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The Week Ahead

EPA Faces FY15 Cuts Despite Move Away From 'Austerity,' Supreme Court GHG Case Weighed

Posted: March 3, 2014

EPA's enforcement and infrastructure programs are likely to face budget cuts in President Obama's fiscal year 2015 budget request even though the administration is moving away from the “austerity” budget approaches of the past few years. Legal observers will continue to weigh the potential direction and impact of the Supreme Court's ongoing review of EPA's greenhouse gas (GHG) permit program.

FY15 Budget

President Obama's budget request for fiscal year 2015, which is slated to be unveiled March 4, is expected to move EPA and other agencies away from the sharp cuts associated with the “austerity” budgets of the past few years, though the administration has already signaled that EPA's enforcement and infrastructure programs will still take a hit.

For instance, the state revolving funds (SRFs) -- which many states and municipalities rely on to fund crucial water infrastructure projects -- have long been targeted for cuts in the president’s proposed budgets, though Congress has consistently held funding level for the programs in spending bills. This year, stakeholders have again asked Obama to maintain the funds at current levels, saying cuts could undermine job growth and threaten the stability of water infrastructure, though some large municipalities and their supporters are now seeking alternative funding streams.

The SRFs could also stand to benefit from Obama’s call to include a $1 billion climate resilience fund in the FY15 budget -- a request that could test congressional Republicans’ willingness to address the issue in a variety of contexts.

But some of the administration's supporters are calling on policymakers to attach a resiliency requirement to any new SRF spending, a move that could limit funding for some projects.

Stakeholders are also worried over signals in EPA’s draft strategic plan for FY14-18 that the agency plans to cut inspections and other enforcement programs to mitigate the effects of expected budget cuts, including a shift to a "next generation" compliance initiative that would focus more on data reporting than field inspections to guide enforcement priorities.

And even if the agency sees an overall budget boost in FY15, it seems unlikely to raise staffing levels after a round of buyouts the agency has implemented to meet FY14 budget goals. A source at the agency staff union says staff increases "would make no sense at all" so soon after the buyouts, adding that the administration might be planning another wave of cuts just to reach its FY14 staffing target.

But regardless of the details of Obama’s FY15 request, it is unlikely to have much practical impact on the coming year’s appropriations process, after Senate budget chair Patty Murray (D-WA) confirmed last week that Democrats will not pass a budget this year. Instead, they will allow the default funding levels set in the FY14 budget deal to take effect, which would hold overall discretionary spending at roughly current levels.

TSCA Reform

The chemical industry is holding its annual GlobalChem Summit in Baltimore March 3-5, where recently unveiled House legislation reforming the Toxic Substances Control Act (TSCA) is slated for review.

The draft legislation, unveiled Feb. 27 by Rep. John Shimkus (R-IL), makes several key changes to legislation the Senate has been struggling to amend. But the revisions do not appear to have done enough to satisfy environmentalists and their congressional supporters.

Given that the TSCA legislation is unlikely to advance through Congress this year, other sessions at the GlobalChem meeting are also important, including EPA's TSCA regulatory agenda and its chemical risk assessment program.

Climate Change

Legal observers will continue to weigh the potential direction and impact of the Supreme Court's ongoing review of EPA's greenhouse gas (GHG) permit program.

The Environmental and Energy Study Institute is holding a March 6 meeting (http://files.eesi.org/030614_supreme_court.pdf) where Michael Gerrard, director of Columbia Law School's Center for Climate Change Law, and Amanda Leiter, an associate professor with the American University Washington's College of Law, will weigh the impact of the case.

According to the event's website, the observers will discuss: “What is and is not at stake in this case, and what are the potential outcomes of the Court’s decision? What does the relatively narrow focus of the case, despite a much broader challenge, mean for future judicial challenges to EPA's regulatory authority concerning greenhouse gases?”

The high court case, Utility Air Regulatory Group (UARG) v. EPA, focuses on the narrow issue of the validity of EPA's “timing” rule -- the statutory trigger EPA used to apply GHG permit limits to stationary sources. EPA said that when it issued its finding that GHGs from motor vehicles endanger public health and welfare, it had to issue its vehicle GHG standards, which in turn triggered a Clean Air Act mandate to regulate GHGs from stationary sources.

EPA pursued a “tailoring” rule that raised the air law thresholds for triggering prevention of significant deterioration (PSD) far higher than the existing limits for conventional pollutants. EPA did so to avoid “absurd results” of triggering GHG permit requirements for thousands of small sources of GHGs that would otherwise not trigger PSD mandates.

At Feb. 24 oral arguments, the justices appeared to indicate that they would be open to scaling back EPA's GHG permitting requirements to a narrower scope than the agency implemented -- a position Solicitor General Donald Verrill reluctantly agreed with.

Observers say that the likelihood that the high court might restrict the scope of EPA's GHG permitting program is prompting some near-term uncertainty for facilities in the midst of permitting. But they say such a ruling is also likely to embolden EPA as it crafts performance standards to limit GHGs at power plants and other sectors.

On Capitol Hill

A House Transportation & Infrastructure Committee maritime panel is slated to hold a March 4 hearing that will almost certainly highlight industry concerns that the agency has been unwilling to delay implementation of its 2013 vessel general permit (VGP) -- even in cases where shippers have won extensions to comply with related U.S. Coast Guard (USCG) technology standards.

EPA's five-year permit -- governing discharges from large commercial vessels -- sets standards governing a range of discharges, including ballast water containing invasive species and other pollutants, deck runoff, graywater discharges and bilgewater discharges. EPA issued the permit under its Clean Water Act authority even as USCG, acting on its authority under the National Invasive Species Act, issued separate rules for vessels to install approved technologies to limit releases of invasive species from ships’ ballast.

When the agencies crafted their rules, they expected that installation of USCG-approved pollution control technologies would allow vessels to comply simultaneously with their respective requirements.

But, to date, the USCG has only certified two independent laboratories to accept ballast water treatment systems (BWTS) from manufacturers for so-called “type approval” testing required by USCG. And as of Feb. 19, the USCG had granted extension requests to 25 vessels, according to a briefing from the subcommittee.

While the Coast Guard has granted shippers additional time to comply with its requirements, EPA has so far declined an industry request (http://insideepa.com/201312182456148/EPA-Daily-News/Daily-News/as-epa-ve...) to delay or amend the permit to limit industry's liability in cases where they lack USCG-approved technologies.

Instead, agency officials late last year designated violations of the requirements a “low-enforcement” priority, though industry says the agency's approach does not go far enough.

The shipping industry is concerned that the agency’s limited relief is forcing them to consider burdensome individual permits, even though none has ever been granted, or is effectively requiring them to install multiple technologies to comply with the separate EPA and USCG requirements, even though the agencies say they are seeking to coordinate implementation of their respective regulations. Industry has petitioned EPA to reopen the permit to formally delay compliance deadlines until 2016 and revise its technology standards given the lack of technology to comply with USCG requirements.

In other House action, the House Rules Committee is slated to meet Feb. 4 to advance two bills aimed at curtailing new federal environmental requirements -- though neither is expected to be considered by the Senate.

H.R. 2641 would restrict EPA and other agencies' powers to review projects' environmental impacts under the National Environmental Policy Act (NEPA). The bill, modeled after language the Senate has included in transportation and water infrastructure measures, would amend the Administrative Procedure Act (APA) to set deadlines of one year for agencies to perform NEPA reviews of projects that require only an environmental assessment, and a two-year deadline for those that require a more intensive environmental impact statement (EIS), though the two-year clock would only start after an agency determines an EIS is necessary.

During a hearing last year, the House Judiciary Committee urged advocates on both sides to craft an agreement on the measure, though it appears the parties were unable to come to a compromise.

The rules committee is also slated to take up H.R. 2824, a measure that would bar the administration from moving ahead with revisions to its rule setting requirements to create buffer zones to protect streams from disposal of mine waste. The bill is being considered weeks after a federal court required the administration to revise the rule.

An Energy & Commerce Committee panel is slated to hold a March 6 hearing to continue its hearing series on energy access and supply. The upcoming event will focus on the transmission, storage, and distribution of oil and gas, while a past hearing has focused on electricity.

In the Senate, the Environment & Public Works Committee is slated to hold a March 6 hearing on how EPA and other agencies are implementing President Obama's executive order aimed at strengthening chemical safety controls at industrial facilities. The hearing will almost certainly highlight the debate over whether and how EPA should mandate consideration of inherently safer technologies, such as benign chemicals, at facilities.