Ten Highlights from the Environmental and Energy Space in 2023

Below, we summarize 10 major developments in the energy and environmental space in 2023.

Supreme Court Decisions

Major Supreme Court decisions in the environmental space in 2023 included Sackett v. EPA, dealing with the scope of the federal Clean Water Act (CWA), and National Pork Producers Council v. Ross, which evaluated the constitutionality of California laws related to pork production and potential effects on the national market. Additionally, Biden v. Nebraska, one of two cases evaluating the legality of the Biden Administration’s COVID-related student loan forgiveness plans, referred back to last term’s star interpretive canon, the “major questions doctrine.” Highlights:

• Sackett (discussed here) narrowed the authority of federal agencies to regulate discharges of pollutants into “waters of the United States” (WOTUS) under the CWA. In Sackett, the Court held that WOTUS means “streams, oceans, rivers, and lakes” and wetlands that share a “continuous surface connection” with those water bodies. By contrast, the federal government and courts had generally accepted WOTUS to include wetlands “adjacent” (but not necessarily physically connected) to interstate or traditionally navigable waters and their tributaries. Following this and other recent CWA decisions like the 2020 County of Maui decision, the US Environmental Protection Agency (EPA) issued draft guidance outlining how CWA relates to groundwater. Practically speaking, many wetlands that were previously regulated may now be outside the agency’s jurisdiction. Absent new legislation, the primary role of protecting many wetlands will fall back to individual states.
• National Pork Producers (discussed here) involved a challenge to California’s Proposition 12, which prevents the in-state sale of pork from pigs who are confined in cruel conditions that prevent the pig from “lying down, standing up, fully extending [its] limbs, or turning around freely.” The Supreme Court affirmed the Ninth Circuit’s decision to uphold Proposition 12 and, in doing so, pared back certain limitations on state regulations of all varieties that potentially affect broader markets beyond state lines. National Pork stands for the proposition that states may have more leeway to pass state-specific environmental or energy laws even if those laws impact out-of-state businesses. This type of state regulation could present businesses with significant obstacles and difficult choices when they wish or need to participate in multiple state markets, but those states have conflicting laws for compliance. This said, state regulations cannot be predicated on a desire to harm out-of-state businesses to the benefit of local ones.
• Biden v. Nebraska, one of two cases evaluating the legality of the Biden Administration’s COVID-related student loan forgiveness plans, referred back to last term’s star interpretive canon, the “major questions doctrine.” (Our detailed discussion is here.) In the case, a six-judge majority found that even though the US Secretary of Education may have formalistically complied with statutory requirements to enact a student loan forgiveness program, the Secretary nevertheless lacked authority because the program was so vast in scope — $430 billion in total, potentially affecting nearly all student loan borrowers — and Congress alone has the power to resolve such “major questions.”

In addition to these issues, the Court’s Fall 2023 docket contains cases related to Chevron deference (see here), powers delegated to administrative law judges, and “regulatory takings” (see here). We will discuss these in greater detail in a forthcoming “issues to watch in 2024” post.

Other Federal and State Decisions

Three other “big picture” court decisions are worth noting:

• Sixth Circuit decision in Hardwick v. 3M Co. In November, the Sixth Circuit vacated a Southern District of Ohio class certification and remanded the case with instructions that it should be dismissed for lack of jurisdiction. In a case involving alleged PFAS contamination, the lower court had certified a class consisting of every resident of Ohio even though — in the Sixth Circuit’s view — the plaintiff had failed to specifically link any of the 10 named defendants to his alleged harm. “To allege simply that these defendants manufactured or otherwise distributed ‘PFAS’ [is] insufficient to support a plausible inference that any of them bear responsibility for the particular PFAS in [plaintiffs’] blood.” The vacatur of the class in Hardwick has the potential to affect other PFAS-related cases pending in courts around the country.
• State climate litigation. Last term, the Supreme Court declined to review cases originally filed in state courts against fossil-fuel-associated companies seeking damages related to climate change. (See our discussion here.) These cases continue to percolate through state courts where corporate defendants often seek to persuade state courts that the claims against them are fundamentally federal in nature. One notable example is this decision in City and County of Honolulu v. Sunoco LP allows tort litigation against various oil and gas producers to proceed. (Our detailed discussion is here.) Similarly, a Montana trial court found for a group of young plaintiffs in Held v. State of Montana, who sought to compel state regulators to abide by “Green Amendment” type language in the Montana State Constitution. (Our detailed discussion is here.)

PFAS Developments

On March 29, 2023, EPA published proposed National Primary Drinking Water Standards for several PFAS constituents, including those commonly referred as PFOA, PFOS, PFNA, HFPO-DA (otherwise known as GenX), PFHxS, and PFBS. EPA proposed a Maximum Contaminant Level of 4.0 parts per trillion for PFOA and PFOS and the use of a Hazard Index approach (using a Hazard Index of 1.0) to regulate mixtures of PFHxS, GenX, PFNA, and PFBS. EPA has a stated goal of finalizing this rulemaking by the end of 2023.

In April 2023, EPA issued an Advance Notice of Proposed Rulemaking (ANPR) regarding the future designation of seven types of PFAS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The ANPR also requested comment on whether EPA should instigate a future action to designate precursors to certain PFAS constituents as hazardous substances. The comment period for the ANPR closed on August 11, 2023.

In October 2023, EPA promulgated a final rule governing PFAS reporting under the Toxic Substances Control Act. The final rule includes requirements for commercial manufacturers and importers to report current and historical information regarding PFAS in materials, including information regarding uses, production volumes, byproducts, environmental and health effects, exposure, and disposal. Additionally, EPA finalized a rule expanding reporting requirements for PFAS under the Emergency Planning and Community Right-to-Know Act. The rule adds PFAS to a list of “chemicals of special concern” on the Toxic Release Inventory and eliminates a de minimis exception for reporting PFAS under Supplier Notification Requirements, resulting in additional reporting and notification requirements for facilities that use, manufacture or process PFAS.

Coal Combustion Residuals (CCR)

On May 17, 2023, EPA issued a proposed rule to expand the scope of CCR regulation, including closure and corrective action requirements, to (1) legacy CCR surface impoundments located at inactive power plants and (2) units designated as CCR management units at power plants, which includes areas where non-containerized accumulations of CCR has been received, placed or managed. On November 13, 2023, EPA issued a Notice of Data Availability in the rulemaking releasing additional information pertaining to the rulemaking, including a risk assessment. EPA reopened the comment period to allow comments on the Notice of Data Availability. That comment period currently closes on December 11, 2023.

Other Administrative Developments

Federal, state, and local regulators prioritized environmental justice, climate, and sustainability issues in 2023. Key developments included:

• Federal efforts to continue to hardwire the consideration of EJ issues across the government and to develop tools needed to assess “cumulative risk” in EJ communities.
• The Biden Administration’s proposal of significant changes to regulations implementing the National Environmental Policy Act (NEPA). Under NEPA, federal agencies must complete environmental impact assessments for major federal actions significantly impacting the environment. NEPA assessments are often required as part of the development of large-scale infrastructure projects of the sort envisioned to address climate and energy issues.
• Continued attention to plastic-related issues both domestically and at United Nations-sponsored meetings.

Members of the firm’s Environmental and Energy & Cleantech groups regularly monitor state and federal administrative activity with broad implications to the regulated community.