Tag: environment

Interior Secretary Immediately Implements President’s Executive Order on Energy and Climate

President Trump Executive Order Environmental RegulationNew Secretary of the Interior Ryan Zinke wasted no time implementing the mandates of the Trump Administration’s most recent Executive Order (EO), “Promoting Energy Independence and Economic Growth,” which was issued on March 28. On March 29, the Secretary issued two Secretarial Orders (SO) implementing the March 28 Order, and took additional administrative action consistent with its mandates. Separately, the Secretary has reinstated a public-private advisory committee to address royalty issues.

The first Order, SO 3348, overturns the Obama Administration’s 2016 moratorium on federal coal leasing, and terminates the programmatic environmental impact statement process under National Environmental Policy Act (NEPA) that would have re-evaluated the environmental impacts of the Bureau of Land Management (BLM) coal leasing program.  Hours after this SO was issued, a coalition of environmental groups sued the Department in the U.S. District Court for the District of Montana challenging the decision to lift the moratorium and resume federal coal leasing without first completing the NEPA process.

The second Order, SO 3349, implements the agency review provisions of the March 28 EO directed to the Department of the Interior.  Specifically, SO 3349:

  1. revokes SO 3330, “Improving Mitigation Policies and Practices of the Department of the Interior,” which was a prior Department-wide directive to adopt more landscape-level mitigation strategies and more rigorous compensatory mitigation criteria;

  2. directs each bureau to review all regulations, orders, and policies that could hamper energy development and, where permissible, rescind, revoke or suspend such regulations, orders, and policies;

  3. directs review of Departmental actions impacting energy development, including re-evaluation of BLM’s “venting and flaring rule” for oil and gas leases, for consistency with the policies set forth in the March 28 EO;

  4. directs BLM to “expeditiously proceed” with a proposal to rescind its 2015 hydraulic fracturing rule, which was invalidated by a federal district court and is now on appeal to the Tenth Circuit; and

  5. directs each bureau and office to identify other existing actions that could potentially burden the development of domestic energy resources, particularly oil, gas, coal, and nuclear resources.

The SO affords the Interior agencies little time to accomplish this work. Deadlines fall within the next 90 days, including as soon as 14 days.

Finally, Secretary Zinke signed a charter re-establishing a Royalty Policy Committee (RPC).  As it had done in prior years, the RPC will operate as a Federal Advisory Committee Act body providing regular advice to the Secretary on fair market value and collection of revenue from federal and Indian mineral and energy leases, including renewable energy leases.  The group will consist of up to 28 federal, local, Tribal, state, and other stakeholders, and will also advise on royalty-related regulatory matters.

ARTICLE BY James M. Auslander, Peter J. Schaumberg & John G. Cossa of Beveridge & Diamond PC
© 2017 Beveridge & Diamond PC

Trump Order Sets Up Rollback of Obama Energy and Climate Action

President Trump clean power planOn Tuesday March 28, President Donald Trump signed an Executive Order that takes the first step in rolling back executive actions that had been undertaken by the Obama Administration to address climate change and energy resource development.  The far-reaching order directly revokes or rescinds certain presidential and regulatory actions and directs the review and potential subsequent rescission or revision of other key programs and regulations administered by a variety of agencies.  However, it does not go as far as the Trump Administration might have in uprooting the underpinning of the federal government’s climate authority—the Environmental Protection Agency’s (EPA) 2009 endangerment finding—or in walking away from the international process to address climate change as codified in the 2015 Paris Agreement.  Moreover, implementation of the measures outlined in the Executive Order will likely take significant additional time and process to fully implement and will almost certainly be challenged in the courts.

The Executive Order directs EPA to reconsider its climate-related energy sector regulations.

1.  Clean Power Plan

Most prominently, the Executive Order directs EPA to immediately review the Clean Power Plan, a regulation promulgated pursuant to section 111(d) of the Clean Air Act that is intended to limit greenhouse gas emissions from existing power plants.  The Executive Order directs EPA to “as appropriate” initiate rulemaking to suspend, revise or rescind the rule and related actions.  Following the issuance of the Executive Order, EPA Administrator Scott Pruitt signed a Federal Register notice announcing that EPA is reviewing and, “if appropriate, will initiate proceedings to suspend, revise or rescind the Clean Power Plan.”

Importantly, the Executive Order cannot and did not itself rescind the Clean Power Plan.  This must be done by EPA, through the same notice-and-comment rulemaking process used to promulgate the rule in the first place, which could take up to a year.  A final rule rescinding or revising the Clean Power Plan rule will almost certainly be challenged by states and environmental organizations.

The Clean Power Plan is currently subject to challenge in the D.C. Circuit and has been stayed by the Supreme Court.  The Executive Order directs the Department of Justice (DOJ) to inform the D.C. Circuit of EPA’s plans and ask the court to put those challenges on hold while EPA takes action to rescind or revise the rule. Late Tuesday night, DOJ filed a motion requesting that the D.C. Circuit hold its proceedings in abeyance.  This request likely will be challenged by environmental groups, states, and businesses that have supported the Clean Power Plan.

2.  Carbon Pollution Standards Rule

The Executive Order directs EPA to review and, as appropriate, suspend, rescind or revise its Carbon Pollution Standards Rule, which sets emission limits for new, modified and reconstructed power plants.  Most significantly, this rule establishes a limit on carbon dioxide emissions from new coal-fired power plants that is achievable only if such a plant installs carbon capture technology.  Following issuance of the Executive Order, EPA Administrator Scott Pruitt signed a Federal Register notice announcing EPA’s review and intent to suspend, revise, or rescind the Carbon Pollution Standards Rule as appropriate. As with the Clean Power Plan, any revision or repeal of the rule must be done through notice-and-comment rulemaking and will most likely be subject to legal challenge in the D.C. Circuit.

The Carbon Pollution Standards Rule is currently subject to challenge at the D.C. Circuit.  The Executive Order directs DOJ to notify the court of EPA’s plans and ask the court to put the challenges on hold while EPA takes action to reconsider the rule.  Late Tuesday night, DOJ filed a motion requesting that the D.C. Circuit hold its proceedings in abeyance. As with the request related to the Clean Power Plan, this request likely will draw opposition from those entities that have supported the Carbon Pollution Standards Rule.

3.  Oil and Gas Sector Methane Emission Limits

The Executive Order directs EPA to review and, as appropriate, suspend, rescind or revise a 2016 rule establishing new source performance standards limiting methane emissions from new, modified, and reconstructed sources in the oil and gas sector.  That rule covers equipment, processes, and activities in the onshore production, gathering, transmission, and storage segments of the sector, and also expands upon a 2012 regulation directed at limiting emission of volatile organic compounds (VOCs). Among other things, the rule requires performance of a rigorous protocol for leak detection and repair (LDAR) on a periodic basis.  The rule is currently being challenged in the D.C. Circuit, and the Executive Order directs DOJ to request the case be suspended pending reconsideration of the regulation.  The Order also directs EPA, “if appropriate” and “as soon as practicable,” to suspend, rescind, or revise “any rules and guidance issued pursuant to” its oil and gas methane rule.  The impact this directive will have on EPA’s voluntary Methane Challenge Program and Control Technique Guidelines for VOC emissions from the oil and gas sector—policies that were included in the Obama Administration’s Methane Strategy (which the Executive Order also rescinds, as discussed below)—is uncertain.  For more details about the oil and gas methane new source performance standards, see our VNF alert here.

The Executive Order directs the Department of the Interior to reconsider specific energy-related regulations and policies.

1.  Coal Leasing Program Review and Coal Leasing Moratorium

The Executive Order directs the Department of the Interior (DOI) to amend or withdraw Secretarial Order 3338, which called for the Bureau of Land Management (BLM) to prepare a programmatic environmental impact statement (PEIS) to analyze potential leasing and management reforms to the federal coal leasing program.  Among other topics, the PEIS was to address the process, timing, and location of leasing; whether existing bonus bid, rent, and royalty payment policies provide a fair return to the United States; and the climate change and other impacts of coal development and use. The BLM published a scoping report in January 2017 summarizing the issues raised in meetings and public comments during the scoping period that began in March 2016, and the issues, including preliminary reform options, to be considered in the PEIS.

The Executive Order further directs DOI to suspend a moratorium that the Obama Administration BLM had placed on the leasing of new coal development on federal land while the agency reconsidered the coal leasing program. Unlike some of the other actions specifically identified in the Executive Order, the coal leasing moratorium and environmental review of the coal leasing program can be suspended without going through notice-and-comment rulemaking.

Recognizing “the critical importance of the Federal coal leasing program to energy security, job creation, and proper conservation stewardship” and “finding that the public interest is not served by halting the Federal coal program for an extended time” and that a PEIS is not necessary to consider potential improvements to the program, on March 29, Secretary of the Interior Ryan Zinke issued Secretarial Order 3348 revoking Secretarial Order 3338, halting further activity on the PEIS, and reopening the coal leasing program. Simultaneously, DOI established a Royalty Policy Committee to regularly advise the Secretary on the fair market value of, and collection of revenues from, energy and mineral resource development on federal and Indian lands.

2.  Fracking Rule

The Executive Order directs DOI to review and, if appropriate and as soon as practicable, suspend, revise, or rescind BLM’s March 26, 2015 final rule entitled “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands.”   The final rule imposed certain requirements related to well integrity, surface waste water management, and disclosure of details regarding the composition of hydraulic fracturing fluids.  The final rule had been vacated by the U.S. District Court for the District of Wyoming, but that decision is currently on appeal in the U.S. Court of Appeals for the Tenth Circuit.  Wyoming v. Jewell, No. 15-8134 (10th Cir. filed June 24, 2016).  The Executive Order directs DOJ to inform the court of this order and seek “appropriate relief,” such as requesting that the case be suspended or otherwise stayed pending DOI’s reconsideration of the regulation.

3.  Waste Prevention Rule

The Executive Order directs DOI to review and, if appropriate, suspend, revise, or rescind BLM’s final rule on the prevention of waste of natural gas from venting and flaring.  On November 18, 2016, BLM issued a final rule, entitled “Waste Prevention, Production Subject to Royalties, and Resource Conservation,” intended to reduce natural gas waste and air pollution resulting from onshore flaring, venting, and leaks by oil and gas production on federal and tribal lands, and to provide a beneficial return on public resources for states, tribes, and federal taxpayers.  The final rule, among other things, prohibits the venting of natural gas except in limited circumstances; requires operators to capture most of their gas after accounting for specified volumes of allowed flaring; and imposes rigorous LDAR protocols for limiting equipment leaks.   The final rule took effect January 17, 2017, after an unsuccessful attempt by several states and industry groups to enjoin implementation of the rule in federal court in Wyoming.   Western Energy Alliance et al. v. Jewell, No. 2:16-cv-00280 (D.Wyo. filed Nov. 15, 2016).  However, litigation concerning the final rule is ongoing, and the Executive Order directs DOJ to seek appropriate relief from the court, such as requesting the case be suspended pending reconsideration of the regulation, which the agency had already done.

Additionally, the House of Representatives has passed, but the Senate has not yet taken up, a joint resolution of disapproval under the Congressional Review Act that would rescind this rule and limit BLM’s authority to issue a substantially similar regulation in the future.

4.  Non-Federal Oil and Gas Rights Rules

The Executive Order calls for DOI to review and, as appropriate, suspend, rescind or revise two final rules related to non-federal oil and gas rights on National Park Service (NPS)-managed lands and Fish and Wildlife Service (FWS)-managed refuges.

The first rule, issued by NPS on November 4, 2016, and entitled “General Provisions and Non-Federal Oil and Gas Rights,” updated the regulations (called the “9B regulations”) that govern private and state-owned oil and gas rights in the National Park System, which had not been updated since being promulgated more than 37 years ago.  The final rule, which took effect December 5, 2016, eliminated provisions that previously exempted more than 300 oil and gas operations and requires all operators, except those in Alaska, to comply with the 9B regulations.  The final rule also eliminated the cap on financial assurances, and strengthened enforcement authority by incorporating existing NPS penalty provisions.

The second rule, issued by FWS on November 14, 2016, and entitled “Management of Non-Federal Oil and Gas Rights,” updated the regulations governing the exercise of non-Federal mineral rights located outside of Alaska within the National Wildlife Refuge System (NWRS), which had not been updated since being promulgated more than 50 years ago.  The final rule, which took effect December 14, 2016, instituted a permitting process for new operations; requirements related to well-plugging and reclamation; operating standards; and provisions for fees, financial assurances, and penalties.

Resolutions of disapproval have been introduced in the House of Representatives that would rescind both of these rules under the Congressional Review Act.

The Executive Order directs federal agencies to review regulations that burden domestic energy development.

In addition to directing review of specifically-identified regulations and policies at EPA and DOI, the Executive Order directs all “executive departments and agencies” to review and report on “all existing regulations, orders, guidance documents, policies, and any other similar agency actions” that “necessarily obstruct, delay, curtail, or otherwise impose significant costs on the siting, permitting, production, utilization, transmission, or delivery of” domestic energy resources.  The Executive Order directs agencies to pay “particular attention to oil, natural gas, coal, and nuclear energy resources”; it does not specifically mention renewable energy.  “Executive department and agency” is not defined, and the application of this requirement to independent agencies is not clear.

Specifically, each agency is directed to submit a plan outlining how it will conduct its review to the Office of Management and Budget (OMB) within 45 days.  Draft reports detailing the actions reviewed and including recommendations to address the burdens those actions impose on domestic energy production are due to OMB within 120 days, and final reports are due within 180 days.  Identified regulations that are rescinded can be used by the agency to comply with the President’s Regulatory Review Executive Order (for details on this order see our alert, here).

The Secretary of the Interior already has issued Secretarial Order 3349 commencing DOI’s review, requiring DOI bureaus and offices to submit reports within 21 days identifying regulations, orders, guidance documents, policies, and any other similar agency actions that burden energy development.  DOI has further committed to developing a department -wide plan within 35 days.

The Executive Order directs the Council on Environmental Quality to rescind guidance incorporating climate change into environmental reviews.

The Executive Order directs the Council on Environmental Quality (CEQ) to rescind its final guidance encouraging federal agencies to consider impacts from greenhouse gas emissions and climate change in environmental reviews pursuant to the National Environmental Policy Act (NEPA).  The final guidance, issued August 5, 2016, characterized climate change as a “fundamental environmental issue” and recommended that federal agencies consider the potential effects of a proposed action and related activities on climate change, using reasonably foreseeable, direct and indirect greenhouse gas emissions as a “proxy” for assessing impacts.  Although not binding or otherwise legally enforceable, federal agencies typically strive for compliance with NEPA guidance documents, and courts may afford greater weight to interpretations and guidance issued by CEQ.

This guidance can be revoked without having to go through notice or comment or other administrative procedures.  However, the Executive Order does not preclude federal agencies from continuing to consider the impacts of federal action on climate change in order to mitigate litigation risk when conducting environmental reviews.

The Executive Order rescinds the Interagency Social Cost of Carbon Guidance.

The social cost of carbon is a metric for quantifying the costs of greenhouse gas emissions and the benefits of policies that reduce greenhouse gas emissions.

The Obama Administration convened an Interagency Working Group, led by OMB, to implement a uniform range of values for agencies to use when quantifying impacts of carbon dioxide emissions and emission reductions—the “Social Cost of Carbon for Regulatory Impact Analysis” (SCC).  Similar guidance documents have been developed for two other greenhouse gases: methane, and nitrous oxide.  The SCC has largely been used to comply with executive orders requiring agencies to analyze impacts of regulations.  In some instances, agencies have used the SCC to set the stringency of regulatory actions in order to comply with statutory obligations.

The Executive Order disbands that Working Group and rescinds the uniform SCC guidance and related documents.  Based on court precedent, at least some agencies will likely still be required to consider the quantified benefits of greenhouse gas reduction in their rulemakings. See Ctr. for Biological Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2008); High Country Conservation Advocates v. U.S. Forest Serv., 52 F. Supp. 3d 1174 (D.Colo. 2014).

The Executive Order directs agencies to instead rely on long-standing cost-benefit analysis guidance outlined in OMB Circular A-4 when quantifying the costs of greenhouse gas emissions or benefits of greenhouse gas emission reductions.  Whereas the cost ranges required under the interagency SCC guidance included the impacts of greenhouse gas emissions on a global basis, OMB Circular A-4 directs agencies to primarily evaluate a rule’s costs and benefits only as they impact the United States.  This different direction, along with a number of other important technical changes, will likely result in agencies attributing much lower monetized benefits to actions that reduce greenhouse gases, if such quantification is performed at all.

The Executive Order revokes certain other energy- and climate change-related executive orders, presidential memoranda, and frameworks.

The Executive Order directly revokes the following four executive orders and presidential memoranda signed by President Obama related to energy and climate change.

First, the Presidential Memorandum on Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment directed agencies to more fully develop and implement requirements for the mitigation of adverse impacts from development and other activities on land, water, wildlife, and other ecological resources. Among other things, the memorandum established a mitigation hierarchy (avoid, minimize, then compensate); set a “net benefit goal” or, at a minimum, a no net loss goal for natural resources; emphasized large-scale or landscape-level planning and mitigation; and directed a number of agencies to take certain, specified actions to strengthen mitigation policies.  As noted above, following the Executive Order, the Secretary of the Interior issued Secretarial Order 3349 which, in part, revokes Secretarial Order 3330, “Improving Mitigation Policies and Practices of the Department of the Interior,” dated October 13, 2013, and directs a review of all actions taken pursuant to that order and the revoked Presidential Memorandum for possible reconsideration, modification, or rescission. This review will include the U.S. Fish and Wildlife Service’s recent Mitigation Policy, dated November 21, 2016, and Endangered Species Act Compensatory Mitigation Policy, dated December 27, 2016.

Second, the Presidential Memorandum on Power Sector Carbon Pollution Standards directed EPA to conduct a rulemaking to regulate greenhouse gas emissions from the power sector.  Rescinding this is consistent with the Executive Order’s direction to suspend, rescind or revise the Clean Power Plan and Carbon Pollution Standards Rule.  It also leaves open the possibility that EPA will only repeal, but not replace, these two rules.

Third, the Presidential Memorandum on Climate Change and National Security established a framework and directed agencies to take actions to ensure that climate change-related impacts are fully considered in the development of national security doctrine, policies, and plans.

Fourth, Executive Order 13653 (Preparing the United States for the Impacts of Climate Change) directed federal agencies to take steps to prepare for climate change impacts and to support state and local resilience efforts, and established a State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience.

The Executive Order also rescinds the Obama Administration’s Climate Action Plan, which identified addressing climate change as a priority and established a framework for doing so across federal agencies, and the Obama Administration’s Methane Strategy, a framework for addressing emissions of methane across a number of federal agency programs.  Rescinding these documents will have no independent legal effect and can be done with no further process.

The Executive Order directs agencies to review and, as appropriate, suspend, rescind, or revise regulations, orders, guidance documents, policies, and any other similar agency actions made in furtherance of these executive orders, presidential memoranda, and frameworks.  Such actions may require notice-and-comment rulemaking.  As noted above, DOI already has initiated its review, requiring that departments identify all such actions issued pursuant to them or currently under development within 14 days, identify actions that should be reconsidered, rescinded, or revised within 30 days, and submit to the Deputy Secretary draft revised or substitute actions within 90 days.

The Roads Not Taken

Finally, the Executive Order is notable for two actions that it does not take.

It does not direct reconsideration of, or even discuss, EPA’s 2009 finding that greenhouse gas emissions cause air pollution which endangers public health and welfare (the “endangerment finding”).  This finding was made under the Clean Air Act in response to the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007) (holding that greenhouse gases are an “air pollutant” under the Clean Air Act) and upheld by the D.C. Circuit, Coalition for Responsible Regulation v. EPA, 684 F. 3d 102 (D.C. Cir. 2012).  The endangerment finding serves as the necessary factual and legal predicate authorizing EPA to adopt greenhouse gas regulations under the Clean Air Act.  Doing so would have called into question not only EPA’s energy-related greenhouse gas regulations targeted for repeal or revision by the Executive Order, but also regulations under Clean Air Act section 202 limiting greenhouse gas emissions from passenger cars and trucks, and heavy duty vehicles and its requirement that large new and modified stationary sources install the best available control technology to limit greenhouse gas emissions pursuant to the Clean Air Act Prevention of Significant Deterioration program.

Second, the Executive Order does not direct the State Department to withdraw the United States from the Paris Agreement or otherwise mention that agreement.  However, this silence cannot be interpreted to mean that the United States will remain and continue to participate in the Paris Agreement in the manner set forth by the Obama Administration.  For example, if the Trump Administration reverses or significantly revises the policies targeted by the Executive Order, it will be difficult, if not impossible, to achieve the level of emission reductions that correspond to the U.S. pledge under the Paris Agreement.  This pledge—referred to as the U.S. “Nationally Determined Contribution” (NDC)—is a 26 percent reduction in greenhouse gas emissions below 2005 levels by 2025, and requires periodic updating of the greenhouse gas emissions reductions pledged under the NDC to assure the achievement of the Paris Agreement’s goals.  Accordingly, the Executive Order might presage a future action by the Trump Administration either to withdraw from the Paris Agreement or to submit a revised NDC with a significantly lower greenhouse gas reduction pledge.

The Executive Order calls for a large number of specific actions from a wide variety of agencies.  How agencies go about implementing those actions and the outcome of the inevitable legal challenges to those actions remains to be seen.

ARTICLE BY Kyle W. Danish, Stephen C. Fotis, Tyson C. Kade, Frances Bishop Morris, Jonathan D. Simon & Avi B. Zevin of Van Ness Feldman LLP

© 2017 Van Ness Feldman LLP

USDA Releases Report On Lifecycle Greenhouse Gas Balance Of Ethanol

greenhouse gasOn January 12, 2017, USDA released a report on the lifecycle greenhouse gas (GHG) balance of corn ethanol, titled “A Life-Cycle Analysis of the Greenhouse Gas Emissions of Corn-Based Ethanol.”  The study reviewed industry and farm sector performance over the past decade and found that in the United States corn-based ethanol generates 43 percent less GHG emissions than gasoline.  Compared to previous studies, the lifecycle GHG benefits were greater due to improvements in corn production efficiency, conservation practices, and ethanol production technologies.  The report also presented two projected GHG emissions profiles for corn ethanol in 2022, with one assuming a continuation of observable trends and the other analyzing additional improvements that could further reduce the GHG emissions.

ARTICLE BY Lauren M. Graham, Ph.D. of Bergeson & Campbell, P.C.

©2017 Bergeson & Campbell, P.C.

What’s New About the Revised TSCA – Toxic Substances Control Act

Toxic Substances Control ActAfter years of effort, comprehensive legislation to reform the Toxic Substances Control Act (TSCA) passed the House of Representatives on May 24, 2016.  The Frank R. Lautenberg Chemical Safety for the 21st Century Act is expected to pass the Senate the week of June 6.  President Obama is expected to sign the legislation shortly thereafter.  At that point, the Environmental Protection Agency (EPA) will begin its implementation of the new TSCA.

This alert first highlights key ways in which passage of TSCA amendments will impact industry.  Next, it outlines the key changes that the legislation will make to TSCA.  It then identifies those provisions of the bill as passed by the Senate in December 2015 that are retained in the bill as passed by the House on May 24 (thus expected to remain in the final Senate-passed version) and those provisions that are changed.  Finally, it considers what is likely to happen in the early days of implementation of the new TSCA.

Note:  Section references in this alert refer to TSCA as it will be amended by the legislation.

How Passage of TSCA Reform Legislation Will Affect Industry

Alone among major environmental statutes, TSCA had not been significantly amended since its enactment in October 1976, almost 40 years ago – until now.  During much of that time, EPA has regarded TSCA’s principal control provision, section 6, as unworkable.  As a result, EPA has not proposed any rulemaking under section 6 in 25 years, ever since a court invalidated the EPA ban on asbestos in 1991.  Other aspects of TSCA have also shown their limitations.

Once enacted, this legislation will amend section 6 to make it much easier for EPA to evaluate and, if appropriate, regulate chemicals.  The bill contains provisions mandating that EPA identify substances that are high priorities for risk evaluations; evaluate the health and environmental risks of those substances; decide, without regard to cost or other non-risk factors, whether a high-priority substance presents an unreasonable risk; and regulate those substances found to present an unreasonable risk under the conditions of use.  All of these steps are subject to tight time deadlines.  EPA must meet some quotas in the first five years.  This means that industry can expect EPA to review more chemicals, to review them more systematically and thoroughly, and to regulate those chemicals that it finds to be in need of regulation.

Continue reading…

Article By Mark N. Duvall, Ryan J. Carra, Timothy M. Serie & Sarah A. Kettenmann of Beveridge & Diamond PC
© 2016 Beveridge & Diamond PC

Army Corps Proposes Renewal of Nationwide Permits for Work in Waters of the United States

On May 23, 2016, the U.S. Army Corps of Engineers (“Corps”) released a pre-publication version of its “Proposal to Reissue and Modify Nationwide Permits” (the “Proposal”).  The Proposal presents a draft version of the Corps’ latest renewal of its program for “Nationwide Permits” (NWPs) that authorize general categories of construction in waters of the U.S.  This begins the process for renewing and revising the 2012 NWPs that are set to expire on March 18, 2017.

The Corps has proposed changes to several existing NWPs, as well as the issuance of two new NWPs and modification to some of the General Condition and Definitions.  The Corps’ proposed modifications to existing NWPs, which are tabulated in the Corps’ summary table for the Proposal, aim largely to clarify the terms of the NWPs rather than change their substantive authorization.  More significant, however, are the comments the Corps has solicited, which address critical issues such as the relationship between the NWP program and the definition of the phrase “waters of the United States” (“WOTUS”) (which defines the scope of the Corps’ jurisdiction); potential changes in acreage limits for certain NWPs; potential changes in the Corps’ use of waivers; and potential changes in the pre-construction notifications (“PCN”) process.

Once the Proposal is published in the Federal Register, the Corps will provide a 60-day comment period.  Parties interested in the NWP renewal process should begin preparing to submit comments now.  Permittees with coverage under an existing NWP may wish to consider seeking to “grandfather” their rights by entering into a contract by March 18, 2017 to perform the work authorized by the NWPs, and/or by commencing construction by that date, and must complete construction by March 18, 2018.

Background

Section 404(e) of the Clean Water Act (“CWA”) authorizes the Secretary of the Army to “issue general permits on a State, regional, or nationwide basis for any category of activities involving discharges of dredged or fill material.”  33 U.S.C. §1344(e)(1).  Activities that qualify for a general permit must be similar in nature, cause only minimal adverse environmental effects when performed separately, and have only minimal cumulative environmental effects. 33 C.F.R. § 325.5(c).

The most common general permits are NWPs, which provide streamlined review and authorization for categories of activities that the Corps has determined have minimal impacts on the aquatic environment.  NWPs automatically expire unless renewed every five years.  33 U.S.C. §1344(e)(2).  The 2012 NWPs became effective on March 19, 2012 and authorized 50 different categories of activities.  The EPA maintains a web page that provides a chronology of NWPs issued to date and related materials.

NWP Renewals and Revisions

The Corps’ Proposal states that, unless a particular NWP is specifically discussed in the Proposal’s preamble, the Corps is proposing to reissue the NWP without changing any of its terms.

The Corps’ summary table describes the proposed changes to individual NWPs.  A few of the key changes include:

  • NWP 12 (Utility Line Activities):

    • Authorize the use of temporary mats. Add note referencing definition of “single and complete linear project” and 33 C.F.R. §330.6(d).  Add note with reference to Corps regulations for required minimum clearances of overhead electric power transmission lines over navigable waters.

    • Clarify that NWP 12 only authorizes crossings of waters of the United States associated with the construction, maintenance, and repair of utility lines. In cases where Department of the Army authorization is required, NWP authorizes inadvertent returns of drilling muds through sub-soil fractures (frac-outs that might occur during directional drilling operations to install utility lines). Add note stating that NWP authorizes utility line maintenance and repair activities that do not qualify for the CWA §404(f) exemption for maintenance.

  • NWP 14 (Transportation Projects)

    • Add note referencing definition of “single and complete linear project” and 33 C.F.R. §330.6(d).

    • Does not authorize storage buildings, parking lots, train stations, aircraft hangars, or other non-linear transportation features.

  •  NWP 29 (Residential Developments)

    • Clarify that any losses of stream bed are applied to the 1/2-acre limit.

  • NWP 33 (Temporary Construction, Access, and Dewatering)

    • Require PCNs only for activities in section 10 waters.

  • NWP 39 (Commercial and Institutional Developments)

    • Clarify that any losses of stream bed are applied to the 1/2-acre limit. Add wastewater treatment facilities to the list of examples of attendant features.

  • NWP 43 (Stormwater Management Facilities)

    • Stormwater or wastewater management facilities that meet the criteria at 33 C.F.R. §328.3(b)(6) are not waters of the United States, and maintenance does not require a section 404 permit. Clarify that any losses of stream bed are applied to the 1/2-acre limit.

  • NWP 44 (Mining Activities)

    • For mining activities in non-tidal open waters, the 1/2-acre limit applies to the mining area. The loss of non-tidal wetlands plus the mining area in non-tidal open waters cannot exceed 1/2-acre. Clarify that any losses of stream bed are applied to the 1/2-acre limit. Final reclamation plan required for PCN, if reclamation is required.

  • NWP 51 (Land-Based Renewable Energy Generation Facilities)

    • Clarify that any losses of stream bed are applied to the 1/2-acre limit. Revise Note 2 to include NWP 14 activities.

  • NWP 52 (Water-Based Renewable Energy Generation Pilot Projects)

    • Add floating solar panels in section 10 waters to the list of activities authorized by this NWP, with 1/2-acre limit. Clarify that any losses of stream bed are applied to the 1/2-acre limit. Add note stating that hydrokinetic renewable energy generation projects authorized by the Federal Energy Regulatory Commission under the Federal Power Act of 1920 do not require separate authorization under Section 10 of the Rivers and Harbors Act of 1899.

Two New Proposed NWPs

In addition to these proposed modifications to existing NWPs, the Corps has proposed to add two new NWP categories:

  • NWP A (Removal of Low-Head Dams) would authorize removal of low-head dams, which is defined as a dam built to pass upstream flows over the entire width of the dam crest on an uncontrolled basis) for river restoration and public safety.

  • NWP B (Living Shorelines) would authorize construction and maintenance of living shorelines (natural and man-made materials to establish and maintain marsh fringes or other living elements to reduce erosion while retaining or enhancing ecological processes) for shore erosion control.

“Single and Complete Project”

The Corps is proposing to add a note regarding the term “single and complete project” to NWP 12 (Utility Line Activities).  The Corps applies the term “single and complete project” when determining the scope of NWP 12’s coverage for linear projects such as utility lines and transportation projects.  NWP 12 is routinely used to help expedite the permitting of energy development projects.

The following definition of “single and complete project” was added during the 2012 NWP process:

that portion of the total linear project proposed or accomplished by one owner/developer or partnership or other association of owners/developers that includes all crossings of a single water of the United States (i.e., a single waterbody) at a specific location. For linear projects crossing a single or multiple waterbodies several times at separate and distant locations, each crossing is considered a single and complete project for purposes of NWP authorization.

In order to qualify for coverage under NWP 12, each single and complete project cannot result in the loss of more than 1/2–acre of jurisdictional waters. Thus, for very large linear projects (including utility, cable, telephone, etc. lines as well as pipelines used to move oil, gas, slurry, etc.), there may be hundreds of separate NWP 12 verifications issued by the Corps, one for each crossing.

Importantly, the Proposal does not propose to modify the definitions of single and complete linear or non-linear projects.  The Proposal does, however, include a “clarification” of how single and complete projects are to be construed to address situations where both NWPs and Individual Permits are used for one project.  For example, while an overall project may qualify for the use of NWPs, one or two of the project’s components (crossings) may still require an Individual Permit (e.g., where greater than 1/2-acre of wetlands will be lost). Note 2 reminds applicants of the Corps’ regulations at 33 C.F.R. §330.6(d), which can require an Individual Permit for all crossings if one triggers an Individual Permit and the others do not have “independent utility.”  While the proposed Note 2 is consistent with the definition of single and complete project and the Corps’ historic treatment of these types of projects, it is unclear why Corps has chosen to emphasize this issue, which may be worthy of public comment.

Grandfathering Jurisdictional Determinations

According to the Proposal, activities that were authorized by the 2012 NWPs that have commenced or are under contract to commence by March 18, 2017, will have one year (i.e., until March 18, 2018) to complete those activities under the terms and conditions of the 2012 NWPs.  However, activities that were previously authorized by the 2012 NWPs that have not commenced or are not under contract to commence by March 18, 2017, will require reauthorization under the 2017 NWPs, provided those activities qualify for authorization under the 2017 NWPs.

Additionally, those projects with approvals under the 2012 NWPs should look for specific language in their verification letters, which, according to 33 C.F.R. §330.6(a)(ii), should include a statement that the verification will remain valid if  the NWP authorization is reissued without modification or the activity complies with any subsequent modification of the NWP authorization.  In such cases, a permittee under an existing NWP might not need to seek reauthorization under the 2017 NWPs.

Request for Comments on Other Important Issues

The Corps has solicited comments on a number of potentially-significant changes and other issues, including the following:

  • “WOTUS” issue

    • The Corps is seeking the views of NWP users on how the 2015 revisions to the definition of “waters of the United States” might affect the applicability and efficiency of the proposed NWPs.

  • Acreage and Linear Foot Limitations

    • The Corps is seeking comment on whether to retain the 1/2-acre limit that has been imposed on certain NWPs (i.e., NWPs 12, 14, 21, 29, 39, 42, 43, 44, 50, 51, and 52), or to impose different acreage limits on these NWPs.

  • Pre-construction notification (“PCN”)

    • The Corps is soliciting comments on changing the PCN thresholds for those NWPs that require pre-construction notification.

    • The Corps is also proposing to develop a standard form PCN that will be released in a separate notice and comment rulemaking.

  • Waivers

    • The Corps is soliciting comment on five aspects of waivers: (1) making changes to the numeric limits that can be waived; (2) whether to retain the authority of district engineers to issue activity-specific waivers of certain NWP limits; (3) whether to impose a linear foot cap on certain waivers; (4) whether to impose a linear foot cap on losses of intermittent and ephemeral stream bed potentially eligible for certain waivers; and (5) whether to require compensatory mitigation.

Pre-Construction Notifications

Many NWPs require the submittal of PCNs to the District Engineer before the prospective permittee may act pursuant to the permit.  Notification is required under General Condition 18(c), for example, if any species listed under the Endangered Species Act or designated critical habitat may be affected by or is in the vicinity of the project.

The procedures for PCN are set forth in General Condition 31.  In general, the Corps must be notified that a project proposed for authorization under a NWP requiring PCN is being undertaken.  The District Engineer must determine if PCN is complete within forty-five (45) calendar days of the receipt.  If the application is not complete, PCN review does not commence until all of the requested information has been received.  The prospective permittee may proceed if he/she is notified in writing that the activity may proceed under the NWP or if forty-five days have passed from the District Engineer’s receipt of the complete PCN and the permittee has not received written notification from the District or Division Engineer.  However, if the prospective permittee was required to notify the Corps pursuant to General Condition 18 (Endangered Species) or General Condition 20 (Historic Properties), he/she cannot begin the activity until receiving written notification. The Corps always retains the right to modify or revoke authorization under a NWP by following procedures specified at 33 C.F.R. §325.7.   Where PCN is not required, obtaining written verification from the Corps that a project meets all the applicable criteria and conditions for authorization under a NWP may be helpful to avoid a Corps’ investigation of potential violations.

As noted above, the Corps is proposing to eliminate the PCN requirement for certain NWPs; is proposing to develop a standard form PCN that will be released in a separate notice and comment rulemaking; and is soliciting comments on changing the PCN “thresholds” for those NWPs that require pre-construction notification.  All of these PCN-related topics are worthy of public comment, especially for frequent users of particular NWPs.

Other Conditions on the Use of NWPs

In addition to proposing changes to certain NWPs, the Corps also is proposing to modify a number of General Conditions (“GCs”).  GCs apply to all NWPs and currently there are 32 of them.  The Corps proposes to modify GCs 12 (Soil Erosion and Sediment Controls), 16 (Wild and Scenic Rivers), 18 (Endangered Species), 19 (Migratory Birds and Bald and Golden Eagles), 20 (Historic Properties), 23 (Mitigation), 30 (Compliance Certification), 31 (Activities Affecting Structures or Works Built by the United States), 32 (Pre-Construction Notification).

There are also regional and state conditions that may apply to project proponents seeking to utilize the NWP process.  Each Corps District can adopt regional conditions specific to NWPs implemented within their Districts.  Similarly, each state is required to issue water quality certifications under section 401 of the CWA and a consistency determination under the Coastal Zone Management Act for all permits under section 401 of the CWA, including NWPs.  Thus, states also have the authority to deny, preapprove, or establish conditions for the use of the NWPs.

Next Steps

The changes included in the Proposal appear relatively minor, especially compared to the breadth and depth of issues for which the Corps is seeking comment.  It would not be surprising, especially considering the drastic changes the Corps and the Environmental Protection Agency made between the proposed and final WOTUS rule, to see the Corps implement some of the “Important Issues” flagged above.  It will be very important for interested parties to carefully review and draft comments on the specific issues for which the Corps is seeking comments that are most likely to impact business and project development plans.

Finally, project proponents who have received coverage under one of the 2012 NWPs and have concerns about potential changes in the 2017 NWPs may wish to consider entering into contracts to complete all authorized work before the 2012 NWPs expire on March 18, 2017, arranging to have all of the work completed by March 18, 2018, or obtaining Corps verification of continued coverage under the 2017 NWPs.

EU Policy Update – February 2016 re: Dutch Presidency and Brexit, Digital Single Market Policy, Energy and Environment

Dutch Presidency and Brexit

In January, the Netherlands took over the Presidency of the Council of the European Union from Luxembourg.  In line with the political intentions of the Juncker Commission to be ‘big on the big issues but small on the small issues’, the Netherlands promises to focus on the essentials during its Presidency.  In particular, the Dutch Presidency would like to focus on migration and international security.  Another priority is to strengthen the free movement of services and the free movement of workers, where the Presidency would like to strengthen the protection of workers posted abroad.

Additionally, on February 2, the President of the European Council, Donald Tusk, presented his proposals for a ‘new settlement of the United Kingdom within the European Union’.  If accepted, they would allow David Cameron to campaign in the ‘Brexit’ referendum on the continuing membership of the UK in the bloc.  The Heads of State and Government will discuss and adopt the text in a meeting on February 18.  For Covington’s analysis of the proposals presented and the referendum, please see here.

Digital Single Market Policy

The formal adoption of the EU Network and Information Security (NIS) Directive is a step closer following a vote on January 14 by the European Parliament’s internal market and consumer protection (IMCO) committee.  The committee confirmed that the minimum harmonisation requirements under the Directive do not apply to digital service providers.  This means that Member States will not be able to impose any further security or notification requirements on digital service providers beyond those contained in the Directive, when transposing it into national law.  The NIS Directive will now be put forward for a plenary vote in the European Parliament.  Once it is published in the Official Journal of the European Union and enters into force later this year, Member States will have 21 months to transpose it into national law.  Member States will then have a further 6 months to apply criteria laid down in the Directive to identify specific operators of essential services covered by national rules.  These processes are likely to be complicated, and companies that may fall within scope should participate in consultations and monitor developments across the EU over the coming months.

On January 19, the European Parliament adopted a resolution on the Digital Single Market Strategy of the European Commission.  The parliamentarians called for ambitious and targeted actions to complete Europe’s digital single market.  Among other things, the MEPs support the end of geo-blocking practices across Europe, the setting of a single set of contract rules and consumer rights for online sales and for digital content, and the modernization of the copyright framework.

On February 2, the European Commission and U.S. Government reached a political agreement on the new framework for transatlantic data flows.  The new framework – the EU-U.S. Privacy Shield – succeeds the EU-U.S. Safe Harbor framework. The EU’s College of Commissioners has also mandated Vice-President Ansip, in charge of the Digital Single Market, and Commissioner Jourová, Commissioner for Justice, Consumers and Gender Equality, to prepare the necessary steps to put in place the new arrangement.  For Covington’s full analysis of the announcement of the EU-U.S. Privacy Shield, please see here.

Energy and Environment Policy

The European Commission published a proposal to update the approval requirements and market surveillance of new passenger cars and their respective systems and components.  The Commission’s proposal aims at strengthening the credibility and enforcement of the applicable safety and environmental requirements for cars, following the controversy regarding Volkswagen last year.

In a significant departure from past EU legislation, the proposal would empower the Commission to impose administrative fines on economic operators who are found not to have complied with the approval requirements, of up to €30,000 per non-compliant vehicle.

The Commission’s proposal focuses on three elements.  First, the European Commission proposes to reinforce the credibility of the type-approval assessment of new vehicles by ensuring that the technical services testing the new vehicles are fully independent from car manufacturers.  For this purpose, the proposal would enhance the financial independence of such technical services and require Member States to create a national fee structure to cover the costs of type-approval testing and market surveillance activities for vehicles.  Moreover, in order to prevent the use of ‘defeat devices’, as in the Volkswagen controversy, the proposal would grant approval authorities and technical services access to the software and algorithms of the vehicles tested.

Second, the proposal includes measures to strengthen the market surveillance of vehicles after they are type-approved and in circulation.  Member State authorities and the Commission would be able to conduct tests and inspections on cars available on the market and would be empowered to adopt restrictive measures in case of non-compliance of vehicles.  Among other proposed measures, the Commission would establish and chair a forum to coordinate the network of national authorities responsible for type-approval and market surveillance.  Member States would also be able to inspect and take measures against vehicles type-approved in a different EU Member State.

Third, the Commission proposes measures to ensure that non-compliant manufacturers are penalized in case of non-compliance.  Member States would be required to adopt penalties for non-compliant economic operators, including car manufacturers, importers and distributors, as well as technical services.  This may be complemented by administrative fines, imposed by the Commission, of up to €30,000 per non-compliant vehicle, as referred to above.

Finally, the European Commission hopes to ensure a more uniform application of the legislation in the EU by proposing a Regulation as opposed to the current Framework Directive 2007/46/EC.  If adopted, the Regulation would be directly applicable in national law with no requirement of transposition.

The Commission proposal is available here; it has been sent to the Council and European Parliament for consideration.

The European Commission is expected to propose a revision of the Fertilizers Regulation (EC) 2003/2003 in March 2016.  This revision comes in parallel to the Circular Economy Package announced in December 2015, which aims to create a single market for the reuse of materials and resources.

Under the current EU Regulation 2003/2003, manufacturers and importers of fertilizers may choose to comply with the laws of the Member States where they market their products, or to get their products approved and CE-labeled under the Regulation.  However, Regulation 2003/2003 only regulates a limited number of categories of fertilizer products.

According to Commission officials, the proposal aims to create a level playing field between existing, mostly inorganic categories of fertilizers, and innovative fertilizers, which often contain nutrients or organic matter recovered and recycled from biowaste or other secondary raw materials.  Therefore, the proposal will make the approval process more flexible for new categories of CE-labeled fertilizers.

The draft legislative text is structured in four parts: (i) a list of materials that could be used for the production of CE-marketed fertilizing products under the conditions included in the annexes of the proposal; (ii) a list of product function categories for fertilizers, rules for blends of different product categories, and respective safety and quality requirements for each category included in the annexes; (iii) an annex with the labelling requirements by product function; and (iv) a section with the different conformity assessment procedures.  Fertilizers that follow the harmonized EN standards will be presumed to conform with the requirements of the regulation.

Moreover, the proposal would continue to allow Member States to regulate national fertilizing products.  Products that are not in compliance with the EU Fertilizers Regulation and do not carry the CE label would be able to marketed in a particular Member State if they comply with its national legislation.

Importantly, the revised Fertilizers Regulation is also likely to include an EU-wide limit on the presence of cadmium in fertilizers.  In November 2015, the Scientific Committee on Health and Environmental Risks published an opinion concluding that new scientific information available justifies an update of the 2002 opinion on Member State Assessments of Risk to health and the Environment from Cadmium – see here.

The draft proposal is currently in inter-service consultation among the different Directorates General of the European Commission.  Fertilizer manufacturers wishing to voice their opinion regarding the future Regulation on fertilizers should reach out now to the different services of the Commission.

Internal Market and Financial Services Policies

On January 15, the European Commission launched a public consultation on non-binding guidance for reporting non-financial information by certain large companies, following Article 2 of Directive 2014/95/EU – see here.  Directive 2014/95/EU aims at improving the transparency of certain large companies related to Environmental matters, social and employee matters, human rights, and anticorruption and bribery matters.  The feedback gathered during the consultation will be used to prepare the guidelines and facilitate the disclosure of non-financial information by undertakings.  The public consultation will run until April 15, 2016.

On January 28, the European Commission presented its so-called Anti-tax Avoidance Package – see here.  The initiative includes: (i) a new communication on tax avoidance in the EU; (ii) a proposal for an Anti-Tax Avoidance Directive; (iii) a proposal for a Directive implementing the G20/OECD Country by Country Reporting (CbC Reporting); (iv) a Recommendation to the Member States on Tax Treaties, and (v) a Communication on an External Strategy regarding tax avoidance.

The Anti-Tax Avoidance Directive includes six measures, which aim at limiting the abuse of six well-established practices used to avoid taxes in various jurisdictions in Europe.  These include the mismatch in legal characterisation of financial instruments or legal entities between Member States, excessive inter-group interest charges, and a general anti-abuse rule against arrangements the essential purpose of which is to obtain a tax advantage.

The legislative proposal on CbC Reporting aims to strengthen the existing mandatory and automatic exchange of information between the Member States in the field of taxation.  The proposal also requires the parent entity of a multinational group to report to the competent authorities the aggregated information on the revenue, profit (or loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash equivalents, in respect of each jurisdiction in which the group operates.

Finally, because tax avoidance has a strong global dimension, the EU will also cooperate better with third countries on tax issues. The Commission therefore proposes to adopt a common EU system to screen, list and put pressure on third countries that refuse to adopt policies to limit tax avoidance. In addition, before the end of 2016, the Commission and Member States will consider whether to put in place sanctions to incentivize third countries to improve their tax systems.

Life Sciences and Healthcare Policies

At the beginning of February 2016, the Dutch presidency will resume trilogues on the legislative proposals regarding the medical devices Regulation (“MD proposal”) and the in vitro diagnostic medical devices Regulation  (“IVD proposal”).  The European Commission presented this pair of proposals in September 2012, and recently called upon the Council of Ministers and the European Parliament to reach an agreement in the first half of 2016.  The Dutch delegation therefore intends to ramp up the number of trilogues between the institutions to five political meetings and 10 to 15 technical meetings during its presidency.  Nonetheless, important differences remain between the negotiators on the reprocessing of single use devices, liability insurance for manufactures, and the classification of devices in the framework of the IVD proposal.  It is understood that the Dutch presidency hopes to achieve an agreement by the Employment, Social Policy, Health and Consumer Affairs Council of June 17, 2016.

Trade Policy and Sanctions

On January 1, the Deep and Comprehensive Free Trade Area (“DCFTA”) between the EU and Ukraine became operational.  According to the Commission, the implementation of the DCFTA will improve the Gross Domestic Product of Ukraine by circa 6% and increase economic welfare for Ukrainians by 12% over the medium term.

On January 13, the European Commission held an initial orientation debate on Market Economy Status for China in anti-dumping proceedings.  Under the current WTO rules, the EU can calculate potential anti-dumping duties on the basis of data from another market economy country rather than the domestic prices used in China, because there is a presumption that market economy conditions do not prevail in China.  However, this provision, included under Article 15(a)(ii) of China’s Protocol of Accession to the WTO, will expire on December 12, 2016.  The Commission is therefore considering its options for changing the methods used to calculate dumping margins in respect of China.  It is important for the Commission to start the process on time, because any change in the anti-dumping rules are likely to require legislation to be adopted by the Council and the European Parliament.  Given the delicate nature of such negotiations, the process is expected to take a year.

January 16, 2016, saw the Implementation Day of the Joint Comprehensive Plan of Action (“JCPOA”) – the historic deal reached among China, France, Germany, Russia, the UK, the U.S., the EU and Iran to ensure the exclusively peaceful nature of Iran’s nuclear program.  As part of that agreement, the Council of the EU lifted all nuclear-related economic and financial EU sanctions on Iran.  It did so by bringing into force the EU legislative package adopted on October 18, 2015, following the verification by the International Atomic Energy Agency (“IAEA”) that Iran had complied with the requirements laid down in the JCPOA.  As of January 16, many sectors and activities have been reactivated, including, among others: financial, banking and insurance measures; oil, gas and petrochemical; shipping and transport; gold and other metals; software; and the un-freezing of the assets of certain persons and entities.  Note that proliferation-related sanctions, including arms and missile technology sanctions, will remain in place until 2023 (subject to various conditions).  For the Council press release, see here.  For more details, see the Council Information Note here.

Article By Sebastian F.A. Vos of Covington & Burling LLP
© 2016 Covington & Burling LLP

Testing Waters: Supreme Court Agrees To Hear Army Corps’ Clean Water Act Determinations Challenge

On Friday, the U.S. Supreme Court agreed to hear a challenge to the Eighth Circuit’s April 2015 ruling that U.S. Army Corps of Engineers’ (“Army Corps”) jurisdictional determinations are final agency actions subject to judicial review. The Eighth Circuit’s decision is contrary to a July 2014 Fifth Circuit ruling and thus created a circuit split. The Supreme Court’s decision could resolve that split and settle the question of whether parties may challenge Army Corps’ jurisdictional determinations.

Many types of development projects may impact “waters of the U.S.” under the Clean Water Act (CWA). Such activities might therefore be subject to the Army Corps’ requirements for permitting and implementation of mitigation measures. Whether “waters of the U.S.” may be impacted by a project is often far from clear, so project developers and property owners frequently request jurisdictional determinations from the Army Corps before proceeding with a project. The Army Corps’ long-standing position is that its jurisdictional determinations are not judicially reviewable final decisions since a party is not required to act or refrain from acting based solely on the decision. Rather, the Army Corps has taken the position that a party’s rights are not affected until a party is either denied a permit or subject to enforcement proceedings for acting without a permit. Developers and property owners have long struggled with this position, since a party must either go through the time intensive and costly permitting process before being able to seek review of the underlying jurisdictional decision, or choose to act without a permit and then possibly be subject to enforcement proceedings.

The Fifth Circuit Decision

In Belle Co. LLC et al. v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), the Army Corps had issued a jurisdictional determination that a portion of the property in question was a “water of the U.S.”

On appeal to the Fifth Circuit, the Court decided that the Army Corps’ jurisdictional determinations are not final agency actions subject to judicial review, but are simply “notifications” regarding a property’s classification. The Fifth Circuit explained that for an agency action to be final it must: 1) be the “consummation of the agency’s decisionmaking”, and 2) the action must be a vehicle “by which rights or obligations have been determined, or from which legal consequences will flow.” The Fifth Circuit ruled that although jurisdictional determinations are the consummation of agency action, they do not determine legal rights or consequences, these decisions merely serve as a “notice.” Agreeing with the Army Corps’ position, the Court reasoned that the jurisdictional determination did not force the companies to refrain from acting on the property, and did not impose a penalty scheme for continuing with the project.

The Eighth Circuit Decision

The more recent Eighth Circuit decision, Hawkes Co., Inc., et al v. U.S. Army Corps of Engineers, 782 F.3d 994 (8th Cir. 2015), dealt with the Hawkes Company’s plan to mine peat. The Army Corps determined there were “waters of the U.S.” on the proposed mining site so the company would need a CWA permit before it could start mining. At the first stage of judicial review, the District Court denied Hawkes’ challenge, agreeing with the Fifth Circuit’s view that the determination was not a final agency action. The Eighth Circuit reversed, holding that Army Corps’ jurisdictional determinations are judicially reviewable final agency actions under the Administrative Procedure Act. The Eighth Circuit held that the Fifth Circuit had misapplied the law in ruling otherwise.

The Eighth Circuit noted that without judicial review the Hawkes Company had no choice other than “to incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties.” These options adversely affected the property and business interests of the company. The Court reasoned: “the prohibitive costs, risk, and delay of these alternatives to immediate judicial review evidence a transparently obvious litigation strategy: by leaving [property owners] with no immediate judicial review and no adequate alternative remedy, the Corps will achieve the result its local officers desire . . . without having to test whether its expansive assertion of jurisdiction” would ultimately be upheld in the courts. The Eighth Circuit found the jurisdictional determination process analogous to the administrative order process at issue in the 2012 Supreme Court decision in Sackett. There the Court ruled “[t]here is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review – even judicial review of the question whether the regulated party is within the [federal agency’s] jurisdiction.” Sackett v. EPA, 132 S. Ct. 1367, 1374 (2012).

The Eighth Circuit found the Army Corps’ contention that Hawkes had adequate alternative remedies – either seeking a permit or acting without one and then challenging any compliance action that resulted – was untenable and failed to consider that Hawkes could never recover the time it lost or expense it incurred in taking either action.

Practical Implications of a Supreme Court Decision

The Supreme Court’s upcoming decision could have important practical implications for project developers and property owners. The Army Corps’ long-term position has left the regulated community with few pre-permitting or enforcement options. The Eighth Circuit decision, and the Supreme Court’s decision to review this issue, provide some hope to developers and property owners that they may soon be able to seek judicial review of jurisdictional determinations before going through the permitting process.

Article By Sarah A. Slack & Amanda K. Beggs of Foley & Lardner LLP

© 2015 Foley & Lardner LLP

EPA and U.S. Army Corps of Engineers Approve New Definition of "Waters of the United States"

The U.S. EPA and the U.S. Army Corps of Engineers announced today that they have jointly approved a new definition of the key term “waters of the United States,” a term that defines the limits of federal jurisdiction over surface waters under the Clean Water Act and several other federal laws. The rule containing the new definition will become effective 60 days after its publication in the Federal Register, which typically occurs within a week or so of the agencies’ public announcement of a new rule.

The agencies announced the new rule after several years of wrestling with this regulatory definition, which establishes the scope of federal wetlands permitting authority, federal discharge limitations, and other important programs. EPA and the Corps assert in the preamble to the rule that this new definition is “narrower” than the existing regulatory definition, and that “fewer waters will be defined as ‘waters of the United States'” than under existing regulations. In the debate leading up to today’s announcement, however, a variety of affected parties – landowners, developers, farmers, manufacturers and others – have argued that the agencies’ effort to redefine “waters of the United States” will lead to a broadening of federal jurisdiction.

Several features of the new rule are of particular importance to interested parties in California and other western arid states:

  • All “tributaries” are jurisdictional (i.e., subject to federal regulation) “by rule” if they have an ordinary high water mark and a “bed and bank” and if those features can be shown to be hydrologically linked to navigable waters or interstate waters. The “by rule” designation means that it will no longer be necessary for the agencies to establish that a tributary has a significant link to a navigable water, regardless of how attenuated that connection might be. There are no threshold requirements for volume of water nor for frequency of flow. By way of example, it appears that a “tributary” that is miles removed from the closest river, lake or ocean, with only a trickle of flow that occurs once every 10 years or more, will nevertheless be deemed jurisdictional as long as there is physical evidence of a “bed and bank” and an ordinary high water mark.

  • Certain “adjacent wetlands” are now also jurisdictional “by rule” if, for example, they are located in a 100-year floodplain and are within 1,500 feet of a “traditional navigable water” (e.g., a river, lake, or ocean) or of a tributary.

  • Case-by-case determinations of whether an aquatic feature has a “significant nexus” to a navigable water – thereby rendering it jurisdictional – will continue to be made for a variety of different waterbody types, including “western vernal pools in California” and any surface water feature within the 100-year floodplain or within 4,000 feet of a navigable water or covered tributary that is not already defined as jurisdictional by the “by rule” standard. The term “significant nexus” is given some definition in the final rule by reference to a familiar list of functional ecosystem values served by wetlands and other water bodies.

The final rule does call out a narrow class of “waters” that are determined not to be jurisdictional as “waters of the United States,” including, but not limited to,

  • certain types of ditches;

  • artificially irrigated areas that would revert to dry land should the irrigation cease;

  • erosional features, including gullies, rills, non-wetland swales;

  • groundwater, including groundwater drained through subsurface drainage systems;

  • stormwater control features

  • swimming pools, ornamental waters created in dry land, “puddles.”

Added to this list is a statement in the preamble to the final rule that it does not “regulate shallow subsurface connections nor any type of groundwater.”

Importantly, this rule applies only to new jurisdictional determinations that are required after the rule’s “effective date.” The agencies will not reopen existing approved jurisdictional determinations unless the usual conditions apply for a revision of the determination.

Implementation of this rule will be far more complicated and detail-driven than what can possibly be captured here in this very brief synopsis. It is hard to calculate its impact on the regulated community, especially in places like California where the Corps and EPA have traditionally taken a very aggressive approach to their claims of jurisdiction. At the very least, this rule will bolster those claims by giving the agencies a formal regulation to rely upon. Litigation challenging this rule has been threatened for months, and certain Members of Congress have vowed to do what they can to take legislative action.

ARTICLE BY James T. Burroughs & David D. Cooke of Allen Matkins Leck Gamble Mallory & Natsis LLP

© 2010-2015 Allen Matkins Leck Gamble Mallory & Natsis LLP

EPA and U.S. Army Corps of Engineers Approve New Definition of “Waters of the United States”

The U.S. EPA and the U.S. Army Corps of Engineers announced today that they have jointly approved a new definition of the key term “waters of the United States,” a term that defines the limits of federal jurisdiction over surface waters under the Clean Water Act and several other federal laws. The rule containing the new definition will become effective 60 days after its publication in the Federal Register, which typically occurs within a week or so of the agencies’ public announcement of a new rule.

The agencies announced the new rule after several years of wrestling with this regulatory definition, which establishes the scope of federal wetlands permitting authority, federal discharge limitations, and other important programs. EPA and the Corps assert in the preamble to the rule that this new definition is “narrower” than the existing regulatory definition, and that “fewer waters will be defined as ‘waters of the United States'” than under existing regulations. In the debate leading up to today’s announcement, however, a variety of affected parties – landowners, developers, farmers, manufacturers and others – have argued that the agencies’ effort to redefine “waters of the United States” will lead to a broadening of federal jurisdiction.

Several features of the new rule are of particular importance to interested parties in California and other western arid states:

  • All “tributaries” are jurisdictional (i.e., subject to federal regulation) “by rule” if they have an ordinary high water mark and a “bed and bank” and if those features can be shown to be hydrologically linked to navigable waters or interstate waters. The “by rule” designation means that it will no longer be necessary for the agencies to establish that a tributary has a significant link to a navigable water, regardless of how attenuated that connection might be. There are no threshold requirements for volume of water nor for frequency of flow. By way of example, it appears that a “tributary” that is miles removed from the closest river, lake or ocean, with only a trickle of flow that occurs once every 10 years or more, will nevertheless be deemed jurisdictional as long as there is physical evidence of a “bed and bank” and an ordinary high water mark.

  • Certain “adjacent wetlands” are now also jurisdictional “by rule” if, for example, they are located in a 100-year floodplain and are within 1,500 feet of a “traditional navigable water” (e.g., a river, lake, or ocean) or of a tributary.

  • Case-by-case determinations of whether an aquatic feature has a “significant nexus” to a navigable water – thereby rendering it jurisdictional – will continue to be made for a variety of different waterbody types, including “western vernal pools in California” and any surface water feature within the 100-year floodplain or within 4,000 feet of a navigable water or covered tributary that is not already defined as jurisdictional by the “by rule” standard. The term “significant nexus” is given some definition in the final rule by reference to a familiar list of functional ecosystem values served by wetlands and other water bodies.

The final rule does call out a narrow class of “waters” that are determined not to be jurisdictional as “waters of the United States,” including, but not limited to,

  • certain types of ditches;

  • artificially irrigated areas that would revert to dry land should the irrigation cease;

  • erosional features, including gullies, rills, non-wetland swales;

  • groundwater, including groundwater drained through subsurface drainage systems;

  • stormwater control features

  • swimming pools, ornamental waters created in dry land, “puddles.”

Added to this list is a statement in the preamble to the final rule that it does not “regulate shallow subsurface connections nor any type of groundwater.”

Importantly, this rule applies only to new jurisdictional determinations that are required after the rule’s “effective date.” The agencies will not reopen existing approved jurisdictional determinations unless the usual conditions apply for a revision of the determination.

Implementation of this rule will be far more complicated and detail-driven than what can possibly be captured here in this very brief synopsis. It is hard to calculate its impact on the regulated community, especially in places like California where the Corps and EPA have traditionally taken a very aggressive approach to their claims of jurisdiction. At the very least, this rule will bolster those claims by giving the agencies a formal regulation to rely upon. Litigation challenging this rule has been threatened for months, and certain Members of Congress have vowed to do what they can to take legislative action.

ARTICLE BY James T. Burroughs & David D. Cooke of Allen Matkins Leck Gamble Mallory & Natsis LLP

© 2010-2015 Allen Matkins Leck Gamble Mallory & Natsis LLP

EPA Issues Changes to Due Diligence Requirements for All Appropriate Inquiries (AAI) Under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

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2005 ASTM No Longer Accepted Effective Oct. 6, 2015

On October 6, 2014, EPA issued a final rule mandating the use of the 2013 standard, ASTM E1527-13, for conducting Phase I Environmental Site Assessments for satisfaction of All Appropriate Inquiries (“AAI”) under CERCLA. [Click here for a copy of EPA’s preamble to the final rule, published in the federal register today].

In December 2013, EPA adopted a new AAI rule allowing use of the updated 2013 standard and continuing to allow use of the 2005 standard, ASTM E1527-05. The reference to both standards was widely criticized as a source of confusion in due diligence requirements. Prospective owners/operators were strongly encouraged to use the 2013 standard; however, they had flexibility to decide whether to use the 2013 or 2005 standard for each particular site.

Today’s revised AAI rule removes the reference to the 2005 standard, thus allowing use of only the 2013 standard for entities performing AAI. The new rule does not modify the 2013 standard; it merely mandates the use of it for AAI.

Notably, the new rule will not become effective until October 6, 2015, giving prospective property owners/operators and consultants one year to complete site assessments that are currently being performed consistent with the 2005 standard. Though EPA’s expectation is that entities will no longer use the 2005 standard and transition to the 2013 standard, the EPA’s rule allows use of the 2005 standard for property acquired prior to the effective date of October 6, 2015.

The primary differences between the 2013 and 2005 standards are:

  1. The 2013 standard requires evaluation of the potential for the release of subsurface vapor contamination (vapor migration), and more clearly identifies vapor migration as a recognized environmental condition. The 2005 standard did not explicitly require an analysis of vapor migration
  2. The 2013 standard clarifies existing and adds new definitions, which as a result, revises the potential scope of assessment. For example, the term “Controlled Recognized Environmental Condition” was added to the standard to include past releases that have been addressed but allow contamination to remain in place.
  3. The 2013 standard requires a more extensive review of agency files and historical site documents.

Overall, the 2013 standard is considered more comprehensive and thorough based on today’s realities and is touted by EPA in its final rule preamble as “the consensus-based, good customary business standard.”

Copyright © 2014 Ryley Carlock & Applewhite. A Professional Association. All Rights Reserved.
ARTICLE BY

Bert H. Acken
Jon Steeler
Julie A Rosen
OF
Ryley Carlock & Applewhite, A Professional Corporation