Legislative Update: Senate Appropriators Spare EPA of Deep Cuts But Set Stage for a Budget Battle

Lawmakers left Washington for the August recess at the end of last week and are not due back in Washington until they reconvene after Labor Day in September. The Senate returns on September 5th, and the House will not be in session until September 12th, giving lawmakers just a few short weeks to reach a deal on budget appropriations before the Sept. 30 deadline. The biggest issue for House Speaker Kevin McCarthy (R-CA) may be uniting Republicans around spending, as the GOP-led House Freedom Caucus is pressing for funding cuts $100 billion below what had been agreed to with President Biden on the debt ceiling deal.

Last week, the Senate Appropriations Committee approved its $42.7 billion Interior-EPA spending bill in a vote 28-0.  The legislation spared the agencies the deep cuts that House GOP lawmakers made in their $25.4 billion spending bill.  EPA would receive $9.9 billion, slightly lower than the current annual budget of $10.1 billion. This amount falls short of the 19 percent funding increase of nearly $12.1 billion requested by President Biden in his budget proposal earlier in the year.  In contrast, the House Republican bill aims to significantly reduce the EPA’s funding by almost $4 billion, representing a 39 percent cut from the enacted levels. This would reduce the agency’s annual budget to approximately $6.2 billion for fiscal year 2024.

The Senate legislation includes $100 million for environmental justice initiatives and an additional $35 million above the fiscal year 2023 funding levels for EPA’s geographic programs. It also includes $2.76 billion for aging water infrastructure. From within funds provided for capitalization grants for the Clean Water State Revolving Fund and the Drinking Water State Revolving Fund, the Committee recommends $345 million from the Clean Water SRF and $243.6 million from the Drinking Water SRF for Congressionally Directed Spending grants for the construction of drinking water, wastewater, and storm-water infrastructure and for water quality protection. Each project shall provide at least 20 percent matching funds from non-Federal sources unless approved for a waiver.

The bill also provides a total of $75,640,000 for the Water Infrastructure Finance and Innovation Program (WIFIA). This funding is consistent with the enacted level and $4,803,000 below the budget request. The Committee recommends $7,640,000 to assist with the administrative expenses for the WIFIA program and up to $5,000,000 to implement the Securing Required Funding for Water Infrastructure Now Act.

However, the Washington Post published an article that lawmakers are increasingly using earmarks to redirect water funding to their states and districts. According to an unpublished federal study, Members of Congress have redirected roughly $2.3 billion in federal water funds toward pet projects over the past two years, often failing to meet federal set benchmarks and directing the money from needier communities. This could complicate the new national incentives to replace lead pipes, repair wastewater facilities, and improve other aging infrastructure.  This would only be further exacerbated by the House spending bill that cuts federal waters spending by more than half and reserves the remaining amount for earmarks.

The Senate Committee also included language in its report stating that they are concerned about the growth of pyrolysis and gasification of plastic waste and notes current law provides the Agency with the authority to continue to regulate these facilities.  The Committee also encourages the Office of Chemical Safety and Pollution Prevention to enhance outreach and guidance for submitters dealing with chemicals. The aim is to ensure that they understand the information needs, processes, and requirements before and during the submission of pre-manufacturing notices.

 EPA Seeks To Stay Landmark Vinyl Institute Suit Challenging TSCA Test-Order

The EPA is seeking a postponement of oral argument in the landmark case that the Vinyl Institute filed challenging the agency’s power to order new chemical tests under the reformed Toxic Substances Control Act (TSCA).  In a July 28 motion, the EPA said that it is reviewing VI’s new claims that the avian reproduction test at the heart of the case may be “infeasible.” The Agency is conducting a fresh evaluation of the test’s feasibility and could modify or eliminate it, potentially rendering moot the arguments against the test order.

The case, Vinyl Institute, Inc. (VI) v. EPA, involves avian reproduction tests for the solvent 1,1,2-trichloroethane (1,1,2-TCE), which is one of the 20 “high-priority” existing chemicals the agency is evaluating for potential risk-management rulemakings. VI raised concerns about technical issues with the test during its method validation process; specifically, the feed was not maintaining stable concentrations of 1,1,2- trichloroethane.  No animals have been tested yet, and the EPA is now evaluating the feed preparation, mixing, and feeding protocols to address the infeasibility concern. EPA says it is possible that, because of the evaluation, it might issue a modification of the Test Order, withdraw the challenged test from the Test Order, or take other administrative action.

The court is set to reach a decision in September, and the outcome could set a precedent on the standards for justifying new industry-funded tests under the reformed TSCA, including the use of animal studies versus alternative methods like computational or in vitro assays.

Industry Groups Warn That Administration’s National Strategy on Plastics Pollution is Off Course

Plastics industry groups are critical of the Environmental Protection Agency’s (EPA) national strategy on plastics pollution, claiming that it has veered off course and is too focused on reducing plastics without considering the impact of other materials. While environmental groups and several states’ comments on the strategy recommend restricting manufacturing an reducing production of specific plastics, industry groups are pointing out that the initial draft fails to deliver an achievable solution for plastics in the circular economy.  They argue that the EPA should prioritize improving recycling and waste infrastructure instead. Industry groups believe that the EPA’s draft strategy deviates from the intent of Congress’s Save Our Seas 2.0 law, which they say directed the agency to focus on post-consumer materials management and infrastructure.

The Vinyl Institute and other industry groups, including the Plastics Industry Association and the American Chemistry Council, continue to emphasize the importance of plastics in a lower carbon economy and call for a clearer understanding of chemical recycling to handle more plastic waste. Focusing on reducing plastics would hinder domestic manufacturing, export jobs, and supply chains.

The Consumer Brands Association is urging the EPA to harmonize recycling standards nationwide and review recycling symbols and identification codes. They also emphasize the need for rigorous safety reviews of recycled plastic in products, as many consumer goods companies have committed to using more recycled materials in their packaging.

Republicans Strongly Oppose White House Draft Rule on NEPA Overhaul

The White House Council on Environmental Quality (CEQ) on July 28 released its highly anticipated notice of proposed rulemaking to overhaul the National Environmental Policy Act (NEPA), aiming to streamline project reviews for major energy infrastructure projects while addressing climate and pollution concerns. The Biden administration presented it as a compromise between faster project implementation and environmental impacts. However, Republican lawmakers blasted the plan, accusing it of favoring renewable energy over fossil fuels.

The disagreement may complicate negotiations on permitting, as Democrats want to ease regulations for renewable projects while Republicans seek limits on citizens’ ability to litigate energy projects. The proposed changes include speeding up approvals for renewable energy and adding limits on climate change impacts. Republicans claim the administration disregards Congress’s will and pursues a political agenda. The proposal has become a point of contention between the parties, even though both agreed that revisions were needed as part of the debt ceiling negotiations.

House Natural Resources Chair Bruce Westerman (R-AR) criticizes the administration, accusing them of pushing a radical agenda and disregarding Congress’s bipartisan compromise on the debt ceiling. Westerman vowed to that House Republicans wouldn’t stand by idly while the CEQ prioritizes their political agenda.  Similarly, Rep. Garret Graves (R-LA) is displeased with the proposed approach to addressing climate change, claiming it has led to higher greenhouse gas emissions, reliance on foreign energy, and unaffordable gasoline and electricity prices. He believes the changes will lead to more frivolous lawsuits against environmental reviews and discriminate against certain project types.

Graves and several Republicans warned that could “torpedo” an opportunity to further negotiations and finish their work on permitting.  Senate Energy and Natural Resources ranking member John Barrasso (R-WY) and Shelley Moore Capito (R-WV), ranking member of the Senate Environment and Public Works Committee who have introduced their own permitting overhaul proposal, agreed the Biden administration is heading in a precarious direction. “Once again, the Biden administration is attempting to layer on more requirements to achieve their own misguided policy priorities that create confusion in an already complicated regulatory process,” Capito said. “This rulemaking just shows the need for further action by Congress to clarify the intent of NEPA.”

Meanwhile, as negotiations appear to be up in the air, Senate Majority Leader Chuck Schumer (D-NY) is calling on the Federal Energy Regulatory Commission (FERC) to “strengthen” and finalize several major rules that could accelerate clean energy and transmission line deployment. He laid out a series of potential changes to the rules in a letter to FERC last week.

Senate GOP Demanding EPA Withdraw Power Plant Rule

Thirty-nine Senate Republicans on Aug. 1 wrote a letter to  EPA Administrator Michael Regan urging the Agency to withdraw its “unlawful” proposed power plant rule, arguing that the regulations are flawed and contradict a Supreme Court ruling on the agency’s powers from the previous year. The proposed Clean Power Plan 2.0 aims to reduce emissions from fossil-fired power plants, requiring coal plants to capture 90% of their emissions by 2030 and allowing gas plants to capture 90% by 2035 or run mainly on hydrogen energy by 2038.

The GOP senators, led by Sen. Shelley Moore Capito and joined by Senate Minority Leader Mitch McConnell (R-KY), assert that the required carbon capture and clean hydrogen technologies are still in their early stages and not adequately demonstrated. They accuse the EPA of effectively mandating coal plants to shut down since the capture technology is not yet commercialized.

The senators also state that the proposal conflicts with a Supreme Court decision from last June, which ruled that the EPA did not have the authority to induce a systemwide shift towards more climate-friendly sources. They believe the proposal would require a generation shift, which the Court has previously stated the EPA does not have the authority to demand under the Clean Air Act.