Environmental update: June 2022
New York lawmakers passed a bill designed to slow the spread of cryptocurrency mining operations that burn fossil fuels for power in early June.
New York Governor Kathy Hochul subsequently suggested she may wait to decide whether to sign it into law until more information can be gathered about the effects.
If signed into law, the bill would impose a two-year moratorium on new and renewed air permits required to run fossil-fuel power plants used for cryptocurrency mining.
Environmentalists are urging Hochul to sign the moratorium in light of the energy-intensive nature of the mining operations and the environmental impacts from burning fossil fuels.
Bitcoin and Ethereum miners use high-powered computers to process transactions and collect rewards in crypto.
Bitcoin mining worldwide already currently uses more electricity annually than is used by the entire nation of Argentina. All of this electricity demand has implications for greenhouse gas emissions. Unless new renewable energy capacity additions keep pace, the electricity will come partly from dirty sources.
If enacted, the law would be the first of its kind in the United States.
There is speculation that Hochul may wait to sign or veto the bill until after the Democratic primary in late June in which she is running for re-election.
The US Environmental Protection Agency proposed in early June to reverse limits that the Trump administration placed on states’ and Indian tribes’ authority to review proposed new projects for effects on local water quality.
Section 401 of the Clean Water Act gives states the ability to review any proposed activity that requires a federal license or permit and that may involve discharges into federally regulated “waters of the United States” to ensure compliance with appropriate state water quality requirements.
States review impacts from proposed section 402 Clean Water Act discharge permits in states where EPA administers the permitting program and section 404 permits issued by the Army Corps of Engineers, as well as Rivers and Harbors Act sections 9 and 10 permits issued by the Army Corps and hydropower and pipeline licenses issued by the Federal Energy Regulatory Commission.
EPA says the new proposed rule would replace and update existing regulations to be more consistent with the Clean Water Act’s statutory text and clarify elements of section 401 certification practice that has evolved since the regulation was first issued 50 years ago.
The Trump limits on state and tribal authority have been contested in the courts since they took effect on September 11, 2020, leaving regulated projects to proceed in the face of a repeatedly shifting regulatory landscape.
A US district court issued an order with nationwide effect vacating the Trump limits in 2021. The US Supreme Court stayed that order on April 6, 2022. EPA and the US Army Corps then laid out a policy giving states greater latitude, extending deadlines as much as possible and easing federal review of state rationales for rejecting certification.
Some states have used the water certification rules to oppose fossil-fuel projects, such as interstate gas pipelines in New York, New Jersey and Massachusetts and a coal export terminal in Washington. The Trump administration accused a number of states of obstructing development for reasons that go beyond impacts to water quality; namely, increased impacts on climate change.
The Trump administration objected to use of the certification process to delay or stop development. It moved in 2020 to prohibit states from blocking a permit for a project for any reason other than direct impacts to state waters.
Trump also limited the amount of time states and tribes can take to review a project and act on a request for water quality certification to one year. After one year, they will be considered to have waived the right to object.
The 2020 Trump approach remains in effect today as a proposed replacement winds through the regulatory process.
The Biden EPA identified concerns with the Trump approach that relate to cooperative federalism principles and the Clean Water Act’s goal of ensuring that states, territories and tribes are empowered to protect their waters.
The new Biden policy is to require project developers to request a pre-filing meeting with state regulators to try to avoid potential issues. Once an application is filed, the states would have 30 days to work with the relevant federal permitting authority for the project to set a specific review period for the project, which can run up to a maximum one year. The period defaults to 60 days if no agreement is reached.
The new Biden policy would also restore the states’ ability to evaluate an activity as a whole rather than limiting the review to a project’s specific discharges.
In other words, EPA is proposing to “reaffirm the broader and more environmentally protective ‘activity as a whole’ scope of review that the Supreme Court affirmed in” a 1994 decision. In PUD No. 1 of Jefferson Cty. V. Washington DOE, a seven-member majority concluded that Clean Water Act section “401(d) is most reasonably read as authorizing additional conditions and limitations on the activity as a whole once the threshold condition, the existence of a discharge, is satisfied.”
This significant change would allow states to object to any “activity” related to a project that affects water quality and not solely to direct pollution discharges.
Under the new approach, states would also have greater flexibility, including granting a certification subject to certain conditions.
Specifically, a state would have four options: it could grant a certificate, grant it with conditions, deny a certificate or expressly waive certification.
This flexibility would effectively limit federal override of state decisions on water quality to instances where there is a deficiency with the decision that is not fixed in time. It would limit the ability of federal regulators to hold a state certification “waived” if the state’s action is deficient. The final action by state regulators must clearly state which of the four options was selected.
The proposed rule would also clarify when water quality certifications could be modified, the process for involving neighboring jurisdictions, and enforcement and inspection considerations. It also spells out mandatory pre-consultation meetings and a more standardized application and approval process.
The Biden proposals were published in the Federal Register on June 9, 2022. A virtual public hearing is set for July 18. The public comment period runs through August 8.
The Biden administration, through its Council on Environmental Quality, is in the process of amending in two stages federal regulations for implementing the National Environmental Policy Act, or NEPA.
The first stage is complete. The headline is that federal agencies will again consider the climate change impacts from proposed new infrastructure projects and other activities that require federal action. NEPA review is required for projects on federal land or that require federal action, like a hydroelectric license or permit.
NEPA requires federal agencies to conduct detailed environmental assessments of any major federal action that could significantly affect the environment, such as by increasing air or water pollution or threatening endangered species or their habitats. Federal actions include such things as federal agency approvals of non-federal actions (such as issuing permits), federal agency funding of projects and the development of federal agency regulations.
The second phase of the NEPA review is expected to lead to more comprehensive regulatory reforms later this year.
The Trump administration updated the NEPA regulations for the first time in more than 40 years when it acted in 2020 to facilitate “more efficient, effective, timely NEPA reviews.”
Developers generally supported the 2020 update as a means of streamlining a lengthy and sometimes overly cumbersome NEPA process that often leads to significant project delay and increased costs.
Environmentalists opposed the changes as an attempt to weaken environmental protections, especially by prohibiting the use of the NEPA process to account for project impacts on climate change.
The first-phase updates to the NEPA regulations took effect on May 20, 2022.
They remove key 2020 limitations. Federal agencies have discretion again to consider a range of reasonable alternatives to address environmental concerns that may not be entirely consistent with the goals of the project developer. Thus, federal agencies may again consider alternatives that could minimize environmental and public health costs even if they extend beyond the scope of the agency’s regulatory authority.
Federal agencies have been directed to consider the historic categories of “reasonably foreseeable” direct, indirect and cumulative effects when deciding whether to approve new projects.
Trump had wanted to require a “reasonably close causal relationship” between a proposed project and an environmental effect before the government could tag the project with the effect. The Trump regulations required federal agencies to consider only direct effects, despite giving agencies discretion to consider indirect effects. However, agencies were prohibited from considering cumulative effects during a NEPA review.
The latest changes direct federal agencies to evaluate all relevant environmental effects resulting from the agency decision. This includes consideration of climate change impacts in cases where a proposed new project will have a significant cumulative effect on climate change when considered alongside other projects.
The phase-two changes to the NEPA regulations are expected later this year and will change the NEPA rules on a more granular level. There is tension within the Biden administration over how to shape further changes. Any tightening of NEPA processes could conflict with the Biden goals to build out US infrastructure and advance renewable energy.