Trump NEPA Initiatives to Expedite Energy Infrastructure: “One Federal Decision”

One of President Trump’s first actions was to issue Executive Order 13766, “Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects” (Jan. 24, 2017), directing the Council on Environmental Quality (“CEQ”) to begin efforts to identify high priority infrastructure projects and expedite federal environmental reviews required by the National Environmental Policy Act (“NEPA”). This was followed by the more detailed EO 13807, “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects” (Aug. 15, 2017) describing the “One Federal Decision” (“OFD”) policy. The CEQ, the Department of the Interior (“DOI”) and the Bureau of Land Management (“BLM”) have taken several actions to implement this presidential OFD direction.

The challenge the EO is trying to address is the integration and timely coordination of the multiple federal agencies, federal laws and permit decisions that are triggered by a major infrastructure project. Expediting NEPA is not new; Congress and prior administrations have addressed the need for permit streamlining for at least the last 15 years. For example, in 2001, President George W. Bush created a NEPA Task Force to modernize agency regulations implementing NEPA. In 2004, BLM issued a “cooperating agency” rule directing that BLM invite state, local and tribal governments to participate as cooperating agencies in the Bureau’s NEPA processes. In 2003, as part of the President’s Healthy Forest Initiative, bi-partisan legislation, the Healthy Forest Restoration Act, was enacted to expedite NEPA and court review of hazardous fuels reduction projects. Congress also created expedited NEPA for airports (Vision 100 Act of 2003), for highway and transit construction (SAFETEA-LU Act of 2005), and for oil and gas and LNG terminals (Energy Policy Act of 2005).

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Paris Agreement Exit: Who Holds the Real Power?

President Trump announced on June 1 that the United States is withdrawing from the Paris Agreement. The announcement follows months of uncertainty about whether President Trump would fulfill his campaign pledge to withdraw U.S. participation in the deal (which was signed by 195 countries with only two countries in opposition--Nicaragua (because it wasn’t stringent enough) and Syria).

According to the President, the decision is necessary to protect the U.S. economy from burdensome emissions restrictions and foreign interference in U.S. energy policy:

In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord . . .[s]o we're getting out, but we will start to negotiate, and we will see whether we can make a deal that’s fair.

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Wyoming Wolves De-Listed Under the Endangered Species Act

On March 3, 2017, the D.C. Circuit reinstated the rule promulgated by the United States Fish and Wildlife Service (“FWS”) in 2012 to remove the Northern Rocky Mountain gray wolf in Wyoming from the endangered species list under the Endangered Species Act (“ESA”). Defenders of Wildlife v. Zinke, --F.3d.--, 2017 WL 836089 (D.C. Cir. Mar. 3, 2017).  The FWS has been trying to turn over the management of the wolves in Wyoming to the state since 2008, but has faced several reversals at the hands of the courts.  This decision reverses a 2014 ruling of the U.S. District Court, District of Columbia that vacated the FWS 2012 rule delisting the gray wolf.

Although the D.C. District Court agreed with the FWS finding that the species had recovered and did not overturn FWS’ determination that the gray wolf is not endangered or threatened within a significant portion of its range, it found fault with the state plan to guarantee the required baseline wolf population.  The District Court denied the delisting of the gray wolf because FWS did not require Wyoming to meet a specific numeric buffer above the baseline population but instead relied upon representations in a “non-binding” Addendum to its wolf management plan.  On appeal the D.C. Circuit disagreed, and held that nothing in the ESA demands that level of certainty.  The Court stated that:

[FWS’] decision to delist in the absence of legal certainty is compatible with the ESA’s requirement for monitoring of the species after delisting ‘for at least five years' and its emergency provisions authorizing the [FWS] to take immediate action to ensure the delisted species does not become threatened or endangered again.

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The Uncertain Future of the Clean Power Plan under the Trump Administration

Since the Obama Administration announced its implementation in August of 2015, the Clean Power Plan (“CPP”) has managed to survive despite the many challenges brought against it. The Environmental Protection Agency (the “EPA”) rule was the centerpiece of the Obama Administration’s climate change plan and seeks to reduce carbon pollution from power plants by 32% from baseline 2005 levels by 2030 by setting reduction goals for each state. However, the CPP has encountered many legal roadblocks, and, with the election of Donald Trump and a Republican Congress, its future appears to be in doubt.

On February 9, 2016, the United States Supreme Court ordered the Obama Administration to stay any efforts to implement the CPP until the completion of all legal challenges to the same in a 5-4 ruling. While the Court stay of the CPP is not final, it placed the Obama Administration’s environmental agenda in peril. However, the death of Justice Scalia in February appeared to put the CPP in a much more stable position. The sitting panel of the United States Court of Appeals for the District of Columbia Circuit, which will decide the challenge, is composed of a majority of judges appointed by Democratic Presidents that would likely uphold the regulations. A majority of the Supreme Court would then be needed to overturn the Supreme Court’s decision. Prior to the election, that seemed unlikely, as the Court was deadlocked at 4-4. Oral arguments in case against the CPP were heard in the D.C. District Court on September 27, 2016, but no final ruling has been issued.

With the recent election of Mr. Trump to the presidency, however, the CPP will likely be rendered completely ineffective. Mr. Trump has stated that he believes that climate change is a hoax, and, in a May 2016 speech to the North Dakota Petroleum Council, he said that he would “rescind” the CPP in his first 100 days in office. Further, he has appointed Myron Ebell, the Director of Global Warming and International Policy at the Competitive Enterprise Institute, as the head of his EPA transition efforts. Mr. Ebell is a well-known skeptic of climate change and is a vocal opponent of the CPP.

In order to limit or block the CPP, the Trump Administration has several options:

• As a far-reaching option, the Trump Administration, working with the Republican-controlled Congress, could author and pass a bill amending the Clean Air Act that would reduce or eliminate the power of the EPA to regulate carbon emissions. This would effectively kill the CPP. Such a bill would be subject to a Democratic filibuster in the Senate; however, Senate Republicans have the constitutional option of removing or substantially limiting the filibuster. In the alternative, the Republican Congress may attempt to attach a rule reducing the regulation of carbon emissions to a more popular bill as a compromise with the Democrats to avoid a battle over the filibuster.

• If the D.C. District Court does not issue its decision before Mr. Trump’s inauguration, the Trump Administration’s newly-appointed Attorney General could move for a “voluntary remand” as discussed in SKF USA, Inc. v. United States, 254 F.3d 1022 (Fed Cir. 2001), whereby the agency, in this case the EPA, can ask that the court remand the action to the agency to conduct additional proceedings in the underlying case. The Trump Administration then could modify the CPP at the agency level to weaken or remove its more stringent regulatory requirements.

• If the D.C. District Court does uphold the CPP prior to January 20, 2017, the Trump Administration could require the EPA to re-write the CPP. The EPA would then need to follow the full necessary rulemaking procedures, including notice, drafts of the rule, and public comment on the same, which would typically take at least 12 to 15 months.

• The Trump Administration, through the EPA, could also decline to strictly enforce the CPP regulations and instead give states leeway to create very weak implementation plans.

If the Trump Administration is successful in weakening or overturning the CPP, various states, such as Colorado and California, will likely move ahead with their state-specific plans, while other states, such as Texas and West Virginia, may abandon their plans entirely. Moreover, economic factors such as the low price of natural gas and the continuing growth and efficiency of solar and wind energy will likely continue the decline in the use of coal-fed power plants. Regardless, the elimination of the CPP will slow the de-carbonization of the energy sector, and the Trump Administration’s actions on the CPP will likely be indicative of the coming political battles over energy production during the next four years.

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Upon the Death of Justice Scalia, the Clean Power Plan Gains New Life

The Obama Administration, through the Environmental Protection Agency (“EPA”), announced the implementation of the Clean Power Plan (“CPP”) in August of 2015. The CPP has the stated purpose of “establishing guidelines for states to follow in developing plans to reduce greenhouse gas emissions from fossil fuel-fired electric generating units,” or, in layman’s terms, to cut carbon emissions from power plants. At that time, fifteen coal-reliant states filed for an emergency stay of the CPP with the U.S. Court of Appeals for the District of Columbia Circuit. The court dismissed the petition on September 9, 2015, stating that it was untimely because the final regulation had not yet been properly published. On January 21, 2016, the D. C. Circuit Court denied the requested stay on its merits. On January 26, 2016, officials of twenty-nine states appealed to the U.S. Supreme Court, requesting a stay pending the resolution of litigation regarding the regulation. The appellants argued that the CPP provided the EPA with too much power, which would result in the EPA pushing for the use of wind and solar at the expense of older energy-generating plants that burn coal or oil.

In a 5-4 ruling on February 9, 2016, the Supreme Court ordered the Obama Administration to stay any efforts to implement the CPP until the completion of all legal challenges to the same. This stay will remain in place while courts consider more than 30 lawsuits pertinent to the CPP. While the Supreme Court stay of the CPP is not final, it placed the Obama administration’s environmental agenda in peril. Following the ruling, the White House expressed its disappointment as follows:

We disagree with the Supreme Court's decision to stay the Clean Power Plan while litigation proceeds. The Clean Power Plan is based on a strong legal and technical foundation, gives states the time and flexibility they need to develop tailored, cost-effective plans to reduce their emissions, and will deliver better air quality, improved public health, clean energy investment and jobs across the country, and major progress in our efforts to confront the risks posed by climate change.

Even if the rule is eventually upheld, the stay will adversely affect compliance timelines set forth for states and utilities. The CPP requires states to submit implementation plans as early as this year (with possible extensions to 2018) in order to reduce greenhouse gas emissions from existing power plants by 2022. This would result in carbon emissions reductions of 32 percent from 2005 levels by 2030.

The EPA enacted the CPP under a section of the Clean Air Act that has been rarely used since it was passed in 1970. Justice Antonin Scalia, writing for the majority, noted that “[w]hen an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism.” The stay indicated that the conservative majority of the Court foresaw a reasonably high likelihood that the challengers to the CPP would probably win their case, and that the denial of the stay would result in irreparable voluntarily harm.

However, the recent death of Justice Scalia puts the CPP in a much more stable position than it would have been otherwise. The sitting panel of the D.C. District Court, which will decide the challenge, is composed of a majority of judges appointed by Democratic Presidents that would likely uphold the regulations. A majority of the Supreme Court would then be needed to overturn the D.C. Circuit Court’s decision. This seems unlikely, as the Court as it stands now is deadlocked at 4-4. If the Obama Administration is able to fill the vacancy on the Court or if a Democratic successor to President Obama is elected, the Court would likely uphold the CPP by a 5-4 vote. On March 3, 2016, Chief Justice John Roberts refused a similar request by 20 states to stay an EPA regulation limiting mercury and other toxins from power plants as it undergoes a lower court challenge, a move that some pundits claim evidences a shift of power on the Court.

In any regard, the EPA plans on pushing forward with the implementation of the CPP. At a recent conference in Houston, EPA Administrator Gina McCarthy expressed confidence that the CPP would survive these on-going legal challenges, and she pledged that the EPA would, in the meantime, continue to help states that wanted to continue to implement the CPP by choice. In her words, “[t]he stay doesn’t preclude the EPA from continuing to make progress on climate change. Are we going to respect the decision of the Supreme Court? You bet we are. But that doesn’t mean we won’t continue to support any state that voluntarily wants to move forward.”

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Early State Challenges to the Clean Power Plan Fall Short of Stay

On August 3, 2015, the Obama Administration through the Environmental Protection Agency (“EPA”) announced the implementation of the Clean Power Plan (“CPP”) which has the stated purpose of “establishing guidelines for states to follow in developing plans to reduce greenhouse gas emissions from fossil fuel-fired electric generating units,” or, in layman’s terms, to cut carbon emissions from power plants. The Final Rule addresses both new and existing power plants. Through the CPP, the EPA has set forth (1) carbon dioxide performance rates for fossil fuel-fired electric utility steam generating units and stationary combustion turbines; (2) state-specific carbon dioxide goals based on past carbon dioxide performance rates; and (3) guidelines for the development and implementation of state or multi-state plans that establish standards and other measures to implement these performance rates. http://www2.epa.gov/cleanpowerplan

The ultimate goal of the CPP is to reduce carbon pollution from power plants by 32% from baseline 2005 levels by 2030, and sets reduction goals for each state. In determining these reduction goals, the EPA considered each state’s current carbon dioxide emissions and fossil fuel generations. Individual state plans are due in June 2017 and multi-state plans are due in June 2018. States must begin complying with their plans by 2022, with reductions phased through a “glide path” to 2030. For western state targets see 8/5/15 post http://goo.gl/2desV2

In issuing the rule, the Obama Administration cited environmental and health effects of carbon dioxide, a primary greenhouse gas. According to the EPA, electric power facilities accounted for almost a third of greenhouse gas emissions in the U.S. in 2013. Options for meeting the rule presented by the EPA include increased reliance on alternative energy sources, transitioning from coal to natural gas, and increased energy efficiency.

However, many energy providers that currently rely on coal-fired power plants have already requested a delay in the implementation timeline set forth in the rule. They cite concerns such as increases in electricity rates, decreases in system reliability, and the loss of jobs due to the potential closure of non-compliant plants.

Fifteen coal-reliant states, led by West Virginia and including Alabama, Arkansas, Florida, Indiana, Kansas, Kentucky, Louisiana, Michigan, Nebraska, Ohio, Oklahoma, South Dakota, Wisconsin, and Wyoming filed a petition for an emergency stay of the CPP with the U.S. Court of Appeals for the District of Columbia Circuit on August 13, 2015. They argued that amendments to the Clean Air Act in 1990 prevent the EPA from regulating a carbon emissions source, such as existing power plants, under Section 111(d), as these emissions are already regulated under Section 112. The states also argued the EPA is requiring more stringent standards for existing coal-fired power plants than new power plants, thereby undermining the viability of continuing use of the existing facilities. The Court dismissed their petition on September 9, 2015, in a one sentence order stating only that the petition did not satisfy “the stringent standards that apply to petitions for extraordinary writs that seek to stay agency action.” There will be more challenges. Stay tuned.

The CPP is codified at 40 CFR Part 60 [EPA-HQ-OAR-2013-0602; FRL-XXXX-XX-OAR] and is available online at http://www2.epa.gov/sites/production/files/2015-08/documents/cpp-final-rule.pdf, and the Petition for an Emergency Stay is available at http://www.eenews.net/assets/2015/08/14/document_ew_04.pdf.

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Gold King Mine Accident Highlights Risks Posed by Abandoned Mines

On August 5, 2015, EPA personnel were working with a private contractor on a water quality project at the Gold King Mine near Silverton, Colorado. The intent of the project was to assess ongoing mine water leakage and to identify and evaluate options for additional mine water treatment and for reduction in the amount of mine water that flows into Cement Creek. In the course of this project, workers inadvertently damaged a tailings pond that had been built to slow and treat mine water outflow. This resulted in destruction of the pond and a discharge of over 3 million gallons of mine waste water and tailings into Cement Creek, a tributary of the Animas River.

Since this event, EPA officials have engaged in ongoing water quality testing and report that contamination levels in the Animas River have decreased to pre-spill levels. The Colorado Department of Public Health and Environment has reached similar conclusions and reports that the river has returned to “stable” conditions which means that that are no human health concerns during typical recreational exposure.

The Gold King Mine was abandoned in 1923, and according to the EPA, mine tailings were directly released into the creeks and rivers in the area until the 1930s. Prior to this 2015 accident, contaminated mine water flowed from this mine at a rate of approximately 7 gallons per minute. That rate briefly increased to more than 500 gallons per minute immediately following the accident. The EPA had previously sought to list the Gold King Mine and surrounding area as a Superfund site which would have provided additional funding for environmental remediation and clean-up. Community input, however, raised concerns about the effect of Superfund status on tourism. As a result, the EPA agreed to postpone seeking Superfund status for the site as long as measurable progress could be made to improve the water quality absent such status.

The accident at the Gold King Mine emphasizes the risks posed by the legacy of mines that were opened, operated and abandoned in the western U.S decades ago during a time when neither the technology nor the regulations necessary for effective water quality protection existed. The Gold King Mine is one of approximately 23,000 such abandoned mines in Colorado, 6127 of which have been reclaimed by the Colorado Division of Reclamation, Mining and Safety. The BLM lists 3400 abandoned mines on BLM-managed lands in Colorado. In the Upper Animas Watershed, where the Gold King Mine is located, there are approximately 400 abandoned and inactive mine sites. Numerous reclamation projects have been completed in that watershed over the last 20 years.

The BLM’s Abandoned Mine Lands Program was created in 1997 to reduce dangers to the public, public lands and the environment from health and other adverse impacts related to hard rock mines at which operations ceased prior to 1981. As of 2014, this Program had over 46,000 abandoned mine sites in its inventory. Of those, approximately one-quarter are remediated, are sites that do not require remediation, or are sites at which remediation actions have commenced.

These site clean-up and remediation actions on federal lands are governed by various federal statutes including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the federal Clean Water Act (CWA), the Federal Land Policy and Management Act (FLPMA) and the National Environmental Policy Act (NEPA). The lack of a robust federal budget for clean-up of abandoned mine sites and the liability that can attach to non-government actors who attempt clean-up of mine sites has inhibited progress towards addressing this mining legacy in Western states.

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U.S. Fish and Wildlife Service Announces Notice of Intent to Prepare Rulemaking for Migratory Bird Treaty Act Incidental Take Permits

On May 26, 2015, the U.S. Fish and Wildlife Service issued a notice of intent (NOI) to prepare a programmatic environmental impact statement (EIS) evaluating the impacts of a proposal to authorize the incidental take of migratory birds under the Migratory Bird Treaty Act (MBTA).

The MBTA was enacted almost 100 years ago in order to curb poaching and commercial hunting of migratory birds. The MBTA makes it unlawful to “pursue, hunt, take, capture, kill, attempt to take, capture or kill,” possess, sell, purchase, or ship any migratory bird or any part, nest or egg of a migratory bird, unless authorized “taking” by a federal regulation (such as the issuance of hunting permits and permits for the control of injurious or depredating birds). “Taking” under the MBTA is defined more narrowly than under the Endangered Species Act or the Bald and Golden Eagle Protection Act, and, in contrast to those statutes, the MBTA does not include a prohibition on general harassment of birds or habitat modification.

Nonetheless, even with the slightly narrower prohibitions contained in the MBTA, individuals still face potential criminal liability for violations of the Act. Currently, there is no regulatory mechanism in place to provide protection from prosecution for harm caused to migratory birds during common commercial and industrial activities.

The NOI outlines several proposals the FWS is evaluating for authorizing take of migratory birds, and has asked for industry feedback on these proposals, which include:

• Individual, site-specific incidental take permits for activities that “present complexities or siting considerations that inherently require project-specific considerations, or for which there is limited information regarding adverse effects.”

• General, nation-wide take authorizations for identified types of hazards known to be caused by specific industry activities. These industry activities include utility-scale wind and solar generation and certain E&P activities such as oil and gas reserve pits and wastewater ponds, flares, exhaust pipes and vents at oil and gas production sites.

• Entering into or expanding inter-agency agreements with other federal agencies permitting the other agencies to provide incidental take authorization when permitting actions regulated by those agencies.

• Expanding the scope of the use of voluntary guidance agreements in specific industry sectors, such as wind, solar and oil and gas. Under these agreements, best management practices and mitigation measures are set out that, if complied with, lessen the likelihood of prosecution in the event of a take. FWS currently uses this approach with wind and solar producers.

It is almost certain that, if FWS moves forward with the rulemaking, the rule will face legal challenges. Federal courts are split on whether the MBTA even prohibits the incidental killing of migratory birds. The 10th Circuit has held that MBTA liability is triggered any time a bird is killed, even if that was not the purpose of the activity. However, the 9th Circuit and the Federal District Court for the District of North Dakota have disagreed, finding that the MBTA only prohibits the intentional killing of migratory birds. Thus, the FWS’s authority to regulate incidental take is not clear.

Beyond the questions of regulatory authority are the practical concerns related to agency capacity to process what could be a huge number of new permits. Permit processing times for oil and gas facilities and renewable energy operations can already span a period of years, and adding an additional layer of federal oversight could potentially extend these already long permitting times. It is also unclear whether the FWS intends to grant incidental take permits only for new projects or facilities, or whether it will seek to permit existing facilities as well. Aware of the likely administrative burden this would impose on the FWS, the NOI makes clear that intends to focus largely on industry sectors that are known to cause a large number of bird deaths. However, this could still embrace a very large number of actions.

The NOI invites comment on the proposal through July 27, 2015. After scoping is complete, FWS will prepare a draft EIS for public comment, which would likely be accompanied by proposed regulations.

The NOI can be found at: https://www.federalregister.gov/articles/2015/05/26/2015-12666/migratory-bird-permits-programmatic-environmental-impact-statement

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EPA Announces Final Rule Defining “Waters of the U.S.” under Clean Water Act

On June 27, 2015, the Environmental Protection Agency (EPA) published the final version of a long-anticipated rule defining the scope of the agency’s power to regulate waters under the Clean Water Act. The rule defines what constitutes a “water of the United States” for purposes of regulation under the Clean Water Act. The publication finalizes a multi-year rule-making process of draft proposals and public comments.

The Federal Water Pollution Control Act Amendments of 1972, commonly known as the “Clean Water Act,” allows the EPA to regulate wetlands, lakes, streams, rivers, and other “waters of the United States.” The Act requires that parties obtain a permit for the discharge of any substance into “waters of the United States.” The vagueness of the term “waters of the United States” has been the subject of significant litigation concerning the scope of waters that fall within the EPA and Army Corps of Engineer’s jurisdiction under the Clean Water Act.

Two Supreme Court cases interpreting the definition of “waters of the United States” added to the confusion. In 2001, the Court ruled in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers that the Army Corps of Engineers exceeded its jurisdiction under the Clean Water Act by interpreting the term “waters of the United States” to include isolated, intrastate, non-navigable waters. In 2006, in Rapanos v. United States, where all nine justices agreed that the term “waters of the United States” includes some bodies of water that are not navigable. However, the ruling was a plurality, meaning that there was no majority ruling definitively defining what qualifies as a water of the United States and what does not. The EPA says that the newly final rule does just that.

According to the EPA press release announcing the final rule, the Supreme Court decisions “threw protections into question for 60 percent of our nation’s streams and millions of acres of wetlands. The new rule states explicitly which types of bodies of water are ‘waters of the United States’ and which are not. Using the latest science and technology, this rule clears up the confusion…about which waters to protect.” Under the Rule, EPA has attempted to establish a bright-line test for determining which bodies of water have a hydrological connection to larger water systems. If a hydrological connection is found, under the rule, the EPA has jurisdiction over those waters.

Critics of the new rule say it represents an expansion of the EPA’s authority and could allow the EPA to require private landowners, especially farmers, to obtain permits or environmental studies for temporary bodies of water like seasonal ditches used for irrigation or even large puddles produced during a rainstorm. Supporters of the new rule say landowners do not need to worry about small and temporary water sources because if a body of water does not flow to a major water system or body of water, the EPA did not and still does not have jurisdiction over it.

The EPA stated when it announced the final rule that no new regulations are being added and that this rule is only a clarification of existing law. However, many land users are skeptical of this claim and believe that the rule not only significantly expands the reach of the Clean Water Act, but also raises more questions about which waters are subject to Clean Water Act jurisdiction than it answers. As of the date of this posting, 22 states have filed suit challenging the rule and numerous trade and agricultural associations have stated an intent to join the challenges.
Unless the pending challenges result in a stay of the rule’s implementation, the rule becomes effective on August 28, 2015. To read the full rule, see: https://www.federalregister.gov/articles/2015/06/29/2015-13435/clean-water-rule-definition-of-waters-of-the-united-states

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Michigan v. EPA: The EPA Must Consider Costs in Emission Limits

On June 29, in a 5-4 decision, the United States Supreme Court held in Michigan v. EPA that the Environmental Protection Agency (EPA) must consider the costs of industry when deciding to set limits under the Clean Air Act on the emissions of hazardous air pollutants from certain stationary sources such as power plants. The decision, written by Justice Scalia, reversed the decision of the D.C. Court and held that ignoring costs was unreasonable.

The EPA had estimated that the cost of its regulations to power plants would be $9.6 billion per year, and estimated that the benefits from the resulting reduction in emissions would be between $4 million to $6 million each year. However, the EPA conceded that its cost analysis had “played no role” in finding that its regulation was appropriate and necessary. The Court held, “The Agency must consider cost – including, most importantly, cost of compliance – before deciding whether regulation is appropriate and necessary. We need not and do not hold that the law unambiguously required the Agency, when making this preliminary estimate, to conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value. It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.”

The Court remanded the EPA’s mercury and air toxic standards (MATS) to the D.C. Circuit for further proceedings consistent with the opinion.

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EPA Proposes Methane Emissions Cuts for Oil and Gas to Meet Climate Change Goals

On January 14, 2015, the Obama Administration announced a plan to reduce methane emissions from oil and gas operations by 40 to 45 percent by 2025. http://www.whitehouse.gov/the-press-office/2015/01/14/fact-sheet-administration-takes-steps-forward-climate-action-plan-anno-1

This announcement is part of the implementation of the President’s 2013 Climate Action Plan, and, in particular, the 2014 “Strategy to Reduce Methane.” President Obama stated then that reducing methane emissions is “critical.” Widely viewed as part of the U.S. “quid” for the “quo” of China’s agreement to peak its greenhouse gas (GHG) emissions by 2030, methane reduction will be a focus of administration policy-making for the next two years.

This 2015 announcement is built on the foundation of several earlier actions. In 2009, pursuant to the Clean Air Act (CAA), the EPA issued the “Endangerment Finding” determining that GHG emissions endanger public health. At that time, the EPA identified methane as one of “the two most important, directly emitted, long-lived greenhouse gases.” 74 Fed. Reg. 66,496, 66,517 (Dec. 15, 2009). Methane is considered to be a more potent GHG than CO2. Also in 2009, the EPA issued a mandatory GHG reporting rule under CAA §114. The oil and gas industry began reporting under subpart W of this rule in 2011. As of 2014, subpart W now covers multiple oil and gas facilities and activities including upstream, gathering and boosting, completions and workovers of fracked oil wells, natural gas distributors, pipeline transportation, and blowdowns of natural gas transmission pipelines between compressors. Finally, in April 2014 the EPA issued five technical “white papers” on oil and gas methane and volatile organic compounds (VOCs) emissions covering compressors, completions/productions, leaks, liquids unloading and pneumatic devices.

The EPA’s 2015 proposal is based on the data collected from the 2009 mandatory reporting rule and the analyses in the 2014 white papers. According to the EPA, methane makes up 10% of GHG and of that total, 30% is contributed by oil and gas. The EPA recognizes that the industry has decreased its methane emissions by 16% since 1990, but is focused on a predicted 25% increase over the next decade. As proposed, these EPA measures apply only to new or modified facilities. Environmental groups will push for application to existing facilities while the industry will argue that voluntary actions have a proven record of achievement.

In order to meet the new goal, the White House proposes several initiatives that will be implemented by several federal agencies:

EPA - New Standards for Methane and VOC Emissions - In the summer of 2015, the EPA will be proposing new standards in a rule for methane and VOCs from “new and modified oil and gas production sources, and natural gas processing and transmission sources” for the oil and gas industry. On January 28, 2015, the EPA called for input from oil and gas small businesses, NGOs and states on the development of a rule to reduce methane and VOCs under the CAA New Source Performance Standards. After considering comments from the states, the oil and gas industry and the public, the EPA will issue a final rule in 2016.
EPA - New Guidelines for Reducing VOCs - The EPA will be developing new guidelines and proposing control measures to reduce VOC emissions from oil and gas operations that states could adopt to help meet air quality standards for ozone. The EPA will publish Control Technique Guidelines (CTG) to address options for VOC emissions in ozone nonattainment areas and states in the Ozone Transport Region.

EPA - Enhanced Leak Detection and Reporting - The EPA will be considering remote sensing technologies to improve the accuracy of reported methane emissions.

BLM - Updated Standards on Public Lands - In April 2015 the BLM will be proposing an update to standards (Onshore Order No. 9) for new and existing oil and gas wells on public lands to reduce venting, flaring and leaks of methane. The final Order is expected in April 2016.

DOT - New Pipeline Safety Standards - Later this year, the Pipeline and Hazardous Materials Safety Administration (PHMSA) will be proposing new natural gas pipeline safety standards to reduce emissions.

DOE - Technology and Emissions Quantification - The federal budget for Fiscal Year 2016 includes approximately $25 million in funding for the development of technology to detect and repair natural gas transmission leaks, development of next generation compressors and quantification of natural gas emissions.

Over the next few years, methane emissions may be reduced automatically if low prices for oil and gas persist and production drops. In the meantime, the emissions reducing strategies outlined above will begin to take effect.

EPA Fact Sheet on the Proposal may be found at: http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/ba7961bf631c87bf85257dcd00526ff7!OpenDocument

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