Environmental Enforcement and Regulatory Updates
A shift in administration at the state or federal level comes with regulatory changes and uncertainties. Already, the Biden administration has demonstrated it will have different environmental enforcement priorities and approaches than the previous administration. So what should the regulated community expect at the national level, as well as regionally?
Increased Environmental Inspections and Enforcement, But Also the Return to Supplemental Environmental Projects as a Settlement Tool
It is likely the Biden administration will adopt regulatory changes under the Clean Air Act and the Clean Water Act to employ more stringent regulatory programs. For example, as discussed in more detail here, the Biden Environmental Protection Agency (EPA) may reevaluate the previous administration’s guidance memo regarding regulating discharges to groundwater under the Clean Water Act. Changes to guidance documents and adopting new rules takes time, but will likely lead to increased enforcement once in place.
Most enforcement matters are handled in a civil enforcement or administrative enforcement context, and such enforcement is expected to increase under the Biden administration. The U.S. Department of Justice Environment and Natural Resources Division already issued a memo withdrawing enforcement discretion guidance documents issued by the previous administration.
In Oregon and Washington, state agencies have authority delegated from the federal government to carry out certain federal environmental laws, such as the Clean Water Act and the Clean Air Act. Even though states carry out the programs to enforce these laws, changes at the federal level can affect regulation at the state level.
Despite companies implementing thorough protocols, sometimes business practices slip and a regulatory agency may issue a notice of violation and penalty. To resolve violations and penalties, the U.S. EPA, the Washington Department of Ecology (Ecology), and the Oregon Department of Environmental Quality (DEQ) sometimes use Supplemental Environmental Projects.
- Supplemental Environmental Projects Stage a Comeback
Supplemental Environmental Projects (SEPs) are projects that provide a tangible environmental or public health benefit that could not be required or compelled by EPA, and are not otherwise legally required (at the federal, state, or local level). For that reason, SEPs provide benefits that go beyond compliance obligations.
For decades, SEPs have been a common component of environmental civil enforcement actions, in which regulated parties reduce the amount of their penalties by funding and/or implementing projects that provide direct benefits to the environment. Typically, the SEPs in a settlement will mitigate the particular harm caused by the subject of the enforcement action. The theory behind SEPs was that parties that had caused harm to the environment should be required to fund projects to offset that harm.
SEPs have long had their detractors, and in March 2020, the Trump administration banned SEPs as a settlement tool in federal enforcement actions. Critics of SEPs were uncomfortable with the practice of allowing the executive branch to take funds that would otherwise go to the U.S. Department of the Treasury and instead divert them to environmental projects designed and implemented by third-party groups. They argued that this raised questions about the separation of powers and whether SEPs interfered with Congress’s authority to control how money from penalties is spent. Opponents of SEPs also questioned whether SEPs violate the Miscellaneous Receipts Act, which provides that any official “receiving money for the Government from any source shall deposit that money with the Treasury.” 31 U.S.C. § 3302(b).
That ban lasted less than a year, until the Biden administration issued a memorandum restoring SEPs’ use on February 4, 2021. The Department of Justice concluded that the previous administration’s ban on the use of SEPs was “inconsistent with longstanding Division policy and practice” and “imped[ed] the full exercise of enforcement discretion.”
The rescission of the ban on SEPs will benefit both the communities that are directly harmed by environmental violations, and defendants in environmental enforcement actions that would prefer to invest money in the environmental health of their communities rather than see 100 percent of their penalty dollars go to the United States Treasury. The groups that design and implement SEPs will also be glad to see a source of funding return.
A Focus on Climate Change and Environmental Justice
The Biden administration has made tackling America’s persistent racial and economic disparities a central part of the plan to combat climate change. In the January 20, 2021 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, the President ordered, among other things, the reconvening of the Interagency Working Group on the Social Cost of Greenhouse Gases. The initial task of the Working Group is to publish estimates of the monetized damages associated with carbon, methane, and nitrous oxide (collectively, the “Social Cost Values”), which agencies will use in decision-making to monetize the costs of changes in greenhouse gas emissions.
The order states, “It is essential that agencies capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account. Doing so facilitates sound decision-making, recognizes the breadth of climate impacts, and supports the international leadership of the United States on climate issues.”
The order also revoked a number of executive orders issued by the previous administration, including executive orders seen as shortcutting environmental protections during the review and permitting of federal projects, such as Executive Order 13766 of January 24, 2017 (Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects) and Executive Order 13778 of February 28, 2017 (Reviewing the “Waters of the United States” Rule). In addition, it directed the Council on Environmental Quality (CEQ) to rescind its Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions, 84 Fed. Reg. 30097 (June 26, 2019), which failed to require the assessment of climate change impacts on the proposed project, the calculation of upstream and downstream greenhouse gas impacts of the proposed project, or the consideration of alternatives to the proposed project that generate lower emissions or higher sequestration. The order directs CEQ to review, revise, and update its guidance from 2016, which had been rolled back by the 2019 Executive Order that has now been rescinded.
Another executive order, issued on January 27, 2021, established a White House Environmental Justice Interagency Council, created an Office of Climate Change and Health Equity at the Department of Health and Human Services, recommended forming a separate Office of Environmental Justice at the Justice Department, and directed the Attorney General to consider renaming the Environment and Natural Resources Division the Environmental Justice and Natural Resources Division. The order also directed the government to spend 40 percent of its sustainability investments on disadvantaged communities.
In practical application, the Executive Order on Tackling the Climate Crisis at Home and Abroad will result in focused attention on environmental justice in both decision-making and enforcement priorities. The order directs the CEQ to create a geospatial Climate and Economic Justice Screening Tool and annually publish interactive maps highlighting disadvantaged communities.
Federal agencies must consider human health, environmental, climate-related, and other cumulative impacts on disadvantaged communities, and the economic challenges of such impacts, in all decision-making activities.
EPA is directed to strengthen enforcement of environmental violations with disproportionate impact on underserved communities through the Office of Enforcement and Compliance Assurance, and create a community notification program to monitor and provide real-time data to the public on current environmental pollution, including emissions, criteria pollutants, and toxins, in frontline and fenceline communities.
A Return to Meaningful Tribal Consultation
One of the policies that the Biden administration is rolling out in its first 100 days is contained in a Memorandum on Tribal Consultation and Strengthening Nation-to-Nation Relationships, which was issued on January 26, 2021. In that memorandum, President Biden affirmed that it is a “priority of my administration to make respect for Tribal sovereignty and self-governance, commitment to fulfilling Federal trust and treaty responsibilities to Tribal Nations, and regular, meaningful, and robust consultation with Tribal Nations cornerstones of Federal Indian policy.”
In order to achieve the goal of more robust Tribal consultations, the Memorandum requires the head of each agency to develop and submit a plan of action to implement Executive Order 13175 to the Office of Management and Budget by April 26, 2021. Executive Order 13175 was originally signed in November of 2000, and it requires all federal agencies to respect Indian self-government and sovereignty, grant statutory waivers to Tribes as a matter of executive discretion where the law allows, and consult with and defer to Tribes where possible in policy areas that “have Tribal implications.” Each agency is required to consult with Tribes in developing its plan of action. Once agencies have submitted their action plans, the Office of Management and Budget is tasked with reviewing them and monitoring the agencies’ progress toward implementing them.
Federal agencies are putting the new Memorandum into effect. On February 9, 2021, for example, the Deputy Assistant Secretary of Defense, Richard G. Kidd IV, published an open letter to “Tribal leaders” seeking their input on a range of issues, including how the Department of Defense can enhance its consultation efforts; protect Tribal land, rights, and resources from the effects of ongoing military activities; and address legacy pollution issues caused by past Department of Defense activity. They have until March 8 to submit their comments on these and other matters. We can expect that other agencies will also be reaching out to Tribes and Tribal leaders in an effort to increase communication between Tribes and the federal government.
The administration’s recommitment to consultation gives Tribes a valuable opportunity to engage with all levels of the federal government and to play a real part in federal decision- and policy-making. It also affords other stakeholders occasion to proactively engage with Tribal interests and to forge partnerships with Tribes that may have interests that intersect with their own.
The change in administration is not likely to affect environmental regulation and enforcement regionally. However, there are some developments for 2021 that you should be aware of.
Washington State Adopts 2021 Energy Strategy for Carbon-Free Future
The Washington State Department of Commerce has released its 2021 State Energy Strategy, which aims to “offer a blueprint for how, by 2050, we can nearly eliminate the use of climate-threatening fossil fuels.” This is in step with HB 2311, the Washington Legislature’s directive to reduce greenhouse gas emissions in the state to 45 percent below 1990 levels by 2040, and 95 percent below 1990 levels by 2050.
The strategy calls for rapid investments in upgrades to the way power is generated and transmitted throughout the state, the addition of electric heat pumps in buildings, and a plan to phase out gasoline-powered cars and trucks on Washington’s roads. The Washington Department of Commerce also calls for universal broadband access to enable remote work and increased resiliency. In the years ahead, we can expect to see the state investing in green infrastructure in the transportation, energy, and technology sectors.
Although this policy by itself has no direct legal effect, it is consistent with increased reluctance on the part of state regulators to move forward with projects involving fossil fuels. As has been becoming clear for several years, proponents of large-scale fossil fuel-based projects face an uphill battle with getting their projects permitted in Washington State. In January of 2021, for example, the Department of Ecology rejected a shoreline conditional use permit for construction of a marine export facility for the manufacture and export of methanol on the Columbia River. Ecology determined that the use of the methanol, which contributes to greenhouse gases, would cause impacts to the State’s shorelines that could not be adequately mitigated.
Oregon Expands Regulation of Discharges to Waters of the State and Air Emissions
Oregon DEQ has expanded the scope of its regulations and increased enforcement efforts under the State’s air and water quality statutes, and that trend seems likely to continue.
Developers in particular should be aware that DEQ has begun regulating discharges to waters of the state by requiring a water quality review of any removal-fill activity in non-federal wetlands or waters of the state. Even where filling a non-federal wetland or water of the state is done in compliance with an Oregon Department of State Lands removal-fill permit, DEQ has threatened enforcement action if a water quality review by DEQ is not obtained. DEQ has no permitting authority to authorize the impacts to water quality that it seeks to review, so instead is requiring that the actions be covered with a memorandum of agreement between DEQ and the developer in lieu of a permit that would authorize water quality impacts from the fill or removal. DEQ has indicated it is going to develop rules to implement a permitting program, but its timeline is unclear. This also raises questions about the extent to which DEQ intends to regulate discharges to other waters of the state, like groundwater.
DEQ is also continuing to adjust the extent and scope of its regulation of air emissions. In 2018, DEQ adopted the Cleaner Air Oregon rules to regulate toxic air emissions. DEQ is currently working on a rulemaking to further expand its Cleaner Air Oregon authority, which is expected to expand DEQ’s review to a greater number of facilities. Just last year, DEQ adopted new rules regarding the appropriate air contaminant discharge permit required for certain facilities. DEQ is also working on a regulatory program to “cap and reduce” greenhouse gas emissions.
These regulatory changes at the state and federal levels require that the regulated community stay informed and adapt to the changes in order to avoid the types of environmental enforcement actions that are expected to increase in 2021. We can help you prepare for increased environmental inspections and enforcement.
Preparing for Increased Environmental Inspections and Enforcement
Given these changes in enforcement discretion at the state and federal levels, now is a good time to evaluate current inspection practices. The following protocol should be considered for any site or facility subject to environmental enforcement inspections:
- Designate a team of individuals at a facility or jobsite who will be responsible for handling environmental inspections. Ensure there is a designated person who will act as the company’s primary contact with the inspectors.
- Properly organize pertinent plans and records to be prepared for an environmental inspection. Records like a Stormwater Pollution Prevention Plan or a Stormwater Management plan and sampling data should be readily accessible.
- Maintain a relationship with your regulators.
- Request an opening conference with the inspection team to discuss the type of inspection; the scope of the inspection; how the inspectors will receive documents from the company and how the company will receive photographs taken by the inspector; and if sampling is done, take duplicate measurements and samples.
- Take notes during the inspection about observations and any employee interviews.
- Request a closing conference to correct any errors relating to the inspection and learn the agency’s intended next steps.
The changing federal and state regulatory landscapes necessitate staying apprised of regulatory changes and how they may affect your business. These regulatory changes also make it particularly important to ensure your site or facility is prepared for an environmental inspection.
This does not constitute legal advice and you should consult with an attorney as to how this applies to your business or organization.
- Connie Sue MartinIndustry Group Leader
- David StearnsAssociate
- Lindsay ThaneAssociate
- Brien FlanaganShareholder