customers. Effects from the attack were largely confined because no other systems were impacted, including, most notably, industrial controls for critical infrastructure. However, the attack comes on the heels of a Federal Bureau of Investigation and Department of Homeland Security (“DHS”) alert warning of Russian attempts to use tactics including spearphishing, watering hole attacks, and credential gathering to target industrial control systems throughout critical infrastructure, as well as an indictment against Iranian nationals who used similar tactics to attack private, education, and government intuitions, including the Federal Energy Regulatory Commission (“FERC”). These incidents are raising questions about cybersecurity across the US pipeline network.

On March 12, 2018, the United States Court of Appeals for the Second Circuit affirmed a Federal Energy Regulatory Commission (FERC) order finding that delays by the New York Department of Environmental Conservation (NYDEC) in reviewing Millennium Pipeline Company’s application for water quality certification constituted waiver of NYDEC’s authority under the Clean Water Act (CWA).

Read the full report on PipelineLaw.com.

Earlier this month, the United States House of Representatives Committee on Science, Space, and Technology published a staff report entitled “Russian Attempts to Influence U.S. Domestic Energy Markets by Exploiting Social Media.” The report is the result of the Committee’s investigation into Russian efforts to influence U.S. energy markets.

See the full report on PipelineLaw.com.

EP Association Updating International Environmental Standards Following Admission of New Member Financial Institutions from China, Japan, Korea, Sweden and Taiwan

Following its annual meeting in São Paulo, Brazil, the Equator Principles Association (EP Association) announced plans to update its globally recognized risk management framework to reflect significant changes to the manner in which environmental and social impacts and risk mitigation strategies are recognized and managed by financial institutions, corporations, governments, non-governmental organizations (NGOs) and society.

This week, the U.S. District Court for the Middle District of Louisiana granted a preliminary injunction, halting construction of the $750 million Bayou Bridge Pipeline. Judge Shelly D. Dick concluded that the U.S. Army Corps of Engineers, in authorizing the project, did not provide sufficient explanation for how the proposed off-site mitigation would compensate for the loss of wetlands impacted by construction. In addition, the Court found the Corps’ environmental analysis failed to sufficiently consider and address historical impacts to wetlands from similarly situated ...

While still early in the new administration, emerging enforcement trends are beginning to indicate that EPA and the U.S. Department of Justice (DOJ) will continue to pursue cases involving fraud in the Renewable Fuel Standard (RFS) program. We noted last summer that EPA and DOJ have pursued numerous enforcement actions against renewable fuel producers and importers that generated invalid Renewable Identification Numbers (RINs), which are the “currency” of the RFS program. Although it is reasonable to assume the vast majority of program participants comply with EPA’s regulations, the program has suffered from high profile cases of fraud and abuse requiring federal enforcement, including criminal prosecutions. Recent cases and statements by DOJ and EPA officials show that federal prosecution of RFS fraud, particularly that involving multi-state schemes, will continue. And RFS fraud cases may even occupy a larger portion of EPA’s enforcement bandwidth as EPA gives greater deference to states in enforcement of delegated programs like the Clean Water Act, Clean Air Act, and Resource Conservation and Recovery Act.

There are 7.6 billion people on the planet today. By 2050, there are projected to be 9.7 billion—or put another way, in just thirty years we will add the equivalent population of seven United States. The world’s most credible energy forecasting entities predict a global increase over that time not only in demand for energy, but demand for fossil energy. Even with steady increases in energy efficiency and a massive increase in renewables, consumption of fossil fuels will grow. That means carbon dioxide emissions won’t be reduced significantly without some technology to do so.

As part of the Bipartisan Budget Act of 2018, Congress significantly increased and extended the Section 45Q tax credit for sequestration of carbon oxides. This has been a top priority of carbon capture and sequestration (CCS) supporters for several years.

CCS is considered to be essential to global efforts to reduce CO₂ emissions. The world’s most respected analysis organizations all estimate that fossil fuel use will increase in the coming decades, even with energy efficiency improvements and vast increases in renewable energy. 

On Monday, the Trump Administration released an ambitious legislative proposal that aims to stimulate $1.5 trillion in new infrastructure investment over the next 10 years, expedite the federal permitting process, address rural infrastructure needs, and prepare the American workforce for the future. To accomplish those goals, the proposal includes aggressive recommendations to streamline key federal environmental review and permitting processes for infrastructure projects. In addition to traditional forms of infrastructure, such as roads, bridges, and airports, the Legislative Outline for Rebuilding Infrastructure in America addresses drinking and wastewater systems, energy infrastructure, veterans’ hospitals, and Brownfields and Superfund sites.

Federal agencies that authorize or permit large infrastructure projects, like interstate natural gas pipelines, are often subject to the requirements of the National Environmental Policy Act (NEPA), and environmental organizations frequently rely on NEPA to challenge a project. The D.C. Circuit recently struck down a decision by the Federal Energy Regulatory Commission (FERC) to approve the construction and operation of three interstate natural gas pipelines because the Court found defects in FERC’s NEPA analysis. The court’s decision to vacate FERC’s authorization now threatens to shut down the pipelines, including the Sabal Trail pipeline currently supplying natural gas to newly constructed power plants in Florida.

On January 31, 2018, in proceedings to condemn easements for the Mountain Valley Pipeline project, the US District Court for the Western District of Virginia ruled that the pipeline company’s preliminary injunction motions for pretrial possession of the easements would be granted only if it appraised each of the nearly 300 properties at issue.

Read the full report on PipelineLaw.com.

The House Energy & Commerce Committee is considering revising the Public Utility Regulatory Policies Act (PURPA), a 1978 law enacted in the wake of the 1973 oil embargo to promote energy conservation and production by domestic alternative energy sources, including renewables. Why is Congress considering changing it, and what would the proposed revisions do?

On January 11, 2018, the Federal Energy Regulatory Commission (FERC) denied Constitution Pipeline Company, LLC’s Petition for a Declaratory Order that New York had waived its ability to act under section 401 of the Clean Water Act (CWA) by failing to grant or deny Constitution’s application for a section 401 certification within a “reasonable period of time.” See In re Constitution Pipeline Co., LLC, 162 FERC ¶ 61,014 (Jan. 11, 2018). The decision is another in a sequence of decisions from FERC and the federal courts of appeals concerning the time period for States to act under ...

The Federal Energy Regulatory Commission (FERC or the Commission) announced last month that it will review its policies governing the certification process for natural gas pipelines. The announcement was made by FERC Chairman Kevin J. McIntyre on December 21, 2017, in fulfillment of a pledge that he made during his Senate confirmation hearing in September 2017. The format and scope of the review are still being determined.

Read the full report on PipelineLaw.com.

On November 16, 2017, the D.C. Circuit heard oral argument in the cases challenging EPA’s 2012 rule allowing states to rely on compliance with the Cross-State Air Pollution Rule (CSAPR) to satisfy electric generating units’ “best available retrofit technology” (BART) requirements for emissions of nitrogen oxides and sulfur dioxide under the Clean Air Act (CAA). The cases are UARG v. EPA, No. 12-1342­ and consolidated cases (D.C. Cir.).

When Congress enacted the Endangered Species Act (“ESA”) to protect and recover imperiled species and the ecosystems on which they depend, it emphasized the need to strike the proper balance between protecting species and allowing productive human activities. Widespread concern that this balance has been lost has sparked movement within the Trump Administration and Congress to improve the ESA and its implementation by the US Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) (together, the Services). Many of these reform efforts are focused on ensuring earlier and increased involvement of states and other regulated entities and on improving the listing/delisting process to make certain that the extraordinary protections of the ESA are imposed, where warranted, and lifted, as appropriate.

Energy ministers from participating Carbon Sequestration Leadership Forum (CSLF) countries will meet to discuss carbon capture and sequestration (CCS) issues in Abu Dhabi December 3-7. Below are some suggestions for a US position heading into the meeting. Before listing them, perhaps a bit of background on the CSLF and CCS is in order.

The CSLF was founded in 2003 with a mission to promote development and deployment of CCS technologies. It describes itself as “a Ministerial-level international climate change initiative that is focused on the development of improved cost-effective technologies for . . . CCS. It also promotes awareness and champions legal, regulatory, financial, and institutional environments conducive to such technologies.” Participants currently include 25 countries plus the European Union. It is unique in bringing together energy ministers and various stakeholders to discuss issues in open dialogue.

On November 22, 2017, Environmental Protection Agency (EPA) Administrator Pruitt signed a notice denying petitions to change the “point of obligation” under the Renewable Fuel Standard (RFS) program away from refiners and importers.  The notice, which was sent to the Federal Register for publication, provides a broad overview of EPA objections to the petitions.  EPA also posted on its website a final decision document explaining its denial in detail.

After a string of highly publicized attacks on energy pipelines in different areas of the country, several Congressmen addressed a letter to US Attorney General Jeff Sessions last month, asking that the United States Department of Justice (DOJ) respond to several questions concerning the ability and intent of the DOJ to investigate and prosecute criminal activity against energy infrastructure at the federal level. The letter also asks for DOJ clarification on whether attacks against the nation’s energy infrastructure fall within the DOJ’s understanding of 18 U.S.C ...

Once large infrastructure projects, such as oil and natural gas pipelines, receive federal government approval, they are often the target of legal challenges from opposition groups. Opponents repeatedly argue that the environmental review, pursuant to the National Environmental Policy Act (NEPA), was insufficient. If a court finds deficiencies in the government’s NEPA analysis, can a court halt construction or cease operations even after years of project design, permit approvals at all levels of government, and tens of millions of dollars in investment? This question ...

On August 23, the Department of Energy (DOE) released a study entitled “Staff Report to the Secretary on Energy Markets and Reliability.” This is the so-called “DOE grid study” that Secretary of Energy Rick Perry ordered his chief of staff Brian McCormack to produce in an April 14 memorandum, noting that “Over the last few years...grid experts have expressed concerns about the erosion of critical baseload resources.”

These concerns have been simmering for several years. As the US Environmental Protection Agency was developing the rule that became the Mercury and Air Toxics Standard, the Federal Energy Regulatory Commission (FERC)—prompted by then-Senate Energy and Natural Resources Committee Ranking Republican Lisa Murkowski—held a multi-day meeting to evaluate potential electric reliability impacts from anticipated closings of coal-fired power plants prompted by the rule.

On August 15, 2017, the US Court of Appeals for the DC Circuit (DC Circuit) issued its decision in Sierra Club v. Department of Energy (Freeport),[1] denying Sierra Club’s challenge to the Department of Energy’s (DOE) order authorizing export under the Natural Gas Act of 1938 (NGA) from the proposed Freeport Liquefied Natural Gas (LNG) Terminal in Freeport, Texas. The decision marks yet another victory in a string of successes for supporters of LNG export.

Several presidential administrations have sought to shorten the lengthy process for obtaining federal authorizations and permits, with particular attention on infrastructure projects that usually require multiple federal permits with accompanying environmental reviews. Despite consistent interest in improving this process, delays persist, in part because of how courts have interpreted the level of analysis required during these environmental reviews. This past Tuesday, President Trump issued a new Executive Order (EO) 13807: “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects.” As this EO is implemented, the big question is: How much relief can this or any other executive action provide?

Increased use of renewable fuels is a core element of our country’s quest for energy independence and has also been used to incentivize private efforts to reduce greenhouse gas emissions. Now more than ten years old, the Renewable Fuel Standard (RFS) program has helped make ethanol made from sugarcane and compressed natural gas produced from sludge at municipal wastewater treatment facilities common household concepts. While the vast majority of renewable fuel producers are compliant, the program has suffered from high-profile cases of fraud and abuse requiring federal enforcement, including criminal prosecutions.

In a closely watched case, the United States Court of Appeals for the D.C. Circuit last week dismissed an interstate natural gas pipeline company’s challenge to the State of New York’s delay in issuing a water quality certification under section 401 of the federal Clean Water Act (CWA) for the Millennium pipeline project. While the company requested a ruling that the state had waived its right to make a decision on water quality certification for the project, the court decided to dismiss the action – holding that even if the state agency’s lengthy delays did constitute a waiver under CWA section 401, there was no cognizable injury to the company that would give it standing to challenge the delays in court. Rather, according to the court, the remedy is for the company to present evidence of waiver directly to the Federal Energy Regulatory Commission (FERC) to seek authorization to begin construction of the project. The case is one of several pending across the country that involve a state’s authority to issue, deny, or waive a CWA water quality certification for interstate natural gas pipeline projects.

Despite oil already flowing through the pipeline, federal litigation involving the controversial Dakota Access Pipeline (DAPL) took another turn last week when partial summary judgment was granted to tribes challenging the adequacy of the US Army Corps of Engineers’ review of DAPL under the National Environmental Policy Act (NEPA) and other statutes. Two tribes, the Standing Rock Sioux Tribe and the Cheyenne River Sioux Tribe, filed suit in July 2016 attempting to block construction of the last remaining segment and operation of DAPL. As sometimes is the case, agency approvals came faster than the court’s opinion, and without a stay of proceedings DAPL began operating in early June 2017. Having granted partial summary judgment, the court did not require pipeline operations to cease, instead delaying the question of an appropriate remedy until after further briefing by the parties.

Just before President Trump announced his decision to withdraw from the Paris Agreement on Climate Change, California is moving ahead with new greenhouse gas (GHG) regulations, making good on its commitment to continue its path regardless of what goes on in Washington, DC. This week, the Board of the Bay Area Air Quality Management District (BAAQMD) held a special meeting to consider a controversial new regulation targeting oil refineries. If adopted, as planned at the June 21, 2017, Board public hearing, Regulation 12, Rule 16:  Petroleum Refining Facility-Wide Emissions Limits (Rule 12-16) would establish first-of-its-kind, refinery-specific, facility-wide caps on emissions of greenhouse gases (GHG). The proposed caps limit refinery emissions to seven percent above recent operating levels.

In the latest of a series of moves reflecting the state’s intention to double down on its climate change agenda in the wake of President Trump’s inauguration, the California Air Resources Board (CARB) recently approved a new regulation aimed at curbing methane emissions from oil and gas operations. This measure, characterized by CARB as “the most comprehensive of its kind in the country,” comes on the heels of several actions recently announced by the United States Environmental Protection Agency (US EPA) to reassess the climate change programs of the previous administration, specifically those targeted at oil and gas sector emissions.

President Trump made good on one of his key campaign promises on Tuesday, signing an executive order (E.O.) titled Promoting Energy Independence and Economic Growth. The long-awaited E.O., which was published in the Federal Register today (82 Fed. Reg. 16093), targets the Obama administration’s key climate policies, including regulations affecting power plants and oil and gas production facilities. More broadly, the E.O. affirms the Trump administration’s priority of ensuring domestically produced energy and economic growth.

You’ve likely heard that just hours after the inauguration, White House Chief of Staff Reince Priebus issued a Memorandum for the Heads of Executive Departments and Agencies captioned “Regulatory Freeze Pending Review.” The so-called Regulatory Freeze Memo sought to freeze midnight actions by the Obama administration. In response to President Trump’s freeze actions and expected regulatory reforms, California lawmakers are seeking to issue their own “freeze” to ensure regulations in place just before the transition remain effective in California. On top of that, California legislators have been introducing a series of bills designed to “insulate the state from dangerous rollbacks in federal environmental regulations and public health protections,” including:

• SB 49, entitled The California Environmental, Public Health, and Workers Defense Act of 2017, related to retaining all pre-Trump environmental regulations.
• AB 1646, related to website posting of petroleum refinery risk management plans (RMP) on public agency websites and establishment of emergency notification equipment.
• AB 1647, related to air monitoring for petroleum refineries.
• AB 1648, related to increasing CalOSHA’s refinery inspection resources.
• AB 1649, related to codification of Governor Brown’s Refinery Task Force.
• SB 584, related to speeding up the RPS 50 percent renewable goal by five years and setting a new 100 percent renewable goal at 2045.

President Trump has already issued several executive memoranda directing federal agencies to expedite environmental reviews and approvals for all infrastructure projects (as noted in our post yesterday), with emphasis on high-priority matters, such as pipeline construction and an aim to boost steel manufacturing in the United States.  Specifically, he seeks to renew and expedite the approval of two oil pipeline construction projects, the Keystone XL Pipeline (Keystone) and the Dakota Access Pipeline (DAPL).  He has further directed the Commerce Department to prepare a plan under which all new and repaired pipe used in the United States would be manufactured stateside.

Yesterday President Trump signed several Executive Orders (EOs) and Presidential Memoranda designed to speed environmental permitting and reviews. Among them is an EO to “Expedite Reviews and Approvals for High Priority Infrastructure Projects.” While past administrations have recognized the costs and delays of federal environmental permitting and encouraged timely decisions by regulatory agencies (e.g., EOs 13,212, 13,274 and EO 13,604), President Trump’s EO reflects a new sense of determination by the White House to move important infrastructure projects forward. The EO reflects a recognition that major infrastructure projects trigger an array of overlapping environmental and natural resource laws and requirements.

Just before Christmas, the U.S. Environmental Protection Agency (EPA) released controversial regulations, titled Accidental Release Prevention Requirements: Risk Management Programs under the Clean Air Act; Prepublication Final Rule, that EPA states will “modernize” the Clean Air Act Section 112(r)(7) Risk Management Program (RMP) regulations. These 1990s-era regulations, covering about 12,500 facilities across the country, require that facilities storing certain amounts of specified chemicals develop risk management plans to prevent the accidental release of those substances into the air and mitigate impacts of accidental releases that do occur. EPA initiated these RMP rule revisions under the directive of President Obama’s August 1, 2013, Executive Order (EO) 13650, Improving Chemical Facility Safety and Security. After proposal on March 14, 2016, EPA received more than 44,000 comments, making rule issuance in just over six months’ time remarkable, especially given that the final rule and response to comments total about 600 pages.

This summer has been an eventful time for EPA’s regional haze program. In July, the Fifth Circuit issued an important decision to stay EPA’s controversial Texas and Oklahoma regional haze rule and to retain jurisdiction over the litigation on that rule, denying an EPA request that the litigation be transferred to the DC Circuit. While that litigation played out in the spring of this year, EPA proposed major revisions to the regional haze rules­ that will shape the next round of the program’s implementation.

There has been much controversy in recent weeks surrounding the Dakota Access Pipeline (DAPL), a 1,172-mile line proposed to carry crude oil from North Dakota to Illinois. Although only 3 percent of the DAPL requires federal approval, much of the pipeline has already been constructed In particular, the DAPL has raised issues regarding the scope and adequacy of the US Army Corps of Engineers’ (Corps’) consultation with federal tribes in authorizing segments of oil and gas pipelines crossing federal waters, and has caused the administration to consider reforms for how tribes weigh in on infrastructure reviews.