31 October 2017

Sidley Environmental Trends

Topics discussed this week include:

  • U.S. House of Representatives passes bill to end EPA’s “sue and settle” practice.
  • EPA announces that public wastewater treatment plants air standards will remain unchanged.
  • Interior Department issues report evaluating federal energy regulations.
  • DOI announces sale of largest federal oil and gas lease in U.S. history.
  • Sixth Circuit reinstates residents’ nuisance claim against Detroit refinery.

U.S. House of Representatives passes bill to end EPA’s “sue and settle” practice. Following the Oct. 16 announcement by the Environmental Protection Agency (EPA) to limit the types of settlements that EPA can reach with outside parties, the House of Representatives passed the Sunshine for Regulations and Regulatory Decrees and Settlements Act (H.R. 469) on Oct. 25. The bill targets lawsuits where an agency is sued, most frequently in connection with a regulatory deadline, and then reaches an agreement on a settlement before the public can review its terms. As discussed in our last Trends, in connection with his directive to end “sue and settle,” EPA Administrator Scott Pruitt had announced new EPA public participation procedures for agency settlements. Environmental groups have criticized the shift in policy, arguing that lawsuits are frequently the only option to advance delayed rulemakings and deadlines. Similar to EPA’s announced policy, the House bill would require that federal agencies seek public comments on proposed settlements, allowing outside parties, including industry groups and affected companies, an opportunity to intervene before a settlement is finalized. Sen. Chuck Grassley, R-Iowa, has introduced a companion bill, S. 119, which is pending before the Senate Judiciary Committee.

EPA announces that public wastewater treatment plants air standards will remain unchanged. In a final rule issued on Oct. 26, EPA announced that the standards will remain the same for public wastewater treatment plants subject to national emission standards for hazardous pollutants for the publicly owned treatment works (POTW) source category. EPA had considered whether wastewater treatment plants should be required to upgrade their air pollution control technology to limit toxic air emissions from industrial wastewater. EPA concluded that the current standards, developed in 2002, provide an “ample margin of safety” to protect public health and the environment, as required to readopt the standards. The rule applies to POTWs that are considered major sources — those that emit more than 10 tons per year of a single hazardous air pollutant or more than 25 tons per year of any combination of hazardous air pollutants.

Interior Department issues report evaluating federal energy regulations. The U.S. Department of the Interior (DOI) has released a report describing its progress in responding to President Trump’s March 28 Executive Order 13783, Promoting Energy Independence and Economic Growth. The executive order requires each agency to review all agency actions that may burden the development or use of domestic energy resources. The report details several orders issued by DOI Secretary Ryan Zinke intended to promote onshore and offshore energy production. Additionally, it outlines several actions that are ongoing or that DOI intends to take, including (1) taking steps toward rescission or revision of the Bureau of Land Management’s hydraulic fracturing and flaring rules, (2) reviewing protest regulations and policy, (3) rescinding the incorporation of master leasing plans (MLPs) in the oil and gas leasing process and (4) streamlining National Environmental Policy Act analyses. Reaction to the report has been mixed. Environmental groups have universally criticized the findings. Industry groups, while generally encouraged by the report, have also expressed concerns that some of the proposed changes, particularly with respect to MLPs, may discourage collaboration, increase challenges to leases and create uncertainty for oil and gas operators.

DOI announces sale of largest federal oil and gas lease in U.S. history. DOI Secretary Zinke announced last week that in March 2018 Interior will make available for lease sale nearly 77 million acres in federal waters spanning the Gulf of Mexico, Texas, Louisiana, Mississippi, Alabama and Florida. The acreage includes all available, unleased areas on the Gulf’s Outer Continental Shelf, ranging from three to 230 miles offshore and will be the largest oil and gas lease sale ever held in the United States. The sale, Proposed Lease Sale 250, will be live-streamed from New Orleans. It is the second offshore sale under 2017–2022 National Outer Continental Shelf Oil and Gas Leasing Program. The first sale received over $120 million in bids. In addition to any bids received for Proposed Lease Sale 250, DOI receives rental payments and royalty payments tied to any production from the wells. The lease revenues are distributed to the U.S. Treasury, Gulf states, the Land and Water Conservation Fund and the Historic Preservation Fund.

Sixth Circuit reinstates residents’ nuisance claim against Detroit refinery. Last week, the Sixth Circuit revived a lawsuit against Marathon Oil Corporation relating to its Detroit, Michigan refinery. Local residents had sued the refinery, alleging that the facility’s emissions constituted a private nuisance that affected their ability to enjoy their property. The district court had dismissed the plaintiffs’ case on statute-of-limitations grounds, finding that plaintiffs’ alleged injuries accrued at the first incident of alleged conduct and thus fell outside of the three-year statute of limitations. On appeal, the Sixth Circuit reversed, holding that each alleged generation, creation or release of emissions from the refinery is a separate claim, with a separate time of accrual under the statute of limitations. Because plaintiffs had alleged that emissions occurred less than three years before they filed their complaint, the lawsuit was timely. The Sixth Circuit remanded for further proceedings.

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