During the second quarter of 2022, there were several regulatory developments involving the National Environmental Policy Act (NEPA), the United States (U.S.) Securities and Exchange Commission (SEC), Nationwide Permit (NWP) 12, and Section 401 of the Clean Water Act (CWA). These updates are summarized in the following subsections.
NATIONAL ENVIRONMENTAL POLICY ACT
On April 20, the Council on Environmental Quality (CEQ) issued Phase 1 of a final rule to amend NEPA. The rule finalizes a narrow set of changes to generally restore regulatory provisions that were in effect for decades before the 2020 rule modified them for the first time. Specific changes are related to addressing the purpose and need of a proposed action, agency NEPA procedures for implementing CEQ’s NEPA regulations, and the definition of “effects.”
We expect to see a corresponding push for federal agencies to fully analyze and disclose contributions of projects on cumulative climate change impacts and associated consequences to environmental justice communities.
CEQ continues to work toward proposing a set of broader “Phase 2” changes to NEPA regulations to help ensure full and fair public involvement in the environmental review process; meet the nation’s environmental, climate change, and environmental justice challenges; provide regulatory certainty to stakeholders; and promote better decision-making consistent with NEPA’s general goals and requirements.
SECURITIES AND EXCHANGE COMMISSION
On May 25, the SEC announced proposed amendments to existing rules and reporting forms designed to promote consistent, comparable, and reliable information for investors concerning the incorporation of environmental, social, and governance factors in investment funds and strategies. If adopted, the proposed amendments would modify disclosure requirements that apply to all investment companies and business development companies registered under the Investment Company Act of 1940, as amended, as well as investment advisers registered under the Investment Advisers Act of 1940, as amended, and certain advisers exempt from registration.
The proposed rule has not yet been published in the Federal Register. Once published, there will be a 60-day comment period.
NATIONWIDE PERMIT 12
The U.S. Army Corps of Engineers (USACE) recently published a notice that it is initiating a formal review of NWP 12. This is just a little over 1 year after its latest iteration took effect. NWP 12, which serves as a general permit under Section 404 of the CWA, is designed to streamline the federal permitting process for qualifying oil or natural gas pipeline activities that have insignificant environmental effects. While NWPs typically are valid for up to 5 years, the USACE’s notice explains that a review of the permit is proper now to consider whether modifications to NWP 12 may be appropriate in light of President Biden’s instructions to all federal agencies under Executive Order 13990 to take a fresh look at environmental rules issued under the previous administration. This review also responds to years of ongoing litigation involving NWP 12, including its temporary nationwide vacatur and the 2021 re-promulgation of NWP 12 limiting it to oil.
A series of public workshops were held in May seeking stakeholder input on the adequacy of NWP 12’s consideration of potential impacts of oil and gas pipeline activities on environmental justice, climate change, and drinking water, as well as sufficiency of notice provided to impacted communities. The USACE indicates that it will consider adopting “potential off-ramps” for these concerns that would require heightened agency review and potentially render a proposed project ineligible for NWP 12 coverage, thus requiring proponents to acquire individual permits. This could cause substantial delays, thereby increasing costs, time, energy, and mitigation needed for project approval.
The notice solicited input from stakeholders to inform the USACE’s decision-making process regarding NWP 12, and it posed nine questions. Although some of these questions are within the scope of what the USACE normally considers when reviewing and reissuing NWPs, some go beyond that scope and may foreshadow significant changes in NWP 12, and possibly even its ultimate revocation. Indeed, since the USACE issued NWP 12 for 5 years only 1 year ago, the fact that the Biden administration has elected to undertake this review 4 years before the current NWP 12 expires is unusual and likely indicative that the government is considering significant changes. Comments were due May 27.
SECTION 401 OF THE CLEAN WATER ACT
On June 9, the U.S. Environmental Protection Agency Administrator published in the Federal Register a proposed rule to improve the CWA Section 401 certification process. The proposed rule would replace and update the existing regulations at 40 Code of Federal Regulations 121 to be more consistent with the statutory text of the 1972 CWA and clarify elements of the Section 401 certification practice, which has evolved over the 50 years since the 1971 regulation was promulgated. The public comment period is open until August 8.