On May 27, the Environmental Protection Agency (EPA) announced its intent to reconsider the Clean Water Act (CWA) Section 401 final rule issued by the Trump administration in June 2020 (Final Rule).

Following the Council on Environmental Quality’s (CEQ) July 2020 overhaul of regulations implementing the National Environmental Policy Act (NEPA), environmental plaintiffs filed a series of lawsuits challenging the rule in federal courts in California, Virginia, New York, and the District of Columbia. The plaintiffs argued that CEQ violated NEPA itself in promulgating the final rule by failing to prepare an environmental assessment (EA) or environmental impact statement (EIS). They also argued that CEQ ran afoul of the Administrative Procedure Act (APA) by failing to follow notice-and-comment requirements, by issuing a final rule that is “arbitrary and capricious,” and by improperly narrowing both the scope of projects under review and the types of impacts agencies should consider.

In an order dated May 20, 2021, the Federal Energy Regulatory Commission (FERC, or the Commission) terminated the hydropower licenses for three projects located on the Tittabawasee River in Michigan—the Secord (P-10809), Smallwood (P-10810) and Sanford (P-2785) dams.  The termination by implied surrender follows a May 2020 breach at the Sanford dam and the breach and failure of the upstream Edenville dam, which was also operated by the same licensee before the Commission revoked the Edenville license in 2018 due to the licensee’s repeated noncompliance with FERC dam safety orders.  The resultant floods caused significant damage in the communities surrounding the dams and have been estimated by the State of Michigan to have caused economic harm exceeding $190 million.

Addressing environmental justice (EJ) has been an immediate priority for the Biden administration. Within a week of taking the oath of office, President Biden issued a sweeping executive order with a number of EJ initiatives, including creation of a White House Environmental Justice Interagency Council consisting of the heads of each Cabinet-level and independent federal agency. The order also directed federal agencies to “make achieving environmental justice part of their missions” through development of programs and policies aimed at addressing disproportionately high adverse environmental impacts on disadvantaged communities.

The financial world appears to be reeling from the recent board of director election held by Exxon Mobil Corp. (Exxon) in which activist Hedge Fund Engine 1 (Engine 1) garnered enough votes to seat two directors (Kaisa Hietala and Gregory Goff), and potentially more, as the vote count continues. In the grand scheme of things, eight of Exxon’s nominees, including CEO Darren Woods, were re-elected to the 12-member board, and yet still, Engine 1 placing directors while sporting $50 million in holdings among over a $250 billion market cap for Exxon is worthy of note. The efforts of Engine 1 were aided by other large shareholders, such as BlackRock, Inc., Exxon’s second largest shareholder. The debate around the dissident directors centered on climate change issues.

Last week, Washington became the latest state to address environmental justice (EJ) through legislation by adopting the Healthy Environment for All (HEAL) Act and the Climate Commitment Act into law. The HEAL Act, which is the more comprehensive of the two passed laws, was based on recommendations of a state-funded environmental task force issued in fall of 2020 and seeks to remedy the effects of past disparate treatment of vulnerable communities. The Climate Commitment Act is a more targeted law that establishes a greenhouse gas (GHG) emissions cap-and-invest program with the goal of reducing GHG and criteria pollutants in overburdened communities highly impacted by air pollution. Although the laws become effective on July 25, their major EJ-related requirements take effect at later dates.

Although the Biden administration has yet to issue many new substantive air quality regulations, Biden’s EPA recently issued two rules revoking Trump-era procedural regulations that should pave the way for a more aggressive regulatory agenda. On May 13, EPA rescinded the “Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process Rule” (Cost-Benefit Rule), a requirement governing cost-benefit analyses for Clean Air Act (CAA) rulemakings, and on May 18, the agency revoked the “EPA Guidance; Administrative Procedures for Issuance and Public Petitions Rule” (Guidance Document Rule), which required all “significant” EPA guidance to undergo a public notice and comment process prior to issuance, modification, or withdrawal.

Although environmental justice (EJ) is not a new concept in the context of air permitting, the Biden administration’s increased focus on identifying and addressing disproportionate environmental impacts on low-income neighborhoods and communities of color is likely to spur an increase in EJ claims being raised as part of the public review process for both new air permits and permit renewals. Many, if not most, states do not have statutory or regulatory requirements dictating how EJ concerns must be considered in the air permitting context. Similarly, while there is a patchwork of EJ requirements applicable to federal agency actions, most are imposed by executive order and are not prescriptive in nature, meaning that there is no robust legal framework for considering EJ concerns in the air permitting context at the federal level either. Accordingly, while potential permittees and current permit holders seeking to renew or modify their air permits should be aware that there is an increased likelihood that EJ concerns may be raised by third parties or permitting agencies, there is little certainty about how these concerns will be implemented in the course of permit issuance.

On April 5, the U.S. Court of Appeals for the D.C. Circuit vacated a Trump-era rule that would have prevented the Environmental Protection Agency (EPA) from setting greenhouse gas (GHG) emissions standards for almost any class of stationary sources, except for fossil fuel-fired electric generating units. The court’s decision, issued at the request of the new Biden EPA, clears the way for new sector-by-sector GHG regulations should the new administration seek to set new GHG standards under Section 111 of the Clean Air Act (CAA).

On March 23, 2021, the United States Court of Appeals for the Second Circuit (the “Second Circuit” or the “Court”) agreed with FERC’s determination that the New York State Department of Environmental Conservation (“DEC”) had waived its certification authority under the Clean Water Act (“CWA”) by failing to act within the one-year statutory deadline. Notably, the Second Circuit held that a state agency cannot revise a certification request date by written agreement with the applicant, thereby altering the one-year statutory deadline for state action. Denying the petitions for rehearing by DEC and the Sierra Club, the Court applied the same reasoning it applied in New York State Dep’t of Env’t Conservation v. FERC (“New York I”), 884 F.3d 450, 455-56 (2d Cir. 2018) (see March 20, 2018 edition of the WER) where the Second Circuit determined that DEC could not unilaterally alter the application date based on when it considered an application complete “because that approach would allow a state agency not only to dictate when the review process can begin but also to delay it indefinitely.” There, to avoid such a subjective standard, the Second Circuit established a bright line rule that the beginning of the review is determined by the date “of receipt of such request.”