Sidley Environmental Trends

Topics discussed this week include:

  • Federal agencies reopen comment on Obama administration auto fuel efficiency standards.
  • Environmental groups file legal challenges to TSCA rules.
  • Tenth Circuit vacates EPA denial of small-refinery renewable fuels exemption.
  • EPA begins revisions to power plant wastewater rules.
  • DC Circuit rules EPA’s hydrofluorocarbon rule exceeds statutory authority.

Federal agencies reopen comment on Obama administration auto fuel efficiency standards. The U.S. Environmental Protection Agency (EPA) and Department of Transportation (DOT) opened a public comment period for reconsideration of the January 2017 Mid-term Evaluation Final Determination setting greenhouse gas emissions standards for light trucks and cars model years 2022-25. See 82 Fed. Reg. 39551 (Aug. 21, 2017). The agencies announced in March that they would reevaluate the previous administration’s standards and submit a new proposal if they found the original determination inappropriate or unrealistic. Industry groups, including automobile manufacturers, requested reconsideration of the rule, claiming that the stricter standards would be difficult to meet absent increased consumer demand for fuel-efficient vehicles. Environmental groups have been critical of the decision to reevaluate the standards, arguing it would place the United States at an international disadvantage as cars trend toward cleaner energy. EPA and DOT are encouraging stakeholders to submit comments and data to assist with evaluation of the final determination. The agencies have until April 2018 to reconsider the standards.

Environmental groups file legal challenges to TSCA rules. Earlier this month, the Environmental Defense Fund, Natural Resources Defense Council and other environmental groups filed multiple petitions in the U.S. Courts of Appeals for the Second, Fourth and Ninth Circuits challenging two EPA rules that set a framework for EPA to evaluate chemicals under the Toxic Substances Control Act (TSCA). (See Environmental Defense Fund, 2d Cir. Cases 17-2464 and 17-2403; Natural Resources Defense Council, et al., 4th Cir. Cases 17-1926 and 17-1927; Safer Chemicals, Healthy Families et al., 9th Cir. Cases 17-72260 and 17-72259.) The rules were originally proposed in January before the change in administration but were finalized earlier this summer. Under TSCA, the agency must evaluate the level of risk a chemical poses and assign it a priority level. High-priority chemicals will require further study. Following the priority assignment, EPA must perform a risk evaluation to determine the safety of the chemical substance. In their lawsuits, the environmental groups allege that the final rules give EPA unlimited discretion to exclude activities from its initial analysis, ignoring potential exposures to chemicals that may affect the chemical’s total risk.

Tenth Circuit vacates EPA denial of small-refinery renewable fuels exemption. On August 15, the U.S. Court of Appeals for the Tenth Circuit vacated EPA’s decision not to exempt two small Wyoming refineries from the Renewable Fuel Standards (RFS) program under the Clean Air Act. Sinclair Wyoming Refining Co. v. EPA, No. 16-9532 (10 Cir. Aug. 15, 2017). The program sets standards on oil refineries to encourage increasing use of renewable fuels. Small refineries that can demonstrate “disproportionate economic hardship” may qualify for an exemption. Two Wyoming refineries had argued that their operations would be unfairly affected if EPA did not extend their small-refinery exemption, which expired in 2013. EPA found that the refineries did not qualify for the exemption because they were profitable and would not be forced to close if they entered the program. The Tenth Circuit, in a 2-1 decision, ruled that EPA’s analysis of “threat of closure” too narrowly interpreted the rule and should have considered additional factors such as profitability: “By reading a necessary ‘viability’ requirement into its statutory directive to evaluate a refinery’s petition for exemption from the RFS program based on ‘disproportionate economic hardship,’ the EPA exceeded its statutory authority.” 10th Cir. op. at 26.

EPA begins revisions to power plant wastewater rules. In a letter to the U.S. Court of Appeals for the Fifth Circuit on August 14, EPA Administrator Scott Pruitt announced that the agency will begin the rulemaking process to revise the 2015 Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category (2015 Rule) establishing stricter wastewater treatment standards from steam electric power plants. Specifically, the agency will reconsider the Best Available Technology Economically Achievable (BAT) effluent limitations and Pretreatment Standards for Existing Sources that apply to bottom ash transport water and flue gas desulfurization wastewater. The 2015 Rule had updated regulations on power plant discharges for the first time since 1982. Administrator Pruitt’s letter is the latest in a series of actions that have been taken to challenge and reevaluate the rule. In December 2016, numerous industry groups filed the challenge in the Fifth Circuit, arguing that EPA did not follow the Administrative Procedure Act when it finalized the 2015 Rule without fully disclosing all data and analyses used in the rulemaking process. Southwestern Electric Power Co., et al. v. EPA, No. 15–60821. In April, EPA postponed the rule’s deadlines, finding that the new rule would impose significant costs on industry during the first several years of compliance. See 82 Fed. Reg. 19005 (April 25, 2017). Any revisions to the rule will be subject to notice and public comment.

DC Circuit rules EPA’s hydrofluorocarbon rule exceeds statutory authority. In a recent 2-1 decision, the U.S. Court of Appeals for the District of Columbia ruled that EPA exceeded its authority under the Clean Air Act (CAA) when it issued a 2015 rule eliminating the use of hydrofluorocarbons (HFCs) in certain products (the 2015 HFC Rule). See Mexichem Fluor, Inc. v. EPA, No. 15-1328 (D.C. Cir. Aug. 8, 2017). EPA originally considered HFCs to be safe substitutes for ozone-depleting substances. In 2015, with the greenhouse gas effects of HFCs better understood, EPA removed HFCs from the list of safe substitutes and also required manufacturers to stop using HFCs in their products. In its rulemaking, EPA had relied on Section 612 of the CAA, which authorizes EPA to require manufacturers to replace ozone-depleting substances in their products with other EPA-approved substances. However, according to the court, Section 612 does not authorize EPA to require the replacement of non-ozone-depleting substances, such as HFCs. The court found EPA exceeded its authority under the CAA and vacated the 2015 HFC Rule, remanding to EPA for additional consideration.