The first two years of the Biden Administration have brought about a marked shift in environmental policy by contrast to the prior Administration, with the emphasis on addressing climate change at the national and international levels, the revisiting of a number of rules and policies of the prior Administration, the focus on environmental justice for disadvantaged communities in both the permitting and enforcement context and more significant enforcement of environmental laws and regulations generally. The pace of rulemaking and policy development has been brisk. For developers, a number of recent developments with the potential to add time, money and additional complexity to projects bear watching as they evolve in the coming months.
Environmental Due Diligence.
US EPA recently amended its Standards and Practices for All Appropriate Inquiries to reference ASTM International’s E1527-21 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process and allow for its use to satisfy the requirements for conducting all appropriate inquiries under the Comprehensive Environmental Response, Compensation and Liability Act to allow a party who acquires contaminated property to claim protection from liability under one of the landowner liability protections afforded by CERCLA. To allow for transition from the old standard to the new standard, US EPA allows for use of either ASTM E1527-13 or E1527-21 for one year after the effective date of the rule, after which ASTM becomes the exclusive standard to be used to support the liability protections. Irrespective of whether the liability protections are sought, the ASTM standards have been routinely used to evaluate to evaluate the environmental condition of property in connection with its acquisition. Among other revisions, the new standard now references “emerging contaminants,” which includes substances such as per- and polyfluoroalkyl substances (PFAS). PFAS are a common group of synthetic chemicals that have been used in industry and consumer products since the 1940’s and are highly persistent in the environment.
US EPA is currently engaged in an ambitious “whole of agency” approach to evaluating the risks posed by these chemicals and addressing those risks through regulation. The new ASTM standard treats consideration of these compounds as “non-scope considerations” and states that “emerging contaminants may want to be assessed in connection with commercial real estate, because once these contaminants are defined as a hazardous substance under CERCLA, then these substances must be evaluated within the scope of E1527-21.” Notably, last fall US EPA proposed to designate two of the most widely used PFAS as hazardous substances, which, if finalized as proposed, would bring those substances squarely within the scope of CERCLA’s liability scheme and ASTM E1527-21, requiring investigation of contaminants which may not have previously been examined, let alone clearly regulated.
Definition of “Waters of the United States.”
US EPA and the Army Corps of Engineers recently published their final rule revising the definition of “waters of the United States” which expanded the scope of waters subject to regulation under the Clean Water Act. For developers, the definition has implications for permitting under Section 404 of the Clean Water Act for the dredge and fill of wetlands and streams. The rulemaking represents the culmination of US EPA’s efforts to revise the controversial revisions to the definition promulgated during the Trump Administration. The Trump Administration sought to limit the definition in a matter consistent with Justice Scalia’s plurality opinion in Rapanos v United States 547 US 715 (2005) as covering “relatively permanent” waters that are connected to traditional navigable waters as opposed to the more ambiguous “significant nexus” test articulated by Justice Kennedy in his concurring opinion in Rapanos which was relied on in the Obama era rulemaking. See US EPA and the Corps Finally Publish Their Definition of “Waters of the United States” Narrowing the Scope of Federal Jurisdiction Under the Clean Water Act | frESH (freshlawblog.com). US EPA Administrator Michael Regan described the Trump Administration’s revisions as “leading to significant environmental degradation.” The final rule incorporates both the “relatively permanent” and the “significant nexus” tests to extend jurisdiction beyond traditionally navigable waters. Challenges to the final rule have been filed as they have with respect to every other effort to define “waters of the United States. At the same time, the US Supreme Court has just concluded oral argument in Sackett v EPA, a case which has the potential to provide further insight with respect to the appropriate test for jurisdiction.
Water Quality Certifications under Section 401 of the Clean Water Act.
US EPA recently published a proposed rule to revise and replace the prior Administration’s rule revising the regulatory requirements for water quality certifications under Section 401 of the Clean Water Act. Section 401 of the Clean Water Act prohibits a federal agency, like the Army Corps of Engineers, from issuing a permit that may result in a discharge to “waters of the United States” unless the state or authorized tribe where the discharge originates either issues a water quality certification that the discharge will comply with the applicable provisions of the Clean Water Act or waives the certification. These certifications are threshold requirements to the issuance of a permit for impacts to wetlands and streams under Section 404 of the Clean Water Act. US EPA identified substantial concerns with a number of the provisions of the rule that it believed were at odds with ensuring that states and tribes were empowered to protect water quality. Revisions include addressing the scope of certification, federal agency review, and the reasonable period of time for review. Comments were received through August 8, 2022. US EPA is currently reviewing comments received, after which it is expected to issue a final rule.
National Environmental Policy Act.
The Council on Environmental Quality finalized revisions to its regulations to implement the requirements of the National Environmental Policy Act, a review often lengthy and critical to a project. The revisions were described by CEQ as “restor[ing] provisions that were in effect for decades before being modified in 2020.” The revisions allow agencies to consider a “variety of factors” when assessing an application, removing language that could be considered to “limit agencies’ flexibility to develop or revise procedures to implement NEPA specific to their programs and functions that may go beyond the CEQ regulatory requirements” and broaden the definition of “effects” to include direct, indirect and cumulative effects. While this rulemaking was intended to rollback revisions made during the Trump Administration CEQ intends to more broadly revisit the requirements of its rules in a second rulemaking. That rulemaking is expected to address the Biden Administration’s climate change and environmental justice priorities.
On his first day in office, the President Biden signed Executive Order 13985 Advancing Racial Equity and Support for Underserved Communities which charged the federal government with advancing equity for all, including disadvantaged communities. “Because advancing equity requires a systematic approach to embedding fairness in decision-making processes, executive departments and agencies must recognize and work to redress inequities in their policies and programs that serve as barriers to equal opportunity.” Executive Order 14008 Tacking the Climate Crisis at Home and Abroad reinforced that objective stating “it shall be the policy of my Administration to secure environmental justice and spur economic opportunity for disadvantaged communities that have been historically marginalized and overburdened by pollution and under-investment in housing, transportation, water and wastewater infrastructure, and health care.” A few key highlights of US EPA’s implementation include: the establishment of opening of the Office of Environmental Justice and External Civil Rights, the issuance of guidance that identifies the “legal tools” that US EPA can rely on to ensure that its programs and activities advance equity for all communities EPA’s New Office of Environmental Justice and External Civil Rights: A Moment in History | US EPA, a framework for addressing environmental justice concerns in Clean Air Act permitting EJ in Air Permitting – Principles for Addressing Environmental Justice Concerns in Air Permitting | US EPA, recommended best practices for researching the effects of cumulative impacts and conducting cumulative impact assessments EPA Researchers Release Cumulative Impacts Report, Prioritizing Environmental Justice in New Research Cycle | US EPA and the legal tools to address those cumulative impacts not only through the Clean Air Act, but other major federal programs as well. EPA Legal Tools to Advance Environmental Justice | US EPA. These developments bring environmental justice front and center in the permitting process.
The ever-evolving regulatory landscape has the potential to add time, expense and additional layers of complexity to infrastructure projects. As a result, developers, financing entities and others involved in project development should be monitoring and evaluating these developments for their impact on current and future projects. We will explore these topics in greater detail and other topics of interest in the coming months.