At the time of this writing, we are just beginning to glimpse what 2023 has in store for us. Like so many, I watched from my couch as Kevin McCarthy was elected Speaker of the House after 15 rounds of voting. It was a long night after several long days. The adoption of the new rules package that Speaker McCarthy negotiated followed. For those watching, though, what it looks like is that it may be tough to consistently achieve the votes needed to pass legislation that will also make it through the Democrat-controlled Senate.
What does that mean for environmental rules and regulations in 2023? The federal permitting reform efforts that were led by Senator Manchin in 2022 failed to make it into the Senate defense funding bill at the end of the year. House and Senate Republicans and some moderate Democrats appear ready to introduce multiple bills to continue the effort to streamline environmental review and permitting processes, address supply chain issues, and bring mining jobs back to the United States. But, major reforms require bipartisan support when government power is divided, and unless circumstances change, it seems unlikely that we will see much advancement at the federal level on environmental issues that the Northland keeps front of mind.
That does not mean that we won’t see agency action at the federal level. For example, on December 30, 2022, the Environmental Protection Agency (EPA) announced a final rule defining waters of the United States (WOTUS), largely bringing back a Reagan-era definition with updates to conform to case law over the last several decades. The Clean Water Act (CWA) governs the discharge of pollutants into WOTUS, but over the past several presidential administrations we’ve seen back-and-forth changes to the definition and rule. The latest Biden Administration EPA rule will be impacted as the U.S. Supreme Court makes its own interpretation of WOTUS in Sackett v. EPA, a case argued in front of the Justices in October, with a decision expected in 2023. Hydrologic connectivity is at the core of these issues, but with differing hydrologic conditions across the country and different views on connectivity, the challenge is creating a rule that is applicable and appropriate in all places. However it is decided, though, it will have an impact on development projects across the state.
Another EPA action to watch is its proposed tighter controls on nitrogen oxide emissions from industrial facilities and power plants under its “Good Neighbor” Plan that is intended to cut smog across the United States. Minnesota is a covered state under this proposed rule, which targets power plants and other large industrial users. The EPA is also looking to enforce stricter nitrogen oxide emissions from commercial vehicles.
At both the federal and state level, expect environmental justice issues to remain a priority. The Department of Justice has created its own Office of Environmental Justice, and the EPA has consolidated a number of divisions into the Office of Environmental Justice and External Civil Rights. The Inflation Reduction Act (IRA) dedicated $40 billion to environmental justice initiatives. There is also an expectation that we’ll see the cumulative impacts rules portion of federal environmental review updated in 2023 with an environmental justice lens.
In Minnesota, the Pollution Control Agency updated its Environmental Justice Framework in 2022, and we can expect to see legislation on the topic of environmental justice at the Minnesota legislature in 2023 and 2024. In addition, there is talk about utilizing both the budget surplus as well as federal matching dollars from the Infrastructure Act to address climate justice, like weatherization programs. In addition, expect the fully DFL-controlled legislature to pass a robust bonding bill. Governor Walz included approximately $940 million in climate justice related funding in his 2022 bonding proposal.
The Minnesota Legislature is also likely to pass a bill requiring 100% carbon-free electricity by 2040. Governor Walz campaigned on this issue, and legislation has already been introduced that previously passed the House but was held up by the Republican-controlled Senate. Minnesota’s power providers have not opposed the legislation at this point.
Ultimately, no matter what happens at the federal or state level in 2023, the ongoing problem for developers is that investment in large projects requires some semblance of regulatory certainty, or at least consistency. Because large projects often need environmental review, as well as permitting, projects can see timelines that span multiple presidential administrations. Over the past several decades, this has meant that, for federally covered projects, administrations pick winners and losers, create arbitrary delays, and leave business at the whim of the politics of the day. At the state and local level, as well, we often see the interpretation of rules and laws used to play favorites, or last-minute changes or requests made by government that threaten the economic viability of projects. While the modernization of laws and rules are necessary and important, especially as we continue to learn about the potential for environmental impacts, the political back-and-forth that we have been seeing puts our regional economy in a difficult position.
The most important change that could come for environmental regulation and permitting in 2023 and beyond is a recognition that the investment business makes in our communities matters tremendously, and while not every project should be permitted, every project deserves fair and consistent treatment.
Julie Padilla is an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., practicing in the areas of environmental law, economic development, mining, energy, real estate, land use, and zoning. This article is not intended to provide legal advice. You should always consult with an attorney about your specific circumstances.
