30 May 2019

Sidley Environmental Trends

Topics discussed this week include:

  • U.S. House and Senate hold hearings on per- and poly-fluoroalkyl substances (PFAS)
  • D.C. Circuit issued two decisions related to small refinery exemptions to the Renewable Fuel Standard (RFS)
  • California Department of Pesticide Regulation moves to ban chlorpyrifos in California
  • Carbon capture and storage technology receives greater political support with new bill in the U.S. Senate

Hearings on PFAS in U.S. House and Senate show potential for bipartisan legislative action.

Thirteen bills related to PFAS have been introduced in the U.S. House of Representatives in 2019, and the Committee on Energy and Commerce held a hearing on May 15. The U.S. Senate Committee on Environment and Public Works held a hearing on six bills related to PFAS on May 22. Testimony at the hearings came from a range of parties including academics, environmental organizations, members of the public and trade groups. This activity follows the Environmental Protection Agency (EPA) issuance of draft interim cleanup guidelines for groundwater contaminated by two specific PFAS chemicals. Most of these bills have provisions that would supersede EPA’s pending regulatory processes related to PFAS in drinking water and other releases of PFAS into the environment.

D.C. Circuit denies challenge to EPA’s issuance of small refinery exemptions to Renewable Fuel Standard.

In another chapter of the ongoing disputes over the Renewable Fuel Standard (RFS), the U.S. Court of Appeals for the District of Columbia Circuit recently issued two decisions involving small-refinery exemptions from the RFS. Under the RFS, refiners generally must blend certain minimum volumes of renewable fuel into their petroleum fuel products. Smaller refineries (i.e., those with throughput of less than 75,000 barrels per day) may qualify for an exemption from EPA.

In May 2018, the Advanced Biofuels Association (Association) challenged an alleged increase in EPA’s issuance of small-refinery exemptions, alleging that EPA had improperly lowered the threshold required to receive the exemption. The Association relied primarily on an increase in exemptions granted over 2016 and 2017 but did not attribute those changes to a specific rule, guidance document or policy. EPA responded that no final, reviewable agency action had been taken because exemptions are granted separately for each case and no new policy had been issued. With the petition for review still pending, in April 2019, the Association filed a motion for a preliminary injunction against EPA’s issuance of further exemptions. The D.C. Circuit ruled on May 17, in a per curium order, that the Association has not demonstrated that an injunction was warranted. Briefing for the case is scheduled to conclude in June.

In July 2018, Producers of Renewables United for Integrity Truth and Transparency filed a petition for review of EPA’s decisions to afford relief following the grant of small-refinery exemptions to certain small refineries located in Wyoming. The petitioner challenged EPA’s programmatic approach to granting such exemptions, as well as how to manage the renewable identification numbers (RINs), which are tradeable renewable fuel credits, that the refineries retired prior to receiving exemptions. On May 24, 2019, the D.C. Circuit issued a judgment concluding that it lacked jurisdiction to hear challenges to EPA’s implementation of small-refinery exemption regulations because it was untimely, coming over 60 days after the petitioner had access to the requisite information about the exemptions. With respect to the RINs, the D.C. Circuit found that the Tenth Circuit was the proper venue for the petition because the EPA orders at issue were specific to Wyoming refineries and lacked a national impact. The court, therefore, transferred those claims to the Tenth Circuit.

California Department of Pesticide Regulation moves to ban chlorpyrifos – and Ninth Circuit orders EPA to act on long-outstanding petition.

The California Department of Pesticide Regulation initiated cancellation proceedings on May 8 of the state registration of chlorpyrifos, a pesticide used on a wide range of crops. Cancellation of the registration would effectively ban the use of the pesticide within the state. In September 2018, the Department proposed to list chlorpyrifos as a toxic air contaminant and, in November, recommended interim measures that would have reduced the use of chlorpyrifos. The listing as a toxic air contaminant became final in April. In a related matter, the Ninth Circuit recently addressed an appeal related to a 2007 petition to EPA asking the agency to cancel tolerances for chlorpyrifos. Tolerances are the maximum amount of pesticide residue permissible on or in food. In April, the en banc Ninth Circuit ordered EPA to respond to the petition to cancel the tolerances for chlorpyrifos within 90 days.

Trump administration and U.S. Senate reportedly move to support additional funding of carbon capture technology.

Sen. John Cornyn, a Texas Republican, introduced a bill on May 23, co-sponsored by two Democratic Senators, that would authorize $50 million per year to research carbon capture from the use of natural gas. Other reports also indicate Republican Senators are developing climate innovation bills. This follows a letter from a bipartisan group of U.S. Senators seeking to maximize carbon capture and storage (CCS) funding through the Department of Energy as well as hearings on a separate bill sponsored by Sen. John Barrasso, a Wyoming Republican, related to CCS earlier this year. A coalition of unions, environmental organizations and private businesses have endorsed that bill. The Trump administration also has reportedly chosen to offer additional financial support for CCS technology. Some see recent support for CCS as a response to other legislative proposals seeking direct reductions in greenhouse gas emissions.

Over the past decade, CCS technology research and development has continued to receive investment, including from some large players in the energy sector. Most notably in North America, Royal Dutch Shell Plc launched a carbon capture plant in Alberta, Canada, in 2015, which has sequestered 4 million tons of carbon dioxide as of May. The facility captures emissions from a nearby bitumen upgrader and is subsidized by the provincial and national government. Challenges remain for CCS, including economics and geographic proximity of sources to available storage. However, if these can be overcome, legal regimes may seek to integrate CCS into carbon regulation and carbon trading markets.

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