EPA Issues Final Hydraulic Fracturing Report, Concluding that The Practice “Can Impact Drinking Water Resources under Some Circumstances”; Follow-on Federal Regulation Highly Unlikely

Posted in EPA, Hydrofracking, Water

When Congress first tasked the Environmental Protection Agency in 2009 with studying the impacts of hydraulic fracturing on drinking water resources, pundits on both sides of the debate collectively held their breath: at last, they thought, there would be an independent, comprehensive, scientific study of the oil and gas extraction technique.

Seven years in the making, EPA’s final report, dubbed, “Hydraulic Fracturing for Oil and Gas: Impacts from the Hydraulic Fracturing Water Cycle on Drinking Water Resources in the United States,” (EPA-600-R-16-236ES) and issued December 13, was greeted not with a bang, but a whimper. Environmentalists who had hoped that the study might represent a scathing indictment of the technique were disappointed, as were industry representatives who hoped that the EPA would issue an unassailably clean bill of health.

Hampered by an uncertain budget and its failure to secure the participation of private companies in prospective case studies, the EPA concluded, seemingly unremarkably, that activities throughout the hydraulic fracturing water cycle – from water withdrawal through disposal of produced water – “can impact drinking water resources under some circumstances.” But, the agency said, it could not quantify the frequency of impacts on a national level.

In addition to finding that spills of hydraulic fracturing chemicals had sometimes reached drinking water resources, the EPA also identified incidents of the well injection process itself contaminating drinking water resources. One such incident resulted from improper well cementing, while another stemmed from a burst production casing.

The final assessment clarifies the findings in the agency’s June 2015 draft final report. There the EPA concluded that it had not found “evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States.” Industry greeted this conclusion enthusiastically, while environmentalists and others cried foul.

Last August the agency’s own Science Advisory Board (SAB) sharply criticized the statement as unsupported by the data and not reflective of the significant data gaps in the agency’s research. The SABspecifically faulted the EPA’s failure to provide updates on allegations of drinking water contamination in Pavillion, Wyoming, Parker County, Texas and Dimock, Pennsylvania – the small town at the center of the 2010 documentary Gasland which featured now infamous scenes of homeowners setting tap water alight.

The final report relegates discussion of these high-profile matters to three brief text boxes, which collectively reflect uncertainty in determining the precise source and mechanism of contamination and suggest that additional data may be available that would allow other researchers to draw more certain conclusions.

While the 666-page report said little about Pavillion, Parker County and Dimock, the EPA researchers concluded that six hydraulic fracturing activities are “more likely than others to result in more frequent or more severe impacts” to drinking water: water withdrawals; chemical spills; injection of fluids into wells with inadequate mechanical integrity; injection of fluids directly into groundwater; inappropriate discharge of fracturing wastewater into streams and lakes; and storage of fracturing wastewater in unlined pits.

While the EPA could not pinpoint the overall incidence of impacts, the report contains some clues. Regarding well integrity, for example, the EPA found that in 0.5% of the 28,500 hydraulic fracturing jobs it surveyed, “all of the protective barriers intended to prevent [ ] fluid migration had failed, leaving the groundwater source vulnerable to contamination.” Chemical spills, meanwhile, ranged from about 0.4 to 12.2 reported spills per 100 wells. While those numbers may seem modest, they, along with documented impacts, nevertheless contravene the pre-study message that there were no known cases of drinking water contamination stemming from hydraulic fracturing.

In a different political environment, regulators might have relied on these numbers to support additional rulemaking at the federal level to protect drinking water resources from hydraulic fracturing impacts. The incoming Trump administration, however, has made no secret of its disdain for EPA and its regulations on fossil fuel production and use. Absent an environmental catastrophe, new federal requirements on hydraulic fracturing are highly unlikely.

More than ever, regulation of these activities will fall to the states. For now, though, with oil and gas prices at or near historic lows – and with a continuingly cooled pace of oil and gas exploration and production activities – states may be loath to issue new regulations or take aggressive enforcement action.

 

Massachusetts Releases Draft Regulations to Further Reduce GHG Emissions

Posted in Greenhouse Gas, Massachusetts, Regulatory

The Massachusetts Department of Environmental Protection (MassDEP) recently released draft regulations for public comment which aim to further reduce greenhouse gas (GHG) emissions from various industry sectors in Massachusetts, including transportation, electricity generation, and natural gas pipelines. Public comments on these regulations are due by Feb. 24, and can be submitted in writing to MassDEP or orally at hearings MassDEP will be holding throughout the state.

Background

These regulations are the latest effort to reduce GHG emissions in Massachusetts, which started with the 2008 enactment of the Global Warming Solutions Act, M.G.L. chapter 21N, (GWSA). That statute mandated an 80 percent reduction (relative to a 1990 baseline) in statewide GHG emissions by 2050. In addition, the statute mandated that MassDEP set an interim GHG emissions reduction target between 10 percent and 25 percent for 2020 from the 1990 baseline. MassDEP elected to adopt the higher end of that range and set the GHG emissions reduction target for 2020 at 25 percent below the 1990 baseline.

The GWSA also required MassDEP to adopt “regulations establishing a desired level of declining annual aggregate emission limits for sources or categories of sources that emit greenhouse gas emissions.” M.G.L. c. 21N, § 3(d). MassDEP concluded that existing regulations limiting sulfur hexafluoride leaks, a state low emissions vehicle (LEV) incentive program, and Massachusetts’ ongoing participation in the regional CO2 cap and trade program (known as the Regional Greenhouse Gas Initiative or RGGI) satisfied this mandate.

A citizens group sued MassDEP to force the promulgation of additional regulations to ensure that the 25 percent GHG emissions reduction target was met by 2020. The Massachusetts Supreme Judicial Court last year ruled in favor of the citizens group, holding that MassDEP was obligated by the statute to promulgate regulations that “address multiple sources or categories of sources of greenhouse gas emissions, impose a limit on emissions that may be released, limit the aggregate emissions released from each group of regulated sources or category of sources, set emission limits for each year, and set limits that decline on an annual basis.” Kain v. DEP, 474 Mass. 278, 281-82 (2016). 

Following this ruling, Governor Baker issued Executive Order 569 (“Establishing an Integrated Climate Change Strategy for the Commonwealth”), which established a number of policy directives regarding climate change mitigation and adaptation. One of those directives set a schedule for MassDEP to issue GHG emission reduction regulations, specifically draft regulations, by Dec. 16, 2016, and final regulations by Aug. 21, 2017. Keeping to that schedule, MassDEP held pre-proposal stakeholder meetings this past fall and then released draft regulations last month.  

Regulatory Details 

In drafting the GHG emissions reduction regulations to conform with the GWSA and the Kain decision, MassDEP concluded the regulations must: (1) be mass-based limits; (2) decline annually; (3) limit the aggregate emission levels of existing and new sources within a category; (4) be enforceable; and (5) ensure reductions within Massachusetts. MassDEP also elected to include a margin of error to ensure the 25 percent reduction target was met by 2020. As of 2013, GHG emissions within Massachusetts had been reduced by 19.7 percent, leaving a 5.3 percent gap to close in order to meet the 25 percent reduction target. MassDEP estimates that its draft regulations will reduce GHG emissions by another 7.2 percent, thereby providing some margin of error for achieving the 2020 reduction target. 

The regulations target the following areas for emissions reductions: (1) CO2 emissions from vehicles, (2) CO2 emissions from other transportation sources, (3) methane emissions from natural gas distribution systems, (4) CO2 emissions from electricity generation, (5) sulfur hexafluoride emissions from utility switchgear, and (6) clean energy standard for retail electricity generators. Of these, nearly all of the proposed 7.2 percent GHG emissions reductions are concentrated in the transportation and electricity generation industries. 

MassDEP calculates that, unlike other industry sectors, GHG emissions from the transportation sector in Massachusetts have increased since 1990 and now represent the largest share (40.8 percent) of the statewide GHG emissions. The draft regulations propose a 3.1 percent reduction by 2020, nearly all of which MassDEP forecasts will be achieved through its existing regulations (310 CMR 7.40) promoting the use of Low Emissions Vehicles (LEVs). The draft regulations (310 CMR 60.05 and 60.06) also propose reducing CO2 emissions from mobile equipment and buildings used by state transportation agencies, but MassDEP openly acknowledges that the anticipated reduction (0.01 percent) are more symbolic than meaningful. 

In contrast to the transportation sector, the electricity generation sector in Massachusetts reduced GHG emissions by 42 percent from 1990 to 2013, and now accounts for 21.5 percent of the statewide GHG emissions. The draft regulations propose a further reduction of 4.0 percent. MassDEP justifies this reduction on the fact that, as other sectors like transportation and commercial and residential buildings increasingly rely on electricity over petroleum, it becomes more important to reduce GHG emissions from electricity. The draft regulations propose doing so by imposing an annually increasing requirement for power from clean energy sources (310 CMR 7.75) and other GHG emissions reduction measures including a credit trading program (310 CMR 7.74). 

Citing the fact that the global warming potential of sulfur hexafluoride is 23,900 times that of CO2, MassDEP is proposing to create a declining annual, aggregate limit for the permissible sulfur hexafluoride emissions from gas-insulated switchgear used by large utilities (specifically, Eversource and National Grid). This limit is stated as a proposed leak rate, which the draft regulations (310 CMR 7.72) would decrease from 3.5 percent in 2015 to 1.0 percent by 2020. 

Finally, the draft regulations (310 CMR 7.73) propose to reduce methane emissions (which have 25 times the global warming potential of CO2) from natural gas distribution systems in Massachusetts. The proposed regulations piggyback on an existing natural gas leak detection and elimination program and set declining annual methane emission limits from main and service lines owned by gas companies that have previously approved plans to replace leak-prone gas infrastructure. 

Additional Interim Reduction Limits?

During the last legislative session, the Massachusetts Senate unanimously passed S. 2092, which would have added interim GHG emission reduction limits for 2030 and 2040 (respectively, 35-45 percent and 55-65 percent from the 1990 baseline). The House did not take up the Senate bill, allowing it to expire at the end of the legislative session. Comments made during a recent legislative hearing on MassDEP’s draft GHG emissions reduction regulations indicate that the Senate bill may be re-filed in the next legislative session with the intention of forcing the House (and Governor Baker) to respond to the Senate’s proposal for additional interim GHG emission reduction standards.

 Conclusion

Given the relatively narrow focus of MassDEP’s proposed regulations, their near-term impact will be limited primarily to the transportation, gas distribution, and electricity generation sectors. Beyond 2020, however, substantially larger statewide GHG emissions reductions may be achieved and there is legislative interest in setting interim reduction targets that could mandate that most of the remaining GHG emissions reductions are achieved in the next two decades. From that perspective, these regulations represent the opening salvo of what will likely be a significant regulatory effort to further reduce statewide GHG emissions in the next several decades – an effort that will likely proceed regardless of how federal climate policy evolves in the next few years.

 

Investors in Many Syndicated Conservation Easement Deals Must Notify the IRS

Posted in Real estate, Transactional

The IRS has designated certain syndicated conservation easement transactions as “listed transactions.” This will require taxpayers who have invested in such transactions to file a notice with the IRS. It will also result in reporting and list maintenance obligations for professionals (law firms, accountants, appraisers, etc.) who provided material advice on such transactions. If the required notice is not provided, severe penalties will be imposed.

Conservation easements, a tax planning technique that has gained popularity with real estate developers, have been under IRS scrutiny for over a decade. Syndicated conservation easements are those offered to prospective investors in a partnership or other pass-through entity that purport to give investors the opportunity to obtain a charitable contribution deduction for donation of the easement. The IRS just increased the heat by classifying these syndicated conservation easement deals as listed transactions. The notice required to be given to the IRS by law may result in a close examination of the reported deals; consequently, taxpayers considering going into a syndicated conservation easement transaction should be extremely cautious.

The tax code allows a charitable contribution deduction for the donation of a qualified conservation contribution (QCC) if several conditions are satisfied.  A QCC can either be for an open space conservation easement or a facade easement for a certified historic structure. With an open space easement, the donor puts a perpetual deed restriction on the property which limits development. With a façade easement, alteration of the exterior is restricted. The amount of the charitable deduction that may be claimed is based on the reduction in value to the real property as a result of the development restriction, which must be documented by a qualified appraisal. The IRS claims in many syndicated conservation easement transactions that the value of the affected real property prior to the recording of the development restriction is greatly overstated, thereby artificially increasing the value of the charitable contribution. The IRS has successfully challenged the over-valuation of many QCC’s, and designating these deals as listed transactions will allow the Service to easily identify these transactions for a closer look and likely denial of the deduction.

IRS Notice 2017-10 which was released on Dec. 23, 2016, says that a conservation easement is a listed transaction where: (1) the investor receives promotional materials describing the transaction; and, (2) the amount of the charitable deduction claimed to be available to the investor is 2.5 times greater than the amount invested. The IRS Notice says that taxpayers who have invested in such a listed transaction on or after Jan. 1, 2010, must disclose the investment for tax years that are open under the statute of limitations as of Dec. 23, 2016. For most taxpayers, this means that a disclosure will need to be made for deals entered into on or after Jan. 1,  2013; however, if the investor extended the statute of limitations for the 2010, 2011, or 2012 tax years, the notice requirements may still be required for deals entered into on or after Jan. 1, 2010.

The required notice of involvement in such transactions is filed on IRS Form 8886.

In addition, Notice 2017-10 says that advisors who provide material assistance with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out  the easement transaction since 2010 also are required to report the transaction to the IRS and maintain a list of investors in the deal. A material advisor in a listed transaction must file IRS Form 8918 to comply with this notice requirement.

For more information on filing obligations if you have either invested in or acted as a material advisor on a syndicated conservation easement transaction, please contact your Greenberg Traurig attorney.

EPA’s Amendments to the Standards for Hazardous Waste Generators

Posted in Articles, EPA, Hazardous Waste, Pennsylvania, RCRA, Solid waste

Last month, the U.S. Environmental Protection Agency published its amendments to, and reorganization of, the regulations governing generators of hazardous waste, 81 Fed. Reg. 85,732 (Nov. 28). These rules govern the hundreds of thousands of enterprises nationally that produce wastes characterized or listed as hazardous under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Sections 6901-91i. For the most part, these amendments do not change the requirements that generators face, but merely reorganize the regulations in a way that will make old guidance and citations obsolete. However, the final rule also codifies a number of EPA interpretations of the rules found in letters and memoranda that the EPA has written over the years. In addition, in some respects the rules will change when this rulemaking becomes effective on May 30, 2017.

Read more from my article in The Legal Intelligencer supplement, PA Law Weekly by clicking here.

FAST Act Implementation Progress: An Important Tool for Expediting Energy Projects for the Incoming Trump Administration?

Posted in FAST Act, Federal, Federal Regulation, Infrastructure, NEPA, Permitting

FAST Act Implementation Progress: An Important Tool for Expediting Energy Projects for the Incoming Trump Administration?

On Dec. 4, 2015, President Obama signed the Fixing America’s Surface Transportation Act, also known as the “FAST Act,” which sought to expedite the NEPA environmental review process for major infrastructure projects. One year later, rulemaking and guidance from both the Federal Permitting Improvement Steering Council (FPISC) and affected agencies have helped provide some contours to the program as a whole, painting a better picture of how this proposed expedited review will function.

 

Summary of 2016 Activity

  • FPISC Takes Shape

As discussed in our prior blog post, a substantial area of uncertainty under the FAST act related to the newly established Federal Permitting Improvement Steering Council; now, some of those questions have been answered. The Steering Council, which comprises 15 federal agencies, is an expansion of the 13-member Federal Permitting Steering Committee established by a 2012 executive order. Agencies in the FPISC include:

  1. Advisory Council on Historic Preservation
  2. Army Corps of Engineers
  3. Department of Agriculture
  4. Department of Commerce
  5. Department of Defense
  6. Department of Energy
  7. Department of Homeland Security
  8. Department of Housing and Urban Development
  9. Department of the Interior
  10. Department of Transportation
  11. Environmental Protection Agency
  12. Federal Energy Regulatory Commission
  13. Nuclear Regulatory Commission
  14. U.S. Coast Guard
  15. Udall Foundation

The FPISC has also updated the Permitting Dashboard to reflect the changed regulatory atmosphere under the FAST Act.

 

  • Richard Kidd IV Appointed Executive Director of the FPISC

In July, President Obama appointed Richard G. Kidd IV, the Deputy Assistant Secretary of the Army for Energy and Sustainability, to serve as the Executive Director of the FPISC. In his capacity as Deputy Assistant Secretary, a position he has held since 2010, and in prior positions with the Department of Energy, the State Department, and the United Nations, Executive Director Kidd has extensive experience with infrastructure projects and environmental review.

 

  • Establishment of Covered Project Inventory

In coordination with its constituent agencies, the FPISC has established the preliminary inventory of the “Covered Projects” under Section 41 of the FAST Act. On Sept. 22, Executive Director Kidd announced a list of 34 pending projects that will benefit from expedited review. The inventory contains a number of major infrastructure projects, ranging from Nuclear Regulatory Commission approvals of new generators to HUD Coastal Resiliency projects on Manhattan’s East Side.Surprisingly, however, none of the projects currently covered by the FAST Act—a law passed ostensibly to modernize surface transportation—fall within the traditional realm of transportation projects. Of the projects approved, many fall within the energy sector. The projects include:

  • Four nuclear power plants
  • One offshore oil and gas terminal
  • Five electricity transmission projects
  • Eleven natural gas and pipelines
  • Seven solar and hydroelectric generating plants
  • Two HUD coastal resiliency plans
  • One solar panel manufacturing plant

 

  • Individual Agencies Provide Initial Guidance

In addition to the activities undertaken by the FPISC in aggregate, its constituent agencies have been providing additional guidance on the implementation of the FAST Act. Through opinions, Fact Sheets, and FAQs, the individual agencies like the Department of Transportation and the Department of Agriculture have explained the way that Section 41 and other elements of the FAST Act will affect numerous elements of current and future programs, such as funding mechanisms and state obligation systems.

 

How Much FAST-er Under the New Administration?

As with many areas of law and policy, the future of the FAST Act under the Trump administration remains up in the air. The FAST Act, which seeks to reduce the burden of the regulatory apparatus by expediting environmental review, would appear to align with many of the goals stated by the incoming administration, including its emphasis on infrastructure and energy projects. It is therefore likely that many more projects—even those not traditionally seen as infrastructure projects—will benefit from the expedited review procedures over the next four years.

Federal Court Rejects Citizen Suit to Force Stormwater Permitting Program

Posted in Clean Water Act, Federal, Permitting, Stormwater

Last week, a federal district court in Rhode Island dismissed a citizen suit that sought to radically expand Clean Water Act stormwater permitting programs. In Conservation Law Found’n v. U.S. Environmental Protection Agency, Civil Action No. 15-165-ML, the plaintiff attempted to invoke a rarely used provision in the Clean Water to mandate that the U.S. EPA regulate stormwater discharges to impaired waterbodies with approved Total Maximum Daily Loads (TMDLs). The court granted the government’s motion to dismiss in what appears to be a case of first impression for the federal courts.

33 U.S.C. Section 1342(p) grants the U.S. EPA authority to regulate stormwater discharges where it has determined that those discharges “contribute[] to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States.” Referred to as “Residual Designation Authority,” this provision has been exercised in only two instances (both at the instigation of environmental groups) to address water quality impacts from stormwater discharges.

In this case, Conservation Law Foundation (CLF) sued the U.S. EPA to force the agency to require permits for stormwater discharges to five impaired waterbodies in Rhode Island. Under 33 U.S.C. Section 1313(d), states must develop TMDLs for such impaired waterbodies, which essentially act as pollution budgets to help ensure that the impaired waterbodies achieve state water quality standards. CLF argued that, by approving the TMDLs for the impaired waterbodies, the U.S. EPA had made a “determination” that stormwater discharges to those waterbodies “contribute[] to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States.” According to CLF, that determination triggered a non-discretionary duty to exercise the U.S. EPA’s Residual Designation Authority and required permits for stormwater discharges from commercial and industrial facilities to those impaired waterbodies.

The court rejected that claim, based on a close examination of the five TMDLs in question, none of which the court concluded rose to the level of an actual determination that stormwater discharges to those waterbodies were contributing to a violation of a water quality standard or otherwise were a significant contributor of pollutants to waters of the United States. On that basis, the court dismissed CLF’s suit. CLF has not yet appealed, and may not appeal, that decision.

Beyond being a case of first impression for a federal court, this case is significant for two other reasons. First, CLF has filed a similar case in Massachusetts, seeking to compel the U.S. EPA to regulate stormwater discharges to the Charles River based on TMDLs the U.S. EPA previously approved for that watershed. The government has moved to dismiss that case as well and a hearing on that motion is scheduled for January 2017. Last week’s ruling, though tied to the specific TMDLs at issue in Rhode Island, may have some persuasive authority for the Massachusetts federal district court.

Second, there are thousands of approved TMDLs around the United States, and an even larger backlog of impaired waterbodies that require TMDLs which have not yet been approved. If taken literally, CLF’s claims would mandate that the U.S. EPA (or the delegated state permitting agency) establish stormwater permitting programs for each TMDL for which stormwater is determined to “contribute[] to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States.” CLF and other environmental groups have repeatedly petitioned the U.S. EPA to exercise its Residual Designation Authority, which the U.S. EPA has declined to do. The Rhode Island and Massachusetts cases reveal that those environmental groups are now turning to the federal courts to force the regulatory outcome they have been seeking. In the first court ruling to address it, that strategy has been rejected.

EPA Seeks to Impose Financial Responsibility Requirements on Hardrock Mine Operators

Posted in Chemicals, Environment, EPA, Federal Regulation

On Dec. 1, the Environmental Protection Agency (EPA) administrator signed a proposed rule, “Financial Responsibility Requirements under CERCLA § 108(b) for Classes of Facilities in the Hardrock Mining Industry,” which would impose new financial responsibility requirements for current owners and operators of hardrock mines, including numerous metal mines in the western United States. Federal Register publication of the proposed rule is expected within the month.

According to the agency, this rule is designed to ensure that mining companies have the resources to pay for liabilities arising under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Under CERCLA’s strict joint and several liability scheme, the government may incur up-front costs for responding to pollution at a particular site, and is able to recover those cleanup costs from “potentially responsible parties,” defined in the CERCLA to include current and past owners and operators.

Problems can arise when a potentially responsible party is unable to pay (e.g., because it has filed for bankruptcy), which under CERCLA’s joint liability regime causes that party’s share of liability to pass to any financially secure co-defendants, or if there are none, to the government. To avoid this problem in the mining sector, the EPA seeks to impose financial responsibility requirements on all hardrock mine owners and operators, even those who may never be involved in a CERCLA matter.

Legal Background: Under section 108(b) of CERCLA, 42 U.S.C. § 9608(b), the EPA is required to “promulgate requirements . . . that classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.” Although this provision was enacted in 1980, the EPA did not take action for decades. In fact, the hardrock mining rule has been promulgated under the terms of a settlement between the EPA and environmental groups who, in In re: Idaho Conservation League, petitioned the United States Court of Appeals for the D.C. Circuit for a writ of mandamus compelling the EPA to issue the requirements under CERCLA. The parties negotiated a schedule for EPA’s rulemaking activities, and in January 2016, the D.C. Circuit issued an opinion approving the parties’ settlement as well as an order establishing agreed-upon deadlines for the EPA.

The New Regulations: The proposed regulations at 40 C.F.R. Part 320 would establish the amount of financial assurance owners and operators of hardrock mines are required to hold. Notably, the amount of financial assurance needed per the proposed formula in 40 C.F.R. § 320.63 will be lower for facilities that have certain environmental protection practices in place, giving regulated entities an opportunity to reduce insurance needs.

Regulated entities are also given options for meeting the financial responsibility requirements: the regulation identifies several acceptable financial instruments and includes an option for corporations to self-insure if qualified to do so.

As detailed in the EPA’s July 28, 2009 Federal Register Notice, the EPA considers “facilities which extract, beneficiate or process metals (e.g. copper, gold, iron, lead, magnesium, molybdenum, silver, uranium, and zinc) and non-metallic, non-fuel minerals (e.g. asbestos, gypsum, phosphate rock, and sulfur)” to be generally subject to the rule. Notably, the agency did not include several non-fuel mineral (including sand, gravel, and limestone) mines within its group of priority classes of facilities. (See “Mining Classes Not Included in Identified Hardrock Mining Classes of Facilities,” available here). The proposed rule at 40 C.F.R. § 320.60(a)(2) further exempts the following facilities from the financial responsibility requirements: “(i) Mines conducting only placer mining activities; (ii) Mines conducting only exploration activities; (iii) Mines with less than five disturbed acres that are not located within one mile of another area of mine disturbance that occurred in the prior ten-year period, and that do not employ hazardous substances in their processes; and (iv) Processors with less than five disturbed acres of waste pile and surface impoundment.” The EPA expects approximately 221 facilities to be affected, but that number is subject to fluctuation.

The plaintiffs in In Re: Idaho requested that the EPA promulgate financial responsibility regulations for four industry sectors: hardrock mining; chemical manufacturing; petroleum and coal products manufacturing; and electric power generation, transmission, and distribution. Accordingly, the D.C. Circuit also ordered the EPA to determine by Dec. 1 whether it would initiate rulemaking for the other three industries. Per the agency’s “Notice of Regulatory Determination for Financial Responsibility Requirements for Facilities in the Chemical, Petroleum and Electric Power Industries,” it will continue the regulatory process and determine whether financial responsibility requirements are necessary for the remaining three sectors. The EPA must issue the final rules by December 2020, 2021, and 2024. However, the order does not specify the sequence in which the three industries should be addressed, nor does it require the EPA to actually promulgate final rules. Thus, the EPA still retains discretion in determining requirements for these three industries.

Future of the Financial Responsibility Regulations: Critics of the rule argue that additional financial assurances are unnecessary and duplicative – mining is already a heavily regulated industry subjected to state financial responsibility obligations and a host of state and federal environmental regulations – and the new rules will only increase compliance costs without improving environmental conditions. In addition, President-elect Trump has been critical of existing environmental regulations for their impact on U.S. jobs, especially in industries that will be targeted for financial responsibility requirements. Since the incoming administration and Congress appear receptive to the concerns of industry, advocacy during the upcoming comment period may be particularly effective in changing the rule before finalization.

However, the background of this particular financial responsibility rule – promulgated pursuant to a court order and 40-year old congressional mandate – makes it hard to revoke. Although executive branch agencies typically enjoy significant discretion in rulemaking, the EPA’s actions here are required by court order, and the In re: Idaho plaintiffs could take additional legal action if the agency fails to comply. The case also serves as a reminder of how environmental organizations can use legal action to advance policy goals. Given the new administration’s stated opposition to many environmental regulations, we may see an increase in court involvement, through citizens suits filed both to compel agency action as well as to compel regulated entities to comply with environmental statutes.

Buckle Up for a Wild Ride: Environmental Policy in the Trump Administration

Posted in Articles, Environment, EPA, Federal, Federal Regulation, Legislation, Pennsylvania, Policy, Politics

Millions of Americans are coming to grips with the broad social and political ramifications of Donald Trump’s stunning upset victory in last Tuesday’s presidential election. And while the president-elect’s policy pronouncements to date have been short on detail, one thing is clear: those concerned with environmental protection and climate change had better buckle up for a wild ride.

As a 15-year veteran of the U.S. Environmental Protection Agency (EPA) and former agency enforcement official, I served under both Republican and Democratic administrations and played key roles in briefing incoming political leadership during transitions. As I know up close, for better or worse, federal agencies are not nimble and do not steer on a dime, a fact that often frustrates new political leadership.

Read more from my article in The Legal Intelligencer supplement, PA Law Weekly by clicking here.

Brexit: The Great Repeal Bill and the EU’s Chemicals, Emissions, and Medicines Regimes

Posted in Brexit, Chemicals, Environment, REACH

As discussed in our recent GT Alert, “Brexit: 100 Day Update“,  the UK Prime Minister Theresa May recently announced plans for a “Great Repeal Bill” for the repeal of the 1972 European Communities Act (ECA). Under the ECA, European Union (EU) law was established as part of the UK’s legal order and was given supremacy over the UK’s domestic laws.

It is intended that the Great Repeal Bill will enter into force on the date of Brexit (which appears to be March/April 2019 at the earliest). It is expected that the Great Repeal Bill will preserve the majority of existing EU law in domestic UK legislation until the UK Government has had an opportunity to assess individual EU-derived domestic laws and decide whether to retain, amend, or remove them. This process is likely to take many years, depending on the resources devoted to it.  New, post-Brexit EU law, including the decisions of the European Court of Justice, will not form part of UK domestic law.

Continue Reading.

Philadelphia’s Approach to Nuisance Abatement on Vacant Properties

Posted in Articles, Contamination, Environment, Pennsylvania, Real estate

Conventional environmental lawyers may find themselves in unfamiliar territory when faced with a municipal citation for allowing a vacant property to become a nuisance or a municipal claim to recover the costs of abating that nuisance.  In Philadelphia, the City has a regular program to do both.  That program proceeds under City ordinances and regulations, and not the more familiar state environmental laws.  A special unit within the City Solicitor’s Office handles this code enforcement program and brings enforcement proceedings before a single judge of the Philadelphia Court of Common Pleas.

Read more from my Pennsylvania Law Weekly article by clicking here.

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