01 March 2018

Sidley Environmental Trends

Topics discussed this week include:

  • Waters of the United States challenges proceed in district courts.
  • Court dismisses challenge to “two-for-one” executive order.
  • BLM proposes significant revisions to gas venting and flaring rule.
  • Court preliminarily enjoins BLM methane suspension rule.
  • EPA seeks comment on Clean Water Act discharges via groundwater.
  • Environmental groups challenge offshore general discharge permits.
  • EPA looks to settle renewable fuel standards suit.
  • Environmental groups challenge Louisiana regional haze plan.
  • Court ruled that EPA unlawfully extended deadline for formaldehyde rule.
  • White House legislative outline attempts to speed infrastructure construction.
  • Supreme Court denies certiorari for five environmental cases.
  • Colorado issues new rules for gathering lines.

Waters of the United States challenges proceed in district courts. Last month, the U.S. Supreme Court held that challenges to the 2015 Waters of the United States Clean Water Act jurisdictional rule (Rule) issued by the Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) can only be raised in the U.S. District Courts. Now, a number of legal challenges to the Rule are pending in the district courts. On Feb. 22, the Southern District of Texas was the first U.S. District Court to hear arguments on plaintiffs’ request for preliminary relief staying the Rule. The Eleventh Circuit also issued an expedited mandate so that proceedings in the U.S. District Court for the Southern District of Georgia could begin promptly. EPA and the Corps have issued a stay the Rule’s effective date until 2020 (Stay), but environmental groups have challenged that Stay. Rule opponents thus view judicial review of the Rule as a backstop in case the Stay is vacated. Environmental groups have intervened to oppose an injunction, arguing that the Stay imposed by rule makes it unnecessary but also arguing in separate challenges filed in the Southern District of New York that the Stay is invalid. A stay of the Rule issued by the U.S. District Court for North Dakota, covering 13 states, remains in effect.

Court dismisses challenge to “two-for-one” executive order. The U.S. District Court for the District of Columbia dismissed challenges to Executive Order 13,771, requiring federal agencies to rescind two regulations for every new regulation issued, holding that the environmental group and union plaintiffs lacked standing. The court’s decision found that the groups could not show how their members would be harmed by the order as they never alleged that any specific regulation was rescinded or weakened as a result of the order. It also dismissed plaintiffs’ claims that the order chilled their First Amendment right to advocate for more stringent regulations as they did not allege any facts to support an inference that the order caused them to stop lobbying the government. The court, however, requested briefing on whether the case should be dismissed with prejudice or if the plaintiffs should be given the opportunity to amend their complaint.

BLM proposes significant revisions to gas venting and flaring rule. On Feb. 22, the Bureau of Land Management (BLM) proposed to rescind significant portions of the 2016 Waste Prevention Rule, imposing limits on the venting and flaring of gas from oil and gas wells on federal and Indian lands. The proposal would eliminate requirements for gas capture plans, gas capture percentages, leak detection and repair programs, and equipment replacement, citing BLM’s questionable legal authority to regulate air emissions, as opposed to regulating mineral waste. Instead, oil and gas operations will be subject to existing state and EPA regulations that already impose similar requirements. A key aspect of the rule was a revised cost-benefit analysis that used an interim social cost of methane calculation with much lower numbers than that used for the 2016 rule. The new Regulatory Impact Analysis concluded that the 2016 rule’s costs far exceeded any benefits from additional gas capture and sale. Critics argue that the proposal undervalues the lost gas that would have been captured under the 2016 rule, reducing royalties for the U.S. and individual states, and that the social cost of methane should have been given a higher, not lower, value than that used in the 2016 rule. Comments are due April 23.

Court preliminarily enjoins BLM methane Suspension Rule. A U.S. District Court granted environmental groups a preliminary injunction against a BLM rule that suspended the compliance dates for its 2016 Waste Prevention Rule. The Suspension Rule, issued through the notice-and-comment rulemaking process, pushed back several requirements to prevent natural gas venting and flaring on federal and Indian lands by one year. The court, however, agreed with state attorneys general and environmental groups who argued that BLM never provided a detailed, record-based justification as to why it now found the Waste Prevention Rule’s requirements legally questionable and too costly for the purported benefits. The Suspension Rule’s cost-benefit analysis was held to be unsupported and the court concluded that comments cited by BLM lacked detailed factual citations. The court further agreed that staying the rule, which had never been in effect, would cause financial harm to the state plaintiffs through reduced royalties, harm public health through increased air pollution, and increase climate change effects.

EPA seeks comment on Clean Water Act discharges via groundwater. EPA announced that it is seeking comment on whether discharges to groundwater, which then migrate to jurisdictional waters, should be regulated under the Clean Water Act (Act). The notice comes shortly after the Ninth Circuit held that pollutant discharges from wastewater wells that seeped into groundwater and migrated to the Pacific Ocean required a Clean Water Act permit. In its ruling, the court found that the Act applied whenever discharges to navigable waters were “fairly traceable” to groundwater discharges. Other recent district court decisions split on the issue, with some holding that the states, not the Clean Water Act, regulate groundwater pollution. EPA had previously taken the position in an amicus brief with the Ninth Circuit that Clean Water Act jurisdiction extends to groundwater discharges that have a “direct hydrological connection” to navigable waters. Given the difference of opinion among lower courts, and with appeals before the Fourth and Sixth Circuits pending, EPA is now asking for whether its “statements” on the issue should be reconsidered. Specifically, EPA is asking whether groundwater contamination is already adequately regulated under the Safe Drinking Water Act and state law and, if it chooses to maintain its past position, how it might define a direct hydrological connection.

Environmental groups challenge offshore general discharge permits. A coalition of environmental groups petitioned the Fifth Circuit for review of EPA’s renewal of the general permit for wastewater discharges from offshore oil platforms in the western Gulf of Mexico. The group contends that EPA failed to consider potential harms to marine wildlife from chemicals in oil and gas wastewater and should have undertaken formal consultation under the Endangered Species Act. The groups are petitioning the court to enjoin use of the general permit until EPA performs an additional environmental review of the potential effects.

EPA looks to settle renewable fuel standards suit. The Department of Justice submitted a joint status report informing the U.S. District Court for the District of Columbia that it is negotiating a settlement of an environmental group’s suit alleging that EPA missed a statutory deadline to review its renewable fuel standards. Any settlement may have a larger importance in view of EPA Administrator Scott Pruitt’s October 2017 policy of no longer settling environmental group suits. The policy repudiated EPA’s “sue-and-settle” practice where many believed that EPA collusively settled suits on terms favorable to environmental groups. Under the new policy, EPA would settle cases only after a relatively lengthy process of consulting states and industries that the suit may affect. Many cases, however, involve EPA’s failure to meet statutory deadlines, leaving the agency with no real defenses and other recent rulings have subjected EPA to short deadlines for issuing mandatory rulemakings. In this case, environmental groups allege that EPA failed to perform a review of the resource conservation impacts and prepare an anti-backsliding study for the renewable fuel standards required by the Clean Air Act and Energy Independence and Security Act.

Environmental groups challenge Louisiana regional haze plan. The Sierra Club and National Parks Conservation Association petitioned the Fifth Circuit to review EPA’s approval of Louisiana’s regional haze plan. The groups claim that the state provided EPA with no evidence that it is making reasonable progress towards reducing haze in Class I areas and improperly exempted emission sources from installing new pollution controls. Instead, Louisiana included emission reductions through the Cross-State Air Pollution Rule. The groups, however, argued that Louisiana should not be permitted to rely on those reductions because they are required only during the five-month ozone season. They want EPA to require tougher emission limitations that apply year-round.

Court ruled that EPA unlawfully extended deadline for formaldehyde rule. A U.S. District Court judge held that the effective date for an EPA rule governing formaldehyde emissions from wood products could not be extended. In 2010, Congress had enacted an amendment to the Toxic Substances Control Act directing EPA to issue formaldehyde emission limits for composite wood products by July 1, 2013, but EPA did not issue the regulations until December 2016. EPA subsequently stayed the initial December 2017 compliance date for one year, to December 2018, in part due to delays in getting the certification and testing program in place. Although Sierra Club had not commented on the extension rule, it filed a challenge to the extension. The court sided with Sierra Club and issued an opinion vacating the extension. The court rejected the agency’s arguments that Sierra Club had waived its right by not commenting and that an exception within the statute granted the Administrator the discretion to delay the effective date. However, the court stayed issuing its order to give time to the parties either to work out a joint proposed schedule or to submit simultaneous briefs stating their positions on how to ensure timely and effective implementation of the rule. Amici had also pointed out to the court the serious problems with vacating the extension given the impacts on the global supply chain for composite wood products.

White House Legislative Outline attempts to speed infrastructure construction. Continuing a common theme established through a series of Executive Orders, the White House issued a Legislative Outline as part of a $1.5 trillion budget infrastructure proposal to speed up environmental reviews for roads, bridges, airports, pipelines, and other projects. The National Environmental Policy Act (NEPA) is especially targeted for reform, with the White House seeking to impose a “One Agency, One Decision” approach that could consolidate the work of multiple agencies into a single review. Under the plan, lead agencies must complete Environmental Assessments within 21 months with decisions on all other federal permits due three months later. Other aspects of the Legislative Outline include general requirements for the Council on Environmental Quality to implement policies or regulations to speed up NEPA reviews, reduce the statute of limitations to file a NEPA challenge to 150 days, and propose to limit the ability for courts to enjoin projects under NEPA to “extraordinary circumstances.” Another proposal would establish a limit for how long states can ask for additional information to supplement Clean Water Act water quality certificate applications before determining whether the application is administratively complete. Some states have used the tactic of repeated demands for more information, asserting that they are not bound by the Clean Water Act’s time limit for considering the application until they deem it to be complete, to stall pipeline projects for years.

Supreme Court denies certiorari for five environmental cases. In a recent order, the U.S. Supreme Court declined to hear several cases raising environmental law questions.

  • One case sought review of EPA’s application of a Clean Water Act policy to prohibit blending stormwater and sewage for discharge during heavy storms and the use of mixing zones. The Eighth Circuit vacated the policy in 2013 and EPA responded by permitting blending and mixing zones only in the seven states within that circuit while continuing to prohibit them in all other states. Municipalities challenged EPA’s limitation of the Eighth Circuit decision at the D.C. Circuit but the court held that they should have filed their challenge in district court.
  • In another case, the Southern California Alliance of Publicly Owned Treatment Works claimed that two water reclamation plants were denied permits after EPA sent a formal objection letter to the Los Angeles Regional Water Quality Control Board demanding that the permits include additional discharge limitations for chronic toxicity. The Ninth Circuit rejected the group’s claim that EPA’s objection letter created new regulatory obligations without a formal rulemaking, holding that the letter was only an interim step in the permitting process.
  • The Supreme Court also declined to hear an appeal from 140 Pennsylvania residents seeking review of a Third Circuit ruling that the Price-Anderson Act barred their suit against several companies that processed nuclear materials. The residents claimed that exposure to enriched uranium caused their cancer but the court held that they did not show that radioactive emissions exceeded maximum permissible concentrations.
  • In a fourth case, a timber company and union sought review of a Ninth Circuit ruling dismissing an appeal of a lower court’s injunction against a timber harvesting project due to potential impacts on the endangered northern owl. The court held that it could not consider the appeal by the private parties when BLM itself had not appealed.
  • Last, the Supreme Court declined to review a Second Circuit ruling upholding EPA’s 2008 interbasin water transfer rule, exempting the transfers of water from one body to another via pipes, tunnels, or pumps from Clean Water Act permitting requirements. Several states, environmental groups, and New York City argued that the transfers violate the Clean Water Act by allowing the addition of pollutants from one water body to another.

Colorado issues new rules for gathering lines. The Colorado Oil & Gas Conservation Commission approved new rules for gathering lines, small diameter pipelines that carry oil and gas from wells to processing plants or compressor stations. A fatal April 2017 explosion prompted the revision of gathering line regulations. The regulations include new rules for gathering line design, installation, maintenance, integrity testing, and abandonment. The Commission can also share information about the lines with local governments under a confidentiality agreement. Environmental groups criticized the rules for not requiring oil and gas companies to map the location of existing gathering lines, a move they claim is necessary for public safety. Oil and gas companies, however, said that locating and mapping existing lines would involve enormous costs, especially as many lines are already abandoned.

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