Source: https://www.mcguirewoods.com/client-resources/Alerts/2019/2/expect-environmental-regulation-2019
Timestamp: 2019-04-23 08:51:23+00:00

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Deregulation was one of the primary promises of President Trump’s campaign, and in 2018, the administration continued to roll back environmental regulation. The recent shutdown of the federal government has slowed deregulation, while at the same time affecting funding and implementation of programs. While it is difficult to estimate the impact of the recent shutdown, and the possibility of another, on environmental regulation, expect 2019 to continue the trend of federal deregulation, as well as judicial challenges to such deregulation. Meanwhile, certain states, like California, will continue implementing a comprehensive environmental regulatory agenda, while others may focus on clean energy, such as Maryland with its Clean Energy Jobs Act.
The following are some of the more material areas to track in 2019.
On June 1, 2018, the U.S. Environmental Protection Agency (EPA) issued a press release announcing that it took “three important steps to ensure chemical safety” under the Frank R. Lautenberg Chemical Safety for the 21st Century Act, which amended TSCA (Lautenberg Act). EPA released the following for public comment: (1) the problem formulation documents to refine the scope-of-risk evaluations for the first 10 chemicals under the Lautenberg Act, (2) EPA’s systemic review approach document, and (3) a significant new use rule (SNUR) proposal enabling EPA to prevent new uses of asbestos. EPA published a Federal Register notice on Nov. 15, 2018, regarding the availability of and seeking public comment on the first draft chemical risk evaluation for Colour Index (C.I.) Pigment Violet 29. It intends the risk evaluation to determine whether C.I. Pigment Violet 29 presents an unreasonable risk to human health or the environment under the conditions of use. Comments on the draft evaluation were due Jan. 14, 2019.
EPA has a grueling schedule for 2019 and must meet a number of important TSCA deadlines.
By early 2019, EPA must issue a list of chemicals that are active in commerce.
By June 2019, EPA must issue a proposed rule to reduce exposure to five specific persistent, bio-accumulative and toxic chemicals.
By December 2019, EPA must complete risk assessments for the first 10 chemicals the agency selected for assessment. In addition to the draft risk evaluation for C.I. Pigment Violet 29 described above, draft risk evaluations for the nine additional chemicals are expected in early 2019.
By December 2019, EPA must select at least 20 new chemicals as high priority for risk assessment and at least 20 new chemicals as low priority that will not require risk analysis.
In addition to the statutory and regulatory deadlines, EPA must defend several pending lawsuits in 2019 involving TSCA implementation rules, the risk evaluation rule and a citizen petition urging EPA to use its TSCA authority to ban fluoridation of drinking water.
As EPA was closed during the partial shutdown of the U.S. federal government, EPA actions on existing chemicals (including the risk evaluations and publication of the updated TSCA Inventory with active/inactive status) and progress toward its 2019 deadlines were delayed.
OSHA continues to operate without a Senate-confirmed head. (Currently, the assistant secretary of Labor, Occupational Safety and Health heads OSHA.) President Trump nominated Scott Mungo, a FedEx vice president, to the position in 2017, but the full Senate has yet to act on the nomination. For this reason, career OSHA employees continue to exert considerable influence at OSHA, and many of them date back to the Obama administration.
Perhaps as a result, OSHA enforcement was more robust in 2018 than might have been expected, given the Trump administration’s deregulatory focus. This trend is likely to continue into 2019, particularly since OSHA’s FY 2019 budget proposes hiring additional OSHA enforcement personnel.
While OSHA’s regulatory agenda is modest in light of a push toward deregulation, several regulations continue to work their way through the agency in 2019. Expect new rules on tracking workplace injuries and illnesses. Rules relating to beryllium exposure in the workplace are still very much under consideration, as OSHA closes in on potential permissible exposure limits (PELs) for the metal. OSHA is also considering proposals to update its hazard communication standard to conform it to the most recent version of the Global Harmonized System, and to re-evaluate limited aspects of its silica rule.
Overall, no sea changes are anticipated in OSHA in 2019, but don’t be surprised if there’s more enforcement in the news than one might anticipate.
In July 2018, the U.S. Fish and Wildlife Service (FWS) and the National Oceanic and Atmospheric Administration's National Marine Fisheries Service (NOAA Fisheries Service) jointly proposed revisions to regulations that implement portions of the Endangered Species Act (ESA). The proposed rule changes were published in the Federal Register on July 25, 2018, and the agencies accepted comments until Sept. 24, 2018. While the agencies have not indicated when the proposed changes will be adopted, the rules may be finalized in early to mid-2019.
Several of the proposed changes relate to Section 4 of the ESA, which addresses procedures for listing species, recovery, reclassifications and critical habitat designations. The agencies proposed to revise the procedures for designating critical habitat by reinstating the requirement that they will first evaluate areas currently occupied by the species before considering unoccupied areas. The agencies proposed to clarify when they may determine unoccupied areas are essential to the conservation of the species. In addition, the proposed rules would remove the requirement that the agencies list, delist or reclassify species “without reference to possible economic or other impacts of such determination.” Finally, the agencies clarified that decisions to delist a species should be made using the same standard as decisions to list species (i.e., whether a species meets the definition of an endangered or threatened species).
The FWS separately proposed to rescind its blanket rule under Section 4(d) of the ESA that automatically conveys the same protections for threatened species as for endangered species unless otherwise specified. The FWS stated that this would bring the regulatory approach in line with that of the NOAA Fisheries Service, which has not employed such a blanket rule. The proposed change would impact only future listings and will not affect the protections for species currently listed as threatened.
The proposed rules also include changes to Section 7 of the ESA, which includes parameters under which other federal agencies must consult with FWS and NOAA Fisheries Service to ensure their actions do not jeopardize the continued existence of listed species, or destroy or adversely modify critical habitat.
Response to the proposed rules has been mixed. Some welcome changes aimed at improving reliability and regulatory efficiency. However, many environmental groups argue the proposed rule changes will actually endanger wildlife and undercut the effectiveness of the ESA.
As part of its push for infrastructure development, the Trump administration released a memorandum of understanding (MOU) among 12 administrative agencies to streamline NEPA review for major infrastructure projects. The goal of the MOU is to implement a two-year target for completion of the environmental review and permitting process for major infrastructure projects.
If the signatories are serious about implementing a two-year goal, then each agency will have to make regulatory changes to its National Environmental Policy Act (NEPA) review processes, and proposed regulatory changes should begin appearing in 2019 to incorporate deadlines and specific requirements necessary to reduce environmental permitting review.
On Aug. 21, 2018, EPA proposed the Affordable Clean Energy Rule. If adopted, the rule would establish guidelines for states to develop plans to address greenhouse gas (GHG) emissions from existing coal-fired power plants and would replace the 2015 Clean Power Plan (CPP). The EPA proposed a repeal of the CPP and the U.S. Supreme Court stayed the CPP so it has never gone into effect.
EPA’s proposed Affordable Clean Energy Rule defines the “best system of emission reduction” for GHG emissions from existing power plants as on-site, heat-rate efficiency improvements, and provides states with a list of “candidate technologies” that can be used to establish standards of performance. The best system of emission reduction under the Affordable Clean Energy Rule means only on-site efficiency improvements. The new rule would not require an analysis of “outside the fence line” measures like switching to cleaner energy sources.
The Affordable Clean Energy Rule is important for existing power plants because it updates EPA’s New Source Review Permitting program to provide incentives for efficiency improvements at existing power plants. Some predicted that the CPP would make existing coal-fired plants obsolete. By contrast, the focus of the Clean Energy Rule would make coal plants operate more cleanly, but would not cause them to be retired from service.
Another difference between the CPP and the Affordable Clean Energy Rule is that the new rule does not specify numerical standards for each state the way the CPP did. Instead, EPA is proposing to let states set their own standards for cutting emissions. The result of this state-driven approach likely will be a disparity among states in the amounts of reductions and in how aggressively they cut emissions.
Public comment ended in October, and the EPA expects to publish a final rule before the end of 2019. Opponents on all sides likely will mount challenges as soon as the EPA finalizes the new Affordable Clean Energy Rule. If the courts stay enactment of the Affordable Clean Energy Rule (as they did with the CPP), then 2019 will end as it began; without any federal Clean Air Act climate change regulation.
The Affordable Clean Energy Rule also included a modification to the triggering mechanisms for New Source Review (NSR). The proposed revision to the existing regulations changes the NSR triggering standard, from an expected increase in annual facility emissions, to an alternative test that would trigger NSR if there is a significant net increase in hourly emissions.
As previously stated, expect challenges to the Affordable Clean Energy Rule as soon as it is finalized. If its enactment is stayed (as was the case with the CPP), then 2019 will end without any form of federal Clean Air Act climate change regulation in place.
EPA announced its intent to “reset” the volumetric fuel blending obligations contained in EPA’s renewable fuel standard (RFS) program. The RFS program, enacted by Congress in 2005, sets certain standards for the amounts of various types of renewable fuels that must be blended into the nation’s fuel supply. If the volumetric standards set are higher than the amount of renewable fuels produced, then EPA may issue waivers. EPA’s rules allow it to reset the volumetric standards going forward if the amount of fuels produced is 20 percent less than the amount of renewable fuels targeted to be produced and blended into the fuel supply. Although 2016 levels reached the reset threshold, the reset rule has not been used.
Expect EPA to propose new volume requirements in the first quarter of 2019. Although EPA typically sets the volume requirements one year at a time, the reset rule proposal is that EPA will set the volume requirements for 2020, 2021 and 2022, the last year for which the requirements must be updated.
As the requirements set for 2022 likely will continue past the expiration of the Renewable Fuel Standard, this number will be of extreme import to renewable fuel producers (particularly the corn ethanol producers), who want the requirements set as high as possible, and to oil refiners, who want the numbers set as low as possible. Thus, expect a great deal of lobbying on this issue as each side tries to get numbers that are more favorable to its position.
In December 2018, EPA announced new funding for a grant program to reduce emissions from older diesel engines in transportation. EPA anticipates funding $40 million of improvements through the Diesel Emission Reduction Program (DERA). “By financially supporting projects that upgrade aging diesel engines, EPA is helping improve their efficiency and reduce air pollution throughout the nation,” said EPA Acting Administrator Andrew Wheeler. “From our grant programs to our new Cleaner Trucks Initiative, EPA is taking important steps to help modernize heavy-duty trucks and provide cleaner, more efficient methods of transportation that will protect the environment and keep our economy growing.” The EPA is accepting applications for projects that will reduce emissions, and is giving priority to projects that benefit communities designated as having poor air quality and increased risk of related health problems.
In December 2018, the EPA and the Corps of Engineers signed a proposed rule revising the WOTUS rule, which has been stayed on and off throughout the country since its promulgation in 2015. Despite EPA’s move to repeal the 2015 rule, it is still in effect. The proposed rule is generally understood to narrow what are considered federally jurisdictional waters under the Clean Water Act. Two key differences between the 2015 rule and the recent proposed WOTUS rule are the treatment of “adjacent” wetlands, which must have a direct hydrologic connection under the proposed rule, and the treatment of streams, which now must have “relatively permanent” flow to be jurisdictional. This will rule out most intermittent streams from federal jurisdiction.
The government shutdown delayed publication of the new WOTUS rule in the Federal Register and the first public hearing on the new rule. Therefore, the rule probably will not be finalized until late 2019. In what has become the common course in environmental regulatory practice, expect a lawsuit to immediately follow issuance of the final rule.
In 2019, expect to see decisions in suits alleging that Section 402 of the Clean Water Act regulates discharges of pollutants into groundwater that is “directly hydrologically connected to surface water.” See Red River Coal Co. v. Sierra Club, 2018 WL 491668 (U.S. Dist. Ct., W.D. Va., Big Stone Gap Division), signed Jan. 19, 2018; and Ohio Valley Envtl. Coal. v. Pocahontas Land Corp., 2015 WL 2144905, signed May 8, 2015.
While some courts have allowed such suits, other courts have dismissed them, holding that a discharge that does not leak pollutants directly into navigable waters, but rather into soil and groundwater that allegedly “may” reach navigable waters, are not a discharge of pollutants into “navigable waters,” pursuant to the Clean Water Act. See Upstate Forever v. Kinder Morgan Energy Partners, L.P., 252 F.Supp.3d 488, 496 (April 20, 2017), noting that “the two circuit courts to address this issue have concluded that navigable waters does not include groundwater that is hydrologically connected to surface waters,” citing Village of Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962 (7th Cir. 1994); Rice v. Harken Expl. Co., 250 F.3d 264 (5th Cir. 2001).
Future updates will provide the status of cases pending in several federal circuit courts concerning the applicability of Section 402 of the Clean Water Act to discharges to groundwater.
Improvements in analytical methodology have allowed low-level detection of an ever-increasing number of pharmaceuticals, personal care products, hormones, pathogens and other contaminants of emerging concern (CECs). These programs are conducted primarily to protect drinking water quality under the federal Safe Drinking Water Act (SDWA), looking at both the sources of the drinking water and the quality of the treated water. EPA, along with the U.S. Geological Survey, conducted comprehensive testing programs to determine the presence of certain categories of chemicals and other contaminants in the waters.
Treatment plants chosen for this study receive waters impacted by a variety of waste sources, including municipal waste, septic systems and agricultural production. Samples were analyzed for 247 chemical and microbiological pollutants, including a wide range of chemicals used in homes, businesses and industries. The samples were analyzed by 15 methods for chemicals, microorganisms and estrogen bioactivity. Analyte selection focused on pharmaceuticals, but also included other classes of analytes, such as specific manmade chemicals, hormones, fungi, bacteria, protozoa and viruses.
The contaminants examined in the study are not among those regulated by EPA for drinking water, and little is known about their prevalence. However, in an attempt to learn more about these unregulated pollutants, in 1996, Congress amended SDWA to provide for monitoring of no more than 30 contaminants every five years. In response, EPA promulgated the Unregulated Contaminant Monitoring Rules (UCMR), which dictated the collection of data for contaminants that are suspected to be present in drinking water but do not have health-based standards set under the SDWA. The monitoring includes large systems and a representative sample of small public water systems serving less than or equal to 10,000 people, with the results stored in EPA’s National Contaminant Occurrence Database.
Monitoring under the UCMR occurs in cycles, with testing for different substances in each cycle. EPA bases its selection of contaminants for a particular UCMR largely on a review of the Contaminant Candidate List (CCL). Three testing cycles have been completed under UCMR. The fourth Unregulated Contaminant Monitoring Rule (UCMR 4) was published in the Federal Register on Dec. 20, 2016. UCMR 4 requires monitoring for 30 chemical contaminants between 2018 and 2020 using analytical methods developed by EPA and consensus organizations. According to EPA, monitoring under UCMR will provide a basis for future regulatory actions to protect public health.
EPA has regulated Coal Combustion Residuals (CCR), more commonly known as coal ash, since the 2015 passage of the federal CCR rule. The CCR rule established national standards for landfills and surface impoundments containing coal ash, but was immediately challenged by both environmental and industry groups through petitions in the U.S. Court of Appeals for the D.C. Circuit.
As those challenges proceeded in 2016, Congress passed the Water Infrastructure for Improvements to the Nation Act (WIIN Act), which transferred authority for regulating coal ash disposal to EPA-approved state permitting programs. In light of the WIIN Act, in 2017, the EPA granted petitions from industry groups requesting reconsideration of aspects of the 2015 CCR rule. Because the proposed reconsideration would include some provisions that were under review at the D.C. Circuit at the time, EPA requested a stay before the D.C. Circuit so it could proceed with its voluntary reconsideration. But in August 2018, the D.C. Circuit denied the stay and issued a ruling striking down certain provisions of the 2015 CCR rule and remanding others for reconsideration. In particular, the D.C. Circuit struck down provisions that allowed unlined impoundments to continue receiving coal ash unless they leak, that classified clay-lined impoundments as lined, and that exempted inactive impoundments at inactive facilities from regulation.
But even before release of the D.C. Circuit’s ruling, EPA proceeded with a proposal, notice and comment period, and issued a new final rule in July 2018. That final rule, which is just the first part of Phase One of the planned reconsideration, amended the CCR rule to provide regulators (whether the EPA or states with approved CCR permit programs under the WIIN Act) the ability to use alternate performance standards for closures; revised groundwater protection standards for certain constituents; and extended the time for certain facilities to cease receiving waste and initiate closure. Environmental groups have already challenged the July 2018 amendments in the D.C. Circuit.
These ongoing legal battles will shape the landscape of federal coal ash regulation in 2019, even as the Trump administration continues to push further changes to the CCR rule. Environmental groups appealed the D.C. Circuit’s August 2018 ruling in October, so that case is not fully resolved. Even if that ruling stands, it remains to be seen how EPA will address the rejection of several aspects of the 2015 CCR rule. EPA’s planned reconsideration of specific provisions of the original CCR rule will also continue in 2019, and are likely to see new challenges. Further confounding the issues, the D.C. Circuit’s ruling remanded to EPA provisions of the CCR rule that related to alternative groundwater protection standards — an area already affected by EPA’s July 2018 amendments, which environmental groups have separately challenged. The landscape of CCR regulation remains fluid and is unlikely to be resolved anytime soon.
The industrial solvent TCE has long been targeted by EPA, which found that exposure to TCE can cause cancer, birth defects and other health problems. At the end of the Obama administration, EPA issued two proposed rules under TSCA Section 6 that would (i) prohibit the manufacture (including import), processing, and distribution in commerce of TCE for use in aerosol degreasing, spot cleaning in dry cleaning facilities, and vapor degreasing; (ii) prohibit the commercial use of TCE for aerosol degreasing, spot cleaning in dry cleaning facilities, and in vapor degreasing;(iii) require manufacturers (including importers), processors, and distributors, except for retailers of TCE for any use, to provide downstream notification of these prohibitions throughout the supply chain; and (iv) require limited recordkeeping. Comment periods on the rules were extended and closed in mid-March and mid-May of 2017, respectively.
EPA indicated that it plans to issue one final rule addressing the TCE uses in both proposed rules, but it remains unclear when such final rule would be published and become effective. Given that the extended comment periods closed more than 18 months ago, it seems unlikely that it will go as far as the Obama administration proposed. It is also worth noting that, while EPA is working toward finalizing the rule, states are becoming much more aggressive on TCE regulation, particularly when TCE is implicated in vapor intrusion. Expect this trend to continue in 2019.
In the seminal case of Chevron, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), the Supreme Court directed courts to defer to agency interpretations of the law on subjects within the agency’s expertise, so long as the agency’s interpretation is “reasonable.” Republicans in Congress have pushed to overturn what is now termed as Chevron deference in recent years, including House Bill 4768, which passed the House in the summer of 2016, and House Bill 5 in the summer of 2017 (the Regulatory Accountability Act of 2017). Both H.B. 4768 and H.B. 5, as well as other companion bills, stalled in the Senate. Given the change in composition of the House this session, it seems less likely now that Congress will enact changes to Chevron deference in the near future.
However, following the appointment of conservative Justice Gorsuch, the Supreme Court has continued to follow the trend of limiting and eroding the reach of Chevron deference. The court has issued six opinions in 2018 that cite to Chevron, none of which actually defer to the agency interpretation. These opinions were written by both conservative and liberal members of the Court. Of significant interest, however, is the continued rhetoric within these opinions regarding the continued viability of Chevron, particularly from the court’s conservative members.
It seems clear that the court, as currently structured, will continue to erode the reach of Chevron deference, if not overrule the case entirely.
With Gov. Gavin Newsom taking the reins of California’s executive branch on Jan. 7, onlookers can expect the continuation and perhaps even strengthening of former Gov. Jerry Brown’s environmental policies. The state already has the most ambitious goals of any large state in the country of achieving 50 percent renewable electricity by 2030 and 100 percent carbon-free electricity by 2045. These dual policies will continue to drive large-scale renewable energy projects in the coming years. And, while much work on climate change regulation at the federal level continues to be paused or in the process of being rolled back, California is making steady progress toward implementing the program necessary to achieve a greenhouse gas emissions reduction target of 40 percent below 1990 levels by 2030.
On the issue of transportation and motor vehicle emissions, California continues to rely on a waiver issued by the EPA administrator to allow it to regulate more stringently than the federal government. Expect the federal government to finalize its Safer Affordable Fuel-Efficient Vehicles Rule for Model Years 2021-2026 in spring 2019 and California to finalize a more stringent rule later in the year, setting up a potential legal challenge.
In 2019, large interstate trucking companies will face continued enforcement of California’s Truck and Bus Rule. At the end of the year, the California Department of Motor Vehicles will begin verifying compliance with the Truck and Bus Rule prior to registering trucks.
While Gov. Newsom will make new appointments to the California Public Utilities Commission and California Energy Commission in 2019, expect no major changes to any ongoing proceedings, which largely involve the energy efficiency standards for buildings and appliances (with an increasing emphasis on decarbonizing buildings) and onloading increasing proportions of renewable energy onto the grid. Expect Gov. Newsom to embrace and possibly increase Gov. Brown’s goals of dramatically increasing the use of electric vehicles in the state.
Finally, on chemical regulation, companies must continue to comply with Proposition 65 for any goods sold into California, including with the new warning regulations that took effect back in August 2018. The private plaintiffs enforcing Proposition 65 likely will continue to focus on acrylamide, BPA, lead and phthalates in a variety of consumer products. As part of its Safer Consumer Products initiative, the California Department of Toxic Substances Control deemed spray polyurethane foam systems with unreacted methylene diphenyl diisocyanates as a priority product in mid-2018. On Jan. 1, 2019, paint and varnish strippers containing methylene chloride also became a priority product, which sets in motion a series of obligations on manufacturers to notify the state. Next on the list of priority products are paint and varnish strippers and graffiti removers containing N-Methylpyrrolidone (NMP), expected to be finalized as a priority product in 2019.
In 2018, the Maryland Clean Energy Jobs Act (HB1453) was introduced in the Maryland General Assembly. The bill proposed to increase the state’s renewable energy portfolio standard (RPS) from 25 percent by 2022, to 50 percent by 2030; modify the existing offshore wind process to allow new applications beginning Jan. 1, 2020; and make other changes. The Clean Energy Jobs Act was withdrawn after it received an unfavorable report from the Economic Matters Committee. News reports in late 2018, though, indicated that the bill would be reintroduced in the 2019 session. If passed, the legislation would result in a significant increase in solar and wind projects in the state, leading to an increase in jobs in the renewable energy sector and lower emissions. California, New Jersey and New York each have an RPS of 50 percent by 2030, with Hawaii close behind at 40 percent, although Hawaii has an RPS of 100 percent by 2045.

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