On January 22, 2018, the U.S. Supreme Court unanimously held that challenges to the 2015 Waters of the United States Rule (the “WOTUS Rule” or “Rule”) belong in district court rather than the appellate court. The WOTUS Rule was developed by the U.S. Environmental Protection Agency (“EPA”) and Army Corps of Engineers (“Corps”) to clarify which waters and wetlands fall under federal jurisdiction. Numerous parties challenged the Rule in both federal district courts and circuit courts of appeals. The circuit court actions were consolidated in the Court of Appeals for the Sixth Circuit. In 2016, the Sixth Circuit held that it had jurisdiction to hear petitions related to the legality of the Rule and issued a nationwide stay. This decision was appealed to the Supreme Court by industry groups who argued that, under the plain text of the Clean Water Act, the district courts were the proper jurisdiction.

In an opinion authored by Justice Sonia Sotomayor, the Court noted that the Clean Water Act lists seven specific categories of EPA actions that federal courts of appeals have the exclusive power to review and the Rule did not fall into a category on the list. The Court determined that it had “no basis to depart from the [Clean Water Act]’s plain language” despite arguments by the U.S. government (forwarded by both the Obama and Trump Administrations) that the Rule was “functionally related” to categories on the list and that efficiency, national uniformity, and other policy arguments weighed in favor of making the circuit courts of appeals the appropriate jurisdiction. The Court reversed and remanded the case to the Sixth Circuit, directing the court to dismiss the petitions for review that had been filed.

Because the Supreme Court’s decision was related to jurisdiction and not the merits of the Rule, what does this mean for the Rule’s future? Continue Reading U.S. Supreme Court Sends Waters of the US Rule to District Courts; Nationwide Stay in Question

The announcement of the Office of the U.S. Trade Representative (“USTR”) on January 22, 2018, that the Trump Administration is granting relief for the domestic solar panels and modules industry under section 201 of the Trade Act of 1974, confirmed the fears of many consumers that substantial additional duties would be imposed on those products. USTR announced that the relief would come in the form of a tariff increase of 30% in the first year, decreasing to 25% in year two, 20% in year three, and then to 15% in year four. On January 23, 2018, President Trump signed the Proclamation implementing the relief. The relief will go into effect on February 7, 2018.

Despite the above tariffs, the relief announced provides that the first 2.5 gigawatts of imported cells are excluded from the additional tariffs. The use of the exemption for the first 2.5 gigawatts makes the relief a form of a “tariff rate quota,” meaning that tariffs only apply if imports rise above a certain quota amount. This type of relief has been imposed in the past, including on certain steel products. The ITC Commissioners made various recommendations to the President in this case, some of which included types of tariff rate quotas.

The nature of the relief will mean that exporters now are likely want to rush to import their products in order to be within the 2.5 gigawatt exclusion. The Proclamation states that the quota of 2.5 gigawatts “shall be allocated among all countries except those countries the product of which are excluded from such tariff rate quotas…” While this statement seems to imply that there will be a base time period used to determine different market shares within the total quota for different countries, our discussions with government officials indicate that this was not what was intended. Instead, the intention was to have one worldwide quota of 2.5 gigawatts that will apply to all countries, without any allocation among countries. Regardless of whether allocations are made among countries or there is just one overall quota, if shipments are made in the hope that they will fall within the exclusion but the 2.5 gigawatt quota already is filled at the time of entry, the 30% tariff that then will be applied may change the economics of a deal if the possibility of a tariff has not been taken into account. It is not clear at this time whether there will be some kind of pre-clearance for such imports before the time of exportation, or whether there will be a free-for-all at the time of entry. Continue Reading Solar Panels and Modules Trade Decision Creates New Uncertainty for Purchasers

The Menominee Indian Tribe of Wisconsin has sued the U.S. Environmental Protection Agency (“EPA”) and Army Corps of Engineers (“Corps”) over the proposed Aquila Resources Back Forty Mine, arguing that EPA and Corps have failed to take responsibility for reviewing wetland permits for the project. The lawsuit was expected since the Tribe filed a notice of intent to sue in November 2017.

Aquila Resources has proposed an open pit mine, deemed the “Back Forty Mine,” to extract gold, zinc, and other metals. The mine would be located in Michigan’s Upper Peninsula and adjacent to the Menominee River, which forms the boundary between Wisconsin and Michigan. The river flows into Lake Michigan. The Michigan Department of Environmental Quality (“MDEQ”) is the permitting authority and has issued three of the four permits required for the project, including a Nonferrous Metallic Mineral Mining Permit, a Michigan Air Use Permit to Install, and a National Pollutant Discharge Elimination System (NPDES) permit. A permit for wetland impacts is still required and is under review by MDEQ. Given the location of the wetlands near a commercially navigable interstate waterway, normally the Corps and EPA would have wetland permitting authority and permitting would also trigger an obligation for the federal agencies to consult with the Tribe under the National Historic Preservation Act. However, MDEQ is one of two state agencies which has been delegated additional permitting authority under the Clean Water Act by EPA for permitting of wetlands under federal jurisdiction, and MDEQ is not required to consult with the Tribe.

The Tribe is alleging that the federal government has deprived it of treaty rights that are supposed to protect its cultural and historical sites. The Tribe’s sacred place of origin is within its 1836 treaty territory at the mouth of the Menominee River and there are numerous sacred sites and burial mounds located along the river, including in the area of the proposed mine. The Tribe is also concerned about the potential impact of acid mine drainage from the mine on the water and fishery resources in the area and Great Lakes ecosystem. According to the Tribe, it has been trying to meet and consult with the Corps and EPA for months, but the agencies have not responded in a meaningful way. The Tribe has asked the court to order EPA and the Corps to take over the wetland permitting process.

Watch this blog for additional updates.

On January 8, 2018, the Federal Energy Regulatory Commission (FERC or the Commission) issued an Order terminating the rulemaking proceeding that it established to address DOE Secretary Rick Perry’s proposed Grid Resiliency Pricing Rule.  The proposed rule directed FERC to provide special compensation to certain coal and nuclear power plants (for a full summary of the proposal, refer to Husch Blackwell’s client alert).  In response, FERC found that Secretary Perry’s proposal did not meet “clear and fundamental legal requirements[.]”  FERC stated that Comments from Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) did not indicate that the grid is threatened by the retirement of coal and nuclear power plants.

FERC none-the-less emphasized the importance of grid reliability and resilience, and determined that it has consistently taken action to address the issue, including:  (i) extensive reliability planning and standard setting through NERC, (ii) examination of fuel assurance methods during the 2014 Polar Vortex, (iii) certain capacity market reforms, and (iv) coordination of wholesale gas and electricity market scheduling.  To continue its reliability work, FERC initiated a new proceeding in Docket No. AD18-7 “to specifically evaluate the resilience of the bulk power system in the regions operated by regional transmission organizations (RTO) and independent system operators (ISO).”   In the new proceeding, FERC directs each RTO and ISO to submit information on certain resilience issues and concerns identified by the Commission to enable it to examine holistically the resilience of the bulk power system.  FERC stated that this new proceeding will provide further information on whether further action is warranted.    Continue Reading FERC Rejects DOE Proposal for Special Compensation for Coal and Nuclear Generators

FERC Holds its First Meeting in Nearly Two Years with a Full Slate of Commissioners.

At the December 21, 2017 FERC open meeting, the first with the agency’s new Chairman, Kevin McIntyre and a full slate of Commissioners, several major new orders and policy initiatives were announced that are important to the energy industry, including initiating a more RTO-specific approach to fast-start resource pricing policies, new reporting requirements for cyber security incidents and a preliminary announcement of FERC’s intent to review the current pipeline certificate procedures. Continue Reading FERC Off to a “Fast Start”

On December 18, 2017, EPA Administrator Scott Pruitt signed an advanced notice of proposed rulemaking (“ANPRM”) to solicit input regarding the emissions guidelines limiting greenhouse gas (“GHG”) emissions from existing electric utility generating units (“EGUs”) that the U.S. Environmental Protection Agency (“USEPA”) is considering proposing.

The Clean Power Plan regulations adopted by the Obama administration would have limited GHG emissions by substituting generation from lower-emitting existing natural gas combined cycle units and zero-emitting renewable energy generating capacity. Continue Reading EPA Solicits Input on Greenhouse Gas Emissions Limits for Existing Electric Utility Generating Units

Since 2001, Wisconsin law has required a permit to discharge fill into wetlands that do not fall under federal jurisdiction (“nonfederal wetlands”). Of the approximately five million acres of wetlands in Wisconsin, an estimated 10 to 30 percent are nonfederal wetlands.

State lawmakers held hearings on December 21 on proposed legislation, AB547/SB600, which would exempt nonfederal and artificial wetlands from the state wetland permitting requirements administered by the Department of Natural Resources (“DNR”). The bill would still require a developer to mitigate the nonfederal wetland loss by creating a minimum of 1.2 acres of wetlands for every acre filled, but a permit would no longer be required.

The proposed bill also authorizes the DNR to apply to the U.S. Environmental Protection Agency (EPA) for delegation of permitting authority for federal wetlands within Wisconsin. If EPA approves the application, the DNR become the permitting authority for fill in federal wetlands instead of the U.S. Army Corps of Engineers.

Proponents of the legislation argue that the existing nonfederal wetland permit program often protects low-value wetlands and stands in the way of development projects. Opponents argue that the existing program is necessary given the uncertainty of the definition of federal wetlands; that nonfederal and artificial wetlands provide valuable ecosystem services such as flood control and water quality protection; and that mitigation attempts often fail or do not create the same benefits as the fill wetland.

Legislative action on the bill is expected when the legislature returns to session in January 2018.

The renewables industry can breathe easier this weekend as details emerge from whirlwind negotiations that appear to clear the path toward passage of the first comprehensive tax bill in more than 30 years.

The final language, released by the Conference Committee last night, scraps a House provision which would have effectively gutted Production Tax Credits (PTCs) critical to the wind industry; eliminates the corporate Alternative Minimum Tax; and takes the teeth out of the so-called BEAT (Base Erosion Anti-Abuse) Tax Continue Reading Congressional Compromise Mollifies Renewable Industry Concerns

A client alert issued today by Husch Blackwell’s environmental practice group details a major reversal of Obama-era policy by the Trump Administration.  The EPA announced it will not issue final regulations under CERCLA Section 108(b) imposing financial responsibility requirements on the hardrock mining industry. Abandoning a December 1, 2016 proposed rule, the EPA emphasized that after carefully evaluating public comments, statutory authority, and the extensive record it had concluded that the minimal environmental risk involved in modern mining practices combined with existing state and federal financial assurance requirements made the proposed rule unnecessary and unduly burdensome.  Read the entire client alert here.

The Texas Commission on Environmental Quality (TCEQ) is in the process of renewing its General Permit to Discharge under the Texas Pollutant Discharge Elimination System Permit, Permit No. TXR150000, issued on February 19, 2013 and effective on March 5, 2013, which authorizes discharges from construction sites into surface water in the state.  The new permit will go into effect March 5, 2018 and will expire five years from the effective date.

Developers and other parties that currently hold an authorization to discharge stormwater under the existing permit will want to take note of the provisions in the new permit for obtaining renewed authorization to discharge; for large construction activities: Continue Reading Texas Developers, Mark Your Calendars for March: Changes Coming for Texas Stormwater Permit