Environmental and Energy Policy Round-Up: Status of Regulations and Key Decisions under the New Administration

There has been much discussion lately regarding the new Administration’s efforts to review and possibly “roll-back” several environmental and energy-related regulations issued by the Environmental Protection Agency (EPA), the Department of Interior (DOI), and other federal agencies, as well as to reverse key decisions made during President Obama’s tenure. Because many of these policy changes may directly or indirectly impact your businesses, we wanted to keep our clients abreast of which of the major environmental and energy policies are in and which are out. We plan to update this blog, if and when, this landscape shifts.

So far, the new Administration’s moves fall into three categories: (1) overturning regulations using the Congressional Review Act; (2) reversing key decisions by Executive Order (EO); and (3) reviewing, revising, and potentially rescinding regulations through the federal rulemaking process. As discussed in more detail below, some policy changes will take immediate effect, while others will take considerable time to be fully implemented. Supporters of the Administration’s efforts view these recent moves as removing regulatory hurdles for businesses that will strengthen the Nation’s economy and boost job creation. Opponents view them as hurting the U.S.’s ability to address the impacts of climate change and protect human health and the environment. Each category of Administration action is discussed below.

Congressional Review Act

The Congressional Review Act (CRA), passed in 1996, created a period of 60 legislative days (days in which Congress is in session) during which Congress could use an expedited procedure to overturn a regulation of the previous administration. This removal procedure is not subject to the procedural requirements in the Senate that make a filibuster possible, but the action can still be vetoed by the President. The CRA has been used successfully only once since 2001, yet the current Congress has successfully used it several times already. The following regulations have been revoked by Congress or are under consideration for revocation by one chamber. A rule’s revocation is immediate upon the President’s signature.

  • Stream Protection Rule: The DOI, Office of Surface Mining, published the Stream Protection Rule in December 2016. The rule updated a number of regulations impacting the coal industry, particularly by protecting streams and waterways in the vicinity of coal mining operations from being polluted by operational waste. On February 16, Congress revoked the rule and the bill was signed by President Trump on the same day.

  • Methane and Waste Prevention Rule: The DOI, Bureau of Land Management, issued new regulations in November 2016 to reduce waste of natural gas from venting, flaring, and leaks from oil and gas production activities occupying leased Federal and Indian lands. Using the CRA, the House voted to repeal the regulations and a similar bill is under consideration in the Senate.

  • SEC Disclosure Rule: In June 2016, the Securities and Exchange Commission issued new regulations requiring oil, gas, and mining companies to disclose payments to foreign governments in an effort to increase transparency. On February 14, Congress passed and President Trump signed the bill canceling this disclosure requirement.

Executive Orders and Directives

President Trump has also issued several EOs and directives to reverse key decisions made by former President Obama or by federal agencies during his tenure. The reversals with immediate effect include:

  • Methane Regulation of Existing Oil and Gas Production: In June 2016, EPA issued an information collection request seeking a broad range of information from the oil and gas industry. This request accompanied EPA’s final rule limiting emissions of methane and other ozone-causing volatile organic compounds from new, reconstructed, and modified oil and gas infrastructure. This information request was viewed as a precursor to EPA’s evaluation of potential regulatory requirements for methane emissions from existing oil and gas sources. On March 2, at the White House’s request, EPA Administrator Scott Pruitt withdrew this information request, signaling that new regulations are not on the horizon.

  • Keystone Pipeline: Following the President’s EO in January, the State Department announced on March 24 that the Undersecretary for Political Affairs, Mr. Tom Shannon, issued the required cross-border permit needed to revive the controversial Keystone XL pipeline. Secretary of State Rex Tillerson recused himself from the decision-making process due to his former position as Chief Executive Officer of Exxon Mobil, Corp. The permit had been rejected by the Obama Administration; however, the pipeline, which will run from Alberta, Canada to Steele City, Nebraska, will now move forward.

  • Dakota Access Pipeline: After President Trump signed a directive aimed at pushing the 1,172 mile pipeline project forward, the U.S. Army Corps of Engineers terminated its preparation of an environmental impact statement and issued the easement needed to cross federal lands along Lake Oahe in North Dakota. The easement and the construction of the pipeline had been halted by an earlier decision by the Corps to conduct an extensive environmental review before issuing the easement and by federal lawsuits brought by tribes alleging that the Corps violated the National Environmental Policy Act (NEPA) and tribal treaties. It has been reported that the pipeline will be operational in a few weeks.

A significant EO was issued on March 28, called the “Presidential Executive Order on Promoting Energy Independence and Economic Growth.” According to the EO, the order was issued “to promote clean and safe development of our Nation’s vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production.”  Like the EOs before it, some of its directives may take effect immediately, while others will take some time to be implemented. Those taking effect immediately include:

  • Review of Agency Actions: The EO directs the heads of all agencies to “review all existing regulations, orders guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources” and to develop a report identifying such agency actions. Potentially, these actions could be suspended, revised, or rescinded. EPA Administrator Pruitt formally began the agency review process.

  • Presidential Actions: The EO revokes several energy and climate-related Presidential EOs, memorandums, and directives, including former President Obama’s Climate Action Plan.

  • Coal Leasing on Federal Lands: The EO compels DOI Secretary Ryan Zinke to lift the moratorium on the issuance of new coal leases on federal lands, which had been in place since early 2016. Secretary Zinke formally lifted the ban on March 29.

  • Consideration of Climate Change in Decisions: The EO rescinds an August 2016 White House, Council of Environmental Quality directive and final guidance that required federal agencies to consider climate change impacts when those agencies conducted reviews under the National Environmental Policy Act (NEPA).

  • “Cost of Carbon” Considerations: The EO directs a review of the estimate of the “social cost of carbon,” which is used to calculate the economic costs and impacts of climate change when conducting analysis and developing regulations. The EO also “disbanded” the Interagency Working Group on Social Cost of Greenhouse Gases (IWG) and withdraws several of its working documents.

Administrative Rulemaking Process

Many of the EOs simply direct EPA and other federal agencies to review environmental and energy-related regulations and ensure that regulations align with the new Administration’s priorities and current law. Suspension, revisions, or revocation of these regulations will take considerable time, possibly several years, because proposed changes must go through the lengthy federal rulemaking process, as directed by the Administrative Procedure Act. The rulemaking process is comprehensive and entails, among other requirements: proposing a rule that is supported by extensive science and legal arguments; issuing proposed rules; opening the proposed rule to notice and public comment; considering and responding to comments; and eventually surviving judicial review. The regulations that EPA Administrator Pruitt has been directed to review include:

  • Clean Power Plan (Existing Stationary Sources): EPA’s final rule, Existing Sources, Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (80 Fed. Reg. 64661), was published in October 2015 and was challenged the same day by several states, state agencies, and industry. State of West Virginia v. EPA (Consolidated Case No. 15-1363). More commonly known as the Clean Power Plan (the CPP), the CPP sets emissions rates goals and mass equivalents for each state. The March 28 EO directs EPA Administrator Pruitt to review the CPP to ensure it aligns with the Administration’s priorities. Oral arguments were heard by an en banc panel of the U.S. Court of Appeals for the District of Columbia Circuit on September 27. The court has not yet ruled, but may do so any day now. On March 29, EPA asked the court to suspend this suit as the agency works to revise or replace the final rule.

  • Carbon Pollution Standards for New, Modified, and Reconstructed Power Plants: EPA’s final rule, Standards of Performance for Greenhouse Gases from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units (80 Fed. Reg. 64509), was also published in October 2015. This rule has not received the same level of attention as the existing stationary source rule because very few new coal plants are in the construction pipeline due to the availability of affordable natural gas and reluctance in the investor community to finance new coal projects. This rule has been challenged in the U.S. Court of Appeals for the District of Columbia Circuit. State of North Dakota v. EPA (Consolidated Case No. 15-1381). It has moved more slowly than the CPP litigation, but oral arguments are set for April 17. The March 28 EO also directs EPA Administrator Pruitt to review this regulation and possibly suspend, revise, or rescind the rule. The Department of Justice most likely will file a motion to suspend this suit as EPA works to revise or replace.

  • Methane Regulation at New Oil and Gas Production Facilities: In June 2016, EPA published its final rule, Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources (81 Fed. Reg. 35824), limiting emissions of methane and other ozone-causing volatile organic compounds from new, reconstructed, and modified oil and gas infrastructure. The rule updated the New Source Performance Standards (NSPS) associated with methane and other VOCs and requires oil and gas companies to prevent leaks, capture methane from hydraulic fractured wells, and limit emissions from various types of oil and gas extraction and transmission equipment, including pumps, compressors, and pneumatic controllers. The March 28 EO directs EPA Administrator Pruitt to review this regulation and possibly suspend, revise, or rescind.  

  • Hydraulics Fracturing on Federal Lands: The March 28 EO directs DOI Secretary Ryan Zinke to review several final rules governing hydraulic fracturing, or fracking, for oil and natural gas on federal lands and possibly suspend, revise, or rescind the rules.
  • Clean Water Rule or Waters of the United States Rule (WOTUS): This June 2015 rule clarified which streams, wetlands, and other waters fall under the federal clean water regulations – a point of confusion since the U.S. Supreme Court’s 2006 split decision in U.S. v. Rapanos. President Trump signed an EO on February 28 requesting that EPA Administrator Pruitt review the rule and begin the lengthy process to possibly suspend, revise, or rescind.  

  • Vehicle Fuel Economy Standards: The model year 2022-2025 greenhouse gas emissions standards for light-duty vehicles were established in 2012. Last year, EPA conducted a midterm review to determine whether the automotive manufacturing industry could meet the stricter standards, which would have vehicles getting more than 50 mpg on average across the fleet by 2025. The agency completed its review ahead of schedule and approved the standards in January 2017. President Trump has now directed EPA Administrator Pruitt to reconsider the agency’s recent decision and approval.

  • California Vehicle Fuel Economy Standards: President Trump and EPA Administrator Pruitt left in place a waiver that allows California and other states to enforce stricter emissions standards within their borders, thus delaying a standoff with the state. On March 24, California’s Air Resources Board voted to push ahead with stricter emissions standards for cars and light trucks. It is unknown at this point if the White House will take any action restricting this waiver.

Although the new Administration has made several moves to cut back regulations and decisions issued during former President Obama’s term, it has not addressed two substantial issues. First, whether President Trump will direct EPA Administrator Pruitt to address and possibly reverse the agency’s December 2009 “endangerment finding” for emissions of six greenhouse gases. The finding provides EPA the statutory authority to regulate these emissions and was the result of an April 2007 Supreme Court decision in Massachusetts v. EPA, which required EPA to determine if greenhouse gas emissions threaten human health and welfare and if so, to regulate them. Addressing this issue will be difficult considering it has already survived judicial scrutiny and is supported by scientific data. Second, President Trump hasn’t addressed whether the U.S. will exit the 2015 Paris Climate Agreement. This issue is not as straightforward for the new Administration as many in President Trump’s inner circle are divided regarding whether the U.S. should move away from its commitments. This division has kept the issue’s resolution in limbo as the new Administration addresses the U.S.’s role in the international agreement.  

There are many moving parts to the new Administration’s change in direction on environmental and energy policy. The above is not an exhaustive list of policy changes, so please check back to this blog for updates. In the meantime, please contact any of the attorneys on this post if you have any questions.

This blog was written by Van Hilderbrand, Jr. and Marian Hwang at Miles & Stockbridge.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Accessing this blog and reading its content does not create an attorney-client relationship with the author or with Miles & Stockbridge. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.