Post-Election Analysis 2020: Energy & Environment
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President-elect Biden will depart radically from the Trump Administration's energy and environmental agenda. In particular, climate change policy will top the new administration's agenda. However, the president-elect's broader policy proposals may not gain enough ground in a divided Congress, especially those with a high price tag.
During the campaign, President-elect Biden touted a $2 trillion climate plan that aims to achieve net-zero emissions, economy-wide, by 2050 with ambitious interim targets for the power, transportation, and building sectors. His platform connects the need to reduce pollution with reducing the negative health impacts from the coronavirus, especially respiratory symptoms. The Biden Administration likely will take action to reverse Trump-era deregulatory policies that were criticized for not being protective of human health and the environment. For example, President-elect Biden is expected to revoke executive orders issued by President Trump that affect energy and the environment, such as President Trump's executive order encouraging energy exploration and production on the Outer Continental Shelf. The Biden Administration may also reverse the Trump Administration's revisions to the NEPA regulations and to the definition of "waters of the United States." In addition, the Environmental Protection Agency (EPA) may take stronger and more aggressive action to regulate certain chemicals, such as per- and polyfluoroalkyl substances (PFAS) and asbestos. Many of these regulatory changes likely will face significant opposition and court challenges from stakeholders, including regulated entities and Republican state leaders.
The incoming Biden Administration is anticipated to depart from the Trump Administration's approach to enforcement and permitting. Whereas the Trump Administration was swift to permit projects on federal lands, including those for traditional fossil fuel projects, the Biden Administration will likely prioritize stronger environmental review procedures and encourage the growth of renewable energy projects on federal lands. Regarding enforcement, there was a noticeable dip in activity and in the penalties assessed under President Trump. That trend should turn around under the Biden Administration with increasing levels of enforcement. The Biden Administration also is likely to put increasing attention on environmental justice issues.
While President-elect Biden's goals are consistent with the August 2020 climate plan released by the Senate Special Committee on the Climate Crisis and the June 2020 plan released by Democrats on the House Select Committee on the Climate Crisis, the Republican-controlled Senate will prove to be a barrier to proposals that are costly or that impose major regulatory burdens. Given a divided legislature, Congress is more likely to make headway on bipartisan initiatives started during the 116th Congress, including drinking water protections, surface transportation, energy efficiency, and investments in advanced carbon reduction technology, including carbon capture and sequestration.
Climate Change and the Power Sector
Addressing climate change at the federal level will be one of the top priorities of both President-elect Biden and congressional Democrats; however, with a Republican-controlled Senate, narrow bipartisan proposals likely will be the only ones to advance. In the last several years, a growing number of states and businesses alike have committed to achieve stronger emissions reductions targets to address the impact of climate change. At least 30 states have adopted a Renewable Portfolio Standard, and numerous companies have made net-zero emissions pledges. President-elect Biden similarly committed to put the US on a path to achieve net-zero emissions, economy-wide, by 2050 and a carbon pollution-free power sector by 2035. He will rely on executive authority to achieve policy objectives for carbon reduction and clean energy deployment to get there.
The Biden Administration will use existing authority as expansively as allowable for these initiatives. In addition to rejoining the Paris Agreement, President-elect Biden is expected to revoke President Trump's executive orders that affect energy and the environment, such as his order revoking President Obama's Executive Order 13693, which set a goal of cutting the federal government's greenhouse gas emissions by 40 percent over ten years. The president-elect likely will issue new executive orders reestablishing a federal commitment to reducing greenhouse gas emissions and restricting oil and gas leasing on federal lands. President-elect Biden has also announced his intention to establish ARPA-C, a cross-agency Advanced Research Projects Agency focused on climate solutions. In addition, President-elect Biden pledged to use the federal government procurement system to drive towards 100 percent clean energy and zero-emissions vehicles and to ban new oil and gas permitting on public lands and waters. The administration likely will initiate rulemakings to amend the Department of Energy's energy efficiency standards for buildings and appliances; to revise the social cost of carbon, which was greatly reduced under President Trump; and to create a successor to the Obama Administration's Clean Power Plan. However, the administration likely is to face legal challenges from Republican states, as was the case with the original Clean Power Plan.
At the Federal Energy Regulatory Commission (FERC), we expect a Democratic Chairman to be rounded out by two Democratic Commissioners and two Republican Commissioners during the administration's first term, tipping the scales in favor of policies such as developing a long-range transmission infrastructure strategy for a growing clean energy power sector, and using FERC's existing authority to require wholesale electricity rates to incorporate the cost of externalized greenhouse gas emissions, which would help level the playing field in power markets between renewables and fossil fuels. In fact, near the end of the Trump Administration, FERC expressed potential interest in the latter topic by proposing a policy statement that regional market rules incorporating a state-determined carbon price can fall within the Commission's jurisdiction over wholesale rates, following a technical conference on carbon pricing. FERC also is expected to accommodate and facilitate renewable energy growth, and treat with greater skepticism applications for new natural gas pipelines and liquefied natural gas terminals.
In addition, FERC likely will increase its energy-related enforcement activity. For context, to date in 2020, FERC has issued only two orders imposing civil penalties, which totaled less than $180,000. While it imposed civil penalties totaling $18.5 million in 2019, this stands in stark contrast to the nearly $300 million in civil penalties that FERC imposed across ten cases in 2016 alone. Under the Biden Administration, FERC likely will reverse this trend, renewing the aggressive approach to enforcement seen during the Obama Administration.
President-elect Biden's plan to decarbonize the power sector aligns in several ways with recommendations released by Democrats on the House Select Committee on the Climate Crisis and Senate Special Committee on the Climate Crisis, which reflect congressional Democratic leaders' policy priorities for carbon reduction. In particular, all three plans call for: (1) a national clean energy standard to achieve net-zero emissions in the coming decades; (2) incentivizing the improved energy efficiency of homes and buildings; (3) designing market incentives, such as tax breaks, to spur the growth of clean energy while requiring entities to bear the cost of externalities; and (4) investing in research, development, and deployment of advanced technologies, especially carbon capture and sequestration (CCS) technology in hard-to-abate sectors of the economy.
While many Democrats may view these policies favorably, with a divided Congress, major legislative changes impacting the power sector are unlikely to move beyond the House, including any non-technology neutral initiatives. However, lawmakers may succeed in advancing narrow, bipartisan legislation that would reduce carbon emissions. The American Energy Innovation Act (S. 2657) from Sens. Lisa Murkowski (R-AK) and Joe Manchin (D-WV), which focuses on targeted investments in advanced technology, including carbon capture, and energy efficiency improvements, could advance to the president-elect's desk. While the bill neither includes clean energy tax extensions nor does it set carbon emission reduction targets, it includes other climate priorities, such as a multi-year phasedown of hydrofluorocarbons and authorization of significant investments in solar and wind power improvements, energy storage, and grid modernization. The House passed its own energy innovation bill in September 2020 (H.R. 4447), which includes many similar provisions to the Senate measure. Congress likely will not pass these bills before the end of 2020, so the 117th Congress may take action in 2021.
Permitting and Infrastructure
The Biden Administration committed to significant investments in infrastructure in the transportation, electricity, and building sectors to create jobs, lay the foundation for a clean energy future, and prepare for the impacts of climate change. In contrast to the Trump Administration's focus on cutting regulatory requirements to facilitate faster infrastructure deployment, President-elect Biden expressed his intention to reinstate robust environmental review, especially for fossil fuel-related projects, and permitting requirements to ensure infrastructure development is sustainable. Specifically, the Biden Administration likely will pursue regulatory actions to replace the Council on Environmental Quality's major overhaul of NEPA-implementing regulations, the EPA's reinterpretation of the scope of State Water Quality Certifications under Section 401 of the Clean Water Act, and the Interior Department's amendments to the Endangered Species Act-implementing regulations, among others.
More immediately, President-elect Biden has committed to taking executive action to require all federal infrastructure investments reduce climate pollution, and all federal permitting decisions consider the effects of greenhouse gas emissions and climate change. Through exercise of those permitting authorities and changes to litigation strategies, the Biden Administration will also have the opportunity to influence the outcome of controversial major infrastructure projects, such as the Keystone XL Pipeline, the Dakota Access Pipeline, and the Pebble Mine.
The incoming administration will work closely with Congress to create an economic stimulus package that will build off proposals in both chambers to invest in surface transportation. On the campaign trail, President-elect Biden laid out a $2 trillion infrastructure plan, which included "transforming our crumbling transportation infrastructure." This proposal included provisions expanding labor protections, improving climate resiliency, supporting transportation electrification, and expanding high-quality transit services. To secure passage of infrastructure legislation, the Biden Administration will have to compromise with Senate Republicans, who support a more traditional surface transportation authorization, embodied in the America's Transportation Infrastructure Act of 2019 (S. 2302).
Surface transportation reauthorization legislation will be a near-term priority in Congress since funding for existing programs will expire at the end of September 2021. During the 116th Congress, the relevant committees of jurisdiction in both chambers passed long-term reauthorizations of surface transportation but failed to reach a bicameral solution. In the Senate, Chairman John Barrasso (R-WY) led the Environment and Public Works Committee to unanimously pass a $287 billion, five-year reauthorization (S. 2302) package, which included a climate change title for the first time in Senate history. In the House, Chairman Peter DeFazio's (D-OR) Transportation and Infrastructure Committee passed a largely partisan $494 billion, five-year authorization that likewise included significant new investments in climate mitigation programs. The two bills included several similar provisions, including an annual grant program for electric vehicle charging and low-carbon fueling infrastructure. Unlike the Senate legislation, Chairman DeFazio's legislation moved forward and ultimately passed through the House in early July 2020.
Interest in a robust reauthorization of federal surface transportation programs from both Congress and the administration is strong. However, levying adequate funding for surface transportation programs has proved politically challenging because of a widening shortfall in revenues. The bulk of revenues for federal transportation programs (and for many state programs) come from excise taxes levied on fuels, which have not been raised since 1993 and have been severely curtailed by the economic crisis created by the coronavirus pandemic. State transportation departments urged Congress for an additional emergency allocation of $50 billion in April 2020 to allow states to move ahead with projects planned that summer. The mismatch between spending and revenues will offer the most challenging hurdle for the incoming administration, as they work with a Republican Senate increasingly hesitant to increase spending.
Protecting the nation's drinking water will be a major priority for Congress and the new administration in 2021, and will represent an issue where congressional leaders in both chambers may find common ground with the president-elect, who focused on strengthening regulatory protections and repairing infrastructure extensively during his campaign. President-elect Biden has committed to "tackle water pollution in a science-based manner." His plan calls for "historic investments across federal agencies aimed at eliminating legacy pollution" by: (1) repairing water pipelines and sewer systems; (2) replacing lead service pipes; (3) upgrading treatment plants; and (4) integrating efficiency and water quality monitoring technologies. While paying for some of these priorities will be a challenge, President-elect Biden's priorities represent more of an evolution from the Trump Administration's focus and should find at least some common ground with Republican congressional leaders, which could lead to bipartisan congressional action.
Drinking Water Regulations: President-elect Biden plans to "accelerate the process to test for and address the presence of lead in drinking water and housing" and to "help protect rural communities from water and air pollution and make water bills affordable." To achieve these goals, the Biden Administration likely will start with reversing deregulatory actions from the Trump Administration. For example, the administration may attempt to repeal and replace the Trump Administration's rules reducing the scope of the definition of "waters of the United States," which governs the federal government's Clean Water Act permitting jurisdiction. The administration may also reverse the Trump Administration's summer 2020 rollback of the coal ash discharge rule, which was aimed at protecting drinking water supplies from toxic waste from coal-fired power plants. The Biden Administration likely will face numerous legal challenges to its actions from Republican-led states and industry, lengthening the timeline to repeal and replace these regulations.
Infrastructure: Even during the coronavirus pandemic, both chambers of the 116th Congress continued to develop and advance bipartisan drinking water infrastructure legislation. The House passed the bipartisan Water Resources Development Act of 2020 (H.R. 7575) in late July 2020, and the Senate Environment and Public Works Committee advanced bipartisan bills in May 2020, including the America's Water Infrastructure Act of 2020 (S. 3591) and the Drinking Water Infrastructure Act of 2020 (S. 3590). These bills would authorize funding for various water resources development projects. While Congress could come to a final agreement on water infrastructure legislation during the lame duck session, competing priorities could stop this from being reality. If the legislation is not enacted before the end of 2020, Congress likely will pass a limited extension of existing authorizations. Congress then will prioritize passing water resources development legislation in 2021 on a bipartisan basis.
PFAS: Congress and the new administration will likely continue efforts to regulate PFAS. The new Congress, however, is unlikely to pass comprehensive PFAS legislation, such as the PFAS Action Act (H.R. 535), which stalled after passing in the House in January 2020. Republicans have generally viewed the PFAS Action Act as too sweeping, and, with a Republican-controlled Senate, Congress is more likely to address PFAS incrementally. Therefore, the Biden Administration will likely take stronger action under various environmental laws to monitor and regulate PFAS and accelerate rulemakings started under the Trump Administration. In so doing, agencies will likely heed calls from certain environmental groups to regulate PFAS broadly, despite the preference of industry groups and congressional Republicans to use an incremental approach.
In the area of chemicals regulation, there likely will be a shift in regulatory and enforcement priorities, but little in the area of new legislation. Under President Trump, the EPA declined to ban chlorpyrifos, an insecticide used in corn, soybean, and other agricultural production, as well as for non-agricultural uses such as golf courses. The Obama Administration proposed to ban the substance in 2015, but in 2019, the Trump Administration decided not to impose a ban. Similarly, under the Trump Administration, the EPA issued a ban on methylene chloride that only covered consumer uses, delayed consideration of a proposed ban on certain uses of trichloroethylene, and initially elected not to consider legacy uses in its risk evaluation of asbestos. While Democrats in Congress have introduced legislation to ban these and other substances, including asbestos, the prospects for a legislative ban are unlikely given divided control of Congress. However, the Biden Administration's EPA will revisit many, if not all, of these recent decisions.
The EPA likely will take a hard look at how the Trump Administration implemented recent reforms to the Toxic Substances Control Act (TSCA). President-elect Biden could change some aspects of the rules implementing the 2016 amendments to TSCA that have proven to be the most controversial and subject to challenge by environmental groups, such as provisions governing the conditions of use the EPA will consider during risk evaluations of existing chemicals (i.e., 40 C.F.R. §§ 702.41(a)(9), 702.47). The EPA also could reconsider the Trump Administration's risk management rules for Persistent, Bioaccumulative, and Toxic (PBT) Substances, which, per statute, must be finalized by the end of 2020. In addition, compared to the relatively rapid pace of approval of new chemicals over the past few years, new EPA leadership likely will implement more aggressive review procedures, leading to lengthier approval processes for new chemicals. For example, the EPA could revert to practices under the Obama Administration in 2016, including placing additional restrictions on uses of new chemicals when approving them for market entry in the US and requiring manufacturers to generate new health and environmental effects studies for existing chemicals undergoing EPA reviews.
One of the highest priorities of the Democratic environmental platform is to address the disproportionate impacts of environmental and public health stressors on communities of color and low income communities. The Biden-Harris Administration can be expected to prioritize environmental justice in all aspects of environmental policy and enforcement. In this regard, the administration will draw upon the expertise of Vice President-elect Kamala Harris, an environmental justice advocate in Congress who introduced the Environmental Justice for All Act (S. 4401/H.R. 5986) and the Climate Equity Act (S. 4513/H.R. 8019).
Among other initiatives, the Biden Administration has committed to: (1) revise and reinvigorate President Bill Clinton's Executive Order 12898, which focuses federal attention to address environmental justice and the disproportionately high and adverse human health or environmental effects of agency programs in "minority populations and low-income populations"; (2) establish new interagency leadership structures to elevate environmental justice issues throughout the federal government; (3) establish a new Environmental and Climate Justice Division at the Department of Justice; and (4) target 40% of the investments in clean energy to disadvantaged communities. The incoming administration will need to pursue these objectives through existing authority through various agencies, since prospects for Senate passage of comprehensive environmental justice legislation are low.
Given a divided Congress, the Biden Administration likely cannot rely on Congress exercising its authority under the Congressional Review Act to disapprove of certain regulations. However, President-elect Biden is expected to pursue repealing or reversing Trump-era policies through executive orders and regulatory actions. For example, President-elect Biden likely will revoke President Trump's Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs, which was issued near the beginning of President Trump's term and announced the administration's policy of proposing two regulations to repeal for every new proposed regulation. In addition, the president-elect likely will halt rulemaking processes started, but not completed, under President Trump and seek to pause litigation challenging Trump-era environmental and energy regulations, giving the administration the opportunity to withdraw the challenged rules or take other actions to reverse the administration's position.
The Biden Administration also is expected to revisit the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule. In the SAFE Vehicles Rule Part One, the EPA withdrew its prior Clean Air Act waiver for California's Greenhouse Gas and Zero-Emission Vehicle programs, and the National Highway Traffic Safety Administration (NHTSA) interpreted the Energy Policy and Conservation Act to preempt state greenhouse gas regulations for new vehicles. In the SAFE Vehicles Rule Part Two, the EPA rolled back the stringency of the prior federal greenhouse gas standards through Model Year 2026, and NHTSA adopted parallel fuel economy standards for that period. Democrats included in their 2020 platform the affirmation of California's authority to set standards, and the president-elect and Democrats have expressed support for more stringent emissions standards for passenger vehicles. The new administration likely will seek to restore California's authority, reconsider the outgoing administration's federal standards, and pursue more stringent standards through Model Year 2026 and beyond.
In addition, the new administration is expected to attempt to revise the Trump-era EPA's reversal of Once In, Always In, which sets standards for when and how a facility designated as a "major source" under Section 112 of the Clean Air Act could be reclassified as an "area source," which often entails less stringent or less specific emissions control technology; revisions to the NEPA regulations; and rollbacks under the Endangered Species Act. The Biden Administration also is expected to promulgate regulations to limit methane emissions in oil and gas extraction, given recent court decisions. Specifically, in 2020, a California federal district court vacated the Trump Administration's reversal of the Obama-era methane emissions regulation, and later, a Wisconsin federal district court struck down the Obama-era rule, leaving in place the original regulations, which are over 30 years old. The Biden Administration likely will work on a replacement rule akin to the one developed during the Obama Administration, while considering the court's concerns.
The Trump Administration has started but not finalized several regulatory initiatives, thus making them vulnerable to withdrawal by the Biden Administration if not promulgated before January 20, 2021. In particular, the Biden Administration is expected to withdraw or significantly revise the following: (1) National Ambient Air Quality Standards for particulate matter; (2) the Strengthening Transparency in Regulatory Science proposed rule; and (3) the proposed rule rolling back penalties for companies that "incidentally" kill birds.
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© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.