The Nickel Report

Earlier this week, July 4, 2017, was the nation’s 241st birthday. In Washington, DC, and in countless other places across the country, the event was celebrated with dazzling fireworks displays. My childhood days are long behind me. But, a good fireworks display still evokes awe and gives me goose bumps. Although fireworks are synonymous with the 4th of July, Americans are not alone in their appreciation of fireworks. All across the globe—from Europe, to Asia, to South America and back again—fireworks are a universal symbol of celebration.

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.

Last year Congress directed the US Environmental Protection Agency (EPA) to review new chemicals by a new process. A major question for manufacturers and consumers is whether EPA can do this within a reasonable time period without unnecessarily getting in the way of innovation.

Since enactment of the Lautenberg Act amending the Toxic Substances Control Act (TSCA) in June 2016, the pace of EPA’s review of new chemicals has slowed dramatically. While EPA’s pre-enactment new chemicals program handled around 1,000 premanufacture notifications (PMNs) annually, EPA estimates that a backlog of about 600 new chemicals had built up by January 2017, which created a substantial concern in the regulated community.

Today, EPA and the Corps released a highly anticipated proposal to rescind the Obama Administration’s controversial 2015 Clean Water Rule. The June 2015 rule, which has been stayed since October 2015, would broadly define the scope of “waters of the U.S.” (WOTUS) subject to federal regulation and permitting requirements under the CWA. The proposed rescission is the first step of a two-step process to repeal and replace the 2015 Clean Water Rule with a new WOTUS rule. With today’s proposal, EPA and the Corps are proposing to officially rescind the 2015 rule and continue to implement the regulatory definition in place prior to the 2015 rule while they work to promulgate a new rule to define WOTUS.

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.

In a surprising turn of events, the Board of the Bay Area Air Quality Management District (BAAQMD) voted to delay adoption of first-of-its-kind caps on refinery greenhouse gas (GHG) emissions. As we reported just three weeks ago, the Board was slated to adopt Regulation 12, Rule 16: Petroleum Refining Facility-Wide Emissions Limits (Rule 12-16), a regulation that would establish refinery-specific, facility-wide caps on GHG emissions from the five Bay Area refineries and three support facilities.  At a public hearing last week, in what initially looked to be a sure thing, the Board pivoted.  Signaling unease about legal vulnerabilities surrounding procedure, the Board voted to delay adoption of the regulation until at least September 2017.

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.

The Administration’s proposed 30 percent reduction to EPA’s operating budget has raised many questions.  Will it happen?  How would it impact operations?  Are all EPA programs equally affected?   The final answers will come at the end of a lengthy congressional process, but last week’s hearing provided clues that any final cuts could be significantly less than the Administration’s request.  But first, it’s worth a quick review of the federal budget process.

About to turn 100, the Migratory Bird Treaty Act of 1918 (MBTA) is among the oldest wildlife (or any environmental) laws. Yet major questions persist whether the Act applies to the unintended “take” of birds, and how to avoid criminal liability under the Act for many common and beneficial commercial activities.

A new policy directive issued earlier this week by the Department of Justice (Justice) has raised concern among regulated industry that the availability of Supplemental Environmental Projects (SEPs) in civil settlements could be severely reduced, or even largely eliminated.  If the directive is applied to restrict the availability of SEPs, it would remove a useful, and at times powerful, tool routinely used by the regulated community to negotiate acceptable settlement agreements in civil enforcement actions. It could also eliminate tens of millions of dollars of annual funding of such projects—which typically benefit local communities or address niche environmental issues—currently provided through the use of SEPs in consent decrees.  Because applicable policies preclude Justice from requiring parties to include SEPs in settlements, it is difficult to identify any upside in any potential narrowing or elimination of SEPs as an optional tool to assist in the resolution of civil environmental enforcement actions.