Real Estate & Land Use

On January 18, 2023, the U.S. Environmental Protection Agency (“EPA”) and the Department of the Army published a new final rule to re-define “waters of the United States” (“WOTUS”) under the Federal Clean Water Act (“CWA”). Although the rule is set to take effect March 20, 2023, the looming U.S. Supreme Court decision in Michael Sackett, et ux v. EPA, et al., Docket No. 21-454(2022) could establish additional legal precedent as to what constitutes WOTUS and could enable further legal challenges to the rule. If the rule goes into effect, it would broaden the types of water bodies subject to CWA regulation, while providing some clarity with regard to some newly excluded water features.

The Bureau of Land Management (“BLM”) recently circulated a Proposed Rule on Waste Prevention, Production Subject to Royalties, and Resource Conservation (“2022 Proposal”). This iteration, as BLM acknowledges, is a revamp of its fraught 2016 attempt to issue a similar rule ostensibly aimed at reducing natural gas waste on federal and Indian leases (“2016 Rule”). The 2016 Rule was ultimately struck down two years ago as unlawful. To the Wyoming federal court, the 2016 Rule sought to regulate air emissions—a role reserved for the Environmental Protection Agency (“EPA”) and the states—rather than prevent the waste of resources through flaring and other means. Undeterred, the Biden Administration believes it has learned from and theoretically fixed the flaws in the 2016 Rule through the 2022 Proposal. The 2022 Proposal claims to focus on reducing operator costs and generating taxpayer revenue. This is a shift from the 2016 Rule, which relied on the benefits from reduced carbon emissions to justify its issuance. Nevertheless, the question to many stakeholders remains: does the 2022 Proposal still exceed BLM’s authority, or has the agency done enough to win a future legal challenge?

The Environmental Protection Agency (“EPA”) released its most recent proposal for controlling greenhouse gas emissions produced by the oil and gas industry earlier this month. The supplemental proposal builds upon the comments received by EPA in response to its proposed emission-control rules issued under Section 111 of the Clean Air Act (“CAA”) on November 15, 2021. In particular, the supplemental proposal revises and expands the stringent emissions control program introduced one year ago for new and existing sources. The supplemental proposal, however, raises questions regarding the implementation of existing greenhouse gas reporting and fee requirements under the Inflation Reduction Act (“IRA”). 

On September 21, 2022, the Senate passed the Kigali Amendment to the 1987 Montreal Protocol (which had been signed by former President Obama in 2016) by a vote of 69 to 27, reaffirming U.S. commitment to the reduction of hydrofluorocarbons (“HFCs”) through multiple processes (some of which are already causing shifts in import and export markets, as well as in the consumer market).   

On December 7, 2021, the U.S. Environmental Protection Agency (“EPA”) released its proposed 2020, 2021, and 2022 Renewable Volume Obligations (“RVOs”). RVOs determine the amount of renewable fuel (typically, ethanol) certain fuel refiners and others involved in the transportation fuel supply chain (“Obligated Parties”) are required to blend into their own fuel production during a given year. Obligated Parties failing to meet their RVOs for any year must buy Renewable Identification Numbers (“RINs”) or other credits, or risk default under the Renewable Fuel Standard (“RFS”).

Pursuant to the Renewable Fuel Standard (“RFS”), the U.S. Environmental Protection Agency (“U.S. EPA”) issues annual renewable volume obligations (“RVOs”), which set the minimum aggregate volume of renewable fuel that refiners must blend with transportation fuel for the following calendar year.

Refineries producing transportation fuel meet their RVOs by blending the required volume of renewable fuel into gasoline or diesel fuel or by acquiring credits (called renewable identification numbers, or “RINs”). The RFS permits “small” refineries – those producing fewer than 75,000 barrels of fuel per day – to claim an exemption by showing that meeting their RVOs would cause them “disproportionate economic hardship.”

The American Society for Testing and Materials (“ASTM”) is expected to release a revised international standard for Phase I Environmental Site Assessments (“ESAs”) in December of 2021 that will clarify a number of key components of the standard and elevate the importance of per/poly-fluoroalkyl substances (“PFAS”).

Phase I ESAs are conducted by many parties when they become involved in the sale, acquisition, development, or financing of a piece of land, including developers, owners, and parties who provide loans for or serve as tax equity investors on renewable energy projects.  The Phase I ESAs allow those parties to get a glimpse into the environmental condition of the land and identify any potential contamination on-site.  Some of those parties – by acquiring an ownership or leasehold interest in the land, or by becoming an operator of the site – take on potential environmental liability if there have been releases on-site, including liability under the strict liability scheme of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).  A defense to CERCLA liability is available if the party conducted certain diligence that complies with the United States Environmental Protection Agency’s All Appropriate Inquiries (“AAI”) standard, and if the party exercises appropriate care with respect to issues identified.  Environmental consultants prepare those Phase I ESAs and use the current ASTM standard as a guideline to prepare a thorough report and comply with AAI.

Senior Associate Megan McLean has published “Biden Administration Promises to Double Down on Environmental Justice” in Rock Products Magazine. 

In the article, Megan outlines President Biden’s stance on environmental justice, the actions the EPA is taking to address environmental justice, and what companies need to do to mitigate foreseeable risks.

Read the article here.

Senior Counsel Coty Hopinks-Baul has published an article in Coal Age titled “CWA’s Permit Shield Spans SMRCA”.

In the article, Coty details a recent decision in the case of Southern Appalachian Mountain Stewards v. Red River Coal Co. Inc., where the Fourth Circuit upheld a district court’s dismissal of a citizen suit to enforce…