Legislative Update: Congress to Return to Busy September as Government Shutdown Looks More Eminent

NOTE: Congress remains on their August recess until September 5^th for the Senate and September 12^th for the House

 

Congress to Return to a Busy September as a Government Shutdown Looks More Eminent

The House and Senate are scheduled to reconvene following the August Recess after Labor Day but face a tight timeline to avert a potential partial government shutdown by October 1. Amid this situation, the House Freedom Caucus has made clear that they will oppose a “clean” short-term spending solution (meaning they want policy changes along with the extra funding). This decision presents House Speaker Kevin McCarthy (R-CA) with two challenging options in the ongoing spending debate: either risk a government shutdown or seek support from across the aisle. The Caucus’s concerns, centered around issues such as the southern border, the Department of Justice, and what they view as concerning ideological trends within the Pentagon, are generally popular with Republicans in the House, but are not supported within the Democratic-controlled Senate.

Prominent Republicans are advocating for a strategic move to garner Democratic backing, positioning it as a more prudent way to prevent a shutdown. Tom Cole (R-OK), an experienced appropriator and chair of the House Rules Committee, has emphasized the political undesirability of stumbling into a shutdown. He believes Democrats could potentially agree to a mutually acceptable stopgap funding bill continuing resolution (CR). Seasoned figures like former House Majority Leader Eric Cantor (R-VA) are indicating that another shutdown is increasingly likely.

Behind closed doors, Democratic Senators, alongside a handful of Republicans, are reportedly exploring the possibility of taking the initiative on the stopgap measure due to the House’s dynamics. They are concerned about the near-depleted FEMA funding for natural disaster funding and aid to Ukraine.  However, the Senate currently needs an appropriate legislative vehicle – traditionally in the House for appropriations bills- because the Constitution mandates that spending measures originate in the House of Representatives.

One discussed option involves capitalizing on the parliamentarian’s approval to utilize the earlier House-approved debt limit increase bill. This legislation, currently in the Senate’s possession, presents the potential for accommodating both a short-term measure and an accompanying supplemental appropriations bill. However,, Democrats are eyeing the same bill as a potential vehicle for tax-related legislation later in the year.

While the House Freedom Caucus’s stance underscores internal divisions within the GOP, there is notable backing for their demands from House Majority Leader Steve Scalise (R-LA). Scalise has indicated his openness to linking border security provisions with appropriations, echoing the concerns of the Freedom Caucus. His assertion that securing the border takes precedence reflects worries about fiscal responsibility and the broader impact of policy actions under the Biden administration. These concerns outweigh immediate apprehensions about a government shutdown. Despite differing perspectives within the Republican caucus, McCarthy’s challenge lies in navigating these divergent viewpoints to attain a workable funding consensus.

Coalition of States and Water Utilities Plead for “Maximum” Funding to Safeguard National Water Infrastructure

A coalition of 18 organizations, including representatives from state environment commissioners, drinking water regulators, infrastructure officials, and various water utilities, issued a collective appeal to Congress to allocate the maximum authorized funds for the EPA’s  State Revolving Funds (SRFs) in the upcoming FY2024 appropriations legislation. The requested amount is approximately $3 billion for each fund. This call for funding comes amidst the House’s proposed reductions in both accounts.

In a letter addressed to key congressional leaders, the coalition emphasizes the crucial role of the Clean Water and Drinking Water State Revolving Funds in preserving water infrastructure.

The letter asserts that enhanced federal investment in SRF-subsidized loans for clean water and drinking water systems would not only bolster economic growth but also contribute to deficit reduction.

The coalition underscores the need to close a funding gap estimated at $625 billion for water infrastructure needs over the next two decades, citing studies highlighting this financial disparity. Without increased funding, a projected capital investment gap in water infrastructure is expected to reach $434 billion by 2029, according to American Society of Civil Engineers data. House Republicans aim to curtail funding for the two SRFs to a combined total of $995.6 million, a reduction of $1.77 billion from current levels.

The groups’ letter further renews their opposition to offset provisions that reduce annual appropriations for the SRFs in proportion to the funds they received from the Infrastructure Investment and Jobs Act (IIJA). The coalition contends that this approach hampers the groundbreaking potential offered by the landmark IIJA, which aimed to extend affordable financing for water infrastructure to a wider range of communities. The groups emphasize that historically, congressional earmarks were funded in addition to the SRFs rather than replacing them and argue that the SRFs are a “catalyst for greater investment” on the local, state, and federal level. The groups say that a fully funded SRF program helps maintain lower interest rates on loans and develop management plans to protect federal investments in water infrastructure.

At the federal level, the coalition says that a fully funded SRF program contributes to maintaining lower interest rates on loans and enables the development of management strategies to safeguard federal investments in water infrastructure.  

Agencies Publish Final Rule Narrowing WOTUS Definition to Align with Sackett

On Aug. 29, the EPA and the Department of the Army Corps of Engineers unveiled a final rule amending the 2023 definition of “waters of the United States by eliminating the “significant nexus” test for determining whether any waters are jurisdictional and excluding “adjacent” wetlands and “interstate waters” from federal protections. This revision is in response to the U.S. Supreme Court’s ruling in the Sackett v. Environmental Protection Agency case on May 25, 2023. Although the Supreme Court did not directly address the 2023 rule regarding WOTUS, the Sackett decision revealed the invalidity of specific aspects within the rule. In a fact sheet, EPA says the final rule “provides clarity for protecting our nation’s waters consistent with the Supreme Court’s decision while advancing infrastructure projects, economic opportunities, and agricultural activities.”

The rule faces near-certain litigation from industry groups who charge it exceeds the agencies’ statutory authority under the Clean Water Act.   GOP lawmakers are charging that the rule does not comport with the Sackett opinion.  The administration’s critics are also raising concerns over the procedural aspects of EPA’s “good cause” rulemaking, claiming it violates the Administrative Procedure Act. The rule could be challenged under the APA, according to Sen. Charles Grassley (R-IA).

The agencies defended their rulemaking process, saying it did not involve the exercise of agency discretion and that a notice-and-comment process would neither provide new information to the public nor inform any agency decision-making regarding the aspects of the regulations defining WOTUS that are invalid as inconsistent with the Clean Water Act.

Industry Groups Comment on SNURs Proposal Impacting Pyrolysis-Derived Fuels

Industry trade groups are urging federal environmental authorities to reconsider proposed rule changes that would impact the regulatory oversight of waste plastics subjected to pyrolysis. The EPA invited comments on the proposed June 15 “significant new use rules” (SNURs) under the Toxic Substances Control Act (TSCA).  The proposed rule would establish new restrictions on 18 fuel chemicals previously approved under pre-manufacture notices (PMNs). If adopted, they would prohibit the manufacturing or processing of fuels produced from pyrolysis oil if the source plastic of the pyrolysis oil contains any level of specific contaminants like heavy metals, dioxins, phthalates, and per- and polyfluoroalkyl substances (PFAS).

The American Chemistry Council (ACC) and Plastics Industry Association (PIA) expressed concerns about these proposed changes. The ACC highlighted that the existing EPA proposal from 2021 already seeks to regulate pyrolysis under the Clean Air Act. The groups argue that pyrolysis-based advanced recycling is pivotal for achieving a circular plastics economy and contend that the SNUR proposal, as written, could impede the advancement of innovative technologies aimed at enhancing circularity in plastics.

PIA asserts that the EPA’s move is “unlawful” and despite the Biden administration’s efforts to encourage the practice of recycling plastics.  They, and other industry groups such as the U.S. Chamber of Commerce, commented that that EPA did not consider any of the factors listed in TSCA section 5(a)(2) before regulating pyrolysis oil through a SNUR.  Instead, the EPA’s rationale is confined to a single sentence in the proposal’s preamble, which states that upon reviewing the original PMNs submitted by the industry for the targeted chemicals, the agency became aware of potential contaminants in the precursor chemicals for pyrolysis oil that were not previously identified.

The trade groups argue that this level of concern is insufficient to warrant the implementation of SNURs without a more comprehensive analysis. The U.S. Chamber of Commerce also questions the EPA’s justification for additional review and prior approval, implying that the agency has not adequately explained the need for such actions.

The ACC also expressed confusion regarding the proposed regulations, particularly regarding the definition of “feedstocks.” ACC is concerned about potential ambiguities and emphasizes the need for consistent and cohesive regulatory approaches to materials and processes to avoid unnecessary burdens, costs, delays, and obstacles to achieving a circular economy.