10 April 2018

Sidley Environmental Trends

Topics discussed this week include:

  • EPA announces decision to revise GHG emission standards for light-duty vehicles.
  • NGOs sue EPA for ending “once-in, always-in” MACT policy.
  • EPA OECA Assistant Administrator issues memorandum requesting early notice of enforcement referrals to DOJ.
  • EPA Administrator retains the authority for headquarters to make certain jurisdictional determinations under Clean Water Act.
  • Coalition of states and cities sues EPA, alleging EPA must issue regulations governing methane emissions from existing oil and natural gas operations.

EPA announces decision to revise GHG emission standards for light-duty vehicles. The U.S. Environmental Protection Agency (EPA) recently reevaluated its January 2017 Final Midterm Evaluation of greenhouse gas (GHG) emission standards for model year 2022-25 light-duty vehicles, initially set in 2012. That reevaluation culminated in an agency decision, in a notice to be published in the Federal Register, that it will revise those GHG emission standards. EPA concluded that the standards “are based on outdated information” and that “more recent information suggests that the … standards may be too stringent.” For example, EPA now believes that the initial standards were based on an overly optimistic view of consumer adoption of electrified light-duty vehicles and on estimates of higher gasoline prices. In the notice, EPA states that it will separately begin a joint rulemaking with the National Highway Traffic Safety Administration to consider replacement standards. According to the initial Midterm Evaluation, the existing 2022-25 standards were expected to achieve a projected fleet average fuel economy of 51.4 miles per gallon equivalent, which would translate to an approximately 36 miles per gallon real world average fuel economy. EPA’s reversal could set up a legal battle with California over its Clean Air Act waiver granting the state the right to impose stricter-than-federal standards for certain vehicular emissions.

NGOs sue EPA for ending “once-in, always-in” MACT policy. Environmental nongovernmental organizations (NGOs) filed a petition for review with the District of Columbia Circuit challenging EPA’s decision to end its “once-in, always-in” interpretation of Clean Air Act Section 112. Under the “once-in, always-in” policy, based on a 1995 guidance document, after an existing source qualified as a major source under Section 112 of the Clean Air Act, it had to continue meeting major source maximum achievable control technology (MACT) standards for hazardous air pollutants (HAP) even if it later reduced its emissions below the major source threshold. EPA’s January 2018 memorandum revoking that policy enables a source to later change from being a major source by taking an enforceable permit limit for HAP emissions at any time. The lawsuit faces a number of threshold issues, such as whether the January 2018 memorandum is a final, reviewable agency action. Contemporaneously with filing the petition for review, the Environmental Integrity Project – one of the plaintiffs – issued a report alleging that reversal of the policy could lead to a large increase in HAP emissions from major sources. We discussed the January 2018 guidance in more detail here.

EPA OECA Assistant Administrator issues memorandum requesting early notice of enforcement referrals to DOJ. On March 23, Susan Bodine, Assistant Administrator (AA) of EPA’s Office of Enforcement and Compliance Assurance (OECA), issued a memorandum to staff establishing an interim process for providing her with early notice of referral of matters to the Department of Justice (DOJ) for civil judicial enforcement. The memorandum requests EPA case teams contemplating a DOJ referral to brief the relevant Regional Administrator for region-led cases and the AA for headquarters-led cases before making the referral. For region-led cases, the memorandum directs the regions to provide existing briefing materials, along with the Regional Administrator’s position on the referral, to the Assistant Administrator. The memorandum also permits the AA to request copies of final referrals before EPA transmits the referral to DOJ. The memorandum applies to all civil enforcement cases other than those under the Comprehensive Environmental Response, Compensation, and Liability Act, which OECA intends to address separately. OECA plans to revisit the new policy later this year, when its new National Case Status Information System is in operation.

EPA Administrator retains the authority for EPA headquarters to make certain jurisdictional determinations under Clean Water Act. On March 30, EPA Administrator Scott Pruitt issued a memorandum and accompanying revised Delegation of Authority 2-43 retaining the authority for EPA headquarters to make certain jurisdictional determinations under the Clean Water Act Section 404 discharge of dredged/fill material permitting program. Jurisdictional determinations are important as they delineate whether, and to what extent, a water body is subject to Section 404 permitting, and the Supreme Court held several years ago that they are final agency action reviewable in court. Among other elements, the memorandum delegates authority to designate “special cases” to the AA for Water (and then redelegates it to the Director, Office of Wetlands, Oceans, and Watersheds). Under a 1989 memorandum of understanding between the Department of Army and EPA, the Regional Administrators made jurisdictional determinations for special cases, which are situations “where significant issues or technical difficulties are anticipated or exist” in determining the exact scope of waters subject to the Clean Water Act. The memorandum also delegates the ability to restrict or prohibit designation of disposal sites under Section 404(c) to the AA for Water. The memorandum states that EPA is taking these actions “to ensure consistency and certainty” while the agency completes its reevaluation of the definition of “waters of the United States” under the Clean Water Act.

Coalition of states and cities sues EPA, alleging EPA must issue regulations governing methane emissions from existing oil and natural gas operations. A coalition of 14 states and two cities sued the EPA and Administrator Pruitt, alleging that the agency had violated a nondiscretionary duty under the Clean Air Act to promulgate regulations governing methane emissions from existing sources that produce, process and distribute oil and natural gas. The complaint claims that since EPA has promulgated New Source Performance Standard (NSPS) regulations in 2016 for methane emissions from new oil and gas sources under Section 111(b) of the Clean Air Act, Section 111(d) of the Clean Air Act allegedly triggers a corresponding mandatory duty to issue emission guidelines for methane emissions from existing oil and gas sources. Among other relief, the complaint requests that the District Court for the District of Columbia order EPA “to propose and subsequently promulgate” such emission guidelines. EPA is in the process of reconsidering its 2016 NSPS governing methane emissions from new oil and gas sources. A previous challenge in the D.C. Circuit to the 2016 NSPS has been held in abeyance, while EPA completes its reconsideration of the regulations.

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