The U.S. Environmental Protection Agency (EPA) announced the latest step in implementing its February 2019 “Action Plan” for regulating a group of synthetic chemicals called per- and polyflouroalkyl substances (PFAS) last week. While PFAS have long been used in a wide array of consumer and industrial products, they have recently become an emerging area of focus for environmental law and policy at both the state and federal level. The EPA’s latest Notice of Proposed Rulemaking (Notice) proposes adding PFAS to the list of chemicals for which facilities must report their annual manufacturing, processing, or use under the Emergency Planning and Community Right to Know Act (EPCRA).

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Informal guidance memos can be a powerful tool — allowing agencies to quickly pivot following a change in administration, avoiding the time and expense associated with the notice and comment process. But whether new guidance memos benefit or harm industry, they can often raise as many questions as they answer, with businesses left to wonder what legal effect an agency policy statement has and whether it can be challenged in court. These questions can hamper long-range planning by increasing regulatory uncertainty. Two recent cases help clarify when agency guidance should be considered a “final agency action” and how and when guidance can be challenged in court.
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On August 9, 2019, the EPA plans to publish a proposed rule to codify the current interpretation of New Source Review (NSR) Project Emissions Accounting. The rule would explicitly allow consideration of emissions decreases from a project, alongside any emissions increases, when determining whether the project causes a significant emissions increase from the source. Historically, many state regulators, and even certain EPA applicability determinations, have suggested that only emissions increases (and not decreases) should be considered. Considering emissions decreases in this analysis allows more projects to avoid triggering NSR.

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Regulated companies need to understand what material courts can consider when they review administrative decisions. The Administrative Procedure Act generally allows courts to consider only the existing administrative record when reviewing agency decision-making to determine whether agency decisions are arbitrary and capricious. But the Supreme Court recently reminded us that this rule is not absolute by looking beyond the record in Dep’t of Commerce v. New York to block an agency decision that it found to be based on a “contrived,” pretextual rationale.

Regulated companies may be able to ask courts to consider information beyond the administrative record if they can show that the agency acted in bad faith or exhibited improper behavior. A company’s ability to present the court with information beyond a record carefully constructed by an agency can be a powerful tool.
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A key building block of U.S. government is how administrative agencies interpret their own regulations. Because this question is so fundamental to the entire regulated community, we have blogged about administrative deference generally and the Kisor case specifically. The Supreme Court affirmed the long-standing judicial tenet of administrative deference to agencies’ interpretation of their own regulations this week. In doing so, however, the majority cautioned against a laissez faire application of deference, emphasizing that courts must carefully and explicitly consider the specific criteria established under Auer v. Robbins before deferring to an agency’s interpretation of its own regulation.
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Everyone knows that environmental cleanups are complicated. Sites can be geographically vast and varied, involve operations that have released chemicals over decades, and goal posts for how and what should be investigated, characterized, and – if necessary – remediated can change over time. The U.S. Supreme Court recently granted certiorari in a case that could potentially throw remediation efforts at Superfund sites around the country – as Atlantic Richfield (the petitioner) put it – into “chaos.”
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The EPA announced its final rule for power plant greenhouse gas (GHG) emissions, culminating often rancorous discussion and litigation over the EPA’s authority to regulate GHG emissions from existing coal-fired electricity generating sources. Under the new Affordable Clean Energy (ACE) rule, the states, not the federal government, are now responsible for driving down GHG emissions from power plants. Specifically, the EPA now requires unit-specific standards of performance to be developed by the states using its new emission guideline that details the “best system of emission reduction.”
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In separate decisions, a federal district court in Alaska recently struck down two Trump Administration efforts to roll back President Obama’s environmental initiatives. Taken together, these decisions signal that citizen suits can, in some sense, limit the ability of the administration to “deregulate.” To the regulated community, these decisions should serve as a warning that we continue to be in an ever-shifting legal landscape where individual decisions can buck the current deregulatory climate.
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Strategic in-house counsel and court-watchers are keeping a close eye on developments related to the U.S. Supreme Court’s recent commitment to further address deference to administrative interpretation of regulations, a fundamental legal principle central to the regulated community. This practice of courts resolving close questions of statutory or regulatory interpretation in favor of “expert” agencies can cause significant ripple effects to industry profitability – especially when agencies’ regulatory interpretations change.
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