United States: Update - Environmental And Energy Policy Round-Up: Status Of Regulations And Key Decisions Under The New Administration

Last Updated: May 31 2017
Article by Van P. Hilderbrand Jr

As the environmental and energy regulatory landscape under the new Administration continues to shift, we want to keep our clients up to speed, as many of these policy changes may directly or indirectly impact your businesses. The following updates our earlier April 6, 2017 post, entitled " Environmental and Energy Policy Round-Up: Status of Regulations and Key Decisions under the New Administration," where we discussed how the new Administration's policy objectives include reducing regulatory burdens, encouraging domestic energy production, and rolling back many of former President Obama's regulations and policies concerning climate change. Please refer to that post if you need further background on the environmental and energy-related regulations and policies discussed below.

  • EPA's FY 2018 Proposed Budget Remains Unchanged: We discussed in an earlier post that the White House's March 16, 2017 proposed fiscal year 2018 budget outline proposed reducing the Environmental Protection Agency's (EPA) operating budget by 31 percent and its workforce by roughly 3,000. Despite critics on both side of the aisle that believe the cuts go too far, the Administration held firm and released a new proposed budget on Tuesday, May 23, 2017 which retained the 31 percent reduction in EPA's operating budget. Congress will have to approve the budget so the fight over what cuts are necessary and appropriate is far from over.
  • Methane and Waste Prevention Rule Survives: As we discussed earlier, the Congressional Review Act (CRA) was being utilized to "roll-back" these November 2016 regulations aimed at reducing the waste of natural gas from venting, flaring, and leaking from oil and gas production activities on leased Federal and Indian lands. The United States House of Representations voted to repeal the regulations; however, the measure failed in the Senate by a vote of 49-51. Republican Sens. Susan Collins of Maine, Lindsey Graham of South Carolina, and John McCain of Arizona joined all Democrats to vote against the measure.
  • Plan in Place to Repeal the Clean Water Rule or Waters of the United States Rule (WOTUS): The June 2015 final rule clarified which streams, wetlands, and other waters fall under the clean water regulations. In early May 2017, EPA sent its plan to repeal and replace the rule to the White House for review. This move was in line with the President's February 28, 2017 Executive Order, entitled "Restoring the Rule of Law, Federalism and Economic Growth by Reviewing the 'Waters of the United States' Rule," instructing EPA Administrator Pruitt to review the rule. EPA and the United States Army Corps of Engineers also sent letters this month to all of the state governments asking them for input on revisions to the rule.
  • United States' Withdrawal from the Paris Climate Accord is Still Uncertain: A key meeting of White House advisers scheduled for May 9, 2017, to discuss the United States' participation in the international climate change agreement was indefinitely postponed. Under the agreement, the United States pledged to reduce greenhouse gas emissions by 26 to 28 percent by 2025 (from 2005 levels). The rescheduling will allow the President to hear from foreign leaders directly during the G-7 meeting on May 26-27 in Rome, Italy. Many in the international community and in the President's own inner circle support the United States' participation in the agreement. If the United States doesn't withdraw, the next question would be whether the President seeks to modify the agreement or revise the nation's pledge.
  • FERC Quorum Set to Be Restored: The President nominated Neil Chatterjee and Rob Powelson to fill two of the three commissioner vacancies on the Federal Energy Regulatory Commission (FERC). Chatterjee, a senior energy adviser to Senate Majority Leader Mitch McConnell, and Powelson, a member of the Pennsylvania Public Utility Commission, would take positions that expire in 2021 and 2020, respectively. Each commissioner serves a five-year term. The nominees will require Senate confirmation, which could take several months. FERC has been unable to either approve any new energy projects, such as pending natural gas pipelines, or make major decisions on contested electricity rate plans since it lost a quorum in February when one commissioner stepped down. If confirmed, the two Republican-nominated commissioners would join the two already sitting Democrat-appointed commissioners. This leaves one open commissioner vacancy on the usual five member panel.
  • Decisions Regarding CERCLA Remedies Centralized at EPA Headquarters: EPA Administrator Pruitt issued a memorandum on May 9, 2017, centralizing decision-making on major Superfund remedies at EPA Headquarters. Final decisions on remedies exceeding $50 million under the Comprehensive Environmental Response, Compensation, and Liability Act (CERLCLA) are to be made by Administrator Pruitt or the Deputy Administrator, not by Regional Administrators.  According to the memorandum, this move will improve the remedy selection process by "enhancing consistency in remedy selection across states and the regions."

As we discussed earlier, on March 28, 2017, the President issued Executive Order 13783, entitled "Promoting Energy Independence and Economic Growth," which outlined the Administration's plan to rescind, revise, and/or replace several actions taken by former President Obama to address global climate change. Citing this change in policy direction, EPA has asked several courts to hold ongoing litigations in abeyance so the agency can fulfill this directive. The following challenges to regulations were paused this month.

  • Litigation Challenging Carbon Pollution Standards for Existing Stationary Sources (Clean Power Plan): EPA's final rule setting emissions rate goals for each state was challenged by several states, state agencies, and industry in State of West Virginia v. EPA (Consolidated Case No. 15-1363). Oral arguments were heard by an en banc panel of the United States Court of Appeals for the District of Columbia Circuit on September 27, 2016. On April 28, 2017, the court issued a 60-day stay and ordered all parties to file briefs on whether the case should be remanded back to the agency or just kept on hold. On May, 15, 2017, EPA asked the court to extend the 60-day stay to allow the agency to complete its review and potentially withdraw the rule. Clean Power Plan supporters argued that since the court had already heard oral arguments, it should issue a decision on the merits when the 60-day stay expires. If not, a remand to the agency would be preferable to holding the litigation in abeyance indefinitely.
  • Litigation Challenging Carbon Pollution Standards for New, Modified, and Reconstructed Power Plants: EPA's final rule was also challenged in State of North Dakota v. EPA (Consolidated Case No. 15-1381). On April 28, 2017, the court issued a similar 60-day stay. Unlike the Clean Power Plan, this rule isn't subject to a Supreme Court stay and is already in effect. EPA and opponents of this rule are pushing for an extension of the stay, while supporters are pushing for the court to issue a decision on the merits.  
  • Litigation Challenging Methane Regulations at New Oil and Gas Production Facilities: The United States Court of Appeals for the District of Columbia Circuit suspended consolidated challenges to EPA's methane rule for new oil and gas infrastructure on Thursday, May 18, 2017. Similar to arguments made in support of the stay in the litigation involving the carbon pollution standards, the agency argued that its review of the rule under the March 28, 2017 Executive Order could impact the disputes. The court told the EPA to file status reports regarding its review of the rule every 60 days and directed the parties to file motions to govern future proceedings in the cases.
  • Litigation Challenging Regulation of Hydraulics Fracturing on Federal Lands: On May 5, 2017, the United States Bureau of Land Management (BLM) asked the United States Court of Appeals for the 10th Circuit to hold in abeyance litigation over its rule restricting hydraulic fracturing, or "fracking", for oil and natural gas on Federal and tribal lands. Similar to the arguments made in other courts, BLM argued that these regulations may not reflect the new Administration's policies and that the agency needs time to review and possibly rescind the rule. State of Wyoming et al. v. Jewell et al. (Case Number 16-8068). The court has yet to rule.

On May 4, 2017, EPA Administrator Pruitt announced that he will not participate in several pending lawsuits involving the agency, many of which he pursued as Oklahoma attorney general. These include challenges to the agency's:

  • Final rule setting carbon pollution standards for existing stationary sources (Clean Power Plan);
  • Final rule setting carbon pollution standards for new, modified, and reconstructed power plants;
  • Clean Water Rule or Waters of the United States Rule;
  • Final rule regulating methane emissions from new oil and gas production facilities;
  • Cost analysis related to the Mercury Air Toxics Standards (MATS) rule;
  • Action requiring 36 states to revise emissions exemptions related to startup, shutdown, and malfunction events at power plants;
  • Final rule lowering the acceptable levels of ozone in states;
  • Final rule to control nitrogen dioxide emissions in states; and
  • Litigation surrounding the Volkswagen AG emissions case.

Conclusion

There continue to be many moving parts and unanswered questions as the new Administration settles in and begins to govern after the first 100 days in office. As we have seen already, there are also many key obstacles to the full realization of the Administration's agenda. These include opposition to the agenda by states and environmental non-governmental organizations, a slowdown in regulation repeal due to current court challenges and future litigation, and market forces, not regulations, driving the nation's energy mix. Please check back to this blog for updates. In the meantime, please contact any of the attorneys on this post if you have any questions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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